State policy and the making of the housing crisis

Government support for private profit-making over housing justice offers nothing more than the illusion of protection for working-class communities

By John Clarke

230 Fightback is fighting against a developer’s plan to build a luxury condo tower at 214-230 Sherbourne, in the heart of Toronto’s Downtown East. The organization, of which I’m a member, is demanding social housing that meets the needs of this low-income neighbourhood, rather than the planned monstrosity.

This particular attempt to further feed the oversupply of socially destructive upscale housing is, as I suggested in Canadian Dimension in March of 2023, part of a “redevelopment juggernaut descending on the Downtown East.” At that time, we calculated that the frenzy of condo construction in the area would bring in more than a billion dollars in profits for the developers, even as the surrounding community faces a housing crisis and a dramatic upsurge in homelessness.

The situation that we are confronting in this neighbourhood contains many elements of what can be described as the commodification of housing in Canada. The profits of developers and investors are driving the supply of housing and any semblance of a rational and just attempt to meet a vital social need has been pushed aside.

The failure of Toronto’s City Hall in this case to oppose or even limit the “redevelopment juggernaut” is symptomatic of the role of the state in serving the needs of monied interests and greasing the wheels of their profit-making. Their self-serving and deeply harmful activity is made possible at every turn by political decision makers and public administrators.

Diminished State Role

While it would be an enormous oversimplification to present the decades that followed the Second World War as some golden age of social justice, it is undeniable that state regulation of housing provision was more equitable during that period than it has become since the last part of the 20th century. Relative to today’s state of affairs, governments provided significant support to expanding the social housing sector; the unbridled power of developers and investors that we presently face had yet to be established.

Since the emergence of a neoliberal strategy in the 1970s that sought to maximize profits at the expense of workers and communities, those limited commitments to housing needs and public welfare have been replaced by an entirely profit-driven approach.

As Leilani Farha put it in 2019, when she was the United Nations Special Rapporteur on the right to adequate housing, “Under the new financialised model, housing isn’t viewed as a home or a place where families grow, a place where you generate memories. Housing is an asset. It’s a place to park capital.”

The Canadian Centre for Housing Rights summarized the withdrawal of a direct governmental role in housing provision: “The federal government ended its co-operative housing program in its 1992 budget after building nearly 60,000 affordable homes for low- and moderate-income households, and froze investments in social housing the following year.” 

Then, “[i]n 1995, the federal government stopped funding the development of affordable housing for the first time in 50 years. From that year until 2002, almost no new non-profit housing units were created.” 

This drastic curtailing of the state’s role in housing provision left the field wide open for private market solutions.

Today, major investors and financiers have an iron grip on housing that they don’t intend to loosen. Government intervention is mainly devoted to facilitating the profit-making of these interests. To the limited extent that any effort to meet real housing needs comes into play, politicians and state bureaucracies seek partnerships with developers and apply the mildest possible pressure to ensure that projects offer token gestures around social responsibility and affordable housing.

In 2023, in her capacity as global director of The Shift, Farha submitted a brief to the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities. In it, she dealt with some key issues related to the financialization of housing and identified some of the major players responsible.

Farha noted that this process “involves many actors, such as pension funds, private equity firms, asset management funds, publicly traded companies, and Real Estate Investment Trusts (REITs). These actors acquire and operate housing properties to generate profits for themselves and their shareholders.” Moreover, “[a]ll levels of government, public bodies, and industry bodies also contribute to the financialization of housing by fostering an economic, legal, and policy environment that promotes the desirability and profitability of the financialization of housing.”

The brief stressed that “Canadian landlord/tenant legislation has also provided investors with operational advantages – advantages which make running their businesses in a profitable way far easier.” In this regard, “Even where rent control regulations are in place, these are often skirted through above-guideline rent increases (AGIs), which allow investors to increase the rent by higher levels, typically if they can show capital investment into their buildings.”

Crucially, “rent control in Canada is rarely combined with vacancy control. Without vacancy control, once a tenancy ends, investors can increase rents by any amount. This may incentivise landlords to create hostile living environments to drive tenants out, or to directly evict tenants. Indeed, certain financialized landlords have been observed increasing evictions following their acquisition of new properties.”

Public policy in the area of housing provision has become utterly subordinated to profit-making at the expense of social and community needs. Any notion of a neutral state must be set aside, and hopes that governments would at least feel the need to protect citizens from the worst instincts of capitalism are sadly unjustified.

The profit-driven housing system has not only worked to drive up rents and reject the housing solutions that poor and working-class people desperately need; it has also used redevelopment as a tool of gentrification.

In an article written in November 2025, Jay Brudny of People’s Voice suggested that “the process of gentrification occurs where there are large and easily exploited rent gaps created by capital with help from the state. A rent gap is the difference between what landlords receive from tenants […] and what they could receive if that property and the area surrounding it were ‘improved.’” 

This active process of class-based and racialized displacement has become a feature of modern urban life in Canada. Whole neighbourhoods are targeted – as higher-income residents move in, rents are driven up, community services removed, and police persecution of poor residents intensified. The Ontario Coalition Against Poverty (OCAP), for which I was an organizer, had an anti-gentrification banner that proclaimed “We Will Not Be Pushed, Priced, or Policed Out.” 

Private Partnerships

Amid the consolidation of the commodified housing agenda, the housing crisis has deepened, with millions of tenants juggling the cost of rent and food, while the number of unhoused people grows each year. Where governments have concerned themselves with public housing policy, it has been based on the assumption that no serious commitment to social housing is possible and that partnerships with developers and investors are necessary.

In 2017, Justin Trudeau’s Liberals introduced a much heralded National Housing Strategy. Writing in The Tyee at the time, former Vancouver city councillor Jean Swanson and housing activist Sara Sagaii offered a cutting critique of the initiative, suggesting that it should be regarded as a “National Gentrification Strategy.” 

The Liberal plan was to put public resources into developer-driven “mixed income” developments, in which high-end housing projects would include at least “30 per cent of units having rents at or less than 80 per cent of median market rents, for a minimum of 20 years.” However, housing at this price would still be unattainable for many low-income people, not to mention temporary. As Swanson and Sagaii write, “if the median rent is $2,000 a month, 80 per cent of it would be $1,600. You need to make about $65,000 a year to afford this amount of rent.” This absurd focus on providing fake affordable housing in order to pretend needs are being met has continued to provide cover for developer-led profit-making ever since.

Under the leadership of the even more cold-blooded Mark Carney, the Liberals are at it again, peddling supposed solutions to the housing crisis that rely on partnerships with investors and profiteers. In an article for Canadian Dimension in November 2025, Laurence Braun-Woodbury examines the federal government’s allocation of $13 billion to Build Canada Homes (BCH). 

Braun-Woodbury concluded that, “Taken as a whole, the Liberal’s [sic] new housing agency signals a return to a public-private partnership (P3) model [and …] the same profit-first mode.” He went on to argue that the plan’s “shifty language creates an important loophole: BCH homes are set up to be privately owned and [non-governmental organization] operated.” This leads to a “model far too weak to stabilize prices or challenge landlord power.”

For years now, Canada has lived with a highly distorted system of housing provision that has failed to meet the needs of communities and treated housing as a commodity instead of a social need and basic right. Average-income homeowners have struggled with almost impossible debt loads and tenants have barely managed to pay the rent and feed their families.

Yet this huge source of profit for some and supposed engine of the economy has been based on a bubble of speculative greed. Rebounding interest rates following pandemic-related lows and the more recent crisis brought on by the U.S. protectionist turn have shaken the whole house of cards. In March of 2025, Candyd Mendoza in CMP News warned that Trump’s tariffs “threaten[ed] to drive up costs and disrupt an already fragile housing market recovery” – exactly what happened in the months that followed.

Writing in Canadian Dimension in May 2025, I considered Toronto’s condo market crash, which is unfolding even as the housing crisis deepens and record numbers are forced onto the streets. I drew on a video made by Mark Morris, a “real estate insider,” who very candidly laid out the complete irrationality of what has unfolded. 

To paraphrase Morris’ argument, the housing bubble focused on new-builds, specifically condos, not to meet the housing needs of those who might live in them but to be attractive to investors.

According to Morris, this reached a point where “the only reason really from 2017 onward that anything sold was because everyone kind of recognized that they could take advantage of the bubble that had been created.” Now, however, the investors have walked away. Morris estimates that a quarter of pre-construction buyers are defaulting, and the disaster is likely to get worse.

The agenda of destructive greed that governments at every level have enabled is failing on its own terms. There is no way out of this impasse other than to break the power of developers, investors, and corporate landlords. They must be shut out and the public resources devoted to their profit-making must go instead toward social housing on a massive scale, offered on a rent-geared-to-income basis.

At the same time, we must have real and effective rent controls and security of tenure for tenants. At the beginning of the pandemic, Ontario premier Doug Ford uncharacteristically said, “If you’re down and out, you just don’t have the money, food’s more important to put on the table than pay rent, then put the food on the table.” We should take him at his word and demand a moratorium on economic evictions in these harsh and uncertain times.

The need for solutions that meet the needs of our communities, rather than swelling the coffers of developers and landlords, is pressing and vital. We can be sure, however, that they won’t be granted willingly by Mark Carney and his provincial counterparts. The building of a powerful grassroots mass movement for housing justice is the only possible response to the hugely unjust and highly destructive commodification of housing.

John Clarke first became involved in anti-poverty struggles in 1983 when he helped form the Union of Unemployed Workers in London, Ontario. He was an organizer with the Ontario Coalition Against Poverty (OCAP) from 1990 to 2019 and currently facilitates a Fighting to Win course for union and community activists through 230 Fightback.