Statistics Canada released data this week that challenges one assumption about Canada's housing crisis while confirming another. Temporary residents aren't driving up home prices because they're almost never buying homes. But they absolutely affected housing markets in ways that matter.

The numbers are stark. In BC, non-permanent residents made up 5% of the population in early 2022 but represented just 0.13% of homeowners. That's about one in every 770 homeowners.

In 2021, just 0.31% of homebuyers in BC were non-permanent residents. And only 1.41% of non-permanent residents in the province owned homes at the start of 2022.

But saying temporary residents didn't buy homes misses the larger story. They changed housing markets through rental demand, construction labor, investor behavior, and population pressure that housing supply couldn't match.

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The Rental Market Hit

The StatCan report is clear on this. "Large growth in the number of NPRs was much more likely to influence the rental market than the ownership market of Canada's housing system, given that NPRs tended not to be homeowners."

For every 1,000 non-permanent residents in Canada, 316 rental units are occupied. When the temporary resident population jumped from 1.4 million in Q1 2022 to over 3 million in Q1 2025, that added demand for roughly 500,000 rental units.

Canada's rental vacancy rate hit historic lows in many cities in 2023 and 2024. Rents increased double digits in many markets as rental demand surged while construction lagged.

Stephen Pomeroy, a housing expert at McMaster University, told CBC that "temporary foreign workers and students don't come to buy homes. They rent. So we've had a massive demand impact on the rental part of the housing system."

That rental pressure is real. It affected vacancy rates, rent prices, and competition for units. Anyone who rented an apartment in Vancouver, Toronto, or Kelowna between 2022 and 2024 felt it.

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The Construction Labor Paradox

Here's where it gets complicated. Temporary residents increased housing demand, but they also increased housing supply.

Between 2023 and early 2024, Canada issued over 42,000 work permits to temporary foreign workers in construction occupations. The construction sector is specifically exempted from caps on the proportion of temporary foreign workers that employers can hire in low-wage positions.

The construction industry already struggled to attract and retain workers before the pandemic. Labor shortages were a major constraint on housing production. Temporary foreign workers helped fill that gap.

BuildForce Canada noted that housing starts climbed to 245,400 units in 2024, a modest 2% gain following a steep 22% decline in 2023. Purpose-built rental construction, which depends heavily on construction labor, grew 18% in 2024.

Without temporary foreign workers in construction trades, those numbers would have been lower. So temporary residents both increased housing demand and helped build the supply needed to meet that demand.

Cutting temporary resident numbers removes some demand but also removes some construction capacity. The net effect on housing availability isn't as straightforward as it seems.

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The Investor Response

StatCan acknowledges an indirect effect on the ownership market. Higher rental demand from increased temporary resident entries might spur investor interest in residential properties for their rental potential.

That's exactly what happened. Purpose-built rental construction grew 18% in 2024, responding to incentives like the 100% GST rebate for rental projects and strong rental market fundamentals.

Investors who saw rental vacancy rates below 1% and rents climbing 10% to 15% annually had clear signals that rental properties would generate strong returns. That investment showed up in the ownership market even though temporary residents themselves weren't buying.

Condo investors have been major providers of new rental supply, adding more than 200,000 new rental units to Canada's four largest cities over 15 years, according to RBC Economics.

Some of those purchases pushed up condo prices. Some affected single-family home prices as investors bought properties to rent out. The investor effect cascaded through multiple segments of the ownership market.

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The Supply and Demand Mismatch

The core problem was timing. Population grew faster than housing supply could respond.

Federal public servants warned the government in 2022 that housing construction had not kept up with population growth. Internal documents from Immigration, Refugees and Citizenship Canada stated: "In Canada, population growth has exceeded the growth in available housing units."

Canada's population grew by more than 430,000 in Q3 2023 alone, the fastest pace in any quarter since 1957. Nearly all of that growth came from immigration, both permanent and temporary.

Housing construction can't scale that quickly. The all-time peak for completions was 257,000 in 1974. Hitting 320,000 annual completions to match population growth would require a 47% increase from recent levels, according to RBC Economics.

The construction industry has capacity limits. Labor constraints, land availability, municipal approval processes, and financing conditions all cap how quickly housing can be built. Even with temporary foreign workers filling construction jobs, the industry couldn't keep pace.

Bank of Canada Deputy Governor Toni Gravelle warned in December 2023 that strong population growth was pushing rents and home prices upward. The central bank's analysis showed population growth eroding housing affordability as demand outpaced supply.

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The Government Response

The federal government slashed temporary resident targets from 673,650 in 2025 to 385,000 in 2026, a 43% cut. International student permits face the sharpest reductions, dropping nearly 50% to 155,000 in 2026.

The goal is to reduce the temporary resident population from 6.2% of Canada's total population back to 5% by 2027. That represents roughly a 20% decrease in the non-permanent resident population.

By year-end 2024, Canada had a net outflow of non-permanent residents for the first time. The net number of non-permanent residents dropped 85% in Q3 2024 compared to Q3 2023.

Housing was a major justification for the cuts. Finance Minister François-Philippe Champagne claimed reducing immigration would decrease the housing supply gap by approximately 670,000 units by the end of 2027.

But that math only works if you assume each temporary resident removed equals housing demand removed without any offsetting effects. It doesn't account for construction labor lost, investor demand changes, or permanent residents filling vacated units.

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Who Counts as a Non-Permanent Resident

StatCan defines non-permanent residents as people holding valid temporary permits for work or study, plus those who've claimed refugee status. The definition includes people on permits lasting less than a year, like seasonal farm workers.

It excludes anyone whose permit expired before the end of 2021 or who became a permanent resident by that date.

Work permit holders include international students who work part-time, temporary foreign workers across all sectors, intra-company transferees, and spouses of skilled workers. Study permit holders are primarily international students at colleges and universities.

The composition matters because different groups have different housing impacts. International students disproportionately concentrate in major cities near educational institutions. Temporary foreign workers in construction are more dispersed but critical for housing supply. Seasonal agricultural workers typically live in employer-provided housing.

Grouping all temporary residents together for housing analysis obscures these differences.

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The Transition Effect

StatCan flagged an important nuance. If you include people who were non-permanent residents in 2021 but became permanent residents by year-end, the share of buyers who were once temporary residents triples.

In BC, that takes the share from 0.31% to 0.94%. Still small, but three times larger.

Many temporary residents eventually transition to permanent residency. International students finish degrees and apply through express entry. Temporary foreign workers accumulate Canadian work experience and qualify for provincial nominee programs.

The pathway matters. Canada has increasingly moved to a two-step immigration process where people come for education or work experience, then apply for permanent resident status. Over 200,000 post-graduation work permits are set to expire within 15 months, intensifying competition for permanent residency.

Those who successfully transition from temporary to permanent status often buy homes a few years later. That delayed demand still affects housing markets, just not immediately.

"The question of homeownership and immigrant status transition will be further explored in upcoming studies," StatCan notes. That research will clarify how much temporary resident demand converts to ownership demand over time.

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Why Temporary Residents Rent

The barriers to homeownership for temporary residents are structural, not incidental.

Their status is temporary by definition. They don't know if they'll stay in Canada long-term. Buying a home requires certainty about staying put for at least five years to make the transaction costs worthwhile.

Many arrive on student visas with limited employment potential. Working part-time while studying doesn't generate income sufficient to qualify for a mortgage. Student loans don't count as income for mortgage qualification.

They lack work and credit histories. Canadian lenders want to see steady employment and established credit. New arrivals have neither. Building a credit history takes time. Demonstrating stable employment takes longer.

They're younger and have less saved for down payments. The typical international student or temporary foreign worker doesn't arrive with $50,000 to $100,000 for a down payment on a starter home.

Mortgage qualification is harder. Stricter financial requirements introduced in 2024 doubled the Guaranteed Investment Certificate requirement to $20,635. But even with that cash, qualifying for a mortgage requires documented income that most temporary residents don't have.

And renting is easier. The process of buying a home in Canada takes 30 to 60 days at minimum, requires navigating complex mortgage requirements, legal processes, and inspections, and involves substantial transaction costs. Renting requires first and last month's rent and a credit check.

These aren't minor obstacles. They're fundamental reasons why non-permanent residents stay out of the ownership market almost entirely.

What the Data Actually Shows

The StatCan study focused on homeownership rates, which tell part of the story but not all of it.

Non-permanent residents clearly aren't buying homes in meaningful numbers. The 0.31% share of BC buyers in 2021 is minuscule. Even tripling that to 0.94% when including those who transitioned to permanent residency is still small.

But housing markets are systems. Rental demand affects investor behavior. Investor behavior affects ownership prices. Construction labor affects supply. Supply affects prices. Population growth affects everything.

Temporary residents increased rental demand dramatically. That's indisputable. They also provided construction labor that helped build housing supply. They influenced investor decisions about purchasing rental properties. And their population growth exceeded housing production capacity.

The net effect on housing affordability was negative, but not primarily through direct competition for homes to buy. The effect came through rental market pressure, construction constraints, and timing mismatches between population growth and housing supply.

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The Kelowna Context

Kelowna and the Okanagan saw their share of temporary residents, particularly international students at Okanagan College and UBC Okanagan.

The rental market tightened significantly over the past few years. Purpose-built rental projects have been proposed and approved to meet demand. Some are under construction now.

If federal immigration cuts reduce international student numbers in Kelowna, rental demand will soften. Purpose-built rental projects in the pipeline might face weaker-than-expected leasing. That affects investor returns and could slow future rental construction.

But temporary residents weren't competing for homes to buy in Kelowna. They rented apartments, basement suites, and shared accommodations near campus or downtown.

Home prices in Kelowna peaked in early 2022, before the 2022-2024 surge in temporary residents. The recent cooling in Kelowna's housing market happened despite record temporary resident numbers. That timing suggests temporary residents weren't the primary driver of home price appreciation.

Interest rates, buyer psychology, available inventory, and local economic conditions played bigger roles in Kelowna's ownership market.

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What Happens Next

Population growth could drop to near zero in 2026 and 2027 as temporary resident reductions take full effect, according to TD Economics. That removes a significant source of housing demand.

But housing supply doesn't adjust instantly. Purpose-built rental projects take two to three years from planning to completion. Investors who bought properties to rent out won't sell just because rental demand softens. Those units stay in the rental pool.

The result will likely be rental market cooling rather than collapse. Vacancy rates rise from historic lows. Rent growth moderates or stalls. Landlords compete for tenants instead of tenants competing for units.

For renters, that's good news. For investors who bought rental properties expecting continued strong demand and rent growth, it's less positive. For construction workers, reduced rental construction means fewer jobs unless other segments pick up the slack.

The ownership market sees indirect effects. Less investor demand for rental properties means slightly less competition for condos and single-family homes purchased as investments. But the direct impact is limited because temporary residents weren't buying anyway.

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The Economic Trade-offs

Educational institutions reliant on international tuition face financial strain due to fewer study permits. Some schools anticipate program closures, layoffs, and diminished student services.

Ontario and BC universities in particular depend on international student tuition, which is substantially higher than domestic tuition. A 50% cut in international student permits affects university budgets, which affects local economies where universities are major employers.

Construction labor constraints will tighten as temporary foreign worker numbers drop. The industry already struggles with labor shortages. Removing workers who help build housing supply creates a different problem than the one being solved.

These trade-offs matter for housing markets. Less rental demand is good. Less construction capacity is bad. The net effect depends on which force dominates.

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What Buyers and Sellers Should Know

For anyone making real estate decisions in Kelowna or elsewhere in BC, understanding the full picture of temporary resident impacts helps clarify what's actually driving market conditions.

If you're a buyer, don't expect immigration cuts to dramatically lower home prices. Temporary residents weren't competing for homes to buy. Their impact was indirect through rental markets and investor behavior. Reducing their numbers removes rental demand, not direct ownership demand.

Home prices respond to interest rates, employment, buyer sentiment, and available inventory. Those factors matter more than temporary resident numbers for the ownership market.

If you're a seller, immigration cuts don't fundamentally change the buyer pool for your home. The people looking to buy were always permanent residents or citizens, not temporary residents. What might change is investor appetite for rental properties, which could affect condo pricing in particular.

If you're an investor in rental property, immigration cuts matter directly. Reduced temporary resident numbers mean softer rental demand. That affects vacancy rates, rent growth, and property values for investment properties.

If you're a renter, immigration cuts should eventually help. Less competition for rental units means more negotiating power, slower rent increases, and better selection. But the effect takes time to show up as existing leases expire and market conditions adjust.

The key takeaway is that immigration affects different parts of the housing market in different ways and at different speeds. Temporary residents impacted rentals directly and ownership indirectly, and understanding those distinctions helps you make better decisions about whether current market conditions make sense for your situation, which is where working with the team at Coldwell Banker Horizon Realty provides value because they can help you separate the direct effects from indirect effects and focus on the factors that actually matter for your specific housing goals in the Okanagan market.