The Financialization of Housing

Housing is generally considered a human right, providing necessary security, comfort and sense of belonging and community. While it is an essential good, housing is also a means to store and accumulate wealth. This dual nature has existed for a long time. Some, however, feel that the search for financial returns through housing are now creating barriers to accessing adequate, affordable housing.

The Financialization of Housing Solutions Lab will examine the concept of financialization of housing. It will also explore how it may be linked to some of the housing challenges faced in Canada. The first phase of the Lab will focus on understanding the potential link between the issue of financialization and housing affordability. The second phase will focus on confirming priority problems in order to develop solutions.

Project scope and expected outcomes

Arriving at a better understanding of the financialization of housing

The term “financialization of housing” has entered popular discourse in recent years. The term originated in academia, but it is now used far more widely. It reflects a belief that changes in housing and financial markets have resulted in housing being treated as a commodity. This, in turn, has led some to suggest the financialization is linked to reduced housing affordability.

Meeting the housing goal of the National Housing Strategy means arriving at a better understanding of the financialization of housing. It also means investigating how structural changes in Canada’s financial systems for residential real estate are affecting housing affordability. The Financialization of Housing Lab will address these challenges before co-developing, testing and scaling solutions with stakeholders.

Two linked phases

The Financialization of Housing Lab will take a social innovation lab process to bring together multiple, diverse groups. The participants will collaborate to first understand and define the problem, and then to co-create solutions together. The Lab is actually comprised of two linked stages: the Micro Lab and the Macro Lab. The findings of the Micro Lab, which occurs first, will feed into the Macro Lab, which comes second.

The Micro Lab will focus on understanding the potential connection between the issue of financialization and housing affordability. It will draw on a wide range of perspectives from across Canada’s housing ecosystem in order to define the problem accurately.

The Micro Lab will have 3 main components.

1. Background Research: This will include a literature review and analysis of historical statistics. A group of stakeholders will participate in semi-structured interviews. This will include individuals from government, academia, non-profit housing developers and providers, investment funds and financial institutions. The Lab’s initial hypothesis will be refined based on this research.
2. Workshops: Thiswill involve 4 conversations with stakeholders. Participants will be asked to provide feedback on the work completed to this point. This will help validate research findings, further refine the hypothesis and develop an even deeper understanding of the problem.
3. Additional Research: This will involve continually looking for additional research and views on the subject. This includes seeking other stakeholders who will be unable to participate in workshops due to the pandemic.

The Lab’s results—particularly its deeper, more balanced understanding of the financialization of housing in Canada—will inform the Macro Lab.

The Macro Lab

The Macro Lab will identify priority problems in order to develop potential solutions. Working with CMHC and other lab partners, it will then create a national roadmap for implementing these solutions across Canada.

The Macro Lab will occur over 6 phases:

1. The Definition Phase will confirm the project objectives, define roles and responsibilities, and create a work plan. The Lab’s scope will be confirmed and problems will be prioritized for solution development. A stakeholder engagement strategy will be developed, and a framework for the final report will be created.
2. The Discovery Phase will establish team leads, projects and steams of work for developing solutions and developing prototypes. Barriers and research gaps related to the selected problems and solutions will be identified. Levers for change will also be highlighted, including through a review of international best practices, models, incentives and frameworks.
3. The Solutions Phase will create a long list of potential solutions ideas and areas to explore. Lab participants will take part in sessions to brainstorm solutions. Additional research will be performed when required, and more Lab participants will be recruited where needed.
4. The Prototyping Phase will see prototyping teams plan, develop and deliver solution ideas through a series of co-design sessions. Stakeholder feedback will be gathered on the prototypes, and they will be repeatedly tested and validated before being finalized.
5. The Implementation Phase will involve the Lab team working with CMHC and the lab partners to create a national roadmap. Stakeholders will be invited to provide their feedback, which will be integrated into the roadmap draft. Materials about the lab activities, including insights and recommendations, will be prepared and delivered.
6. The Final Report Phase will see the final project report created. A knowledge mobilization strategy will be created, and the project’s files will be distributed and archived.

Outcomes

The final phase of the Macro Lab will create and release a final report that includes financial reporting, insights and recommendations. The Macro Lab will also create, refine and release a roadmap for implementing the Lab’s solutions on a national scale.