The Secondary Circuit of Capital Reconsidered: Globalization and the U.S. Real Estate Sector

Abstract

The author examines the U.S. real estate sector to show how the state shapes global real estate flows and networks of activity through the creation and control of liquid resources. The analysis focuses on the role of state laws and regulations in the expansion of the mortgage‐backed securities markets and the development of real estate investment trusts (REITs). These institutional developments represent a series of ad hoc state efforts to "delocalize" residential and commercial property, and embed real estate financing within global capital markets. Rather than viewing globalization as weakening the state, the author argues that the U.S. state's capacity to influence the degree and development of liquidity is a powerful mechanism of globalization.