News: 1 Out of 5 Home Purchases is an Investor
- Shael Soberano
- Jun 21, 2021
- 3 min read
Updated: Jan 12, 2022
In this week's Industry News (Week of 21 Jun 2021).
Investors account for one-fifth of all home purchases, raising fears of even higher prices | Rachelle Younglai, The Globe and Mail
Investors account for one-fifth of all home purchases in Canada, adding more fuel to the debate about their influence on the country’s soaring real estate prices and demand for housing.
The Bank of Canada data shows that the share of investor buying in Canada reached a high of 21.7 per cent in spring of 2018, before dipping just below 20 per cent in 2019. The most recent reading was 20.1 per cent in February. With the country’s rental vacancy rate below 3 per cent and an affordable housing crisis raging across the country, rental homes have become coveted assets for big investors who believe they can earn steady profits by increasing rents. While recent news has raised concerns about investor ownership of homes, as CMHC’s deputy chief economist, Aled ab Iorwerth, points out, this does not reduce the supply of housing, “they are shifting it from homeownership to rental.”
Blackstone to buy Home Partners of America in $6 billion deal | Reuters
Blackstone Group agrees to acquire Home Partners of America, which acquires and rents single-family homes, in a $6 billion deal.
Yet another deal south of the border exhibits the veracious appetitive from institutional investors to garner access to the sought after Single-Family Rental (SFR) Home asset class. Further, more and more are seeking flexible housing solutions and choosing the benefits of renting. “The fundamental premise of the Home Partners platform is to provide residents with the opportunity to live in their chosen home with the option to purchase it,” Jacob Werner, Blackstone real estate senior managing director, said in a statement.
Konfidis is not surprised to see further activity in the U.S. and is proud to be the leading provider of technology, brokerage, and management services for investors seeking access to the residential real estate asset class in Canada.
Canada's housing market is 'moderating' — but still blazing hot | Financial Post
When the new mortgage stress test came into effect on June 1 and ate into the average Canadian’s homebuying power, you probably saw numerous mentions in the media about a potential cooling of Canada’s overheated housing market. Well, it turns out that “cooling,” when it comes to Canadian real estate, is about the same as throwing your Brita at an active volcano.
One of the most important metrics for taking a market’s temperature is its sales-to-new listings ratio. We follow this metric closely at Konfidis to gauge the real-time supply and demand of housing stock in an effort to best position our clients. for A new listing is considered an offer to sell, or "supply", while a sale represents executed demand. In May, the ratio was 75.4 per cent, down ever so slightly from April, but a massive improvement over the 90.7 per cent seen in Jan. For Canada to shift into buyer’s-market territory, the sales-to-new listings ratio would need to be closer to 40 per cent.
Konfidis is pleased to share our weekly real estate investing industry news piece herein. We love connecting with our members. Reach out with your questions to hello@konfidis.com.
Shael Soberano, CFA Konfidis Inc. Chief Investment Officer
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