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WHY HOMELESSNESS STALKS AMERICA LIKE THE GRIM REAPER  
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Thom Hartmann
April 22, 2024
The Hartmann Report
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_ Both homelessness & inflation are the result of America allowing
housing to become a commodity that can be traded & speculated in by
financial markets & overseas investors... _

Deon Robertson Washington, who has been homeless for four years, sits
among his belongings where he lives under Interstate 35 at East Sixth
Street in Austin, Texas, shown on February 9, 2021., Jay Janner /
American-Statesman

 

Back in 1967, a friend of mine and I hitchhiked from East Lansing,
Michigan to San Francisco to spend the summer in Haight-Ashbury. One
ride dropped us off in Sparks, Nevada, and within minutes of putting
our thumbs out a city police car stopped and arrested us for vagrancy.

The cop, a young guy with an oversize mustache who was apologetic for
the city’s policy, drove us to the desert a mile or so beyond the
edge of town, where we hitchhiked standing by a distressing light-post
covered with graffiti reading “39 hours without a ride,” “going
on our third day,” and “anybody got any water?”

VAGRANCY LAWS WERE SO 20TH CENTURY.

Today, the US Supreme Court will hear a case involving efforts by the
City of Grants Pass, Oregon to keep homeless people off its streets
and out of its parks and other public property. The city had tried a
number of things when the problem began to explode in the last year of
the Trump administration, as _The Oregonian newspaper notes
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“They discussed putting them in their old jail, creating an unwanted
list, posting signs at the city border or driving people out of
town... Currently, officers patrol the city nearly every day, Johnson
said, handing out [$295] citations to people who are camping or
sleeping on public property or for having too many belongings with
them.”

The explosion in housing costs have triggered two crises: homelessness
and inflation. The former is harming the livability of our cities and
towns, and the Fed’s reaction to the latter threatens an
incumbency-destroying recession just as we head into what will almost
certainly be the most important election in American history.

THE PROBLEM WITH HOUSING INFLATION IS SO SEVERE TODAY THAT WITHOUT IT
THE NATION’S OVERALL CORE CPI INFLATION RATE WOULD BE IN THE
NEIGHBORHOOD OF FED CHAIRMAN JEROME POWELL’S 2 PERCENT GOAL.

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Graphic based on BLM data and interpretation by _The Financial Times
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Both homelessness and today’s inflation are the result of America
— unlike many other countries — allowing housing to become a
commodity that can be traded and speculated in by financial markets
and overseas investors.

Forty-three years into America’s Reaganomics experiment
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homelessness has gone from a problem to a crisis. Rarely, though, do
you hear that Wall Street — a prime beneficiary of Reagan’s
deregulation campaign — is helping cause it.

THIRTY-TWO PERCENT SEEMS TO BE THE MAGIC THRESHOLD, ACCORDING TO
RESEARCH FUNDED BY THE REAL ESTATE LISTING COMPANY 
[[link removed]]_ZILLOW
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WHEN NEIGHBORHOODS HIT RENT RATES IN EXCESS OF 32 PERCENT OF
NEIGHBORHOOD INCOME, HOMELESSNESS EXPLODES.

And we’re seeing it play out right in front of us in cities across
America because a handful of Wall Street billionaires want to make a
killing.

IT WASN’T ALWAYS THIS WAY IN AMERICA.

Housing prices have spun out of control since my dad bought his house
in 1957 when I was six years old. He got a Veteran’s
Administration-subsidized loan and picked up the brand-new
3-bedroom-1-bath ranch house my 3 brothers and I grew up in, in
suburban south Lansing, Michigan. It cost him $13,000, which was about
twice what he made every year working a good union job in a
tool-and-die shop. 

WHEN MY DAD BOUGHT HIS HOME IN THE 1950S THE MEDIAN PRICE OF A
SINGLE-FAMILY HOUSE WAS 2.2 TIMES
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MEDIAN AMERICAN FAMILY INCOME.  TODAY, THE FED SAYS
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$479,500 WHILE THE MEDIAN AMERICAN PERSONAL INCOME IS $
[[link removed]]41,000 — A RATIO
OF MORE THAN TEN-TO-ONE BETWEEN HOUSING COSTS AND ANNUAL INCOME.

As the Zillow study notes:

“Across the country, the rent burden already exceeds the 32 percent
[of median income] threshold in 100 of the 386 markets included in
this analysis….”

AND WHEREVER HOUSING PRICES BECOME MORE THAN THREE TIMES ANNUAL
INCOME, HOMELESSNESS STALKS LIKE THE GRIM REAPER.

We’re told that America’s cities have seen this increase in
housing costs since the 1950s
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some part because of the growing wealth and population of this
country.  There were, after all, 168 million
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in the US the year my dad bought his house; today there are 330
million
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And it’s true that we haven’t been building enough new housing,
particularly low income housing, as 43 years of neoliberal
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income for working class people relative to all of their expenses
while stopping the construction of virtually any new subsidized
low-income housing.

BUT THAT’S NOT THE ONLY, OR EVEN THE MAIN DYNAMIC, DRIVING HOUSING
PRICES INTO THE STRATOSPHERE — AND, AS A CONSEQUENCE, THE CRISIS IN
HOMELESSNESS — OVER THE PAST DECADE. YOU CAN THANK SPECULATION FOR
MUCH OF THAT. 

As the Zillow-funded study noted: 

“This research demonstrates that the homeless population climbs
faster when rent affordability — the share of income people spend on
rent — crosses certain thresholds. In many areas beyond those
thresholds, even modest rent increases can push thousands more
Americans into homelessness.”

SO HOW DID WE GET HERE?

It started with a wave of foreign buyers over the past 30 years
(particularly from China, Canada, Mexico, India and Colombia
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who, in just the one single year of 2020, picked up over 154,000 homes
as their way of parking money in America. Which is part of why there
are over 20 times more empty houses
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America than there are homeless people.

As _Marketwatch_ noted in a 2015 article titled “The Danger of
Foreign Buyers Gobbling Up American Homes
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“Unusual high appreciation of the aforementioned urban centers is
due to the ever growing influx of foreign buyers — mostly wealthy
Chinese — who view American residential real estate as the safest
investment commodity. … According to a National Realtors Association
survey, the Chinese spent $22 billion on U.S. housing in 12 months
through March 2014…. [Other foreign buyers primarily include]
Canadians, British, Indians and Mexicans.”

BUT FOREIGN INVESTMENT HAS BEEN DOWN FOR THE PAST FEW YEARS; WHAT’S
TAKEN OVER AND IS REALLY DRIVING HOME PRICES TODAY ARE MASSIVE,
MULTI-BILLION-DOLLAR US-BASED FUNDS THAT SWEEP INTO NEIGHBORHOODS AND
BUY EVERYTHING AVAILABLE, BIDDING AGAINST FAMILIES AND DRIVING UP
HOUSING PRICES.

As noted in a _Wall Street Journal_ article titled “Meet Your New
Landlord: Wall Street
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in just one suburb (Spring Hill) of Nashville, “In all of Spring
Hill, four firms … own nearly 700 houses … [which] amounts to
about 5% of all the houses in town.”

THIS IS THE TINIEST TIP OF THE ICEBERG. 

“On the first Tuesday of each month,” notes the _Journal article
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a similar phenomenon in Atlanta, investors “toted duffels stuffed
with millions of dollars in cashier’s checks made out in various
denominations so they wouldn’t have to interrupt their buying spree
with trips to the bank…”

THE SAME THING IS HAPPENING IN CITIES AND SUBURBS ALL ACROSS AMERICA;
THE INVESTMENT GOLIATHS USE FINELY-TUNED COMPUTER ALGORITHMS TO SNIFF
OUT HOUSES THEY CAN TURN INTO RENTAL PROPERTIES, MAKING OVER-MARKET
AND UNBEATABLE CASH BIDS OFTEN WITHIN MINUTES OF A HOUSE HITTING THE
MARKET.

After stripping neighborhoods of homes families can buy, they then
begin raising rents as high as the market will bear. 

In the Nashville suburb of Spring Hill, for example, the vice-mayor,
Bruce Hull, told the _Journal
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used to be able to rent “a three bedroom, two bath house for $1,000
a month.”  Today, the _Journal
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“The average rent for 148 single-family homes in Spring Hill owned
by the big four [Wall Street investor] landlords was about $1,773 a
month…”

RYAN DEZEMBER, IN HIS BOOK _UNDERWATER: HOW OUR AMERICAN DREAM OF
HOMEOWNERSHIP BECAME A NIGHTMARE
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THE STORY OF A FAMILY TRYING TO BUY A HOME IN PHOENIX.  EVERY TIME
THEY ENTERED A BID, THEY WERE OUTBID INSTANTLY, THE PRICE RISING OVER
AND OVER, UNTIL FINALLY THE FAMILY’S FATHER THREW IN THE TOWEL. 

“Jacobs was bewildered,” writes Dezember. “Who was this
aggressive bidder?” 

Turns out it was Blackstone Group, now the world’s largest real
estate investor.  At the time they were buying $150 million worth of
American houses every week, trying to spend over $10 billion. And
that’s just a drop in the overall bucket.

IN 2018, CORPORATIONS BOUGHT 1 OUT OF EVERY 10 HOMES SOLD IN AMERICA,
ACCORDING TO DEZEMBER, NOTING THAT, “BETWEEN 2006 AND 2016, WHEN THE
HOME OWNERSHIP RATE FELL TO ITS LOWEST LEVEL IN FIFTY YEARS, THE
NUMBER OF RENTERS GREW BY ABOUT A QUARTER.”

This all really took off around a decade ago, when Morgan Stanley
published
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report titled “The Rentership Society,” arguing that — in the
wake of the 2008 Bush Housing Crash — snapping up houses and renting
them back to people who otherwise would have wanted to buy them could
be the newest and hottest investment opportunity for Wall Street’s
billionaires and their funds. 

Turns out, Morgan Stanley was right. Warren Buffett, KKR, and The
Carlyle Group have all jumped into residential real estate, along with
hundreds of smaller investment groups, and the _National Home Rental
Council [[link removed]]_ has emerged as the
industry’s premiere lobbying group, working to block rent control
legislation and other efforts to regulate the industry.

As John Husing, the owner of Economics and Politics Inc., told _The
Tennessean newspaper
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“What you have are neighborhoods that are essentially unregulated
apartment houses.  It could be disastrous for the city.”

Meanwhile, as unionization levels here remain among the lowest in the
developed world, Reagan’s ongoing war on working people continues to
wipe out America’s families.

AT THE SAME TIME THAT HOUSING PRICES, BOTH TO PURCHASE AND TO RENT,
ARE BEING DRIVEN THROUGH THE ROOF BY FOREIGN AND WALL STREET
INVESTORS, A SURVEY PUBLISHED BY NPR, THE ROBERT WOOD JOHNSON
FOUNDATION, AND THE HARVARD TH CHAN SCHOOL OF PUBLIC HEALTH FOUND THAT
AMERICAN FAMILIES ARE IN CRISIS.

Their study found
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— “Thirty-eight percent (38%) of [all] households across the
nation report facing serious financial problems in the previous few
months.
— “THERE IS A SHARP INCOME DIVIDE IN SERIOUS FINANCIAL PROBLEMS,
AS 59% OF THOSE WITH ANNUAL INCOMES BELOW $50,000 REPORT FACING
SERIOUS FINANCIAL PROBLEMS IN THE PAST FEW MONTHS, COMPARED WITH 18%
OF HOUSEHOLDS WITH ANNUAL INCOMES OF $50,000 OR MORE.
— “These serious financial problems are cited despite 67% of
households reporting that in the past few months, they have received
financial assistance from the government.
— “ANOTHER SIGNIFICANT PROBLEM FOR MANY U.S. HOUSEHOLDS IS LOSING
THEIR SAVINGS DURING THE COVID-19 OUTBREAK. NINETEEN PERCENT (19%) OF
U.S. HOUSEHOLDS REPORT LOSING ALL OF THEIR SAVINGS DURING THE COVID-19
OUTBREAK AND NOT CURRENTLY HAVING ANY SAVINGS TO FALL BACK ON.
— “At the time the Centers for Disease Control and Prevention’s
(CDC) eviction ban expired, 27% of renters nationally reported serious
problems paying their rent in the past few months.”

THESE ARE NOT SEPARATE ISSUES, AND THEY ARE DRIVING AN EXPLOSION IN
HOMELESSNESS.

The Zillow study found
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damning data:

— “Communities where people spend more than 32 percent of their
income on rent can expect a more rapid increase in homelessness.
— “INCOME GROWTH HAS NOT KEPT PACE WITH RENTS, LEADING TO AN
AFFORDABILITY CRUNCH WITH CASCADING EFFECTS THAT, FOR PEOPLE ON THE
BOTTOM ECONOMIC RUNG, INCREASES THE RISK OF HOMELESSNESS.
— “The areas that are most vulnerable to rising rents,
unaffordability, and poverty hold 15 percent of the U.S. population
— and 47 percent of people experiencing homelessness.”

THE ZILLOW STUDY MAKES GRIM READING AND IS WORTH CHECKING OUT.  IN
COMMUNITY AFTER COMMUNITY, WHEN RENT PRICES EXCEED 32 PERCENT OF
MEDIAN HOUSEHOLD INCOME, HOMELESS EXPLODED.  IT’S MEASURABLE,
PREDICTABLE, AND IS DESTROYING WHAT’S LEFT OF THE AMERICAN WORKING
CLASS, PARTICULARLY MINORITIES.

The loss of affordable homes also locks otherwise middle class
families out of the traditional way wealth is accumulated — through
home ownership: over 61%
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American middle-income family wealth is their home’s equity. And as
families are priced out of ownership and forced to rent, they become
more vulnerable to long-term economic struggles and homelessness.

HOUSING IS ONE OF THE PRIMARY ESSENTIALS OF LIFE.  NOBODY IN AMERICA
SHOULD BE WITHOUT IT, AND FOR SOCIETY TO WORK, HOUSING COSTS MUST
TRACK INCOMES IN A WAY THAT MAKES HOUSING BOTH AVAILABLE AND
AFFORDABLE. THIS REQUIRES GOVERNMENT INTERVENTION IN THE SO-CALLED
“FREE MARKET.”

— Last year, Canada banned
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foreign buyers from buying residential property as a way of
controlling their housing inflation.
— NEW ZEALAND SIMILARLY PASSED
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NO-FOREIGNERS LAW (EXCEPT FOR SINGAPOREANS AND AUSTRALIANS) IN 2018.
— Thailand requires
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minimum investment of $1.2 million and the equivalent of a green card.
— GREECE BANS
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NON-EU CITIZENS FROM BUYING REAL ESTATE IN MOST OF THE COUNTRY.
— To buy residential housing in Denmark, it must be
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primary residence and you must have lived in the country for at least
5 years.
— Vietnam, Austria, Hungary, and Cyprus also heavily restrict
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can buy residential property, where, and under what terms.

THIS ISN’T ROCKET SCIENCE; THE PROBLEM COULD BE EASILY FIXED BY
CONGRESS IF THERE WAS A GENUINE WILLINGNESS TO PROTECT OUR REAL ESTATE
MARKET FROM THE VULTURES WHO’VE BEEN CIRCLING IT FOR YEARS.

Unfortunately, when Clarence Thomas was the deciding vote to allow
billionaires and hedge funds to legally bribe members of
Congress in 
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United
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he and his four fellow Republicans opened the floodgates to
“contributions” and “gifts” from foreign and Wall Street
interests to pay off legislators to ignore the problem.

BECAUSE THERE’S NO LOBBYING GROUP FOR THE

INTERESTS OF AVERAGE HOMEOWNERS OR THE HOMELESS, IT’S UP TO US TO
RAISE HELL WITH OUR ELECTED OFFICIALS. THE NUMBER FOR THE
CONGRESSIONAL SWITCHBOARD IS 202-224-3121.

If ever there was a time to solve to this problem — and regulate
corporate and foreign investment in American single-family housing —
it’s now.

_Thom Hartmann is a NY Times bestselling author of 34 books in 17
languages & nation's #1 progressive radio host. Psychotherapist,
international relief worker. Politics, history, spirituality,
psychology, science, anthropology, pre-history, culture, and the
natural world._

* Homelessness in America
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* Housing Crisis
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* corporate profits
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