Housing advocates say big money is transforming rental markets. And Alberta could be a poster child

A contentious housing trend being debated on Parliament Hill appears to be particularly prominent in Alberta, some observers say.

This spring, the federal housing advocate kicked off a series of hearings before a House of Commons committee on financialization — the effect of the increasing corporate investment in the rental market.

It's a trend that advocate, Marie‑Josée Houle, blames for driving up rents.

"It's contributing to housing unaffordability and it's worsening housing conditions. It is leading to evictions and displacement," said Houle, who reports to the Canadian Human Rights Commission.

"It's a widespread issue that has been negatively shaping Canada's housing system with very little oversight."

The hearings ran through May and June. A report on the hearing is expected to be tabled in the House of Commons and several advocates who spoke at the hearings said they hope it will lead to changes in regulations. 

Houle argues corporate investment has changed the market because these large companies are so efficient at finding ways to increase the profit they pull from renters.

That corporate investment is happening across Canada, and recent examinations suggests it's even more prevalent in Alberta. 

But not everyone agrees this is a problem. Some economists and corporate landlords argue these investment dollars are critical to building the 5.8 million new homes Canada needs.

They say increasing demand without a matching supply is what's driving up prices, and they are calling on local governments to ease up on zoning restrictions.

What we know about trends in Alberta

To date, most research conducted in Canada about the financialization of the housing market has been heavily focused on Toronto and Vancouver, where rents are highest, leaving a research gap in the prairies.

But in 2020, University of Waterloo professor Martine August tallied up the publicly-traded investment companies in Canada and found that of the largest provinces, Alberta has the highest proportion of private multi-family apartment buildings owned by those companies — 24 per cent, compared to 10 per cent nationwide.

The Edmonton-based Affordable Housing Solutions Lab is also trying to fill out the local picture. In partnership between the City of Edmonton and the University of Alberta, the Solutions Lab has been researching housing financialization and posted their findings online this spring.

They found that investors now own around 48 per cent of purpose-built rentals in Edmonton — nearly double the estimated amount of 20 to 30 per cent nationwide. That's about 26 per cent of Edmonton's total rental market, including condo conversions and private rentals.

The change in ownership has been happening at the same time as the increase in rent. But to what extent is it causing the rental increase? The team doesn't know that yet, they say.

"There are still many unanswered questions regarding financialized housing and its impact on housing affordability in Alberta," said Joshua Evans, who leads the team, in an email.

"We have only scratched the surface by first tracking the number of financialized rental housing providers in Edmonton," said Evans.

Rents have been increasing much faster in Calgary, driven in part by record migration from within and outside Canada.

But Evans says similar local ownership data doesn't exist here. 

CBC Calgary has been exploring the renting situation through tips from community members for nearly a year.

Renters say they're now facing long lines for viewings, paying hundreds of dollars for deposits and competing with others in a rental search they call "dehumanizing." Others report $800 rent increases they can't afford and, in turn, some report living in RVs, in campgrounds or in their cars. It's anxiety inducing and can trigger serious mental health issues, including visits to emergency.

Why Alberta might attract big corporate investors

At the School of Planning in Waterloo, associate professor Martine August specializes in housing financialization and led the background research for the hearings on behalf of Houle.

One of those reports says real estate investment trusts (REITs) went from owning zero rental suites in 1996 to nearly 200,000 in 2021, in part by buying up existing rental stock from the small-scale landlords who used to dominate Canada's housing markets.

She says several large corporate landlords — including Boardwalk REIT and MainStreet Equity — were founded in Alberta and invested in housing in the province.

In general, she says housing investors seek out jurisdictions with weak or no rent control because it's easier to maximize value there. In Alberta, there is no cap on how much landlords can raise rents — though they can only increase it once a year.

"There's fewer tenant protections in that province and that draws financial investors in because they can make more through their business strategy of raising rents on tenants," said August.

She says firms can maximize value for their shareholders by raising rents, increasing charges or charging new fees. When she looked into financial firms in Toronto, she found that they file for more evictions and charge more for rent than other types of landlords.

"Financial firms seem to be quite innovative in coming up with new ways to extract more value out of apartment buildings, and this ultimately comes from the pockets of tenants."

Red tape gets in way of building, says economist

Moshe Lander, an economist at Concordia University who lives in Alberta, says theoretically, housing financialization does raise rents in the short term. But it should have long-term benefits, he said.

"Anytime people recognize that, hey, there's money to be had here, there's actually this rush of supply," said Lander.

"You could actually prompt a lot more home building than would otherwise exist because now you have institutional investors that merely look at it as a financial investment."

But that's not happening yet, and that could be where advocates are right, he says.

If supply and demand works, he says eventually the cost of housing will naturally stop rising and developers will catch up with the demand.

But there's something getting in the way: municipal zoning restrictions and slow permitting processes make it difficult for developers to build homes, he said.

"It's a matter of, at what point do [investors and builders] start pressuring city hall, and at what point do city halls start competing with each other?"

Investments needed to fix housing supply, landlord says

Another perspective on this comes from the real estate groups themselves. In Calgary, Sam Kolias co-founded Boardwalk in 1984. It transitioned to a REIT in 2004 and today, owns and operates approximately 20,000 profit-producing units across Alberta.

He says he doesn't like the term financialization because it suggests simply doing business is causing harm. Making a profit is important, he says; it's what keeps businesses building more homes.

"Profit is simply defined as revenue minus expenses, and positive profit is really essential for financial sustainability," said Kolias.

"Over 90 per cent of new housing is built and provided by market housing providers. The question then is if market housing providers should not provide housing, who should?"

He says provinces without rent control, like Alberta, have the lowest rents across the country because they end up having more supply.

He said his priority is getting more units built, which he says could be moved along faster with capital grants and tax incentives for developers. Even if those new units are luxury condos, he said there should be a domino effect that eventually frees up affordable units for those who need it.

But to truly solve the housing crisis, he says people on either side of the issue need to find balance with "healthy, respectable debate where we're all open to the problems and we're all open to hearing solutions."