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Abstract
This paper explores the links between housing, financialization, and inequality—as exposed by the COVID-19 pandemic. It focuses specifically on seniors’ housing (retirement and long-term care homes) and purpose-built rental housing, exploring how government cuts and retrenchment in the late 1990s created an opportunity for private profits for financial investors in housing that catalyzed a dramatic rise in “financialized” ownership of care homes, retirement properties, and multifamily rental housing in the province. Financial business strategies then generated a series of crises exacerbated by COVID-19. In rental housing, a crisis of affordability has led to displacement pressures and a COVID-related flood of evictions. In seniors’ housing, a crisis of care has been exposed by disproportionate deaths in long-term care and retirement homes nationwide. In Ontario, COVID-19 death rates were highest in financialized and corporate-owned for-profit homes, pointing to the downsides of prioritizing investor profits over housing, good jobs, and high-quality care. This paper is part of the SPE Theme on the Political Economy of COVID-19.
Acknowledgements
The author would like to thank Dr. Samantha Biglieri and Dr. Nick Revington, who were co-principal investigators on the original project that catalyzed the research in this paper on the financializaton of seniors' housing. I am also grateful to Roger Keil and Ahmed Allahwala, and to the peer reviewers of this paper for their valuable feedback and comments.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 See Blakely, “Financialization, Real Estate, and COVID-19”; Farha, COVID-19 Guidance Note; Harris, “Demand Grows”; Ramos et al., “Coronavirus Pandemic Is an Opportunity.”
2 Dowling, The Care Crisis; Horton, “Liquid Home?”
3 Krippner, “Financialization of American Economy”; Epstein, Financialization and World Economy.
4 Froud et al., Financialization and Strategy; Palladino, “Financialization at Work”; Zorn et al., “Managing Investors.”
5 Martin, Financialization of Daily Life.
6 Aalbers, The Financialization of Housing.
7 Bakker, “Neoliberal Governance and Reprivatisation of Social Reproduction.”
8 Federici, “Elder Care and the Limits of Marxism.”
9 Bakker, “Neoliberal Governance”; Roberts, 2008.
10 Federici, “Elder Care and the Limits of Marxism.”
11 Richardson, “Taking Stock”; Gallagher, “‘Golden Child’ for Investors.”
12 Cohen and Rosenman, “From School Yard to Conservation Area”; Engelen, Fernandez, and Hendrikse, “How Finance Penetrates Its Other.”
13 Revington and August, “Making a Market for Itself.”
14 August, “Financializaton of Multi-family Rental Housing”; Fields, “Unwilling Subjects of Financialization”; Fields and Uffer, “The Financialization of Rental Housing”; Teresa, “Managing Fictitious Capital”; Wijburg et al., “Financialization of Rental Housing 2.0.”
15 Aalbers, “Financialization of Home and the Mortgage Market Crisis”; Walks, “Canada’s Housing Bubble Story.”
16 Horton, “Liquid Home”; August, “Financializaton of Multi-family Rental Housing.”
17 Andersson and Kvist, “The Neoliberal Turn and the Marketization of Care”; Vural, “Financialization in Health Care.”
18 Secondary rental market units include housing, basements, or condominiums that are rented out.
19 Retirement homes are so lightly regulated that firms refer to them as unregulated. They are subject to self-regulation and licensing, by organizations such as Ontario’s Retirement Homes Regulatory Authority (RHRA). In Ontario they are regulated under the Retirement Homes Act, 2010.
20 August, “Financializaton of Multi-family Rental Housing.”
21 August, “Securitizing Seniors Housing.”
22 Wijburg, “The De-financialization of Housing.”
23 Madden and Marcuse, In Defense of Housing.
24 Horton, “Liquid Home.”
25 Bezanson, Gender, the State, and Social Reproduction; Evans and Smith, Transforming Provincial Politics.
26 Bezanson, Gender, the State, and Social Reproduction.
27 Evans and Smith, Transforming Provincial Politics; Keil, “‘Common-sense’ Neoliberalism.”
28 Evans and Smith, Transforming Provincial Politics; Keil, “‘Common-sense’ Neoliberalism.”
29 Daly, “Dancing the Two-Step”; Panos, “Crisis in Care.”
30 Ontario Health Coalition, Ownership Matters, 5.
31 Ontario Health Coalition, Situation Critical.
32 Ontario Health Coalition, Situation Critical.
33 August, “Securitizing Seniors Housing.”
34 LeBaron, “Political Economy of the Household
35 CAPREIT, IPO Prospectus, 3.
36 Residential Equities REIT, IPO Prospectus, 41.
37 See August and Walks, “Gentrification, Suburban Decline, and Financialization.”
38 Daly, “Dancing the Two-Step”; Panos, “Crisis in Care.”
39 Leisureworld, IPO Prospectus, 4.
40 August, “Financializaton of Multi-family Rental Housing.”
41 Residential Equities REIT [ResREIT], IPO Prospectus, 28. Emphasis added.
42 Sunrise Senior Living REIT, IPO Prospectus, 37.
43 Sunrise Senior Living REIT, IPO Prospectus, 40.
44 August, “Securitizing Seniors Housing.”
45 This includes REIT-owned units in manufactured housing communities (MHCs) in which housing pads are rented to occupants of mobile homes. Without MHCs, REIT ownership was 170,0805 units in 2019.
46 This is in the primary rental housing market (that is, purpose-built structures), not including secondary rental market units such as rented condos, basements, or converted single-family residences. The data are for buildings six units or larger.
47 August, “Securitizing Seniors Housing.” In Ontario, these patterns are even more pronounced, with 43 percent of all seniors' housing owned by financial firms, including 55 percent of retirement homes and 31 percent of LTCs, according to my own analysis.
48 August, “Securitizing Seniors Housing”; Minto, Annual Report 2019, 5.
49 Minto, Annual Report 2019, 7.
50 This figure was calculated based on CAPREIT’s claim that it turned 19 percent of its multifamily stock (that is, 0.19 × 43,401 suites = 8,246 turned suites) with an average increase of $167.30 per suite, meaning the increase in revenues from turned suites would be $167.30 × 8,246 = $1.379 million.
51 These comments were shared at the 2019 Canadian Apartment Investment Conference (CAIC), held in Toronto (September 4) in a panel discussion about Asset and Portfolio Management Strategies.
52 August, “Securitizing Seniors Housing”; August and Walks, “Gentrification, Suburban Decline, and Financialization”; Fields, “Contesting the Financialization of Urban Space”; Teresa, “Managing Fictitious Capital.”
53 Ferrer and Momani, “The Starting Impact”; Hou et al., Economic Impact of COVID-19; Subramaniam, “New Race-based Data.”
54 Bowden and Cain, “Black Neighborhoods in Toronto”; Ontario LTC COVID-19 Commission, Meeting with SEIU.
55 Mah and August, Housing Impacts of COVID-19.
56 Leon and Iveniuk, Forced Out, Leon, COVID-19 Eviction Applications in Toronto.
57 Keep Your Rent, “Toronto’s Worst Offenders.”
58 Keep Your Rent, “Toronto’s Worst Offenders.”
59 See August, “Securitizing Seniors Housing.”
60 Basic rooms are typically ward-style shared rooms. In 2021, the maximum monthly rate for a basic room funded by the government was set at $1,891. Semiprivate rooms cost up to $2,280 and private rooms $2,701. Subsidies for basic rooms are available, with income-based eligibility criteria (Ontario, 2021).
61 Canada Mortgage and Housing Corporation, “Seniors Housing Report,” Table 1–3.
62 Chartwell Seniors Housing REIT, IPO Prospectus.
63 Amica Mature Lifestyles, “Annual Report 1999,” 14.
64 August, “Securitizing Seniors Housing.”
65 Horton, “Financialization of Non-disposable Women.”
66 Sudo, “Welltower CEO.”
67 Stevenson and Grabowski, “Private Equity Investment in Nursing Home Care”; Harrington et al., “Nurse Staffing and Deficiencies.”
68 Horton, “Financialization of Non-disposable Women.”
69 Horton, “Financialization of Non-disposable Women.”
70 Stall et al., “For-Profit Long-Term Care.”
71 Harrington et al., “Nurse Staffing and Deficiencies”; Hsu et al., “Staffing in Ontario’s Long-Term Care Homes.”
72 Hillmer et al., “Nursing Home Profit Stats”; McGregor et al., “Care Outcomes in Long-Term Care.”
73 Comondore et al., “Quality of Care in For-Profit”; Ronald et al., “Observational Evidence of For-Profit Delivery.”
74 Tanuseputro et al., “Hospitalization and Mortality Rates.”
75 Loreto, “Deaths in Residential Care.”
76 For example, Bos and Harrington, “What Happens to a Nursing Home Chain”; Gupta et al., “Does Private Equity Investment in Healthcare Benefit Patients?”
77 Of particular note is Gupta et al.’s 2020 findings that homes in the US owned by private equity firms had 10 percent higher rates of mortality after acquisition.
78 Lancaster, 2020.
79 Ontario LTC, 59. Neinstein Personal Injury Lawyers, cited in SSAO, Related Company Schemes, 10. Chartwell is facing a class action lawsuit for its “alleged failures in outbreak planning, precautions, and response related to COVID-19, which resulted in alleged preventable resident deaths and unnecessary suffering for their family members.”
80 Southbridge Health Care Fund, Operational Review, 1–3.
81 For an example of this management, see CBC News, “Orchard Villa Long Beset by Problems.”
82 Warnica, “The Bottom Line.”
83 August, “The Coronavirus Exposes the Perils.”
84 Davis, cited by SSAO, Related Company Schemes, 4.
85 Ontario LTC COVID-19 Commission, Meeting with SIEU, 82.
86 Gotham, “Creating Liquidity Out of Spatial Fixity.”
87 Ward and Swyngedouw, “Neoliberalism from the Ground Up.”
88 August, “Securitizing Seniors Housing.”
89 According to Whitzman, COVID-19 Housing Policy Roundtable Report, Spain has reduced rents by 50 percent in properties owned by landlords with more than 10 units.
90 Whitzman, COVID-19 Housing Policy Roundtable Report. California’s Bill SB-1079 prevents the bundled sale of foreclosed homes to single buyers, and allows nonprofit and similar actors first right to buy such homes. In Montreal, the city has a pre-emptive right to purchase buildings for social purposes in specific areas, https://montreal.ca/en/topics/pre-emptive-right.
91 Sullivan, “Barcelona’s Latest Affordable Housing Tool.”
92 Wijburg, “The De-financialization of Housing.”
93 Carter, “Ontario Health Experts Demand.” This group goes by Doctors for Justice.
94 Tholl et al., “A Rare Window of Opportunity.”
95 Wigle, Cartan, and Spindel, “Presentation to COVID-19 LTC Commission.”
96 For apartments, only multifamily units (not MHCs, see endnote 45) are included. Data are for CAPREIT, ResREIT, Northern Properties, Lanesborough, Boardwalk, InterRent, TransGlobe, True North, Morguard North American Residential, Northview, Killam, Centurion, and Skyline REITs. For seniors' housing, data are from CPL REIT, Retirement Residences REIT, Chartwell, Amica Mature Lifestyles, Baybridge, Leisureworld/Sienna, HealthLease Properties, Regal Lifestyle Communities, Sunrise Senior Living, Welltower, Ventas, Extendicare, Revera Living (estimates), and private equity firms.
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Martine August
Martine August teaches in the School of Planning at the University of Waterloo in Waterloo, Ontario, Canada.