Earlier this week, global investment giant Blackstone Inc. made headlines when it announced it would open a real estate office in Toronto.
The move was quickly met with mixed reactions, as Blackstone became the subject of passionate online banter. In the past decade-plus, Blackstone has been accused of profiteering in the U.S. during the 2008 housing crisis by buying foreclosed single-family homes at cheap prices.
So, it didn’t take long for the alternative investment management business to start to get slammed on social media after Monday’s announcement. “The vultures are here in anticipation of a housing market bloodbath,” wrote one Twitter user, for example. Meanwhile, Reddit was alive and well with banter of its own.
Whether a scapegoat or a legitimate culprit, institutional investors like Blackstone have been blamed in part for North America’s housing crisis. And many Canadians — some, inevitably would-be homebuyers in another time and place — are shouting “NIMBY” at them loud and clear.
On one hand, proponents argue that the entry of institutional investors could add much-needed rental supply to the housing market. On the other, critics say it may make it even more difficult for first-time buyers to purchase homes by removing stock from the market, ultimately contributing to the affordability crisis.
Residential suburb in Toronto/Shutterstock
But, while some may have been quick to assume that Blackstone will come in and purchase large quantities of single-family homes like they did south of the border, there is actually no indication to suggest this is the case in Canada. In fact, the company says it’s not happening.
“In Canada, we’ve been long-term investors in areas like logistics, which continue to be under supplied and are benefiting from growing ecommerce. Our focus will continue to be on investing in our highest conviction themes, including logistics, high quality creative offices and life science offices, studios, and multifamily residential,” said Nadeem Meghji, Head of Real Estate Americas, in a statement to STOREYS.
This doesn’t mean that other institutional investors aren’t buying up single-family homes in Canada. Last June, Core Developments purchased $1B worth of single-family homes, including properties in eight Ontario communities. Core has purchased properties in Cambridge, Hamilton, Peterborough, London, Barrie, Kingston, and St. Catharines, and Guelph.
“These are mostly in secondary markets; they’re buying these homes, renovating them, adding basement suites, and creating an additional unit in the rental marketplace. I don’t see that as having a major impact on some of those smaller markets,” says Ben Myers, President and owner of Bullpen Research & Consulting Inc, of Core Developments’ mass purchase. “Yes, it’s removing one unit of ownership housing, but it’s creating two units of rental housing. In a lot of those markets, the percent of single-family homes for rent is only 10% — a small percentage of an overall total and it’s a good option to have for people.”
Not everyone is as thrilled with the growing presence of institutional investors in the housing market. “In our opinion, it’s a disaster,” says Geordie Dent, Executive Director of the Federation of Metro Tenants’ Associations of Blackstone’s move further into Canada’s real estate market. “Institutional investors tend to look at units as money making machines, not as places where people live. So, they’ll often cut services, try to jack up rents for existing tenants, or — more often or not — try to evict tenants who are in there now. They’ll try to jack up rents through renovictions or other illegal means. When they did this in the U.S., the rents went up. They were a disaster in the U.S. and they’ll be an issue in Canada.”
But, even if they wanted to, it would be difficult for Blackstone to purchase clusters of homes in Toronto, says Myers. “In the U.S. markets, they’re able to purchase so many cheap homes in sprawl-like communities,” he says. “They can scale the business and have one person looking after a cluster of homes. I don’t think there’s the same availability in the Greater Toronto Area market to do more of that. There’s no more room to build single-family homes in Leslieville, or The Annex, or Rosedale. There’s a fixed number of houses. So, it’s not something I’m too particularly worried about.”
Myers points to how Blackstone has been investing with existing rental owners like Starlight in the U.S., which is intensifying their existing rental supply. “Blackstone is essentially creating more rental housing supply,” he says. “I know people always want to get scared of big bad companies coming into Canada from the US, but I think this will actually be a positive thing.”
When it comes to the growing role of institutional investors in Canada, Elke Rubach, principal at Rubach Wealth Management, says the idea sounds good in principle. “But if permits take forever to go through, the supply issue still won’t be solved at all,” says Rubach. “Canada will continue to be an attractive place to live and work. The demand for supply is there; the need is there. If they can provide it, by all means. I do think there has to be political support there to make that happen, and some oversight to ensure there aren’t abuses. Every level of government needs to collaborate on the supply issue.”
Whether you’re for or against it (or indifferent), the presence of institutional investors in Canadian real estate isn’t going away.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
