April 19, 2022

Canada Bans Foreign Investors From Purchasing Homes

 

In efforts to cool down a hot Canadian housing market, which has over the past two years seen the average house price increase by more than 51 percent, to around 868,300 Canadian dollars ($693,000 US) (according to the Canadian Real Estate Association).  Canadian Prime Minster Justin Trudeau’s government on Thursday April 7th, 2022, decided to take action.

During the federal budget, presented to Parliament by finance minister and deputy prime minister Chrystia Freeland announced plans to curb soaring real estate prices by introducing a two-year ban on foreign investors purchasing homes in Canada. There were a wide variety of budget proposals directed at making housing more affordable, however the seemingly biggest move is blocking non-Canadian companies and most foreigners from buying residential real estate.

Higher taxes will also be implemented for individuals who sell their homes with a year of purchase. There are of course some exemptions to both measures including permanent residents and foreign students. The budget also included billions for new housing and other maneuvers to try and help Canadians get on the housing ladder, this included savings account changes and first-time homebuyer tax credit.

Only time will tell if these measures have an impact on the Canadian market, however some experts don’t believe it will result in house prices falling, and probably won’t result in a change in the fundamental lack of supply.

What could this potentially mean for the Seattle area housing market?  Well, we believe that there will be a trickledown effect for sure, as investors shift gears and set their sights on the Pacific Northwest. This could result in even more pressure on an already challenged market, and expand the strain on inventory, while conceivably increasing home prices further. While his can be good news for sellers, it can make navigating the market for buyers somewhat more challenging.

Tend Home Team recognizes that looking for the perfect home and getting under contract in this market can be an emotional roller coaster and takes perseverance, we are here to help and are available to answer all your questions, connect with us today, we can offer strategies and expertise to guide you and get you into your dream home.