The Securitization of Security

Abstract

While the meaning and general implications of the ongoing “securitization revolution” within the American real estate market have been a consistent point of focus in the social science literature of recent years (see Harvey, The Enigma of Capital [Oxford University Press, 2010]; Brenner and Theodore, Spaces of Neoliberalism [Oxford University Press, 2004]; Gotham, “The Secondary Circuit of Capital Reconsidered,” American Journal of Sociology [July 2006]), few academic studies have attempted to examine the political, economic, and social effects of securitization in situ. While the aforementioned scholars have been quick to condemn the rapid ascendance of such innovations as mortgage-backed securities (MBS) or multinational Real Estate Investment Trusts (REITs) on a theoretical level, no serious academic study to date has attempted to place these innovations in context by examining their rise and effects within the political, economic, and developmental trajectory of any one particular geographic region. This article fills this gap within American urban history by examining the dynamic relationship between real estate-related financial innovations (specifically, REITs) and the political economy of one American county: Fairfax County, Virginia. Fairfax County’s consistent economic growth and resilience in the face of recession (owing to the prevalence of defense contractors operating in the county) have made its real estate market especially prominent as an outlet for transnational investment, and thus an ideal place for the study of the multifaceted effects of real estate securitization at the local level. By focusing exclusively on Fairfax County, this article offers a much more complex picture of securitization, its causes, and its effects than that typically offered by the existing social science literature. By examining securitization within the defined geographic and historical context of Fairfax County, this article elaborates, first, the various conditions that allowed Fairfax County to become a veritable proving ground for real estate-related financial innovations in the late-20th and 21st centuries; and, consequently, the multifaceted (and sometimes ambiguous) effects of those innovations for the political and economic structure of the county.