Housing has become a principle vehicle for wealth concentration across the globe, reaping huge profits for some, but also causing displacement, evictions and drastic inequality at an unparalleled scale for millions more.
Paper money is becoming old-fashioned. The new way to flaunt wealth, or make more of it, is housing. It’s the new currency, representing $163 trillion in global wealth, or almost triple the world’s GDP. Housing as a commodity has usurped housing’s traditional purpose – to shelter, protect and provide a home.
Four walls and a roof is now crude terminology for dollar signs and investment opportunity.
While some individuals are reaping huge profits on land speculation and increasing property values, the flipside for so many across the globe is extreme unaffordability, mass evictions and foreclosures, drastic inequality and ultimately homelessness. This is the reality of the financialization of housing and it is a global epidemic.
Bolstered by a free-market – free of financial regulations – housing has become a principle vehicle for wealth. Follow the money trail and you will find foreign entities, nameless shell corporations and connections to the uber wealthy one-percent seeped into, and changing, neighborhoods in large metropolises like New York, London, Sydney and Singapore.
But they aren’t acting alone. Governments follow in stride.
The recent election of President Donald Trump and his selection of senior advisors almost parodies the deep connections between housing as an asset of choice, wealth and governance. Consider the appointment of the chief executive officer of Blackstone – the world’s largest real estate private equity firm (which spent $10 billion to purchase re-possessed homes following the financial crisis) – who is now heading up the president’s “Strategic and Policy Forum;” or the recently appointed treasury secretary, Steven Mnuchin, who is colloquially known as the “foreclosure king” thanks to his leadership at OneWest Bank during the financial crisis, where predatory lending lead to rising profits at the expense of low-, modest- and even middle-income earners.
Financialized housing markets have caused displacement and evictions at an unparalleled scale: In the five years following the 2008 financial crisis, more than 13 million foreclosures resulted in more than nine million household evictions in the U.S., disproportionately affecting racialized minorities. In Spain, more than half a million foreclosures between 2008 and 2013, resulted in over 300,000 evictions, and in Hungary almost one million foreclosures took place between 2009 and 2012.
The destructive nature of this shift in housing is not confined to developing nations and mortgage foreclosures; it has seeped into all corners of the globe due to a lack of regulations to curb the growing tendency to treat housing as a financial commodity, with scant attention given to preserving housing as a social good.
But national and local governments that recognize the effects of this human rights debacle have started to fight back.
From Canada to Singapore, taxes of up to 18 percent on foreign buyers have been implemented in order to keep housing more affordable and accessible. In other areas of the world, new tax parameters have targeted empty homes, capital gains and flipping (selling within one year of purchase) – all steps geared towards curbing the pressure of a commodified housing market.
Incentives for developers also offer an avenue to rein-in real estate markets and re-direct development towards need as opposed to profit. From ensuring a proportion of affordable units to offering free land to encourage the building of rental properties, creative approaches to tackle financialization are, without question, necessary.
But are these responses enough?
Governments play a pivotal role in regulating and overseeing domestic and international financial markets – as such, they must be held accountable for their human rights obligations. The mantra ‘profits over people’ simply cannot hold.
The oft-tabooed words ‘human rights’ and ‘regulation’ may seem sacrilegious to developers and financial lenders but are necessary bastions of defense and guidance, ensuring that all have access to adequate and affordable housing.
At its core, the right to housing is about living with dignity and security – values that states are obligated to respect, protect and fulfill. Rather than reflecting on these rights after-the-fact, they should instead be guiding housing policy from the outset of all developments.
The balance of power needs to shift to human rights because housing is more than just a cash transfer.
Ms. Leilani Farha is the Special Rapporteur on the right to housing appointed by the United Nations Human Rights Council in June 2014. She also serves as Executive Director of the NGO Canada Without Poverty, based in Ottawa, Canada. A lawyer by training, for the past 20 years Ms. Farha has worked both internationally and domestically on poverty, homelessness and related issues with the most vulnerable groups. Ms. Farha is known as a dynamic and effective advocate for economic, social and cultural rights and for promoting legal protection and access to justice for these rights.
This article first appeared in TheMarkNews