You know something is wrong when neoliberal and Marxist economists 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 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.
