Corporate House hoarding has been happening in the United States since about 2012 and it seems that it's now coming to Canada.
A Toronto condo developer is in the midst of buying hundreds of detached houses in Ontario, with the plan of renting them and profiting on the housing crisis ripping across the country. The reality that future generations will be renters (and not homeowners) is an opportunity for large corporations to profit from housing prices getting out of reach for most people.
For clients like mine who are trying to navigate a market of low inventory and cheap money, this is the last thing they want to hear. Bidding wars suck now. They will be exponentially harder if my clients have to compete against Billion Dollar corporations spending like drunken sailors!
If the approach of Core Development Group Ltd. is anything like the approach of Invitation Homes in the United States you can expect blind bids with escalation clauses so they will never be outbid.
Core Developments will be concentrating their 'corporate house hoarding' on small cities like: Kingston, St. Catherines, London, Barrie, Hamilton, Peterborough and Cambridge to start. As their market share grows and other investors buy single-family homes by the 1,000's, rents in these cities will skyrocket like they did in Spring Hill, Tennessee where only 4 companies own three quarters of the homes for rent.
If this venture is successful, these companies won’t just be depriving potential homeowners of a place to call their own, they'll be destroying the ability for thousands of middle-class Canadian families to accumulate wealth. Home-price appreciation has historically been how Canadians achieve financial prosperity. Unlike stocks and bonds, ownership of which is concentrated at the top, houses are widely held. Roughly half of housing wealth is owned by Canada's middle class.
What Should You Do?
If at all possible, I recommend buying rental properties now! Especially if you have significant equity in your home.
Wages are not going to be catching up to home prices anytime soon so more people will be forced into renting as time goes on. Immigration will be ramping up this year as well which all point to greater demand for all housing types; rentals included. These corporations can read the writing on the wall and so should you.
If you have kids like me, then the thought of them not being able to afford a home on their home may be just the motivation you need.
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