Investors own 23.7 per cent of Ontario homes, report says

A new report has found that owners of multiple properties remain the drivers of real estate purchasing in Ontario, as first-time buyers and people moving house slowed down their purchases in 2023.

The story over the past decade-plus has been a surge in the number of homes purchased by multiple-property owners, according to Teranet Inc., the private company that manages property registration records in Ontario. In 2011, multiple-property owners accounted for 15.3 per cent of home purchases, but by 2022 their share of the market reached 25.2 per cent of all homes sold in the province.

According to Teranet’s Market Insight Report, the multiowner share of the market slipped in 2023 to 23.7 per cent, but that’s still enough to keep the leading market share, having surpassed the next largest group – first-time home buyers – in 2021.

By contrast, the high point of first-time buyers as share of transactions was in 2011, with 23.6 per cent, and it has hovered around 22 per cent ever since (in 2023 first-time buyers accounted for 21.9 per cent of the market.)

That said, Teranet has found signs of weakness within the category of multiproperty owners, particularly when you start to look at who owns what.

While 55 per cent of those who own more than one property own only two, in 2023 some 7.6 per cent of multiowners owned 11 or more homes. The two areas with the most multiowners are Toronto and Muskoka, which were just above the average with 24.8 and 25.4 per cent of the properties respectively.

“Typically those portfolios cluster in the same region; there’s very few that cross regions,” said Emily Cheung, director of data analytics and insights at Teranet. “The hypothesis is it’s for maintenance,” she said, suggesting that multiproperty owners prefer their assets close by so they can keep an eye on them.

Ms. Cheung notes that the share of those with 11 or more properties is down significantly from just a year ago, when Teranet reported that group made up 13 per cent of all multiowners. That decline is also a contrast to those who owned three or four properties who have seen their shares remain stable at 19 and 8 per cent.

“I have listed three condos for this one client – these are investments they’ve owned – because all of the sudden the rates don’t make sense,” said Andre Kutyan, broker with Harvey Kalles Real Estate. Mr. Kutyan said he is also hearing from other clients who are looking to deleverage a property portfolio where rents don’t always cover the costs of mortgages. “We’re not seeing capital appreciation, so let’s list them [they say.] They want to off-load it.”

Condo purchases are a category dominated by first-time buyers and multiowners. Multiple ownership in the condo sector has surged from 20.6 per cent of buyers in 2011 to 30.9 per cent in 2022. The number is down slightly in 2023 data at 30 per cent, with first-time buyers slipping to 28 per cent of the condo market, down from 31.8 per cent in 2011.

“That [multiowner percentage] seems like an undercount. I’d suspect the number would have been much higher,” said Christopher Bibby broker with Re/Max Hallmark Bibby Group Realty, who works primarily in the condo market in Toronto. Teranet’s data was focused on those who own the property under their own name, and not a corporation, but Mr. Bibby said he has seen all manner of corporate and naming structures by investors with property portfolios that could muddy up Teranet’s data. “Let’s say the home they live in might be in their name and everything else might be a holding company or they are buying properties in kids names,” he said.

He’s also said the decline in investor-buyer interest has continued so far in 2024. “All the resale work I’m doing right now is end users. We did eight deals [before March break], all end-users; no investors. It’s fascinating, how much it has changed,” Mr. Bibby said.

Mr. Kutyan is seeing increasing interest from developers to sell leftover inventory on recently completed condo projects, and is currently marketing seven units from the prestige address of 1 Yorkville – a 58-storey Bazis International and Plaza Corp. building that was finished in 2021. The softness in the market has meant that these units could end up selling at a loss compared to their preconstruction selling price. Overall Toronto condos saw more sales in February (up 7 per cent) but prices drifted lower year over year (0.4 per cent), according to the Toronto Regional Real Estate Board’s February market statistics.

“I think it’s been very humbling,” said Mr. Bibby of multi-property owners who call him looking to sell. “I’m fielding calls from buyers who say ‘I know I’m going to lose money but I have to sell,’ or ‘I’m one of those people who bought at the peak but I have to sell.’ “

Even so, for those buyers calling him looking for fire-sale prices, Mr. Bibby said things haven’t yet gotten to the stage where any offer will be considered.