Research Seminars & Workshops @ IRES
Immigration and Real Estate Returns
We exploit a surprise suspension and subsequent closure of a popular investor immigration program in Canada to assess the impact of immigration and capital inflows on local real estate markets. Using transaction data from the Greater Vancouver area, we find that the closure of the program had a significant negative impact on the neighborhoods and market segments most favored by the investor immigrants. The negative impact we document was quick and persistent, reflecting both a change in seller expectations and subsequent drop in demand. However, within two years the effects the program suspension and then closure had dissipated and the immigrants and units most favoured by wealthier immigrants had returned to their relative price premium. The effects are strongest for the most expensive units in the target neighbourhoods. Our findings suggest that the mix of wealthy immigrants and capital flows impacts real estate primarily through changes in demand for space it causes. None of our findings hold for property types not likely to be favored by investor immigrants. Comparing our findings with the existing literature these results indicate that in assessing the effects of immigration on housing markets immigrant type matters. They also support the argument that capital inflows in real estate raise prices more in the destination neighbourhoods than they raise the overall level of house prices.
About the Speaker
Tsur Somerville is an associate professor, Director of the UBC Centre for Urban Economics and Real Estate, and holder of the Real Estate Foundation Professorship in Real Estate Finance at the Sauder School of Business at UBC. His primary areas of research are housing markets, Canadian mortgage markets, and real estate development. He has published in all of the leading journals in urban economics and real estate and served on the boards of the top academic organizations and on multiple academic journal editorial boards in these fields. In addition to his academic research, Somerville is a frequent commentator in the local and national media on housing markets.
Somerville received his Ph.D. in Economics from Harvard University and his BA from the Hebrew University (Israel) in Economics and East Asian Studies and has been at UBC since 1993.