As the world is increasingly becoming more urbanized, the interrelationship between population growth and housing development has imposed unprecedented challenges for many cities worldwide. Ideally, public policies must ensure access to housing for all, but in fact, what we have witnessed is an alarming increase in homelessness and inadequate housing that often are directly linked to embedded patterns of discrimination, colonization, and marginalization. In recent years, housing systems around the world have been profoundly transformed by a phenomenon known as “the financialization of housing” in which housing has become a commodity to be bought, sold, and priced as a portfolio asset for speculation, rather than being traded according to its value as a social good (FAHRA, L. 2017).
Private financial corporations and offshore investors often purchase a massive number of existing modest houses (often occupied by minority and marginalized groups) based on the convenient justification that renovations would bring development for those communities. In reality, what happens is that they dramatically increase the market rental and purchase value of these properties, making them unaffordable for those same communities. Such scenario is part of a perverse and very well-structured plan to attract more “advantaged” higher-income householders, which both exploit inequalities and reinforce socio-economic segregation.
Figure 1. A sign sits outside of Welch Park in Atlanta calling for an end to gentrification. Image source: https://www.gpb.org/news/2019/11/27/equity-advocate-economist-share-different-views-of-gentrification. Retrieved on November 9th, 2021.
In her investigation about the effects of the global economy on major cities, the Dutch-American sociology Saskia Sassen highlighted this trend of reshaping the city as this valuable commodity based on new modes of privatizing urban spaces where property regimes led by wealthy investors have been mining the capacity of the working and lower classes to find affordable houses. Exploring the concept of “deurbanization of the urban space” Sassen also states the weak utility function of existing properties that are purchased and renovated by large-scale corporates: many of these houses are left empty on purpose as a speculative way of storing capital which is considered one of the best investments for the elites.
These new exclusionary real estate practices and large-scale acquisitions of urban land and housing stock have established new frontiers in major cities where the low and middle classes have no choice than to occupy peripheral and more affordable spaces - “an ambiguous zone of mostly low-rise, poor-quality housing that is neither city nor slum” (SASSEN, 2016).
Figure 2. New frontiers between “the periphery” and the “formal” city in São Paulo - the largest and most populated city in Brazil. Image source: Paloma Vasconcelos/Ponte Jornalismo. https://www.observatoriodasmetropoles.net.br/mortalidade-por-covid-19-em-sao-paulo-ainda-rumo-a-periferia-do-municipio/ Retrieved on November 9th, 2021.
References
SASSEN, Saskia. The city: a collective good. Brown J. World Aff., v. 23, 2016.
FARHA, L; PORTER, B. Commodification over community: financialization of the housing sector and its threat to SDG 11 and the right to housing in Spotlight on Sustainable Development, 2017.