Earlier this week, news of a condo developer planning to purchase $1-billion worth of single-family houses in Canada, including in Guelph, created a buzz among housing advocates who opposed the idea of a corporation buying up scarce housing inventory.
But local experts in Guelph say it's not nearly as bad as it sounds.
Core Development Group announced that it's plans included buying housing stock in Hamilton, London, Kingston, St. Catharines, Barrie, Peterborough, Cambridge and Guelph.
While some critics say this is taking advantage of the housing crisis because it mimics what American corporations did after the 2008 financial crisis, others are quick to slam that claim given the current circumstances.
Paul Anglin, a University of Guelph professor known for his research on issues related to buying and selling property, said while $1 billion is an eye-popping number, the important thing to remember is that it will be spent on 4,000 units across the country and $1 billion is not what it used to be.
“I think as context, Guelph's Skyline claims that they have more than 20,000 units,” said Anglin. “In terms of the number of people and number of families, Skyline appears to be already doing five times as much as what this proposal says.”
Anglin said if the company was to purchase 4,000 units in one city (which is not the case), that’s when it would make a difference to the local market.
He said from a property management perspective, it would make sense for the company to focus on good rental properties like student housing. However, the business model has already been set up for those buildings by investors and students are well aware of what rent prices are so any property manager or landlord who wants to charge more will somehow have to convince the renters to pay more than the competitor because its a competitive market.
He said the rental house market in Guelph has a lot of small investors who make extra money and what the tenants tend to worry about is the quality of service.
If Core were to purchase (giving a random figure) 100 units, it doesn't necessarily mean price will go up.
“And for no particular reason other than 100 is a nice number. There are far more than 100 units in the Guelph area so the ability to jack up prices, just because you bought some units. That’s an argument that has limited power.”
According to Core Development Group’s website, there are over 20,000 homes sold annually in Ontario that fit its investment criteria.
In an email response to Village Media, Corey Hawtin, founder and CEO of Core Development Group, said there should be no fear his company will engage in bidding wars.
"I think the thought is, because we have all this institutional money that we will outbid anybody to buy a home. But we have really strict buying parameters, and we will never out-pay the end-user," said Hawtin.
Sabrina Essery, president of the Guelph & District Association of REALTORS said she’s seeing a growing number of people in various stages of life choosing to go into the rental markets instead of being homeowners.
She said as long as this company goes through this process in a very safe way and has a good product, then it could be a viable option for many people in Guelph.
She said she doesn’t see it as a threat.
“We know about the vacancy rate, it's hard, It’s challenging for the rental market,” said Essery.
She said with this company buying units, it may ease the pressure for a lot of people to get into the rental market and eventually move up into the buying market.
But that's an position some don't side with.
Greg Ross of the McElderry Community neighbourhood group says the number one concern for the group is increasing house prices.
“Let's face it, corporations are not nonprofit. They’re there for profit,” said Ross.
“If they're gonna' buy a lot of homes, it's going to drive up the house prices. That's gonna make things unaffordable for people that want to move here.”
He said it doesn’t seem fair for young people wanting to begin their lives especially during a time when people haven’t even begun recovering from the pandemic.
“We need affordable housing for all kinds of people, not just people who can afford it.”
Dominica McPherson of the Guelph and Wellington Task Force for Poverty Elimination said from a poverty elimination point of view, this company sweeping in and buying property is an example of the financialization of housing that can happen in the housing market.
“When corporations and investors buy up rental housing, they deepen the housing crisis by taking the rental housing off the market, or in often cases, increasing rent, making it unaffordable,” said McPherson.
“This results in people living on low incomes being unable to afford rent or live in the neighbourhoods or communities they choose.”
She said financialization of rental housing in Canada is taking affordable housing out of the market faster than it can be replaced, which is compounding Canada's housing crisis which makes an impact locally.
“Too often, housing is viewed as a commodity for investment and wealth, rather than a basic need and human right,” she said.
