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Over the next few emails, I want to build a case about why Philadelphia has such a problem with getting house prices and rents under control and how the crisis can be solved across the country.
Philly’s housing crunch isn’t the result of natural market factors; we can’t just ride it out, or wait for it to get better—this crisis has been created. At its roots sit familiar villains: Big Corporations and major developers—companies that are motivated by profit and corporatist greed and don’t seem to care about the long-term costs to the rest of us.
They make more money building luxury condos than affordable units or single homes. And even when they are required to set aside some of their buildings for lower income residents, they fight tooth and nail to keep that number to an absolute minimum, and the square footage to the smallest possible.
The end result? Higher rents, smaller spaces, less housing, and less desirable housing across the spectrum—from single people, to families, to seniors.
As gentrification continues to displace long-time residents in urban areas, there just aren’t enough affordable units available among the new high-rent high-rises to accommodate everyone.
This isn’t a mystery to city governments. Here in Philadelphia, like elsewhere, the major real estate developers have powerful friends and loud voices in city government. And they leverage campaign contributions, support, and influence across the board to get the best deals for their businesses—and worst for the rest of us.
It’s problematic that there is no affordable housing advocate on Philly’s current City Council. But it’s infinitely more worrisome that the developers of this town literally hold a seat at that table instead.
That’s not the only problem. Another group of big companies—the short-term rental industry—has built their highly profitable business model on converting family homes for residents to vacation spots for people from elsewhere.
Across the country, and here too, major real estate conglomerates (and to a lesser degree, the one percenters) are buying up homes in huge numbers. In 2021, big corporations purchased 13.2% of all residential properties sold. Perhaps more concerning is the fact that they used their vast resources to negotiate prices and deals that no normal home buyer could dream of getting—paying 26 % lower than the state median prices for their “investments.”
These large companies are exacerbating the home-inventory shortage with their predatory purchasing by buying up the most affordable properties, but still paying well below market rate, and renting them out at well above fair value—making it even harder for individuals and families, especially first-time homebuyers, to get themselves onto the housing ladder.
Together, these companies’ and developers’ single-minded focus on money has come at the expense of everyday people who now find themselves unable to afford housing, or spending so much on housing that there’s little left for anything else.
And what do they care? Their higher-ups can afford housing no matter what.
We’ve got to do something to take back our housing.
In solidarity,
Alexandra
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