Housing: A Right or an Investment?
What an Essay, Yale University, and Robert Shiller Taught Me About Financialization
This Christmas, I completed the Yale University Financial Markets course on Coursera, taught by none other than Robert Shiller, the Nobel laureate who basically wrote the book (literally) on behavioural finance.
While Shiller’s lectures on market efficiency, bubbles, and behavioural anomalies were fascinating, one topic that hit me hard was while writing an essay assignment on the financialization of housing.
This led me to dig deeper into how housing has transformed from a basic need to a speculative asset class, creating problems like skyrocketing rents, displaced communities, and empty luxury apartments.
So here’s a condensed version of my essay on this topic — plus, a little nudge to check out Shiller’s course if you’re curious about financial markets and their quirks.
Housing: A Right or an Investment?
The 2017 UN Human Rights Council report puts it bluntly: housing has become a financial instrument rather than a basic human right. This means cities like London, Mumbai, and Vancouver now cater more to wealthy investors than to the people who actually live there. This trend, called financialization, lets global investors treat homes like stocks, prioritizing returns over residents.
Let me break it down:
- Housing isn’t just shelter anymore. It’s an asset class.
- Instead of addressing housing shortages, financial markets focus on flipping properties for profit or holding them for appreciation.
- Data backs this up — investment in luxury real estate globally outpaced affordable housing by over 200% in 2017 (Knight Frank report). & the trend has continued ever since…
The effects? Predictably bad. Families spend a larger chunk of their income on rent or mortgages, leaving less for essentials. In many cities, rent-to-income ratios exceed 40%, making affordability a myth for most.
What Happens When Housing Becomes a Commodity?
Here’s where it gets worse:
- Displacement: Gentrification funded by big investors drives out long-term residents. After the 2008 crisis, companies like Blackstone snapped up thousands of foreclosed homes in the U.S., only to rent them back at higher prices.
- Ghost neighbourhoods: Investors often keep properties vacant as “wealth vaults.” In Vancouver, over 25,000 homes were empty in 2017 during a housing shortage.
- Economic instability: Empty homes mean reduced tax revenue and weaker local economies.
How Do We Fix This?
Shiller’s course taught me that markets are tools — they can build wealth, but they can also break things when left unchecked. Governments and communities can push back against financialization with:
- Vacancy taxes: Cities like Paris and Melbourne use these to discourage investors from leaving properties unused. They work — rental availability in Canada increased by 20% after implementing these taxes.
- Public housing: Singapore’s model is a gold standard. Over 80% of Singaporeans live in public housing, and 90% own their homes.
- Community-driven housing: Cooperative housing models, like Zurich’s, ensure affordability while keeping neighbourhoods vibrant.
Why Shiller’s Course is Worth It
If you’re intrigued by how financial markets shape the world, Shiller’s course is an absolute gem. It’s not about cramming formulas; it’s about understanding the “why” behind market behaviours and their societal impacts. His lectures are packed with insights, and his passion for making finance accessible is contagious. Plus, getting financial wisdom straight from a Nobel laureate? Priceless.
So …
Learning about the financialization of housing was both eye-opening and frustrating. On one hand, it’s a reminder of how markets can distort basic needs. On the other, it shows why thoughtful regulation and community efforts are essential to reclaim housing as a right.
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