You know something is wrong when neoliberals and Marxists start agreeing.
The emerging consensus among economists of both schools is that rampant speculation is to blame for our dysfunctional real estate market, in which the “law” of supply and demand doesn’t seem to apply.
In this talk recorded at BESI on October 31, 2024, Rachel Weber reveals how commercial real estate analysts have enabled big property owners — private equity funds, real estate investment trusts, investment banks, and legacy real estate companies — to become property speculators. Weber’s talk was co-sponsored by Berkeley Global Metropolitan Studies and UC Berkeley Department of City and Regional Planning.
Weber observes that analysts and the speculators who rely on them lack any special cognitive access to the future. But that doesn’t stop them from trying to account for and anticipate it.
“Speculators are prone to prophecy and prognostication, and cannot place their bets without also imagining an uncertain future,” Weber told the multidisciplinary audience of urban planners and political economists gathered for her talk.
Weber’s current research project, “The Urban Oracular: Prediction and Speculation in Real Estate,” on which this talk is based, documents the predictive knowledge practices of real estate analysts, such as hiring PR teams to attest to their forecasting acumen and circulate persuasive future imaginaries. Drawing from interviews with the “quants” themselves, she follows forecasters’ outputs as they travel up the “food chain” through individual asset managers and investment banks before they ultimately become dispersed among professional networks.
For Weber, the core problem isn’t that the predictions are inaccurate — although forecasters get plenty wrong. Her more fundamental concern is that forecasts allow speculators to convert imagined spreads in the future into capital in the present, driving the “inexplicable” behavior of the contemporary real estate market.
Following her presentation, Weber invited Julien Migozzi and Sai Balakrishnan, two of her distinguished peers in the urban planning space, for a panel discussion on the argument she presented. An open Q&A with audience members closed out the event.
Ultimately, the alarming picture Weber paints is of a “self-referential world of real estate speculation, where value is based as much on the anticipation of appreciation as on current cash flows. Forecasts strategically enable speculators to conjure the rent gap and capture inter-temporal value differentials before they even exist.”
“I think that’s kind of scary,” she concluded.
About the Speaker
Rachel Weber is a professor in the Urban Planning and Policy Department at the University of Illinois at Chicago. Weber is the author of over 50 peer-reviewed journal articles, as well as numerous book chapters and published reports. She’s also the co-editor of the “Oxford Handbook of Urban Planning,” a compilation of 40 essays by leading urban scholars. Her book “From Boom to Bubble: How Finance Built the New Chicago” won the Best Book Award from the Urban Affairs Association in 2017. Weber’s current research project, tentatively entitled “The Urban Oracular: Prediction and Speculation in Real Estate,” unpacks the mechanics of contemporary property speculation in an age of financialization and digitalization.
In addition to her academic responsibilities, Weber has served as an advisor to planning agencies, political candidates, and community organizations on issues related to property taxes, infrastructure finance, and neighborhood change. She was appointed to then-presidential candidate Barack Obama’s Urban Policy Committee in 2008 and by Chicago Mayor Rahm Emanuel to the Tax Increment Financing Reform Task Force in 2011. She has been cited and quoted extensively in The New York Times, The Wall Street Journal, National Public Radio, The Economist, Crain’s, The Chicago Tribune, and other news outlets.