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Book Review: Capital City: Gentrification and the Real Estate State

Featured_Books CapitalCity

Paperback / 208 pages / Verso / March 2019

Wherever you live, I am certain that you would agree with this one statement: It is terrifyingly hard to make ends meet. Specifically, when it comes to housing costs.

“Capital City: Gentrification and the Real Estate State” by Samuel Stein is about how our countries have been captured by real estate capitalists, who inflate land values, evict tenants, and promote gentrification, all in the name of urban investment. Although city planners make decisions about land use, housing, transportation, environment, and other aspects, they are trapped in a difficult position, according to Stein. Even if planners want a more equitable city, they are instructed by the political class to find ways to increase property values and facilitate gentrification, which only widens inequality. Stein focuses on what real estate has done to the United States, but believes that readers all over the world will see the parallels between his country and theirs.

He gives us the early history of zoning laws in the U.S., describing them as instruments of racial segregation, and shows how this continues today. The political leanings of the people who shape cities might be different, but the results are often the same. Whether neoconservative or neoliberal, despite trying opposing strategies, we end up with rising housing costs. Stein sees cities as stuck between gentrification and disinvestment because ultimately real estate capitalists want to turn “places into products” to be sold.

Cities that become attractive to global real estate speculators are deemed good for investments, which gives them more money for public services. The cities that fail to make that transition suffer a decline which their citizens experience as a paucity of services. Stein does a good job of explaining the challenges that cities face, as they add value for their property owners, in order to raise money in property taxes. It is a flawed ‘rising tide lifts all boats’ strategy that puts pressure on planners to makes decisions that induce investment, even if that means displacing some residents.

To exemplify this broken belief that one solution solves all problems, Stein focuses on the real estate industry in New York City. He explains that in the last 20 years, despite New York having two mayors with divergent policies for solving the city’s problems, the solution was always luxury real estate investment. The Republican turned Independent, Mayor Michael Bloomberg, and the current Democratic Mayor, Bill de Blasio, had opposite world views and priorities. What Stein shows that they had in common is the use of rezoning to increase real estate development. As a result, some areas in that city, like Harlem or parts of Brooklyn, have been gentrified to the point where they are barely recognizable to the residents who continue to live there, following the displacement of their neighbors. 

Stein’s New York example underlines that the obstacles to affordable housing are so structural, that even politicians with good intentions cannot remove them. He also wants us to understand that New York is just one example of what is happening in many, if not every, major American city. It is why he calls the U.S. a “real estate state.” The first half of the book is the strongest because Stein explains the problem so clearly by showing us the motivations of the various actors involved. Politicians, city planners, real estate capitalists, and the financial services all making the country’s major cities less affordable.

The second half of the book is disappointing. As an attempt to demonstrate how this real estate state works, Stein gives us a brief history of the Trump patriarchs, from the current President of the United States back to his grandfather. I was sceptical of the relevance of a chapter about the Trumps because surely there are other developers who are less polarizing that Stein could have used to prove his thesis. My concern was that it would be too topical. However, the more I read, the more I began to understand why Stein included it, but I was not wholly convinced. He details how the Trumps used real estate in a predatory fashion to take advantage of government housing programs, as a representation of how unscrupulous developers can act. Stein could have used other developers who did as much or worse, but he chose the Trumps. As well as Stein established how “the Trumps played planners for profit and walked away with the country,” parts of this chapter felt extraneous.

When it comes time for solutions, Stein believes that if current policies were altered that they would produce better results to create affordable housing, but I am not sure about that. He writes that cities should prioritize inclusionary zoning to subsidize affordable housing, tax luxury condos, tax non-primary residences, tax banks when they foreclose homes, and other initiatives to decrease speculation. That may cool the high-end of the housing market, but it was not clear how Stein believes that will cause more affordable housing to be built. To get that part done, he suggests that there should be public pressure in the form of disruptive mass protests centred around the core principles of public stewardship (increasing the amount of publicly managed assets), socialized land (turning land from “commodity to commons”), and reordered regionalism ( to “subvert political boundaries”). Despite elaborating on those principles, Stein concedes that they are “sketchy” and that there is no political climate in the U.S. to pull them off. 

The point that Stein is trying to make is that change has to come from the bottom, and not the top. He concludes that the population has to forcibly demand affordable housing, and that the politicians and city planners will act accordingly. With multinational real estate investment trusts, financial institutions, and property owners still involved in the process, it is unclear that a radicalized population will be enough to force the creation of more affordable housing. Yes, small battles can be won here and there, but the war is likely never to be won. From the halls of government to the average homeowner, tested interests will prevent that from happening on a large scale.

“Capital City” is a substantive book, but it does not define the solutions as well as it defines the problems. The book is more informative, than inspiring, and is a good starting point for larger discussions about urban development.

Review by Phil Roberts

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