Investment firms are snapping up U.S. homes. In Canada, the trend is 'in its infancy,' says Remax boss

Investment firms have become the biggest new buyers of U.S. homes — a trend that could make home ownership more difficult for average families.

The idea of big investors buying single-family homes to rent them out is "just in its infancy" in Canada, but is worth watching, according to the president of one of this country's largest real estate firms. Some advocacy groups fear families can't compete against money managers with billions in assets. 

As interest rates rise and property prices fall across much of North America, deep-pocketed investors such as hedge funds, private equity giants and pension managers are hunting for stable assets to offset inflation and volatile stock markets, according to market observers.

In the first quarter of 2022, investors made up a record 28 per cent of U.S. single-family home sales, according to a report published in June by the Harvard Joint Center for Housing Studies, compared to less than 20 per cent a year earlier. 

"Investors bought a larger share of America's homes than ever before," noted a  separate report from the real estate firm Redfin.

The trend of money managers buying single-family homes to rent out is "a new phenomenon" for the Canadian market, said Christopher Alexander, president of ReMax Canada. He thinks the notion could catch on here as it has south of the border, especially given recent price declines. 

"The lower you can buy as an investor, the higher the chance of selling high," Alexander said in an interview.

"They are well capitalized, they are smart and they have the means to make an impact in the marketplace." 

As middle-class families increasingly struggle to buy homes, analysts say more capital from large firms is expected to enter the Canadian market, further straining supply and affordability for average people. A lack of hard data on the scale of these investments makes it harder for policymakers to respond to the emerging trend, affordable housing advocates said. 

The scale of current institutional ownership over Canadian housing is unclear, but analysts believe it's far lower than in the U.S. and generally a minor cause of the rapid rise in home prices this country has seen over the last decade. 

The Canadian government does not have clear data on the footprint of large investors in the domestic housing market. Neither Statistics Canada nor the Canadian Mortgage Housing Corporation (CMHC), federal agencies which track the sector, could say how many homes are owned by investment firms. 

"For the moment, Statistics Canada does not publish information on institutional investors, and the type of residential properties they own," a spokesperson for the government organization told CBC News via email.

"CMHC does not collect the data that you are looking for," a spokesperson echoed. 

Nailing down purchases by institutional investors isn't an easy task, said ReMax's Alexander, especially as these firms often "don't put all of their purchases in the same name or will register properties to different numbered companies or holding companies."