In Defense of Housing. Peter Marcuse
for their tenants. Renters of REIT-owned houses in California report paying higher-than-average rents and shouldering the burden of home repairs on their own.65
In the United Kingdom, tenants are also facing a new world of exploitation and insecurity. Public housing is being dismantled, and, as a result, tenants must turn to private landlords—sometimes the same people who cannibalized the public housing stock in the first place. In one development in South London, more than forty ex-public-housing units are owned by the son of the government minister who presided over the privatization of public housing in the 1980s.66 In London as whole, more than 36 percent of former publicly owned units are now rented out privately; in some local areas this figure is more than 50 percent.67
In a notable example of housing policy absurdity, some UK tenants in ex-public-housing units receive public subsidy for their rent, which they pay to private landlords.68 One tenant on a council estate told reporters that she is charged £800 per month by a private landlord, while her council rent for the same unit would have been £360 per month—with the public making up the shortfall.69 The whole situation typifies hyper-commodified housing: profit-seeking businesses inserting themselves into the residential system and siphoning off resources, making housing more expensive while contributing nothing to the ability of the system to meet residents’ needs.
Commodification and Gentrification
For the corporate investors buying up housing throughout New York, gentrification is the business plan. Firms purchase buildings on the assumption that rents can be doubled, tripled, or more. This strategy is predicated upon taking units out of the rent stabilization system—in effect, recommodifying housing—and displacing lower-income tenants.70
Take the case of Zhi Qin Zheng, a founding member of New York’s Chinatown Tenants Union and a former garment worker in her sixties. When an investment company named Madison Capital bought the downtown Manhattan building where she lived in a rent-stabilized unit, it determined that what she saw as her longtime, affordable home was in fact an “underperforming asset.” Her home needed to be “repositioned” to garner the sixfold rent increase that the market supposedly demanded in the name of efficiency. So her landlord, according to reports, began a campaign of harassment—cutting the heat, leaving damage unrepaired, and gratuitously calling the police on tenants in a campaign that residents saw as “aimed at pushing them and their culture out of the buildings.”71
Landlord associations say that only the few proverbial bad apples break the law. But this basic story—a building that is seen to be underperforming is reorganized to generate more income—happens every day across the city. It is a pure form of what the geographer Neil Smith saw as the essence of gentrification: claiming the gap between the current rent and a building’s “highest and best use.”72 When housing units are bought on the assumption that they can be turned into more liquid commodities, displacement is the predictable result.
Low-income tenants who cannot afford higher rents maintain a foothold in gentrifying neighborhoods in two ways. Either they are protected by some form of partial decommodification, such as rent control or public housing—policies which, as we have shown, are being actively undermined by the day—or they are lucky enough to have an economically irrational landlord. This is a risky prospect in a competitive real estate environment, but it does allow some tenants a modicum of stability. A New York community organizer told housing researchers,
Landlords are not always maximising their income. Many things affect the decisions of landlords. There are members of the community, there are thousands and thousands of disabled people and older people, for example, who pay far below the market rate and have been for a long time because the landlord knows them and has a relationship with them. He makes this illogical decision and that’s why the old lady comes in and has been paying $600 for the last decade. There are community values that mediate the market. Not 100 per cent but in many cases, there is a community consensus that we shouldn’t evict the disabled, single person; this mediates the pressure to raise the rents.73
The onward march of commodification makes situations like this unlikely. The community organizer continued, “As the market rate goes up and up, that consensus breaks down.”74 Shareholders may live scattered across the world and only own a share in a property on a short-term basis. They have no patience for such irrational behavior. The economic and organizational logic demands that rents be raised as high as possible.
This is not to say that this strategy always turns a profit. Buildings can easily fail to generate the desired returns. But even when this happens, there is no exit from the commodified housing system—and no clear mechanism whereby failed real estate projects might be reappropriated by residents as common property. Foreclosed buildings are just reinserted into financialized circuits, setting up a repeat of the entire process. Rent-regulated buildings in the Bronx purchased by Ocelot Capital in 2007, for example, fell into foreclosure and in the following years cycled through a series of owners, falling into an ever-worsening state of repair.75
Commodification is a self-reproducing process. And it operates simultaneously at different scales: at the scale of the neighborhood, the building, and even the household. Hence the practice of subletting spare rooms or sofas—the commodification of ever-smaller spaces becomes a strategy for eking out a place in an unstable and expensive housing market. This too gets absorbed into a broader instrumental logic. One self-styled “rent-to-rent” entrepreneur in London explained straightforwardly to a reporter, “I rent a property with a view to renting it out at a higher rent.”76 No doubt some canny financial innovators are already working on the securitization of rent-to-rent housing or the pooling of income streams from subletting.
Unleashing the Cranes
Some observers argue that the unprecedented shift towards the commodification of housing has not gone far enough. There are many voices today that declare that if real estate developers were just given a freer hand, then the market would solve the housing crisis.
For example, the economist Edward Glaeser argues, “The best way to make cities more affordable is to reduce the barriers to building and unleash the cranes. To do so, end the dizzying array of land use regulations in most cities that increase cost.”77 The conservative housing scholar Howard Husock contends that New York must “thaw its frozen housing market” by getting rid of rent stabilization and public housing.78 The liberal writer Matthew Yglesias also affirms a “deregulatory agenda.”79 For these authors and more, the hyper-commodification of housing is not the problem—it is the solution.
This reasoning follows clearly from standard economic logic. But this position ignores the real-world effects of the commodification of housing. Fully deregulating and unleashing the cranes will not and cannot solve the housing crisis, for a number of reasons.
First, while markets are imagined as self-organizing entities, as we have seen, the state has always been central to the process of making housing a commodity that can circulate through market exchange. The state cannot “get out” of housing markets because the state is one of the institutions that creates them. Government sets the rules of the game. It enforces the sanctity of contracts, establishes and defends regimes of property rights, and plays a central role in connecting the financial system to the bricks and mortar in which people dwell.
In other words, housing markets are political all the way down. The balance of power between tenants and landlords, or between real estate owners and communities, cannot be determined in a neutral, apolitical way. What the free market boosters ignore is the question of power.
The housing market is, among other things, a domain of struggle between different, unequal groups. Removing the regulations that rein in property owners shifts power towards capital and away from residents—while also, not coincidentally, making land more valuable and more amenable to speculation. This is why it is the real estate lobby that campaigns to deregulate the housing system, a demand that tenants almost never make. The commodification of housing is