Conor here: In the following video (transcript below), Paul Jay explores how Wall Street firms, Real Estate Investment Trusts, and private equity giants treating homes as hedge funds has put housing as a public good in the rearview mirror and is leading to displacement and homelessness as rents increase evermore.
He argues that a solution is to make housing public infrastructure—like schools or libraries.And just the periodic reminder that even just providing housing for all America’s homeless would cost roughly one percent of the Pentagon’s trillion-dollar budget or even a fraction of what the US sends to Israel annually, but that might upset the housing market and give the unwashed masses ideas. And even were that to happen, it wouldn’t halt the endless stream of people losing housing, which require solutions like the one Jay is offering.
By Paul Jay. Originally published at TheAnalysis.news.
Paul Jay
Hi, I’m Paul Jay, and welcome to theAnalysis.news. This is an essay I’ve been working on, which is about how big banks in the financial sector have made rental housing across North America so unaffordable. Be back in just a second.
Homes or Assets: Why Housing has Become a Playground for Global Capital
Across Canada and the United States, housing is not treated as a basic human need. It has been reimagined as an investment vehicle, a speculative asset class, and a profit machine for institutional investors. This transformation, what housing experts call the financialization of housing, sits at the heart of the affordability crisis gripping cities across North America.
From Toronto to Atlanta, apartment towers and suburban homes are being snapped up, not by families, but by real estate investment trusts, hedge funds, and private equity firms. These financial landlords rarely set foot in the properties they own. For them, rent is revenue, eviction is a business strategy, and maintenance is a cost to be minimized.
The fallout is clear: skyrocketing rents, deteriorating housing quality, and communities hollowed out for the sake of investor returns.
The Rise of Corporate Landlords
After the 2008 financial crisis, Wall Street found its next gold mine in housing. With interest rates near zero and stock markets volatile, investors poured billions into residential real estate. In the U.S., major players like Blackstone began buying foreclosed single-family homes by the thousands, bundling them into securities and renting them out through subsidiaries like Invitation Homes.
Since 2010, institutional investors have acquired over 80,000 homes, though they still own only about 3% of the total single-family rental market nationwide. But in some cities, their presence is far more concentrated.
In Atlanta, institutional investors now control an estimated 27% of single-family rentals. That’s based on data from the Urban Institute.
In Canada, the story centers on apartment buildings. REITs, R-E-I-T-S, and other institutional players now own roughly 25 to 30% of the country’s purpose-built rental stock, according to the Canadian Mortgage and Housing Corporation. CapReit, that’s C-A-P-R-E-I-T, alone manages around 64,300 suites nationwide. That’s a number from 2023, so we can expect it’s larger now.
These landlords run their operations like corporate balance sheets. Rents are algorithmically organized, repairs are deferred to cut costs, and tenants are churned to maximize profits. Ontario’s policy of uncapped rent increases between tenancies actively encourages this cycle of displacement.
The Human Cost
The wave of financialization isn’t just abstract economics. It’s shaping lives. In Canada, 22.1% of renter households are in core housing need, meaning they spend more than 30% of their income on shelter or live in overcrowded or substandard housing. That’s the CMHC number from 2022. Again, likely worse now.
In the U.S., nearly 49% of renter households are cost-burdened, with about 12 million paying over half their income on housing. Again, a 2023 statistic. Highly unlikely to be better, more likely to be worse.
Buildings owned by REITs or private equity firms are more likely to have pest infestations, broken elevators, and mold because maintenance is treated as an expense to suppress. Meanwhile, renovictions, where landlords evict tenants under the guise of renovations, only to relist the units at higher rents, have become a favorite tactic for driving out lower-income tenants.
Public Housing: A Neglected Solution
It wasn’t always like this. For much of the 20th century, Canada and the U.S. built public and non-market housing on a scale large enough to shape housing markets to some extent. In the U.S., the 1937 Housing Act created a foundation for affordable housing, which expanded dramatically after World War II. Public housing peaked at 1.4 million units in the 1990s before Reagan-era budget cuts and programs like Hope VI gutted the system. Today, only about 970,000 units remain, excluding another 2.2 million households relying on vouchers to supplement private market rents.
Canada’s federal government funded significant social housing from the 1950s through the early 1990s, when Ottawa withdrew and left provinces to pick up the slack. Now, social housing represents just 3.5% of Canada’s total housing stock, compared with OECD averages of 7%, and far behind countries like Austria at 23% and the Netherlands at 30%. Those numbers are from an OECD housing database in 2022. Where public housing was well-funded and well-managed, it worked. It works in Europe, and there’s no reason it can’t work here. Where public housing is neglected and stigmatized, it fails, opening the door to today’s speculative profit-driven model.
Public Financing: A Path Forward
Other countries demonstrate alternatives. Germany’s Sparkassen system of municipal banks funds affordable housing while keeping profits in the community. Norway’s Kommunalbanken supports low-cost housing and infrastructure. Even in the U.S., the century-old publicly-owned bank of North Dakota proves public banks can finance housing projects the private sector ignores. By providing low-interest loans for nonprofit, cooperative, and public housing, public banks can shift housing finance away from speculation.
Here’s a practical agenda for housing justice. To reclaim housing as a human right, both countries must embrace bold structural reforms. This can be done at the city level. In the U.S., of course, state governments need to participate. In Canada, provincial governments. But here’s what we need to demand:
– Robust rent protections, end vacancy decontrol, limit rent increases to inflation, and outlaw renovictions.
– Ownership limits.
– Cap institutional ownership per market and tax speculative vacant units.
– Massive non-market housing investment.
– Build new public, nonprofit, and cooperative housing.
– Retrofit existing stock.
– Public finance mechanisms.
– Establish municipal, provincial, and state public banks to fund affordable housing at scale.
– Tenant empowerment.
– Expand tenant unions, community land trusts, and resident-controlled ownership models.
The Case for Full Public Ownership
But even these measures are just a start. While a minimum objective should be to bring Canada and the U.S. at least up to the levels of Europe’s most advanced models, where countries like Austria and the Netherlands provide 20 to 30% of housing as social or cooperative stock, even that would fall short of true equity. To address the systemic failures of financialized housing, we must think bigger.
All large-scale rental housing should eventually be publicly owned and managed. Small family homes and modest private investments can coexist. But the era of corporate landlords treating entire apartment blocks as speculative assets must end. A system where large rental properties are treated as public infrastructure, like schools, libraries, or transit systems, would ensure housing stability and affordability over generations. It’s the only way to end the extractive business models that have gutted communities for decades.
Homes Before Hedge Funds
The financialization of housing has enriched a small class of investors while impoverishing millions of renters. It’s not inevitable. It’s the result of decades of policy choices. It’s the result of the financialization of our whole economy. The power of big banks and the financial sector has never been greater, the concentration of ownership has never been greater, and the concentration of political power has never been greater. But it can be reversed.
The question isn’t whether Canada and the U.S. can afford to build public housing. The question is, how much longer can we afford the alternative? Housing is a fundamental human right, not just another commodity.
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Framing social problems as rights is looking through the wrong end of the telescope. Social ‘deficits’ must be thought of in terms of duties, responsibilities and obligations. This ONLY way to build social ‘capital.’
Yours is one of the more interesting thoughts I’ve seen. Indeed, the area of duties, responsibilities, and obligations is rarely discussed. The usual statement I see in this regard is a complaint about taxes.
The slum lord has been corporatized and financialized. No city feels the pain of this more than New York City. Mamdani’s electoral chances are terrifying to the lords of Wall Street, whose excessive profits depend on them being able to extract vast amounts of economic rent from the populous. I’m with Keynes. These rentiers need to be euthanized. What a great thing it would be for Mamdani to win and take down these feudal lords. If it happens there, in the capital city of capitalism, it can happen anywhere…
“The slum lord has been corporatized and financialized. No city feels the pain of this more than New York City.”
I am aware that rents in NYC are totally out-of-hand but I am afraid that although probably financialized the slum lords in NYC may not be as corporatized just yet as elsewhere:
“A quarter of lawmakers in Albany are landlords. Almost none of them are covered by the most significant tenant protection law in years.” May 13, 2024
https://nysfocus.com/2024/05/13/good-cause-eviction-landlord-legislators
“The law[good cause eviction] only applies in New York City, though towns and cities elsewhere can vote to opt in. It also exempts new housing for 30 years after it opens and landlords who own fewer than 10 units. The carve-outs mean that nearly three quarters of the 1.1 million market-rate rental homes in New York city will not be covered by the law….”
“I think that we missed the mark on helping a majority of New Yorkers,” said Pamela Hunter, the Assembly sponsor of an original, broader version of good cause eviction.”
“Many legislators stand to benefit from the exemptions. Fifty-four lawmakers, representing a quarter of the legislature, own homes in New York other than their primary residences”
As bad as the rent situation is in NYC, I believe corporate landlords are even more rapacious than most small real estate investors.
You say “I’m with Keynes. These rentiers need to be euthanized.” I really don’t recall Keynes suggesting anything like this, nor do I believe is likely to be part of Mamdani’s program to “take dow these feudal lords.”
Happy Bastille Day!
During our 2015 Danube river boat vacation we went on the “Communist tour” in Bratislava. They showed us the gray, small and barren public housing guaranteed by Communism. Also some interviews of people from both sides. The rich had property stolen by the state. In contrast to the relatively normal, varied and colorful free market housing. For the less rich HC was guaranteed. I don’t know the result there.
I would suggest you visit more commie cities to disabuse yourself of the idea that all public housing was gray, small, and barren.
Also, even if some are gray and small, and barren, the infrastructure is there and refurbishing and greening can take place.
But what is a plague for all these places is that now everyone wants a car, in very dense compact urban places, and there is not enogh parking space, but plenty of public transit.
Can someone please tell me if all or most Americans, Residents of the USA to be more precise, conflate communism with socialism? Pretty sure Austria, Netherlands and Singapore were never communist…
All or most Americans are subjected to “free market” propaganda from cradle to grave, 24-7.
You went on a Disney cruise, and mistook if for a history lesson. Reminds me of guys that think the strippers like them. ;)
Vienna and Singapore also demonstrate the value of public housing investment.
Though not mentioned in Jay’s essay, the lack of public housing investment over the past 40 years is also behind the rise of the blight of homelessness.
How is it that we find ourselves beset once more by Depression era levels of “hobos” and in a capital allocation regime which wouldn’t be out of place in a Jane Austen novel?
It’s almost as if Henry George has been forgotten altogether … 😑
“As if” ? Over the years, I’ve mentioned Henry George to quite a number of people. Outside of my own family, I’ve only encountered one or two who had ever heard of him. (My great-grandfather, grandmother and mother, all professional musicians, were all life-long Georgists as well).
It’s all part of the rentier economy where the philosophy behind it is that people should not be allowed to own things – only corporations. And that these corporations will rent out what they decide on. ‘You will own nothing’ was not a cute story but a promise. You will rent your homes, rent your cars, rent your appliances and anything else that can be rented out and turned into an income stream by some corporation. Taken to its ultimate conclusion down the track, I would not be surprised if you could rent partners as well one day on an annual contract. Tell me how that under capitalism that this will never, ever happen.
‘People not being allowed to own things’ also ‘explains’ why corporate lobbyists are so opposed to ‘right to repair legislation’ and why corporations insist that only they have the right to repair whatever to keep warranties valid. They also ensure that no ‘markets’ can develop for replacement parts they could provide, but won’t provide.
In the end, capitalism ends with corporations owning and people effectively ‘renting’ what they purchase, unable to fix what they exchanged their money and time to buy. Ownership is no longer the prerogative of buyers but of the ‘makers’.
Thanks for this, and if I can say so, more please, because I think this is a critically important issue, perhaps the issue of our times. Why? Because two generations, millennials and Gen Z are being systematically impoverished by unaffordable housing. It can’t go on for long without blowback, mark my words, and walking the streets of my mid-sized Canadian city in the early-morning hours I see the signs: Homelessness, drug use, smashed windows and other forms of vandalism.
I might be over-simplifying here but I blame central banks the world over (because it is not just a North American problem) solely for this terrible injustice. Fifteen years of unprecedented low interest rates brought all sorts of predators into the real estate market who, having access to large loans at corporate-friendly rates, promptly bought up everything in sight to let out at exorbitant rents or to “condo-ize”. Gone, the mom-and-pop rental buildings of just two decades ago.
As Yves says, it’s not a lack of housing, it’s a lack of *affordable* housing. And, in my opinion, the current idea about the need for government to subsidize the building of more units is just a canard, meant to shift blame from where it belongs (see, again, central banks) and just a way to give away more money, this time to so-called developers. A bubble on a bubble?
On a personal note, here in Canada our recently-elected Prime Minister Mark Carney is closely associated with Brookfield Corporation which invests in—guess what?—real estate. Its headquarters are in New York (so much for Carney being Canadian to the core). Its stock price in 2009 when ZIRP was initiated was $6. As of Friday it was $86. I think that tells us something—maybe a lot of things.
In Canada, it was not only a matter of bad monetary policy, but also of bad tax policy. Capital gains on a principal residence are tax-free, and the duration of residency to qualify was fairly short. This tax policy, when combined with the overly permissive interest rates, made “house flipping” into a national pastime bigger than ice hockey.
The investment trusts are a big problem, but the petty bourgeoisie are equal partners in the real estate bubble. Because so many “middle class” people are over-invested in housing, it’s political suicide for anybody in government to address the problem.
We ended up with a government of the landlords, by the landlords, for the landlords, headed by a globalist investment banker who bears a large share of personal responsibility for the crisis, dating from his tenure at the bank of Canada.
But that’s all right, Carney waves a flag, and gets elected because everybody detests some other country’s head of state. That’s rationality, Canadian-style.
The idea that building more public housing is the solution to the housing crisis is nonsense. In my country, we have a lower percentage of public housing than in the U.S., yet everyone can afford a home. This is because people here buy homes to live in, not as investments.
wait for the international investor to dip in…
Sure — try telling this fairy story to the Viennese or Singaporeans. What sort of dupes do you take us for?
In Western neoliberal capitalism, rent-seeking is the highest good. Michael Hudson proposes that taxing ‘unearned income’ is the best way out of what is a huge impediment to general prosperity. I add that heftily taxing inheritance along with taxing ‘rents’ would be the nonviolent revolutionary way to end this insanity. If we only could…
[from “Mommy, I wanna grow up to be a landlord” to “Mothers, don’t let your children grow up to be landlords”]
“Mommy, I wanna grow up to be a landlord”.
Then tell your young ones to learn Oztralian so they can sound like “authentic” patriots of Oztralia and of Oztralian “values”. Outside our mining and agricultural sectors, this is practically all we do these days; and then the two faced bastards in power (who are landlords btw) dare tell us they care for the escalating numbers of homeless and the steady fall in home ownership rates and declining economic productivity and flat-lining wages.
For those who want a view on what public housing can be like, I highly recommend the relevant chapter in P.J. O’Rourke’s Parliament of Whores.
Americans (on both sides of the Red/Blue divide) just LOVE to talk about rights – yet always get real quiet when it’s time to mention that rights come with duties.
I am never going to be keen on people’s “rights” to force me to pay for what they think others should have – but at least make me feel a LITTLE bit better about it by imposing on the recipients a duty to use whatever is provided in a responsible manner. And at least make a de minimis effort to ensure that my (and others’) taxes are spent frugally and efficiently.
If you find public housing objectionable, just wait until you get a load of the socioeconomic ills of increasing homelessness … 🙄
I think this is also leading to worse behavior by tenants, which is feeding into small landlord perceptions.
I hear complaints all the time from small landlords (basically, people who bought a second home and moved while not needing to sell their first) about how tenants now are worse than they were before, leaving houses and apartments trashed upon vacating. However, if people are generally stuck renting from these large concerns who without fail raise their rent 20% come renewal time, why would anyone expect the tenant to treat the place like anything but disposable?
What I’m REALLY curious about is the near ubiquity of places that are stuck dealing with the new plague, HOAs. It’s damn near impossible in some parts of the US to buy a place WITHOUT one, which while theoretically is a way to “maintain and improve property values”, ends up in reality a permanent $200 – $500 (or much, much higher) increase in your monthly expenses for the benefit of having some group of busybodies dictate what your property can look like at the very least. Don’t even get me started on the constant embezzlement, stealth foreclosures at the drop of a hat, and other awful shit HOAs get up to.
And now, the allure of steady streams of income even have the big players getting involved. Local rags have started reporting how some new developments have built in permanent clauses regarding communal spaces in said areas, guaranteeing a percentage of profit as part of the monthly fees, with no way of getting rid of them due to being written into the deed itself.
It’s the next developing front in sketchy property shit. I hate it so much.