Financialization of housing

A human rights issue

Financialization is a term used to describe how housing is treated as a commodity – a vehicle for wealth and investment – rather than a human right and a social good for people and communities.

Financialization is a human rights issue. It has significant consequences for the affordability, security of tenure, and habitable conditions of rental housing for tenants. It is associated with elevated risks of illness and death for seniors and people with disabilities in long-term care facilities.

Addressing financialization is a priority issue for the Federal Housing Advocate.

What is financialization

Financialization is a term used to describe how housing is treated as a commodity – a vehicle for wealth and investment – rather than a human right and a social good for people and communities.

Globally and in Canada, investment firms have been purchasing rental buildings and then upgrading them and raising rents, forcing low-income tenants out of their homes. Because the business model associated with financialization demands short-term high yield profits, there is pressure placed on locating and purchasing housing that is deemed “undervalued”, which often means housing that is affordable and hence where the most disadvantaged and low-income communities are located. Financialization also affects other sectors of the housing system, including single-family homes, retirement communities, and long-term care homes.

This trend worsened during the economic crisis caused by the COVID-19 pandemic. Real estate became a safe profit-making opportunity for large investors in a volatile market, further driving up prices and putting affordability at risk for those most in need.

How widespread is the issue

The research estimates that about one-third of all seniors’ housing in Canada has been financialized, along with 20-30 percent of purpose-built rental buildings. Financialization of purpose-built rental has expanded dramatically in Canada since the late 1990s, with an estimated 340,000 units in multi-residential rental buildings now owned by large financial firms, and an estimated 20-30 percent of Canada’s purpose-built rental housing now owned by institutional investors. The acquisition of purpose-built rental portfolios by institutional investors has accelerated in the wake of the COVID-19 pandemic, with rental housing identified as a safe investment during a period of economic instability. The experts warn that a lack of transparent ownership data prevents researchers and policy-makers from knowing the full extent of financialization of housing in Canada.

Research on financialization

The Office of the Federal Housing Advocate led a research project that brought together five researchers to examine the growing role of private equity and investment firms in the residential real estate market and long-term care in Canada.

The research demonstrates that the financialization of purpose-built rentals and long-term care have had significant impacts for tenants, seniors, workers, and communities. It also points to actions that governments at all levels can take to curb financialization and mitigate its impacts.

This research and engagement will help the Federal Housing Advocate to develop legislative and policy recommendations for government to implement better protections against the financialization of housing and its impacts on people, disadvantaged groups, and communities. Measures to address financialization must put human rights first.

The financialization of housing in Canada: A summary report for the Office of the Federal Housing Advocate by Martine August

This report serves to introduce and summarize the findings from a series of reports commissioned by the Office of the Federal Housing Advocate on the financialization of housing. It begins by considering the social value of housing and the emergence of the right to housing in international and Canadian law. It then defines financialization and maps the role of states in favouring financialization in the housing industry, as well as the investment strategies used by the financial industry. Financialization has played out differently with different types of housing, and so to understand the phenomenon as a whole, the report examines financialization of single-family homes, multi-family rentals, seniors’ housing, social housing, student housing, short-term rentals, and mobile home communities, as well as the financialization of mortgages. This analysis gives a basis to trace the impacts of financialization and develop a series of recommendations to address it. Finally, this summary report looks in turn at each of the other reports in the series, offering a brief summary of how they fit into the body of literature on the financialization of housing. The report: The financialization of housing in Canada: Project summary report
The financialization of seniors housing in Canada: A report for the Office of the Federal Housing Advocate by Jackie Brown

The financialization of seniors’ housing refers to the ownership and/or operation of long-term care homes and retirement residences by companies with a mandate to maximize returns for external shareholders. As of 2020, financialized companies owned approximately 33% of seniors’ housing in the country, including 42% of retirement units and 22% of long-term care beds. There is a well-documented pattern of inferior care at for-profit long-term care homes compared to public and non-profit homes, including fewer hours of direct care, lower staffing levels, and higher mortality and hospitalization rates. This report details the corporate strategies used by financialized companies to extract profits from the seniors’ housing sector, including maximizing government funding, debt-financed growth and expansion, sale-leaseback arrangements, economies of scale, and fee-for-service models. This report makes several recommendations to reduce the scope of financialization in seniors’ housing, focusing on federal transfers and standards, licensing, support for public and non-profit seniors’ housing, and investment in alternatives. Finally, the progressive realization of the right to adequate housing requires support for alternatives to retirement residences and long-term care homes to ensure seniors are not institutionalized against their wishes. The report: The financialization of seniors housing in Canada
The uneven racialized impacts of financialization: A report for the Office of the Federal Housing Advocate by Dr. Nemoy Lewis

The term “financialization” has significant utility in describing the finance-led housing accumulation that has transformed housing ecosystems in urban rental markets in Canada and beyond. Missing from the discourse, however, is a deeper understanding of the anti-Black nature of financialized landlords’ everyday business and management practices in Canada. The objective of this report is to provide research and evidence to better understand how financialization operates, its impacts on persons who are members of disadvantaged groups , and potential policy and regulatory solutions, particularly at the federal level. In the first section, the report discusses the evolution of financialization in a global context and its impact on racialized people and households who are economically disenfranchised. It then provides a general overview of the rise of financialized landlords, their investment and management practices, and anti-Black impacts, with a particular focus on the role of pension funds. Finally, it presents a case study of the former city of York in Toronto to illuminate the sociospatial impact of financialized landlords on Black renters, before concluding with some recommendations to re-establish housing as a social good. The report: The uneven racialized impacts of financialization
Housing financialization – the international landscape: A report for the Office of the Federal Housing Advocate by Manuel Gabarre

The international housing landscape is increasingly financialized, and this presents an urgent challenge to the realization of the human right to adequate housing. To better understand this phenomenon, this report traces its political and historical development from the Bretton Woods Accord through the Nixon Shock and into the current central bank-dominated environment. It looks at changes to the international mortgage regulatory framework since the Great Financial Crisis of 2008 and the impact on household debt levels. It details the main agents of financialization—such as shadow banking entities, sovereign wealth funds, and pension funds—and the various investment strategies they deploy: core, value-add and opportunistic. Finally, it analyzes how these international factors shape Canadian housing policy and how they impact the right to adequate housing, with a particular focus on the growing role of real estate investment trusts, or REITs. The report: Housing financialization: the international landscape
The financialization of multi-family rental housing in Canada: A report for the Office of the Federal Housing Advocate by Martine August

This report presents an overview of the financialization of rental housing in Canada. After describing the phenomenon of financialization in general terms, it considers the current state of financialization in Canada’s stock of rental housing by analyzing the policies that have catalyzed it. It interrogates the evolving role of financial firms in the Canadian housing market, with a particular focus on the period during and following the COVID-19 pandemic, how these firms respond to the presence or absence of rent controls, and what their relationship is to the construction of new housing. This is followed by a discussion of the business strategies used by financial firms in the rental housing market as they seek to reduce costs and increase revenues, in particular the practice of “value-add” renovations, and of the impacts of this process on tenants and communities. It concludes with a series of recommendations to track the impacts of financialization, definancialize the rental market, end subsidies to financialized landlords, regulate financial firms, and enact meaningful rent controls and tenant protections. The report: The financialization of multi-family rental housing in Canada
The impact of financialization on tenants – findings from a national survey of ACORN members: A report for the Office of the Federal Housing Advocate by ACORN Canada

ACORN Canada worked with the Office of the Federal Housing Advocate and researchers to better understand how financialization affects tenants, especially those tenants who are facing disproportionate barriers to housing. This report includes a compilation of ACORN’s existing research focused on tenants’ rights, findings from a national survey conducted by ACORN of more than 600 tenant households, and in-depth conversations with select members and community contacts to help understand tenants’ lived experiences. The findings of the survey (N=606) clearly illustrate a larger trend, which is that financialized landlords perform worst on almost all counts when it comes to affordable and habitable homes compared to other landlords—including large (private/family-owned/corporate); small (private/family-owned); and non-profit, co-op and social housing. In addition to the quantitative survey, it was critical to understand the lived experiences of tenants in financialized housing. Central to a human rights-based approach to housing is to learn from the voices of tenants whose rights are being violated. The report closes with a list of recommendations for federal, provincial/territorial, and municipal governments, developed in consultation with ACORN members, that aim to address the problems associated with financialized rental housing and move towards meeting the human right to housing for all tenants. The report: The Impact of financialization on tenants

Make a submission on financialization

If you have experienced financialization – including high prices, rent increases, added fees, renovictions, or companies buying up homes – we want to hear from you.

Make a submission to the Federal Housing Advocate