Core Development Group, a Toronto-based real estate company, announced in June that it plans to buy $1 billion in single-family homes over the next five years and turn them into rentals. This move, while touted as a way to increase rental stock, is likely to add even more fuel to the long-standing housing affordability crisis that is impacting most urban centres in the country, driving access to housing out of reach for most people.
The company says it will buy 4,000 single-family homes across the country and that it is seeking to provide more rental stock to the housing market, including affordable rental housing. Canada’s national rental vacancy rate is under three per cent, and in many of its largest urban areas like Toronto and Vancouver is often even lower—though during the pandemic Toronto’s vacancy rate has risen significantly. In particular, Core Development claims that it will be able to provide affordable housing to immigrants and families who could not otherwise afford to live anywhere, or at least in a home suitable for their needs, such as a family with several children who need more space.
Core Development will begin purchasing properties for this plan in eight mid-size Ontario cities: Kingston, Guelph, St. Catharines, London, Barrie, Hamilton, Peterborough, and Cambridge. By 2026, the company says it wants to own properties in Quebec, B.C., and Atlantic Canada as well.
Core Development is the first company to bring this business model to Canada. Private real estate companies have been buying up property in the U.S. for some time, especially in the last several months as more homes become available during the pandemic. The investment management corporation BlackRock, the world’s largest asset manager, has made news several times recently for their activity in the American housing market, which has included buying entire neighbourhoods at a time. Due to the vast resources these companies have, they are able to outbid average home buyers, which both limits the supply of available housing and pushes up home prices.
Companies that engage in this activity are taking advantage of several factors in the real estate market, including the already high cost of home ownership and rent as well as Canada’s rising population and its increasing urbanization, which has increased demand and competition for housing in city centres near workplaces. Additionally, many new homes are being bought by investors as individual rental properties, Airbnbs, temporary accommodation for investors travelling to cities like Toronto or Vancouver—or for speculative purposes as appreciating investments and/or money-laundering schemes. For these reasons, much of the new housing supply that is built every year is not inhabited by one person or family. New housing does not mean new homes for people.
The real estate industry makes the argument that increasingly, people are looking for rental housing rather than ownership. However, that is a market trend driven primarily by high housing prices and the inaccessibility of home ownership—itself driven by predatory real estate practices from companies like Core Development, who now want to take advantage of the opportunities those practices have created.
The move by Core Development will directly pit individual home buyers against a multimillion-dollar company that is seeking to use each property as a revenue-generating investment instead of a home. There is also no way to guarantee Core Development’s claims that it will provide affordable housing—as new rental units in the Canadian market, the company has the ability to price them at any level. That is on top of the already absurd definition used for affordable rent, which is the average market rent (AMR) for a property in a given jurisdiction. In Toronto, AMR for a one-bedroom apartment is currently $1,431 per month. While some affordable housing providers charge 80 per cent of the AMR, that is still $1,145 per month.
Massive companies like Core Development and BlackRock buying up massive amounts of housing represent the latest assault on workers by the capitalists. One of the few ways for people to tangibly build wealth in a capitalist society historically has been property ownership. For many families, this has been the first way to begin building generational wealth. The pillage of the economy and the meagre wealth of the working class has been consumed by capitalists over the last several decades, and in the past 12 years especially. Home ownership is the final frontier. Rental property and landlordship is often the most parasitic form of capital ownership because it requires little effort on the part of the owners, who are only responsible for basic maintenance of a property—and even then they often fail in that respect. People need a place to live and will do almost anything to have one.
There is more than enough wealth in society for everyone to have a home, yet equal access to housing is impossible on a capitalist basis. Under capitalism, basic human needs such as housing become merely another commodity in which the goal for the developer or landlord is to maximize profits. The housing bubble in Canada has created vast profits for the rich while making access to good housing increasingly unattainable for the vast majority. More and more workers find themselves priced out of the housing market in major urban centres such as Toronto and Vancouver. The acquisition of vast numbers of homes to sell as rentals by companies like Core Development will not reverse this trend, but rather make it worse.
Any solution to the housing crisis ultimately comes down to the question of ownership. You cannot control what you do not own. Under capitalism, large private corporations such as Core Development control an ever greater portion of housing stock and all efforts at reform are subordinated to the needs of capital. While many people are homeless or cannot afford housing in urban centres, vast numbers of houses and apartments sit empty. Speculative properties owned by capitalists should be seized without compensation and remodeled to suit the needs of workers and youth.
To solve the housing crisis, we also need a massive program after the pandemic to build affordable social housing with rents geared to income. Yet even if we expand the overall supply of housing, major real estate owners will continue to own and control a vast number of homes. Ultimately, we must nationalize big property developers and put them under the democratic control of workers and tenants as part of a rationally planned socialist economy and expropriate housing units only used as investments or extra housing for the bourgeoisie. Only in this way can we guarantee quality affordable housing for all.
