Parasitic Landlords Capitalize on the Housing Crisis
August 27, 2021 at 8:16 PM - Views: 16 #442580Ohio BarbarianModerator
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(Socialist Revolution) Under pressure from the big landlords, the Supreme Court has nullified an extended moratorium on evictions, implemented in the interest of slowing the spread of COVID. Some seven million Americans are behind on rent and millions of working-class families now face a tsunami of evictions. What does all of this mean for the longstanding crisis of housing in the richest country on earth?
Acquisitions of foreclosed homes by large investors first accelerated soon after the Great Recession. Initially, the crisis increased the number of small landlords. A study of US landlords in 2016 found a significant rise in the number of taxpayers reporting rental income after the 2008 crisis, when “many folks took advantage of the glut of foreclosed single-family properties being sold at low values.” This allowed many of these new landlords to receive “passive income” throughout the tepid recovery, while dispossessed homeowners had their housing payments funneled into the pockets of their landlords as rent. This process served to dislodge single family homes from the single families that had once owned them. However, once these homes were thrown into the rental arena, market forces took effect, consolidating properties in the hands of larger and larger owners, separating a segment of those new small landlords from the passive income they had recently captured.
The consolidation was aided by efficiencies of scale at several points. The foreclosure wave put large quantities of similar properties up for sale at the same time, allowing them to be purchased in blocks, using concentrated cash reserves acquired from previous decades of monopoly activity. The geographic concentration of these units then allowed these large firms to exert a monopolistic power on local rents, driving up the value of their properties and powering even more purchases.
After the Obama-Trump recovery consolidated institutional investors as the new landlords for a massive segment of renters, the 2020 economic crisis intervened again to concentrate the market even further. With the largest disruption to employment in history, the ability for many workers to pay rent effectively collapsed overnight. While the limited government response offered significant support for landlords, many small landlords still dipped into savings and sold properties in response to their disappeared rental income. On the other hand, the survival of the institutional landlords was never really in question. The stimulus support simply subsidized their acquisition of even more market share. Housing everywhere is sliding into the hands of those with extra cash, and as the crisis deepens, the threshold for “enough cash” gets higher and higher, primarily benefiting the same monopolists who have capitalized on every other element of the ongoing economic crisis.
Full article here. Not all that long, I promise.
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