Nationalize Housing!

It’s the first of the month. That means, for many of us, our hard-earned cash will be transferred to the bank account of the person who owns the home we live in. That’s called rent. It happens each month. That person? They’re your landlord. Maybe you have a landlord that you know personally. A Steve, or Beth, or Margaret, or, worst of all, a Jeff. 

Or maybe you have a landlord that’s not a person, but a company. Maybe they own a few buildings in your city, or maybe they own thousands of units nationwide. It’s increasingly possible that they’re a Wall Street hedge fund, which spent a combined $36 billion targeting distressed home markets in the aftermath of the 2008 financial crisis and turned long-time owner-tenant housing into purely rentals. 

In theory, the money you spend on rent should be going to pay the landlord’s mortgage for the house you’re living in, improvements to that housing, and taxes on that property, with the smallest percentage of all that going into the landlord’s pocket. The reality, however, and this does not need to be proven beyond a shadow of a doubt, because it is acutely felt by almost everyone who has rented and had to deal with substandard housing, is that money is almost never, ever coming back to you in the form of improvements, or just casual maintenance. That money is gone. 

You have done nothing with it except made it another month without ending up like an increasing amount of Americans, without a home. 

In California, property owners even capped their property taxes decades ago, meaning that your Boomer landlord, the dreaded Jeff, is almost certainly a millionaire by now. Oh also? Bad news. Jeff is on a safari right now, and he won’t be returning your call about the black mold, or the flooding basement, or the fact that the heater has never worked, not ever. 

Housing, many believe, is a human right. In America, though, we have something called a rental broker, whose sole job it is to give you the phone number of the slumlord. That costs a month’s rent, too. 

With America having learned absolutely nothing from the 2008 financial crisis, where wild real estate speculation led to a global credit crisis whose effects are still reverberating today, what hopes do tenants have for a more just and equitable approach to housing? Quite a bit, actually. 

Hi, I’m Max Rivlin-Nadler. And this is Nationalize This! a podcast about public ownership, democratic control, and the successes and failures of nationalization projects. This week’s episode: Housing. 

For the nation’s banking sector, the next big crisis is almost certainly coming (see episode 1). But for housing, the crisis is already here. A person working full time, paid minimum wage, cannot afford a two-bedroom apartment in any county in the United States. The crisis has also grown consistently, with rents rising by 31 percent in the past decade, rapidly outpacing inflation. Since 2000, the median rent has risen dramatically, while real household incomes have dropped. More than half of all Americans spend over 30 percent of their income on rent and utilities. 12 million households dedicate over half their wages to housing. Today, more than three million families and individuals experience homelessness, including more than one million children. 

The 2008 financial crisis, which led to millions of foreclosures,  had a compounding impact on rents — because more people were booted from their homes, the rental market became more competitive, driving up rents across the country. Right now, there are 43 million households on the rental market, nearly half of whom spend at least 30 percent of their income on housing. Simply put, more people are paying more rent, as homelesness continues to skyrocket across the country. 

Here are more depressing statistics! No place has this been more stark than in California. In Alameda County, the number of homeless residents jumped 43 percent over the past two years. In Orange County, 42 percent. San Francisco was up 17 percent increase since 2017. The county of Los Angeles was up by 12 percent over last year.

At the same time, construction of new housing has begun grinding to a halt, as rents have now reached far beyond what people can pay, and developers begin to sense the beginnings of a market about to come crashing down. 

No one has ignored the housing crisis, however. Cities across the country are acutely aware of the need to build new housing for the non-luxury set, but are deeply divided on how to do so. Land-use laws restrict the building of dense affordable housing, while at the same time long-standing low-income communities fear the displacement that comes with development. 

In the midst of this battle, a set of upwardly mobile white professionals have fought back against the antiquated zoning laws, believing that the free market will solve all — yes, I’m speaking about the YIMBY movement.

The YIMBY’s, which stands for Yes In My Backyard, as opposed to NIMBY’s, the not-in-my-backyard set, believe that the very same housing developers who have accelerated the displacement of low-income communities in gentrifying cities, could, somehow, also solve the housing crisis by being allowed to build even more housing, some of which would be deemed, quote un quote, affordable

Curiously, the YIMBY’s relatively Maoist zeal for land reform, runs up against the fact that the construction of more market-rate housing has consistently shown to increase displacement, even when it’s coupled with affordable housing. Without government protections, like rent control or stabilization, low-income tenants will be driven out of the neighborhood before any of them have a chance to live there. 

Government intervention in the housing market isn’t new or novel. As long as housing has been treated since a commodity, government programs have been there as a counterweight to try to stop the logical endpoint of land being treated like an actual free market, which is the total consolidation of housing in the hands of the extremely wealthy. 

And the government has dealt with serious housing emergencies before, in vastly different ways. During the Great Depression, public housing began to be built in areas that the government deemed to be “blighted,” with the goal of improving sanitation and keeping the working class housed and close to the jobs they needed to fill. This was not without consequence, of course, as many existing communities were not the ones benefiting from the new housing built on top of them. 

In the three years after World War II, the federal government responded to a housing shortage by subsidizing the building of 2.5 million new homes, mostly in car-oriented suburbs. Within a few decades, this had effectively led to the hollowing out of major cities tax bases, and the dominance of the austerity-driven policies that continue to reverberate today. 

Public housing that had once been well-funded, diverse and maintained, were rocked by disinvestment from both state and federal governments, leading to the depiction of public housing we see in most media today, one of crime and degradation. In truth, public housing continues to keep over a million people across the country sheltered with significant protections against eviction. For seniors and people with disabilities, it has helped them from being shut out of the housing market completely. 

But the federal government has slashed funding significantly over the decades, as cities have demolished large-scale housing projects.

As much as the federal government retreated from trying to secure housing through any means other than just promoting homeownership (through increasingly risky government-backed loans), some programs have remained in place. Section 8, which gives extremely low-income people the ability to apply for rental vouchers, is another New Deal holdover. It assists about 2.5 million extremely low income households by subsidizing a portion of their market-rate rents. But it still only covers just 22% of the people who are eligible

The government has also tried to spur the construction of affordable housing through tax breaks, which have been less than effective… unless you’re a developer looking to save a LOT of money while not actually building much affordable housing… than its been great!

Cities like New York have tried to take advantage of the luxury building boom earlier this decade by goading developers to build affordable housing in exchange for letting them build even higher. This has… not worked out great

It should be noted that just as many people lost their homes following the 2008 financial crash as did during the Great Depression, and while the country has grown since then, meaning a smaller percentage of people lost their homes, the government has not responded to the crisis even remotely proportionately… there’s been no mass housing plan presented by the federal government since the 1960s. The Affirmatively Furthering Fair Housing Rule, which was the largest Obama-era initiative meant to tackle housing, simply ordered cities to comply with the Fair Housing Act and de-segregate housing programs that received federal assistance. This has since been put on hold by the Trump administration. Another Obama-era program, the Rental Assistance Demonstration, or RAD, is meant to privatize large swaths of public housing in an effort to drum up money to pay for a repair backlog that has piled up while the federal government has starved public housing authorities. 

But tenants themselves have not been waiting around for the government to act. They’ve been working to strengthen and expand rent regulations that cap a landlord’s ability to boot out a tenant, simply because they want to extract more profit from a property. 

Tenant-led movements have won significant recent victories in New York and Oregon. In New York, legislators, pushed by a relentless tenant movement, stood up to the powerful real estate industry and closed loopholes that have allowed thousands of homes to exit regulation. In Oregon, legislators earlier this year passed a statewide rent control measure. 

Resistance to these movements is fierce. A November ballot proposition in California, which was to simply overturn a rule that prohibited counties from enacting their own rent control, was defeated by a thirty-point margin after the private equity firm the Blackstone Group, which owns thousands of properties in California, spent millions on the campaign against the measure.  

Many housing advocates believe that the path forward to secure housing for working people in America is for a mass tenant’s movement to push the government to reinvest in housing. Right now however, cities are banned from building anymore federally-funded housing under the Clinton-era Faircloth Amendment. Nonprofits like community land trusts are trying to fill the void, but both money and land are hard to come by. 

Still, in the United States, a mass movement for social housing, meaning housing that’s owned by the government or by a non-profit, is certainly gaining steam. Will it be enough to turn around the worst housing crisis since the Great Depression? 

My guest today is Tara Raghuveer….