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Is Ontario investing too much in foreign builders?

Everyone is talking about the foreign buyers tax in Ontario — but no one is talking about the increase in foreign builders.

What do I mean by foreign builders? Large, international companies based in Italy, France, or Japan, with small offices within the GTHA, are being given contracts for large transit projects while smaller Canadian companies are shut out.

If you take a look at the shortlist for the Hurontario LRT, half of the constructors are not from Canada. They may have Canadian offices, but the companies themselves were created and have headquarters in Europe, the United States, and Asia. While each individual “team” that is bidding for the contract does have at least two Canadian companies on board, this is not a guarantee on division of work and/or financial contributions.

And this is a big problem.

By allotting contracts for big developments and transit projects to foreign builders, it severely impacts the Canadian economy. It means less jobs and less money for construction workers, and it means the competition between Canadian companies is steep.

Canada also has a unique climate. There are certain materials that must be used for a development to support extreme cold and hot temperatures. Would a company from Spain or Italy be able to understand how to build something resistant to this temperamental landscape?

An even bigger problem is that these foreign companies are not connected to the community, and therefore do not understand and/or empathize with local concerns over a new development. These companies come in, build, and leave, which means they are not around if any problems arise and they don’t get to see the affect it has on the residents who leave them. There is no real investment to the community they are building.

To be clear, collaborating with international partners is not a bad thing. These types of partnerships can inspire new ideas and provide interesting solutions to municipal problems.

However, when native companies are pushed out of the process in favour of international conglomerates — it’s Canada that loses out.

What do you think? Let us know in the comments below!

Empty houses are driving up Toronto real estate market

People often speculate on reasons why the real estate has ballooned so heavily in the last couple years in Toronto, and across Canada. Everything from foreign buyers to decreased land availability has been blamed, and Statistics Canada sheds further light on why the housing market is on high alert.

The newest 2016 census shows that Toronto alone has over 99,000 unoccupied homes in the city. These statistics results reflect that a lack of occupancy is a top housing issue in the city and is growing at the same rate as the rising price of real estate. Across Canada, the number of unoccupied homes as grown and is highest in Toronto, followed by Montreal. Vancouver is trailing in third, potentially in part due to the new foreign buyer bylaws that have come into effect.

By comparing the number of total private dwellings and the total private dwellings occupied in each city as collected in the census, it is easy to see there is an unusual difference between occupied homes and total dwellings available. In the last 10 years, the amount of unoccupied dwellings have also grown 10.5 per cent in Toronto, and the problem continues to worsen. It appears that the highest rate of non-occupancy is in the Concord area of Vaughan, which was at 35 per cent. Downtown Toronto also had more homes that weren’t being occupied, especially in the fashion district at King St. W, with 21 per cent not regularly occupied.

In this circumstance, blaming foreign buyers isn’t a viable reason because local Canadians are most often the residents to fill out the statistics report. Other factors could be AirBnB or short-term rentals to explain the unoccupied rentals, but it is becoming more clear that speculation is a big part of the reason. Homeowners are hanging onto their homes while the red hot real estate market is at its highest, and people are waiting until the city hits its peak price. These people are often known as ‘flippers’ and are unnecessarily preventing families in desperate need of housing from getting a much-needed house.

Having statistics available to highlight housing issues can provide answers to convoluted real estate issues that are often kept under wraps by stakeholders. By crunching numbers, it is easy to see why unoccupied homes are negatively contributing to the real estate bubble in the city. House flippers and speculators need to sell or rent unoccupied homes to people who need them, and housing must be made more affordable. Hopefully the government takes the necessary steps to crack down on unoccupied homes, and the real estate market can balance as a result.