nextcity.org/features/view/capital-city-gentrification-and-the-real-estate-state
Capital City: Gentrification and the Real Estate State Tapping into the remarkable power of city planning to reclaim urban life for all residents.
EDITOR’S NOTE: Next City’s Oscar Perry Abello spoke with author Samuel Stein last week about his new book, “Capital City: Gentrification and the Real Estate State,” published by Verso Books. The following is an excerpt from the book’s introduction, in which the author digs into the ways the state uses and is used by capital — in particular, the $217-trillion real estate industry — and how urban planners often find themselves conflicted between the need to make cities “better” and more liveable and the pressure to make decisions in service to rising real-estate values.
On March 25, 1911, fire engulfed New York’s Triangle Shirtwaist Factory. The bosses had locked the doors and 146 workers were killed. Two days later, the Jewish socialist newspaper The Forward printed an impassioned plea from its editor, Abraham Cahan. After describing the pain felt throughout Manhattan’s Lower East Side, Cahan wrote that mourners were beginning to see a figure through their tears: the biblical Angel of Death. “Who is the Angel of Death? Who is the thug? Who is the mass murderer? Must we again say it is that gluttonous ravager of humans — capital?!”
Just over a century later, a public housing complex in West London called the Grenfell Tower burst into flames. Though residents had warned that the building was a firetrap, public authorities allowed it to deteriorate. When the fire started, it quickly accelerated due to the highly flammable cladding that management had added to the building’s exterior in order to make it more attractive to posh neighbors. The fire killed over seventy tenants.
Who is the Angel of Death? Who is the mass murderer?
Today, as a century ago, the culprit is capital, rushing in and out of spaces with abandon in search of profit and growth. In 1911, the arsonist was industrial capital, then the dominant force in urban politics. In 2017, it was real estate capital. Around the world, more and more money is being invested in real estate, the business of building, buying and renting land and property. You can sense it as you walk through most cities, and feel it every time you pay the rent or mortgage.
Global real estate is now worth $217 trillion, 36 times the value of all the gold ever mined. It makes up 60 percent of the world’s assets, and the vast majority of that wealth — roughly 75 percent — is in housing. There are a number of reasons why capital is converging on land and buildings: a long period of financial deregulation, low federal interest rates and “quantitative easing” in the United States; massive urbanization programs in China, the United Arab Emirates and several other countries; a proliferation of predatory equity funds scouring the globe for “undervalued” investment opportunities and finding them in housing; economic polarization around the world, with extremely wealthy and somewhat nervous individuals viewing property as the safest place to hide their money; and more. When capital gains rise while rates of profit plummet across many once-dynamic sectors of the economy, real estate becomes the latest stop on what geographer Cindi Katz calls “vagabond” capitalism’s eternal search for profitability.
In the United States, homes are changing hands at a rapid pace, but homeownership is at a fifty-year low. In 2016, a record 37 percent of home sales were made to absentee investors. While some of those buyers were pensionless seniors who needed a retirement strategy, most of them were banks, hedge funds and private equity firms like Blackstone — now the world’s largest landlord.
Mary Bolton 202-390-1208