Wealthiest Property Owners Control One-Quarter of Residential Real Estate Value

New data published by the Canadian Housing Statistics Program (CHSP) Tuesday reveal the extent of deep inequalities in this country’s housing market.

The report found that owners of multiple properties possess almost one-third of all residential properties and the wealthiest 10 percent of owners control approximately one-quarter of all residential housing value.

For Ricardo Tranjan, a senior researcher at the Canadian Centre for Policy Alternatives, the findings are not surprising.

Government programs and initiatives, he told The Maple, are too fixated on creating more market housing supply, which is being snapped up by an increasingly concentrated class of deep-pocketed investors and housing speculators.

“If you don't change the regulations around housing, if you don't go into taxation rules and all the kinds of structures of the housing market, you won't solve the problem,” said Tranjan. “We're just going to add more very expensive housing into the marketplace.”

Those who own multiple properties, the CHSP report explained, “hold properties to receive rental income or for other investment purposes, or as a recreational property which may also provide rental income.”

Purchasing additional properties increases competition in an already tight market, CHSP noted, making it harder for first-time buyers to purchase a home.

Notably, the data revealed that the wealthiest 10 percent of individual property owners earn more than the bottom 50 percent combined:

“In the provinces of Nova Scotia, New Brunswick, Ontario, and British Columbia, the top 10% declared incomes totalling 29% (New Brunswick) to 35% (British Columbia) of the total income declared by all owners in those provinces … The income of the bottom half of owners was less than one-quarter of the total in each of these provinces, ranging from 20% in British Columbia to 23% in New Brunswick.”

The report continued, “The bottom 50% contained five times as many owners as the top 10%, yet received a lower share of total income. This is because the average income in the top 10% was at least five times the average in the bottom 50%.”

The value of real estate holdings among individuals followed a similar pattern:

“The top 10% owned between 24% (New Brunswick) and 29% (British Columbia) of the sum of all residential property values in each province. The bottom half of individual owners owned less than one-quarter in every province, ranging from 21% in Nova Scotia, to 24% in New Brunswick and Ontario.”

Meanwhile, urban homeowners make double the income of renters, the report said. In Toronto, the median income among owners was $55,000 per year compared to $25,000 per year among renters. Identical figures were recorded for Vancouver.

Among provincial urban centres, the largest disparities were seen in Halifax and St. John’s, which both recorded median incomes of $60,000 per year among owners and $25,000 per year among renters.

At the federal level, Tranjan said, the government has made some limited moves towards more regulation of the housing market, including measures first outlined in the Liberal Party’s 2021 election platform and then reiterated in the Liberal-NDP confidence-and-supply agreement.

However, these proposals won’t meaningfully address housing inequality, he explained.

The new measures include a two-year ban on foreign homebuyers, a move Tranjan called “low-hanging fruit.”

The 2022 federal budget, tabled last week, also promised to subject those who resell properties after less than 12 months of possession to a full taxation rate, with profits made from such transactions treated as business income. The new levy will take effect starting January 2023.

While these changes correctly identify speculation as a problem, Tranjan said, they are “very timid” in how far they go.

“The way governments look at wealth that has been accrued through home ownership and real estate investment has to change,” he explained. “It has to be considered capital gains; it has to be taxed at higher rates, especially for people who own more than one home.”

As well, said Tranjan, Canada has a culture of treating the interests of “small” landlords as equal to the wellbeing of tenants.

“We need to change that perspective and say no, owning two or three homes, that operation is a business, and needs to be treated as a business; it needs to be regulated as a business and it should be taxed as a business,” he explained.

Doing so, Tranjan added, would help cool the market and “let houses be houses.” Ultimately, he said, there needs to be more focus on ensuring that tenants can be securely housed in decent rental housing for the long term.