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Struggling to afford housing

From the little patch of grass in front of her townhouse, Ayesha Mohammed can see the future of her neighbourhood. A brand new six-story building rises above the rooves of the rows of 1960s townhouses that, interspersed with the odd high-rise apartment building, make up the southern Ottawa neighbourhood of Herongate.

Originally developed in the 1960s, Herongate has been home to a largely working-class, immigrant community, offering a rare combination of low rents, ample greenspace and, according to older residents, a friendly “village feel.”

But all that has changed in recent years. Landlords have changed, maintenance standards have plummeted, and a run-down character has set in, with garbage strewn across lawns and windows boarded up with plywood. Complaints by the residents and notices from the city went unaddressed by the landlord – including serious health and safety concerns. Those desperate for a place to live were forced to accept the inadequate conditions because it was their only affordable option.

In 2012, a large investor purchased Heron Gate Village and embarked on a campaign to redevelop the site. Two waves of evictions followed — in 2016 and 2018. Gradually, the original buildings are being replaced with condos and apartments which, for the most part, will be priced way beyond the reach of current residents.

Ayesha knows her days at Heron Gate Village are numbered. Every time she checks the mail, she is expecting an eviction notice. And she has no idea where she and her mother, who came to Canada as refugees from Somalia, will go next.

“I am worried,” she says on the phone from a water treatment plant in Ottawa, where she is working as a security guard. “Everything here is so expensive. Ottawa has a housing crisis.”

Ottawa ranks among the most expensive rental markets in Canada for a major city – behind only Vancouver and Toronto. Low vacancy rates also mean that available housing is scarce. Meanwhile, the waiting list for subsidized units in the city ranges anywhere from 5 years to 20 years depending on the size of the unit, with more than 10,000 households on the list.

In fact, all of Canada is experiencing a housing crisis. For many in the middle class, it will mean never owning the kind of houses they grew up in. According to the Royal Bank of Canada, the country's housing market reached peak unaffordability last year, with the average cost of home ownership in Canada accounting for 60 per cent of median household income.

But for others, it will mean not being able to afford any housing whatsoever. What's at stake in Canada's housing crisis are not just crushed dreams of home ownership but a fundamental human right: of access to adequate housing. And according to experts, one of the most serious threats to the realisation of that right is the mechanism behind what is happening at Heron Gate Village: financialization.

The financialization of housing refers to the process by which housing is treated as a financial commodity and an asset for profit, instead of its actual purpose: meeting people's basic right to shelter and a place to call home. As the trend gathers steam across Canada, financialization is driving up the price of housing, and eating away at a dwindling supply of affordable housing.

Financialization works in various ways, but the motive is always profit-driven and the main actors are financial entities. The company that bought Heron Gate Village, for instance, is a global investor, manager and owner of real estate; it manages over 24,000 residential units in Canada.

Companies like it, which package housing into investment products, are playing an ever more active role in Canada's rental market. Real Estate Investment Trusts (REITs) are one such investment vehicle. From no involvement in 1996, REITs owned some 200,000 rental suites in Canada in 2021, and combined with other types of financial firms, hold roughly 30% of the country's purpose-built rental housing.

These real estate companies and funds aim to drive profits for investors, shareholders and executives. They have no incentive — beyond what they are compelled to do by local municipal governments — to create or even maintain affordable housing. The strategy with older properties is often to invest as little as possible in the existing stock. This is something Ayesha and her neighbours in Heron Gate Village say they experienced first-hand whenever they reported a broken washer or burst pipe. They allege that they would often be berated by office staff before waiting weeks if not months for replacement or service.

Once facilities have degraded beyond a certain point, property owners can present demolition as the best option. And then they are free to develop a new class of real estate which, in keeping with their own logic, maximises the asset's financial value.

Martine August, a professor of urban planning at the University of Waterloo, finds it paradoxical that Canada, with its firm tradition of keeping social goods like education and health care in public hands, is tolerating this development.

“The right to profit has been elevated above the right to housing,” she says, pointing out that financialization inevitably leads to growing inequality and disproportionately impacts racialized groups.

Such was the case at Heron Gate Village. Following the 2018 evictions, in which 105 families lost their homes, 14 former tenants launched a human rights complaint, seeking redress at a provincial level. They claimed that: “the mass, forced displacement of an entire community of immigrants, people of colour, families, and people receiving public assistance amounts to systemic discrimination.” A ruling in their favour would set a landmark precedent for human rights protection against financialization. So far though, they don't yet have answers about their complaint.

August argues that all levels of government must work to reduce the influence of financialization on housing, and not only as a matter of fairness. In 2019, the federal government codified the right to housing into law with the National Housing Strategy Act. It requires governments to ensure the provision of affordable, secure, accessible and decent housing to all Canadians. With some 235,000 Canadians experiencing homelessness every year, and forty per cent of tenants spending more than a third of their household income on rent, there is a long way to go.

Among the measures August recommends are a strengthening of rent control. Some provinces do not have any form of it, and those that do offer loopholes that are easily exploited. She also wants to see more rigorous anti-eviction legislation and limits to the proportion of housing that can be held by financial entities. Most importantly, she hopes for a shift in attitude.

“We have to realize that financial firms are in rental housing for what they can take, not what they can give,” she says.

Meanwhile, Ayesha is watching friends and former neighbours struggle to find housing in Ottawa, knowing that the task will soon fall to her. She's checked the website of the Vista Local, the new apartment building that she can see from her front yard, whose one-bedroom studio suites cost more than the 3-bedroom townhouse she now shares with her mother and a roommate.

“Go without boundaries and move beyond the mortgage,” the website reads. “Own what matters and liberate what doesn't… it's time to choose a life that's truly yours.”

If only she could.