Discontent is growing amongst some US policymakers over the hastily designed ban on foreign buyers and the subsequent tax on underused housing by the Canadian federal government. The wording used in the law may also go against the government’s primary goal of augmenting the pace of new housing across the country.  

As real estate brokers and even law professionals still struggle to parse through all the details of the new law, one of the unintended consequences has been to undermine a relationship with our strongest ally to the south. US property owners who may live just across the borders are now penalized from owning a property in Canada. It may deter them from investing more funds into the Canadian economy and diverting the money into their own regional market across the US. 

One of the main goals of the ban was also to curb what was deemed the excess speculation on the housing market and bring back empty homes as an available offering. However, analysts suggest that the wording of the ban may in fact restrict the housing supply by preventing large foreign developers from acquiring land zone for residential or mixed uses. 

In effect, some projects regarding land that would have been developed and turned into housing supply are now being called off by developers for fear they will contravene the ban. Ironically, the centerpiece of the ban and the promise made by the federal government was to double the pace of new construction to 400 000 units annually over the next 10 years. 

For investors across the country, this may be an opportunity to step in and fill the void left by foreign investors. The medium and long term, even after the two years periods, are still to be determined in the real estate market if every foreign investor and developer is effectively pushed out of the housing construction market.