In Defense of Housing. Peter Marcuse

protections are only pursued by meddling bureaucrats or greedy residents. But the real estate industry does whatever it can to maintain high prices. Removing existing tenant protections would just place real estate firms in a better position to reshape markets even more in their own favor.

      Second, when housing becomes a globalized, financialized commodity, the gulf widens between the price signals to which markets respond and the actual social need for dwelling space.

      Investment firms chasing short-term gains reorient the housing system away from local residential needs and disconnect prices from wages in local labor markets. Transnational speculation begins to shape what gets built, where it appears, and who can afford to live in it. We see this happening in cities like London and Vancouver, home to increasing numbers of apartments that are ill-suited to the families who need to live in them but easily sold to investors who live abroad.

      There is a world of difference between economic demand and social need. Many people, especially poor and working-class households, need more housing than they can afford. But this form of need does not register with purely profit-oriented developers. Far from responding efficiently to residential needs, investors can turn a profit by squeezing more money out of existing spaces while adding nothing to the general housing stock. Developers routinely engage in land hoarding and other strategies centered on speculation and scarcity.

      Even some economists recognize that housing markets are structurally incapable of being efficient.⁸⁰ It is easy to inflate price bubbles and difficult to deflate them. The history of real estate is replete with speculation.⁸¹ Despite how it appears in abstract models, the actual market in housing is neither efficient nor rational.

      Those who want to unleash the cranes will counter that “distortions” in housing markets must be due to government regulation rather than to market dynamics as such. Displacement would not be a problem, they say, had there not been rent regulation in the first place. State interference creates distortions, they argue, so deregulation is necessary in the name of removing inefficiencies.

      But we need to question this definition of efficiency. One person’s inefficiency is another person’s home. We need to ask why investors’ profits should trump the needs of residents. From the perspective of a tenant facing displacement from their longtime home, it is the system of commodified residential development that is inefficient, not to mention cruel and destructive. That a building has become a target for speculators due to changes in global housing markets in no way lessens its usefulness as living space for its inhabitants.

      Supporters of deregulation offer the process of filtering as a deus ex machina that will provide affordable housing. But in practice, there are limits to the stock of old buildings, especially within specific neighborhoods. And filtering today often takes the form of older buildings being recouped by wealthier households.

      This touches on the final reason why markets will not solve the housing crisis. Those who want to deregulate and build do not consider the practical consequences of commodification in action.

      It may be true that, all other things remaining equal, enlarging supply while keeping demand constant would lead to lower prices. But stated that way, the claim is too abstract. All other things would not remain equal. Promoters of free-market housing solutions never consider the costs and consequences that would result from attempting to establish a purely self-regulating market in housing.

      Setting up the conditions for frictionless exchange and unlimited development could in theory create a situation where the price of housing falls until it is affordable to everyone including the lowest paid workers. But trying to reach that point would entail overturning the existing residential landscape. It would mean displacement on an immense scale. It would make it easier for landlords to threaten, harass, and exploit tenants. It would lead to huge increases in residential segregation. It would encourage shoddy, dangerous conversions and environmental degradation. It would lead to the proliferation of under-maintained, overcrowded, dangerous dwellings; such buildings were pervasive during the heyday of laissez-faire housing in the late nineteenth century. The idea that tenants in a fully unregulated market could avoid such harmful conditions just by exercising consumer choice is naïve. And it is unrealistic to imagine that there would not be some countermovement in response.

       Towards Decommodification

      Around the world, those seeking to turn houses into liquid assets are creating problems for those who merely want to live in them. And yet the ideological glorification of the free market is stronger than ever. It is becoming harder to visualize any alternatives other than minor modifications in the pattern here or there—or even to see the commodified housing system for what it is.

      Commodification is not the default state that housing adopts. It is relatively new. It depends upon state action. It differs according to time and place and mutates in response to changing conditions. And its consequences are uneven, helping the super-wealthy generate huge profits while creating instability for the rest.

      In The Great Transformation, Karl Polanyi demonstrated that “the idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society.”⁸² The idea of a self-adjusting housing market is similarly utopian.

      In unequal contexts where the logic of commodification rules, some people will always be forced into uninhabitable dwelling spaces. Some will live in sheds, some in closets. Some will live amid toxic pollution. Some will be packed with twenty-five other people, including children, into a single home.⁸³ These are not market failures—they are how the market works.

      Ultimately, the problem with making housing a commodity is that as such, living space will be distributed based on the ability to pay and provided to the extent that it produces a profit. But ability to pay is unequal while the need for a place to live is universal. There is thus an unavoidable contradiction.

      No matter how many actors and institutions treat it as such, housing can never be a fully liquid, exchangeable commodity. Its use value, and indeed a portion of its monetary value, comes from its place within communities that emerge over time. They require continuity and stability. Wrenching housing out of its context obliterates this social dimension.

      In the end, however, we cannot blame real estate companies for today’s housing injustices. As entities created, using the legal powers of the state, for the sole purpose of economic accumulation, corporations are single-minded by design. Profit seeking without regard for external social consequences is intrinsic to the way they are set up. Residential inequality and crisis will always result from a housing system dominated by these kinds of firms and by other property owners following the same logic.

      The solution to the housing problem, then, is not moralism, but the creation of an alternative residential logic. Exhorting for-profit real estate companies to act differently in the name of creating a less vicious housing system is pointless. Housing problems are not the result of greed or dishonesty. They result from the structural logic of the current housing system. Alternative, decommodified models of residential development must therefore be created. Far from stopping new construction, cities need more new decommodified dwellings, such as public or cooperative housing. A proper understanding of the housing crisis today requires an account of its commodification. Making real progress on housing problems requires developing concrete alternatives to it.