^{Welcome back to Five Days of Financialization. This is the Fifth of Five blogs the AHSL has shared over the past Five days about the Financialization of Housing and what this means for Edmonton.}

Like all communities across Canada, Edmonton has a housing problem. And despite many best efforts, this crisis only continues to worsen.

How can we best understand and fix this issue of (in)access to adequate housing?

One way we can apply a rights based approach is by identifying major trends and emerging challenges that negatively impact housing rights (UNHRC 2019, p 20).

One major trend that has been identified as a driver of our prolonged housing crisis, including increasingly unacceptable housing, is the financialization of housing.

In this series we have covered:

• What Is the Financialization of Housing
• What types of Financialization Exist
• The Role of Transparency (or lack thereof)
• The Advantages in Alberta, as well as in Edmonton, for financialized investors

How Financialized is Edmonton’s Primary Rental Market?

Nationwide it is thought that 20% of primary purpose built rental suites are owned by financialized entities (p.iii).

In the City of Edmonton, as of 2022, the AHSL estimates that 48% of all purpose built rental suites are owned by financialized landlords – which could be up to more than double the estimated national average!
^{Click on the chart below to view}

^{Note: National estimates of financialized multi-family housing range between 20 – 30%. And details on the AHSL’s methodology can be viewed here.}

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We know that with the financialization of multi-family housing comes less affordable rents (August 2022, ACORN 2022). Edmonton is no different.

Between 2006 and 2016 alone Edmonton lost over 50,000 ‘more affordable market’ rental suites with rents less than $999/month (City & CMA). Looking at Edmonton and the surrounding area:

• In 2006 81% of all rental suites were less than $999/month
• In 2016 27% of all rental suites were less than $999/month

The figure below shows average rental wage versus the percentage of multi-family suites owned by financialized landlords in the city of Edmonton between 1990 – 2022:
^{Click on the figure to expand}

We can see that rises in rental wages seem to coincide with the increase of the amount of financialized multi-family housing. There is also a widening of cost in between each type of rental.

Between 1997 and 2008 rental wage effectively doubled. While Edmonton is often lauded for being affordable, this is not what the data tells us, and this is not the experience of over 68,000 tenant households in Edmonton living in unacceptable housing. And this is especially not the case for women.

For decades, Alberta has maintained the title of the province with the largest gender wage gap across Canada.

If we look at rental wage compared to men’s and women’s average market incomes by age it is clear that women have far less access to housing choices then men as women’s wages have not kept pace with escalating housing costs. This is especially important as this is clearly a barrier for women exiting relationships – further intensified when seeking housing alternatives with children and searching for rental suites with 2 or more bedrooms.

The three graphs below show rental wage for men and women compared with average market income by age. The second chart has the same y axis to show how big the gender wage gap is in Edmonton. The third chart offers a closer look at rental wage and women’s market income.
^{Click on each graph below to expand}

^{Data source: Statistics Canada. Table 11-10-0239-01  Income of individuals by age group, sex and income source, Canada, provinces and selected census metropolitan areas. Income disaggregated by sex and age was not available for census subdivision (city) so data for Census Metropolitan Area (CMA – Edmonton and surrounding area) was used. Rental wage was calculated using average city rents by year (CMHC).}

Realities are even more dire when we look at social assistance rates compared with increasing rental wages:
^{Click on each graph below to expand}

Review panel on the financialization of purpose-built rental housing

The financialization of housing is a key structural driver of our housing crisis in Edmonton.

This is a phenomenon that is largely hidden, secretive, incredibly complex, tedious, confusing, and difficult to understand. This can make it incredibly hard to even begin to identify what is actually going on with housing in our community. In the absence of good information narratives can emerge that are in stark contrast to the realities experienced by households trying to access adequate housing. And takes us even further away from understanding the issues at the heart of our housing crisis, much less solving them.

The National Housing Council just launched its written hearing for the review panel examining the financialization of purpose-built rental housing. The review panel is a new mechanism for rights-based participation – meaning this was intended and created for tenants and households who are most impacted by the financialization of multi-family housing.

Individuals and organizations are encouraged to send in a written submission through mail or email by June 23, 2023.

More details can be found here.

^{How can we understand the financialization of housing? What does it mean? And can this help us make sense of our current housing crisis?}

Like all communities across Canada, Edmonton has a housing problem. And despite many best efforts, this crisis only continues to worsen.

How can we best understand and fix this issue of (in)access to adequate housing?

One way we can apply a rights based approach is by identifying major trends and emerging challenges that negatively impact housing rights (UNHRC 2019, p 20).

Emerging Challenges

A growing number of households are unable to access housing that is affordable, in a good state of repair and with enough bedrooms (i.e. tenants).

Unacceptable Housing is housing that is directly unaffordable (over 30% of household income towards housing costs) or indirectly unaffordable (living in homes that are ‘more affordable’ because major repairs are needed and/or have fewer bedrooms than what the household needs).

Which in the City of Edmonton (2021) includes:

Major Trends

One key trend that has been identified as a driver of unacceptable housing, and our prolonged housing crisis, is the
financialization of housing.

What Is the Financialization of Housing?

The financialization of housing is the change from understanding housing as a basic need necessary for survival to housing as an item used for investment.

In other words, “when housing is treated as a commodity—a vehicle for wealth and investment—rather than a social good” (OHCHR 2021).

The beginnings of the financialization of housing in Canada can be traced back to the 1980s, alongside the rise of neoliberalism (Walks 2014, Walks & Simone 2016).

However the financialization of housing has really ramped up over the last 20 years (UNHRC 2017, August 2022).

What does this mean?

Seeking other ways to generate wealth outside of the stock markets, protected from downturns (especially after the financial crisis of 2008), investors have made ‘housing’ that alternative.

Consequently, “…massive amounts of global capital have been invested in housing as a commodity, as security for financial instruments that are traded on global markets, and as a means of accumulating wealth (UNHRC 2017, p.1).”

Globalized markets are not aware of housing as a keystone for individual, household, neighbourhood and community well-being.

As a result of financialization, housing has become detached from:

Key Takeaway

The financialization of housing has created a totally different relationship to housing than people have had in the past, where local housing is not owned by local people in a local community.

Instead, housing is owned by a number of people who buy shares in a company, or by investors with access to huge sums of money looking for a surefire way to get a big return on their investment. Including banks, governments, the wealthiest 0.01%, insurance companies, hedge funds, mutual funds, and even pension funds.

Investors have taken housing as we (still) know it, as a jumping off point for the creation of other items that we cannot physically see, and are worth much more than the value of the home itself (i.e. debt, collecting interest).