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Capital City: Gentrification and the Real Estate State (ENCORE)

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The cost of living in a city has skyrocketed. While wages have flatlined for most working-class people, rents have reached new highs, leaving most people struggling. And this, despite the economic costs of the pandemic. A one-bedroom apartment in San Francisco is over $3,200 a month. But it’s not just in the US. The rising cost of living is affected the entire world. But why does the cost of housing continue to spiral upward? Samuel Stein’s new book, Capital City and the Real Estate State highlights the growing influence of investment capital into land as the driving force behind gentrification and the power developers have over city and local governments.  We talk to Samuel about the rise of the global real estate market and we talk about how radical city planning, rent control and socialized land projects can help fight gentrification.

Image Credit: Alliance for Californians for Community Empowerment Action

Image Caption: Elizabeth Hernandez and other tenants protest rent hike

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  • Guadalupe Morales, Tenant in San Pablo California and Organizer with Alliance of Californians for Community Empowerment
  • Samuel Stein, Author of Capital City, Gentrification and the Real Estate State
  • Elizabeth Hernandez, Tenant in South Central Los Angeles and Organizer with Alliance of Californian’s for Community Empowerment


The Making Contact Team

  • Host: Salima Hamirani
  • Executive Director: Jina Chung
  • Interim Senior Producer: Jessica Partnow
  • Staff Producers: Anita Johnson, Monica Lopez, Salima Hamirani, Lucy Kang, Amy Gastelum
  • Audio Engineering: Jeff Emtman


Music Credits:

  • Bio Unit – Steppe
  • Bio Unit – Subterranean
  • Blear Moon – Further Discovery
  • Jonny Ripper – San Soucis
  • Bio Unit – Industrial Zone
  • Jim Hall – Wonderlust
  • Crowander – Opening Lines

[00:00:00] Intro Button

[00:00:18] Salima Hamirani: I’m Salima hamirani and on today’s making contact.

[00:00:21] Samuel Stein: My understanding is there is not a single county in the United states where a minimum wage worker can afford the average apartment.

[00:00:29] Salima Hamirani: We talk to Samuel Stein, author of a book called Capital City: Gentrification and the Real Estate State about why it’s so expensive to live in modern cities.

[00:00:39] Samuel Stein: What we’re seeing is a transformation of where investment capital is going around the world. The bulk of the world’s investment is now in real estate. Meaning the ownership of land and buildings on top of it for profit.

[00:00:57] Salima Hamirani: His book explores what international capital has to do with rising rents and what we can do to fight the global capitalist class.

[00:01:05] Samuel Stein: If that much money is invested in the proposition that rents will rise continuously, then renter’s ability to slow that down to stop it, or even to reverse it can have tremendous impacts on the global capitalist class.

[00:01:25] Salima Hamirani: It’s a cold windy day in San Pablo, a city in the bay area in California, which is famous for being the tech capital of the world. I’m meeting up with Guadalupe Morales at her apartment and I’m here because Guadalupe is facing an eviction.

[00:01:41] Guadalupe Morales: So, basically our landlord gave everyone in the building, an eviction notice at the end of October, giving us about two and half months to move out.

[00:01:51] And these are a lot of long-term trends. At least 10 plus years, I’ve been here about six, but my, I used to live in this building with my dad.

[00:01:58] Salima Hamirani: It’s unusual that she’s been living here for so long. This is one of the most expensive housing markets in the country.

[00:02:05] Guadalupe Morales: I’ve known Anita, who’s my neighbor on the same floor. She’s been here for like almost 30 years. For her it’s a single mother trying to raise her kid. Maria has been living here for almost 15 years. Also has her daughter with her and then some neighbors downstairs who, you know, they’re just working in trying to get by every day.

[00:02:22] Salima Hamirani: Her apartment complex was once affordable and stable, but all of that changed after the building was bought by a new owner,

[00:02:29] Guadalupe Morales: you know, he’s had the buildings for a few years. Now. We need initially got them. He basically tried to raise the rent right away, double the first time he tried to evict us. And at the time what helped us was the AB 1482 law. Now he’s trying to find that loop hole where, if you need to renovate for 30 days or more that you can kick folks out, he keeps saying that folks can move in right after, but obviously at a new rate. For some people it’s almost triple

[00:02:53] Half the building, more than half the buildings already gone. There’s only six tenants left out of 14 units. We’ve had a lot of already a few neighbors leave and a lot of them were folks on fixed incomes. A lot of them were elderly neighbors. I had one who left right after the first eviction that we got, because she was just worried it was going to happen again. Um, so obviously, I mean, it happened again.

[00:03:12] Salima Hamirani: And living under the threat of multiple evictions is taking his toll on Guadalupe.

[00:03:17] Guadalupe Morales: It’s something that really affects you and your wellbeing. I remember when we first got the notice first time, I think I couldn’t see for a few days, cause I was just so stressed out about what to do. But then again, the second time, same thing. I think a lot of my neighbors were just feeling so stressed on what to do. It’s hard to try to find housing. It’s so expensive now. Like you need a big deposit rents at least 1500, 2000. I feel like I could get it, but it would eat up at least anywhere between 50 to 70% of my income.

[00:03:47] Salima Hamirani: But in some ways, Guadalupe and the other residents of this San Pablo apartment complex were lucky. They managed to contact a local housing advocacy group called ACCE or the Alliance for Californians for community empowerment. ACCE is helping them fight their eviction. And because of that, Guadalupe may end up being an organizing success story.

[00:04:08] Guadalupe Morales: We’ve been doing actions. So we’ve been protesting, he’s a restaurant owner our landlord. So we’ve been protesting at the restaurant actually right around the corner. And we’ve been also trying to talk to our council members to let them know, you know, there’s some vulnerable residents at stake here that there’s a really legit concern that they may actually go unhoused. So we’ve been trying to talk with them and try to see if we can get enough votes to push a just cause ordinance. And the other thing is stratified it legally. So they’ve been, um, ACCE has, thankfully been helping us with that end.

[00:04:38] Salima Hamirani: But her story isn’t unique. It’s common, not just in the bay area, but in cities, across the country and even the world. And because I’ve watched gentrification destroy so many communities and because I’ve seen how difficult it can be to fight gentrification, I started to wonder what was really going on throughout my time as a journalist. I’ve heard people talk about the influence of global capital on real estate and cities. But I wasn’t sure what that meant. What is global capital? And why is its influence on real estate so destructive?

[00:05:13] Samuel Stein: My understanding is there is not a single county in the United States where a minimum wage worker can afford the average apartment

[00:05:21] Salima Hamirani: That’s Samuel stein. He’s the author of a book called Capital City Gentrification and the Real Estate State. I asked Samuel to do an interview with us here at making contact, because I thought his book does such an amazing job of explaining what investment capital has to do with land. And his book made me think differently about how we can fight gentrification

[00:05:41] Samuel Stein: The book is about why so many cities seem to be heading in the same trajectory, which is less and less affordable housing, less and less space for working class people. And more and more of a connection between the positive things that urban planning has to offer. And the threat of displacement that comes from gentrification. I guess what motivated me to write the book was this feeling that people were afraid to even demand the things that they want to see in their cities. Like better transit better parks, things like that because they’ve come to associate those things with gentrification, with housing costs, going up and with displacement following

[00:06:26] Salima Hamirani: Samuel comes from an organizing background and his experience made him want to understand why fighting for simple ideas like giving people affordable places to sleep at night was actually incredibly difficult.

[00:06:37] Samuel Stein: I was a tenant organizer for a number of years. And part of what I wanted to do with the book was explain why it’s not easy. Because too often we tell organizers, you know, you just got to organize, organize, organize, do it more, do it harder, do it smarter and we’ll win. And when you’re an organizer and you’re not winning to the extent that you want to, and you keep hearing that it’s almost like people are blaming you for the structural barriers And so I wanted to write a book in clear prose that explained exactly what we’re up against.

[00:07:11] Salima Hamirani: And the real message of his book, which was so eyeopening for me is how the global financial system has zeroed in, on land, on real estate as its primary form of investment.

[00:07:22] Samuel Stein: What we’re seeing is a transformation of where investment capital is going around the world. Not that nobody is investing in anything but real estate, far from it, but the bulk of the world’s investment is now in real estate, meaning the ownership of land and buildings on top of it for profit.

[00:07:46] There have been other times in the history of capitalism when a majority of the world’s capital was invested in land, but a lot of that was agricultural land. And a lot of that was land for industrial production. And what we’re seeing now is that 60% of the world’s assets, if they’re invested in something physical, something you can touchare invested in real estate. 75% of that investment is in housing specifically at the same time, 80% of the world’s population lives in urban areas.

[00:08:17] And so what we see ultimately is a concentration of investment capital into urban housing, into our housing that we live in and, and we consider our home is often somebody else’s real estate investment.

[00:08:29] Salima Hamirani: And we’re talking about enormous amounts of. Global real estate is valued at $217 trillion, which is such an enormous amount that Samuel said he had a hard time even understanding it.

[00:08:42] Samuel Stein: And so I found a report from the United nations where they said $217 trillion is 36 times the value of all the gold that’s ever been mined anywhere in the world throughout history. How and why did this happen? Well, it took a very long time, but it has to do with falling rates of profit in many other industries. And then the rising value of the money you can make simply from owning a thing or capital gains. All of that is a much faster rate of growth than investing in traditional manufacturing.

[00:09:19] You see a number of things facilitate this transformation. In cities like mine in New York city, there was a pretty active push from the real estate industry from urban planners, from an element of the wealthy elite to push manufacturing out of the city because they wanted that space for more profitable uses.

[00:09:41] There was also a kind of pull factor, other places competing with industrial centers for those jobs. There was certainly a racial factor. With Jim Crow laws, basically making working class labor in the south significantly less expensive than the same labor in the north because of segregation because of union bashing, et cetera in the south, we saw the deregulation of finance and the mortgage industry in the U S. And there’s much more to it too, but all of these factors combined to make urban real estate the dominant investment form in global capitalism today

[00:10:19] Salima Hamirani: in the past, the value of land came from what was produced or grown or manufactured on it. But now people can invest money in land itself the way you would with any other speculative market. And then you hope that the value of that land continues to increase

[00:10:34] Samuel Stein: the investor assumes that they will make a profit on either it’s use right now and it’s sale in the future.

[00:10:43] Salima Hamirani: The idea that a piece of land has to increase in value in order to make money for investors has huge impacts on local governments, which is why Samuel Stein coined the term, the real estate state.

[00:10:55] Samuel Stein: The idea of the real estate state was to think about other things that we have a similar formulation for, so when we talk about the carceral state, when we talk about the combination of policing and prisons and its role in government, I wanted to contribute a new way of thinking about the property lobby and the role of property owners, developers, landlords, et cetera, and their control over government. And that’s the real estate state. There’s certainly nothing new about a collaboration between property owners and government. That’s been a feature throughout the history of capitalist states, but I think what’s new is the degree of power that property owners hold in our governments, and particularly in our local governments.

[00:11:47] And then some places that looks like single family homeowners who control the entire agenda and who aim to keep property values rising and rising and keep out poor people and keep neighborhoods racially exclusive. But it also means ultra luxury developers having extreme influence over state and local governments in places that are experiencing hyper gentrification and luxury development.

[00:12:14] Salima Hamirani: So the city is forced to bend to the influence of investors and luxury developers. And then part of the city’s job becomes making sure that private acres of land increase their value over and over again, which is really incredible if you think about it, because the value of private land is tied to public policies and all of the public infrastructure that surrounds it.

[00:12:37] Samuel Stein: There are nothing without the public. The location is what gives it the most value. And that location is entirely socially produced. It’s produced by public investment in, in infrastructure, roads, transit, water, electricity, internet, and it’s also produced by all of us who built the culture of a place who make it, the place that people want to be.

[00:13:01] And the value of that is ultimately recouped by whoever owns the land.

[00:13:06] Salima Hamirani: And how does all of this affect renters or the people who are working low wage or even middle wage jobs?

[00:13:12] Samuel Stein: It makes it incredibly difficult. And what we’ve seen is wages stay relatively stagnant for decades, especially for the bottom half of the income curve. As housing prices are going up as the owners of land and buildings are expecting a higher and a higher return, and they are taking on more debt to purchase their properties and they’re passing. Those debt burdens basically to their tenants in the form of rent.

[00:13:38] Salima Hamirani: And I know this all sounds so depressing and impossible. How do we fight the global speculative capitalist market? Well, we do have some answers right after the break.

[00:13:49] you’re listening to making contact and Samuel Stein talking about his book, capital city, gentrification, and the real estate state. If you like what you’re hearing, you can find many more of our shows and get behind the scenes information at And now back to the show.

[00:14:10] Welcome back to making contact. So in the first half of the show, Samuel Stein explained how the rise in investment capital into real estate is a pretty new phenomenon and why it’s making cities so incredibly expensive to live in. But as I mentioned, Samuel also comes from an organizing background and he also wants to know what we can do to fight gentrification.

[00:14:38] He has a few answers, but one of the few unexpected places he thinks is actually a lot of power is in the profession of city planners.

[00:14:46] Samuel Stein: So I think that history of urban planning is a history of contradiction and also internal conflict between conservatives reformists and radicals. It probably won’t surprise your listeners that I see myself as emerging from the radical wing of urban planning, which sees democratic planning as the most important check against market supremacy.

[00:15:11] So, instead of saying things are the way they are, because that’s what the market dictates. We say, no, we want to see a different future. We’re going to imagine it collectively. And we’re going to use our power to make it happen. That’s the kind of urban planning that inspires me.

[00:15:26] There is of course, many other traditions of urban planning, including incredibly destructive models of kind of slash and burn urban planning that we saw through the red lining and urban renewal of mid 20th century cities in the United States, as well as a kind of moderate reformism that is like tinkering around the edges of our cities to make them more efficient more pretty in some ways in order to prevent the kind of uprising that can follow when things get really, really bad.

[00:15:59] And I think we continue to see that in some of the kind of ameliorative aspects of urban policy and what we often see as a kind of seesawing balance between severe austerity and either at that point, massive social movement push back or enough of a reform that people’s lives can be stabilized without the fundamentals of the economy and the social system being challenged.

[00:16:29] Salima Hamirani: And this is a continuous balance for urban planners. Even the wealthy elite realize that keeping workers in the city is a problem

[00:16:38] Samuel Stein: they want to make a bunch of money from the land and property that they own, but they also want to employ a bunch of low wage labor, either in the construction and maintenance or in the service economies that are dominating many cities right now.

[00:16:53] And so you might see programs that sort of create a residual degree of affordable housing.

[00:17:02] Salima Hamirani: Now you would think that a little bit of affordable housing would ease some of the burden on low wage workers, but

[00:17:09] Samuel Stein: it’s not even close to enough housing to maintain the cities, to maintain the communities. It’s just enough to keep things from falling apart

[00:17:18] Salima Hamirani: and what we consider to be quote, affordable housing in most American cities is pretty expensive.

[00:17:25] Samuel Stein: The federal government sets a standard for what’s considered affordable for a given household and what they say is. If you’re paying less than 30% of your income in rent, then your housing is affordable for you . But if you pay more than 30%, then your rent burdened, and if you pay more than 50%, then you’re severely rent burdened.

[00:17:47] It is now the norm in many cities for most tenants to be rent burdened and for a quarter or more of tenants to be severely rent burdened.

[00:17:56] It used to be that 25% of income paid as rent was what was considered affordable. And before that it was 20%. So we’ve had an inflation in our expectation of what people are going to pay, but we also really do need a lot more, truly affordable housing.

[00:18:13] Salima Hamirani: But that’s not all we need.

[00:18:15] We’re going to have to make some risky, massive structural changes, which is a lot harder than it seems. Here’s something I learned from Samuel’s book, which was really surprising to me. Even cities struggle with their credit ratings.

[00:18:31] Samuel Stein: So it’s not just individuals who are graded by credit scores, but also cities. And the responsibility for giving a credit score to a city is basically controlled by three private corporations. Moody’s Fitch and S&P. And they look at a city’s financials, they look at it’s management. And they decide, is this an investment grade city, a place where you can buy municipal bonds and have a very good expectation that you’ll make back your money and more.

[00:19:06] Is this a risky city where maybe you can invest here, but you should expect higher dividends because you’re not ensured your money back or whether it’s too risky a city to invest in. If we’re talking about what those three big corporations think characterizes a risky city, it is a city that’s massively investing in its poor and working class and massively taxing.

[00:19:33] It’s wealthy. Their idea of good economic development is creating as smooth frictionless unencumbered a terrain for capital as possible. That’s what they’re looking for. And so those three corporations have an enormous amount of power over what cities can and can’t do.

[00:19:53] Salima Hamirani: And so what happens when a city has a bad credit score?

[00:19:56] Samuel Stein: They’re going to have a hard time raising money through the municipal bond market, which is a lot of the way that cities raise their own money.

[00:20:04] The federal government and print money, it can mess with interest scores. It can do quantitative easing. It can buy data. It can do all sorts of things. It’s harder for local cities to do some of those things and impossible for them to do. Others. So because we don’t have control of our own money supply.

[00:20:25] And because we often have pretty strict debt limits, the bond market is the place that cities go to raise the capital to do good things, and also to do terrible things. We’re going to have to do something about these three corporations that can deny cities credit ratings, because it’s very hard to do large scale investment in social housing, in mass transit and in the other things we need without some level of debt,

[00:20:56] Salima Hamirani: but we do have some things on our side. First off, the housing market, as it currently stands is a bubble because nothing can continue to increase in value for the rest of time.

[00:21:09] Samuel Stein: All speculative bubbles bust event. Uh, and they can above slowly or they can, you know, explode, but they can’t continue escalating forever. . We have seen since the 2008 financial crisis. A new round of speculative investment in real estate, sometimes in the very same housing stock that was there before seven times, but we’ve also seen all sorts of other absurd speculative investments in cryptocurrencies NFTs and other things so that there’s people in the world who have a lot of money and they’re looking to protect it and make more.

[00:21:48] And they’re looking to increasingly speculative and sometimes incredibly silly ventures to secure that.

[00:21:56] news clip: There is a land rush happening and it’s not in New York city or Beverly Hills, early speculators, professional realtors and celebrities are buying up virtual land for millions of dollars, creating huge hype around real estate in the metaverse.

[00:22:11] The real estate investors are paying millions of dollars for plots of land that don’t even exist. It’s come to this at least not where you and I can see the land. They’re in the metaverse the virtual reality space where a digital private island can cost as much as an average American home legitimately.

[00:22:27] Samuel Stein: So I think it, it shows something deeper about the crisis of neo-liberalism and in advanced capitalist countries, we’re getting speculation and bubble upon bubble upon bubble.

[00:22:40] Salima Hamirani: However, we don’t have to wait for the housing bubble to burst. The biggest weapon, low wage workers have against the real estate state is organizing

[00:22:50] Samuel Stein: Tenants, especially are in a structurally important position, because so much money is moving into real estate. If that much money is invested in the proposition that rents will rise continuously. Then renter’s ability to slow that down to stop it, or even to reverse it can have tremendous impacts on the global capitalist class. So in terms of what that can look like, we’ve seen movements for stronger rent controls in cities, all over this country, which is not always thought of in planning terms but really should be.

[00:23:26] Rent control is a way of, first of all, seizing power for tenants saying it’s not just up to an individual landlord, how much they want to raise the rent from year to year, it should have some basis in what it actually costs to run housing and tenants should have some say in that mechanism. But the way that it connects most closely to, to planning is rent controlled tenants. Don’t have to be afraid of public investment in the same way that they might have been before. They can say, I want new transit in my neighborhood. I want a park. I want to school. I’m not worried that my landlord is going to arbitrarily raise my rent just because all these public benefits have been made in my place.

[00:24:08] So I think fighting for rent control is really important, but it’s certainly not enough. We need to fight to socialize, land and socialize housing. Taking buildings and then putting them in tenant and community control through community land trusts through limited equity cooperatives, through mutual housing associations and all sorts of other models that already exist for social housing at a large scale in this country today,

[00:24:39] Salima Hamirani: that was Samuel Stein, author of capital city, gentrification, and the real estate state. And to end the show, we’re going to look at one story in Los Angeles and how organizing can really help tenants stay in their homes. Here’s Elizabeth Hernandez, a tenant in south central Los Angeles, who was fighting a rent increase in her apartment building.

[00:25:02] Elizabeth Hernandez: We got an increasement of 200% of our rent. 21 units. It was very challenging because our kids been raised here. The school is just across the street. We have everything like, you know, pretty much close.

[00:25:20] Salima Hamirani: At first, they tried to talk to their landlord. When he came to pick up the rent. ,

[00:25:24] Elizabeth Hernandez: we wanted it to speak to him. Maybe we can come into an agreement and he just said, no, that’s not going to happen. This is your new rent and you still have to, we still had to pay a deposit on top of the rent.

[00:25:37] Salima Hamirani: So they began fighting the increase in other ways, including a rent strike.

[00:25:42] Elizabeth Hernandez: I went on strike. We, well, me and my neighbors went on strike. We did action. We did a protest on his offi.., uh, landlord’s office manager’s house, but a year later we ended up contacting ACCE because of the legal advice.

[00:26:01] Salima Hamirani: ACCE is the organization you heard about at the top of the show, the Alliance for Californians, for community empowerment.

[00:26:08] Elizabeth Hernandez: And the first day that we showed up at the office, we saw the lawyer Elaina Popp, how she replied like, in no time right there and then. And we felt such a relief and then seeing the type of actions that the direct actions they had when I see people getting evicted, I knew somebody was going to have my back

[00:26:31] Salima Hamirani: the process. Wasn’t easy over the years that they’ve been fighting their landlord. They lost a lot of their neighbors.

[00:26:37] Elizabeth Hernandez: I got to see my neighbors leave, you know, crying because this was their home. Like we pretty much, were a family, even though like you might think of it, it’s just the building. But I think just the fact that they raised the rent brought us together and we got super close, extremely close

[00:26:56] Salima Hamirani: Elizabeth Hernandez, and the remaining neighbors managed to finally win a rent reduction.

[00:27:01] Elizabeth Hernandez: Last week. We got word that they settled for $1,304. And for 12 months after the pandemic, there will be no changes.

[00:27:14] It’s amazing because I mean, my kids, they really needed the stability. So it’s such a, it’s such a relief just to know that we have a roof over our heads without thinking what’s going to happen next.

[00:27:28] Salima Hamirani: She credits organizing not just for this particular win, but for changing her views about power and possibility.

[00:27:36] Elizabeth Hernandez: I never thought that organizing becoming an activist will change my life. organizing has opened so many good doors, not just for me, but it opened the eyes to my neighbors, that they were very shy to do anything about it. We’re not longer scared of what comes next, because I think we are more than ready to take action no matter who, no matter what.

[00:28:02] I want to give this message to all the people like our black and brown people, not to be afraid. And just take a little time to take action, to understand your rights, to organize, to find an organization like ACCE, that has been amazing to me, my neighbors, you know, people.

[00:28:23] Salima Hamirani: That was Elizabeth Hernandez, a community organizer with ACCE in south central Los Angeles. And that does it for today’s show. If you’d like to learn more about investment capital and real estate, visit us at You can also follow us on Twitter, our handle making underscore contact and on Instagram we’re making contact radio project. The making contact team includes Anita Johnson, Monica Lopez, Sabine Blaizin, Jessica Partnow, and I’m Salima Hamirani.

[00:28:50] Thanks for listening to making contact.


Author: Radio Project

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