Private equity-backed investors surged in acquisitions of rental properties during the Great Recession, and this trend continued during the pandemic and into the future.
Housing insecurity in the United States is skyrocketing in the wake of COVID-19, ongoing inflation and rising costs of living. Living in a state facing unprecedented homelessness rates, I see the struggle for housing every day. But the pandemic has revealed how to protect people from housing insecurity.
California recently passed the Stable Affordable Housing Act (SB 555), the first state public housing law in the nation, with Sen. Nancy Skinner banning investment entities from purchasing, acquiring, or leasing single-family homes. He has introduced a new bill to do so.
I have lived in some of the most expensive housing markets nationally. At a time when prices in Santa Cruz were skyrocketing due to the housing bubble and Silicon Valley tech billionaires were buying up vacation homes, driving up the already exorbitant cost of housing, I couldn’t afford the market price, so I decided to go to college. I lived in a small apartment that was subsidized by the government. Hired as a tenure-track professor.
During the pandemic, work brought me back to Southern California. My current income is more than 10 times what my parents made when they bought their home, but despite 30 years of saving, homeownership remains a challenge for me and countless others. It Is difficult.
In June 2023, my family and I faced no-fault eviction from our home. A quick analysis of the alternatives available to us revealed the motive behind the property owner’s desire to evict us. They could raise our rent by 40% and force us to move out. I could not sleep. I was distracted from work. I was considering moving to a less expensive area. The daughter was outraged by this potential transfer, her fourth in five years.
While some saw my ordeal as a result of the principles of supply and demand, where property owners make rational choices to maximize profits, the broader housing crisis has It shows the result of wealth being concentrated in the hands. Excess wealth is the extraction of resources from people who have little or no wealth, especially tenants, and then the manipulation of government processes in order to consolidate and defend that wealth and maintain a seemingly unchangeable system. have a disproportionate impact. In the housing market, excess wealth exerts upward pressure on rents and house prices.
Private equity-backed investors surged in acquisitions of rental properties during the Great Recession, a trend that continued during the pandemic. According to forecasts, by 2030 private equity entities are expected to own a 40% share of the single-family rental market. This would further worsen eviction rates and housing rents, and illustrates why the Skinner bill is so important.
The people who benefit most from the housing market structure are the ultra-wealthy. In California, the biggest gains come from Proposition 13, a 1978 ballot initiative that imposed his 2% cap on annual increases in real estate assessed values. Attempts to amend or overturn Proposition 13 are met with formidable resistance, especially from the disproportionately wealthy.
We must be committed to keeping people in their homes while finding solutions for our unhoused neighbors. A number of tenant protections are needed to stop the damage, including rent stabilization and just-cause eviction protection. Tenant associations are gaining traction in communities across the country as an easy way for people to get involved, and their voices at City Council and Board of Supervisors meetings are invaluable.
Despite my fear of losing, I fought back because I could because I knew many of my neighbors couldn’t.
Hard-working people have the right to safe, quality housing. In the end, we technically “won”. The settlement offset moving costs and also covered rent increases for the first few months in the new home. A real victory would allow all families to live free from the fear of sudden eviction or rent increases they can’t afford because they have no alternative.
Gabriela Sandoval is the executive director of the Institute for Excess Wealth Disorders.
