It was not until the second half of the twentieth century that housing would become a liquid asset and real estate a global, corporate behemoth. The commodity character of housing has ebbed and flowed. Its growth has been uneven and, as struggles worldwide demonstrate, it continues to be so. But it has always depended upon state action to make it possible. And it has never been a purely economic process—it has always had social and political dimensions.
The Age of Hyper-Commodification
If the extent of commodification expands and contracts historically, we are currently living through a period of unprecedented expansion. In today’s transnational, digitally enhanced market, housing is becoming ever less an infrastructure for living and ever more an instrument for financial accumulation. The extreme ways in which housing is dominated by real estate today can be called hyper-commodification.
Under hyper-commodification, all of the material and legal structures of housing—buildings, land, labor, property rights—are turned into commodities. In the process, the capacity of a building to function as a home becomes secondary. What matters is how a building functions in circuits of economic accumulation.
The hyper-commodification of housing occurs in the context of broad political-economic developments that magnify its impact. Most significant is our era’s growing inequality, which is reaching unprecedented levels. Inequality multiplies the power of economic elites, who benefit from the commodification of housing and then promote its further growth. Inequality also means that capital is on the offensive while the power of organized labor has been undercut. For working-class and poor people, wages have been stagnant for decades and, for many, consumption has been maintained through debt.26 Lower wages for workers, paired with huge gains for the global elite, have meant many countries are more unequal now than they have been in over a century, or ever.27
This is also a time when housing and urbanization are becoming more central to the global economy. In many places, real estate has become more profitable and important than industry. Henri Lefebvre described this shift in 1970:
Real-estate speculation becomes the principal source for the formation of capital, that is, the realization of surplus value. As the percentage of overall surplus value formed and realized by industry begins to decline, the percentage created and realized by real-estate speculation and construction increases … as economists are accustomed to saying, this is an unhealthy situation.28
Real estate and its allies in the finance and insurance sectors are no longer merely absorbing the shocks of the broader economy. They are increasingly calling the shots.
Beyond these broad trends, we can outline three more specific, interconnected, and mutually reinforcing factors that constitute the hyper-commodification of housing today. They are found in different varieties; some countries and cities have resisted one or another of them. But in one form or another, they are reshaping the housing systems of most of the countries and cities that participate in global neoliberal capitalism today.
The first factor is the contemporary counterpart to enclosure: deregulation, the removal of restrictions placed on real estate as a commodity. Throughout the United States and many other countries, there has been a steady trend towards weakening or abolishing the regulations, customs, and rules governing residential property.
The most obvious example is in home finance. Over the past few decades, regulations surrounding mortgage lending were fatally weakened in the United States, Britain, and many other countries. Pillars of financial regulation that constrained the mortgage market, like the Glass-Steagall Act, were gutted. Usury controls were eliminated. Competition was introduced into mortgage markets that had been tightly controlled. Variable interest rates, balloon payments, self-certification, interest-only loans, NINA (“no income, no assets”) loans, and then eventually NINJA (“no income, no job, no assets”) loans and other exotic mechanisms were introduced—and often sold to people who would have qualified for less expensive and less risky traditional mortgages. Predatory lending affected different communities unequally, and disproportionately destroyed the wealth of black and Latino households.29 The regulatory powers that could have prevented these practices had been removed.30
Many other aspects of Western housing systems were deregulated as well. Rent regulation regimes have been overthrown. Between 1981 and 2011, the number of rent-controlled apartments in New York plummeted from more than 285,000 to fewer than 39,000.31 In the UK, the rental market underwent deregulation from the 1950s onward, accelerating in the 1980s and 1990s as part of a concerted effort to increase the number of private tenants.32 The 1988 introduction of less secure tenancies created buy-to-let mortgages specifically for this purpose. Around a million such mortgages have been issued since then.33
Deregulation also permitted a wave of privatization of publicly owned or controlled housing. In the United States, public housing is in full retreat. Since the 1990s, more than 260,000 public housing units across the United States were either sold off to private owners or demolished in order to sell off the land beneath them.34 The situation is even grimmer in Britain, where public housing represented a much larger piece of the residential sector. Since 1981, nearly 3 million units of council housing have been sold or transferred.35 In the post-socialist world, the privatization of housing since 1989 has probably constituted the largest transfer of property rights in history.36 The hard-won spaces of partial decommodification developed in the postwar period have been eroded.
For all of its far-reaching consequences, deregulation has not meant the subtraction of the state from real estate markets. It has not meant getting rid of regulations so much as rewriting them to make real estate a more liquid commodity. The state is still deeply involved throughout the housing system.
Second, and relatedly, housing has been undergoing a process of financialization. This is a generic term to describe the increasing power and prominence of actors and firms that engage in profit accumulation through the servicing and exchanging of money and financial instruments.37 Managers, bankers, and rentiers produce profits from real estate through buying, selling, financing, owning, and speculating. Players in this market often exchange in a disembodied, electronic realm. They need not ever see the actual physical buildings from which they make their fortunes—though their trading has serious consequence for those who occupy their properties.
Again, the mortgage market provides a good example. What was once a way to facilitate the production of housing has become a tool for profitmaking on its own. Over the past half-century or so, home mortgages were transformed from an industry dominated by local lending, thrifts, and passbook accounts to one dominated by global corporate banking and securitization. Government-sponsored enterprises like Fannie Mae and Freddie Mac have existed since the 1930s to supply liquidity to the mortgage market. But since the 1980s the practice of pooling mortgages and selling shares of their income stream has exploded.38 Mortgage markets have become a way of turning solid structures into liquid assets. Houses can be bought and sold at the speed of electronic trade, and split into thousands of slices. As the housing scholar Desiree Fields puts it, “rather than anchoring wealth in place via property, today mortgages facilitate global investment and the extraction of value from place-bound property.”39 This was a process that financial firms enthusiastically promoted.
Under financialization, the nature of the real estate company is changing. Traditionally, real estate even in big cities was a local and relatively small-scale affair. Merchants, professionals, and others with capital to invest would leverage their money and social networks as landlords.40 Even in cities like New York, real estate has been ruled by thousands of small players led by a few powerful family firms.
But the real estate ecosystem is being colonized by large-scale corporate finance. Wall Street and the City of London are the new landlords on the block. Private equity is becoming a major