The New Urban Displacements? Finance-Led Capitalism, Austerity, and Rental Housing Dynamics

New Urban Displacements: What and Why?

As this was written, 81,664 households were on the active waiting list for social housing in the City of Toronto (City of Toronto, 2021). While this number was down from the 100,515 people listed as being on the waiting list at the end of 2018, the City’s records show that the decline was not due to people being housed. Instead, the drop occurred because 25,297 people had been waiting on the list so long (many more than a decade) they could no longer be immediately located – their “active status” was therefore “cancelled” by the City in the second quarter of 2019. At the average rate of 2,839 people housed per year (3,262 in 2017; 2,898 in 2018; 2,966 in 2019, and only 2,228 in 2020), the waiting list of 81,664 households will take over 28 years to clear – and that is only if new households do not apply. But a typical quarter sees around 5,000 new households apply, and that is only for the central City. The surrounding suburbs, with a majority of greater Toronto’s population, face a similar crisis. Dramatically rising housing costs in recent years (Walks, 2020) have made affordability a mainstream issue in Toronto, with many long-term tenants facing rent increases and eviction notices (August, 2020; Hawes & Grisdale, 2020). Meanwhile, the COVID-19 pandemic that struck in 2020 has been associated with job loss and rising homelessness. So, the underlying need for low-income rental housing has risen, not receded. This need is also highest amongst racialized, gendered and low-income tenants, especially for single-parents, migrants, and refugees – many of whom are low-wage, low-skilled workers employed in the tertiary sector in urban spaces (Leon & Iveniuk, 2020).

This story is not unique to Toronto; displacements are occurring in many cities around the world. In her recent book, Urban Displacements, Soederberg (2021) discussed the processes, practices and structures underpinning urban displacement of racialized and gendered surplus populations (under- and unemployed) across several European cities. One such urban space is Berlin. This city is not only the capital of one of the wealthiest countries in the world, with a relatively generous welfare system, it also holds the dubious title of the homeless capital of Germany. In this city where 85% of 3.5 million inhabitants rent as opposed to own their homes, steady and spectacular rental increases have locked low-income workers out of affordable and adequate housing over the past several decades (Soederberg, 2021). A case in point – approximately 10,000 rough sleepers inhabit the streets of Berlin. While the number of roofless people is staggering, this does not include the low-income households, including welfare recipients, refugees and migrant workers, who have been residing with friends and families, typically in overcrowded conditions (ibid). In 2020, Berlin, as with many parts of Europe, experienced a brutally cold winter, forcing many homeless people, many of whom are high-risk, to make the choice of either remaining in freezing temperatures or to seek refuge in a homeless shelter, where they would be susceptible to contracting COVID-19 (FEANTSA, 2020). As we discuss below, the nature of financial capitalism and neoliberal governance have helped to shape the stark reality in which the growing number of displaced people must navigate to survive.

Despite its spectacular post-crisis growth rates since 2014, Dublin has also registered an increase of 350% of a new demographic of homeless: families (see also Waldron, 2021). By December 2020, there were 2,327 children in emergency homeless accommodations with their families (Focus Ireland, 2019). Many of these families have been rendered homeless due to evictions based on rental arrears, have been living in hotels, hostels, and some, in the city’s 22 family hubs for several years (Ombudsman for Children’s Office, 2019). Despite these rising numbers, Dublin City Council, as is the case with the Berlin Senate and the City of Toronto, has not built sufficient number of public housing units. Locked in the neoliberal mind-set that the markets are more efficient, rational and innovative than governments, the City of Dublin has steadfastly held onto the futile hope that the private rental sector will provide adequate and affordable housing to resolve the homelessness crisis. As the city waits for the private sector to fill the housing need, the City of Dublin continues to spend millions of euros in housing displaced families in marketized spaces such as hotels. One hotel even received payments of €5 million to provide temporary and emergency accommodation for the homeless. Dublin Regional Homeless Executive expects the spending levels to increase dramatically in the face of COVID-19 pandemic in 2020 and 2021 (Soederberg, 2021).

Viewed historically, however, these dislocations in Toronto, Berlin and Dublin are neither novel nor caused by the COVID-19 pandemic nor do they represent a temporary event, often denoted in the term the housing crisis. Instead, these displacements have been ongoing since the new millennium, with increasing intensity. A more productive way of seeing these types of urban displacements is not as a one-off occurrence but instead a reality of contemporary capitalism that has become normalized, individualized and increasingly marketized over the past several decades by states operating at a variety of scales (global, national and municipal). On this view, new urban displacements can be seen as what Soederberg (2021) describes as displaced survival characterized by an everyday life of structural violence punctuated by over-indebtedness, evictions, homelessness, and a subsequent stigmatization of the poor that justifies exclusionary practices, structures and processes.

In keeping with this more dynamic and broader understanding of new urban displacements, the essays comprising this special issue concentrate on rental-based evictions. Indeed, the rental tenure, encompassing both social housing and the private rental sector, is an important site to study displacements, given that the majority of the urban poor reside in these types of dwellings. Unified in their political-economic framings of urban displacements, each essay comprising this special issue seeks to shed critical light on the underlying practices, processes, structures and power relations driving new urban displacements. Taking our cue from these contributions, we suggest here that to fully comprehend the new urban displacements, we must view them in their respective socio-spatial contexts and historically contingent processes that are rooted in the dynamics of capitalism. This view allows us to see a longer trajectory of urban displacements, including important changes and challenges that have emerged alongside the ever-shifting terrain of capital accumulation dominated by financial actors, transactions and markets as well as the power relations and the struggles therein. In what follows, we highlight some of the material roots of urban displacements, including financial capitalism, neoliberalization processes and gentrification.

Situating urban displacements in capitalism

What sometimes get overlooked by those tracking recent trends is that capitalism has never built adequate housing for the working class, particularly low-skilled and racialized workers (Engels, 1872; Madden & Marcuse, 2016). Indeed, capitalism has depended on, and created the conditions for, housing crises as a way of both disciplining labor and as a direct method of credit-led accumulation that feeds off not only speculation but also extracts surplus value through rental income, and interest payments on debt, and relies on a reserve labor army of low-wage, low-skilled workers – many of whom have kept cities running during the COVID-19 pandemic (Soederberg, 2021). Urban housing conditions in many cities are not exceptionally different to those described in 1872 by Engels in The Housing Question, and the current housing crisis has led to calls for similar forms of alternative forms of housing provision that were debated in the 1870s (Hodkinson, 2012). Furthermore, as Marx noted in discussions of primitive accumulation, which Harvey (2003) updated with his concept of “accumulation by dispossession”, displacement – from productive land, from housing, and from urban space – has from its inception been intrinsic to the profitability and maintenance of capitalism.

However, this does not mean that the socio-spatial processes producing displacement are also not potentially new to capitalism. As Harvey (1978) has noted, the dynamism inherent to accumulation has meant it continually finds ways (and must find ways) of circumventing the barriers to the valorization of capital (e.g. crisis of overaccumulation) that it itself creates, and it does this through innovations along spatial and temporal lines involving, for example, the credit system (finance), the liberalization of trade, expansion of production and credit into new lands, and the introduction of new technologies and management strategies to increase productivity (Harvey, 1982; Taylor & Rioux, 2017). Christophers (2018) notes that finance has been productive in part through the ways it turns risk into a commodity for speculation, and how it shifts the onus for insuring against risk onto individuals and individual firms. We might add that rising debt loads also spur households to work more (provide more of their labor power), and thus spur greater labor productivity, without rising wages or salaries (Lapavitsas, 2013; Lazzarato, 2012). Thus, rising debt loads not only spur greater inequality through transfers of wealth to creditors, but also by their regressive effects in labor markets.

Neoliberalism, and neoliberal forms of fiscal austerity, reflect a constellation of one such set of policy and governance innovations that have been implemented in order to bolster accumulation among particular fractions of the dominant classes in a number of nations. Common forms of government austerity typically involve the trimming of state expenditures, particularly for welfare-state programs, the privatization or closure of state functions, wage freezes and reductions, layoffs of public servants, and sometimes tax increases (Donald & Gray, 2017). Austerity is often theorized as part of the “roll-back” of the state under neoliberalism, whose counterpoint is the “roll-out” of new entrepreneurial state processes and programs designed to make government function more like a business (Peck & Tickell, 2002). Peck (2012) coined the term “austerity urbanism” to reflect how the combination of the bursting of the local housing bubbles in the United States (US) and the roll-back of welfare-state programs by upper levels of government in the US during the Global Financial Crisis (GFC) compelled local urban governments to enact specific austerity policies, including the closure of many local programs, the privatization, closure, or contracting out of fire and police services and other public services, and the ending of important programs including those directed at the homeless and low-income households.

But neoliberalism has only had temporary “benefits” for accumulation, necessitating on the one hand ever-more complex global arrangements for production, trade and finance and on the other hand the privatization of public services and lands coupled with ever-more stringent and regressive labor policies and practices, such as workfarism, flexibilization of hiring and firing practices, union busting, and so forth (McNally, 2009; Peck, 2010, 2012). This has largely only accentuated the tendency for neoliberalism to “fail forward” (Peck, 2010), in that policy makers faced with budgetary deficits have increasingly looked to privatization, financial-market innovation and anti-labor policies as “solutions” to fiscal crises. One of the key sectors involved in the transformation of capitalism over the last two decades has been housing and urban land development, and rising land values have been an important source of fiscal resources for local and national states, so they have been structurally incentivized to promote neoliberal policies that bolster investments into urban land. But neoliberalism is always necessarily spatially contingent on local political, cultural and economic factors, and built environments, and its uneven and localized evolution has augmented tendencies toward uneven spatial development and the various class-based tensions this causes. This is particularly the case within housing markets and systems, given that housing is so essential to life and the social reproduction of labor power, and injustices in housing markets are especially visible to anyone living in cities, through among other things the increasing presence of rough sleepers, and a severe lack of low-income housing.

Gentrification and displacement have become one of the core features of accumulation strategies under our contemporary era of finance-led capitalism, which has depended on the development of urban land and housing (Soederberg & Walks, 2018). What Marx called “fictitious capital” (“fictitious” in that it provides the appearance that property automatically inheres value, when in fact the capital derives from the future capacity of labor to pay back loans collateralized on property) has grown immensely as new innovations in finance turns land and housing in financial securities that can be traded on international markets (Haila, 1988; Harvey, 1982, 2003; Lapavitsas, 2013; Walks, 2010). Harvey noted in 1978 that for accumulation to continue, capitalism has to walk a “knife-edge path” between maintaining the value of investments in the built environment, and destroying and re-building the built environment in order to open up fresh avenues for accumulation. As urban land has become more valuable in line with both global population growth, the mechanization and urbanization of the countryside, and the shift of innovation and jobs into the “cognitive-cultural” sectors based in cities (Scott, 2008), surplus populations living in cities have been displaced so that urban space can be remade for progressively wealthier users (Hackworth, 2002; see the papers by Bhagat, Sharma, Cooper and Paton, and Walks, Hawes and Simone, in this volume). Smith noted back in 2002 (Smith 2002) that gentrification had become a global strategy of accumulation.

The concept of urban displacement – which, as noted, includes both direct and indirect forms of compelled displacement as well as the forced removal from one’s home (Soederberg, 2021) – has been associated with the scholarship on gentrification since Ruth Glass noted changes occurring in the center of large cities like London as older rental housing and whole neighborhoods were de-converted to owner-occupation (Glass 1964). In turn, the working class was typically displaced to, and concentrated within, neighborhoods that were stigmatized and/or suffered poorer accessibility. For Neil Smith (1984) gentrification was part and parcel of the uneven development of capitalism, which in “see-saw” fashion saw investment shift between places in order to maximize profit, rather than serving people. In Smith’s memorable phrase, gentrification represented a “return to the city by capital, not people” (Smith, 1979), and those behind such investment generally did not care who got hurt.

However, coincident with the increasing role and power of financial markets and logics (e.g. land and building speculation, municipal bonds) and the economy that accelerated during the 1980s and into the 1990s, patterns of urban development and displacement have evolved and shifted unevenly across urban spaces in Europe and North America, as well as many cities in the Global South (see Lees et al., 2016; López-Morales, 2015; Walks & Simone, forthcoming), including Dhaka (see the paper by Sharma in this issue). While originally restricted to a small number of neighborhoods with particular characteristics (and thus dismissed as mere “islands of renewal in a sea of decay” by Brian Berry in 1982) by the 1990s this has reversed as gentrification produced “seas of renewal” across many inner cities, see Wyly & Hammel, 1999). Furthermore, Lees et al. (2008) noted that by the 2000s, gentrification and displacement were occurring virtually anywhere within existing central cities, and that the financialization up to that point had been a key factor enabling the geographic extension of gentrification to new spaces, including “new-build” forms denoted by condominium development in nonresidential areas. Even previously gentrified areas were now subject to a re-gentrification process, displacing former gentrifiers, a situation that Lees (2003) characterized as “super” gentrification. Yet, before the 2007/08 global financial crisis (GFC), gentrification and displacement were largely still assumed to be tied to tenure conversions, as owner-occupation (largely through condominium development or conversions) meant the removal and deconversion of older rental housing.

The GFC not only brought to light many formerly hidden or overlooked aspects and logics of the expansion of global finance in urban housing markets, including the targeting of marginalized populations living in newly-desirable areas for predatory lending, but the post-GFC period has seen a rapid acceleration of new financial logics, processes and strategies (Aalbers, 2016; Christophers, 2018). Part of this involves the creation of new “planetary rent gaps” out of the ashes of the credit crunch and GFC that forced many households and firms into bankruptcy yet provided new opportunities for capitalizing on crisis (Slater, 2017). On the one hand, despite origins in fictitious capital, new forms of “predatory equity” (Fields & Uffer, 2016; Grob, 2017; Teresa, 2016; Wyly et al., 2010) have arisen which have targeted rental housing, not for tenure conversion to owner-occupation, but instead to hasten turnover to ever-more affluent renters while maintaining rental tenures. Real estate investment trusts (REITs), private equity funds, and large financial asset managers (what August & Walks, 2018 call “financialized landlords”) have shifted investment into residential rental housing, creating new forms and patterns of displacement, while the rise of new rental-housing “sharing” firms promote the conversion of long-term rental units to short-term units for tourists rather than local residents (Wachsmuth and Weisler 2018; see the paper by Grisdale in this issue).

At the same time, the imposition of austerity-led governance in many nations and cities has often meant that subsidized rental housing has been targeted for funding reductions, demolitions, and even outright sales, while roll-out neoliberalism has promoted both gentrification as well as the shift of rental units into the hands of such financialized landlords as a “solution” to both public budgets and housing scarcity (Peck, 2012). Critical scholars rightly portray such decisions as “false choices” (Slater, 2014). However, the run-up in indebtedness, among not only households and firms, but public institutions, cities and nation states (often borrowed under Keynesian pretenses in order to bail out private firms - the latter’s collapse it was thought would have had even worse effects on the economy), coupled with forms of “austerity urbanism” (Peck, 2012) in which cities have been starved of needed state resources and support in order to compel them to adopt ever-harsher neoliberal measures, has worked to limit the range of choices that are available to cities. This has only served to further promote and augment aspects of the debtfare state across various geographical spaces (Soederberg, 2014). Debtfare states describe discursive, material and institutional state forms that facilitate and normalize the dependence of the working poor on expensive consumer credit (payday loans, micro-credit, student loans) to augment and/or replace living wages. But while debt-driven demand and its knock-on effects in bolstering the profitability of finance capital has been fundamental to saving capitalism from its own crises in the recent period (Schwartz, 2016; Soederberg, 2014), this has led to additional contradictions, one of which is rapidly-rising demand-driven urban housing and land values (Haila, 1988).

Finance-led accumulation strategies marked, among other things, by housing speculation across all tenures and debt-driven growth and austerity urbanism have become mutually reinforcing forces, directing economies, household behaviors and state policies along certain paths, while simultaneously creating new contradictions and problems. Among the many implications of these changes is that the financial logics, governance forms and scale of urban displacement have evolved, expanded and, in many cases, intensified the structural violences associated with housing insecurity. The growing number of urban poor, who live with high levels of indebtedness, evictions and homelessness, are at the receiving end of this structural violence (Paton & Cooper, 2017). Scholars increasingly refer to the mainstreaming of gentrification policies, politics and strategies as a form of expulsion of working classes from cities (Kaufman, 2020; Sassen, 2014; Watt, 2018).

No longer restricted to tenure conversions among Victorian houses in pre-war neighborhoods, displacement has become a central feature of private rental housing sectors under the emergence of financialized landlords, and has even moved into the residualized and threatened social housing sector (Soederberg, 2017). Such displacements are multi-dimensional, and have evolved and become undercut by new social cleavages as the politics of urban development, stigmatization, financial-led accumulation practices and austerity re-shape urban governance.

Overview of essays

This special issue examines these dimensions of displacement using a series of case studies set in different urban contexts that have not received as much attention as those in the United States (US). This includes places that were hit hard by the GFC and where austerity urbanism has had more time to become entrenched, as well cities in nations (like France and Canada) which were largely spared the ravages of the GFC but whose housing markets have continued to bubble with speculative investment right up to, and during, the covid-19 pandemic. Thus, although all the articles contained in this special issue were researched and written before the pandemic, many of the processes discussed in these articles remain highly relevant – indeed, more so, given that the covid-19 pandemic has meant so many people have been laid off from work and have had difficulties paying their rents. Neoliberal austerity has evolved in response to the pandemic. In some cases, this initially involved temporary eviction bans, but with the resumption of plans to restart national and urban economies and “get people working again”, many of those temporary measures and eviction bans have been replaced by new “evictions blitzes” as states attempt to rush through a backlog of evictions demanded by private landlords. In Toronto, despite a housing crisis marked by a backlog of over 81,000 households within the City, and a similar but unknown number of households in the suburbs, on the wait list for rent-geared-to-income social housing, neoliberal governments have embarked on such an eviction blitz, and have also pushed through demolitions of the many tent-city encampments set up by newly-homeless evictees (Noamin et al., 2021). Many of the papers in this special issue remain as, or more, relevant in the face of such measures as before the pandemic erupted.

With the previous two decades marked by rising land values, new financial actors and innovations, and increasing dominance of neoliberal institutions and policies, perpetual displacement has come to be an ever-too-common state for many people (Soederberg, 2021; Watt, 2018). Displacements are now articulated among immigrants and refugees, and among different generations and age cohorts, while financial capitalism and the specter of debt – both that pertaining to tenants and would-be homeowners, but also developers, housing associations and whole cities – hangs over them. In each case study chapter, the authors provide extensive empirical documentation of the processes they have uncovered.

In their article examining the dramatic rise in evictions in UK cities, Cooper and Paton link the financialization of rental housing with austerity politics in fashioning a contemporary political economy of rental housing policy rooted in what they call “accumulation by repossession”. They document how evictions are justified, caused, profited from, and enforced, by the state, and discuss how the combination of cuts in government housing subsidies, the privatization of social housing, and the process of rental housing evictions for low-income renters, has led to a transfer of debt and risk from the state to poor tenants. Furthermore, housing precarity has been capitalized into financial practices, which then provides structural incentives for the production of ever-increasing precarity, and the latter has involved changes to various legal frameworks and state enforcement strategies.

In Displacement in “Actually Existing” Racial Neoliberalism: Refugee Governance in Paris, Ali Bhagat, meanwhile, focusses on the plight of the homeless and refugees in France’s largest metropolis. With one of the highest refugee applicant rejection rates, and with the closure of the Calais refugee camp, historically working-class arrondissements near the Stalingrad, Juarez and Porte la Chappelle metro stations in Paris became make-shift refugee camps. Austerity urbanism and the European Migration crisis intersect at multiple scales and sites. These encampments have faced a constant threat of state-led violence, characterized by cyclical evictions, despite overpopulated emergency shelters, poorly funded refugee housing, and social housing backlogs. Bhagat links the expulsions of refugees and the logics of austerity through insufficient and overly-rigid and targeted welfare-state programs that tie welfare provision to housing. Bhagat’s article demonstrates how forcibly displaced migrants have been required to navigate a city that continually seeks to expel them, in line with historical legacies of displacement that link policies and programs from the 1950s through to contemporary times.

Examining changes in the three largest Canadian cities since the early 1990s in Gentrification in Large Canadian Cities: Tenure, Age and Exclusionary Displacement 1991–2011, Alan Walks, Emily Hawes and Dylan Simone find that a substantial proportion of affordable rental housing has disappeared from the central cities through processes of gentrification, despite increases in the total number of social (subsidized) rental units. Such gentrification processes not only include the de-conversion of rental to owner occupation, but also significant “upgrading” by income as a result of “vacancy decontrol” rental policies that allowed landlords to raise rents to whatever they liked for incoming tenants whenever a unit became vacant, a policy which strongly incentivized landlords to evict low-income households as gentrification proceeded. Adopting a shift-share methodology that decomposes changes within the housing stock by tenure, condominium status, and age-cohort, they find that conventional forms of gentrification marked by tenure deconversion help explain much of the change in inner city income profiles. Processes of condoization and generational change have occurred in parallel, and have mirrored, rather than driven, the class transformation of the central city. They demonstrate that the larger rental housing crisis experienced in Toronto, Montreal, and Vancouver in the 2000s is in large part a result of the loss of affordable rental housing in those cities due to gentrification.

Following this up with a focused study of short-term rental housing in the central City of Toronto, Sean Grisdale in Displacement by Disruption: Short-Term Rentals and the Political Economy of “Belonging Anywhere” in Toronto analyzes the geography and profitability of active Airbnb units over the space of a case-study year (before the covid-19 pandemic) to assess the platform’s impacts on the local rental market and its implications for displacing local renter communities. Grisdale finds that a majority of this particular platform’s revenue in that year derived from what he calls “entrepreneurial hosts”, which refers to those hosts who have purchased housing units solely as a full-time, commercial business model. Furthermore, Grisdale finds that these hosts are spatially concentrated in particular downtown and inner-city neighborhoods, which has not only reduced the availability of affordable rental housing in those neighbourhoodbs, but simultaneously driven up land values and spurred gentrification in those places, creating incentives for future forms of gentrification in the inner cities. Grisdale contrasts such practices with the discourses of community and “sharing” that are promoted by platforms such as Airbnb. Grisdale uses this case study to further develop the insights of Wachsmuth and Weisler (2018) for understanding the role of short-term rental platforms in processes of gentrification and displacement in the context of financial innovation and the condoization of cities like Toronto.

Of course, processes of displacement and expulsion are often even more brutal in cities of the developing world. In Down and out in Dhaka: Understanding land financialization and displacement in austerity urbanism, Sarah Sharma shines a light on land grabbing, evictions and patterns of displacement that have arisen due to financialization of housing in Dhaka, Bangladesh. Drawing on case study fieldwork conducted in the Meradia neighborhood, Sharma shows how municipal and national state policies have facilitated the financialization of urban land to the benefit of both international finance capital and local finance and real estate corporations, and helped promote land grabbing practices on behalf of private land developers. In the context of a city with very little social housing or policies for addressing the immense housing needs of the urban poor, this situation has resulted in rising homelessness and housing precarity. Sharma demonstrates the poverty of mainstream theories that regressively promote private-sector land development as a solution to massive housing and labor inequalities in the city.

In each case, this special issue sheds light on contemporary patterns and processes of urban displacement. Capital is – unfortunately for so many – highly dynamic and has spurred new ways of dispossessing people from their housing and profiting from this displacement. However, in each case study highlighted herein it is possible to envision a different world, and there are many scholars currently working on ways of keeping urban land out of speculative markets, of building new forms of governance and social ways of organizing housing, and labor markets, that protect livelihoods from the ravages of finance-led capitalism.

Commenting on the range of papers in this special issue, Tom Slater focusses on one of the key policies – rent controls – that would help alleviate some of the problems that beset contemporary housing markets. In addition to highlighting the importance of rent controls for reducing displacement pressures and keeping lower-income and marginalized tenants in safe and secure housing, Slater deconstructs the arguments made by mainstream economists against rent controls. In doing so, he lays out the history those arguments, and points out the fallacies of assigning the flaws of first generation rent controls (which were implemented in some European states in the early postwar period), to the entire slate of rent control policies. Slater’s commentary ends the special issue by reminding the reader that many (but not all) of the negative changes occurring in housing systems around the world could be addressed with a fairly simple policy tool. His commentary raises the political question of why decision-makers have been so quick to remove rent controls and other regulations meant to protect vulnerable households, when it is clear they are even more necessary today.

Disclosure statement

No potential conflict of interest was reported by the author(s).