Canada has 1.3 million vacant homes, according to a recent article that goes on to explain
that this is six years of housing supply “being used as an alternative to gold” — in other
words, sitting empty due to investors buying homes not to live in or rent out but just
to hold as an investment, like someone might buy and hold stocks, bonds, and cryptocurrencies
named after Japanese dog memes.
Some people have cited this article to show that we don’t really lack housing supply
in this country — there’s plenty of extra housing just sitting empty.
Housing being treated more as an investment than a place to live actually is a major obstacle
to affordability, but in this video we want to propose that the problem goes much deeper
than vacant investment homes, which exist but aren’t nearly as common as articles
like this would have you believe.
That figure of 1.3 million homes is real but the interpretation is wrong.
The number comes from a 2021 OECD report referencing the 2016 Canadian census, which counted 1.3
million homes—9% of the country’s housing stock—as “not occupied by usual residents”,
where a “usual resident” means someone living there as their primary residence.
It’s simply a mistake to assume that all or even most of these are empty investment
properties.
This 9% actually includes empty houses and apartments that are on the market available
to buy or rent that just haven’t sold or rented yet, or that have been sold or rented
but the new occupant just hasn’t moved in yet.
Some census tracts have high numbers of “empty homes” because of big housing developments
that just happened to get completed in the run up to the census.
These homes are “vacant” but this is the opposite of hoarding by investors.
Transaction and moving vacancies might make up half of vacant homes in more expensive
cities, based on American data.
The idea of 1.3 million “vacant homes” that can be requisitioned to solve our housing
supply problem is even weaker when you realize not all these homes are even vacant.
The 9% includes residences recorded as “temporarily occupied” because the occupants, whether
students or workers, identify a primary residence somewhere else.
University towns have big clusters of so-called “empty homes” near the universities because
lots of students live in an apartment most of the year but record their parents’ home
as their primary residence.
Students are also important because the census happens in early May, right after the end
of the university school year, so some student apartments are vacant but only because the
students moved out a week and a half earlier.
Another category that shows up as “not occupied by usual residents” is vacation properties,
which drive resort towns like Whistler and Mont-Tremblant up to half of all their housing
being (quote-unquote) “vacant”.
Maybe this is a problem for affordability in those communities, but it’s not particularly
relevant for the problems facing urban housing markets.
Also, so many jobs in resort towns very much rely on these visitors and temporary residents.
When you look at Canada’s major cities, especially the most expensive ones associated
with housing investors, their rates of these (broadly defined) “vacant homes” are actually
below the national average.
This makes sense.
If you consider yourself a “savvy housing investor”, you’re probably not going to
buy a house or condo and then leave it empty.
You’re going to rent it out, especially in cities like Toronto and Vancouver where
rent is high, in part because these cities haven’t built a lot of purpose-built rentals
over the past few decades, meaning that the secondary rental market is actually pretty
important.
Even if you’re an investor who bought the property mainly to see its value go up, in
most cases you want rental income on top of that.
Renting out your property also allows you to deduct expenses from your income tax bill,
including repairs, maintenance, utilities, and property tax.
If we want to add another tax to further disincentivize vacant homes then that’s fine, but there’s
no massive glut of “six years worth of housing supply” ready to be mobilized.
One credible estimate based on Vancouver is that an empty homes tax in Toronto or Ottawa
could increase housing supply there by up to 1%.
That would help, but it’s far from the 9% of so-called vacant housing we started with.
As we mentioned at the beginning of the video, housing being seen more as an investment than
a place to live actually is a major problem but it goes much deeper than vacant homes
or even specifically “housing investors”.
It goes to the fundamental question of whether we as a society even want housing to be affordable.
Obviously many people do, but it’s really striking how, when housing costs increase,
we don’t consistently panic or recoil like we do when food or gas prices increase.
To a large extent we actually cheer it on.
When house prices rise instead of fall during a pandemic, we refer to the “resilience
and strength” of the housing market.
When polls show that people expect housing to keep rising in price, headlines describe
that as “real estate optimism”.
Rental market reports describe how Toronto historically “boasts the highest rents and
rent growth”.
No one talks about “optimism” in the context of rising food prices and it would be pretty
weird to say that a country “boasts” a high cost of medicine, but we talk about housing
like this all the time.
That’s how we talk about the stock market and it’s deeply unhealthy when applied to
housing.
Simply put, there’s a significant pressure to avoid policies that make housing more affordable.
[Mr. Singh, you’re promising to tackle skyrocketing housing prices.
One of the ways is with that 20% tax on the sale of homes to foreign buyers.
Two thirds of Canadian families actually own a home already.
If you’re successful at cooling the housing market, that would mean that people who have
invested their life savings in their homes may not have it anymore.
They’re relying on that for their retirement.
So what is more important to you?
Helping younger people get access to the market or allowing older Canadians who rely on the
value of their homes to live.]
It’s baffling that this is a question, especially because it refers to “older Canadians”
who likely bought their homes decades ago at a fraction of the current price.
For them, the question is whether they make a large or very large profit from selling
their homes.
How can that be considered as important as young people being able to buy a home at all?
To be clear, we’re not fixated on home-ownership specifically.
We rent and we think that renting has a lot of underrated advantages, including not having
to worry too much about maintenance, flexibility in terms of upsizing or downsizing your housing
configuration, and having more job mobility.
But at the same time, owning makes sense in a lot of contexts and it should be an option.
This wouldn’t be a hashtag Urbanity video if we didn’t talk about zoning and other
supply restrictions, but those are also deeply rooted in seeing housing more as an investment
than a place to live.
It’s completely normal for people to oppose new housing to “protect their property values”.
This comes up all the time in letters from NIMBYs wanting to block multi-unit buildings
that would provide more housing supply in their neighbourhoods.
We can’t stop individuals from preferring their home or land to be worth more money
but that doesn’t make it a legitimate use of government power.
When business owners lobby the government to limit competition that threatens the profit
or value of their business, we rightly see that as corruption, but homeowners doing the
same thing is just normal, maybe because homeowners are a majority of the population.
People like to focus on faceless investors and unsavory speculators and their money does
contribute to the mania of ever increasing home prices but fundamentally what draws them
in is the scarcity of housing, which is to a large extent a policy choice.
The most comprehensive study on housing in Canada in recent years had findings suggesting
that “speculation is more likely to occur in inefficient markets that are supply-constrained”.
They go on to explain that “increased speculation is more likely to amplify the impact of persistent
market imbalances rather than serve as a key cause”.
We’ll leave you here—policies meant to encourage vacant homes to be sold or rented
will probably provide modest benefit but this just isn’t the silver bullet fix to our
housing supply crisis that it’s been made out to be, especially for urban areas.
We do not have six years worth of housing supply just sitting around that we can mobilize.
Vacant homes are a small part of a much bigger problem where people—not just investors
and speculators but also many regular homeowners and the politicians representing them—see
housing primarily as an investment and don’t entirely agree that it should even be affordable.
This system is self-sustaining with lots of bad incentives.
People who manage to save and break into the hot housing market now can easily switch from
being frustrated by high prices to being invested in seeing prices continue to rise.
This isn’t meant as a personal criticism of them—it’s just the way the incentives
work.
Thanks for watching through to the end of the video.
For more detail on these (broadly defined) vacant homes in the census, take a look at
the main resources referenced for this video: the analysis blogs Mountain Doodles and Home:
Free Sociology, and a paper by the Urban Futures Institute.
A special thanks to our supporters on Patreon, and as always, don’t forget to fact-check
claims that people make about housing — including claims that we make, we’ll see you in the
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