Are REITs good for housing? CMHC says we need more, raising concerns among some housing experts

The Canada Mortgage and Housing Corporation (CMHC) has lately suggested that Real Estate Investment Trusts, or REITs, could be a useful tool to expand Canada’s supply of housing. The idea is that by involving REITs, more purpose built rental housing might be built, leveraging private capital rather than relying wholly on government funding. CMHC believes that this model could help ease pressure in tight markets and make more rental homes available faster.

Still, not everyone agrees. Some housing experts warn that trusting REITs to lead housing expansion carries risks. One worry is that REITs, by their nature, must deliver returns to investors. This can mean pressure to maximize profits, which might run counter to keeping rents low or providing housing in less profitable areas. Experts say this tension could reduce the social goals of housing, like affordability and equity.

Another concern is that REITs tend to select properties in the most promising neighborhoods or those with potential for appreciation. That means lower income or remote communities might be left behind, since those places often offer lower returns. Critics caution that housing development decisions made primarily by profit seeking entities may deepen inequality in where new units are built.

In its research, CMHC addresses one common fear: that REITs push rents higher. The corporation reports that REITs do not systematically charge more than other landlords in the same area. What they do is choose certain neighborhoods where growth is expected, and sometimes upgrade properties to demand higher rents, but not in a uniform way across all their holdings. Still, that doesn’t fully allay the concerns about affordability pressures.

CMHC also calls for a balance. It’s not enough to bring in more private investment, tenant protections and good regulation must go hand in hand. It suggests policy measures like rent control or stronger tenant rights to ensure that REIT driven development does not hurt existing tenants. The message is clear: REITs are not a silver bullet, but part of a broader toolkit, and only if the rules are fair and protective.

In the end, whether REITs become a useful ally in solving Canada’s housing shortage depends on governing frameworks, oversight, and the willingness to accept that housing is more than just real estate investment. With the right safeguards, REIT involvement could speed up housing supply. Without them, it may risk favoring profits over people.