Investors and investments are key to building more housing in Canada

Without investors, almost all rental housing stock could disappear, jeopardizing living arrangements for millions

Canada Mortgage and Housing Corp. estimates this country must build almost six million new homes by 2030 to restore housing affordability, but the odds of meeting this target, or even half of it, are low given that not even 2.5 million homes have been built in any decade during the past 100 years.

The goal of building six million homes in fewer than 10 years is very ambitious, but these targets may remain elusive given the intellectual and structural deficits slowing new housing construction. The structural deficits are understandable, but the intellectual deficits are surprising.

One needs land, labour, and capital to build new homes. Most land in urban areas or at its periphery has already been developed over the past five decades. Not In My Back Yard (NIMBY) enthusiasts defeat attempts to further densify urban neighbourhoods, and environmentalists prevent construction on greenfields, which makes building anywhere almost impossible.

Canada underwent a construction boom in the 1970s when it built 2.34 million new homes. It was a time of optimism when Canadians were inspired to put the country on the global map. The Summer Olympics in 1976 and the Expo 67 took place in Montreal when Canada dreamt and built big — and not just housing. Banks and other businesses were staking their claims in downtowns with new skyscrapers.

First Canadian Place in downtown Toronto was the sixth-tallest building in the world when completed in 1975. Builders and developers could mobilize capital and engage labour to deliver the very landmarks we cherish today, including Toronto’s CN Tower, which was built in 1975 and retained the title of being the tallest freestanding structure until 2007.With fewer than 23 million people in the mid-’70s, Canada built at rates and heights not seen before or since then. With a population of more than 40 million today, Canada is struggling to build even the homes it needs to house its current population despite all the advances in construction and information technology.

Standing in the way of construction is also the intellectual deficit empowered by NIMBYs and others that demeans new development and demonizes investors and developers. A prime example of the intellectual deficit is the campaign against investors in housing markets.

Many housing advocates believe in limiting or eliminating investors’ role in housing development altogether. Such a move would be catastrophic, especially for the increasingly vulnerable cohorts, the most prominent among which are renters.

It can be hard to comprehend that almost 100 per cent of renters live in dwellings owned by investors. It does not matter whether a dwelling is in a purpose-built rental (PBR) or a condominium, an individual or a corporate investor owns the dwelling and assumes all the risks and costs associated with ownership.

A series of haphazard changes to tax laws since the 1970s has resulted in a precipitous decline in PBR housing construction. The gap in rental supply was filled by individual investors who financed condominiums and made them available to rental households. In the Toronto Census Metropolitan Area, 46 per cent of renters live in dwellings that are not located in PBR apartments.

The 2021 census tabulated five million renter households in Canada, approximating one in three households. Without housing investors, almost all the rental housing stock in Canada could disappear, jeopardizing living arrangements for millions.

Some may naively believe governments could replace private landlords. That’s unlikely to happen because less than 0.5 per cent of households live in a dwelling provided by a local government or First Nations band.

Canada must overcome the structural and intellectual deficits to meet its housing needs. Building millions more dwellings will require capital, land and skilled labour. The land must be found here, but labour and capital can be sourced from across the globe to meet a growing nation’s housing needs.

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