Investors who own multiple properties within the city has in recent years overtaken first-time homebuyers as the biggest slice of Toronto’s home-purchasing market, according to a recent report by Teranet.
As recently as 2016, Teranet — Ontario’s title search and registration provider, found the most common kind of person purchasing a Toronto home was a first-time buyer. But from 2016 to 2018, things changed. Multiple-home owners — a group that includes real estate investors as well as those who own a vacation home like a cottage — became the most common kind of homebuyer throughout the city. This year, between January and August, Teranet found that multiple property owners made up 29 percent of Toronto purchases, nudging first-time buyers at 28.5 percent.
And across the country, Equifax Canada has noted a multi-year surge in people with more than three mortgages, with a 7.7 percent increase between June 2020 and June 2021.
While some believe investors are taking away supply from prospective homeowners looking for their primary residence, others say they have the potential to provide needed rental supply. Experts say the exact degree to which investors have affected that growth is unclear. John Pasalis, president of Realosophy Realty, presented it as a sort of chicken-or-egg question: did the surge in investors lead to rising home prices, or did rising prices attract more investors?
Either way, he sees the increase in multi-home ownership as yet another challenge facing hopeful buyers searching for their own home, particularly in the competitive single-family house sphere. Pasalis noted that investors were often attracted to average or below-average homes where they saw potential to increase the property’s value. With more capital at their disposal, Pasalis said investors could often be more aggressive in bidding wars.
As of the last census report, slightly more than half of Toronto households owned their homes — 53 percent versus the 47 percent who rented. Of homeowners, 61 percent lived in single-detached, semi-detached, or row houses, while 87 percent of renters were in apartments.
He believes there’s more to the equation, though, noting some older properties are in a state where they require extensive renovations to be in livable shape. Not everyone has the time or money to do those kinds of renovations, he said, particularly someone who barely eked out a down payment.