Last December, Toronto-based developer Core Development Group announced its intention to add 10,000 single-family homes to its original plans, buying $1 billion worth of properties for rental. The company's proposal is to give housing to the growing number of Canadian families who can't afford to buy a home. But in fact, this kind of corporate investment in Canadian housing is harmful, and this plan angered me, and I started **asking the federal government to pass legislation to ban this commoditization.
My advocacy is partly inspired by my personal experience growing up in Iran. For the past 30 years, high inflation and high interest rates have made it difficult for anyone to start a legitimate business and hire employees. In times of rampant inflation, any profit pales in comparison to the 20% interest paid by banks to put money in savings accounts. Only people close to Iran's corrupt *** make money, and that money is usually safely stored in the real estate market or laundered through countries like Canada. This, together with sanctions, has led to astronomical housing prices** and a constant depreciation of the currency, the rial.
This extreme case is strikingly similar to Canada's housing problem in one important way. Much of the funding that fuels fast** and hot demand for house prices comes from the outside, rather than from within the Canadian economy, upsetting the long-standing balance between household income and housing costs, which is now gone.
Across Canada, including the federal, are taking steps to address these issues, such as banning foreign buyers, imposing a vacancy tax, and stricter anti-money laundering laws. However, these efforts do not seem to solve the problem.
Core Development Group's subsidiary**new, aims to "pioneer Canada's fast-growing single-family rental asset class". Leaving aside the description of family homes as an "asset class," allowing this type of investment in Canada seems to open the door to the commodification of housing, further exacerbating the problem.
It's a double whammy for Canadian families looking for housing: it will result in rents**, while capital gains from real estate will go to wealthy global and local investors. It's similar to what I call the "Uber effect": two people ordering food at a local restaurant could cost more than $100, and Uber's Silicon Valley investors would receive about 30% of the revenue.
United StatesThere is also political will in the South to ban such investments, especially after Jeff Bezos-backed investment app Arrived made headlines, and a measure known as the Stop Wall Street Landlord Act raised concerns about the further commodification of housing in the United States. We need similar action from Canada's politicians, but like other important issues, we have seen the future of political football in our homeland.
For decades, financing in Canada's real estate market has relied on household income and private investment. Households contribute by paying for home ownership and rent through mortgages, while the private sector plays a role in investing in mortgages and financing the development of owned and rental properties. In response to the external challenges posed by this traditional model, families are supported by subsidised housing.
We need our leaders to go further and prohibit speculative businesses from investing in real estate.