Toronto-based Core Development Group Ltd. is scooping up $1 billion worth of detached houses in Ontario and planning to rental them, thus profiting off the housing crisis in Canada.
Following the same structure that is seeing growth in the United States, Core Development’s Corey Hawtin and executive vice-president Faran Latafat stated in an interview with the Globe and Mail, “We were trying to answer the question: Why is nobody doing this in Canada? We could not come up with an objective answer to that. In Canada, it works as well or better than the U.S.,” said Ms. Latafat.”
Core has properties in Kingston, St. Catharines, London, Barrie, Hamilton, Peterborough and Cambridge, and will soon search for new opportunities in Guelph, which will lead to $1-billion affordable housing portfolio of 4,000 rental units by 2026.
“The ratio of home prices to rental rates is so extreme that new entrants to residential real estate will gravitate to the rental market,” said Economist David Rosenberg of Rosenberg Research & Associates. “If more potential buyers are forced to rent, that could eventually reduce competition in the residential real estate market and slow home price increases.”
This year, Core has invested $50-million to purchase 75 properties. Its two-bedroom basement apartments rent for $1,600 per month, while its three-bedroom above-ground units rent for $2,100 per month.