The very, very short explanation of the cause and effect of the 2008 financial crisis can be summarized in two words: real estate. Risky mortgages traded like stocks were blown into a bubble that popped, ravaging the finances and savings of people all around the world. In the aftermath, institutional investors bought up swathes of foreclosed properties, and pushed the financialization of housing into hyper-speed.
The title of the book calls out three of the ways this is manifesting. Icebergs are the homes of the superrich in London that, due to building height rules, can see their values increased by adding new levels deeper and deeper below ground. Zombies are the half-dead neighborhoods in places like Dublin and southern Spain where speculative development and investment homes often sit empty. Ultra-thins are the tall luxury towers now popping up in cities around the world that serve less as places to live than as places to invest and grow the buyer’s money.
Matthew Soules: The premise of the book is that we can understand capitalism as having different phases, different points in its history, and that sometime around 1980 a set of changes occurred in terms of policy but also in business culture, how money was thought of, how investment was thought of, that all could amount to what we call finance capitalism. And in the climate of finance capitalism, there’s a heightened tendency for all of us, because it’s so prevalent, to start thinking more and more about the logic of investment and using the mechanisms of finance.
Because of the investment ethos of finance capitalism, you don’t just park your money in savings accounts, you make it work. And part of the making it work has meant a lot of it has gone into real estate, into the products of architecture. So in that triumvirate of shelter, culture, and wealth, things start to get skewed. Of course shelter doesn’t go away and culture doesn’t go away, but the pressure of a home embodying wealth and being a vehicle for speculation and making more wealth becomes heated. It shifts the relationship between the other two. In some cases it even begins to challenge the other two.
At an architectural level I argue, and this is a very debatable point, that there are literal changes to the morphology and shape of buildings, in their proportions, their massing, and their dimensions that help create an investor-friendly architectural product. There’s an increasing global prevalence of using podiums—low rise structures that often house retail and community amenities that are at grade, and have a direct interaction with the messy unpredictabilities of the street. You can find them in Istanbul; Tampa, Florida; Shenzhen, China. It’s a kind of global architectural type to have a podium and then place housing on top of it.
Central Vancouver has seen a huge production of condominium towers since the 1990s. Over 50% of them have been purchased by non-resident owners. Many of them rent them out, so they are investments. And it has been shown that one-bedroom units are the most desirable for those investor types. That’s for a number of reasons but it’s partly that they are relatively small and therefore relatively inexpensive. It’s not the super wealthy investing in these, it’s the upper middle class, a fairly big demographic in Canada. And this is in the context of an ongoing outcry that there’s a demand for two-bedroom and three-bedroom apartments. Yet somehow the developers continue to build one-bedroom apartments and make their profits this way, to sell out projects over 50% to people who seem drawn to the investment power of the one-bedroom apartments that they then go and rent out, or in some cases let sit empty.
I have to be cautious not to exaggerate this, because it’s obviously very complex, but it think the logics of investment capital are having this slow but profound effect over time, that’s happening so in front of our eyes that it’s hard to even see, of diminishing the social richness of our living environments, by things like the thinness and the isolation of the units and the podiums. I think of that as a form of physical distancing. Finance capital was slowly social distancing us for decades, and then we entered this health emergency that necessitates us, for good reason, to socially distance ourselves. It’s an accelerator of what was happening before.
The optimist in me thinks there’s a tremendous opportunity here. The pandemic affords us the chance to reexamine things and question how we want to live in all aspects of our lives. Things only became more intensely financialized after the 2008 crisis. So will this crisis be one that takes us into a new and more beneficial way of being? I don’t know. I hope so, but recent history suggests otherwise.
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