Canada’s surging rents have more to do with financialization than fundamentals, according to a new University of Waterloo study. Researchers from the School of Planning conducted a deep dive into Toronto’s rental market and found the most aggressive rental hikes came from large financial landlords. By using techniques like vacant units, algorithmic pricing, and systematic tenant displacement, these firms behave similarly to an oligopoly—coordinating towards a single goal: maximum rent extraction. The study warns that shelter instability will worsen as these firms get even larger.
While the study was done in Toronto, this has become a global playbook. As housing is increasingly financialized, these firms are scaling up—often with the assistance of policymakers. That’s the case in Canada, and likely a number of countries where the problems are often pitched as the solution.
About The Study
Researchers analyzed Toronto real estate data for 1,600 apartment buildings between 2022 and 2024, then broke it down by neighbourhood and landlord type. They compared rent charged by financial landlords—REITs, private equity, and large asset managers—to those of traditional rental operators, like family-run firms and single-operators (also known as mom & pop landlords).
Most importantly, they went much deeper than spreadsheets and efficient market assumptions: they gathered additional insights from interviews, corporate filings, and transcripts from real estate events. Instead of assuming the market is driven by supply and demand, they got the perspective of the people pulling the strings. As you’ve probably guessed, the problem is a little more complicated than supply and demand.
Higher Rents, Steep Premiums: Toronto’s Financial Landlords Seek Steep Rental Price Increases
The rental price premium over the average rent in a neighbourhood. Broken down by City of Toronto designated Neighbourhood Improvement Areas (NIAs) and non-NIA neighbourhoods, and landlord type.
Source: August & St-Hilaire (2025).
The study found that financial landlords charge 44% more than the average neighbourhood rent—about $670/month more. That’s well above the premium charged by family chains (30%) or individual landlords (15-22%). Because financial landlords tend to cluster and set prices based on comps, this behavior compounds and accelerates rent inflation across entire neighbourhoods.
At the property-level, the gap for quarterly rent increases by landlord type is mind blowing:
- Financial landlords: average 5.04% (+$93) per quarter, or a 21.52% annualized growth rate
- Family-run chains: 4.99%
- Single-property owners: 3.61%
- Non-profits: 1.0%
Using regression models, researchers found the same unit would be 13.8% more expensive if owned by a financial landlord vs a single-property landlord.
“Put in terms that are easier to understand, if a unit held by a Single Owner (owner of one property) was listed at our dataset’s average rent—$2,187, the expected rent of the same unit would be $2,510 if it were owned by a financial firm, a $323 difference,” explain Martine August and Cloé St-Hilaire, the study’s authors.
Targeting The Most Vulnerable For Profits
Rather than being restrained by the market size, financial landlords are leveraging their resources and concentration to exert a disproportionate influence. The study suggests a strategic dismantling in the City of Toronto’s designated Neighbourhood Improvement Areas (NIAs)—low income, racialized districts with historically affordable housing.
In these areas, financial firms charged 20% higher rents than other landlords—capturing what researchers call the “rent gap” in undervalued communities.
“While tenants face a crisis, the shareholders and senior executives in financial firms investing in rental housing gather diamonds.”
—August & St-Hilaire (2025)
It’s tempting to frame this as “just” gentrification but it also mirrors a more dangerous phenomenon: bubble contagion. In a bubble, prices detach from amenities, leveling across large swaths of the city—leaving some areas prime for a correction. It’s a phenomenon that’s only really been observed in home prices, not rent, so this may be worth a deep look on another day.
Algorithmic Rents, Antitrust Alarms, & Strategic Displacement
Financial landlords are deploying both classic and cutting-edge tools to squeeze out higher returns. One of the most controversial tools has been YieldStar, a software platform that sets rents algorithmically based on local conditions, and projected demand. It even sometimes suggests leaving a unit empty to create artificial scarcity and drive rents higher, according to the researchers.
The US Department of Justice (DoJ) is currently pursuing an antitrust case against YieldStar’s parent company, alleging the software facilitates collusion among large landlords by sharing non-public information that can be used to coordinate price hikes. The company denies this allegation.
Meanwhile, some financial landlords have explicitly described using value add and repositioning strategies to extract higher rents. This often involves renovating, displacing, and re-renting the unit for much more. Similar to the renovictions conducted by slumlords, but with more steps to make it fancier.
The researchers’ conclusion is crystal clear: financial landlords are driving higher prices & destroying affordability. The financialization trend first took root in the early 90s, but rapidly scaled up during the era of low rates. In Toronto, the study found these landlords scooped up nearly all rental suites in the past few years. As concentration grows, so does the problem.
Policymakers to the rescue?
You might expect this trend to spark action, and you’re right. That’s why policymakers have adopted plans to throttle the growth of these firms, and redirect capital towards more productive use to fuel the country’s economic growth. Just kidding.
Rather than reigning in these firms, policymakers are using public resources to fuel their growth, even providing funds for well-capitalized firms. In fact, the financialization of rentals is the “solution” that policymakers are pitching to restore housing affordability.
Is anyone else starting to feel like shelter instability is a feature—not a bug?
Good piece. Traditional market analysis assumes all players are rational and won’t incorporate game theory.
It’s a naive way to look at the world, and only two groups of people will be surprised:
> People who have been misinformed
> the people who misinformed the other group, now pretending to be surprised that academics are finally calling it out. That includes the greasy academics who mislead without disclosing their conflict of interest, either direct financial or indirect as a political hit squad.
Very good comment. As noted, price of housing cannot be regulated by free markets efficiently. Further, govt reliance on high housing prices to maintain piwer and suppoet is further market interferrance.
The real concern is not that this is the case, but that the prevailing ‘explanation’ of the cause and possible solution is to subsidize construcrion and large financial firms, landlords?
This narrativw is not in any way supported by economics, nor is there any evidence that it can possibly work.
The govt needs to focus on building expirts and real wage growth, and decreasing housing and debt costs. This requires ending all subsidies for housing, banks, landlords. It must include a focus on investment in industries that drive exports, resourse extraction, processing, manufacturing and services related to that sector.
Trying to retool canada into a green powerhouse has failed in every conceiveable way, leaving canadians with a 65% real wage gap qith amwricans in the last 10 years. This is the root cauae of our problems, and following the same path cannot possibly improve the situation.
So the foolish decision to re elect the authors of the destruction of canadas middle class for another 4 y is only tempered by the consolation that they are a minority, and therefoee can be replaced.
When’s better dwelling going to explain the bananas plan where billions in tax payer funds have been dedicated to providing funds for these financial landlords and the CMHC refuses to disclose which parties they’re giving cash to?
One point missing from this discussion: Rents are sticky. A quick rise doesn’t mean they’ll fall without a shock to drive them lower.
As a result, some places reach the point of destruction: Prices are so high that people no longer see the value in region. It happened to London, it happened to NYC. It can happen to Toronto, which didn’t even get to the same league as those places before it decided the wage-to-rent ratio should be similar.
Well if the govt and media acknowlege that, and let an economist explain that their activity cannot possibly fix fhe sutuation, only make it worse, that qould mean that the liberals have knowingly caused this mess to benefit themselvez and the financial firms.
I expect that that would mean an end to the liberal party, ans since so many large institutions are invested in this and the liberals, including the ‘news media’ and banks. So there is no chance of that until they finally blow up the housing bubble.
I believe the risk is not so much a mass exodus from the gta or gvr, but a market meltdown. A big part of the mess in canada is that ultra high immigration swe most new residents in those regions, ans since many aee on govt assistence, fhe taxpayer is once again maintaining high prices.
The tipping point is without real wage growth, housing prices should be.less than half what they are. If the govt subsidies dry up, the market will collapse. Eventually the feds will be unable to keep subsidizin8g high prices, banks, landlords, and then a major recession will cone.
This may be a change in govt, a credit downgrade or another external shock. The liberals have set up thr narratuve that trump can be the ‘blame’ for a liberal recession already, so perhaps carney plans to use that excuse (as freeland did with russia) to explain the correction. However, the failure of the liberals to get a majority means they are in danger of lising power every day.
Oh shocking another stupid fkn academic study finds the outcome that the academics want. Shocker.
Oh look, another person in real estate or government that didn’t realize Toronto rental vacancy is higher than it was in 2019.
New development outside the TTC subway stop has been trying to rent the same places at the same price for 3 years now, and the incentives keep climbing.
So for supply to cirrect a price problem tequires 3 things. First is the ability of the buyer to not buy. So if prices are too high because there are not enlough units, buyers can then force prices lower by not buying.
Secondly, it requires monetary losses by the landlord if they dont rent it. So if the landlord cant rent it for 3y, they have to drop the rent or sell it.
Finally it requires that govt is not setting a rwnt floor via high taxes, hig interest rates, and so on.
So.housing doesnt meet any of these requirements.
So the entire supply argument is broken.
Well i would say yes, duh. Lets just add to that no serious economist would suggest that supply and demand are the fundamental drivers of housing cost in canada or the western world.
So to argue that by subsidizing the people who fix the prices we are clearly making it less affordable. This is a point every economistnsince adam smith would agree with.
Thr only role of govt to ‘fix’ the housing crisi should be regulation of mortgage pricing and how it drives prices and rents.
So we certainly dont need subsidies for institutional landlords at any time.
Since City Council Members and the Mayor, such as those in Vancouver, receive financial donations from Developers/landlords, you will unlikely receive any assistance from them. They are just part of the algorithm or AI hiding in the background.
They would if they thought they could water down building codes in these significant developments on behalf of major developers. City Council staff or engineers are not allowed to comment on safety or energy efficiency in any project they approve. Approving Rezoning applications is all they need to do to receive financial benefits from developers – the word is complicit in the algorithmic calculation.
Agreed. Also municipal taxes are tied to peoperty ‘values’ creating an oncentivw to keep peicws high. It is tgesame for mortgages and banks. Its called anti selection, and needs to be dealf with to fix this mess.
Me, myself, believes that this is the sign of a prosperous economy. Rents are booming because the economy is booming. If the economy was bad, then none of these financial landlords would be increasing rent. To support low-income tenants, government must provide voucher for the low income tenants and directly pay the hard working landlords which are over-burdened with many many costs these days. Maybe give 30-40% of the rent to the landlord directly so ‘affordability’ will improve for everyone.
Government needs to actively support their big landlord friends but also think about the little landlord. The little landlord must also be supported so greater value can be unlocked in the housing market. If the little landlord is not supported, the big landlords will capture all the gains in the market and supply will decrease further. Government should not interfere in the supply in the market at any cost. We have learnt from 100s of years of good history that capitalism, and free markets, provide the best provision of housing in the long run.
Dude, do you not understand that government intervention is the opposite of the free market? Do you also understand that investors would have been underwater years ago if not for demand stimulus?
Me, myself, believes that Government is intervening here to create the free market. There will be no free market without the robust rules of the government. So we must support the government to maintain this free market. Since the government creates the free market, it has to protect the free market investors. This is Housing 101 in most of the world. All I say is that the government must also protect the little landlord, since they are smaller in value, alongside the big landlord friends of theirs. There should not be discrimination in supporting different kinds of investors. After all, little investors do not have the ability to go to all the private luncheons, donation events or non-public gatherings with the politicians. However, they must still be protected.
If the investors go underwater, the economy will go underwater too. Lots of suffering as unemployment will rise sharply and even more people will not be able to afford their mortgages.
Ok so we have a housing price crisis. Its not a hoysing crisis based on supply, since therr is apparently all kinds of supply, its not the supply the market wants.
As to your assertion that the economy is ‘good’ because the rents are high, that is ignor8ng that if you wabt to live in toronto, and not in a dumpster, you pay rent.
We know that the cost of housing and rent is now up at 60-70% of family gross income in the gta. This number was 35% in 2009. So basically people are not making moee money, they are just living without mist other things to pay rent.
As for hardworking landlords, what is the ‘hard’ work that landlords do? Say i bought a y00k condo and rent it out for 3000/mo. Unless i rent to the wrong psople, i just cash cheques …
Me, myself, believes that it is a supply crisis. Many many millions of houses need to be build to achieve the century goal of 100 million population by 2050. Prosperity absolutely demands it and we must rise to the occasion. Look at the brilliant housing market of China – I hear from my friends living there that there is no much wealth created in the housing market that it is unbelievable. Yuan’s are growing on trees there. We must also copy them and build quickly. Cancel all the regulations and built rightwards, leftwards, upwards and downwards. We certainly have the land for it and we have the skills for it (maybe 1 million more workers because we have skills shortfall in the construction sector, they say). Now, we need the correct government policies for it so we can build baby build like our cousins in the south.
As for rent as % of income, when people will work harder, they will make more money. More people, more hard work, more money, more housing, more income for everyone – landlord and renter
I am not surprised by this, as a central feauture of market economics is that housing, credit and other ‘markets’ are highly inelastic and require substantial regulation to operate in an efficient manner. This has been known since the wealth of nations, and forms the major issue with any free market respurse allocation model.
So the second that a policy maker, economist, ir market analyst refers to ‘market based’ price solutions as a replacement for regulation we have a major problem.
To this point, canada has seen the typical response to unregulated housinv and credit markets in the last 15 years.
High cost if houaing, increased debt at all levels (govt, corporate, consumer), declining priductivity and cost of living. This is because we see inefficient allocation of resources to housing, construction, banking; unequal returns and wealth redistribution; poverty and eradication of the middle class.
As per the study and article, this trend cannot be ‘fixed’ by ‘supply’ as asserted by govt, chmc, realtors. In fact it drives prices higher as govt intervention to dump money to increase supply removes pressure on sellers and landlords to ,drop prices as demand wanes due to price.
Add to that unproductive investment in real estate, increasing and unsustainable prices and debt, lower incomes, and high immigration and we see a mess like the uk.
The only real solutiom is to remove any and all subsidies for large insttitutional landlords, banks and speculators. This will reduce prices to a sustainable level. At peesent the gta has a mahor pricing iasue. With rents and prices at more than double what are sustainable based on incomes, a pervasive belief that real esrate is a risk free investment, and the govt effectively maintianing this situation for political reasons. The market will eventually collapse, and cause widespread financial carnage, finiahing the middle class in canasa, and leaving us with a feudal soceity of rich and poor.
At this.point, the only path to recivery is to redirect investment from real estate to productive investments. This is not the govt investing in ev plants or subsiding non profitable green industries, but a frank and open process to drive exporta and gdp roi.
The iasue is that the ‘new’ govt, led by an ‘economist’ has continued the same narrative of market solytions to ‘fix’ housing and cost of living issues. However, as noted above, inelasticity of demand, sticky prices, and govt conflict of interest (political and financial incentives to keep rents and prices high) mean that they are actually causing the inflation.
Therefore the current govt path to ‘affordibility’ defies any sort of logic or known economic theory, and cant possibly work. To improve affordability requires either pruce of housing, debt, or maintenance costs to drop, or real wages to rise. If we keep investing in non productive assets like housing or green industires that require massive subsidies, how can we pissible do any of those things?
Why do people look at me like I have a second head when I say building public housing again is the only solution to the housing crisis? And if governments refuse to do that, it’s because they want the crisis to continue. We know what works. We’re just not doing it.
REITs have fueled the transformation of Renters into Second Class Citizens.
Time to build guillotines. The entire finance industry, from landlords to insurance to private equity to currency speculators to stock gamblers… They create nothing and eat everything. Time for them to get real jobs that create real things or climb those stairs for the last time.