Who benefits from the housing crisis?
Large, multinational financial concerns stand to win big from current Big-State solutions to our constrained housing market. Susan Kirsch in CalMatters follows the money trail.
"We remember the pain and dislocation brought about by the housing melt-down of 2008, when foreclosures spiked by more than 81% and more than 3 million people lost their homes. It was precipitated by deceitful, predatory loans, subprime mortgages, and fanciful financial tools like derivatives.
"Many individuals never recovered, but banks, developers, and real estate investors scored big. While property values have largely recovered, an ominous trend has occurred: a shift from individual home ownership to corporatized housing.
'We’re in a whole new world of organized, global financial investment into the housing market,' Michael Storper, a professor at UCLA and London School of Economics, explained when asked what changed between 2008 and 2019.
"He called it the financialization of housing.
"Components of the financialization of housing include giant construction companies such as Florida-based Lennar which is behind the controversial San Francisco Bayview-Hunters Point housing project, and national and global private equity investment firms such as The Blackstone Group, with California offices in San Francisco and Los Angeles.
"Why does the financialization of housing matter? It is fueled by corporate greed, not civic values or care about community. Mortgage or rent payments flow out of the community, stewardship diminishes, and global wealth goes into unknown, gold-lined pockets.
"In 2017, the United Nations Human Rights Council warned that the financialization of housing “undermines democratic governance, exacerbates inequality, dehumanizes housing, and causes displacement and homelessness.”
"The UN report cautioned “unprecedented amounts of global capital are being invested in housing as security for financial instruments and traded on global markets, which is having devastating consequences.”
"Against this corporate backdrop groups such as Bay Area Council and the Silicon Valley Leadership Group have curried favor with California legislators. They’ve created a simplistic narrative: We have a housing crisis. Cities are to blame. The state must assert itself with top-down, one-size-fits-all bills that undermine local control.
"What they don’t say is that by reducing local control, global investment firms and national builders will gain easier access to commuonity wealth, including individual homes, land, and public places.
"For example, a stripped-down version of Chiu’s Assembly Bill 1487 seeks to gain approval for a 2020 ballot measure known as the “San Francisco Bay Area Regional Housing Finance Act.”
"It would provide a regional financing mechanism for affordable housing and would apply to all cities, including charter cities.
"This new entity estimates an annual budget of $2.5 billion. It would be governed by the Metropolitan Transportation Authority board, but identified as a separate legal entity.
"Critics, myself included, are alarmed because a regional authority to raise, administer, and allocate funds is likely to reduce their capacity to raise local tax revenue for local projects. Small cities worry that big cities will rake off the majority of the funds, and they’ll be taxed for big city successes.
Read the whole thing here.
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