Canadian study suggests apparent housing shortage due to financialization of markets

[hu...@comcast.net]

Food for thought:

 

https://www.policyalternatives.ca/news-research/the-numbers-dont-lie-the-housing-crisis-is-not-caused-by-a-supply-shortage/

 

 

I don’t know if anyone has completed a similar study in the US. I also don’t know if someone conversant with FED databases or the like might be able to put together corresponding graphs for the US relatively quickly.

In any case, the Canadian study in conjunction with an op-ed in the NYTimes a couple of days ago by Oren Cass suggests a hard look at private equity is in order, not just relative to housing.

https://www.nytimes.com/2026/02/06/opinion/capitalism-industry-financialization.html

 

 

And here’s an article pointing to a community that took matters into their own hands, creating something called a neighborhood trust:

 

https://www.phillymag.com/news/2026/02/06/kensington-corridor-trust/

 

The neighborhood trust in the Philadelphia neighborhood seems to have concentrated on buying up existing properties in a neighborhood teetering between dereliction and gentrification, capturing increasing values for the community itself to administer. The situation in Davis Square may be somewhat different. At the very least, it would require start-up funds of an entirely different magnitude than the $300K in the Philadelphia neighborhood. That would be a hugely ambitious undertaking.

 

And, I don’t know if the graphs in the Canadian study apply in a meaningful way to the specific conditions of Davis Square. For one thing, the arrival of the Red Line in 1984 triggered a dramatic increase in the value of Davis Square properties, presumably independent of any effects of financialization.

 

Speaking of the Red Line, I’m inclined to believe that current residential density underutilizes access to the subway, independent of all other considerations. In my ideal world, the City, or a neighborhood trust would build social housing in the square on the Viennese model. For the record, I’m completely agnostic on height restrictions—whatever works.

 

-Hume

 

Hume Vance

211 Morrison Ave.

Somerville, MA 02144

617 895-6979 c

617 628-5759 h

 

[PJ Santos]

Hi Hume, 

I'd be skeptical of the policyalternatives.ca explanation, the consensus view among experts is housing supply has a significant effect on prices. I'd encourage you to take a look at the governor's housing needs assessment for MA (and Somerville's own) to see what local experts think needs to happen in our region. 

For the figures you posted, I think there are two important factors that change the interpretation of the "Dwellings Per 1000 people" figure you shared. 

First, there's been a shift in geographic demand. I'm not as familiar with the Canadian situation, but if it is analogous there's been a decrease in demand in rural areas and an increase in demand for urban ones as tastes and the nature of work changes. Since we haven't built more housing in cities to accommodate this shift, we have a bunch of inexpensive housing in rural areas without any jobs or services nearby, and high prices in urban areas. A bunch of vacant, cheap houses in Ohio unfortunately do nothing for prices in Boston (or rural Alberta vs Toronto)! My understanding is post-covid this trend reversed a bit with "remote work", but not enough to decrease prices in cities. 

The second factor is society is tending towards more, smaller households. People are marrying later, having fewer kids, and the elderly are living longer. (See the increase # of 1-2 person households vs no change or shrinking larger households in Somerville)  As a result, "per 1000 people"  isn't necessarily the right denominator

Regarding the community trust, we have one of those: https://www.somervillecommunitylandtrust.org/ ! They're doing great work, but the major challenge is that housing is really, really expensive, and they've only secured affordable housing for 11 households at this point. Because of Prop 2.5, it would be very difficult for Somerville to massively raise its property taxes to build social housing. 

Part of the purpose of our Inclusionary Zoning policy (and the state 40B process Copper Mill is trying to use) is that if you need a ton of money to build housing, one place to go get it is from big developers making new, expensive homes. It isn't exactly the Vienna-style social housing model, but it is using a similar approach of wealthy people living with and cross-subsidizing the housing of less affluent people. One thing I do like about the 40B process is that the developer's books are audited by the state, and they are limited to only making a 10% profit, so it puts some limits on how much blood-sucking capitalism ends up happening. 

Due to the limitations of state and federal law, these are the best workaround that we have right now for building affordable housing. It is likely several years away, but I know Rep Mike Connolly is trying to pass a social housing bill at the state house based on a policy pioneered by Montgomery County Maryland. 

Thanks for sharing your thoughts! 

PJ

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[David Booth]

On 2/8/26 10:37, PJ Santos wrote:> I'd be skeptical of the
policyalternatives.ca the consensus view among

> experts is housing supply has a significant effect on prices.

Agreed.

> . . . society is tending towards more, smaller

> households. People are marrying later, having fewer kids, and the
> elderly are living longer. (See the increase # of 1-2 person households
> vs no change or shrinking larger households in Somerville)  As a result,
> "per 1000 people"  isn't necessarily the right denominator

Agreed. And another major mistake that study makes is to assume that
housing supply does not affect price, *because* financial markets caused
prices to rise. They argue that financial markets -- making it easier
for home buyers to borrow -- drove up home prices because prices got bid
up more. They may be right about that, but financial markets and supply
can *both* impact housing prices. They are not mutually exclusive.

> Rep Mike Connolly is trying to pass a social housing bill

> <https://www.repmikeconnolly.org/introducing_the_massachusetts_social_housing_act> at the state house based on a policy pioneered by Montgomery County Maryland <https://www.npr.org/2024/10/07/nx-s1-5119633/housing-crisis-solution-public-housing-mixed-income-maryland>.

Interesting! I think that approach has a lot of potential.

Thanks,
David Booth

[hu...@comcast.net]

Hi PJ,

 

Thank you for your thoughtful and persuasive points. It’s certainly true that household size has declined over the last half century; whether enough to completely flatten the curves of relative housing stock, I’m not sure. And, your point about geographic shifts is also well taken, although Alberta, awash in oil, may not be the best Canadian example. It is very likely true for the Maritimes, as it is no doubt also for the rural areas and faded mill towns of central Massachusetts.

 

I’m no expert on financialization. I believe it is true that in some cases, perhaps moreso in exurban areas in the southwest that cratered after the 2008 financial crisis, that large swaths of residential housing were scooped up by private equity. Locally, there appears to be at least some involvement of private equity, primarily through pension funds and endowments, in ownership of prime property. I’m not sure how much of that is residential. But, the larger point would be that even if financialization is responsible for only a fraction of the escalation in housing prices in our area, if that’s say 10% to 20%, that’s still a substantial number (and no, I have nothing to back up that number). If I’m right, for this we need coordination at the state and national level.

 

Thank you for your helpful links.

 

Best,

Hume

 

From: daviss...@googlegroups.com <daviss...@googlegroups.com> On Behalf Of PJ Santos
Sent: Sunday, February 8, 2026 10:37 AM
To: hu...@comcast.net
Cc: daviss...@googlegroups.com
Subject: Re: [DSNC] Canadian study suggests apparent housing shortage due to financialization of markets

 

Hi Hume, 

 

I'd be skeptical of the policyalternatives.ca explanation, the consensus view among experts is housing supply has a significant effect on prices. I'd encourage you to take a look at the governor's housing needs assessment for MA (and Somerville's own) to see what local experts think needs to happen in our region. 

 

For the figures you posted, I think there are two important factors that change the interpretation of the "Dwellings Per 1000 people" figure you shared. 

First, there's been a shift in geographic demand. I'm not as familiar with the Canadian situation, but if it is analogous there's been a decrease in demand in rural areas and an increase in demand for urban ones as tastes and the nature of work changes. Since we haven't built more housing in cities to accommodate this shift, we have a bunch of inexpensive housing in rural areas without any jobs or services nearby, and high prices in urban areas. A bunch of vacant, cheap houses in Ohio unfortunately do nothing for prices in Boston (or rural Alberta vs Toronto)! My understanding is post-covid this trend reversed a bit with "remote work", but not enough to decrease prices in cities. 

 

The second factor is society is tending towards more, smaller households. People are marrying later, having fewer kids, and the elderly are living longer. (See the increase # of 1-2 person households vs no change or shrinking larger households in Somerville)  As a result, "per 1000 people"  isn't necessarily the right denominator

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