The Real Estate State and Housing Insecurity: An Interview with Samuel Stein

Construction cranes at 34th and 9th Streets, Manhattan. Andrew McMillan/Wikimedia Commons.

Max Mishler’s interview with with Samuel Stein, author of the book Capital City: Gentrification and the Real Estate State (Verso, 2019), is part of the “(In)Security in the Time of COVID-19” series. Read the rest of the series, including a post contextualizing this interview, here.

Max Mishler: Hi Sam. Thanks so much for taking the time to think with us about the connections between the Real Estate State, human vulnerability, the global Covid-19 pandemic. Let’s start off with a simple question: what is the real estate state and why do you think this is an important concept when trying to make sense of the relationship between financializing cities and gentrification?

SS: My addition of “the real estate state” to the lexicon is meant to be a contribution in the spirit of a number of such phrases meant to describe a fraction of the state that is aligned with a particular outcome, and thus also aligned with a fraction of capital and a fraction of labor. Think, for example, of “the carceral state” or “the welfare state” – two expressions of government that put the powers of the state toward a particular end, in alignment with a broader – and generally informal – political alliance.

In the case of the real estate state, I’m talking about the fraction of government that is aligned with real estate capital and the fragments of labor employed therein which seeks to use the tools of state power to increase land and property values. In other words, the real estate state is the part of the government that sees gentrification not as a problem, but as a sign of success. The real estate state can – and does – exist at all levels of government, but it tends to be most influential at the local or municipal level because that is where many crucial decisions around land use, development, taxation, policing and place-based public investments are made.

In highly financialized cities like Toronto, where you are now, and New York, where I am now, the local real estate state tends to be very active in ensuring financial capital can be literally and metaphorically sunk into the bedrock and built into the built environment in ways that seek to ensure maximum profitability. That project is fully in tension with the pursuit of these city’s working classes to live, to find a home, and to build community – which, incidentally, capital also depends on to reproduce into the future – and so the real estate state must also factor in the minimal provision of affordable housing and other human needs that the market will never fulfill independently.

MM: Do you see a broader connection between the real estate state and the carceral state that emerged out of the ashes of the U.S. welfare-warfare state?

SS: There are numerous direct and indirect connections between these two political-economic developments. In the most direct sense, the gentrification we’re seeing in cities is predicated on state violence, in the form of direct police attacks on homeless people and marshal’s offices carrying out evictions, as well as in the implied threat of police violence on those who cross property lines without permission and the increased policing of areas undergoing race and class transformations.

One step abstracted would be the [Loïc] Wacquant formulation that we’ve moved people out of public housing and into prisons, and then barred people from reentering public housing once they’ve been through the system. We can add to that many cities’ insistence on locking up the homeless under vagrancy, trespassing, and “quality of life” offenses rather than providing stable housing for all.

From another vantage, we can see that luxury development has, in many ways, fulfilled similar functions as [Ruth Wilson] Gilmore’s formulation of prison expansion as a sop for surplus labor, land, capital, and state capacities. At one point in my book, I show how, thus far in the 21st century, New York’s two mayors have used luxury development as at least part of the solution to a wide variety of problems, such as the undersupply of affordable housing, the need for higher-paying jobs, the lack of parks and open spaces, failing schools, pollution, segregation, and more.

My analysis is neither as elegant nor as comprehensive as Gilmore’s but we are both showing how a particular form of state action – in her case, building prisons in California, and in my case, enabling gentrification in New York – can, for a time, resolve some of the crises of capital and state legitimation that are endemic to capitalism and liberal democracy. Of course, the way the capitalist state resolves these crises – whether through the rise of the carceral state, the real estate state, or in many cases the two in tandem – always creates new contradictions, which lead to new crises, which demand new rounds of intervention. Gilmore calls this “capitalism saving capitalism from capitalism,” and we see it again and again and again. The important things to remember are that a) it never works for long, and b) it’s not the only way forward.

MM: Capital City is ostensibly about “real estate” and “gentrification” but it’s also about planning. You say in the book “I am a planner (8).” Why is understanding planning as a profession so important to making sense of the real estate state?

SS: I was trained as a planner and I don’t shy away from that label, even if I am also very critical of much of what the planning establishment is doing in cities like New York and Toronto. Planners are responsible for helping people shape space over time. As a project it is simultaneously abstract and utopian on the one hand, and concrete and pragmatic on the other. Planners generally do not have the social or political power to change the direction of the state on their own, and therefore they become enlisted into the governing projects of the political regime in power – though that can, and do, resist in interesting ways. As such, in cities where the real estate state is a (or the) dominant bloc, they are tasked with the contradictory mandates of looking out for the common good and enabling rising real estate values. Often this is done through seemingly mundane or technocratic changes to cities’ land use plans, zoning maps, or design regulations, but these changes can have enormous impacts on real estate flows and returns.

MM: You say that “capitalism makes the best of planning impossible: any good that planners do is filtered through a system that dispossesses those who cannot pay (9).” Can you say more about this?

SS: That sentence was actually the entire impetus behind writing Capital City. I felt like I was seeing – even living – that contradiction every day, but it wasn’t being talked about very clearly. Planning can be this really beautiful and powerful thing. Like I talked about before, in its best version it’s this simultaneously abstract and practical practice where you collectively envision a place in the future and figure out all the steps between the way things are now and the way you want them to be. But in a largely privately-owned and highly financialized city like New York or Toronto, there’s this insidious linkage between the best of what planning can do and the worst of what cities can be. Basically, if planners help people make places better, land owners capture much of the use value the public creates and translates that into an exchange value renters have to pay every month just to enjoy it.

Think about a new park, school, or mass transit line: people need these things, but they know that if there’s not some other mechanism in place – social housing, rent control, etc. – their landlord will charge more for their housing because the public has made it far more desirable, and people with more money will pay more to live there. This forces working class communities into a kind of trap where they are forced to choose between disinvestment and gentrification, neither of which redounds to their benefit. This of course is a false choice, but it’s the one working-class people living in under-regulated land and housing markets are forced into.

MM: Where does public or social housing fit in this story? In what ways does public housing represent a new frontier for the real estate state? On the other hand, might public or social housing represent a potential counterpoint to the real estate state? Should housing activists be demanding public housing in addition to rent control?

SS: Absolutely, housing activists should be demanding public and social housing in addition to rent control – both the preservation and rehabilitation of existing public and social housing, and the creation of new developments. Rent controls can be important and effective checks on a private market, and can have important secondary effects beyond limiting individual rent increases (protecting tenant organizing, cooling overheated markets, decoupling public investment from private rent increases, etc.) but they don’t fully decommodify housing the way public and – depending on the model – social housing do, and they do not add to the quantity of housing available to working-class people.

That said, in many cities, existing public and social housing have been pushed to the brink by severe and persistent underfunding, and by ideological attacks on everything but “free market,” for-profit housing models. In the US, much public housing is now vulnerable to programs that seek privatization, and city leadership has often cheered on such efforts. But it must be noted that US federal rules enable for-profit actors to raise funds in ways that are unavailable to public housing authorities. In other words, there is an explicit preference for private ownership in the US housing model – including publicly subsidized affordable housing – which must be overcome if we expect public and social housing to be sustainable into the future. If there continues to be an uneven playing field, such housing will physically diminish, and the public nature of the housing will be blamed rather than the state’s hostility toward public housing.

MM: What is the connection between homelessness and the real-estate state? On the one hand, homelessness seems to be an intrinsic byproduct of gentrification in cities like New York or Toronto. One assumes, however, that increasing numbers of homeless people sleeping on the street or in parks is at odds with real estate interests since it makes it difficult to ‘sell the city.’ Do those who speak on behalf of the real estate state have a plan for dealing with homelessness beyond simply policing it out of existence?

SS: That’s absolutely right – the policies promoted by the real estate state are directly responsible for the rise of homelessness, but real estate boosters also want to hide both that fact and homeless people themselves from the public view. How can they do this? Through three strategies.

First, as you suggested, there is “policing it out of existence.” Cities with strong real estate lobbies invest inordinate sums of money and labor into harassing, evicting, incarcerating, and assaulting homeless people who are found on public property, or on property owned by an individual or entity who marshalled the state to use its monopoly on “legitimate” violence against them.

Second, the real estate state relies on sometimes-sprawling shelter systems to temporarily house homeless people in conditions that are often overcrowded, unsafe, highly constricting, and unstable. These are definitionally not homes, but rather strategies to, in the most cynical cases, warehouse and hide the homeless, and in the best cases, provided emergency services short of permanent housing. The shelter industrial complex varies in size and operations across geographies but often serves to simultaneously invisibilize and perpetuate homelessness.

Finally, the real estate state promotes the ideological position that it is not neoliberal housing and urban planning policy that has led to rising homelessness but – somehow – the incompleteness of the neoliberal project and the vestiges of Keynesian systems like public housing and rent control. In this funhouse mirror reading of the housing crisis, it is only because the private real estate industry has not been given total and complete control over everything that homelessness persists.

MM: How has theCOVID-19 pandemic affected the real estate state? Do you think we’re witnessing the reconfiguration of the real estate state due to quarantines, the relocation of work and workers from offices to homes, and plummeting occupancy rates in urban commercial real estate markets? If so, might this present any political opportunities?

SS: I feel like so much has changed, and is still changing, that it’s hard to understand everything going on around us. So, I will say with some humility: I think I have some answers to those questions, but I’m definitely still figuring it out as it plays out. Also, it’s increasingly hard for me to have confidence beyond my local context of New York as I haven’t left here in a year, so I’ll speak from that vantage.

Something is clearly happening. On the whole, suburban markets are rising and urban markets are falling, but the nuance is much more complex and interesting than that. We’re seeing rents fall at the top of the market, but rise at the bottom. We’re seeing the city’s internal suburbs – areas with single family homes and duplexes as opposed to large apartment buildings – see their housing prices rise, but we’re seeing the city’s external suburbs boom even bigger. Even as asking rents are falling in much of Manhattan, we’re still seeing some absurdly expensive condo sales. A hedge fund manager just bought a condo by Central Park for a quarter of a billion dollars! But we’re also seeing some of the biggest developers getting into the affordable housing business and buying up subsidized housing projects, since they think it’s a more stable bet in rough times.

The thing I’ve looked at most closely is the dynamic in mid-sized, relatively low-priced rent stabilized buildings. Tenants in New York City collectively owe over $1 billion at this point, and a lot of that rent is owned in these kinds of buildings, which make up roughly half the private housing stock. Landlords there are crying poverty because the rents aren’t rolling in but their mortgage and tax bills are due. The part they won’t say, though, is that in the fat years – the years I write about in my book – landlords were not just making money from rising rent streams, but from refinancing their mortgages, pulling equity out of their buildings, and buying other properties with new debt. So they overleveraged themselves to the hilt, and then were dealt two blows: the first a political blow, when in 2019 the tenant movement secured a historic expansion of the state’s rent stabilization laws, and the second blow the pandemic, which robbed their tenants of their ability to earn wages and pay rents. So they hedged themselves right up to the margin, and the margin got called by history.

So what now? What we need to do is convert these buildings from for-profit entities into social housing. That can be done, and there’s a history of it New York City – you grew up in a building that went through a process like that, and I live in one now – but it’s not something the neoliberal state is particularly interested in doing. And so we’re running up against some of the limits of the political advances we’ve made over the last few years, with socialists in political office but not really controlling the mechanisms necessary to enact that kind of program.

The answer, of course, is to keep organizing, as always.

MM: Have you seen any concrete examples in New York City or other cities where communities successfully took on the real-estate state and won? What kinds of political alternatives to commodification of human shelter are the most likely to succeed?

SS: This is an interesting moment in New York City. I think the social movements have thrown the real estate state into something of a crisis. Several major projects were scuttled by popular opposition, including several proposed rezonings of working class, majority people of color neighborhoods, as well as a couple prominent proposed corporate giveaways. (The most famous example being the city and state’s attempt to lure Amazon to build a headquarters in Queens.) So they’re kind of squirming now, and it’s producing some interesting results. One is that they’re now looking to channel new mixed-income developments into wealthier neighborhoods, since they don’t think they can get away with channeling such projects into poor neighborhoods any long. The second is that there’s a proposal to revamp the planning process in ways that I think mark an improvement over the status quo, but have drawn mixed responses and strange coalitions for and against. So the future is very much up in the air.

But there is a history to draw on. As much as New York City is a real estate town – they like to call it “The Real Estate Capital of the World” – it’s also home to several generations of housing experiments which feature varying degrees of decommodification. We have public housing, which needs a major infusion of capital and repairs but was never torn down the way it was in many other US cities. We have large amounts of subsidized housing, in which tenants’ rents can’t rise faster than their incomes, or in which buyers can’t earn windfall profits. We have limited- and zero-equity coops that were developed out of tenements whose owners abandoned them. We have community land trusts that steward permanently affordable housing, community spaces, and gardens. And we have a strengthened form of rent stabilization, which doesn’t decommodify housing but it does make it harder to speculate off of. And so we have a lot to build on. We don’t have to repeat models of the past into a changing world, but we also don’t need to reinvent the wheel. One of my planning professors once told me that if you took the combined size of all the public and non-profit spaces in New York City, it would make up a majority of the city’s physical size. Thinking about things that way, we see that we already have much to build on.

MM: I think this is a great place to end this initial conversation, thinking the various physical and political infrastructures upon which tenants, activists, and concerned citizens can begin to reconceptualize urban housing as human shelter and a human right rather than as a commodity or site of investment. Thanks for taking the time to talk with us about the real estate state and housing insecurity.

Max Mishler is an assistant professor in the Department of History at the University Toronto. He specializes in the transnational history of the United States, with a focus on slavery, abolition, incarceration, and the history of capitalism. Samuel Stein is a geographer, urban planner and housing policy analyst living and working in New York City. His writing on planning politics has been published by Jacobin, The Journal of Urban Affairs, The Guardian, and many other magazines, newspapers and journals.

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