Ontario’s hottest hot spot for foreign-owned homes is Fort Erie?

ANALYSIS: The latest data on foreign ownership shows that the highest concentration isn’t in Toronto — it’s in cottage country and border towns, writes John Michael McGrath
By John Michael McGrath - Published on Jun 27, 2018
Cottage country has been popular with foreign visitors since long before the current era of globalization. (Mark Spowart/CP)

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One of the most consistent themes in the media coverage of real estate in Ontario is the role of foreign buyers. For years, newspapers and magazines have reported that non-Canadians (usually suspected to be Chinese, though this wasn’t always spelled out) were buying up Toronto-area homes and inflating prices for honest, hardworking Canadians.

The drumbeat became so insistent that, in 2017, the Liberal government imposed a tax on non-residents looking to buy homes in the Greater Golden Horseshoe. As of February 2018, more than 1,300 buyers had paid that tax, in most cases before November 2017. Nearly half of those transactions occurred in Toronto alone —York Region is another hot spot.

Whether the tax on foreign buyers has actually done much to cool the housing markets is debatable: earlier this year, broader federal measures were introduced, and prices for homes in Toronto are still high.

Meanwhile, just in time for the Canada Day long weekend, Statistics Canada has released data that reveals an interesting twist: the places in Ontario with the highest concentration of foreign-owned residential properties aren’t in Toronto or its near suburbs.

Fort Erie, a blue-collar town at the farthest end of the QEW, across the Niagara River from Buffalo, boasts a foreign ownership of just under 9 per cent of homes, according to StatsCan. That’s in contrast to 3.9 per cent in Toronto and even smaller percentages in the suburbs around it.

Then there’s Wainfleet, just west of Fort Erie, where 7.8 per cent of homes are registered to foreign owners.

(It’s important to be clear here: while these are higher percentages, the absolute number of foreign-owned homes in the GTA is certainly much higher.)

What’s going on in the south end of the Niagara Region? The explanation lies with other parts of the province that have similar concentrations of foreign owners: the Kawarthas, Muskoka, Thousand Islands, and Georgian Bay all glow red on StatsCan’s map; in northern Ontario, Manitoulin Island, Thunder Bay, and Lake of the Woods are all popular with non-Canadians.

Cottage country has been popular with foreign visitors since long before the current era of globalization: as more than one history of the region notes, Muskoka has been a vacation spot for out-of-country oligarchs since the titans of Pennsylvania steel first built their mansions there. The Thousand Islands are similarly dotted with remnants of the Gilded Age, such as Boldt Castle. In short, American cottagers have been with us for a long time.

As Terry Rees, of the Federation of Ontario Cottagers Associations, told TVO.org this week, “They came here to vacation with their steamer trunks in the Muskokas in the 1800s, or they came to Frontenac and eastern Ontario to hunt and fish. There are still a lot of people from upstate New York, Pennsylvania, Ohio, whose families came to Canada a long time ago and have a longstanding stake here.”

Niagara is the only cottage-heavy region captured by Ontario’s tax on foreign buyers, and it doesn’t produce much in terms of revenue: $3.4 million of the $173.4 million collected since April 2017 came from Niagara, from 54 of 1,300-plus transactions.

That’s in part because homes that have been in families for generations aren’t being dumped on the market to cash in on high prices — the Liberal government’s tax wasn’t intended to encourage such a result. In British Columbia, the NDP government has proposed a tax on second homes, but it exempted vacation homes after public outcry.

Rees cautioned that his organization has longstanding concerns about how Statistics Canada counts second properties for the purposes of the census but said the figures published this week sound “about right.”

FOCA has raised issues about how vacation homes are counted more generally, because as a rule, Canadians are counted as living at their principal residence. That makes sense from the perspective of the census, but it means that some municipalities are effectively undercounting the number of people who will rely on public services — not a small concern given how dependent some communities are on the property taxes from vacation properties.

It can also lead to some absurd results: the municipality of Cockburn Island, west of Manitoulin Island, in Lake Huron, has an official population of zero, making it the least populated municipality in Canada. Cockburn Island has a summer population that can sometimes be in excess of 100 people, but that doesn’t show up in StatsCan’s map of foreign ownership because it is considered to be “sparsely populated.” The island’s population peaked before World War II at more than 1,000 people before entering a long-term decline.

The issue of foreign-owned cottages is fundamentally different from that of foreign-owned urban properties. If nothing else, it poses a different policy question: Americans bidding up the price of vacation properties doesn’t necessarily affect the cost of living for people who are just trying to put a roof over their heads.

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