Homes Become Commodities in
the Financialized Global Housing Market

Becky O'Malley
Friday August 30, 2019 - 02:18:00 PM
These [now blanked out] pictures from Google showed the street view and the view from above at the recipient's address.
These [now blanked out] pictures from Google showed the street view and the view from above at the recipient's address.
This postcard was sent to a Berkeley resident's [now blanked out]address.
This postcard was sent to a Berkeley resident's [now blanked out]address.

There has been a lot of discussion online and to a certain extent in print recently about what is commonly called California’s housing crisis. It’s easy to see widespread homeless tent cities immediately adjacent to multi-story apartment developments in progress and imagine that the problem will soon be solved. But it’s not that simple.

Albany City Councilmember Michael Barnes sets the scene this way:

“To focus exclusively on California’s “housing crisis” obscures as much as it illuminates. The issues are far broader, and require a more informed and democratic discussion of how much California should grow, and how it needs to change to adapt to its future. Those are the issues our legislators and all Californians should be discussing.”
Today we will try to shed some light on what’s happening by working our way through several illuminating recent attempts to explain what’s going on from the local government perspective.

Though there’s a lot of information, clicking on all the links below will be the best way of understanding the latest version of the perennial ongoing attempts to re-jigger California law to benefit developers and speculators.

Michael Barnes posted a detailed analysis of the imbalance between jobs and housing which is contributing to the situation, complete with excellent graphs, which can be found on his blog here.

From the perspective of local government, Susan Kirsch, founder and former president of Livable California, a statewide housing activist group, in an essay on the Cal Matters web site, says this:

Certain bills introduced by Sens. Scott Wiener of San Francisco, Nancy Skinner of Berkeley, and Assemblyman David Chiu of San Francisco would weaken elected city councils’ planning authority and financial stewardship, and ultimately deepen the affordability crisis.”

How did we get where we are today? Is Nancy Skinner representing the interests of her district, or perhaps instead the interests of the Facebook dynasty as embodied in something called the Chan Zuckerberg Initiative?

For a definitive in-depth analysis of one facet of the concerted effort to transform California housing policy which is backed by Chan/Zuckerberg among others, Berkeley commentator Zelda Bronstein has produced a comprehensive long report , which was first published in full on San Francisco’s 48hills.org.It can most easily be read in four parts on The Marin Post: 

Part 1, Part 2A, Part2B, Part 2C 

According to Bronstein, “AB 1487, a complex regional housing bill, is driven by tech and development interests with no concern for out-of-control office growth.” 

The bill’s principal author is San Francisco Assemblymember David Chiu, with Berkeley’s very own Buffy Wicks as a co-author. It’s been amended many times, most recently this week, but will probably be passed soon. The most recent version can be found here. 

There is a lot to digest on these topics. To understand the big picture, what’s being called the financialization of housing as commodity world-wide, you should watch this excellent lecture by UCLA Professor Michael Storper, posted on YouTube by 48hills, which sponsored his San Francisco talk: 





Here in Berkeley, long time family homeowners have been receiving all-cash no-strings-attached as-is offers both from large corporate brokers and small-time speculators. Glossy color postcards featuring Google photos of their homes are being sent to Berkeley residents, seemingly computer-generated from public address records. 

Instead of their houses being offered to other families through the traditional multiple listing service sponsored and monitored by local real estate companies,many of these homes are being bought by speculative international corporations, sometimes to be rented but often just left empty until they can be flipped as the market rises. One local broker told me that an international firm has been offering large bonuses to lure successful agents away from locally-owned companies, which has forced some small companies out of business. 

In brief, what’s happening is that international capital is acquiring much of the desirable urban housing all over the world, including here, and pumping up the price for resale to the new wealthy class as investments more lucrative than the conventional stocks and bonds. 

Is this just a bubble due to burst soon, or will all of the housing now just barely accessible to some Bay Area workers be swallowed up as wealth continues to flow up hill world-wide? Stay tuned, and watch the California Legislature to see who will come out on top.