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BILLIONAIRE INVESTORS ARE ‘SUPERCHARGING’ HOUSING CRISIS: REPORT
 
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Julia Conley
October 21, 2024
Common Dreams
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_ "Billionaires see housing as a way to boost their bottom line,
instead of a necessity to survive." _

Executives of Invitation Homes, a subsidiary of the hedge fund
Blackstone, tour a home the company bought and turned into a rental
property in Los Angeles on February 8, 2013. , Mel Melcon/Los Angeles
Times via Getty Images

 

A new report out Monday puts "into numbers the trend that ordinary
Americans have known to be true for years," said economic justice
advocates behind the analysis: "Their everyday struggles of affording
a home are made worse by the sweeping influence that billionaires have
over the market."

The Institute for Policy Studies (IPS) joined Popular Democracy in
compiling a 71-page report titled_Billionaire Blowback on Housing
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aiming to get to the bottom of growing concerns in recent years about
how Wall Street, as Democratic vice presidential nominee and Minnesota
Gov. Tim Walz [[link removed]] said
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earlier this month, is "buying up housing and making them less
affordable."

The two groups found that a small number of wealthy individuals and
their investment arms, who control "huge pools of wealth," have spent
some of their vast resources on "predatory investment and
wealth-parking in luxury housing"—contributing significantly to the
crises of unaffordable rents, out-of-reach homeownership, and
homelessness.

Billionaires are "supercharging existing problems" in the housing
market, according to the report.

The authors take issue with assumptions about what is driving the
housing crisis, which is characterized by record-breaking homelessness
in 2023 with more than 653,000 people unhoused; half of tenants paying
more than 30% of their income on rent, making them cost-burdened; and
a significantly widened gap between the income needed to buy a house
and the actual cost of a home.

"The real estate industry would like you to believe the problem is
entirely one based on supply and demand," and that regulations need to
be changed to allow for the construction of more affordable housing,
reads the report. But with 16 million vacant homes across the
U.S.—28 for every unhoused person—"the reality is that the owners
of concentrated wealth... are playing a more pronounced role in
residential housing, thereby creating price inflation, distortions,
and inefficiencies in the market."

Signifying the U.S. real estate market's "emerging status as global
tax haven," the number of vacant units in some communities exceed the
number of unhoused people partially because wealthy investors are
acquiring property and intentionally leaving it vacant, found IPS and
Popular Democracy.

"The reality is that the owners of concentrated wealth... are playing
a more pronounced role in residential housing, thereby creating price
inflation, distortions, and inefficiencies in the market."

For example, in 2017 there were more than 93,500 vacant units in Los
Angeles and an estimated 36,000 unhoused residents, with vacancies
treated as "a structural feature of the market thanks to the presence
of a small class of wealthy investors who engage in speculative
financial behavior."

Billionaires and their investment firms, such as Blackstone—now the
world's largest corporate landlord—are also "taking advantage of the
tight low-income rental market, lack of publicly funded affordable
housing, displacement after the foreclosure crisis, and inaccessible
homeownership to get into the business of single-family and
multifamily home rentals, and buying up mobile home parks," the report
reads.

In one section of North Minneapolis, private equity firms including
Pretium Partners "snatched up blocks of single-family rental homes,
added fees on top of rent, and then proceeded to neglect the
maintenance and upkeep of their properties."

Blackstone now owns 300,000 residential units across the U.S. and
nearly doubled its portfolio in 2021. With $1 trillion in assets, it
owns 63,000 single-family homes, 149,000 apartment units, and 70
mobile home parks.

Corporate ownership of rental housing stock "has not translated into
housing stability, particularly for working-class households and
communities of color," reads the report. "Rather, corporate landlords
have concentrated their predatory investment practices—flipping,
rent gouging, habitability violations, and evictions—in lower-income
communities of color."

The billionaire class and its private equity firms, said Chuck
Collins, co-author of the report and director of the Program on
Inequality and the Common Good at IPS, has "severely disrupted" the
housing market.

"This is not your grandparent's gentrification—but a
hyper-gentrification fueled by concentrated wealth driving up land and
housing costs, expanding short-term rentals, and treating housing like
a commodity to speculate on or a place to park wealth," said Collins.
"The billionaires are displacing the millionaires, and the
millionaires are disrupting the housing market for everyone else."

The report calls on policymakers to expand social housing—housing
developed by the government or a not-for-profit entity to ensure
individuals, households, and families are guaranteed housing as a
human right, which cannot be sold for profit.

Social housing could be paid for by levying mansion taxes, regulating
predatory practices in the real estate market, and taxing
billionaires.

Local communities can also protect residents and generate revenue for
affordable housing through actions including:

* Establishing "Housing First" programs to rapidly provide
permanently affordable housing to the unhoused and end the
criminalization of homelessness;
* Limiting corporate ownership of housing and passing laws requiring
ownership transparency so corporations can no longer secretly buy up
neighborhoods;
* Passing ordinances giving apartment and mobile home tenants the
"first option to buy" when their communities come up for sale;
* Prohibiting owners from keeping units vacant for long periods of
time; and
* Creating local Offices of Social Housing and Social Housing
Development Authorities to function as supportive infrastructure, with
the input of tenant unions, unhoused people's organizations, and other
impacted community members.

"Billionaires see housing as a way to boost their bottom line, instead
of a necessity to survive. This current system doesn't serve our
communities," said Analilia Mejia and DaMareo Cooper, co-executive
directors for Popular Democracy. "We need to do better. That starts
with re-shaping our systems to look out for the needs and desires of
working families, instead of billionaire investment and speculation.
We need to safeguard renters' rights, and drastically expand the
availability of permanently and truly affordable quality housing."

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Julia Conley is a staff writer for Common Dreams.

* Housing; Billionaire Investors; Inequality;
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