The Financialization of Home and the Mortgage Market Crisis

By M. Aalbers. Competition & Change, 2008

673 citations recorded by the source corpus.

Financialization can be characterized as capital switching from the primary, secondary or tertiary circuit to the quaternary circuit of capital. Housing is a central aspect of financialization. The financialization of mortgage markets demands that not just homes but also homeowners become viewed as financially exploitable. It is exemplified by the securitization of mortgage loans, but also by the use of credit scoring and risk-based pricing. In the past century, mortgage markets were transformed from being a ‘facilitating market’ for homeowners in need of credit to one increasingly facilitating global investment. Since mortgage markets are both local consumer markets and global investment markets, the dynamics of financialization and globalization directly relate homeowners to global investors thereby increasing the volatility in mortgage markets, as the current crisis shows all too well.

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Citations in the corpus

London and New York as a safe deposit box for the transnational wealth elite (2016, background): “…of the growing literature on the financialisation of real estate focuses on housing finance as central to ‘mass-based’ financialisation processes (Aalbers, 2008; Montgomerie, 2009; Rolnik, 2013) and related to a broader debt-driven model of accumulation (Boyer, 2000; Fernandez and Aalbers,…”
Centring Housing in Political Economy (2014, background): “Furthermore, debates on the privatization, neoliberalization and financialization of housing go to the core of debates about capitalist ideology and practice, more generally (Aalbers 2008; Ronald 2008; Saegert, Fields, and Libman 2009; Rolnik 2013).”
Speculating on London's housing future (2016, background): “In the USA, as securitisation came to dominate the mortgage market, mortgages themselves became the raw materials for globally traded financial instruments (Newman 2009), ending up as ‘collateralised debt obligations’ (CDOs) in the books of European banks, distributing the risk throughout the system”
Round the Houses: Homeownership and Failures of Asset-Based Welfare in the United Kingdom (2015, background): “…the financialisation of housing signalled an important transformation; securitisation fundamentally re-shaped the socio-economic landscape (Aalbers 2008, Gotham 2009, Wainwright 2009) and the politics of homeownership directly linked the domestic political economy to global financial…”
Land Financialization as a ‘lived’ process: The transformation of Milan’s Bicocca by Pirelli (2016, background): “…urban change became more closely knitted when scholars turned their attention to the relationship between financialization and the mortgage sector (Aalbers, 2008, 2012; Hall, 2011; Smart and Lee, 2003) and the role of financial intermediaries in nurturing urban development projects (Moulaert et…”
The Emergence of a Finance Culture in American Households, 1989-2007 (2015, background): “Scholars have produced a growing number of studies on the origins, dimensions, and effects of financialization across multiple domains, both in the U.S. and elsewhere (Zorn, et al., 2004; Krippner, 2011; Tomaskovic-Devey and Lin, 2011; Lin and Tomaskovic-Devey, 2013; Baud and Durand, 2011; Van Der…”
The financialisation of rental housing: A comparative analysis of New York City and Berlin (2016, background): “…assets into liquid and tradable commodities, and the financial sector’s expanded role in the overall economy (cf. Engelen et al., 2010) have redefined the role of mortgage markets from facilitating borrowers’ access to credit to facilitating processes of global investment (Aalbers, 2008).”
Geographies of money and finance II (2012, background): “…between space, socioeconomically deprived financial subjects and retail financial services provision has also been examined through work that examines access to credit, notably subprime mortgage finance supported by securitization in the 2000s (Aalbers, 2005, 2008; Wyly et al., 2006, 2007, 2009).”
The Handbook of Neoliberalism (2016, background): “In the mid-1980s a package of legislative measures was initiated to increase the accessibility of the primary mortgage market for an everlarger slice of US households (Gotham 2009; Aalbers 2012). What has happened since is a gradual transformation of local legislative frameworks, techniques, experti”
The limits to financialization (2015, background): “, 2010) or, alternatively, in terms of land (Kaika and Ruggiero, 2013), home (Aalbers, 2008), or urban redevelopment processes (Rutland, 2010; Weber, 2010).”
The financialization of Canadian multi-family rental housing: From trailer to tower (2020, background): “In the category of housing, finance has moved from homeownership and mortgage loans (e.g. Aalbers, 2008) into increasingly niche areas, including multi-family housing (August & Walks, 2018; Fields, 2014; Teresa, 2015), social and non-market housing (Aalbers, Loon, & Fernandez, 2017; Fields & Uffer,…”
Geographies of the financial crisis (2009, unknown): “Others have provided the buildings blocks for such an approach (most notably Gotham 2006; 2009; see also Dymski 1999; Sassen 2001; 2009; Wyly et al. 2004; 2009; Aalbers 2008; 2009; Wainwright 2009).”
Commodification and housing market cycles in Chinese cities (2015, background): “This capital switching theory has been further explored in the context of the subprime mortgage crisis in the USA (Gotham, 2009), where the spatial fixity of housing was made more ‘liquid’ through financialisation of the real estate market and the securitisation of mortgages.”