With millions facing housing insecurity, the economic downturn has sparked concerns of a new housing crisis. Where the subprime mortgage crisis thrust the centrality of unsustainable housing financing practices in the global economy into view, the Covid-19 recession has brought increased attention to widespread housing insecurity among the roughly forty-three million renter households in the US. And these units, too, are increasingly financialized.
A 2017 article by geographer DESIREE FIELDS examines these trends with a focus on New York City:
"Rental housing today constitutes an important new node for financializing projects globally, most noticeably in the US single-family market, as well as Spain and Ireland. Private equity funds have taken advantage of sharp price drops, surging rental demand and constrained mortgage credit to buy distressed real estate assets, convert them into rental housing and roll out novel rent-backed financial instruments. Tenants' homes may be subject to financialization even though residents themselves do not have mortgages.
Whereas private equity firms only discovered single-family rental post-2008, they had established themselves in New York City’s rental market in the years leading up to the crisis. New York has been characterized as a testing ground for neoliberal urban restructuring, experimentation made possible by its 1970s fiscal crisis. Three decades later, the city's mid-2000s real estate boom, together with the incomplete dismantling of postwar-era state rent protections in the 1990s, created the conditions for another round of experimentation: private equity firms, in concert with local banks and landlords, set about transforming the city's rent-regulated housing into a novel asset class for capital seeking investment opportunities, subjecting tenants to harassment, displacement and unsafe living conditions to extract financial yield. This experiment represents an important step towards incorporating rental housing into global circuits of capital."
Link to the piece.
- In another paper, Fields and co-authors Rajkumar Kohli and Alex Schafran trace the growth of single-family rental securitization in the US post-2008. Link.
- Joe Beswick et al. document the rise of corporate landlords in post-crisis London's rental market. Link. Manuel B. Aalbers and Andrej Holm compare privatized social housing in Amsterdam and Berlin. Link. Michael Byrne examines asset-management companies and financialized real estate in Ireland. Link.
- For more on the financialization of real estate, see Herman Mark Schwartz's work linking the US housing market and global capital flows. Link. See also: Saskia Sassen on mortgages, and David Harvey on capital and urbanization. Link, and link.