Rents Blast Through the Roof

Photograph Source: Anthony Easton – CC BY 2.0

Some people have all the luck. They also have all the housing. Who are these proverbial winners? Well, for starters include whoever winds up buying a record-breaking $90-million penthouse on posh Fisher Island near Miami Beach. The price for this swanky tropical abode blasts past the $60-million record, previously set by billionaire Ken Griffen when he bought his Florida condo, according to the Wall Street Journal November 26. Ah, the carking cares of the astronomically rich, beset with dispensing tens of millions of dollars in chump change. At least they needn’t concern themselves with the troubles pestering the rest of us proles, particularly our younger cohort, summed up in a November 30 Washington Post headline: “Millennials Shut Out of the Housing Market, Again.” Indeed, nine million millennials moved back in with their parents this year, Bloomberg’s Alex Tanzi reported December 6.

Sliding further down the social ladder, we encounter the November 25 news from Invisible People, a group that supports the homeless, that a fire ravaged a village of tiny domiciles designed to shelter unhoused veterans in California. Apparently, such conflagrations are a trend, due to the flammable nature of these miniscule homes. These veterans can’t catch a break. They served their country, many doubtless diagnosed with PTSD as a result, lack sufficient funds for rent, sleep on the sidewalk, finally get some kind of shelter, which Invisible People dubs a flammable prison-sized cell, and it burns down, leaving them lucky to escape with their lives. I suggest the state of Florida confiscate the opulent Fisher Island penthouse and break it up into apartments for some of Miami’s many, many vagabonds, whom one encounters all over the city but most heartbreakingly in the shadow of the luxury high-rises that line the shores of Miami Beach. They migrate to Miami because the warm weather makes sleeping and living outdoors easier. But the city some have called Fascism’s Capital has no use for these human discards, whose shabbiness contrasts so glaringly with the harsh and haughty opulence of its pitiless glittering glass, chrome and steel.

“Millennials have always lagged behind other generations in homeownership,” the Post informs us. Educational debt is a culprit here. But lately the millennial predicament got worse. That’s because housing costs recently hit an all-time high. For individual buyers, the market stinks. For renters, it’s worse. A full-time minimum wage employee cannot afford to rent a one-bedroom apartment anywhere in the United States. They have to double up or sleep in their car, assuming they have one. That’s because as of June the average rent reached $2000 per month.

For someone on a fixed income or the minimum wage, that’s disastrous. But there’s no reason to believe rents will halt their climb at $2000; on the contrary, given housing market dynamics and the role of big investment firms gobbling up as many homes and apartments as they can, that already stratospheric figure will only soar. American tenants would truly be better off in Russia, where the law favors tenants and effectively counters homelessness.

“Rent prices are still rising in 2022,” Mike Ludwig reported in Truthout November 15, “after spiking last year, and eviction rates already reached pre-pandemic levels in cities across the country.” Rent inflation is as bad as that of food or gas; but it generally flies more under the radar. “Tenants are on the brink of mass displacement,” Ananya Roy from the UCLA Laskin Institute on Inequality and Democracy announced last summer at the launch of a website called Tenant Power Toolkit. She called this website “a game-changer. Mobilizing the collective power created by tenant unions, it creates a much-needed legal infrastructure for eviction defense.” Rob Reed, director of Tenant Defense at Inner City Law Center concurred at the time: “A tenant facing eviction has just five days to review the paperwork and find scarce legal help or navigate the labyrinth of applicable defenses alone. If they make it that far, they still must go to the courthouse,” and struggle through more procedures, forms, documents and legal claptrap.

For prospective home-buyers, the situation is no better. The Federal Reserve burst the housing bubble by raising interest rates – to expand unemployment, so thoughtful of the central bank to fret over low-wage workers earning too much and thus hastily to curtail their buying power to prevent them getting too comfortable – so by late October, the housing market was imploding. Prices fell but so did sales. That’s because of those surging mortgage rates. “Housing Market Obliterated,” began a headline on Zerohedge, November 24. “According to Redfin,” the same outlet reported October 20, “the number of homes sold in the United States during September dropped by 25 percent….and new listings dropped by 22 percent, marking the biggest declines on record in both categories – excluding numbers at the onset of the coronavirus pandemic.” Traffic of prospective buyers thinned dramatically. That’s because people can’t afford what banks now charge for a mortgage.

Indeed, mortgage demand sank to a 25-year low in October. “Mortgage demand,” according to CNBC October 19, “which has suffered four straight months of declines, fell last week to the lowest level since 1997,” as interest rates kept rising. The Zerohedge article concludes: “Much more pain is coming for the housing market, and this new crash could ultimately be even worse than what we experienced back in 2008.” That’s when millions of people lost their homes, thanks to Barack “Evict the Homeowners” Obama’s decision to save crooks on Wall Street, not luckless ordinary people on Main Street, guilty of minding their own business and not scamming anyone.

So who is buying those few abodes that sell? Until recently mega Wall Street firms. They snapped up affordable houses, because they’re good investments, meaning they could raise rents. But in the third quarter of 2022, even investors curtailed their purchasing spree. Sadly that hasn’t yet improved things for the little guy who wants to own a home. Frustrated prospective homebuyers still have no choice but to pay those exorbitant rents demanded by investor-owners, while poorer tenants move back in with their parents or camp out on a friend’s sofa-bed, or sleep on sidewalks.

Meanwhile in real estate developers’ heaven, like San Francisco, for every homeless person, ten dwellings stand empty. Is this not a fitting emblem for anti-human, neofascist capitalism and its brutal class war? Humans are treated like garbage, while landlords’ private homesteads remain pristine and empty. If you can’t pay exorbitant rents, the real estate market makes no bones about telling you you’re disposable. We’ve got the millions of vagabonds in this country to prove it. And to judge from economic trends, more homeless are coming, lots more.

That’s because inflation will keep hammering ordinary people, as monopolies jack up prices, and now that the Dems retained control of the senate, they can afford to say they don’t care. The U.S. will just keep printing money and shipping it to foreign wars and foreign military bases, and tell its citizens, if you don’t like sleeping under the stars, get a job, or a third.

Young prospective homebuyers who want to start a family compete “in a market unlike any other,” the New York Times reported November 14, “one defined by the largest run-up in home prices in modern history, blunted only by the steepest climb in home mortgage rates in decades.” Slammed by sales tabs and mortgage interest, such buyers constitute the smallest part of the market in 41 years. Thus the younger generation is excluded from the American Dream and forced to rent at sky-high prices. They don’t build up equity and therefore stay poorer longer. But hey, they’re doing better than those luckless souls below them on the economic ladder, those folks who work multiple jobs, still can’t make the rent and stare, wretchedly, into the abyss.

Eve Ottenberg is a novelist and journalist. Her latest book is Hope Deferred. She can be reached at her website.