Solving puzzles in the Canadian housing market: foreign ownership and de-coupling in Toronto and Vancouver

Using new data from the Canadian Housing Statistics Program (CHSP), this paper provides a basis for an integrated account of the Canadian housing market in the last two decades. It shows how the housing markets in Vancouver and, to a lesser extent, Toronto have become de-coupled from local incomes due to significant flows of foreign capital. Once this dynamic is appreciated, certain puzzling elements of the Canadian market become intelligible. The analysis points to possible policy solutions to intense housing affordability challenges. It also provides evidence of widespread tax avoidance in certain urban areas. Furthermore, it documents a methodology that researchers in other national contexts, who may lack government generated data on non-resident or foreign ownership, may adopt to infer the presence of de-coupling through foreign ownership.