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PRO-TRUMP OLIGARCHS DRIVING AMERICANS INTO HOMELESSNESS  
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Thom Hartmann
October 26, 2024
Common Dreams
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_ The principle cause of today’s crisis of homelessness and housing
affordability has one, single, primary cause: billionaires treating
housing as an investment commodity. _

Stephen A. Schwarzman, chairman, CEO and co-founder of Blackstone
speaks as then-U.S. President Donald Trump looks on during a strategic
and policy discussion with CEOs in the State Department Library in the
Eisenhower Executive Office Building on April 1, Olivier
Douliery-Pool/Getty Images

 

America’s morbidly rich billionaires are at it again, this time
screwing the average family’s ability to have decent, affordable
housing in their never-ending quest for more, more, more. Canada, New
Zealand, Singapore, and Denmark have had enough and done something
about it: We should, too.

There are a few things that are essential to “life, liberty, and the
pursuit of happiness” that should never be purely left to the
marketplace; these are the most important sectors where government
intervention, regulation, and even subsidy are not just appropriate
but essential. Housing is at the top of that list.

A few days ago I noted
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how, since the Reagan Revolution, the cost of housing has exploded in
America, relative to working class income.

It seems that everywhere you look in America you see the tragedy of
the homelessness these billionaires are causing. Rarely, though, do
you hear about the role of Wall Street and its billionaires in causing
it.

When my dad bought his home in the 1950s, for example, the median
price of a single-family house was around 2.2 times the median
American family income. Today the St. Louis Fed says the median house
sells for $417,700 while the median American income is $40,480—a
ratio of more than 10 to 1 between housing costs and annual income.

In other words, housing is about five times more expensive (relative
to income) than it was in the 1950s.

And now we’ve surged past a new tipping point, causing the
homelessness that’s plagued America’s cities since former U.S.
President George W. Bush’s deregulation-driven housing- and
stock-market crash in 2008, exacerbated by former President Donald
Trump’s bungling America’s pandemic response.

And the principal cause of both that crash and today’s crisis of
homelessness and housing affordability has one, single, primary cause:
billionaires treating housing as an investment commodity.

A new report
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Popular Democracy and the_ Institute for Policy Studies r_eveals how
billionaire investors have become a major driver of the nationwide
housing crisis. They summarize in their own words:

— Billionaire-backed private equity firms worm their way into
different segments of the housing market to EXTRACT EVER-INCREASING
RENTS AND VALUE FROM MULTI-FAMILY RENTAL, SINGLE-FAMILY HOMES, AND
MOBILE HOME PARK COMMUNITIES.
— Global billionaires purchase billions in U.S. real estate to
diversify their asset holdings, driving the creation of luxury housing
that functions as “safety deposit boxes in the sky.” Estimates of
hidden wealth are as high as $36 TRILLION GLOBALLY, with BILLIONS
PARKED IN U.S. LAND AND HOUSING MARKETS.
— WEALTHY INVESTORS ARE ACQUIRING PROPERTY AND HOLDING UNITS VACANT,
so that in many communities the number of vacant units greatly exceeds
the number of unhoused people. Nationwide there are 16 million vacant
homes: that is, 28 VACANT HOMES FOR EVERY UNHOUSED PERSON.
— BILLIONAIRE INVESTORS ARE BUYING UP A LARGE SEGMENT OF THE
SHORT-TERM RENTAL MARKET, preventing local residents from living in
these homes, in order to cash in on tourism. These are not small
owners with one unit, but corporate owners with multiple properties.
— BILLIONAIRE INVESTORS AND CORPORATE LANDLORDS ARE TARGETING
COMMUNITIES OF COLOR AND LOW-INCOME RESIDENTS, in particular, with
rent increases, high rates of eviction, and unhealthy living
conditions. What’s more, billionaire-owned private equity firms are
investing in subsidized housing, enjoying tax breaks and public
benefits, while raising rents and evicting low-income tenants from
housing they are only required to keep affordable, temporarily.
(_Emphasis theirs._)

It seems that everywhere you look in America you see the tragedy of
the homelessness these billionaires are causing. Rarely, though, do
you hear about the role of Wall Street and its billionaires in causing
it.

The math, however, is irrefutable.

Thirty-two percent is the magic threshold, according to research
funded by
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the real estate listing company _Zillow_. When neighborhoods hit rent
rates in excess of 32% 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 are making a
killing.

As the Zillow study notes
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Across the country, the rent burden already exceeds the 32% [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. That Zillow-funded
study laid it out:

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.”

This trend is massive.

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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about 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;
agents for the billionaire investor goliaths use fine-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 young families can afford to
buy, billionaires then begin raising rents to extract as much cash as
they can from local working class communities.

In the Nashville suburb of Spring Hill, the vice-mayor, Bruce Hull,
told the _Journal
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you used to be able to rent “a three bedroom, two bath house for
$1,000 a month.” Today, the _Journal
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notes:

The average rent for 148 single-family homes in Spring Hill owned by
the big four [Wall Street billionaire investor] landlords was about
$1,773 a month…

As the Bank of International Settlements summarized
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of the years since the Reagan/Gingrich changes in banking and finance:

We describe a Pareto frontier along which different levels of
risk-taking map into different levels of welfare for the two parties,
pitting Main Street against Wall Street… We also show that financial
innovation, asymmetric compensation schemes, concentration in the
banking system, and bailout expectations enable or encourage greater
risk-taking and allocate greater surplus to Wall Street at the expense
of Main Street.

It’s a fancy way of saying that billionaire-owned big banks and
hedge funds have made trillions on housing while you and your
community are becoming destitute.

Ryan Dezember, in his book _Underwater: How Our American Dream of
Homeownership Became a Nightmare
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describes 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 run by a major Trump supporter. 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.

As that new study from _Popular Democracy _and the _Institute for
Policy Studies _found:

[Billionaire Stephen Schwarzman’s] Blackstone is the largest
corporate landlord in the world, with a vast and diversified real
estate portfolio. It owns more than 300,000 residential units across
the U.S., has $1 trillion in global assets, and nearly doubled its
profits in 2021.

Blackstone owns 149,000 multi-family apartment units; 63,000
single-family homes; 70 mobile home parks with 13,000 lots through
their subsidiary Treehouse Communities; and student housing, through
American Campus Communities (144,300 beds in 205 properties as of
2022). Blackstone recently acquired 95,000 units of subsidized
housing.

In 2018, corporations and the billionaires that own or run them bought
1 out of every 10 homes sold in America, according to Dezember, noting
that:

Between 2006 and 2016, when the homeownership rate fell to its lowest
level in 50 years, the number of renters grew by about a quarter.

And it’s gotten worse every year since then.

This all really took off around a decade ago following the Bush Crash,
when Morgan Stanley [[link removed]]
published a 2011 report titled “The Rentership Society
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arguing that 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 control the industry.

As John Husing, the owner of Economics and Politics Inc., told
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Tennessean_ newspaper:

What you have are neighborhoods that are essentially unregulated
apartment houses. It could be disastrous for the city.

As Zillow found
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The areas that are most vulnerable to rising rents, unaffordability,
and poverty hold 15% of the U.S. population—and 47% of people
experiencing homelessness.

The loss of affordable homes also locks otherwise middle class
families out of the traditional way wealth is accumulated—through
home ownership: Over
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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 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.

Singapore, Denmark, New Zealand, and parts of Canada have all put
limits
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on billionaire, corporate, and foreign investment in housing,
recognizing families’ residences as essential to life rather than
purely a commodity. Multiple other countries are having that debate or
moving to take similar actions as you read these words.

America should, too.

Thom Hartmann is a talk-show host and the author of "The Hidden
History of Monopolies: How Big Business Destroyed the American Dream"
(2020); "The Hidden History of the Supreme Court and the Betrayal of
America" (2019); and more than 25 other books in print.
 
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* Housing
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* homelessness
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* Billionaires
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