Investors buying up single-family and condominium homes are part of what is making it harder than ever for most Canadians to buy a home. A new report by the Missing Middle Institute and the Canadian Real Estate Association calculates that between the 2011 and 2021 Censuses, about 400,000 newly-built ground-oriented homes (single family or townhouses) were bought by investors. That amounts to about 45 per cent of all such homes built in that decade. About the same percentage of all new condo units, about 200,000 units, were also bought by investors. The investors typically rent them and/or soon sell them, and they typically have greater means to pay escalating prices than most adults.
The result is that the percentage of Canadians who own their home has declined, not just for young adults, but for all age groups under 75. Young adults are hardest hit, with about a 7 per cent decline in the proportion of those under 35 who own their home in that decade. But at every age group under 75, there was a decline in home ownership between 2011 and 2021.
Would-be home buyers are hardly the worst hit by today’s housing crisis. Those hardest hit are the large number of low- and moderate-income tenants struggling with high rents and fearing eviction and the small number (in comparison to renters) of people experiencing homelessness. But the fact that growing numbers of Canadians are priced out of buying homes creates intergenerational unfairness and wealth disparities between owners and renters, and breeds potentially dangerous political resentment. Plus some of the same factors that have been driving up rents also drove up the cost of buying a home, including speculative investors and easy and cheap borrowing, and gentrification of neighbourhoods that used to be affordable to moderate- and low-incomer Canadians.
The Missing Middle report is an interesting analysis of what’s pricing people out of homeownership. Its proposed solutions are more debatable. One proposal the institute strongly encourages is reducing development charges and taking the GST off those charges. Doing that would reduce local revenues used to build the roads, sewers etc. that are needed to allow new housing. GST changes would reduce federal tax revenues. Instead, every tax dollar spent on housing should be used for housing for those most in need, including for new non-profit and co-op housing. https://www.missingmiddleinitiative.ca/p/a-blueprint-to-restore-homeownership