One of the causes of the housing crisis is the idea that a home is not primarily a home, but an investment, a commodity. This is a fundamental problem for which an already existing solution is becoming increasingly important.
Real estate has always been the place par excellence for speculation. Every home sale and resale is an opportunity for the owner to maximize their profit. When we talk about residential buildings, the increase in the purchase price goes hand in hand with the increase in rents: the new owner must be able to pay the new purchase price. It is a virtuous circle for the investor and a vicious one for the person who only wants housing, owner or not.
In 2023, the average gap between the rents of Interloge, a non-profit organization (NPO) in Montreal, and those of the market was 43%. You read that right, 43%. For what ? Because its housing is “off the market”. Interloge does not speculate, it does not want to get rich by reselling its buildings. He doesn’t even want to get rich from the rent he receives, he wants to offer a service at the best possible price, forever. Its accommodations are not commodities.
Interloge is a real company that must cover its costs to survive. So how does it manage to keep rents so low? The company is non-profit, it only increases its rents based on its ability to repay its mortgage and pay building maintenance costs. Over time, the mortgage becomes less and less important, the company reinvests its savings in its buildings, which makes the model sustainable.
Housing NPOs also have significant secondary advantages: transparency in the management of rent increases, better protected tenants, no renovations, etc.
This business model also makes it possible to build a real estate portfolio that meets a specific need, in a specific location. For example, there will always be a need for affordable housing around CEGEPs and universities, and municipalities, small or large, will always have an interest in having a stock of affordable housing suitable for seniors.
In Joliette, the PAX Habitat project, a non-profit organization, set up a monastery so that the nuns of two congregations could continue to live there, with elders from the community. The non-profit model therefore makes it possible to perpetuate a residence which only serves the interests of the community, because the investor is this same community. It is capitalism with a soul or, in other words, the social economy.
In Métis-sur-Mer, the CMétis group, also an NPO, is a partner of the municipality for the development of an eco-district. As a general contractor, he builds his own non-profit housing, as well as traditional private single-family homes. Tenants, through their rents, and owners, through contract, pay for common spaces: vegetable garden, workshops, kitchen, shared electric cars, etc.
As the owner is an NPO, all savings made are reinvested in the neighborhood, in reducing costs for everyone or in new projects. In 2025, CMétis will launch the construction of another eco-district with 250 affordable housing units, this time in Rimouski.
When a government subsidizes a tenant or a buyer, it is helping a person in the short term, it is not changing the system. From the moment of resale, from the moment of moving, the accommodation enters the market again and new buyers and new tenants need help. Government action should instead focus on the system itself.
By supporting the purchase of existing buildings or the construction of new buildings under the aegis of this new generation of NPOs, governments would ensure that the housing concerned remains affordable. In doing so, they would not just provide short-term aid, they would change the system itself: they would increase, forever, the number of affordable housing in the market while consolidating the capacity for independent development of NPOs .
Indeed, large enough NPOs could, over time, accumulate enough revenue to build new housing themselves with much less government assistance. The existence of companies of a certain size also allows for professionalization of activities and significant economies of scale (borrowing will cost them less, for example). For the moment, the biggest players are in Montreal, but, in the long term, all regions could set them up. Quebec’s social economy ecosystem, unique in Canada, has everything it takes for this mode of development to be a success.
Béatrice Alain, from the Chantier de l’entreprises sociale – which inspired this column – estimates that when 20% of the real estate stock is non-profit, the impact of prices is felt across the entire market. This economic model is therefore quickly becoming advantageous to all people who want to find cheap accommodation.
It is becoming urgent to remove a large number of housing units from commercial logic. The market will adapt, there will always be investments to be made, but housing will be treated a little less like merchandise and a little more like essential goods.
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