Row of house with passerby.
In 2015, Toronto Community Housing and Daniels Corporation began the total redevelopment of Regent Park in Toronto displacing many original residents. Credit: Ryan Raz / Flickr Credit: Ryan Raz / Flickr

While the budget announcement loomed last week, two incidents relating to the housing crisis replayed in my mind. I heard stories on separate occasions from young people who couldn’t afford buying a house.

The first was one of a family friend explained that her and her fiancé, both university educated with stable jobs, have been unsuccessful at buying a house. They lost one bid after another in the superheated Ottawa housing market. I gleaned another story while at the pharmacy where one employee who described herself and her fiancé as having good jobs, shared her frustration with a colleague as they haven’t won any bidding wars to secure a house.

Experts’ warnings coming true

These somewhat random anecdotes confirm what many housing experts warned for years: the financialization of the housing market. In an op-ed in the Globe and Mail, Emeritus Professor John Belec told Canadians to “prepare to hear much more about the financialization of housing in 2022.”

He was perfectly right. The 2022 federal budget is almost entirely built around housing.

When I was in business school, our professors kept reminding us that everything in the financial market has to do with supply and demand. Price is the magical intersection between these two curves. When the supply meets the demand, the price is ‘right’.

Basic stuff, isn’t?

This simple financial model easily applies to stock or commodity prices like wheat, oil, gold, or even to goods like refrigerators and cars.

But what about houses? Can we consider houses commodities? Can we simply increase the supply in order the reduce the prices? Or rely on bringing the demand down to avoid the market overheating?

Is housing a commodity or a basic right

For decades now, our governments treated houses like commodities, which increased the ‘commodification of housing’ or the ‘financialization of housing.’ This is fuelling the crisis and it’s spreading across many cities in Canada.

The financialization of housing, according to the United Nations Human Rights Commission, “occurs when housing is treated as a commodity—a vehicle for wealth and investment—rather than a social good.”

It took decades of grassroots advocacy to introduce the National Housing Strategy, later embodied in the National Housing Strategy Act, passed in 2019. That legislation brought Canada a step closer to considering housing a human right as defined by the United Nations. However, we are not there yet, and many activists and experts are still advocating for more.

In last week’s budget, the federal government announced it will tackle the housing crisis, but in reality, it is only scraping the surface of the problem. Instead of strong measures to regulate the housing market and protect it from speculators and financial actors, the federal budget mainly introduced initiatives to increase the supply or reduce the demands. This approach still treats the housing market as a commodity and not as a human right that must be protected.

Weak solutions for a tough problem

For instance, the newly introduced measure about providing tax breaks to new buyers is a market-oriented solution. Tax-breaks may help those with high incomes who are already close to buying a property but won’t end the financialization of housing. It can perhaps give a little push to some potential buyers, but it won’t help people who can’t even begin to save for a house.

It also won’t stop wealthy companies from buying up residential buildings and including them in their investment portfolio. Overnight, your right to housing can become a share in a range of securities owned by a company that is traded in the Toronto Stock Exchange. This is exactly what Real Estate Investment Trusts (REIT) do, all while avoiding corporate taxes.

What does the 2022 federal budget propose to stop these REITs from continuing their exploitation of Canadians?

Just a vague promise: “this will include the examination of a number of options and tools, including potential changes to the tax treatment of large corporate players that invest in residential real estate.”

Another measure found in the newly released federal budget, is to pay 500 dollars a month to Canadian families struggling to pay rent. While this is a quick remedy to help with an immediate problem, it is temporary and can’t be sustained.

What is even more disturbing is that the federal government remains silent about reno-victions or demovictions. Renters are evicted out of their apartments in order for landlords (usually big corporations) to conduct ‘renovations’ or demolish and rebuild the place. The same landlords later increase the rent to unaffordable levels. There is still no concerted agreement between municipal, provincial and federal governments to tackle this increasing phenomenon.

Another measure is a two-year ban on foreigners and non-Canadians from buying residential real estate in Canada. I find this measure quite populist and racist. Putting the blame on foreigners when things are not working well at home is a classic recipe to distract Canadians from the real culprits. In 2015, a survey conducted by the Canadian Mortgage and House Corporation revealed that about 2.4 per cent of Toronto condos and 2.3 per cent of condos in Vancouver were owned by overseas investors. Perpetuating this myth about so-called foreign ownership won’t help solve the housing crisis.

Glimmer of hope in co-op housing investments

Finally, it is worth mentioning that the latest budget included two measures that, if increased and strengthened in the future, will mean more affordable housing available for Canadians who can’t buy houses and may instead live in co-operatives housing with affordable rent and a sense of community.

The reallocation of “$500 million of funding to launch a new Co-operative Housing development Program aimed at expanding co-op housing in Canada” and the additional “$1 billion in loans to be reallocated from the Rental Construction Financing Initiative to support co-op housing projects” are commendable decisions.

These type of strong policies will show the federal government’s commitment to its critical role as provider of affordable housing across the country.

If this housing crisis taught us anything, it is that free market dynamics do not apply to every aspect of our lives, especially when it comes to the human right of safe and secure housing.

In 2008, during the financial crisis of subprime mortgages in the U.S., Canada boasted about its heavily regulated financial sectors. But this hasn’t remained unscathed.

The financialization of the housing market threatens to impoverish the working class and eliminate their purchasing power. It threatens the elusive ideal of the middle class, at the heart of the last federal campaign, and makes home ownership an inaccessible dream for most.

Monia Mazigh

Monia Mazigh

Monia Mazigh was born and raised in Tunisia and immigrated to Canada in 1991. Mazigh was catapulted onto the public stage in 2002 when her husband, Maher Arar, was deported to Syria where he was tortured...