The ‘Financialization’ of Housing

This report comes from the US, but by now, most Canadians have heard that housng costs and rents are too high and we need to build, build, build in order to make housing ‘more affordable’.

I’ve written about this issue many times as it consistently affects all of us: our cost of living, keeping a roof over our heads and how we build our cities in the process of trying to satisfy the demand for residential real estate.

While I’m pleased to see some credible third-party analysis coming out about WHY the cost of housing keeps jumping, the conclusions are still troubling:

• Huge pools of wealth, controlled by a small segment of wealthy individuals and their investment arms, are supercharging existing problems of gentrification, homelessness, unaffordable rental housing, and out-of-reach homeownership.
• Investors have bought up an unprecedented share of housing to extract more rents from already economically squeezed residents. For instance, Blackstone is the largest corporate landlord in the world, with over 300,000 residential units across the United States. Blackstone also recently acquired 95,000 units of subsidized housing.
• Wealthy buyers are bidding-up land and housing prices, inflaming existing gentrification dynamics, and resulting in huge increases in the cost of housing. Homebuyers are competing against private equity funds and wealthy buyers who make swift cash offers.
• New construction is increasingly unaffordable to low-income households. Nationally, we have sufficient and even an excess of housing for the wealthy, alongside not enough housing priced at rates affordable to low-income households.
• Billionaires have influenced government housing policy, striving to give themselves tax breaks, oppose tenant protections, and expand their housing acquisitions even further, at the expense of the public.

Our governments are creating a building boom for the benefit of one group and one group only: builders.

To this report, I would add that we have to stop obsessing with plowing over the world’s best farm land and animal habitats while also clearcutting fields of trees and destroying water aquifer systems.

We need to build where things have been build before: destroy vast parking and create large liveable communities; force companies to reclaim ‘brown’ sites and increase the level of density in our urban cores … but remind ourselves that you can’t just drop a thirty-storey apartment block downtown without getting developers to fund and support the creation of adequate public infrastructure, specifically public transit, but also parks, small shops and entertainment areas.