CMHC looks for new ways to track foreign money into Canadian real estate

Canada's national housing agency is starting to use new tools to get a handle on just how much foreign money is flowing into the country's housing market.

The Canada Mortgage and Housing Corporation (CMHC) told CBC Newson Monday that the housing agency has been in contact with police agencies that track money laundering and tax authorities in order to beef up its data collection on the impact of foreign buyers.

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"At this time, no existing tool can provide a definitive measure of the level of foreign investment in Canada's housing markets," spokeswomanKarine LeBlanc said, confirming details of a story first reported by Bloomberg."That said, CMHC regularly engages in discussions internally, as well as with industry experts, as part of its continued efforts to develop a program of work that would better capture data on foreign buyers."

That includes discussions with FINTRAC,Canada's financial intelligence unit, whichhas amandate is to detect, preventand determoney laundering.The CMHC is also working more closely with the Canada Revenue Agencyin its attempts to follow the money.

Thorny issue

It's an issue that has become divisive in recent months and years as Canadian house prices especially in the two hot markets of Toronto and Vancouver set new sales records with each passing month.

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Unlike the U.S. which has exhaustive research on homebuyers, it's much harder to gauge the impact of foreign money in Canada due to a lack of credible data. So the agencythat has the vast majority of Canadian residential mortgages somewhere on its books is trying to fix that.

The CMHC has already taken steps to address it.

In 2014, the agency startedincluding questions on foreign buyers in its regular communications with real estate boards across the country. It's how the CMHC came up with its benchmark at the time that only 2.4 per cent of condos in Canada were foreignowned in 2014.

By 2015, the number had crept up, but only slightly.

The agency is compiling similar data for new homes, and told CBC News on Monday that it expects to be able to "assess the success of this collection" in the fourth quarter of 2016.

The CMHC says it would love to attempt similar data collection by working with realtor groups in Toronto, Montreal and Vancouver some time in the third quarter of this year. Put together, those three markets make up more than half of all homes sold across the country.

In November, CMHChead Evan Siddall said he suspects foreign money is indeed driving up prices, especially in the luxury home market.

"In Vancouver and Toronto, it is very possible that foreign buyers account for a substantial portion of the demand for pricier, luxury single-family homes," Siddall said last fall, addingthat the agency was looking at beefing up its data on the subject.

What's a foreign buyer anyway?

A big part of the problem is how to define a foreign buyer. It's a nebulous term that might include everyone from legitimate dual citizens of Canada and another country who split time between the two, to students who temporarily live in Canada while pursuing an education, only to leave after finishing it.

The CMHC says that for its purposes, it uses the definition that British real estate consultancy Knight-Frank came up with: "If the property is owned by a person whose permanent residence is outside of Canada."

That would exclude foreign students, who some critics say are a big part of local problems with foreign cash altering the market. And would actually include Canadian-born citizens who live abroad yet still own property here.

"Anecdotal evidence indicates that many properties in the Vancouver area are bought by foreign students (and their families) to live in while they go to school," the CMHC said. But "foreign students are only temporary residents of Canada, and therefore would be counted as non-permanent residents of Canada" for the purposes of determining foreign investment.

At one point, the CMHC was considering monitoring driver's licence data on transactions to determine whether thebuyer was a foreigner, as visitors and temporary citizens can apply for a licence in Ontario. But in the statement, the CMHC told CBC News that the agency is "not currently considering examining driver's licence data."