Abstract
This paper has two purposes: the first is to offer an empirical account of how rented homes have become more entangled in financial markets over the past two decades, particularly through the advent of real estate investment trusts (REITs) and listed real estate operating companies (REOCs). The second is to assess whether conceptualizing this as a process of “rental housing financialization” — distinct from but connected to the broader concepts of “housing financialization” and “financialization” — offers value to the scholarly community.
Highlights
The concept of “financialization” captures the dominant trend in capitalist development — and “housing financialization” has been one its clearest and most salient manifestations — over the past 50 years
While Vonovia is not formally a real estate investment trusts (REITs) — there is an alternative “G-REIT” structure available in Germany, which places more restrictions on the firm — it is generally discussed alongside REITs as a comparable structure and is included in the global index of REITs provided by NAREIT, an industry group representing REITs
There are at least three substantive differences that emerge when focusing on rental housing financialization: (1) whereas the financialization of homeownership has radically altered demand for housing, there is some reason to expect the financialization of rented homes to alter supply; (2) the transparency of listed instruments like REITs and real estate operating companies (REOCs) shares is far higher than the transparency of instruments more associated with owned homes, mortgage-backed securities (MBS) and collateralized debt obligations (CDOs); (3) financialization alters a tenant’s relationship with their home less than it affects the owner’s relationships with their property
Summary
Financialization is a concept that is subject to criticism, concerning whether it is too ambiguous or ill-defined to offer practical value to researchers. This paper follows Aalbers (2015, 216) in arguing that the primary value of financialization is in connecting “different disciplines and different levels of analysis, from the very micro to the very macro – and demonstrating how they are related.” That is, it has value as an umbrella term reminding us that, while studies of financialization might examine very different subjects in very different ways, they remain part of a broader whole. Sociologists, anthropologists, political economists, economists, and housing specialists all discuss ideas that would fit under the umbrella definitions above These communities struggle to understand and cite one another and often fail to recognize that they are carrying on closely related conversations using slightly different conceptual frames. The act of classifying a thing as financialization calls into being an understanding of modern society in which the rising salience of finance and financially mediated social relations play central roles
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