Conor here: And among landlords private equity was also the most eager adopter of software used to exchange price and vacancy information via software from RealPage, which also happens to be owned by the private equity giant Thoma Bravo.It’s a big, blood-sucking club.
RealPage and the mega-landlords using the software to price fix were of course let off with a cost-of-doing-business slap on the wrist last year after splurging on some Trump-connected lobbyists. And there are loopholes in the Department of Justice settlement that could allow them to be back conspiring on prices in the not-too-distant future.
In the kind of good news department, Matt Stoller has a rundown today of a bill working its way through the Congress that would ban corporate ownership of most existing single family homes. Surprisingly the effort to push through this legislation is backed by the likes of Trump and Senator Elizabeth Warren. Although there is this caveat:
The ban would stay for existing housing stock, but it would not apply if private equity built new housing, aka the “Build to Rent” sector. Corporations that own and rent single family homes would not be forced to sell them, and they can build new ones. But the existing stock of owner-occupied single family homes, roughly 70 million of them, effectively cannot be bought by big business.
And as Stoller notes, build-to-rent is where the big money is flowing these days:
Big builders are now working with Wall Street to construct single family homes that never go on the market, but instead are rented out from the beginning. This “Build to Rent” sector took off, doubling in market share from 2021-2024. And it is now where institutional capital is focused. Build to Rent allows Wall Street to augment an asset class, and it enables control of housing supply to keep prices up.
By Shireen Akram-Boshar, a socialist writer, editor and Middle East/North Africa solidarity activist. Originally published at Truthout.
A new report by the Private Equity Stakeholder Project (PESP) shows that private equity firms now own almost 3 million apartment units in the U.S., which amounts to one in eight apartment units, some 13 percent of apartment units in the country. Approximately half of these units were bought since 2021, highlighting private equity’s turn to the housing market even as the U.S. suffers from a housing crisis.
Private equity firms invest money from pension funds and endowments to buy assets in order to make significant profit. In the housing market, private equity firms look for rents that are unregulated, with capped property taxes, in order to maximize their profits. According to the private equity business model, firms aim to increase the value of buildings before quickly selling them for a higher profit.
The PESP report found that private equity companies bought up almost 1.7 million apartment units — some 57 percent — since 2018, and 1.3 million of them since just 2021.
PESP’s report found that private equity’s expanded presence in the housing market “has exacerbated housing affordability issues, displacing local communities through large rent hikes and aggressive evictions, and diminishing tenants’ quality of life.”
Texas has the largest number of apartments owned by private equity in the country, with almost 580,000 units — and this is likely due to the state’s lenient zoning regulations, weak tenant protections, and lack of state income tax. Though there is a high level of private equity ownership of apartments in New York, California, and the Washington, D.C. area, private equity ownership is concentrated in the Sunbelt states as they have weaker tenant protections and also have seen significant population growth since 2020.
Blackstone, the world’s largest private equity firm, is also the largest owner of apartments in the U.S., owning over 230,000 apartment units. The PESP report found that in some cases, Blackstone raised apartment rents in buildings it bought since 2018 by over 30 percent. The report also noted that tenants in apartments bought by Blackstone have complained of “maintenance issues, aggressive evictions, undisclosed add-on fees, and large rent hikes.” This was not unusual in apartments acquired by private equity investors.
Private equity’s expansion into housing comes at the same time as Americans are increasingly struggling to afford rent. Half of U.S. renters spend nearly a third of their income on rent.
“Our country is in the midst of a housing affordability crisis. The last thing we need is private equity billionaires extracting wealth from tenants through unaffordable rents and junk fees,” said Jordan Ash, co-author of the report and director of housing research at the Private Equity Stakeholder Project (PESP). “Now more than ever, policymakers should take action to protect tenants from the private equity industry’s widespread infiltration of the U.S. housing market.”
Though private equity has rapidly encroached into the housing market over the past five years, the problem started earlier. During the 2008 financial crisis, private equity investors bought up hundreds of apartment buildings that held thousands of rent-regulated units, and pressured residents to leave so that they could raise rent prices. Intent on high profits, private equity firms have “at times led the market in rent increases and mortgage foreclosures.” While millions of Americans were financially devastated in the wake of the 2008 Great Recession, private equity firms profited.
A 2022 analysis by ProPublica found that the encroachment of private equity into housing has been fueled in part by Freddie Mac, the U.S.’s largest rental housing finance company. Freddie Mac offered lower interest rates and other advantages to investors. ProPublica found that large private equity firms made up the vast majority of Freddie Mac’s deals financing apartment complex purchases, and almost all of these occurred after 2015.
ProPublica also found that another real estate investment company, Greystar, had helped pave the way in connecting large investors with apartment complexes, by raising funds from pension funds, hedge funds, and life insurance companies. Greystar’s acquired apartments nearly doubled between 2016 and 2021 to over 75,000 apartments.
But grassroots mobilization against private equity has also been growing, with activists and communities organizing tenant unions and taking up lawsuits to protect tenants.
America isn’t a country, it’s a business.
A plantation, to be precise.
It’s not a business. It’s a mafia style criminal organization posing as a nation state.
It’s not a business. It’s a mafia style criminal organization posing as a nation state
Bless you. Any Mafia is very much a business organization, and arguably the only difference between nation states and mafias is their different scales of operation.
The discussion of Major General Smedley Butler’s remarks in the concurrent NC thread ‘Who Do the Military Serve.’ is apropos here.
I was making another point. Civilizational cultures — nations — have deep baseline tendencies.
China, for instance, to be a water empire or hydraulic empire, culture–
https://en.wikipedia.org/wiki/Hydraulic_empire
– with Confucian tendencies, even if it’s the CCP that now rules.
Britain to be an island pirate/trader culture, even if it now extracts wealth from elsewhere in the world through electronic networks centered in the City of London rather than overt piracy.
Similarly, the United States of America was founded largely by slave-owners like its much-revered founding fathers Washington and Jefferson, intent on maintaining the extractionist plantation feudalism their families had recreated in the New World after their grandfathers had been on the losing Royalist side in the English Civil War and been forced out of there.
And that extractionist plantation mentality is the baseline tendency to which America’s owner-class, from colonial America through to now, always revert. Next year, for instance Mexico will have nationalized healthcare. The US will not — and that is because healthcare is one more way that the US owner-class can extract as much wealth as possible from those trapped on the US plantation.
Like China is a hydraulic empire, a thalassocracy is the term for what the British empire was, I’ve just learned.
In other words, a state that’s a maritime empire.
To no one’s surprise:
Record Homelessness Amid Ongoing Affordability Crisis
https://www.jchs.harvard.edu/blog/record-homelessness-amid-ongoing-affordability-crisis
and
The Disappearance of the Moderately Priced Single-Family Home
https://www.jchs.harvard.edu/blog/disappearance-moderately-priced-single-family-home
The picture alone is worth a thousand words, as they say.
In a sense tenants here in Ca. are being forced to cover the costs of other tenants who do not pay rent and who litigate. The advantage the large landlords have is the volume to justify in house legal departments. Evicting non payers and bad actors is a bigger expense than new appliances. The liberal legal system takes many months to years all of which means legal fees and no rent. Government and non profits take the other side legally through various programs for the homeless. The small landlord is vanishing in the LA area. The lawyers and politicians prosper. The traditional long term tenant with a steady marriage and job is a vanishing species.
There’s also the scam of HOA fees. Can be $800/mo for a condo in San Francisco bay area. And if you have an HOA then you don’t really own your house, but have limited rights over it. Rights that can change.
Easy solution to the housing affordability crisis. If the Fed wants to f*ck most of us looking for an affordable place to live with ten years of ZIRP, while rewarding corporations, private equity, and other big borrowers, then f*ck the predators.
Take away those ill-gotten gains. The means exist. It’s called the Excess Profits Tax (sometimes and in some places called the Windfall Profits Tax). From Investopedia:
History of Excess Profits Taxes
Congress enacted the first American excess profits tax in 1917 with rates ranging from 20% to 60% on the profits of all businesses in excess of peacetime earnings.
In 1918, a law limited the tax to corporations and increased the rates. In 1921, the excess profits tax was repealed despite powerful attempts to make it permanent. In 1933 and 1935 Congress enacted two mild excess profits taxes as supplements to a capital stock tax.
During World War II, Congress passed four excess profits statutes between 1940 and 1943 with rates ranging from 25% to 50%. During the Korean War, Congress also imposed an excess profits tax, effective from July 1950 through December 1953. The tax rate at this time was 30% of excess profits with top corporate tax rates rising to 47% from 45%.
In 1991, some members of Congress attempted to pass an excess profits tax of 40% upon larger oil companies as part of energy policy, but that effort was unsuccessful. Some activists have advocated for a peacetime use of the excess profits tax, but such proposals face strong opposition from businesses; some politicians and economists argue it would disincentivize capital investment.
Me here. Of course the EPT bill in 1991 didn’t pass. We were now deep into the age of neo-liberalism.