In the 1970s, a local anti-poverty group in Peterborough, Ontario, recognized the need for more reasonably priced housing, and thus Peterborough Co-operative Homes Inc. was founded. Tiny Budd, the vice president at the time, and a few other members began working with the Peterborough & District Labour Council and the community to develop plans for a housing co-op in the city. The first ten co-op townhouses were purchased with federal funds in 1979, as part of a federal program aimed specifically at supporting co-operative housing initiatives. This program, which ran from 1979 to 1985, was administered by the Canada Mortgage and Housing Corporation (CMHC) and provided financial assistance to such co-operatives in the form of monthly subsidies for low-income members. In the early 1980s, the Peterborough Co-operative expanded to a second location on Chamberlain Place.

According to Janine McDonald, the co-operative’s long-time property manager, the co-operative has been a saviour for many low-income families throughout the years. The co-op now has fifty-nine townhouse units—five two bedrooms, fifty-three three bedrooms, and one four bedroom—and it accepts applications from people at all economic levels.

In 2024, rent for a three-bedroom apartment in the co-op was $828 a month, a very affordable price compared to the $1,687 for a much smaller one-bedroom apartment listed on kijiji.ca in the same city. Twenty of the townhouses in the complex have even more budget-friendly rates thanks to governmental subsidies for “geared to income” housing.

Budd, now seventy-six years old, is one of the co-op’s longest-tenured tenants. She and her fellow residents run the co-op together, making decisions about renovations and financial management together. They don’t need to fear being evicted by a landlord who wants to sell or renovate their buildings. Budd appreciates the fact that her co-op community has her back and that her neighbours care about her well-being. The folks in the community mow her lawn, volunteer to do her grocery shopping, and drive her when needed.

Kerri-Anne Hinds, her husband, and two kids live in a three-bedroom townhouse at the co-op that is perfect for their family of four. It boasts a finished basement and a garden. Hinds works part time at a bookshop, and the couple receives disability assistance payments from the province of Ontario as a result of a spinal injury her husband incurred on the job. Since moving in, Hinds has gotten to know her neighbours and serves on the board of directors. Having a say on the board allows them to have a sense of control and involvement in decision-making processes that directly impact their lives. This empowerment helps them navigate the challenges they face with resilience and determination.

In a housing co-op, residents collectively own and manage the property, making decisions through a democratic process. Key criteria include resident control, affordability, and a commitment to community living. They are a popular choice for many Canadians seeking affordable and sustainable accommodation options.

According to the Co-operative Housing Federation of Canada, a quarter of a million Canadians call a housing co-op home. During the 1970s and ’80s, the first-generation co-ops in Canada acquired vacant land primarily through a combination of cash and sweat equity contributions from members, with significant federal and provincial government support in the form of grants and loans. However, this model was primarily government funded, which frequently resulted in reliance on public funding for development and sustainability.

In contrast, the private equity co-op model has members invest personal capital directly into the co-operative, similar to shareholders in a private company. This model reduces reliance on government funding, allowing for greater financial independence and, possibly, more sustainable growth over time. By leveraging private investments, co-ops can tailor their development more closely to their members’ financial means and preferences, potentially attracting those with moderate incomes who do not qualify for or want to rely on government assistance. This approach may be a more financially viable option because it promotes a self-sustaining community through profit reinvestment rather than relying on external funding on a regular basis, which may not always be available or may be subject to restrictive conditions.

McDonald has worked as the property manager for Peterborough Co-operative Homes and the Kawartha Village Co-op since the early 1990s. She is also an active member of Canada’s Co-operative Housing Federation. She says that demand for co-op membership has never been higher, with rents in Peterborough at an all-time high and a flat vacancy rate in 2024 of less than 1 percent. Wait lists at the co-op are long, and all she can do is add people to the list and inform prospective individuals that they may have to wait several years before a unit becomes available.

The financialization of housing in Canada has resulted in a significant increase in housing costs, driven by speculative investment rather than demand. This phenomenon has created a scarcity of affordable options for many Canadians, exacerbating the housing crisis. As we enter an era of economic degrowth, marked by lower incomes and lower investment returns, the need for government intervention in housing policy is clear. Co-operative models, such as Peterborough Co-operative Homes, offer a promising approach to addressing these trends by promoting not only affordability but also resilience and democratic participation within communities.

The duty of governments is to strike a balance between making housing a profitable investment and ensuring affordable housing. This includes tackling concerns such as wealth disparity, speculation, and the rights of both landlords and tenants. Governments must carefully control the market to avoid commercialization and ensure that everyone has access to secure and affordable housing. This balancing act necessitates a comprehensive approach that addresses the requirements of both investors and citizens.

The term “financialization of housing” refers to the trend of affluent financial entities, such as private equity firms and real estate investment trusts (REITs), using real estate to maximize profits. Rental assets, in the 2020s, have become more desirable, with capital funds shifting to high-yielding assets. Gentrification, short-term vacation home rentals, mass immigration, and foreign investment in real estate have all contributed to an increase in property values and rents, making it more difficult for Canadians to afford housing. This trend is linked to strong rental demand and a legislative environment that permits vacancy laissez-faire. Authorities are now tasked with enacting legislation that balances investors’ interests with citizens’ needs for affordable accommodations.

In Canada, the financial industry, which includes REITs and public pension funds, owns less than 20 percent of all rental properties. As a result, recommendations to eliminate tax breaks or regulate their investments may lower rent prices, but only a small proportion of rental units will be directly affected. The majority of rental properties—around 80 percent—are owned by individual or small-scale landlords who can legally raise rent when properties become vacant, a practice known as “vacancy decontrol,” especially in provinces with weak or no rent control.

This means that, even if policies targeting the financial sector are implemented, they will have a limited impact on the overall rental market, because the majority of renters are under the jurisdiction of landlords who are not subject to these regulations. While changes in financial sector policies may have some benefits, they highlight the need for more comprehensive solutions to address housing affordability for a larger segment of the population, such as expanding rent control across more provinces, implementing policies that apply to all landlords, and investigating other legislative or economic measures.

The idea that a home’s value will increase and be sold off to pay for retirement has influenced the future planning of millions of middle-class people. However, fluctuations in the housing market and potential policy changes could impact property values. A decline in property values could lead to underwater mortgages or difficulty making monthly mortgage payments. This could affect banks, lending institutions, the construction and real estate industries, as well as other sectors of the economy. As people feel less wealthy and less inclined to make significant purchases, consumer spending may decline, causing a contraction in gross domestic product and, potentially, a depression. The interdependence of different economic sectors means a housing market crisis could have far-reaching effects on not only homeowners but also businesses and the general public.

In “Catch-’23: Canada’s Affordability Conundrum,” Bank of Montreal economists Doug Porter and Robert Kavcic delve into Canada’s housing affordability crisis, particularly in urban and suburban areas. The majority of non-owners and recent buyers live in situations where the cost of a single-family home exceeds their income. However, homeowners who have seen significant increases in their property values may be resistant to policies aimed at addressing the housing supply issue. This may complicate efforts to find a balanced solution that addresses both the need for affordable housing and the concerns of current homeowners.

Conventional wisdom holds that there is a problem with the available housing supply, but this interpretation isn’t fully satisfactory. To address the supply issue, some on the political left dream of urban densification by constructing high-density apartment structures that are subsidized by the government and rent controlled. Mainstream economists and some politicians, meanwhile, hold the belief that the private sector should be allowed to increase supply.

However, the extreme rate of population growth in areas like Toronto and Vancouver is outpacing the rate at which new homes can be built. Mortgage rates are still, relative to income, near their highest levels in over thirty years, and interest rate hikes in the early 2020s meant that homeowners could no longer rely on historically low borrowing rates. This pressure on homeowners is huge, and many choose to extend the maturity date of their mortgage rather than face the potential of having to make larger monthly payments or losing their houses due to foreclosure. This means their interest payments will grow and their disposable income will shrink, creating an inverted wealth impact in which both their net worth and disposable income will decline simultaneously. As Porter and Kavcic say, there is no simple solution to our affordability crisis.

It is unlikely that the average salary will suddenly skyrocket and make housing more affordable. A correction in prices is essential in order to restore affordability. The Canadian housing market is predicted to experience a crash, which could potentially lead to more affordable options. However, this scenario poses challenges for homeowners burdened with substantial mortgages and stagnant salaries. Such a market collapse would threaten families’ financial security, as well as cause uncertainty and a loss of hope for a comfortable retirement. Such a crisis would affect the middle class, widen the income gap, and increase wealth disparity. Frustration with the system may lead to social unrest and political instability.

Fostering the growth of the co-op housing sector could help to counteract the negative effects of financialization on the Canadian housing market.

Because the co-operative does not generate equity, when members leave, the co-operative repurchases their shares and sells them to a new resident at the original price or a modest rise in new share value. Because the value of a co-operative’s building and land does not appreciate, it helps to counteract inflationary pressures and real estate speculation. This concept provides long-term affordability for inhabitants by keeping housing costs steady and free of market swings. That means that, while rents fluctuate in accordance with market movements, home and land prices remain fixed in an economy that is steady or declining.

Housing would not be in crisis if the real estate business had begun as a wholly or nearly entirely uncommodified co-operative economy. The rising cost of land, construction, labour, and financing has influenced the feasibility of establishing a new co-op from scratch for new development, while existing co-ops have had to refinance existing debts and interest rates.

In a housing co-op, residents share ownership in a property management company that manages and maintains the complex, which allows them to make financial decisions that they couldn’t make if they were renting at the current market price, potentially saving money. The only reasons for eviction are non-payment of rent or co-op fees, violation of the tenancy agreement, or conduct detrimental to the co-op. The occupancy agreement allows members to continue occupying the premises as long as they are fit for their purposes and fulfill their obligations. The vetting process in a co-op usually involves interviews with the membership committee or board of directors, who ask questions about ability to meet financial obligations, neighbourliness, and community involvement.

Quebec presently has 1,300 housing co-ops, but Patrick Préville, general director of the Fédération de l’habitation coopérative du Québec, believes this figure is insufficient. He claims that, if co-ops were permitted to flourish, over time, Quebec could have anywhere from 3,000 to 10,000 co-ops. According to Préville, these co-operative housing units have been sidelined, resulting in missed prospects for expansion. This exclusion, he claims, stems from a lack of government support, both in terms of policy and money, as well as a market preference for more traditional, profit-driven arrangements. Furthermore, public knowledge of the benefits of co-op living is limited, thereby limiting the spread of this housing form. This view is shared throughout Canada, where many co-ops have long wait lists, demonstrating a strong demand for affordable and community-oriented solutions.

Préville believes that Canadians must be made aware of how successful and beneficial co-operative housing can be. Co-operative housing has struggled to gain traction in Canada due to a lack of public awareness, political will, and government focus on GDP growth where corporations thrive. The lack of awareness of this model and the existing regulatory framework may also hinder its growth. However, if co-operative housing is given more recognition and starts thinking outside the subsidy box, it has the potential to significantly increase in Quebec and across the country.

Raising public knowledge and education regarding co-op housing arrangements is obviously beneficial, but it is not the only tool that can be swiftly advocated to help stabilize the housing market. Policy makers may also encourage grassroots leaders and ease the establishment of the community land trust model.

Community land trusts (CLTs) are private philanthropic or non-profit organizations that hold property in trust to provide permanently low-cost housing and other community assets. The Ottawa Community Land Trust (OCLT), which was created in 2021, is committed to the long-term preservation and expansion of affordable housing in Ottawa.

With a diverse board of eleven sector directors, OCLT’s approach focuses on acquiring and preserving affordable units through a revolving loan fund and community bonds known as “Housing Forever Bonds.” Their strategy focuses not only on protecting current affordable housing from market speculation but also on establishing new affordable choices through collaboration and advocacy for supportive policies. Initially funded by the Community Housing Transformation Centre, the Co-operative Housing Federation of Canada, and the Co-operative Housing Association of Eastern Ontario, OCLT aims to empower the community by involving it directly in the housing solution, ensuring that housing remains accessible to those in need.

The excitement over the introduction of OCLT is palpable. As executive director Mike Bulthuis puts it: “There are a lot of different players that are involved in this that I think will demonstrate to the city that, when you come together from all different sectors, you can build something that is truly marvelous and that works for many, many people.”

The OCLT received $250,000 funding from the CMHC National Housing Strategy Demonstrations Initiative as a revolving loan to purchase older, more reasonably priced apartment complexes on the private market to scale up their operations. The primary aim with these acquired properties is to preserve and expand the stock of affordable housing.

In doing so, OCLT is using their initial working capital to acquire assets, which are then refinanced through equity takeout financing to fund future acquisitions. Equity takeout financing is a financial method in which OCLT leverages its own equity to get new finance. This method usually entails purchasing an apartment complex, which may appreciate in value owing to market conditions or upgrades. The property is then refinanced, with a new loan based on its current, generally higher, worth. The new loan “takes out” or releases the property’s built-up equity, which can then be utilized for a variety of purposes, including repaying the initial loan, supporting additional acquisitions, and reinvestment.

Rather than negotiating with numerous government authorities for possibly transitory funding or subsidies, nonprofits, co-operatives, and even private residential developers can work with OCLT. For nonprofits and co-operatives, this means they may negotiate long-term leases or purchase homes from the trust at reasonable prices, guaranteeing that housing remains inexpensive permanently without the risk of losing government financing. Private developers may be motivated to collaborate with OCLT because they could benefit from accelerated permitting processes and the ability to build larger buildings in exchange for promising to provide affordable housing options.

By 2024, OCLT had already begun the purchase of its third multi-unit property for 2025, which was partially supported by $3 million in community bonds issued in 2024. The OCLT board understands that, in order to be successful, a land trust must be able to become financially self-sufficient and not dependent on government funds by acquiring land and buildings and collecting rents from tenants. The land trust’s creditworthiness improves as a result of the asset base acquired through such purchases, allowing it to borrow money to reinvest in the real estate sector. The ultimate goal is to become self-sufficient while the underlying values potentially rise, and OCLT will borrow against this equity. Rents will remain reasonably inexpensive; however, there may be occasional increases.

The OCLT’s innovative approach exemplifies how community land trusts can transform housing affordability, setting a model for CLTs across the country to use community involvement and strategic financing to ensure housing is accessible to future generations.

Canada is home to about thirty-seven CLTs, of which thirteen have developed and maintained ownership of agricultural sites, commercial spaces for essential community services, and affordable residential properties. CLTs stand out for their unwavering dedication to preserving the land held in trust as a permanent community asset and preserving the affordability of the homes built there through permanent affordability controls and shared equity homeownership models. Homes in the land trust are always a stock of affordable housing that helps low-income families year after year, regardless of whether the market is “hot” or “cold” in the surrounding area. CLTs are also praised for their efficient use of public funds because, with a single public investment, the trust may build or acquire existing affordable homes for all households, both now and in the future. Co-operative living environments and CLTs work closely together.

Preventing gentrification and homelessness in fast-developing areas has also been demonstrated to be a strong suit of CLTs. They can help stabilize communities and protect long-term inhabitants from displacement by holding land in trust and guaranteeing permanent affordability. CLTs frequently give low-income households and recent immigrants top priority because gentrification and housing instability affect them disproportionately. As more places deal with these issues, community land trusts present a promising approach for producing and preserving affordable housing and giving residents a voice in their community’s destiny.

While some CLTs have successfully generated funds through community bond campaigns, many others rely on grants and government subsidies to get started. However, these subsidies are not always available, emphasizing the need for more sustainable solutions. Instead of relying exclusively on external funding, communities could pool individual funds to directly acquire land or buildings.

This bottom-up strategy empowers people to regulate their own living conditions while also instilling a sense of ownership and personal responsibility. Unlike community bond campaigns, which entail issuing bonds for investment with the hope of a financial return, this technique emphasizes direct community co-operation and resource sharing.

Solutions to the financialization of housing exist. Co-ops, community land trusts, building and loan associations, and community bonds—all offer innovative ways to address the housing crisis. A strategic shift in their favour would not only stabilize funding for co-operatives but also align investor interests with the co-operative movement’s larger social and economic goals, fostering a resilient and self-sustaining ecosystem.

Adapted and excerpted, with permission, from The Great Canadian Reset: Why Co-ops Are the Answer to Our Toughest Problems by Ludovic Viger, published by Barlow Books, 2025.

Ludovic Viger is an advocate for sustainable and ethical business models. He lives in Ottawa, where he volunteers for local co-operatives.