Cities Run by Real Estate

After decades confined to the desk drawer of important but boring things, the minutiae of urban planning policy are now attracting some popular attention. Transit-oriented development might come up ...

After decades confined to the desk drawer of important but boring things, the minutiae of urban planning policy are now attracting some popular attention. Transit-oriented development might come up at a dinner party. Important changes to one city’s codes—say, zoning reform in Minneapolis—can make national headlines. Community benefits agreements, property tax overhauls, and the problematic use of area median income in defining “affordable” housing are increasingly key points of engagement for social justice advocates.

On the other hand, the bulk of this newfound interest seems to come from a cadre of college-educated young urbanites, often new to the city, holding the vaguely progressive, but ultimately self-interested, ideals of the upper-middle-“creative” class. Inspired by everyone from Jane Jacobs to CityLab, they have lots of ideas about what their neighborhoods and commutes should be like, and are stirred to action by the dysfunction that they find instead (and by the fact that they increasingly cannot afford to live where they want). This all sounds like good news for planning and for cities in general. Rarely acknowledged, however, is that celebrating urbanism and advocating for housing, density, transit, and other planning priorities can also play directly into the hands of private developers, frequently at the expense of low-income communities. Too often, planning functions as a tool of real estate.

This is where Samuel Stein’s Capital City: Gentrification and the Real Estate State comes in. Although the term is missing from the title—displaced perhaps by the more enticing “gentrification”—this is first and foremost a book about urban planning. The key problem, Stein argues, is the title’s other provocative term, “the real estate state”: that is, the utter dominance of real estate in urbanism and policymaking.

What’s more, Stein writes for amateur urbanists and professional planners alike. Reaching back to the foundations of capitalism and property ownership, he methodically and accessibly lays out just how much influence the curious phenomenon of real estate has had in the shaping of our cities, the making of fortunes, and the production of extreme inequality.

The “real estate state” is more than a clever turn of phrase. As a concept, it captures the degree to which the industry and its commodification of property today not only define the most dominant sector of the urban economy, but also how real estate has become the most powerful player in local politics. So much so, in fact, that today’s urban planning must be understood as an endeavor in service of real estate.

This service can take quite literal forms. In my own research with New York City planners in the latter years of the Bloomberg administration, they would tell me plainly that—regardless of community preferences, practical considerations, or their own ideals of “highest and best use”—the word coming down from on high was that economic development was the top priority. In Capital City, Stein explains how the widespread rezonings of the Bloomberg era enabled new density and luxury development in lower-income minority areas while limiting growth in elite white enclaves. These plans were carefully designed to create and capture real estate value in every context.

Stein sees the real estate state at its extreme in the presidential administration of our current developer in chief. The appointment of neurosurgeon Ben Carson as Housing and Urban Development Secretary, for example, is shown to be not just dumb and cynical, but part of a tactical dismantling of fair housing policies, affordable housing programs, and HUD itself.

Policy machinations that benefit developers and elite landowners are, however, only the most vulgar examples of real estate’s political power. Stein’s most trenchant point is that planning’s servitude to real estate is baked into our very system. Not only are cities reliant on economic development for their own solvency, but when private wealth is produced through the urban landscape itself, its every improvement becomes someone’s profit. Hence, the inevitability of gentrification.

This points to one of urban planning’s most wicked problems: any improvement, any amenity or service, often even any “concession” from a developer (say, including some affordable units in exchange for the right to build higher) causes an increase in land value underfoot and in surrounding property. Regardless of the benefits provided, as Stein explains, such improvements reveal investment opportunities for other speculators to exploit, ultimately increasing the cost of housing and displacing those who cannot afford it. And so the day-to-day work of mainly well-meaning professional planners striving to create good urban places still plays into the neoliberal and often regressive reality of planning at large.

Stein’s most trenchant point is that planning’s servitude to real estate is baked into our very system.

This cycle—in which nearly any element of urban improvement can end up working in the interests of real estate—helps explain some awkward political calculations. Poor communities threatened by the specter of gentrification find themselves opposing new businesses, bike lanes, and even trees for fear that they represent outside investment and may attract development that will lead to displacement. Advocates for the unhoused find themselves opposing much new housing development. Last year, the San Francisco Tenants Union found itself in bed with the city’s NIMBY homeowners, both opposing a state bill designed to increase housing density near transit (a plan critiqued by tenants’ groups as a handout to developers and an invitation to evictions and demolitions). We have needed a book like Capital City to articulate the systemic conditions underlying such paradoxes, and perhaps to sharpen the work of communities trying to protect and improve themselves.

Yet Stein’s book is less a call to arms than a careful discussion of just how messed up everything is and why. Much of Stein’s contribution lies in repackaging existing research and restating more clearly and bluntly the kinds of arguments that critical scholarship has been making in bits and pieces for a couple of decades.

But there are many elucidating moments. For instance, the book’s retelling of the urban “growth machine” narrative highlights the key moment, somewhere around the 1980s, when smart mayors and other elites went from being friends of industry to being friends of real estate. Stein also reveals the disturbing fact that rising property values are “a crucial performance metric for many urban police departments.” (It’s at powerful moments like this that readers may wish for more citations.) The book is also readable, which is no small victory for a Marxian analysis of urban political economy and history of the real estate industry.

It’s not clear who needs a book like Capital City more: planners themselves, or all the activists and other lay participants in urban policy debates who will also benefit from reading it. Stein’s book joins the rising chorus of popular urbanism, and does so in a much-needed critical voice. The mainstream discourse, exemplified by websites like CityLab, is broadly liberal and not unconcerned with social justice, but it rarely acknowledges any need for systemic change. Stein’s critique of urban politics and policymaking makes the need for transformative change seem surprisingly tangible. It also makes plain that the change required must come at least in part from within.


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A recent reading for Capital City at a bookstore in Downtown Los Angeles reflected the moment that we’re in. A standing-room crowd of interested urbanists—from planning professionals and academics to activists and neighborhood residents—packed the Last Bookstore to hear Stein and a small panel discuss this book “about planners in cities run by real estate.” A woman from the Los Angeles Housing Department described the need to redefine highest and best use (ostensibly planning’s guiding ethical principle)—and to harness eminent domain for radical purposes.

Of course, the “popular” planning conversation is still a fairly elite one. But at least it is being had, and by more than just cranky members of wealthy white homeowners’ associations. Books like Stein’s can contribute to, and perhaps embolden, a more informed and critical politics of housing and development—in policy circles, organizing meetings, and around the kitchen islands of young and ostensibly progressive urban elites. If such books succeed, we might see not only a reinvigorated critique of planning, but a chance to make the most of all this interest: with a great urban moment that is actually more hopeful for all.


This article was commissioned by Max Holleran. icon

Featured image: Taller than the Trees (2017). Photograph by Sean Pollock / Unsplash