After 2008’s global economic meltdown—triggered by reckless lending practices, the bundling of mortgages into toxic financial products, and sky-high oil prices—there was a flurry of academic interest that involved a variety of disciplines.
University faculty in public policy, finance, real estate, sociology, and law schools all dug into the roots of what had happened. But according to Matthew Soules, an associate professor in the UBC School of Architecture and Landscape Architecture, there was very little exploration in his field about the impact of the financial bubble on the design of buildings.
“That’s for good reason,” Soules told the Georgia Straight in a phone interview. “That’s because we often don’t think of architecture [as] being that significant to economics and politics.”
Soules was not trained as an economist: his undergraduate degree was in history and fine arts before he studied architecture. But he has a long-standing interest in the economic dimensions of his profession.
He took a finance course at the Sloan School of Management at the Massachusetts Institute of Technology and studied real-estate development at the John F. Kennedy School of Government at Harvard University. And as the years passed, he wondered if architects could offer a unique perspective on the global financial crisis, given their role in configuring the built environment.
So in 2012, he applied for a research grant from the federal Social Sciences and Humanities Research Council to study this. His application was accepted, enabling Soules to hire student research assistants to visit areas of the world where the speculative construction bubble burst most spectacularly.
They started in Ireland in 2013 before travelling to Spain and then to four American states: Florida, Arizona, Nevada, and California.
“We took a drone and went into these wastelands of overdevelopment and documented them,” Soules recalled.
Along the way, they spoke to local architects, real-estate developers, planners, academics, and sociologists. Soules also studied what happened in Melbourne, London, Paris, and cities in China.
He went on to publish papers and speak at conferences before coming to a realization: the behaviour patterns that led to the 2008 meltdown never went away.
In fact, it seemed to him that the products of architecture were increasingly being marketed as financial investments. The built environment was being tethered to financial markets through real-estate investment trusts, securitized mortgages, and the entry of multibillion-dollar private equity groups, such as the Blackstone Group, into the housing market.
That led Soules to write his new book, Icebergs, Zombies, and the Ultra Thin: Architecture and Capitalism in the Twenty-First Century, which was just published by Princeton Architectural Press.
Wealth stored in real estate
He told the Straight that too often the conversation about real estate is incorrectly framed around race, which he called “misguided” and a “complete misdirection”. To demonstrate his point, he said that he knows people who live in Point Grey with investment properties in Kitsilano.
“The reality is British Columbians are huge investors in our own real estate—and Canadians from elsewhere in Canada—Canadians of all races and Americans of all races. Then, of course, the global community of all races,” Soules said.
So what are the “icebergs” in his book title? That refers to a recent phenomenon in wealthy areas in the U.K.—such as the Chelsea and Knightsbridge districts in London—where the super rich build “very large subterranean basement expansions for their homes”.
In some cases, Soules said, these underground bunkers have many floors, featuring swimming pools, movie theatres, or space for car collections.
“This…is one of the things that happens in this era as more and more wealth seeks to store itself in architecture,” he said. “So these are kind of these subterranean storage vaults, these iceberg homes.”
Pencil-thin towers make housing more liquid
“Zombies” refers to sections of cities where there are empty homes sucking the vitality out of neighbourhoods.
“Pieds-à-terre and secondary homes existed for a long time,” Soules acknowledged. “But more and more numbers of people are buying them in this era—second homes, third homes, and fourth homes.”
He noted that this is done for a variety of reasons, but the upshot is that these secondary homes are often underutilized.
Meanwhile, “ultra thin” refers to the pencil-thin towers being developed in many cities. Vancouver was an incubator for these projects, though its height restrictions prevented them from reaching the sky like those in other cities.
“These towers in New York are almost the zenith of this thinking, but it’s everywhere in varying degrees,” Soules said.
Once upon a time, he added, the credo was that all real estate is local. But nowadays it’s becoming increasingly global. And his book points out that in this era of "finance capitalism", there’s inherent pressure to make real-estate markets more “liquid”—i.e., more easily traded like other financial assets, such as stocks and bonds.
To make it liquid in the interest of finance, real estate is becoming less local, he said. “I think one of the main ways it becomes less local is it becomes less
And one way to reduce social entanglements is to reduce contact between residents of buildings, either by having one or two units per floor or by constructing vast underground living areas beneath mansions.
“We’re slowly, incrementally building a less socially vital society where we’re literally delocalizing by diminishing our contact with other humans,” Soules maintained.
Architects can design vibrant communities
The B.C. Real Estate Association’s second-quarter housing forecast stated that the “outsized appreciation of home prices over the past year should continue to spur strong residential construction”. About 40,000 new units are expected.
“That adds up to an already large pipeline of units under construction, the timely completion of which is desperately needed in supply-starved BC housing markets,” the BCREA noted.
But as more supply continues being built, it doesn’t seem to sufficiently address the demand from real-estate investors. Prices keep rising, even after immigration levels crashed and the economy contracted during the pandemic.
Soules hasn’t altogether lost hope, pointing out that architects know how to create spaces that support vibrant communities.
But he also admitted that the financialization of real estate is so complex that architects alone cannot solve this on their own.
“It’s going to involve developers, financiers, politicians, and the public at large,” Soules said. “I think what’s great is that there are people talking about it.”