With the soaring cost of housing, you wouldn’t think anyone could be further ahead. But for the wealthy, that’s the case.
That’s what Professor Yushu Zhu of Simon Fraser University found in study of statistics from 1981 to 2016.
Professor Zhu’s study confirmed the obvious: the cost of housing has risen steadily for most people. It’s been especially hard on renters who saw the percentage of income spent on rent rise from 35 to 42 per cent.
However, for high income earners, the percentage of income spent on housing has actually dropped.
While current statistics aren’t available, things are obviously worse for middle and low income families.
For the wealthy, not so much. Even though housing costs have gone up, so has the wealth of Canada’s billionaires according to the Canadian Centre of Policy Alternatives. Economist Alex Hemingway found that 47 Canadian billionaires now control $270 billion in total wealth at the same time that 5.5 million At the same time, Canadian workers lost their jobs or had more than half of their hours cut during the pandemic.
It’s no accident that there is a shortage of affordable housing.
The shortage of affordable rental units is the result of deliberate government policy starting with the Mulroney Conservatives in the 1990s.
Governments stopped investment in affordable rental units for a number of reasons: strong wage growth from 1996 to 2006 coupled with declining interest rates and modest housing prices enticed more renters into home ownership.
That period also saw a shift in politics in which government off-loaded the building of affordable housing to the private sector.
And the bundling of mortgages into securities meant that housing became part of the stock market. Mortgages were billed as low-risk financial instruments such as mortgage-backed securities, a process called commodification. The Great Recession of 2008 was a consequence of these market-driven neoliberal beliefs says Professor Zhu:
“Driven by the neoliberal belief in the superiority of the free market, the housing policy in Canada has shifted from a welfare-oriented policy to a market-oriented one over the past four decades, encouraging homeownership, deregulation and private consumption. Housing financialization, the transformation of housing from a human right to an investment opportunity, has been driven by the federal government primarily through financial market deregulation and a financial practice called mortgage securitization.”
But by the mid-2000s, stagnant wages and the growth of low paying jobs along with escalating housing prices pushed people into rentals.
It doesn’t have to be that way. Economist Alex Hemingway says:
“A range of policy tools are available to rein in extreme inequality while simultaneously raising revenue for sustained, long-term public investment in much-needed areas after the pandemic such as seniors and child care, affordable housing and climate change,” he adds.
One policy to help achieve more equality is a wealth tax on the super rich.
We all pay for homelessness. Policing and health care cost more.
The private sector has failed to meet the housing needs of Canadians.