Ten years ago, real-estate investors accounted for the smallest segment of buyers in Ontario. Today, they currently make up more than 25% of homebuyers, far surpassing the number of first-time home buyers and people moving between houses.
While these speculative investments are increasing the pricing, they are also creating major economic problems. Amid the rising cost of housing, we also begin to see an increased amount of private debt with homeowners. With interest rates remaining somewhat low, this debt has been manageable. A potential hike in rates could diminish Canada’s housing market.
With the Bank of Canada planning to increase interest rates, we could see a plummet a lot sooner than anticipated.
In the last twenty years, housing prices in Canada have gone up by a shocking 375 percent, with Toronto and Vancouver displaying the highest increase of 450 and 490 percent. This raise in prices far exceeds any other developed market in the world.
This instability will not only lead to further debt on private buyers, but also causes rental prices to climb, forces precarious housing on many and drives many individuals into homelessness.
With increased monthly rent costs, the threat of eviction is something many tenants across Canada now fear. In September 2021, The Globe reported that 10.5 percent of renters in Vancouver were forced out of their previous home, due to eviction. The figures for Toronto and Montreal also reflected high rates of eviction.
During these frightening times, members of the public look to local authority for help, however, the legal system and its enforcers have instead swept these issues under the rug. Due to the pandemic, Toronto has seen a huge increase in the number of homeless individuals occupying public parks. The city responded by implementing police operations to allow for the removal of these encampments.
During the early 1990s, the Canadian government cut all funding for social housing and instead, opened the market to be taken over by private investors. Today, as housing and rental prices swell and homeless shelters overflow, we begin to see that mainstream public policy has completely succumb to the idea that housing be treated as a commodity, rather than a social good.
As investors have been taking over the market, it is estimated that 1.3 million homes across Canada are currently unoccupied. A Toronto lifestyle magazine suggests that the city currently has more construction cranes than any city in North America, mostly working to build condos. A current sixty-five thousand condos sit empty in the city with no purpose other than speculative investment.
The struggle for housing requires a massive expansion for public housing. “The occupation of these empty homes by all the people who the market has displaced would take the challenge of housing beyond the limits of abstract debate and into the realms of real action.”