Carolyn Whitzman is a housing policy researcher and author of Home Truths: Fixing Canada’s Housing Crisis.
Across Canada, a nurse earns between $28 and $50 an hour, which works out to a moderate to median annual household income of $58,240 to $104,000. At the Canadian standard definition of housing affordability – that housing takes up no more than 30 per cent of pre-tax household income – a single-parent nurse would be looking for a two- or three-bedroom home costing between $1,456 and $2,600 per month. But the average asking rent for a two-bedroom apartment rental in Vancouver is $3,666.
A construction worker, building the affordable housing we all desperately need, earns between $16 and $35 an hour. They can’t afford a one-bedroom rental in any city across Canada, from Halifax to Victoria. It would take a median-income young household in Ontario 22 years to save up for a home-ownership down payment. Covering the affordability gap would require house prices to fall by 60 per cent, or wages to more than double.
It wasn’t always this way. From 1946 to 1960, the Canadian government worked directly with developers, municipalities and finance providers to create more than a million new homes that were affordable to single-wage, moderate-income workers at prices between $6,000 and $7,000 (the equivalent of $68,000 to $79,000 for a two- to three-bedroom detached home today).
In the 1970s and 1980s, as federal policy provided long-term, low-rate financing for community-based housing, the Canadian Labour Congress helped create the Co-operative Housing Federation of Canada. Co-operative housing had been pioneered in Nova Scotia, where the Antigonish Movement organized miners and fishers to build their own homes in the 1930s, financed by local credit unions.
In the Toronto area, the unions representing aircraft construction workers built an eight-storey building with more than 100 homes in the Rexdale neighbourhood in the late 1980s, after employees complained of multi-hour commutes. Today, the mortgage is paid off, the maintenance costs are low, and the rents at the Maurice Coulter Co-op are still $900 to $1,400 a month for one- to four-bedroom apartments within a 10-minute walk of the Finch West subway station.
But a myriad of factors has meant that residential real estate has become an attractive investment for pension funds and other institutional investors. And pension-fund investment in housing is a paradox.
Institutional investors have a fiduciary duty to act in the best interest of their beneficiaries, who contribute their savings and expect retirement security in return. Residential real estate is considered integral to a diversified and healthy portfolio. And yet these investments are often cited as a contributing factor in a housing crisis that may affect the lives of present and future pension beneficiaries.
For example, PSP Investments, which manages pensions of federal employees, and Starlight, one of Canada’s largest real-estate firms, co-own 21,000 rental units, and have been implicated in precipitous rent increase and eviction in Toronto neighbourhoods such as Thorncliffe Park, which has a 95-per-cent visible-minority population. Some tenants in Thorncliffe Park have been on a rent strike since 2023. Cadillac Fairview, wholly owned by the Ontario Teachers Pension Fund, is funding the construction of 4,000 homes in Toronto’s East Harbour development, virtually none of which are affordable on a teacher’s salary, let alone the pension for a retired teacher. Together, Cadillac Fairview and Oxford – wholly owned by the Ontario Municipal Employees Retirement System – are developing more than 40,000 homes in six developments in the City of Toronto alone, with a handful of commitments to homes affordable to public servants.
Investors are familiar with ways to address environmental and social factors in other sectors, with “responsible investment” or “ESG investing” moving from the fringes of investment practice to the mainstream. There is potential for pension funds to ensure that their investments contribute to their beneficiaries’ security – in their working lives as well as through their retirement.
Workers – and the unions that represent them – must push for better outcomes. In 2022, the Union Sustainable Development Co-operative in Kitchener purchased two buildings with 58 homes to preserve tenant affordability, with the help of VanCity Community Investment Bank. The Shareholder Association for Research and Education (SHARE) is working on a voluntary set of investor guidelines for affordable housing. Trillions of dollars in retirement investments, many of which are managed by union pension funds, must be redirected to address Canada’s growing housing crisis.
This Labour Day is a perfect time to begin that work.
Editor’s note: This article has been updated to clarify details of Starlight Investments' involvement in rent increases and evictions.