Often, financialization sees large investors buy up affordable apartment buildings.
Because the business model associated with financialization demands short-term, high yield profits, there is pressure placed on locating and purchasing housing that is deemed “undervalued”, which often means housing that is affordable and hence where the most disadvantaged and low-income communities are located. Financialization also affects other sectors of the housing system, including single-family homes, retirement communities, and long-term care homes.
Then, these entities turn them into a product for investors. Profit-making strategies for financial firms investing in housing involve extracting more money from residents, and often involve displacement. These firms dramatically increase rents, cut maintenance services, and evict existing tenants to grow their profits.
It is not new these buildings are privately owned. What is new, is they are owned by large institutional investors whose obligation is maximizing returns for shareholders.
Financialization is contributing to housing unaffordability and violating people's human rights. The result of financialization is that disadvantaged groups are forced to spend disproportionate amounts of their income on housing and have less money for food, medicine, childcare and other needs. Many cannot afford adequate housing of any kind and are faced with the choice of living in precarious housing, temporary shelters, or informal encampments.
This trend worsened during the economic crisis caused by the COVID-19 pandemic. Real estate became a safe profit-making opportunity for large investors in a volatile market, further driving up prices and putting affordability at risk for those most in need.