Prime Minister Justin Trudeau blames investors for ‘commodification’ of housing

Yorkregion.com
Oct. 26, 2023
Graeme Frisque

Prime Minister Justin Trudeau says investors and corporations have played a significant role in Ontario’s housing crisis.

Recent data from Statistics Canada revealed that as of 2021, 43 per cent of condo apartments and between 14 and 21 per cent of houses in Ontario were owned by investors. In the Greater Toronto Area (GTA) alone, investors owned 33 per cent of condo apartments and between nine and 16 per cent of all houses.

Trudeau was in Brampton last week to announce $114 million in funding for that city from the government’s $4-billion Housing Accelerator Fund.

When asked about the Stats Canada data during a news conference, the prime minister said investors and corporations buying up condos and houses has led to the “commodification” of housing by eating up much-needed supply and driving up prices in the process.

“There are many factors that have gone into the housing crisis that people are facing right now. Whether it’s just the growth of our economy or the growth of our population. Whether it’s the success of our communities, or whether it’s under-investment by previous governments in housing over a very long time that requires us to step up in very strong ways right now,” he told reporters.

“But we do know that one of the factors that is challenging for so many people is the commodification of housing (and) the fact that people are using homes and houses as an investment vehicle -- particularly corporations using homes as an investment vehicle -- rather than families using them as a place to live, grow their lives and to build equity for their future,” the prime minister added.

While housing affordability has become a serious issue across much of the country, the problem is particularly pronounced in Toronto and the areas surrounding it.

According to data from the Toronto Regional Real Estate Board (TRREB), the combined average sale price for all dwelling types across Toronto and the GTA rose from $533,797 in September 2013 to $1,119,428 last month -- a 110 per cent increase over just the past 10 years.

Stats Canada found that, as of 2021, investors accounted for 13.5 per cent of all property owners in Ontario, with 2.9 per cent of in-province and 0.5 per cent of out-of-province investors owning three or more properties. There were 5,929,250 private dwellings in Ontario recorded in the 2021 census, which translates to roughly 800,450 properties owned by investors.

Mortgage expert Ron Butler from Butler Mortgage in Etobicoke said that 2021 represented the peak of investor ownership and pointed to persistently low interest rates up until early 2022 as the main culprit.

"(Investor involvement) was constantly growing all the way up to 2021. That was the peak year when mortgage interest rates were at their very lowest point. They were ridiculously low. That really favoured investors,” Butler said in an interview.

According to Butler, the Bank of Canada’s decision to begin raising interest rates in early 2022 has had the desired effect of scaring off investors. Between March 2022 and July 2023, the Bank of Canada has raised its benchmark interest rate -- which commercial banks use to set mortgage rates -- from 0.25 per cent to 5 per cent.

“I suggest today that investors are buying zero (properties) in 2023. Because in 2023, interest rates don’t allow them to make any money on any purchase,” he said.

Real estate sales in Toronto and the GTA in September were the lowest seen for that month since 1998, which Butler attributed to investors increasingly sitting on the sidelines.

While that may be the case, home ownership remains unaffordable for most in the GTA with first-time homebuyers the most affected. Butler believes the best way for governments to reverse the commodification trend is to encourage purpose-built rentals, which the federal government says is one of the main goals of the Housing Accelerator Fund.

Trudeau called for more collaboration between all three levels of governments to discourage further housing commodification moving forward.

“It’s work we have to do collaboratively. Federal, provincial and municipal governments (all) have a role,” he said.

Meanwhile, both the opposition Conservative and NDP parties place the blame for Canada’s housing woes squarely on the Liberals.

“A year and a half after Trudeau created his Housing Accelerator Fund, housing starts are actually down. Photo ops don’t build homes,” said Conservative opposition leader Pierre Poilievre in an Oct. 18 post on X, formerly known as Twitter.

“The housing crisis has worsened under the Liberals,” said the NDP party in a release following Trudeau’s announcement in Brampton. “He failed to better support the construction of more community housing. He failed to build the homes he said he would.”