2023 Theses Master's

Has Crowdfunding Exacerbated fhe Financialization of Housing In New York City?

Costa, Kevin

The central research question of this thesis is to ask whether crowdfunding has exacerbated the nationwide trend of large financial institutions increasing their investments in and control over residential real estate in New York City. This trend is part of a process called housing financialization. Understanding this trend is vital for urban planners, as financialization has been shown to reduce the amount of affordable housing.

Before 2015, only 3% of Americans could invest in most real estate projects. The 2013 and 2015 regulations associated with the 2012 JOBS Act enabled the other 97% to invest this way through crowdfunding. Simply defined, this refers to relatively large numbers of people investing relatively small amounts online in a specific project.

The thesis uses a mixed methods approach to answer the central research question. Important websites were selected to measure the number of deals and amount of crowdfunding investment in New York City. Investments in two US cities with high land values, Boston, and San Francisco, are similarly measured. One crowdfunding portal owner was interviewed, as well as one of the original leaders of the crowdfunding movement that led to the JOBS Act. Several leading real estate executives were interviewed; although they all refused to speak on the record, it did help me form a greater understanding of the movement.

Financialization is not just a process but a heavily contested term with several definitions, some of which are related to crowdfunding. The process is an essential tool in promulgating neoliberal policies and programs. I argue that while crowdfunding has been indirectly promoted as being in opposition to neoliberalism, it ultimately appears to be serving its interests in the long run. Despite this, crowdfunding has the potential to create and preserve affordable housing and therefore slow the financialization of housing.