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A NEW PERMANENT AFFORDABLE HOUSING PROPOSAL
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Omar Ocampo
September 23, 2024
Inequality.org [[link removed]]
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_ Recently introduced legislation would help break corporate
America’s grip on our housing stock. _
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In its most recent year-end letter
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the private equity firm Blackstone gave its stockholders a seemingly
counterintuitive assurance: the lack of new housing stock was reason
for optimism.
Why does a stagnant growth in new living spaces benefit Blackstone?
Because it is the nation’s largest corporate landlord. For the firm
and its investors, chronic housing shortages mean more power
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set prices and more leverage to extract wealth from vulnerable
working-class tenants.
Blackstone’s letter reveals the malevolent and distortionary role
private equity plays in our residential real estate market and
underscores the fundamental problem with housing commodification writ
large.
Our market-based system simply does not give the private sector
incentives to meet the public’s demand for high-quality, permanently
affordable housing. Providing it would be against the sector’s
economic interests since new supply would bring down prices and
negatively impact profitability.
The negative effects of housing commodification are all around us.
For-profit investors are snatching up properties at an alarming rate
– 1 in 6 of all residential homes in the second quarter
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this year – giving them the power to charge residents junk fees on
top of rent increases.
As a result, a record number of renter households
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22.4 million individuals and families, half of all renters – are now
paying more than 30 percent of their income on rent and other
housing-related expenses. This places a significant strain on
household budgets and contributes to a range of problems related to
mental health
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anxiety and depression.
Tenant unions and working-class institutions across the country have
spent years fighting back against the financialization
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housing, organizing their communities against speculators in favor of
greater tenant protections and fighting for housing to be a human
right.
A promising step in this direction was taken last week when Senator
Tina Smith (D-MN) and Congresswoman Alexandria Ocasio-Cortez (D-NY)
introduced new legislation designed to solve our acute affordability
crisis.
The Homes Act
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invest in the construction of new social housing while dedicating
resources to rehabilitate the existing stock. The bill proposes to
establish a Housing Development Authority, authorizing $300 billion
over the next ten years for the new department to finance and develop
permanently affordable housing. It would also repeal the
obsolete Faircloth Amendment
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a provision that effectively limits the availability of public
housing, removing structural barriers to the construction of new
public units.
Rents would be capped at 25 percent of a household’s income for
tenants, greatly easing the burden of housing for them.
Perhaps the most innovative aspect of the bill is the importance it
places on equity and democracy. The new units will be built by union
workers; priority will be given to protect underserved communities of
color from displacement; a significant share of the affordable housing
stock will be earmarked for households with low incomes; and many of
the new homes will be placed under democratic and community control
when transferred to eligible entities
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community land trusts and tenant-owned cooperatives.
The emphasis on permanence in the provision of social housing is
critical for understanding housing struggles today. Permanent
affordability will not only begin the process of decommodification,
but it will also protect buildings from private equity firms who see
affordable housing as another sector they can plunder.
Affordable housing already accounts for eight percent of
Blackstone’s BREIT portfolio [[link removed]],
but there is no genuine commitment to providing reasonably priced
homes to working-class households. The firm has opened its coffers
more than once to defeat rent control ballot initiatives
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it exploits programs
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the Low-Income Housing Tax Credit (LIHTC) to secure the tax benefits
that come with investing in affordable housing. Yet Blackstone still
raises rents, evicts tenants, and underinvests in maintenance.
The permanence of affordability is the cornerstone of social housing.
Social housing will make certain that housing is treated as a public
good that satisfies a social need, not a financial asset to profit off
of. Only when speculators and concentrated wealth are reined in will
we solve the housing crisis and guarantee safe, healthy, affordable,
and dignified homes for all.
_Omar Ocampo is a researcher at the Program on Inequality and the
Common Good at the Institute for Policy Studies._
_Inequality.org has been tracking inequality-related news and views
for nearly two decades. A project of the Institute for Policy Studies
since 2011, our site aims to provide information and insights for
readers ranging from educators and journalists to activists and policy
makers. Our Inequality.org contributors come from the United
States and around the world. Our focus throughout: What can we do to
narrow the staggering economic inequality that so afflicts us in
almost every aspect of our lives?_
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