The Financialization of Housing: Multi-Family Rentals in Edmonton

The Financialization of Housing: Multi-Family Rentals in Edmonton

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?

The key to understanding and effectively addressing our housing crisis is to take a human rights approach (UNHRC 2019).

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:

How Financialized is Edmonton’s Primary Rental Market?

Based on the work of the AHSL, we found that 37,220 primary rental or multi-family suites in Edmonton were financialized – out of the total rental universe of 78,301 (CMHC).
Estimates as of 2022

CMHC’s Housing Market Information Portal is a great resource for housing data by location i.e. Edmonton CMA, Edmonton CY (City)

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.


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

Using CMHC’s historical average rents for the city of Edmonton, rental wages were selected for studio apartments, 1 bedroom apartments, 2 bedroom apartments, and row houses with 3 or more bedrooms – which combined represented 91-93% of all primary rentals. Rental wage was calculated by multiplying the average monthly value by 12, and multiplying that value by 3.4 – generating a minimum yearly income required to afford average rent (paying less than 30% of income).

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.

This is an issue that has caught the attention of the Federal Government.

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.

Learn more about the financialization of housing and what this means for Edmonton:

The National Housing Advocate also has excellent resources.

The Financialization of Housing: What Is It?

The Financialization of Housing: What Is It?

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?

The key to understanding and effectively addressing our housing crisis is to take a human rights approach (UNHRC 2019).

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:

  • 1 in 3 households (130,885, or 33.0%)
    • Close to 1 in 2 tenant households (68,490 or 47.5%)
    • 1 in 4 owner households (62,400 or 24.7%)
Click on the image above to view what households experiencing unacceptable.housing across Edmonton looks like (credit: Mountain Math).

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).”

Click on the chart above to enlarge.
Note: Real Estate accounts for the entire right half of the above chart – dark green is commercial real estate ($32.6 tn), dark blue is agricultural land ($35.4 tn), and light blue is residential real estate ($258.5 tn).
Global GDP is dark grey ($84.8 tn).
Source: Savills Research (2020, p.1)

In 2020, the global value of real estate was estimated to be $326.5 trillion – 79% residential real estate ($258.5 trillion).

Real estate was also estimated to be worth 4 times the value of Global GDP.

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:

  • local housing needs, local incomes and local economies
  • “its social function of providing a place to live in security and dignity” (UNHRC 2017, p.3)

Which, in effect, fundamentally “undermines the realization of housing as a human right” (UNHRC 2017, p.3).

So, instead of building homes that meet the adequate housing needs of individuals, households and communities, homes are built for investors, or financialized entities.

Such as:

  • Real Estate Investment Trusts (REITs)
    • i.e. Boardwalk
  • Publicly Traded Real Estate Operating Companies (REOC)
    • i.e. Mainstreet
  • Private Equity Firms
    • i.e. Hungerford Properties
  • Asset Managers
    • i.e. Petwin Properties
  • Hedge Funds
    • i.e. Blackstone
  • Sovereign Wealth Funds
    • i.e. Alberta Heritage Savings Trust Fund
  • Institutions
    • Pension Funds
      • i.e. Canada Pension Plan (Canada Pension Plan Investment Board)
    • Insurance Companies
      • i.e. The Canada Life Assurance Company (Great-West Life Realty Advisors)
    • Endowment Funds
      • i.e. Alberta Investment Management Corporation
        NOTE: AIMCo manages Pensions, Sovereign Wealth Funds as well as Endowments

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).

Learn more about the financialization of housing and what this means for Edmonton:

The National Housing Advocate also has excellent resources.

The Affordability of Rental Apartments and Townhouses in Edmonton in 2020

The Affordability of Rental Apartments and Townhouses in Edmonton in 2020

The Canadian Mortgage and Housing Corporation released their annual rental market report a few months ago. The report analyzes market trends in large population centres in Canada for the year 2020. Included in the tables that accompanied the release of the report is data on the number of apartments and townhouses in the primary rental market by household income (organized into quintiles). Some of the data has to be interpreted with caution; however, it does provide us with a starting point for understanding the affordability challenges that many Edmonton renters face. Here is a version of the table:

The generally accepted affordability threshold for housing costs is no more than 30% of your monthly income. When it comes to the rental stock reported on in this table, an estimated 83% of the rental stock is unaffordable to those households living on less than $36,000/year. Put another way, an estimated 17% of the rental stock in the primary rental market is affordable to household living on less than $36,000/year. How many households fall into this category today? We will have to wait for the upcoming census data to answer this question.

In the absence of this data we can use other proxies. For example, households that rely solely on income support from Alberta Works and Assured Income for the Severely Handicapped (AISH) receive less than $36,000/year. In December 2020, the Alberta Works and AISH caseloads reported for Edmonton were 23,772 and 24,262 respectively. When it comes to affordable accommodation, the housing needs of this population are likely not being met by the private rental market, a sector that is supplying less than 12,000 units for rent under $900/month.

  • Joshua Evans, Research Lead, Affordable Housing Solutions Lab

Edmonton Rental Market – Year in Review (2020)

Edmonton Rental Market – Year in Review (2020)

Image Source: IQRemix; Link: https://www.flickr.com/photos/iqremix/42276507674/in/photostream/

The Canadian Mortgage and Housing Corporation released their annual rental market report a few weeks ago. The report analyzes market trends in large population centres in Canada for the year 2020.

Here are three highlights from the report for metro Edmonton:

  • Vacancy goes up, average rent stays the same

The vacancy rate in the primary rental sector reached levels (7.2%) not seen since 1995. This vacancy rate equates to roughly 5,188 units. While vacancy reached levels unseen in 25 years, the average rental cost remained roughly the same at $1,153.

  • Supply increases, with addition of higher rent units

The supply of rental units increased by 3.1% for a total of 72,061 units. The average rent for the new units added to the rental stock was 31.2% higher ($1,513) than the average rent of the purpose-built rental stock as whole.

  • Rental market still remains unaffordable for households in deep poverty

Only 15.1% of the rental stock in metro Edmonton is affordable to renter households with low incomes (households with annual income of less than $36K). Housing affordability stress is likely significant among households with children in this income category as only 2.5% of two-bedrooms and none of 3+ bedrooms are affordable to them.

Take-away: Affordability challenges persist alongside an increase in supply.

Joshua Evans, Affordable Housing Solutions Lab