Following the crash of 2008 wealthy investors and individuals sought out investments in rentals as people were losing their homes and mortgage qualifications and regulations were tightened. George W. Bush and his political allies had spent the previous eight years selling Americans on what they called the the ownership society and then it came crashing down around them. Working people started to understand in 2008 what millionaires and billionaires mean when they talk about all the freedom and liberty tied to ownership of property. It means the freedom of banks to foreclose and evict; it means the liberty of the poor to eat out of garbage cans. Almost everything Bush did or proposed in terms of housing, healthcare, taxes, social security, and bankruptcy was tied to the values of the ownership society. All of it had a deleterious effect on working and poor people in the United States who bore the brunt of Bush’s scams, and it cleared the way for the rise of the landlords who rule today.
Republicans do not speak of the ownership society like they once did. They no longer give speeches about all the freedom tied to owning a home; and they no longer provide statistics that purport to demonstrate that under their leadership more people “own” their homes. Republicans these days do not try to appeal to minorities by talking about “closing the ownership gap” between whites and minorities as GW Bush did in 2002:
Now, we've got a problem here in America that we have to address. Too many American families, too many minorities do not own a home. There is a home ownership gap in America. The difference between Anglo America and African American and Hispanic home ownership is too big. (Applause.) And we've got to focus the attention on this nation to address this.
And it starts with setting a goal. And so by the year 2010, we must increase minority home owners by at least 5.5 million. In order to close the homeownership gap, we've got to set a big goal for America, and focus our attention and resources on that goal.
The Republican enthusiasm for promoting ownership to the peasants has definitely waned since 2008 as they no longer announce such ambitious policy tied to ownership. Another of Bush’s ownership society agenda items was the policy of privatizing social security so that everyone could invest their retirement and become an “owner.” Bush’s Social Security proposal failed but other parts of his ownership society agenda, including his tax cuts, remain a feature of policy and politics to this day. Of all of the policies of Bush’s ownership society the policies tied to home ownership have changed the most and likely will have a devastating impact on renters. In the current crisis renters who are poor are particularly susceptible to homelessness as they lose their jobs and can’t pay their rent.
As people lost their homes and jobs following the housing crash wages stagnated for those who remained employed so home ownership was put out of reach for more and more people. While wages stagnated there was massive inflation continued in education, healthcare, and housing. This inflation frequently leads to the acquisition of debts by working people who then can't buy a home because they are already so heavily indebted. Even people who earn a good salary often find themselves working in cities that have become gentrified to the point that they are priced out of home ownership and sometimes even the rental market.
The U.S. Bureau of Labor Statistics reports that rents for a primary residence in the United States in were 214% higher in 2019 compared to 1984. In 1984 the minimum wage was $3.35 per hour ($8.50 in 2020 dollars) while today the federal minimum wage has remained $7.25 per hour since 2009. Wages for workers increased increased only 11.6% while productivity shot up 70%. The paltry increase in wages has been unevenly and unequally distributed with more going to men than women; more for white people than brown people; increases for the professional class with stagnation and precarity for workers in service occupations. The price for higher education increased 1411% from 1977-2020 (a $282,153.94 difference in value); prices for medical care from between 1980 and 2020 increased 643%. Given these figures it is no surprise that younger workers are frustrated as they are unable to repay student loans while rents rise and their wages stagnate. It is no surprise that people in the United States are carrying so much debt and have virtually no savings for emergencies, let alone the ownership society Republicans once talked about.
Nowadays Republicans are thick with the language of slumlords, bill collectors, pawn shop operators, and bail bondsmen. Nearly to a person their vulgarity resembles the moral depravity of the harshest slumlord and the most unscrupulous bill collector. Republicans and their allies in corruption on Wall Street love to scam the poor and workers because it gives them two chances to beat them up and take their money. They get money on the way up as people buy into one of their schemes— like in the housing bubble—and then they get to be there to collect on the way down as people are forced to sell assets, take on more debt, take less money for more work, and pay more in rent.
Republicans and wealthy investors realized that with so many people losing their homes there would be opportunities for them in the rental market. The Democrats failed to substantially address the foreclosure crisis as 10 million homeowners lost their home from 2006-2014 (Dems had both houses of Congress from 2007-2011 and the White House 2009-2017) so the rental market swelled with former homeowners. Investors were desirous of entering the rental market in a big way because they understood that the people living in rentals had to pay because they frequently had nowhere else to go. Properties that were once largely owned and managed by local landlords or property managers like mobile home parks became one of the hottest investment opportunities for investors after 2008. Landlords generally have more leverage over tenants than banks have over mortgage holders so it was better from the perspective of the investors to be landlords than it was to invest in mortgages.
The rush was on to purchase mobile home parks, raise rents, and collect. Investing in mobile homes became such a hot ticket that hundreds of books, podcasts, and films about investing in mobile home parks have been produced. In 2014 the New York Times ran a story about Mobile Home University, a three day course for investors on how to maximize profit from mobile homes.
Here is just a taste of what Mobile Home University taught investors:
We gathered in a circle around Rolfe and the lot’s manager and listened as the manager explained that rents at Green Lantern had been bumped up by more than 30 percent over the past three years. The Mobile Home U. students nodded appreciatively: They learned early in the course that one of the best things about investing in trailer parks is that ambitious landlords can raise the rent year after year without losing tenants. The typical resident is more likely to endure the increase than pay a trucking company the $3,000 it can easily cost to move even a single-wide trailer to another park. As Rolfe put it, an “extra $10 or $20 a month isn’t going to bankrupt anyone.”
In just this mobile home park rents were raised 30% in the midst of the worst economic conditions since the Great Depression and investors approved and sought out more mobile homes. Most of the investors in the above Times article were described as middle class investors. But even billionaires like Warren Buffett got in on the action:
Warren Buffett used his annual letter to Berkshire Hathaway shareholders Saturday to expand his defense of the mobile-home business Clayton Homes, while disclosing that the company foreclosed on more than 8,000 customers last year.
Over the past year, reporters from The Seattle Times, The Center for Public Integrity and BuzzFeed News have detailed how Clayton’s predatory practices devastated many mobile-home buyers around the country. Clayton customers repeatedly have said they were guided by Clayton sales agents to finance their purchase with the company’s internal lender, Vanderbilt Mortgage, which offered particularly expensive loans with interest rates that often exceeded 10 percent…
In his letter, Buffett did not address other issues raised in the reporting about Clayton, including that Vanderbilt Mortgage charged minority borrowers substantially higher rates, on average, than their white counterparts.
Federal data shows that Vanderbilt typically charges black people who make over $75,000 a year slightly more than it charges white people who make only $35,000.
Several members of Congress recently called for a federal investigation of the Clayton Homes and its treatment of minorities. Buffett’s letter did not address this matter.
If Warren Buffett invested in mobile homes and turned a profit you can bet that other wealthy investors would as well:
Yet Florence Commons, along with more than 200 other mobile-home parks around the United States, has produced hefty returns for Stockbridge Capital, a $13 billion private-equity firm, and its major investors….
Their company for mobile-home parks has produced tens of millions for investors in recent years and saw a return on investment of more than 30 percent between late 2016 and the end of 2017, according to documents.
Those ample returns arise in part from their willingness to boost the rents of residents of mobile homes. As one investor’s report on the company put it: The “senior management team has a demonstrated track record of increasing home rental rates.”
It has received $1.3 billion in financing through government-sponsored lender Fannie Mae, which says mobile homes are “inherently affordable.” The money helped them buy existing mobile-home parks.
So there was a rush to invest in rentals like mobile home parks because investors knew they could charge more interest and more rent and people would find a way to pay because they often have no other options for housing. Raising rents on people by 30% in a recession is predatory and it is clear to me after reading all of this investment literature and articles about mobile home investing that a lot of the people who get into this are clearly doing it to prey on poor people.
It is remarkable how many wealthy people are landlords these days and the political leadership in this country is full of landlords. Donald Trump, Jared Kushner, and Sean Hannity are landlords who basically do what other landlords are doing today—invest in rentals to raise rents resulting in evictions of tenants::
The number of eviction orders obtained against tenants in a Georgia apartment complex owned by Sean Hannity has sharply increased since the property was bought by the Fox News host.
County court records say that judgments approving the removal of 61 different residents of the Hampton Place apartments in Perry have been issued during the three years and 10 months since Hannity took over.
The previous owner of the 152-unit apartment complex obtained similar orders against 12 different tenants during the preceding three years and 10 months, according to the records, before selling it to Hannity for almost $8m.
Jared Kushner is a landlord like Sean Hannity but on a larger scale. Kushner’s record as a landlord has been well-documented in the Netflix documentary Slumlord Millionaire. I put Kushner’s photo on top of this page because he so perfectly embodies the behavior and ideology of the rent profiteers who are in power today. They don’t care that rentals are somebody’s home, the property is just a way for them to maximize returns to enlarge their already obscene bank accounts.
The fact that landlords have ascended to power in the wake of the 2008 financial crash means that the prospects for tenants in the near future are dim. As people lose their jobs and their work becomes less secure in the coming months calls for protection of tenants grow. But even with some measures that have been put into place tenants are being evicted and it looks like we could see massive evictions in the coming months. I thought I would share some of Marisa Penaloza's NPR article from May 1st regarding the size and scope of the problem:
- People of color are most likely to be renters. According to the Terner Center for Housing Innovation at the University of California, Berkeley, Latinx and black residents make up 18% and 12% of the country's population and they account for 28% and 18%, respectively, of the tenant population in the United States.
- "We're faced with millions of families who are behind in rent," he says. "Do renters have to pay back rent or start paying rent once the moratoria lifts?" None of that is clear, and it adds to the anxiety among this population, Desmond says.
- estimates that about 500,000 people in Colorado will face eviction risk in the next few months.
- A homeless crisis was already in place in the U.S. long before the COVID-19 pandemic hit. Neumann warns that it will get worse: "We're looking at a tidal wave of evictions." He adds that even with moratoriums currently in place, "evictions are happening."
- When Bott expressed concern about finding another place to rent, he says his landlord suggested he just sleep in his car. He says what's most shocking to him is that he thought renting from a "mom and pop landlord" would give him more protection, and that hasn't been the case. Bott had to move out but says he feels lucky to have found a room to rent through May."I'm going to be homeless after that," he says.
This country is faced with an epic housing and homelessness problem as a result of decades of poor policy decisions, corruption, and profiteering. When George W. Bush was saying we needed to close the ownership gap between whites and minorities in the United States in 2002 he didn’t mean the federal government would help protect mortgage holders from fraud or do anything to help people who took out a mortgage actually stay in their home. He just wanted more people in mortgages for his friends on Wall Street and so he could claim to be creating an ownership society. Minorities in the United States who took out mortgages were the hardest hit by the housing crash because they had so much of their personal wealth tied up in their homes. Minorities make up a disproportionate share of renters in the US today so they will likely be the hardest hit if nothing serious is done to protect tenants in the coming months.
After the crash of 2008 minorities and the poor were blamed for the housing crash. It changed politics in this country as the Tea Party was launched in opposition to mortgage relief and people seeking relief were tarred as dependents and takers. George W. Bush had supported some kind of path to citizenship for undocumented people, then after 2008 Republican rhetoric toward immigrants reached levels of hate not publicly expressed since the 1950s. It gives them someone to blame for all the misery in people’s lives so they don’t have to scrutinize, reflect or question their own policies and positions. It gives people who are living in misery someone to blame for their misery. The saddest thing about the times in which we live is that the poor outcomes of decisions made by people in power are blamed on people without power. This has come with the most hateful, vile, scapegoating rhetoric aimed at people who are struggling by rich powerful people like Mitt Romney in his 47% speech..
Perhaps it will make a difference if a tenant has a nice landlord who is willing to work with them, but the reality is that small landlords can’t afford to take a loss and will tell tenants to sleep in their car like the landlord in the NPR article. Large private equity firms and people like Jared Kushner do not care and will look after their investments as their top priority. They would rather the property be vacant just for the potential of renting it than allow someone to stay past their due date. Property rights are paramount to conservatives and anything that appears to threaten their conception of those rights will be treated with contempt and hostility. Anything that passes Congress will need to be approved by the nation’s top landlords in Trump and Kushner. Nothing is going to become law that will meaningfully help people who are facing a future of homelessness. It is likely that a lot of private-equity firms and wealthy investors will snap up properties that small landlords lose so that more of the rental market is in the hands of the rich.
This system cannot continue on its present trajectory; It is causing pain and people are suffering everyday as business seeks to extract more and more from people who have less and less. Republicans have gone from promoting an ownership society to promoting feudalism without the loyalty. The ownership society was always a scam but nothing has really arisen in US politics to displace it from the left while the right adheres to its most draconian aspects. Trillions have gone to the wealthiest and largest companies just to prop up a system that was already failing millions of people before the outbreak. Trillions to keep the same system afloat without any structural reforms to things like health care, housing or food security. The landlords are in power now and I fear the outcome for many millions of people is going to be homelessness and deep poverty.