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Snow-covered houses and the downtown skyline after a snowstorm in Vancouver on Nov. 30.DARRYL DYCK/The Canadian Press

Corporate ownership of homes in Metro Vancouver increased by 14 per cent, according to new data provided by the Canadian Housing Statistics Program.

In 2018, corporations owned 36,475 residential properties in Metro Vancouver, and by 2020, they owned 41,400 homes in the region, according to Andy Yan, adjunct professor and director of Simon Fraser University’s City program. The data covers years 2018, 2019 and 2020, the first year of the pandemic.

Of those corporate owners, 83 per cent own only one or two properties, said Prof. Yan.

“Mom and pop owners have become Mom and Pop Inc.,” he said.

When a property is held as an asset owned by a company, there are tax benefits, which could explain the mom and pop corporate ownerships. However, other corporations own several hundred properties, including real estate investment trusts. The number of corporations that own more than 100 properties has increased 21 per cent over the three years.

The vast majority of properties corporately owned are condos. But it appears corporations are now targeting condos in a lower price bracket. The average unit owned by a corporation in 2018 was valued at $706,000. In 2020, the average was $692,000.

“One has to wonder if corporate owners are now competing for a stock of housing that used to be a starter home for first-time homeowners,” Prof. Yan said.

Judging by the arrival of institutional investors to Metro Vancouver in recent years, the supply of rental housing is indeed a lucrative business. Large investors with deep pockets can afford to develop and hold large housing projects. While B.C. developers are highly skilled at delivering housing, there are critics who say they don’t have enough incentive to provide affordable housing, and that no amount of market-rate supply will bring down the price of housing without government intervention.

Ottawa housing consultant and adjunct professor Steve Pomeroy has made the case that Canadians have lost many affordable units of housing for every single new unit built or renovated. Prof. Yan has made a similar argument, but he adds that some of those units have gone into short-term rental. And BMO chief economist Douglas Porter penned a piece last spring called, “Could We PLEASE Stop With the Supply Myth?” He included a chart from the 2022 budget that showed Canada’s number of homes per 1,000 persons is keeping up to the Organization for Economic Co-operation and Development average in the U.S., Australia and the U.K.

And yet, few involved in policy decisions acknowledge the arguments, says professor Patrick Condon, the James Taylor Chair in landscape and liveable environments at the University of B.C. Prof. Condon says housing supply has tripled in Vancouver since the 1960s, and yet it has become one of the most expensive cities in the world. He calls the market supply argument more ideological than fact-based.

“It defies logic to think that adding more supply is the solution to this problem. The solution as far as I can see must and can only be a large increase in the production of non-market housing.”

As for the increase in corporate ownership, he sees that as part of the inflow of global money, which helps drive the market.

“This corporate interest in our local real estate is just another version of what I call global capital flows, and sometimes that’s from our own Canadian citizens. Sometimes it’s the grandmother from L.A. who puts money into one of these hedge funds that specializes in real estate. A lot of retirement money is wrapped up and sent to these hedge funds, where a substantial part, or the entire portfolio is in real estate, and the attraction of that to small investors is because they have successfully been able to guarantee returns of 10 per cent for quite awhile now, and that’s the consequence of the increase in land values.”

Former planner and developer turned commentator, Arny Wise, recently wrote a post about the new premier’s housing supply act, which pushes development along by addressing “local barriers” to construction, such as zoning bylaws and approvals processes.

Mr. Eby’s plan is based on a theory that supply “magically” lower housing prices, says Mr. Wise. The focus, Mr. Wise argues, should be on the delivery of non-market housing and the limitation of big corporate money in residential real estate.

“If investors are a major portion of the demand, then the local residents are priced out of the market. And that’s what’s happening,” Mr. Wise says. “The issue is, what are the mechanisms from government to hold them to account?

“Because there is a large percentage of ownership by this investor class, they have no interest in moderating their profits or moderating their revenues, or their return on investment. So it is antithetical or the opposite to producing affordable housing.”

Businesses that seek to improve profit margins by raising rents are key stakeholders in the housing sector. According to the new federal housing advocate Marie-Josée Houle, 30 per cent of purpose built rentals are controlled by financial firms including REITs (real estate investment trusts).

So far, senior governments have focused largely on increasing supply in response to the housing crisis. Two reports released this year have given some initiatives created under the federal housing strategy a failing grade so far.

Last month, an auditor general report revealed that the Canada Mortgage and Housing Corporation (CMHC) hadn’t been keeping proper track of its targets for housing for low-income groups, in the five years since the national housing strategy had launched. The Office of the Auditor General found data were often incomplete or missing.

“They were only measuring output, like the number of units built – but not measuring outcomes, such as measuring whether the results led to specific vulnerable populations identified in the strategy,” said Sean MacLennan, performance audit director responsible for the audit.

He said it also wasn’t clear what agency was responsible for tracking the target to reduce homelessness by 50 per cent.

“During the course of our audit, CMHC took the position it was not directly accountable for the achievement of that target, and Infrastructure Canada was of the view that while they contributed to it, they were not solely responsible – which meant despite being a federally established target, there was minimal federal accountability for its achievement,” he said.

The majority of Canadians who are paying more than 30 per cent (defined as core housing need) are renters.

Another problem is the definition of affordability that is being used by the CMHC. While it’s the standard definition that housing should cost no more than 30 per cent of a household’s before-tax income, the CMHC is instead using the definition that affordable is 80 per cent of market rent for the surrounding area. They used the 80 per cent definition for the co-investment fund, which is a program that provides capital to build new affordable housing. But by linking the definition to market rates, renters are at a disadvantage.

“What we found for the co-investment fund … anything was considered affordable if it was less than 80 per cent of market rent. And we found that for what was approved to date – units that had been constructed, or are under construction or agreements had been signed with builders or other levels of government – that on average, affordable units were coming out at about 63 per cent of market rent.

“And we found that even at 63 per cent of market rent that they were often unaffordable to low-income households.

“By linking housing affordability to market rent [it means] that as market rents increase, if incomes don’t increase at the same pace, they become persistently more unaffordable over time.”

Mr. MacLennan said that they made it clear to the CMHC that using the 80 per cent rule will “continue to produce housing that is unaffordable.”

The National Housing Council released a report in February that showed that new federally backed rental construction program was generating apartments whose median rents were far higher than existing rents. Only 3 per cent of the housing created was affordable to low income households, said the report.

Ann McAfee, a member of the National Housing Council, attributed the erosion of affordable stock to the federal government initiatives as well as the financial firms buying up existing apartment stock.

Private investors demolish and “up-price older rental stock,” said Prof. McAfee, former co-director of Vancouver’s planning department.