A new strategy by Toronto-based developer Core Developments Group to buy hundreds of single-family homes in Ontario — including Barrie, which is in a housing crisis — to use as rentals is causing mixed feelings.
Core Development Group is investing $250 million into creating “ground-oriented missing middle housing,” as well as building secondary units to each home, which they have noted will add much-needed housing stock to the market, according to a statement provided to BarrieToday.
Company officials pointed out they are not looking to buy $1 billion of existing inventory, as has been reported, but noted the investment also includes plans to construct new build-to-rent (BTR) inventory.
“Core Development Group is dedicated to providing diverse living solutions through a multi-pronged approach that encompasses build-to-own multi-residential communities, co-living developments, single -family rental acquisition, and new single-family build-to-rent and build-to own developments to introduce fresh and more attainable housing supply into the market,” says Corey Hawtin, Core Development Group's founder and chief executive officer.
“As the housing market has become increasingly unaffordable in the last decade, more innovative housing supply is needed to match the growing demand," said Hawtin, noting the company's plans would "help meet the housing supply shortfall.”
Their aim, Hawtin continued, is to create more rental supply by providing turnkey ready and high-quality finished homes for tenants, as well as easing the burdens tenants face when renting from an individual or foreign investor in the single-family rental market.
“Increasing density through renovating existing homes is the most expedient way to add supply to the housing stock," he said.
This model will provide new housing opportunities faster than either greenfield or brownfield development, he added.
“We are creating new supply by renovating underutilized and under-invested houses that are geared toward accommodating a second legal and permitted unit," said Hawtin, who claims this adds "gentle density to neighbourhoods without disturbing the characteristics of the community."
He says the homes would be renovated to provide a safer living environment, including upgrades to heating, plumbing, insulation and lighting to the highest energy standards.
“We are dedicated to being a part of the solution to the ongoing housing challenges in the communities we serve," Hawtin said.
But others aren't so sure about the plan.
Barrie-based real estate agent Mike Balenzano shared some of his concerns. How the company approaches its plan will depend on if it will be a positive or negative thing for the city, he says.
“I was recently working with somebody who was looking for a rental and there wasn’t much available at the time,” Balenzano said. “Rents are extremely high and tenants are offering a full year’s rent up front, making the rental market extremely competitive.”
Balenzano says if Core Development’s plan will eliminate that scenario and they have some flexibility in the rents they charge, then he believes the investment could be a good thing.
“If they’re going to capitalize on the high rents that are already here in Barrie, it’s really not going to make things better for people looking for rentals," the agent said. "The only way that is going to change is if they saturate the market with inventory. Then the market will react to that and rental rates will become lower because there’s more available.
"That’s the only way I can see it being a good thing for Barrie is if we can reduce the rents a bit.”
Rob Hilton, co-owner at A.G. Secure Property Management, however, believes the investment plan is a positive thing for the city.
“I don’t know how much or what they’re looking at doing in Barrie, but I would anticipate the fastest way you’re going to increase supply is taking an existing property and legally converting it into a duplex. My understanding is they’re going to do everything above board and are going to build proper suites,” he said. “If they do it with 30 houses, that will create 60 units.”
The demand for rental units, Hilton noted, is currently outpacing that number — something he says he only sees increasing as people continue to relocate outside of the city.
“(People) want a yard and are afraid something like this (COVID) could happen again and I think that will be the status quo for the next 10 years,” he said. “Second of all, there are no buildings going up that will go up quickly… so I can only see more pressure coming on the rental market.
"What I like about Core’s program is they’re doing it legally," Hilton added. "They’re making sure they’re following fire and building codes. There is a sense of security for the tenant. Yes, they’re a business and the goal of any business is to make a profit, but in the process of doing so, they have the best chance of creating a faster supply.”
Hilton also said the company’s choice of Barrie to invest some of its money is a good indication of how the city is growing.
"It’s always a positive when somebody is looking at our community in that fashion," he said.
Barrie Mayor Jeff Lehman isn’t quite as convinced. He says the company’s plans have left him feeling extremely concerned.
“The more housing turns into codified investment, with profit modes built into the cost of living, the more we are going to see prices rise," Lehman told BarrieToday. "While a landlord seeks to make profit, the problem this creates is they’re primarily renting at very high rents… and it is not going to help with the affordable housing crisis that we have in Barrie.”
While it’s always good when there are more rentals created, Lehman added the focus in the city needs to be on creating them in the lower- and mid-range prices. The longest waiting lists are for one-bedroom units, he says, which is why the city needs to focus on purpose-built rentals, such as apartments, in order to meet the need.
“My concern when you start to (have) institutional investments in single-detached houses is that they will only be at the high end of the market and that could potentially result in existing rentals that are at a reasonable rent being sold to an investment company, and then the rents going way up,” he said.
“That’s going on already in Barrie… and could cause even more severe price increases," the mayor added. "I am very concerned about it and it’s all the more reason why our affordable housing task force, the county’s plan and the city’s plan to try to encourage more purpose built rentals is going to be important in the coming years.”
