Canada's $828 Billion Investment Gap: What It Means for Housing
Canadian money is flowing out of the country faster than foreign money is coming in, and many of the people who'd earn and invest that money have moved too. By 2025, Canadian direct investment abroad was about $828 billion larger than foreign direct investment in Canada, up from about $100 billion in 2014, based on Statistics Canada figures. A Bank of Canada staff study estimates that at least 40% of Canadians whose ability would place them in the top 1% of earners live outside Canada. I think that matters for housing, because those are the buyers at the top of the market, and when the top stalls, sellers below them can get stuck.
Key Takeaways
- The investment gap grew 8 times in 11 years. Canadian investment abroad exceeded investment into Canada by $100.5 billion in 2014 and by $828.4 billion in 2025.
- Outflows have run ahead of inflows every year since 2014. From 2014 to 2024, outflows averaged 4.1% of GDP and inflows averaged 2.4%.
- Top earners are part of the story. The Bank of Canada study estimates at least 40% of would-be top 1% earners, and 30% to 50% of the next 9%, live outside Canada.
- Lower rates can't bring buyers back who've left. If part of the top of the market is missing, I'd expect it to take more than rate cuts to fix.
How much investment has left Canada?
Canadian companies and funds now own about $2.4 trillion of businesses and assets abroad, while foreigners own about $1.6 trillion in Canada. The difference was $828.4 billion in 2025, according to a June 2026 Montreal Economic Institute note built on Statistics Canada's international investment position data. In 2014 the gap was $100.5 billion.
This is direct investment: factories, offices, companies and stakes in real businesses. Some of it reflects Canadian pension funds and companies doing well abroad. The same note points out that it also suggests investors see better returns outside Canada.
The picture isn't all one way. Statistics Canada reported $96.8 billion of foreign direct investment into Canada in 2025, a strong year. It would take several years like that to close a gap that built up over more than a decade.
Are top earners leaving Canada?
A large share of Canada's highest earners appear to live in the United States, based on a Bank of Canada staff working paper by James MacGee and Joel Rodrigue. Comparing income in both countries, they estimate that "at least 40 percent of Canadians whose ability would place them in the top income percentile reside outside of Canada." For the next 9% of earners, they put the share at 30% to 50%.
The estimate counts people who would have been top earners here and now work somewhere else, mostly in the United States, built up over many years. The authors call the results "somewhat shocking" and note that estimates at the very top are sensitive to how they're measured, so treat it as a strong signal with a wide margin.
I hear the same thing from realtors. Clients in tech and other high-paying jobs are selling or renting out their homes and taking jobs in Seattle or California.
How does this affect the housing market?
When fewer high earners are buying, the top of the market slows first, and that can hold up sales further down. The people who'd buy a $2.5 million detached home in Vancouver or a luxury home in Calgary are the same people a move-up family needs.
Say a family wants to sell their $1.8 million home and move up to a $2.5 million one. If there are fewer buyers at $2.5 million, that seller waits or cuts the price. The family can't move until they sell, so their buyer waits too, and so on down to condos and starter homes. Fewer sales at the top can mean fewer sales at every price.
Is this a short-term slowdown or a long-term problem?
I think it's a long-term problem. In a normal slowdown, the Bank of Canada cuts rates, borrowing gets cheaper, and buyers come back. If some of those buyers now live and pay their mortgage in another country, a lower rate doesn't bring them back.
Rates aren't falling right now anyway. The Bank of Canada raised its policy rate to 2.50% on October 28, 2026. We broke down what that hike means for your mortgage in a separate post.
What does this mean for your mortgage renewal?
If you're renewing soon, plan around your own numbers and don't count on a hot market to bail you out. Your renewal payment depends on your rate and your balance, but your options depend on your home's value and how easy it is to sell. In a slower market, an appraisal can come in lower than you expect, and that can limit how much equity you can use in a refinance.
That makes it more important to compare your lender's renewal offer with other lenders before you sign. Some lenders may offer better terms to win your mortgage, and we check those for you. If you want to see what a downturn can do to your options, read our post on how a recession affects your mortgage.
Frequently Asked Questions
What's the difference between capital flight and brain drain?
Capital flight is money and investment leaving a country. Brain drain is skilled and high-earning people leaving. In Canada the two are connected: the Bank of Canada study links much of the income gap with the United States to high earners living there, and those are often the same people who'd start companies or invest here. When they move, their spending, their taxes and often their investment go with them, which is why the two trends tend to show up together.
Will lower interest rates fix the housing slowdown?
Lower rates would help some buyers, but I don't think they'd fix this part of the problem on their own. Cheaper borrowing brings back buyers who are waiting on the sidelines. It doesn't bring back buyers who've moved to another country. If the top of the market is short of buyers, sellers there stay stuck, and that holds up the move-up chain below them. Rates are also going the other way for now, after the Bank of Canada's October 2026 hike.
How does the high-end market affect me if I own a condo?
Housing works like a ladder. When buyers at the top can't sell, they can't buy the next home down, and the owner of that home can't move either. That slows sales all the way down to condos and starter homes. For a condo owner, it can mean a longer wait to sell, less competition from buyers, and slower price growth. It also matters at renewal, because a softer market can lead to a lower appraisal if you want to refinance.
Is foreign investment in Canada stopping?
No. Foreign companies still invest in Canada, and Statistics Canada reported $96.8 billion of foreign direct investment coming in during 2025. The issue is the balance. Since 2014, Canadian investment going out has been bigger than foreign investment coming in, and the total gap grew from about $100 billion to about $828 billion. A strong year helps, but it would take many years like that to close the gap.
Should I wait to buy a house because of this?
I wouldn't wait because of this alone. Less competition at the top can mean fewer bidding wars and more room to negotiate, which can help buyers. It also means prices may grow more slowly, so buy a home you plan to stay in and can afford at today's rates. The right time comes down to your own income, savings and plans. Our post on whether now is the right time to buy walks through how to decide.
If you're planning to buy, sell or renew, check your rate with our free rate checkup, or email me at alex@getflowmortgage.ca or call 604-262-3500 and we'll go through your numbers with you.
By Alex McFadyen, Mortgage Broker & CEO, Flow Mortgage Co.
What to do next
Run your own numbers in our renewal calculator, or use the mortgage penalty calculator for the full picture. If you want a second set of eyes, book a free call and we'll go through it with you.