On October 21, Popular Democracy, a national alliance of 50 grassroots organizations across 33 states demanding transformational change for Black, brown, and working class communities, and the Institute for Policy Studies, a leading research organization that regularly publishes groundbreaking findings on bold solutions to inequality, released a timely new report that reveals how billionaire investors have become a major driver of the nationwide housing crisis, by:
- Disrupting local housing markets by acquiring huge swaths of housing;
- Expanding short-term rentals;
- Holding properties vacant;
- Driving up the cost of land and housing;
- Engaging in predatory practices.
The report, Billionaire Blowback on Housing, examines multiple ways that billionaire investors are disrupting local housing markets – and proposes social housing and strong tenant protections as the true solutions to our housing emergency.
The housing affordability crisis – and how to solve it – has become a major focus during election season. Millions of American families struggle to afford and keep a roof over their heads – even as ultra-wealthy investors treat real estate properties like just another opportunity to grow their assets and hoard wealth.
The report identifies four billionaire-driven forces disrupting local housing markets:
- Intensified concentrations of wealth have supercharged gentrification, the trend of higher-income buyers driving up the cost of land and housing.
- Corporate concentration and ownership focus on short-term profit extraction instead of permanent housing supply.
- Short term rentals, increasingly owned by large billionaire investor groups, remove rental housing from the market.
- Billionaires from around the world park wealth in U.S. real estate as a stable asset class and tax haven.
The report reveals several key policy solutions to effectively create and preserve truly affordable housing, which is especially critical after decades of public disinvestment from public and affordable housing, alongside growing wealth disparities and billionaires’ influence over our housing system. The report authors make a strong case that all levels of government should direct public resources towards social housing: quality public housing and non-profit housing under democratic community control that is permanently and deeply affordable, and that can never be resold for profit.
Right now, the focus on expanding housing supply through for-profit development misses a key driver of the housing crisis: as wealth concentrates in the hands of billionaire investors, billions and possibly trillions of dollars are sucked into predatory investment practices and luxury housing schemes – where global billionaire investors park vast quantities of wealth, further driving up the cost of housing for local communities.
With roughly 800 billionaires in the U.S. with combined wealth of $6.2 trillion (and 2,781 billionaires globally with over $14.2 trillion), ultra-wealthy investors tend to diversify their holdings across multiple kinds of assets. A huge amount of this billionaire wealth is invested in real property, land and housing – and more of it is moving into the predatory and wealth extracting parts of the housing market.
Among key findings, the report shows:
- 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.
- For instance, 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.
- 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.
“The U.S. housing market has been severely disrupted by the billionaire class and billionaire-backed private equity firms,” said Chuck Collins, coauthor of the report from the Institute for Policy Studies and author of the forthcoming book, Burned by Billionaires. “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. The billionaires are displacing the millionaires, and the millionaires are disrupting the housing market for everyone else.”
“Our report shows how billionaires are helping drive the U.S. housing crisis. Private equity and the billionaire class are extracting more rents and value from households with few affordable housing options,” said Omar Ocampo, report co-author and Researcher for the Program on Inequality and the Common Good at the Institute for Policy Studies. “Working class and low-income households are excessively rent-burdened. We need to pass and enforce policies that protect tenants and provide housing stability. We also need to invest public resources into the construction of permanently and deeply affordable social housing that guarantees housing as a human right and protects them from the predatory speculative activity of investors and billionaire-backed private equity firms.”
“We have plenty of housing, but the problem is too much of it is not affordable or accessible, especially to those who need it most. There are 16 million vacant homes nationwide. In major cities, vacant homes exceed the unhoused. Because the billionaires treat real estate as a commodity and asset, we have an excess of housing that is not actually being used as shelter for people, to provide people homes,” said Amee Chew, report co-author and a senior research analyst at Popular Democracy. “Many of our communities have faced gentrification over the decades. Billionaire investors are supercharging gentrification. Wealthy investors are making money by holding units vacant, to speculate on real estate appreciation. We need to move housing from the control of Wall Street investors and corporate landlords, to the people. We need housing for people, not profit. By prioritizing those most in need, we can lift all boats and lower housing costs for everyone.”
“This report puts into numbers the trend that ordinary Americans have known to be true for years: their everyday struggles of affording a home are made worse by the sweeping influence that billionaires have over the market. 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.”
Solutions
For too many decades, U.S. taxpayers have subsidized private for-profit investors and developers to build tens of thousands of temporarily affordable units of housing. Federal programs give for-profit investors wasteful tax breaks, but only require the units to remain affordable for 30 years or less, so many have been converted to market-rate housing.
The report calls on policymakers to expand the social housing sector of community-controlled or publicly owned housing that is outside the speculative market, such as quality public housing and other forms of nonprofit-owned housing like community land trusts or resident cooperatives. New investment in social housing should come from taxing billionaires, levying mansion taxes, and regulating harmful practices.
Instead of waiting for action from the federal government, local communities can protect residents in existing affordable housing and generate revenue for affordable housing, through key policy measures such as:
- Protections for tenants from billionaire landlords and against hyper-extractive gentrification and displacement.
- Ending the criminalization of the unhoused and sweeps of unhoused people’s encampments, and establishing “Housing First” programs to rapidly provide permanently affordable and supportive housing to the unhoused, without prerequisites.
- Rules requiring ownership transparency so community members know who is buying up neighborhoods.
- Limitations on corporate ownership of housing.
- Ordinances giving tenants the right to “first option to buy” apartments and mobile home parks when they come up for sale; and public funding as well as support structures to make these buy-outs possible
- Taxes on luxury real estate transactions (known as “mansion taxes”), on speculation, on vacancy, and on the rich, with funds dedicated to expanding the supply of nonprofit and social housing.
- Controls on short-term rentals to prevent contraction of the long-term rental housing market.
- Ordinances prohibiting keeping units vacant for long periods of time.
- Ordinances promoting public land banking, public banking, and using public pension funds to resource and finance social housing.
- Ordinances promoting transfer of critical housing supply assets such as expiring affordable housing, property with tax liens or habitability violations, property owned by abusive corporate landlords, and other corporate-owned properties, into the permanently affordable social housing sector, while keeping residents in place.
- Ordinances creating local Offices of Social Housing and Social Housing Development Authorities to function as supportive infrastructure for the above, with the input of tenant unions, unhoused people’s organizations, and other impacted community members.
Full report: https://ips-dc.org/report-billionaire-blowback-on-housing
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