Are Investors Driving Up Housing Costs in New Brunswick? The rising cost of housing in New Brunswick has become a pressing concern for many residents. One factor that has been suggested as a potential contributor to this trend is the influx of investors into the real estate market. Increase in Investor Activity In recent years, New Brunswick has experienced a significant increase in investor activity in the real estate market. Investors, both domestic and foreign, are attracted by the province’s relatively low housing prices and its growing economy. As a result, investors have become a major force in the housing market, particularly in larger cities like Moncton and Fredericton. Impact on Housing Prices The increased demand for housing from investors has had a direct impact on prices. Investors typically have larger cash reserves than first-time homebuyers, allowing them to drive up prices by outbidding other buyers. Additionally, investors often purchase multiple properties, which can further reduce the supply of available homes for sale. Concerns Over Affordability The rising cost of housing due to investor activity has raised concerns about affordability for first-time homebuyers and low-income residents. Many people are now finding it increasingly difficult to enter the housing market or afford a place to live. This can have a negative impact on the long-term health of the economy, as it limits the mobility of workers and reduces economic growth. Government Response The New Brunswick government has recognized the potential impact of investors on housing costs and has taken some steps to address the issue. In 2022, the government implemented a new “Non-Resident Property Surcharge,” which imposes a 1% tax on the purchase price of residential properties purchased by non-residents. The government has also made it easier for municipalities to implement rental controls and other measures to protect tenants. Conclusion While investors can play a positive role in the housing market by providing liquidity and supporting the construction of new homes, their increased activity has contributed to rising housing costs in New Brunswick. The provincial government has taken some steps to address the issue, but it remains to be seen whether these measures will be effective in making housing more affordable for all residents.Cory Allen, a residential landlord in Fredericton, New Brunswick, owns seven rental units across three properties. He faces high costs to maintain his properties, so he rents some units at a loss to keep rents low for his tenants. However, he refuses to sell them, hoping their value will increase and help finance his retirement.Cory Allen, a residential landlord in Fredericton, New Brunswick, owns seven rental units across three properties. He faces high costs to maintain his properties, so he rents some units at a loss to keep rents low for his tenants. However, he refuses to sell them, hoping their value will increase and help finance his retirement. Allen is part of a growing segment of homebuyers in Canada classified as investors. They purchase residential properties as investments, contributing to rising home prices. Investors like Allen argue that they are not solely responsible for soaring home prices. They cite Canada’s growing population and increases in labor and material costs as primary factors. David Campbell, an economic development consultant, believes that the growth in investor activity is likely contributing to increased costs for renters and first-time homebuyers. He suggests that the provincial government study the impact of investors on the housing market and consider imposing regulations to mitigate negative effects. Matthew Hayes, a spokesperson for the New Brunswick Coalition for Tenants’ Rights, advocates for rent control. He argues that it could have helped stem the appeal of purchasing homes as investments and stabilized home prices. While Allen acknowledges the costs involved in maintaining his properties, he views his investment in housing as a long-term strategy. He believes that changes in provincial and federal policies that classify his properties as residential and reduce costs would benefit both landlords and tenants. The debate over the impact of investor homebuyers on the housing market remains complex. While Allen and other investors maintain that they play a legitimate role, experts and tenant advocates argue that their activities may be exacerbating affordability issues for renters and first-time homebuyers.Investors’ Role in Rising Home Costs in New Brunswick The increasing presence of investors in the New Brunswick real estate market has sparked concerns about its impact on housing affordability. According to a recent report by the Canadian Real Estate Association, non-owner-occupiers accounted for nearly a quarter of home sales in the province in the third quarter of 2022. This is a significant increase from 15% in the same period in 2019. Investors include both corporations and individuals who buy properties as investments, often renting them out for income or holding them for future appreciation. Their presence in the market can drive up prices by creating additional demand, particularly in desirable areas with limited inventory. “Investors are looking for places where they can get a good return on their investment,” said Peter MacWhinnie, president of the New Brunswick Real Estate Association. “And right now, New Brunswick is a very attractive place to invest.” Low interest rates and a strong local economy have made New Brunswick a popular destination for investors. The province has also seen an influx of people from other parts of Canada, further fueling demand for housing. However, the increasing cost of homes is putting a strain on first-time homebuyers and those looking to purchase a larger property. “I’ve been looking for a house for the past six months, and everything I’ve found has been way over my budget,” said Sarah Wilson, a first-time homebuyer in Fredericton. “It’s frustrating because I’m starting to think I’ll never be able to afford a home.” The government has recognized the issue and has taken steps to address it. In 2021, it introduced a two-year ban on non-resident home purchases in an effort to cool the market. However, some argue that the ban is having little impact, as many investors are still able to purchase properties through corporations. They also point out that the province needs investors to provide rental housing and support economic growth. The debate over the role of investors in the New Brunswick housing market is likely to continue as the province grapples with how to ensure that homeownership remains accessible for all residents.