The Foreign Buyer Ban will be coming to force in less than 2 weeks!
Starting January 1, 2023, any non-Canadians and non-permanent residents will be banned from buying residential properties in Canada for a period of 2 years.
The ban was initially announced 8 months ago, in early April 2022.
That was when the market was going up like 20, 30% per year.
So the ban was one of the government’s responses to all the affordability complaints.
It was meant to cool the housing market.
Of course, the government didn’t predict a roller coaster ride on the housing market.
The market is already very cool before the ban even comes into effect.
Is the ban going to make things worse and bring prices down further?
We can gauge the impact of the ban by figuring out the percentage of foreign owned properties in Canada at the moment.
It makes sense to believe that most foreign owners are concentrated in Vancouver and Toronto where home prices are the highest.
What’s the percentage of foreign owners in these cities?
It is actually only 3.1% in the province of British Columbia and is even lower in Ontario, only 2.2%.
In Canada as a whole, we have roughly 3.5% of foreign home owners.
I would say it’s a very insignificant percentage.
Besides, there are possible exemptions from the ban.
Our government has always wanted to bring in more skilled workers from abroad to help our labour market shortage.
So in order to attract more people to come, some businesses are urging the government to exempt all work permit holders from this Foreign Buyer Ban.
This is still up in the air even though we are less than 2 weeks from the new year.
We’ll have to wait for the government to release the finalized details.
In any case, I think the ban would have minimal effect on the market because the solution is tackling an insignificant cause of the problem.
It’s the same thing with life, which is all about problem solving.
I think we all know someone who works very hard, spends hours and hours solving insignificant problems and they end up stuck with the same status for years.
Then someone else comes in, spends only 20% of the effort, but gets 80% of the rewards because they prioritize and work on things that really matter.
So you need to figure out the 20% of factors that will produce the best results.
It is the same with investing.
There are many different ways to make money, some are more rewarding than others.
Did you know that 90% of the world’s millionaires become so through owning real estate?
This is a famous quote by Andrew Carnegie, one of the richest Americans in history.
90% is probably not the exact number, but you get the idea.
You can build wealth using the widely successful way, or you can also figure something out in the 10% category.
Next week will be our last episode in 2022 and I will be giving my predictions on the 2023 Toronto real estate market.
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