This interesting post ‘Housing, money laundry, speculation and precarity‘ addresses the issue of speculation in real estate. It revolves around the re-regulation of real estate and the limits of deregulation in that area.
Confronted to a meteoritic rise of rents in Berlin the decision was taken to propose to renationalise a part of the real-estate A referendum supported this decision in September, however it still needs to be put in effect.
Real estate was privatized and financialized as bonds and Real Estate Investment Trusts (REITs) focusing on profitability without taking into account the usage of the underlying assets. Moreover, “REITs are private equity, and they’re a devastatingly effective tool for money-laundering. REITs are typically backed by anonymous shell companies from financial secrecy havens and onshore-offshore zones like Delaware, Nevada and Wyoming.“
According to the author the situation is worse in the US where homeowning has been transferred to opaque companies with unknown beneficiaries, which may create substantial issues in the medium and long term. All sorts of unhealthy practices seem to develop in particular in distressed communities. This raises the question of how to put some limits on the financialization of such essential services like personal accommodation real estate.
I am convinced that some essential parts of the economy require proper regulation, however the market principles still need to be at play. What is absolutely important is to make that abusive or fraud behavior is avoided, and that certain financial mechanisms are not a conduit to money laundering.