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The private housing market has failed us

And the only solution is to reinvest in public housing

Housing is best delivered by private companies that respond to demand through the market, or so our politicians and the corporate media like to tell us. If this is the case, why are private developers failing to provide enough housing? Why have prices soared to the point where many can scarcely afford a place to live? The problem isn’t government intervention, but that the government has left so much power in the hands of private companies that will stop at nothing to increase their profits. The only pressure they respond to is that of the profit motive, and housing the masses isn’t the road to profit maximization.

Unaffordable housing

The government of the United States was the first to abandon its support for public housing, and the rest of the developed world followed suit. However, simply abandoning support for public housing wouldn’t have been a popular move, so first they had to make it a desirable policy initiative. They had to make public housing seem like a problem, instead of a solution, and they achieved this by defunding housing programmes so the houses and units fell into disrepair. They also ensured such developments were on the outskirts of cities, away from any economic opportunity, so public housing residents were stuck in poverty. The deterioration of public housing, and the perpetual poverty of its residents ensured crime would flourish in those areas, creating the image the corporate media needed to convince the masses that public housing was a menace, but only because the government had first made it so.

As public housing was sold off, the conversation moved to affordable housing. Instead of being delivered by the government, these units and homes would be provided by private developers. Affordable housing was presented as a private solution to the problem of high rents. Why did the government need to provide housing when the market could build “affordable” units and still turn a profit? The hopeful terminology masks the reality that these “affordable” units are often quite unaffordable.

In the United Kingdom, social housing rents were set at 50% of local market rents, but to be termed “affordable housing”, private units can charge up to 80% of local market rents. This leaves many “affordable” units, particularly in London and other major metropolitan areas, out of reach of those who really need them.

It’s generally accepted that people shouldn’t spend more than 30% of their total income on housing costs, but a growing number of people in the developed world are paying much more. In the United States, more than half of all renters pay more than 30% of their income for housing, a figure that has doubled since 1960, and a quarter of all renters pay more than 50% of their income toward housing. These numbers are unsustainable, and are leading us toward crisis.

The figures are even worse for low-income renters. In “Evicted”, Matthew Desmond profiles the poor in the city of Milwaukee and how the unaffordable rents they have to pay have led to an eviction crisis that condemns them to perpetual poverty. Before telling the stories of the renters and landlords he follows, he emphasizes that the book is “set in Milwaukee, but it tells an American story.” Decades of income stagnation have resulted in “the majority of poor renting families in America to spend over half of their income on housing, and at least one in four dedicates over 70 percent to paying the rent and keeping the lights on.” As a result, any unforeseen expenses can lead these poor families to be short on rent, which often results in eviction.

In Milwaukee, a city of fewer than 105,000 renter housholds, landlords evict roughly 16,000 adults and children each year. That’s sixteen families evicted through the court system daily. […] If you count all forms of involuntary displacement—formal and informal evictions, landlord foreclosures, building condemnations—you discover that between 2009 and 2011 more than 1 in 8 Milwaukee renters experienced a forced move. […] The numbers are similar in Kansas City, Cleveland, Chicago, and other cities. In 2013, 1 in 8 poor renting families nationwide were unable to pay all of their rent, and a similar number thought it likely they would be evicted soon.

These high rents make it impossible for people to save or even to think about their futures. The prospect of eviction leaves them in a constant state of insecurity, trapping them and their children in a cycle of poverty. These people have few options outside the private housing market, as

In larger cities like Washington, DC, the wait for public housing was counted in decades. In those cities, a mother of a young child who put her name on the List might be a grandmother by the time her application was reviewed.

This isn’t just a problem in the United States. Renters in England pay an average of 47% of their income toward housing, and it skyrockets to 72% for those renting in London. But young people have it worse than anyone else. Left behind in the post-recession era, those between 16 and 24 years old in London pay 88% of their incomes toward housing.

If the private market was supposed to solve our housing problems because it responds to demand signals in the market, why is it failing so many? The fundamental problem is the profit system that favours those with a lot of money over those with little, and as the world becomes more unequal, companies are far more concerned with serving than wealthy than the impoverished masses.

Building empty condos

The rents of the masses are soaring because there simply aren’t enough units being built by private developers to house everyone. To keep up with population growth, London needs 62,000 new homes annually. The mayor set an initial target of 32,000 homes a year before increasing it to 48,000; still too few. But how did developers respond? Only 20,520 new homes were built in a year period between 2014–2015.

A similar trend is occurring in all the world’s major cities. In New York City, 54,000 people live in homeless shelters because there either aren’t enough units or the rents are too high. But this is where it gets truly horrible. The focus of developers when they have been building units hasn’t been on homes for the masses, but on luxury condos for the global elite, many of which they rarely even visit.

Since the recession, luxury condos and fine art have replaced gold as the best places for the rich to store their wealth. This has led to an explosion in the building of empty condos to be treated as investments, and their values have been skyrocketing. In Manhattan, the value of new luxury developments increased by 57% in a mere five years. It also happens to be the centre of some of the world’s worst unoccupied rates.

A report by the Census Bureau found that in a “large swath of the East Side bounded by Fifth and Park Avenues and East 49th and 70th Streets, about 30 percent of the more than 5,000 apartments are routinely vacant more than 10 months a year,” and in “one part of that stretch, between East 53rd and 59th Streets, more than half of the 500 apartments are occupied for two months or less.” In the whole of Manhattan, about one in 25 homes has an owner who lives there less than two months of the year. The city’s prime real estate sits empty while people struggle to find housing, can’t afford their rents, and thousands live in homeless shelters.

Vancouver also has a huge vacancy problem, along with the highest rents in Canada. In the city’s Coal Harbour district, 23% of units were unoccupied or occupied by a temporarily-present resident, with the rate sitting around 7.7% for the whole city. Tsur Somerville, director of the University of British Columbia’s Centre for Urban Economics and Real Estate, observed that the empty units bought by investors creates “demand for real estate without housing people.”

This trend is repeated in nearly every major city around the world. Average people have a hard time finding a place to live, and struggle to pay their rents once they do find one; while new condo towers are springing up everywhere, but are off-limits to everyone but the wealthy. Instead of responding with a plan to house people for an affordable price, like they did in the early twentieth century, our politicians keep repeating the same tired neoliberal line of thought: the government isn’t good at anything, and the market will provide the necessary units.

But it’s exactly because our governments have left the provision of housing to private developers that we’re all suffering. Why should we have to subsidize the profits of developers by paying inflated rents? Why should we let the profit motive determine what kind of housing gets built? Instead, let’s reinvest in public housing that's controlled by communities, provides affordable rents, and is located in areas with access to services, transit connections, and opportunities. The private sector has already shown it won’t meet the housing needs of the masses, so we either take up the collective responsibility, or we let the cycle of poverty caused by our current crisis continue.

Paris Marx writes about the growing divide within the capitalist system, the movements for alternative forms of economic organization, and ways of living that challenge traditional narratives. He occasionally makes videos on YouTube, and is very active in sharing news and opinions on Twitter.

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