Profit, Poverty, and Pain
by Erik Kingston, PCED (he, him), Housing Resources Coordinator at Idaho Housing and Finance Association
This article was originally published on LinkedIn on 7/22/20.
Forward: As planners, you have the ability to influence the economic, social and aesthetic destiny of communities; that's serious business. What gives me hope for the future is summarized in the AICP Code of Ethics:
“We shall seek social justice by working to expand choice and opportunity for all persons, recognizing a special responsibility to plan for the needs of the disadvantaged and to promote racial and economic integration. We shall urge the alteration of policies, institutions, and decisions that oppose such needs.”
I applaud the trend toward more inclusive 'demand-side' planning processes that bring traditionally disadvantaged or underrepresented voices to the table. This is our 'all hands on deck' moment, and we recognize the status quo hasn't served the APA goals for too many Americans. People of color, people living with mobility or sensory impairments or economically disadvantaged populations can offer valuable perspective on what they need to be more productive and engaged in creating the 'social justice' goals of the planning profession. Planners are essential to the changes needed to cultivate economic and community resilience.
After morning walks in the Boise foothills, I generally come back with photos of birds, plants, clouds or my dog. A recent morning was different. The trailhead parking area was taken up by the above SUV and trailer loaded with a displaced household and the trappings of their fresh eviction. This photo was taken 18 hours after speaking to a woman still searching for housing after an eviction in late January by one of many out-of-state property managers controlling the housing supply in Southwest Idaho.
We are running out of time...there will be a wave of evictions and a spike in homelessness across the country...the coming wave is entirely predictable and completely preventable. —Diane Yentel
Brace yourself; we're running out of time. That's the urgent message from Diane Yentel, President and CEO of the National Low-Income Housing Coalition. See her video statement here and read her Memo to Members here. Federal eviction moratoriums that protect approximately 30% of U.S. renters expire on Friday, July 24.
Eviction tableau: salvaging the pieces of a jigsaw puzzle called home.
To understand the current housing shortage, stats help. Twenty years ago the 'affordable' rental vacancy rate in Southwest Idaho was over 12%. As of 6/30/2020, the rental vacancy rate in Ada County—for rentals affordable to full-time workers earning up to $20/hour—was 0.36%. Statewide the rate is now 0.6%. That estimate is likely high, since many providers aren't updating listings after lease up. That's 22 rentals out of 6,076 in Ada County listed as available; several of those 22 were actually unavailable when contacted. For Idaho, fewer than 123 out of 20,557 units were listed as available as of 7/21/20. (Source: housingidaho.com)
And 70% of Idaho's jobs pay less than $20/hour.
I search rental listings for callers every day. Everything under $1,200/month has a waiting list, and most people I speak with can't afford more than $600. For someone earning Idaho's minimum wage, an affordable rent is a mere $377/month. That means many families are doubled up in overcrowded and substandard conditions, to provide goods and services at a price we consider affordable, turning the concept of subsidy on its head.
Our term for these folks in the COVID-19 era is essential workers. Other terms are grandparents, veterans, students, single parents, and retirees.
I couldn't help seeing parallels from the impromptu campsite in the foothills to iconic Depression-era photos like the one below. Scenes like this are indicators; we can anticipate daily variations on this theme as #COVID19 has its way with our society and economy, and predatory landlords continue to strip mine communities for profit at our expense.
How can you frighten a man whose hunger is not only in his own cramped stomach but in the wretched bellies of his children? You can't scare him – he has known a fear beyond every other.
— Chapter 19, The Grapes of Wrath
The woman I spoke with—and her family—are part of a growing population affected by outside private equity investors, sometimes referred to as predatory landlords. In his book Homewreckers, award-winning author Aaron Glantz describes how many of the architects of the 2008 recession "...exploited a rigged system in which billions of dollars in wealth was transferred to them from millions of individual homeowners after the real estate bust..." and how "...many of these same people now are working to weaken the safeguards that were put in place to prevent a similar disaster..."
As out-of-state interests have descended on our community, the supply of locally owned and managed homes and apartments—what I call legacy affordability—is evaporating. The family evicted in January had a temporary cash flow challenge, a few days late with full rent but able to pay. Instead, the California-based property manager/owner took them to court, where they may have netted at least 3x the $1,200 rent. Once vacant, the unit will be rented to the next household on the waiting list at an even higher rate.
'Tenants' are mothers and fathers, children and grandparents, teachers and students, neighbors, veterans, heroes, caregivers and essential workers—they are people with names, lives and worth. And they are desperately in need of relief.
In neighboring Utah, the housing policy deck is also stacked against people who rent, with many landlords and real estate professionals 'serving' in the legislature and making policy that moves the needle even further in the landlord's favor. Even if your landlord won't address legally required life-safety issues or routine maintenance and you decide to withhold rent until repairs are made, the law "...strips tenants of all legal protections. They can be evicted and sued for triple the cost of the rent, plus court fees. The eviction will appear on any background or credit check."
Renoviction. When housing costs exceed income or new owners simply want to renovate or go in a different direction, families are displaced. But 'displaced' is a sanitized term for what they experience. Loss of a home with no backup impacts our identity, health, stability and hope; it often leads to deep despair and stress. I tried to capture the feelings of this in a post way back in 2009 (during the previous recession), which you can read here. Eleven years on things are even more desperate.
An eviction—for any reason—haunts your credit and can keep any adult on the lease from securing future housing, reasonable interest rates, even employment options. In the U.S., evictions have actually emerged as a business model and driver of poverty. Pulitzer Prize-winning author and McArthur Fellow Matthew Desmond documented the business and consequences of eviction in Evicted: Poverty and Profit in the American City.
...a deeply researched exposé that showed how mass evictions after the 2008 economic crash were less a consequence than a cause of poverty. —Pulitzer Prize citation for Matthew Desmod's 'Evicted'
Despite—or perhaps in response to—growing awareness of this issue, some landlord associations want to make it even easier to evict tenants.
What was true in 2008 remains true now; no amount of suffering on the part of others is too great to ensure the profits of a handful of disinterested strangers through a sleight-of-hand designed to further inflate the wealth held in their already bulging pockets.
Those following me know I'm pretty frank about the impacts of housing commodification on people, society and our economy. That comes from listening to thousands of actual Idahoans who struggle with housing inflation and stability. I imagine each of them as someone I might know—an elderly relative, friend or coworker—and notice patterns of behavior, causes and effects that should inform policy solutions. While a few of these stories are covered in the media—like Becky Boyd or Dom Gallegos—the majority go unheard.
Housing is a basic human right essential to health, stability and productivity, as defined in Article 25 of the Universal Declaration of Human Rights adopted in 1948:
Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
Over the last few decades we've seen this basic human right reduced to a commodity...like oil, corn or steel. The financialization of housing by private equity or corporate investors forces externalized costs on communities—higher property taxes for existing residents, fewer options for local first-time buyers, and speculative activity that forces costs up and tenants out. This increases homelessness, erodes social cohesion and siphons money out of our local economy and taxing districts.
The impacts of housing commodification are outlined in the 2017 report by Leilani Farha, the former U.N. Special Rapporteur on the Right to Housing (now leading a new project, The Shift). Among other things, commodification contributes to the following changes:
1. Undermines democratic governance and community integrity
Credit agencies trump human rights
Remote control of housing use, cost, location or existence
Real estate industry plays central role in government and policy
2. Exacerbates inequality and social exclusion
Encourages gentrification
Displaces marginalized populations
3. Detaches housing from community, human dignity & security
Increases wealth and income disparity
Housing as a speculative commodity becomes dehumanized
Outside investors detached from local residents or housing needs
Remote ownership lacks accountability
Finally, the externalized costs of private equity and other speculation in housing are felt in local economies and communities in the form of foregone spending, money that would have been spent on taxable goods or services if renters were not housing cost burdened—spending more than 30% of household income on rent. Money that would otherwise go to food, health care, clothing, education, and quality child care. The benefits and entitlement of a few come at the expense of others and society at large.
It's estimated that Idaho's economy lost $670 million dollars in foregone spending in 2018 alone; housing cost burden has since accelerated. —SHIFT Research Lab
As we're all painfully aware, this is only one aspect of our nation's legacy of inequity.
I have several dear friends who work in real estate—mostly women and single moms—who are generous, civic-minded, and committed to social justice. They are good people and I love them. Like the rest of White America, they've been shaken by the clarity and extent of institutionalized racism in this country and its impact on people of color. None of us can ignore the stark reality that our own entitlement reflects over four centuries of inequitable distribution of resources that consistently favored White Americans and persistently disadvantaged, impoverished and punished people of color.
Homelessness is not the result of individual failure, but is the failure of governments to implement the right to housing effectively.
An unregulated private market cannot be relied upon to ensure adequate housing for vulnerable groups. —The Shift
This same inequity is perpetuated by an industry that compensates Realtors—and the many related pilot-fish professions—with a percentage of each transaction. This system is designed to inflate housing costs for the personal gain of those involved, without regard to externalized costs. This is no different from a coal mine operator increasing profits by dumping mine waste into nearby waterways or skipping worker protections—forcing the costs of global warming, acid rain and health care onto future generations of taxpayers and coastal populations.
We all pay the high costs of homelessness and instability, and we've been racking up one helluva debt.
When an industry's balance sheet doesn't reflect externalized costs and forced public subsidy, we're left with an illusion of profit. When a privileged class or race profits at the expense of another, it's easy to rationalize that privilege as an entitlement. And when an industry and government welcome and enable out-of-state private equity to play real-life Monopoly in our communities, it's unsustainable.
The problem goes well beyond house flippers or spec investors...even foundations and pension funds profit from housing commodification and the eviction industry. In some cases, charitable foundations with a mission of ending homelessness discover their investment arm is creating wealth by buying up formerly affordable housing, raising the rents, and displacing tenants that wind up homeless, increasing demand for their grants.
It's time to acknowledge the full cost of our actions and reflect that in any cost-benefit analysis. I'm asking those who enable or personally profit from real estate speculation and inflation to take an honest look at the massive public subsidy required for this private equity. Let's put all the cards—and costs—on the table and then make informed decisions about housing and development policies that benefit everyone. We are in a time of historic reckoning, and the housing and mortgage industry, policy makers and developers need to take a hard look in the mirror.
We recently celebrated Independence Day in America. Let's commit to a future that supports liberty and justice for all, and that shifts our perception of housing as a commodity back to its role as an essential human right, and the foundation of a stable society and economy. Let's reassess our idea of equity and the concept of enough, and be willing to include externalized or deferred costs in life's balance sheet.
If we don't, prepare for an historic re-enactment or the Grapes of Wrath over the next decade. The wave is coming; we're running out of time.
Erik Kingston, PCED. Erik is a Certified Professional Community and Economic Developer focused on housing access, availability and affordability. Since 1995, he has explored housing both as a human right and foundation of community and economic stability. Erik works with unhoused populations and tenants as well as professionals in planning, policy, community and economic development. He is a long-time member of the Idaho Rural Partnership board, Western Community Assessment Network and Northwest Community Development Institute.
The views expressed in this article are his own.