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.
“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.”
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.