Automated landlord: Digital technologies and post-crisis financial accumulation
First Published May 1, 2019 Research Article
https://doi.org/10.1177/0308518X19846514
....MUCH MOREIntroductionAbstractThis article centers the role of digital technologies in extending financial accumulation into new sectors of the US housing market in the wake of the global financial crisis. I argue that while post-crisis market conditions provided an opportunity for large investors to acquire foreclosed single-family homes, convert them to rental housing, and roll out an new asset class based on bundled rent checks, these conditions were insufficient on their own. Digital innovations coming to prominence since the 2008 crisis were required to automate core functions, such as rent collection and maintenance, in order to efficiently manage large, geographically dispersed property portfolios. New information technologies enabled investors to aggregate ownership of resources, extract income flows, and securely convey these flows to capital markets. Such advances have, therefore, given rise to the “automated landlord”, whereby the management of tenants and properties is increasingly not only mediated, but governed, by smartphones, digital platforms, and apps, and the data and analytics these devices and infrastructures gather and enable. This article shows how technological transformations actively participate in the ongoing, dynamic process of financial accumulation strategies, and contends that digital technologies, therefore, also comprise a crucial terrain of struggles over housing’s place in contemporary capitalism.
A 2012 New York Times article titled “Investors Are Looking to Buy Homes by the Thousands” (Rich, 2012) followed a home inspector, armed with a clipboard and a tablet computer, through a series of foreclosed homes he was evaluating on behalf of Waypoint Real Estate, one of the large investors seeking to transform the business of single-family rental (SFR).1 After plugging the notes from his clipboard into a software program on the tablet, the inspector obtained an estimate of the renovation costs needed to get a vacant property ready to rent. A “blistering pace” of 20 minutes per home was “necessary to keep up with Waypoint’s appetite” for speedy acquisitions “in a business that some deep-pocketed investors are betting is poised to explode” (Rich, 2012). Later, the renovation costs and other data points would be plugged in to a proprietary algorithm to calculate bids on foreclosed properties up for auction. As one of the company’s founders explained, bespoke computer systems and algorithms based on rental market data, maps, and field observations were central to realizing an ambition to “treat it [the SFR business] like a factory and create a production line” to acquire, renovate, and rent out foreclosed homes (executive quoted in Rich, 2012).
Single-family homes have long been a significant part of the rental market in the USA (Goodman and Kaul, 2017). But until recently they had never been owned and managed at scale, likely due to the cost and inefficiency (compared to apartment buildings) of managing large pools of scatter-site, spatially heterogeneous properties (Mills et al., 2017). The predominance of small-scale investors and fragmented ownership patterns within SFRs has worked against the possibility of structured finance opportunities such as securitization. However, this started to change in 2012. Large supplies of discounted property, constrained mortgage credit, and increased rental demand characterizing the US housing landscape after the height of the crisis presented an opportunity for private-equity-backed investors to assemble large, geographically dispersed portfolios and issue securitizations backed by rental income flows (Mills et al., 2017). The SFR market has undergone a structural change marked by an institutional concentration of ownership, facilitating the rollout of a new financial asset class. But, as the article “Investors Are Looking to Buy Homes by the Thousands” suggests, advances in digital technologies have been vital to capitalizing on the opportunity posed by post-crisis market conditions, and, consequently, to adapting property-led financial accumulation strategies for a new segment of the rental market.
A growing body of research confirms rental housing as an increasingly important site of experimentation for financial actors and logics (August and Walks, 2018; Fields, 2018; Wijburg et al., 2018). Primarily pursued from the perspective of critical political economy, this work generally neglects recent prominent transformations in information technology (such as the rise of big data, artificial intelligence, and cloud and mobile computing), despite their potential role in financialization, e.g. fostering greater transparency and comparability of assets. In a different theoretical register, social studies of finance have long documented how information technology has fundamentally remade the spaces, practices, and cultures of financial markets (e.g. MacKenzie, 2016; Zaloom, 2006), but rarely consider housing a “key object of financialization” (Aalbers, 2017: 542; though see MacKenzie, 2011; Poon, 2009 for relevant contributions). There is significant scope to expand research on the relationship between information technology and financialization (Currie and Lagoarde-Segot, 2017). Indeed, in overlooking digital technologies, scholars concerned with the treatment of housing as a financial asset miss an avenue of analysis vital to grasping how financialization is practically realized (though see Rogers, 2017a, 2017b for an exception).
This article centers the role of digital technologies in extending financial accumulation into new sectors of the housing market in the wake of the global financial crisis. The language of the factory and the production line animating Waypoint’s vision inspires my analysis. This terminology hints at the larger supply chain involved in extracting SFR income and organizing its movement to financial markets. How are digital technologies mobilized in this supply chain? What implications does this kind of analysis have for how we understand housing financialization? What can we learn here about contemporary social struggles over housing?
To answer these questions, I draw on three conceptual points of reference. Mezzadra and Neilson’s (2013, 2015) concept of operations of capital provides a wider analytic framework. This concept revolves around the logics of finance, extraction, and logistics that, together, define contemporary capitalism (Mezzadra and Neilson, 2013), and allows a focus on the socio-technical constitution of contemporary capitalism (a chief strength of social studies of finance) without sacrificing attention to its general tendencies (a core concern of critical political economies of financialization). I further mobilize economic sociology on Fordist-style vertical integration of financial firms (Goldstein and Fligstein, 2017) and expansive interpretations of logistics and extraction, respectively emphasizing the reorganization of economic space around the imperatives of circulation (Chua et al., 2018; Danyluk, 2017) and the application of “prospecting logics” to society (Mezzadra and Neilson, 2017: 194). These additional reference points are crucial to elucidating the organizational strategies pursued by investors like Waypoint, and how these strategies have made it possible to rework housing financialization in anticipation of a potentially post-homeownership society.
The central argument of this paper is that advances in digital technology have been essential to creating a new financial asset for the post-crisis era. In the process, such advances have given rise to what I term the “automated landlord”, whereby the management of tenants and properties is increasingly not only mediated, but governed, by smartphones, digital platforms, and apps, and the data and analytics these devices and infrastructures gather and enable....
