The 2008 global financial crisis was fueled by the availability and affordability of credit in home mortgages, which enabled a buying frenzy and increased home prices. As the bubble burst and individual subprime mortgages that had been bundled as securities defaulted, a cascade was set in motion that led to the largest global financial shock since the Great Depression. The financialization of housing through the speculative activities of corporate investors contributed significantly to subprime borrowing, housing price increases, and the subsequent waves of foreclosures.1 The recognition that investment firms—not “irresponsible” individual home buyers—increased the severity of the crash marks a significant departure from prevailing public narratives about this period. Yet the policy response in the United States since the crisis has largely been to double down on promoting profit-driven investment in housing.
In the long aftermath of 2008, new forms of speculation and financialization have taken hold and reshaped access to housing in the US. Immediately following the crash, when waves of foreclosed properties were available cheaply, institutional investors began to acquire these distressed assets en masse, with the explicit support of the Federal Housing Finance Agency.2 Yet instead of “flipping” them for a quick profit—as had been common in the lead up to 2008, and is referred to as “financialization 1.0”—big investors began to hold on to the homes they were buying in new portfolios of single-family rental properties—“financialization 2.0.”3 Homebuying by big investors has continued since, and even expanded beyond foreclosed properties. Investors have increasingly focused on buying lower-cost homes in hot housing markets and converting them into single-family rentals, which has led to the creation of the single-family rental asset class.4 This shift towards corporate ownership of single-family rental properties has transferred wealth out of communities of color in particular, and has also contributed to increasing rates of eviction.5 In other words, big investor homebuying is the latest strategy of accumulation through dispossession, and continues the racialized practices of exclusion from property ownership that have disenfranchised communities of color since the settler origins of the US.6
The pace and scale of homebuying by big investors is made possible through “proptech,” venture capital-backed applications of digital data and algorithmic thinking to profit making in real estate.7 Turning individual homes into an asset class involves the creation of a financial abstraction that enables individual homes, each with its own set of quirks and idiosyncrasies, in a variety of neighborhood contexts, to be easily comparable and treated as equivalent units for purchase. As Gregor Watson, the founder of Roofstock—the poster child of proptech companies—describes it, “in the housing crash, things were happening so quickly and on such a big scale that you had to build systems. We started building some pretty interesting databases.”8 In these databases, new forms of data and methods of abstraction were mobilized to discern similarity and difference across a variegated landscape of foreclosed properties (and, later, single-family rentals). Geographer Desiree Fields has aptly identified this process as an example of “calculative agency, or the ability to objectify things to facilitate an orderly process of market exchange.”9
Diagram of the property technology stack.
To achieve this calculative agency, proptech companies have amassed databases by trolling through local and state repositories of public information on foreclosure starts, property records, and tax and eviction filings. They then use algorithms and statistical analyses based on these sources to identify and purchase potentially profitable properties at a rapid pace. While proptech itself only occupies the very top layer of a set of policies and technologies that constitute the property market, it is enabled by each layer of this stack, from the survey and instruments like Gunter’s chain, which delimit land as property, to debt technologies like mortgages and foreclosure, regulatory technologies such as zoning and rent control, and information systems such as listings services that facilitate property exchange. Sitting atop this stack, proptech has only fueled big investor homebuying because of how profitable rental housing can be and how few protections tenants generally have in the US. Likewise, proptech is only viable at scale, and thus would not be able to operate without residential Real Estate Investment Trusts (REITs) or the other legal and financial entities exempt from corporate taxes that are often used by big investors to aggregate capital and purchase properties at a mass scale.10
“Flipping” the tools, rather than the houses, computational methods similar to those of proptech can be used to investigate the spatial dynamics of investor home purchases. Big investors use proptech tools to monetize uneven development. Yet rather than black-boxing spatial data as a novel profit-making strategy, spatial and financial data can instead reveal new forms of accumulation at work.
Counter-proptech: a method for identifying large-scale investors
Investor purchases have a distinct geography, one that is increasingly different from that of purchases made by owner-occupants. This signals a new and concerning spatial logic that entrepreneurial urban governance is fully inadequate to address. Philadelphia provides a case study in these spatial dynamics, as entire neighborhoods in the city have become sites of outside investment through a combination of rent extraction and real estate speculation.
Absolute number of home purchases (left) and proportion of purchases (right) in Philadelphia, classified according to whether they were made by a corporate investor, 2000-2018.
Given the history of Philadelphia as a city of homeowners, this recent influx of investor purchases represents a profound qualitative shift, the long-term implications of which can only begin to be glimpsed.11 In the short-term, however, all-cash offers on lower-cost homes by investors block what had previously been stable avenues to affordable homeownership for lower-income Philadelphians. Higher rates of eviction filings by corporate landlords also create precarious living conditions for tenants and destabilize neighborhoods.12 Further, large-scale investors have a track record of neglecting properties and concealing ownership with LLCs, which make it difficult for tenants to address maintenance issues or seek legal recourse.
50 houses purchased by investors in Philadelphia in 2018, as seen via Google Street View.
Public records of deed transfers are filed whenever a property is sold. Residential property in Philadelphia is sold either to investors or owner-occupants. Investors can be identified in these records if they have corporate names and/or make repeat purchases.13 The proportion of all home purchases in Philadelphia that were made by investors using a corporate entity, LLC, or other legal instrument has grown from 7% in 2000 to nearly 30% in 2018. While owner-occupants can be used as a point of comparison to investors, it is important to remember that homeownership is not a universally desirable or necessarily positive outcome. Keeanga-Yamahtta Taylor has shown how policies promoting homeownership have historically been forms of “predatory inclusion” more than paths towards redistributive economic justice.14 However, for Philadelphia, a city where the majority of residents are homeowners, the scale of purchases by investors represents a profound shift in the housing landscape of the city.
Geographies of Financialization 2.0
Aggregating records of houses purchased by investors or owner-occupants and tallying the total number of purchases made on each block relative to the total number of homes on it provides a fine-grain view of the geographies of “financialization 2.0.” Blocks with similar levels of each type of purchase reveal zones of the city where investors, or owner-occupants, are concentrated and where they are absent. Looking at these patterns year after year at the citywide scale, three major shifts can be identified that align with the housing bubble (financialization 1.0), the aftermath of the foreclosure crisis, and the more recent rebound in the housing market (financialization 2.0).
A spatial view of investor home purchases in Philadelphia in the lead up to the housing bubble shows areas of investor concentration (orange) expanding across the city.
A spatial view of investor home purchases in Philadelphia in the lead up to the housing bubble shows areas of investor concentration (orange) expanding across the city.
A spatial view of investor home purchases in Philadelphia in the lead up to the housing bubble shows areas of investor concentration (orange) expanding across the city.
A spatial view of investor home purchases in Philadelphia in the lead up to the housing bubble shows areas of investor concentration (orange) expanding across the city.
A spatial view of investor home purchases in Philadelphia in the lead up to the housing bubble shows areas of investor concentration (orange) expanding across the city.
A spatial view of investor home purchases in Philadelphia in the lead up to the housing bubble shows areas of investor concentration (orange) expanding across the city.
A spatial view of investor home purchases in Philadelphia in the lead up to the housing bubble shows areas of investor concentration (orange) expanding across the city.
A spatial view of investor home purchases in Philadelphia in the lead up to the housing bubble shows areas of investor concentration (orange) expanding across the city.
Between 2000 and 2006, the total number of “high-purchase clusters”—areas of the city where investors had purchased a large number of properties relative to the total number of properties on that block—grew, covering increasingly larger swaths of neighborhoods and moving into new ones. Investors buying properties during the housing bubble focused on areas where flipping properties could be profitable, and where their actions likely contributed to gentrification and neighborhood change.
In comparison to areas with concentrations of owner-occupant purchases, investor high-purchase clusters were on average far less white, had a higher proportion of households living below the federal poverty line, and had moderately higher levels of vacancy. The inflation-adjusted average median household income for investor high-purchase clusters was $28,000, compared with $39,000 for owner-occupant clusters.
The overall number of home purchases by investors declined between 2007 and 2013, as did the size of the areas where there were statistically significant concentrations of investor purchases (orange).
The overall number of home purchases by investors declined between 2007 and 2013, as did the size of the areas where there were statistically significant concentrations of investor purchases (orange).
The overall number of home purchases by investors declined between 2007 and 2013, as did the size of the areas where there were statistically significant concentrations of investor purchases (orange).
The overall number of home purchases by investors declined between 2007 and 2013, as did the size of the areas where there were statistically significant concentrations of investor purchases (orange).
The overall number of home purchases by investors declined between 2007 and 2013, as did the size of the areas where there were statistically significant concentrations of investor purchases (orange).
The overall number of home purchases by investors declined between 2007 and 2013, as did the size of the areas where there were statistically significant concentrations of investor purchases (orange).
The overall number of home purchases by investors declined between 2007 and 2013, as did the size of the areas where there were statistically significant concentrations of investor purchases (orange).
The overall number of home purchases by investors declined between 2007 and 2013, as did the size of the areas where there were statistically significant concentrations of investor purchases (orange).
During the height of the foreclosure crisis and its aftermath, from 2007 to 2013, investor high-purchase clusters shrank in size. This is indicative of a drop in the overall number of homes being purchased by investors during this period, compared with during the housing bubble. But then, between 2014 and 2018, there was an increase in the number of blocks within high-purchase clusters.
Areas of investor concentration (orange) expand again between 2014–2018 and occupy new portions of the city.
Areas of investor concentration (orange) expand again between 2014–2018 and occupy new portions of the city.
Areas of investor concentration (orange) expand again between 2014–2018 and occupy new portions of the city.
Areas of investor concentration (orange) expand again between 2014–2018 and occupy new portions of the city.
Areas of investor concentration (orange) expand again between 2014–2018 and occupy new portions of the city.
Areas of investor concentration (orange) expand again between 2014–2018 and occupy new portions of the city.
These new high-purchase clusters expanded into neighborhoods in south and northwest Philadelphia that were not included in the 2000–2006 period, and correspond with areas where owner-occupants buy few homes. Along with this expansion, in comparison to earlier years, investor high-purchase clusters occurred in areas with lower median household incomes, a higher proportion of the population living below the poverty line, and a significantly higher proportion of black residents than high purchase clusters for owner-occupants.
As a result of the demographic differences between the geographies of investor and owner-occupant purchases, Philadelphia’s poorest residents and residents of color are disproportionately impacted by the increase of investor activity and may bear the brunt of the displacement that these purchases could provoke.
Investor purchases have a distinct geography, one that is increasingly different from that of purchases made by owner-occupants. A map of investor areas of concentration (left, orange) are overlaid on a map of owner-occupant activity (right) and seen to correspond with areas without many owner-occupants (green).
Investor purchases have a distinct geography, one that is increasingly different from that of purchases made by owner-occupants. A map of investor areas of concentration (left, orange) are overlaid on a map of owner-occupant activity (right) and seen to correspond with areas without many owner-occupants (green).
Investor purchases have a distinct geography, one that is increasingly different from that of purchases made by owner-occupants. A map of investor areas of concentration (left, orange) are overlaid on a map of owner-occupant activity (right) and seen to correspond with areas without many owner-occupants (green).
Investor purchases have a distinct geography, one that is increasingly different from that of purchases made by owner-occupants. A map of investor areas of concentration (left, orange) are overlaid on a map of owner-occupant activity (right) and seen to correspond with areas without many owner-occupants (green).
Technologies for/of housing
Emerging at the height of the housing bubble and growing in the years since, the areas of Philadelphia where investors buy houses are different from those where owner-occupants buy homes. While these findings vary across the city, and for some years there are areas of overlap, for the majority of the city the points of focus for investor purchases are spatially removed from areas with concentrations of owner-occupant purchases. These differences are increasing, revealing a growing divergence between zones of the city where investors seek to own buildings and zones of the city where homes are bought by the people who live in them. These overall patterns suggest that areas of investor interest in Philadelphia have shifted, and signal that the spatial logics of financialization have likewise shifted with the transition from “financialization 1.0” to “financialization 2.0.”
Understanding the geographies of these recent forms of investment is a first step towards countering the force of this new wave of proptech-powered speculative investment and the potentially harmful transformations it brings to neighborhoods and individual lives. While inverting the digital tools of proptech can expose these new logics of accumulation, countering the force of proptech will ultimately require interventions further down the stack, including action at the level of politics, policy, and activism. Tenant protections such as good cause eviction (which was enacted in limited ways in Philadelphia in 2019) would make it harder for corporate landlords to evict tenants. Rent regulation could put limits on rent increases, providing stability and predictability for tenants of new corporate-controlled rental properties. And organizing for decommodified modes of housing such as community land trusts (towards which there are small but meaningful efforts in Philadelphia) could create permanently affordable homes outside of the reach of global speculative finance capital.15 A counter-proptech starts by uncovering how proptech operates, but then must necessarily switch to the more fundamental tools of tenant organizing, activism, policy, and political action towards positive housing futures.
Andrew F. Haughwout et al., “Real Estate Investors, the Leverage Cycle, and the Housing Market Crisis,” SSRN Electronic Journal (September 1, 2011); Peter Rosenblatt and Steven J. Sacco, “Investors and the Geography of the Subprime Housing Crisis,” Housing Policy Debate 28, no. 1 (January 2018): 94–116.
Desiree Fields, “Constructing a New Asset Class: Property-Led Financial Accumulation After the Crisis,” Economic Geography 94, no. 2 (March 2018): 118–40.
Gertjan Wijburg, Manuel B. Aalbers, and Susanne Heeg, “The Financialisation of Rental Housing 2.0: Releasing Housing into the Privatised Mainstream of Capital Accumulation,” Antipode 50, no. 4 (2018): 1098–1119.
Sophie Kasakove, “Why the Road Is Getting Even Rockier for First-Time Home Buyers,” The New York Times, April 23, 2022, ➝.
John I. Gilderbloom et al., “Investors: The Missing Piece in the Foreclosure Racial Gap Debate,” Journal of Urban Affairs 34, no. 5 (December 2012): 559–82; Elora Lee Raymond et al., “From Foreclosure to Eviction: Housing Insecurity in Corporate-Owned Single-Family Rentals,” Cityscape 20, no. 3 (2018): 159–88; Emily T. Molina, “Foreclosures, Investors, and Uneven Development During the Great Recession in the Los Angeles Metropolitan Area,” Journal of Urban Affairs 38, no. 4 (October 2016): 564–80.
David Harvey, “The ’New’ Imperialism: Accumulation by Dispossession,” in Socialist Register, ed. Bertell Ollman and Kevin B. Anderson (New York: Routledge, 2004), 213–37; Desiree Fields and Elora Lee Raymond, “Racialized Geographies of Housing Financialization,” Progress in Human Geography 45, no. 6 (April 2021).
Desiree Fields and Dallas Rogers, “Towards a Critical Housing Studies Research Agenda on Platform Real Estate,” Housing, Theory and Society 38, no. 1 (October 13, 2019): 1–23.
Jason Schuman, “Gregor Watson on Why SFR PropTech Is Still in the Early Innings,” Primary VC, ➝.
Fields, “Constructing a New Asset Class,” 11.
Jane G. Gravelle, “Real Estate Investment Trusts (REITs) and the Foreign Investment in Real Property Tax Act (FIRPTA): Overview and Recent Tax Revisions,” Congressional Research Service Report (2016), ➝.
“City of Homes,” The Encyclopedia of Greater Philadelphia, ➝.
Suzanne Lanyi Charles, “The Financialization of Single-Family Rental Housing: An Examination of Real Estate Investment Trusts’ Ownership of Single-Family Houses in the Atlanta Metropolitan Area,” Journal of Urban Affairs 42, no. 8 (November 16, 2020): 1321–41; Michaelle Bond, “Large Investors Are Increasingly Buying up Homes in Philly. Here’s What That Means for Owners and Renters.,” Philadelphia Inquirer, October 13, 2022, ➝.
Specifically, deeds were classified as investor purchases if the listed purchaser name contained LLC, Corporation, or other legal entities, or if the purchaser bought more than two houses within any one-year period between 2000-2018. The full list of corporate names considered was LLC, LP, Limited Partnership, Corporation, Corp, Inc, Company, Limited Partne, L P, L L C, Partnership, LTD, and Trust.
The rhetoric and practices of corporate landlord-controlled housing are arguably a new form of predatory inclusion for tenants. Keeanga-Yamahtta Taylor, Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership (Chapel Hill, NC: University of North Carolina Press, 2019).
Women’s Community Revitalization Project, Justice Community Land Trust ➝.
Spatial Computing is a collaboration with the M.S. in Computational Design Practices Program (MSCDP) at the Graduate School of Architecture, Planning, and Preservation (GSAPP) at Columbia University.
