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So THAT’s why we can’t find affordable homes!

May 3, 2019

Did everyone get to see PUSH, the new film screened to sell-out audiences at this year’s Hot Docs Festival? Or to hear UN Special Rapporteur Leilani Farha speak at last Tuesday’s Planning and Housing Committee?

Ms. Farha offers a welcome alternative to the thesis that a housing crisis can be solved simply by building more homes, and that the government’s job is to get out of the way.

I think there may have been a time when increased supply alone would automatically lead to lower costs. But as Ms. Farha eloquently argues, for cities like Toronto, increasing supply is not enough. Instead, she attributes the escalation of housing costs to the financialization of housing — the structural changes in housing, financial markets and global investment that treat housing as a commodity instead of a home.

According to Farha, financialization has its roots in the de-regulation of housing markets, and particularly, to the rise of mortgage-backed securities. Until the 1980s, most housing was financed by homeowners or landlords borrowing money from a local bank. Mortgage-backed securities brought new investors into the market on a global scale.

And then came the 2008 crash. But instead of introducing reforms to curtail unbridled financialization, the crash fueled global investment as players like Blackstone spent billions purchasing distressed assets. Today, the total value of global real estate is $217 trillion US, with residential real estate comprising 75 per cent of the total. That’s more than the GDP of all countries combined.

When your home is someone else’s safety deposit box

In New York, San Francisco, Hong Kong, London, Sydney, Vancouver and increasingly, Toronto, we are seeing the impact of “housing as safety deposit boxes.”

In the past, most of Toronto’s rental buildings were family-run businesses. They were a mixed bag, with some good landlords, and some not. But they were all united in a business model that depended on attracting and retaining tenants whose rents would cover the building’s costs plus a bit more.

International investors do not rely on keeping tenants happy.  They are interested in quick profits. So Akelius brags about raising rents in “cities with soul,” and then selling the properties when rents peak. Farha shows us districts in London, Stockholm and Melbourne where internationally-owned buildings sit vacant while growing populations are pushed to outer suburbs. She also shows us how these holdings become vehicles for money laundering.

Farha’s thesis helps explain what we are beginning to see in Toronto. Construction cranes dot the landscape, but the benchmark price for a condo apartment last month was $780,839, up 5.1% over the past 12 months. Rents have become completely unhinged from incomes, and there is no evidence the money is going back into the buildings. Instead, money is sucked out of the community as profits disappear to who knows where, and the rents gobble up tenants’ spending power.

Farha have given all of us much food for thought. For me, there have been two questions I’d love to discuss with others.

How to we assert humanity?

Farha reminds us that every human being is a rights-holder. One of those rights is the right to an adequate home we can afford. It is simply a matter of human dignity, and it is hard to retain that dignity when you are on the street or perpetually frightened you will end up there. How do we re-assert human rights where power has shifted to corporations without faces?

The Federal Government is taking the lead in introducing legislation that will entrench housing rights in its National Housing Strategy Act. The legislation would benefit from some modest amendments, but it’s an important first step. Toronto has an opportunity to follow suit this year by making human rights the framework for its upcoming HousingTO 2020-2030 Action Plan.

To ensure these rights are not just talk, we need to embed human rights into all city decisions. That might mean weighing the right to an affordable home more heavily in the balance than the right to a streetscape without two front doors on the same house. It might mean setting policy that would weigh the rights of tenants at 28 – 30 Langley — and the hundreds of tenants like them — to stay in their home over the rights of a real estate consortium to turn a tidy profit.

How do we push back?

How did David beat Goliath? It was a strategically targetted shot. So what is the strategy that would allow us to reclaim an affordable Toronto?

Farha describes housing financialization as an extractive industry. Investors extract whatever value they can get out of the properties by raising rents, and then sell them at an inflated price. So how do we turn this into an unsuccessful business model, and instead reward those who want to be proper landlords?

Regulation and taxation are the usual strategies for shifting investment, and that calls for more government, not less. If it weren’t for Toronto’s Rental Housing Demolition and Conversion controls, I bet Toronto’s rental housing stock would have been decimated by conversions to condos. BC has had some success in cooling the ownership market with a 20% foreign-buyers tax, speculation tax and vacancy tax. And Parkdale Neighbourhood Land Trust has buoyed our spirits when it took a 15-room rooming house out of the market so it would stay affordable forever. 

Farha has spear-headed an initiative called The Shift that calls governments to progressively advance the right to housing. But I note that the governments drawn to the cause are municipalities: Barcelona, Berlin, New York, Stockholm, Seoul. That’s not a surprise: mayors and councils are seeing the crisis first-hand. But in Canada, the regulatory and taxation powers of cities are limited and, as we’ve seen this year, can readily be overpowered by the Province. That doesn’t mean Toronto shouldn’t do what it can — only that we also need to keep the pressure on the Province and Feds to step up.

What one person can do

PUSH was a call to collective action. But is also offered a heartening example in the person of Leilani Farha herself. She did not start out as a financial expert. She does not receive a salary. She just started to ask questions and refused to give up. And as she investigated, she began to pull together a global pattern that enables us to see our housing crisis through new eyes.

My own work, and I suspect other advocates feel this way, often feels rather peripheral. I see gains around the edges, but nothing that really shifts what has become Toronto’s housing crisis. But I ended this week feeling encouraged. I may be one person. But I am also part of the push back. And you can be too.

More on this topic

PUSH. Last screening is Saturday, May 4, 9:15 pm. at HotDocs

Leilani Farha speaks at Toronto’s Planning and Housing Committee, April 30, 2019

Affordable Housing: Lessons for a New Decade of Housing Policy in Toronto, May 11, 10:30 – 5 pm. A great line-up of speakers, hosted by UofT’s School of Cities

And let’s all talk more at my Jane’s Walk, Priced Out: Making Toronto affordable for all, this Sunday, May 5th, 1 – 3 pm, starting at Roden Public School, 151 Hiawatha Road, west of Coxwell, north of Gerrard.

One Comment leave one →
  1. Jane Roberts permalink
    May 5, 2019 8:09 am

    How can I get to see “PUSH” if I missed the Hoc Docs screening?

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