“Why struggle to stay? The question returns when our landlord puts our single-family home in Eagle Rock on the market less than two months after I’ve moved in,” Lupita Limón Corrales writes, in a poignant essay about fighting to stay in Los Angeles amid its housing crisis. The apartment has a veranda overlooking well-established citrus trees. It takes months, but Corrales negotiates a small financial settlement with the new owners, a “bicoastal white couple” who “plan to dig the yard up and build a swimming pool.” Corrales writes, “Maybe rather than asking ‘Should I leave or should I stay?’ we should ask, ‘In which versions of the future can everyone have a choice?’”
It is a good question, and one that is quickly coming for everyone. There is a lot of money riding on the idea that where you live will soon become just as ephemeral, and subject to trends, as how you take your coffee or what kind of shoes you wear. Where someone lives or where they grew up has always contributed to one’s sense of identity, but now there are tools and financing available to turn this sociological fact into a value proposition. Locations can be made to behave like fast fashion or algorithm-refined pop tunes: something designed to be used and forgotten fairly quickly. The U.K.-based private equity firm Queensgate bought two boutique hotel chains, Generator and Freehand, and has increased sales in part by offering extended stays and monthly subscription packages. Perhaps that’s why CoStar, the commercial real estate information and analytics provider, doesn’t refer to them as hotel chains but collectively as an “asset-rich lifestyle hospitality platform.”
There is a lot of money riding on the idea that where you live will soon become just as ephemeral, and subject to trends, as what kind of shoes you wear
All across the world we are witness to a vast consolidation of real estate into the hands of a few companies that see land and shelter as investment vehicles first, and as homes a distant second. An emerging industry of mega landlords are obscuring their consolidation schemes behind an array of lifestyle brands that put a cutesy facade on a totalitarian project. The new players in real estate operate much like Spotify, Netflix, and other platforms that charge a subscription for temporary access to more than you could ever buy outright. These mega landlords, and the digital entities that facilitate them, aim to disrupt existing industries, creating a new world in the shape of their interests, while holding a monopoly on the tools necessary for surviving it. Unlike Netflix and Spotify, however, the platformized real estate industry has the power to determine where and how we live.
The players in this game are in two fast-merging camps. The first are private asset management firms with vaguely martial-sounding names like Cerberus and Vanguard. This used to be the sleepy, stodgy wing of finance that quietly managed the safe investment portfolios of pensions and college endowments. Their job was to pick safe places to put other people’s money so that when it came to retire or build a new wing of the library, the funds would be there. But, like everything else in the finance industry, private asset management has become a growth-hungry speculation machine. The root causes go back to the Great Recession. From 2004 to 2016, the number of Americans that owned their home tumbled 6 percent, leaving thousands of homes on the market (and for each one an evicted family). Banks and investment groups bought the houses en masse and became landlords, shoring up housing prices in the process.
The second camp is a burgeoning field of digital real estate tracking firms that seek to automate and standardize the process of buying, renting, selling, and managing property. Just as there were never national taxi companies until Uber and Lyft created a platform for rides, Zillow, Redfin, Offerpad, and Opendoor Technologies — collectively called iBuyers — have built massive platforms designed to aggregate the geographically fragmented real estate and rental industries. Opendoor’s own definition of an iBuyer is nothing more than “a company that uses technology to make an offer on your home instantly.” Do you want to sell your house fast or not? If the answer is “yes” then the asset managers described above are more than happy to take it off your hands. Zillow, the site most people associate with real estate listings, has recently got into the game of buying homes themselves through their “Offers” division, flipping them for a tidy profit.
The more traditional way of buying a home usually meant finding a real estate agent who knew which houses were on the market in a particular region, and used a mix of proprietary databases and human relationships to find new listings and pair potential homebuyers with sellers. Instead of hiring an agent to show your home to potential buyers, an iBuyer like Zillow Offers just needs a few photos and some information. The purchaser is often an asset manager like Blackrock, who gets to snap up the property before the public even gets a chance to see it. Platform real estate smoothes out the “friction” between asset managers — who have been quick to build special relationships with the platform owners — and the many thousands of homes they intend to buy. This has transformed the landlord business from a series of regional fiefdoms to competing national empires.
The new players in real estate operate much like Spotify, Netflix, and other platforms that charge a subscription for temporary access to more than you could ever buy
These structural changes to real estate have consequences for everyday homebuyers and renters. Aggregating geographically defined markets into national, or even global ones through platforms like Zillow can drive speculation and increase the likelihood that a trillion-dollar asset firm (or a bicoastal white couple) will mow down your citrus trees. What’s worse is that asset firms buy at such rates that they drive up the cost of the homes that are left. Average home prices have more than doubled in this young century, and went up nearly 15 percent just during the pandemic. Meanwhile, new apps like Fundrise and Crowdstreet offer people with relatively little money the option to invest in real estate projects, just like Robinhood lets you buy GameStop and an unadvisable number of apps let you buy cryptocurrencies. Real estate is not Dogecoin, however, and Crowdsourced market speculation can have widespread impacts on people with no hand in the deal: A subreddit could soon, theoretically, spike housing prices in Phoenix, or crash a commercial strip in Pittsburgh, if the mods were so inclined. There may be more buying and selling, with prices going up as a result, but fewer people are being housed.
Big, structural changes to the use and sale of land have always been connected to even bigger, more fundamental changes to economics, politics, and society. Blackrock is nominally an asset manager, but really it is a capitalist central planner. High-level managers move through its revolving doors into government just as easily, and with as much frequency, as do those at Goldman Sachs. Its consulting arm, Blackrock Solutions, helped the Federal Reserve navigate the 2008 and Covid-19 financial crises, and builds software that even its ostensible competitors can’t live without. Blackrock and oligopoly partner Vanguard together own a little less than a quarter of the shares of Invitation Homes, the United States’ largest landlord, which currently owns about 80,000 homes in 16 different cities. Across the U.S., institutional investors are buying tens of thousands of homes, and that number is going up every quarter. And while this is still a tiny fraction of the overall house-buying market, they are making strategic investments in booming housing markets. In some neighborhoods of Atlanta, for example, one in five rented homes are owned by a Wall Street firm.
More important than the percent of homes currently owned by asset managers is what else they own, and how that fits into a larger strategy. Other big asset managers-turned-mega-landlords include Nuveen Real Estate, a subsidiary of retirement services firm TIAA; Brookfield Asset Management which invests in ports and energy generation; and Cerberus Capital Management, which specializes in “distressed investing” by buying up dying companies. (They own Safeway and Albertsons grocery stores.) These firms’ investment decisions — controlling the distribution of food and other goods in addition to, but also in sync with, housing — point toward a much more ambitious program than land ownership.
With this much inventory and command of the market, it seems safe to say that companies like Blackrock have effectively “platformized” real estate. While there are competing definitions of what a platform actually is, most agree that its core function is to mediate a relationship between two or more entities. Often enough this takes the form of amassing a large amount of something and selling access to it, or gathering enough information about a particular field or industry that selling access to the data itself becomes a commodity worth leasing. In this case both factors are at play, thanks to the efforts of two separate (for now) but allied industries.
Nick Srnicek has described platform capitalism as a response to the falling rate of profit in the post-industrial era. More than just a business strategy for individual firms, platforms arise out of “internal needs to handle data” driven by the realization that the old “method of operating was to produce a good in a factory where most of the information was lost, then to sell it, and never learn anything about the customer or how the product was used.” Gathering and working on data gave aging and new firms alike the ability to squeeze more profit out of dwindling sales. Microsoft may not be able to sell as many licenses to Windows or Office as they used to, but they can charge for monthly access to their growing Office 365 suite that, in addition to their staple productivity suite (Word, Excel, and PowerPoint), they can also integrate with their Slack clone (Teams). Profit shifts from periodic sales to an indefinite lease that, if it is not paid, will lock away your work.
Real estate is not Dogecoin. There may be more buying and selling, with prices going up as a result, but fewer people are being housed
With interest rates at all-time lows, and construction costs at all-time highs, the margins for real estate development have never been worse. Developers are feeling the squeeze of declining rates of profit just like every other industry. For a long while, at least since the 1980s, reinvestment in burned-out downtowns was a good way to find new sources of profit, because only a handful of well-resourced firms were capable of tearing down or rehabilitating old buildings on what had become cheap land. But as every downtown becomes an adult playground, developers and all of the financial firms that bankroll them have to make the same pivot to platforms: go from selling to leasing access as a service.
The upshot of this platformization is well-described by Jathan Sadowski in a recent paper on the “internet of landlords.” He writes that the “X-as-a-service” business model across nearly all sectors of the economy is “creating rentier relations by another name. This model relies on the platform latching onto and inserting itself into the production, circulation, or consumption process, thus becoming a (necessary) intermediary.” Rentiers do just what the name implies: live off of the money they can collect from owning something. Zillow or Blackrock can not only rent out homes, but rent out information about even more homes. This lets them outmaneuver other firms, while changing the market itself such that competing business strategies are strangled or obviated. If year-long leases are “too cheap” and eating into month-to-month offerings, a company could alter how vacancies are displayed in listings, or alter investments in construction materials to raise costs to competitors.
In a prescient 2018 paper, Joe Shaw catalogues the burgeoning platform real estate industry through a survey of nearly 400 different applications. These are all very public-facing, consumer-oriented products like AirBnB, Rocket Mortgage (which automates the mortgage and refinancing process), and the services that Zillow and Redfin are best known for. Shaw concludes that these platforms are “reconstructing a new global real estate marketplace that will be increasingly defined by an assemblage of definitively urban spaces and actors.” Since that paper’s publication, the Covid-19 pandemic has accelerated many of the housing trends that were already maturing: as this phenomenon exacerbates urban housing markets, pushing would-be buyers and tenants farther into the suburbs, the same landlords are there to greet them.
In the alternate reality of developers’ ad copy, millions of young professionals just want to flit from a shaggy-chic bungalow in Phoenix to a mid-century modern apartment in Boston, chasing passion projects and self-actualizing interior decoration. Within the urban core are well-appointed, fully furnished efficiencies close to high-salary employers. They sell a safe version of urban grit, and a network of buildings to hop to and from. Out in the ‘burbs there are companies like NexMetro who build gated single-family home communities and rent them, like a horizontal apartment complex. As they put it, “NexMetro builds luxury rental home communities. Our residents are renters by choice. They seek a new American dream untethered by the responsibilities of home ownership.” Just as the Apple Watch’s success was always predicated on the idea that the company’s biggest hit — the iPhone — was an inconvenience, the financial instrument at the center of American ideology — the home mortgage — must be reframed as a burden. Such is the hypocrisy of infinite growth.
Labor has, historically, been the least mobile ingredient to capitalist accumulation. This push toward a nomadic existence serves to free up labor such that it can move with the speed of global capital, fulfilling work needs wherever, whenever companies can realize the most value.
More than just driving up the cost of the space we live in, asset managers and iBuyers are intervening in our sense of place. There is a widely agreed-upon theory in geography that space and place are different. Space is a dimension of nature and society, which is just to say that things, people, and events are located somewhere. Place is a bit trickier. The geographer Yi-Fu Tuan, in a 1979 review of the discipline, wrote that the concept of place is, “more than location and more than the spatial index of socio-economic status. It is a unique ensemble of traits that merits study in its own right.” A place grows out of the continual accretion of events and human relationships within a particular space or location over time.
The financial instrument at the center of American ideology — the home mortgage — must be reframed as a burden. Such is the hypocrisy of infinite growth
What happens when two people disagree about whether a space is a place? The real estate developer and the neighbor see a vacant lot very differently. The former sees it as a potential site of construction, while the latter might see it as a long-loved venue for block parties. One is a space to realize value, the other is a valuable place. “To be always on the move is, of course, to lose place, to be placeless and have, instead, merely scenes and images,” Tuan writes. “A scene may be of a place but the scene itself is not a place. It lacks stability: It is in the nature of a scene to shift with every change of perspective… it is in the nature of place to appear to have a stable existence independent of the perceiver.”
The goal of asset managers and iBuyers, it seems, is to do away with place itself in favor of a series of very well-constructed scenes. The scenes may be every bit as finely crafted as a 20-dollar cocktail or velvet armchair — indeed, these two things might even be a part of the scene! —but the overall effect will be unsettling in two respects.
First, if it replaces past experience with a universalized set of advertised expectations (grandma’s house becomes a grandma’s house with needlepoint on pastel walls) that can be reasonably met by a well-resourced firm. In this way we become unmoored from settlement, the permanence of place.
The second unsettling is within yourself: an uneasy sense that nothing is real and everything is contrived. The platformization of real estate will, at best — even for those with the means to buy in — do to middle-class homes what it has already done to music, movies, and food: make it more convenient to access, and increase ostensible choices, but also flatten those choices such that they better fit the platform’s technological affordances and growth potential. This will mean more swimming pools and less citrus trees — a preference for amenities over unique, time-intensive properties of place.
This won’t be quite as simple as mass-manufactured baubles replacing indisputably authentic places. Companies are absolutely capable of making us love the images they make for us to live in. But make no mistake: not all cages will be gilded. This emerging new rental market can manage migrant workers’ dorms as ably as an architect’s loft. No matter what the situation, the challenge will be to maintain our right to stay put if we want to, and make a place to call home.