The new data makes it ‘really hard to support the claim that large institutional investors are somehow dominating the market’ — Tsur Somerville, professor at the Sauder School of Business at UBC
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Housing unaffordability in Canada’s most expensive cities may not correlate to the dominance of big institutional investors or higher concentration of ownership, new research suggests.
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Some say the new findings, detailed in a report from Statistics Canada released Tuesday, help dispel what they see as a myth about corporate landlords as bad actors driving up home prices and rents.
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But other experts caution that the new data paints an incomplete picture of the full effects of a trend sometimes called the “financialization of housing.”
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There has been much debate in recent years around institutional investors’ role in housing markets in Canada and abroad. StatCan defines institutional investors as entities that make up the top 0.1 per cent of investors based on assessed value of properties owned in a province. These are major organizations such as pension funds and real estate investment trusts, as well as large, family owned businesses.
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The StatCan report looked at 12 large metro areas in B.C., Ontario, Manitoba and Nova Scotia and found the Vancouver and Toronto rental markets, the country’s two most expensive, were also the least concentrated and most competitive markets, meaning they’re not dominated by a small number of huge owners. Instead, rental homes in these markets are owned by a mix of small, medium and large investors — with small-scale landlords making up the biggest portion.
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At the same time, the proportion residential rental real estate owned by large institutional investors was lower in B.C. (where it was 20.3 per cent of the assessed value) and Ontario (23.6 per cent) than in Manitoba (33.6 per cent) or Nova Scotia (38 per cent).
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The new data makes it “really hard to support the claim that large institutional investors are somehow dominating the market,” said Tsur Somerville, a professor at the Sauder School of Business at the University of B.C. “The data is inconsistent with any notion of market power to set rent at the metropolitan level.”
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The report analyzes ownership data from 2022, and doesn’t capture how corporate ownership of Canadian homes has changed over the decades.
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Even if small-scale investors owned more of Canada’s rental market than institutional investors in this snapshot from 2022, research has shown the rise of big financial firms acquiring rental homes in recent years, said Jeremy Withers, a senior researcher with New Housing Alternatives, a Canada-wide research partnership based at the University of Toronto.
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Also, Withers said, research in Toronto found tenants in buildings owned by big corporate landlords, such as private equity firms, faced higher rates of evictions and rent hikes.
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“If governments are committed to making housing more stable and affordable and reducing most of these threats, they should direct funding towards helping non-market actors build and acquire more homes,” Withers said.
