Canada’s Ban on Foreign Home Buyers Coming in January 2023

On January 1st, 2023 the Canadian Government is implementing a ban on foreign home buyers. Canadian citizens and permanent residents are exempt from the ban while other buyers have different rules based on their situation.

International students and foreign workers are permitted to purchase a property in Canada but they have restrictions they have to satisfy before being able to purchase. They are only permitted to purchase one property. For foreign workers they must have worked in Canada for three of the four years before buying a property. Students are required to be in Canada for 244 days each year for five years before buying and are not permitted to purchase anything over $500,000.

The intention of these restictions to to establish that the international students or foreign workers have an intention to become a permanent resident.

The non-citizens who can purchase a property in Canada without further restricions are: refugees, diplomats, foreign nationals with temporary resident status, consular staff and members of international organizintions living in Canada.

Non-Canadian entities and foreign controlled Canadian entities will be banned from buying property in Canada. This includes a non-Canadian who has a three per cent direct or indirect ownership interest in an entity or corporation.

The ban also doesn’t include properties in less populated areas and often this includes areas where recreational properties exist. The Kamloops area is subject to this legislation however a lot of the outlying areas are not included, such as the Shuswap Lakes region, North Thompson, South Okanagan (including Penticton & Kootenays). Here is a map showing the Census map showing the exempt areas.

These rules are also developed to target residential properties with three or less units. So any properties with four or more living quarters are not part of the exemption for foreign purchases. Properties that are part of the ban are detached homes that contain a private kitchen facility, private bath and private living area and a part of a building that is intended to be owned and used as a place of residence. This includes semi-detached homes, townhouses, condos and row houses.

The ban may not do much to calm prices in Canada, we saw such a huge influx of buyers into the market due to low interest rates and a low supply of homes to purchase. The number of foreign buyers in BC specifically is quite low. In 2020 the number of residential properties where one or more owners were a non-resident was 4.7%. In 2021 that dropped to 1.1%.

The ban on foreign buyers is for two years. If any person or entity that knowingly assists a non-Canadian in the purchase of a property they can be fined up to $10,000 and the property may be forced to be sold.

Commercial Leading Indicator December 2022
CLI Falls in Third Quarter 2022

The BCREA Commercial Leading Indicator (CLI) fell to 149 from 153 in the third quarter of 2022 while the six-month moving average retreated from a record high. Compared to the same time in 2021, the index was down by 0.8 per cent.

It is important to note that while the Canadian economy has enjoyed a strong recovery, the environment for commercial real estate remains highly abnormal and uncertain. Although the CLI is designed to interpret economic and office employment growth as positive indicators for commercial real estate demand, the recent strong growth of these indicators may not translate as readily into improved conditions in the commercial real estate market relative to the pre-pandemic period.

The CLI fell in the third quarter due to deteriorations in all three subcomponents of the index. The economic activity index was driven downwards by inflation-adjusted declines in wholesale trade, retail and manufacturing sales. Rapid appreciation in the consumer price index driven by supply chain obstacles and the war in Ukraine meant that rising nominal values in these economic areas were offset after adjusting for general price growth. The financial component of the index was negative as a result of falling REIT prices. Spreads between corporate and government borrowing costs also rose slightly from the prior quarter, contributing negatively to the financial component. The index’s employment component was also negative, with a rise in office employment (finance, insurance and real estate) insufficient to offset a larger decline in manufacturing employment.

Click here to visit to BCREA’s website. To view other statistics for the Kamloops and BC real estate market click here.

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“Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information.

BCREA: Canadian Housing Starts September 2022

Canadian Housing Starts (September 2022) – October 18, 2022
Canadian housing starts rose by 29.2k (10.8 per cent) to 299.6k units in September at a seasonally-adjusted annual rate (SAAR). Comparing year-over-year, starts were up from September of 2021 (19.3 per cent). Single-detached housing starts fell 1 per cent to 76.5k, while multi-family and others rose 16 per cent to 223.1k (SAAR).

In British Columbia, starts increased by 10.9 per cent in September, rising to 54.3k units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts rose 18 per cent m/m to 8k units while multi-family starts rose 10 per cent to 42.1k units. Starts in the province were 50 per cent above the levels from September 2021. Starts were up by 8.8k in Vancouver and 1.3k in Abbotsford, but were down by 4.5k in Kelowna and 1.2k in Victoria. The 6-month moving average trend rose 7.7 per cent to 50.5k in BC in September.

Click here to visit to BCREA’s website. To view other statistics for the Kamloops and BC real estate market click here.

If you want to be kept informed on Kamloops Real Estate, News and more visit our Facebook Page.

To search for Kamloops real estate and homes for sale click here.

BCREA: Mortgage Rate Forecast June 2022

BCREA has released it’s latest mortgage rate forecast. To summarize their report:

  • In the last report BCREA forecasted that the 5 year fixed mortgage rates would reach 4% later in 2022. Instead they are at 4.69% to battle inflation.
  • Bond markets expect very aggressive Bank of Canada.
  • Expecting the 5 year fixed mortgage rate to reach 5% which is the first time since 2009.
  • Current Buyers currently qualified at a rate of 6.49% with it likely going up to a 7% qualification soon. This has not been seen in the Canadian market since the early 2000’s.
  • Bank of Canada’s main focus is to lower inflation at this time.

Economic Outlook

  • Growth in the first quarter of 2022 was 3.1%.
  • Likely will see a slow down in growth due to inflation.
  • Growing concern that 2023 will see a recession but indicators suggest the economy is not currently in a recession.

Bank of Canada Outlook

  • The ultimate end for interest rate increases will depend on the trajectory of inflation over the next few months.
  • Some see signs of inflation peaking while consumer and commodity prices continue to rise.

Full Report is included below or download the PDF here.

Click here to visit to BCREA’s website. To view other statistics for the Kamloops and BC real estate market click here.

If you want to be kept informed on Kamloops Real Estate, News and more visit our Facebook Page.

To search for Kamloops real estate and homes for sale click here.

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