Richard Silver, a Sotheby’s realtor and past Toronto Real Estate Board president who works with foreign buyers, told Metro Morning host Matt Galloway that most of his foreign clients are coming to Toronto for educational and business opportunities, not just to park their money offshore, and that a foreign buyer tax would be a bad idea.
TREB is making a concerted effort to lobby against a possible foreign buyer tax on homes in Ontario, arguing that such a tax would be ‘misguided’ when just 4.9 per cent of its member agents acted on behalf a foreign buyer in 2016.
But Silver also said TREB’s figure significantly understates the proportion of foreign buyers in the GTA, as it only captures home resales — not sales of new construction.
Matt Galloway: Who are the foreign buyers that you’re working with?
Richard Silver: You know, it changes. Right now we have been doing a lot of business with Asia, with people from mainland China. What we’ve done is, we work for a very international company, we’ve gone out and added people to our team who speak Mandarin. We’ve gone to Asia three times, I’m about go to Delhi again for a weekend conference in a couple of weeks. You have to go out, you have to meet people, you have to understand their sensitivities, what’s driving them to buy.
A lot of it focuses on the education. So having great education in the city of Toronto, both in the post-secondary and secondary, I think is very, very important, because that’s what they’re looking for.
MG: Language skills are one thing. Going there is something different. What do you learn about who the potential buyers are when you’re actually on the ground in those countries?
RS: It’s really from the questions. A lot of people have the questions about … they know about Toronto, they know about Vancouver, they want to know which is the city that you should buy in. They want to know mostly about education. Seriously, you have to have an idea of the ratings of all of the private schools, the public schools, the universities. And you can know that those are the locations that people are going to be looking in. It has to be accessible to a university or a private school or a very well-rated public school.
MG: So the belief that you’re seeing is that people actually want to live here.
RS: Oh, definitely.
MG: Because in Vancouver, one of the huge problems that people pointed to is that this was essentially money that’s being parked offshore, that people were coming, buying properties, the properties are empty, it led to empty neighbourhoods, empty buildings, we’ve seen this happening all around the world. That’s not what you are seeing?
RS: I think that that is probably part of the case, not in the case that we deal with, we deal with people who are really coming here … you know, sometimes we have to decide, what is a foreign buyer? Is a foreign buyer somebody who’s already applied for and got their permanent residency? And, is it because they want their children educated in Canada?
We see a lot of husbands continuing to work in mainland China, they send their wife and their children to Toronto so their kids can go to university here. And after university, there’s an automatic three-year work permit that goes with being a foreign student in Canada. So that is an option that you wouldn’t get in other countries.
MG: So based on that, and the business that you’re doing, how much of a presence do you think foreign buyers are in this city’s market right now?
RS: Well, remember that the statistic from the Toronto Real Estate Board is about five per cent — they say 4.9 per cent. And I wouldn’t disagree with that, in that that is what the agents are dealing with who deal mostly with resale. Toronto Real Estate Board figures are resale buyers. They’re not people who are buying new construction.
So I would think that there’s also a lot of investment in the new construction. And in that new construction, the buildings that are being built, Toronto Real Estate Board doesn’t get that information very much from the builders, it’s not reported on the Toronto Real Estate Board. So, I would say there’s probably another five to ten per cent there that’s definitely foreign buyers.
MG: Now this is interesting, because it’s a point of dispute. The real estate board in Greater Vancouver said that foreign buyers made up something like four per cent of transactions in that city. Sales have slowed dramatically since the foreign buyers tax came in. So how do you explain that, if it’s only four per cent in Vancouver?
RS: Well, I don’t think it’s dissimilar in Toronto as well, from the board viewpoint, because the board deals with resales, they don’t deal with builder projects.
MG: And that’s the discrepancy?
RS: And that’s the discrepancy, I think. I think if you were to add the two, you’d come up with a higher figure. But the ones the Toronto Real Estate Board deals with, the ones we deal with in our market place, are people who have come basically for schooling. They’ve come because Toronto is the centre of arts and culture, and they can speak their own language.
MG: What has it done to affordability in this city? Because in Vancouver, people pointed — and this led to accusations of xenophobia and more, but people point the finger and say, ‘the market is being torqued because of offshore money coming in.’
RS: Part of the problem is, when you travel around the world and you look at the other G8 countries and you go to the main cities that those countries are led by economically, our prices are very, very low in comparison …
MG: That’s cold comfort, though, to people who can’t afford to get into our market.
RS: It is, but there’s always … I remember buying my first house, I lived in a house and there were seven or eight people living in the house with me, and I bought that house, and they were paying me rent, and it was just one of those things that we did. You need to get into the marketplace at any point, and these days people are getting into the marketplace in condominiums, smaller condominiums.
MG: There have been calls for Ontario to introduce a foreign buyers tax like the one in British Columbia. What would that do to the people that you’re working with?
RS: You know, it wouldn’t do much, and I think that’s the same problem in Vancouver. I think what it will do is, and I think what is happening is, Vancouver and B.C. are going to start feeling the effects of the tax more in terms of building, in terms of construction, in terms of lumber, in terms of finishing, carpentry and everything. I think that is really going to hurt their economy, and it’s already starting, they’re already starting to see that. I would really not suggest it in Ontario as well.
MG: Are you seeing buyers who are looking at Toronto because of what’s happening in B.C.?
RS: Not as much … to me, Vancouver is a completely different city. I always say, Toronto is the place where you come and make your money, Vancouver’s where you go and spend your money. You know, it’s absolutely beautiful, there’s lots of recreation around it. Toronto’s a place very focused on business. And I think for certain groups, that’s going to be very prominent for them. They want to be where the business is.