The Canadian housing market, already one of the biggest housing bubbles in the entire world, has seen a massive expansion over the past year. With historically low interest rates, a rush of real estate purchases over the past year have led to skyrocketing housing prices. This recent period of purchasing has largely been driven by speculators. Twenty-five per cent of all homebuyers in Ontario are now investors who own multiple properties. The housing bubble will lead to windfall profits for these unproductive middlemen, but it will only make housing more unaffordable for the majority of people.
This investor-dominated market has led to a situation where homes are not used for their purpose, to house people, but instead are bought and sold for profit. In Toronto, for example, 65,000 condo units are empty and owned by investors, who simply want to flip them for profit. And yet there are constantly more construction projects to build new condos, when the existing units remain empty! This highlights the artificial nature of the housing crisis which is driven by profit-hungry investors, not an actual lack of homes.
Anarchy of the market
Big profits are being made by investors in the housing market, but that only makes the market more volatile. Prioritizing their profits, investors will pull out of the market at even small decreases in price. With investors making up a quarter of the housing market, swings in prices naturally become more severe, which increases the risk of the housing bubble bursting.
To make things worse for average home buyers, the Bank of Canada intends to raise interest rates to combat inflation. However, with household debt rising faster than ever, this is a recipe for disaster. Household debt is currently at 173 per cent of disposable income. On top of this, purchases by first-time home buyers have increased by 45 per cent during the pandemic. If interest rates increase, big investors and landlords can easily absorb the cost or sell their property, while renters and workers with mortgages will be forced to bear the burden of higher interest payments.
This is a completely unstable and unsustainable situation, showing the nature of the housing market as a speculative game which is driven by big investors and locks out the majority of people from ever actually owning a home. The average cost of a home in Toronto is now $1.1 million. This is in stark contrast to the 1950s, when the cost of a home was just $30,000. The dream of being a homeowner is baked into the framework of capitalist society. Young people are told every day that if they work and study hard, they will be richer than their parents. Unfortunately for today’s generation, this has turned out to be a complete lie.
Expropriate the speculators and provide housing for all
Meanwhile, the homelessness crisis continues to rampage through cities like Toronto. Nearly 10,000 people are homeless in a city where there are 65,000 empty condos. This is not a natural or inevitable occurrence, but a result of capitalism. As we have stated in the past, housing under capitalism is not made to house people, but to sell for profit. This inevitably breeds speculation, homelessness, and creates an artificial crisis where none before existed.
There are already enough homes in Canada’s major cities to provide comfortable housing for all who need it. There is no need to build more housing in a city where a condominium exists on every street corner. What is needed instead is to seize the existing empty homes and use them for the good of society.
No capitalist government will do this, despite it being the most obvious solution to the problem of homelessness and soaring housing costs. Instead, what is needed is a mass movement of the working class to take power into its own hands. Under a rationally planned economy organized by workers, housing can finally be freed from the shackles of speculation and can become a right for all.