Financialization, housing rents and affordability in Toronto

Abstract

This article examines the links between financialization, rent increases and spatial inequality in Toronto, Canada. By drawing on qualitative data from the grey literature, corporate records and real estate events, we first find that financial landlords (REITs, REOCs, asset managers, private equity and institutions) attest to rent price increases as a strategy core to their financial structure, leading to a systematic undermining of affordability. Drawing on a Toronto-wide database of property rent levels, we then quantitatively demonstrate that financial firms charge higher rents, charge higher premiums to neighbourhood average rents and post the highest same-property quarterly rent increases, compared to other types of landlords. We analyzed the geography of financialization and rent, finding that financial firms charge the highest premiums to average rents in lower-income and racially marginalized ‘Neighbourhood Improvement Area’, (NIAs), capitalizing on the higher rent gap potential in devalued areas with lower rent levels. We conclude by stressing the importance of reining in on financial landlords, especially as they have become the largest acquirers of suites in Toronto in the past two decades.