Beggars can’t be choosers: The ugly reality of the US housing market
Forced to give up their dreams of a “real house,” first time home-buyers set their sights lower, and ex-homeowners muscled out of the market by Covid-19-related job losses have to do the same. The need is great enough that these once-derided mobile homes are now achieving mainstream respectability, according to USA Today – but profit-hungry private equity firms have been buying up stakes in the companies that own these trailer parks for years, going long on the collapse of the American dream.
Trailer trash no more
‘Manufactured homes’ house some 22 million Americans, according to the Manufactured Housing Institute. With prices running about half that of “normal” homes, and the average American family’s net worth either stagnating or declining as inflation soars and the stock market increasingly decouples from reality, the stigma long associated with living in these structures has, supposedly, begun to dissolve. Beggars, after all, can’t be choosers.
But homeownership has always been considered a cornerstone of the American Dream – and some believe that if you can’t own a home, you’re better off at least keeping up appearances by renting one. God forbid you descend into the murky realms of the mobile home inhabitant, a stereotype-ridden zone crawling with two-toothed drug addicts, welfare cheats, and, well, “trailer trash.”
The private equity companies investing in these communities recognize that their inhabitants don’t want to be made to feel like they’ve lost social status. However, when the trailer park is given a makeover, transformed into a charming hamlet of “tiny homes” by the magic of public relations (and given a respectable price increase, courtesy of those private equity firms), those who lived in such communities before it was socially acceptable may in turn be forced to seek out less pricey pastures.
Articles discussing the attractive points of investing in trailer parks are quite open about the positives of owners’ poverty: “despite their name, mobile homes are not that easy to move, and their occupants often cannot afford the upfront costs to relocate. That leaves them vulnerable to rent increases that boost profits for owners of trailer parks.”
A pretty face on homelessness?
As private equity has eagerly gobbled up trailer parks, many of those priced out of that tier of living have taken their houses on the road, literally. The RV (recreational vehicle) market in the US has exploded, especially after the Covid-19 pandemic ignited the desire to flee crowded cities, and a whopping one in four Americans reported planning to either buy, rent, or research an RV in 2021, according to a recent survey. Accordingly, the cost of owning and storing RVs has also soared, and many would-be RV owners are instead buying smaller vans and fitting those out with beds, kitchens, and toilets.
While social media hashtags like #vanlife put a happy face on the booming popularity of the “camper van” phenomenon, films like 2020’s ‘Nomadland’ shine a light on the huge population of dispossessed, elderly, or “retired” (often laid off a few years short of qualifying for Social Security, or unable to live on their benefits) Americans forced to live that #vanlife, following itinerant work around the country or parking on city streets incognito, their belongings hastily stashed in one of a mushrooming number of storage facilities across the country. Younger people burdened with student loan debt can get away with living under their parents’ roof, but their grandparents increasingly find themselves out of luck, unwilling (or unable) to move in with their adult children and deprived of the pensions that were supposed to be stewarded by the likes of BlackRock and other asset managers that found it more attractive to gamble them away instead.
The hierarchy of dispossession, brought to you by Private Equity
No matter which level Americans occupy on the increasingly slippery hierarchy of dispossession, they can be sure there’s a private equity firm with its vampiric fangs jammed firmly into their neck, sucking out what little financial resources they have left. International financial cartels like BlackRock and Blackstone have firmly nestled themselves into every angle of the industry, from the entire neighborhoods of single-family homes they have transformed into rentals to the storage units where those evicted, foreclosed, or simply priced out of their homes are forced to store their stuff.
Never one to miss out on an opportunity, these companies have embraced the storage solutions market, which swells with every evicted or foreclosed-upon tenant, every individual forced to downsize from an apartment to a van, and every person relegated to an indefinite period of ‘couch surfing’. The market is expected to grow to a whopping $115.62 billion by 2025, according to the aptly-named Mordor Intelligence Research, which assessed its value at $87.65 billion in 2019. Blackstone has acknowledged the storage sector is “attractive” because it “require[s] little in the way of capital expenditures, ha[s] relatively low turnover and offer[s] the ability to raise rents since [storage units] typically don’t represent a major portion of their tenants’ monthly expenditures.”
Americans should worry about the full-scale acquisition of their lives by private equity giants. The last time a Blackstone subsidiary laid claim to entire neighborhoods in the aftermath of the 2008 foreclosure crisis, the United Nations itself was forced to step in when their profit-generating (read: tenant-squeezing) techniques proved too rapacious even for the cut-throat real estate industry. However, with the renewed housing boom driven by rock-bottom interest rates, the private equity buy-ups are going on again with a vengeance, so much so that Bloomberg has published multiple articles suggesting Americans give up on the idea of homeownership entirely and become a nation of renters.
Their management style hasn’t improved, either. When New York resident “Carla” (name changed pending potential litigation) visited her Life Storage (a BlackRock “buy”) unit earlier this year to retrieve some belongings, she found her possessions contaminated with black mold, the product of what appeared to be a trail of vomit in the hallway leading to her unit. Exposure to the mold, a potent neurotoxin, has “ruined my life, my health, my mental balance, my savings,” she told RT, adding that her condition is likely permanent and that even her emotional support cat fled her old car in an attempt to escape the mold poisoning, which has since contaminated her new vehicle as well. All of this, she said, “could have been prevented had the facility simply put an overlock on my unit to prevent collateral damage to their customer.”
While management eventually responded to her complaint, their failure to notice and clean up the mess while it festered is emblematic of the chronic neglect that occurs when private equity takes over an industry. Such massive faceless corporations – BlackRock has over $10 trillion in assets directly under management and controls trillions more indirectly – are unable to adequately service customers even when their actions are not deliberately malicious. Capping off the open-top units on the naturally-damp basement level of the storage facility might seem like common sense to a customer, or even a worker who spends time at the facility, but that would have cost a few extra dollars Life Storage’s controlling interests, loyal only to their shareholders, had no reason to spend. Lives are ruined as a result, and this trend toward centralization is only accelerating with the pandemic of small-business die-offs that occurred because of economically suicidal government responses to the coronavirus.
Further down the spiral
With so few Americans able to afford the middle-class dream they’re told everyone else is basking in, the desperate become pragmatic, willing to settle for less. But while home-ownership remains paramount, and renting a grin-and-bear-it second-best, long-stay hotels have also surged in popularity. This is not because people like them – they’re accompanied by the same stigma as trailer parks, if not worse – but because they are not subject to the unregulated swamp of tenant blacklists that keep a growing number of Americans locked out of the rental market even with satisfactory credit ratings and flush bank accounts.
“Jane,” who has lived in New York City for 25 years, has been unable to legally rent an apartment for the last eight of those thanks to a vindictive building management company she says went to great lengths to evict her, including refusing to cash rent checks in order to claim she was delinquent. In her quest to clear her name, she has discovered that tenants can end up on one of dozens of lists kept by tenant-screening companies merely for suing or being sued in housing court, with landlords assuming they’re “trouble” even if they win their case; she declined to be named in the hope that she will be able to find housing elsewhere in the country, having given up on the city where she lived most of her life. A New York Times piece on the tenant-blacklist phenomenon concurs – “Once tenants end up on the list, renting an apartment can be impossible” – and while some reforms have been made, as smaller landlords are pushed out of the business, unable to pay their mortgages thanks to the economic depression that shows no signs of ending, larger ones – like private equity firms – step in, with more money to wait out activist tenants and win the day in housing court.
As the blacklisted seek refuge in extended-stay hotels, as Jane has been forced to do, they become increasingly likely to run into the same problem that rendered them homeless in the first place – unaccountable faceless financial cartels who see these hotels (or these cheap apartment blocks, or these trailer parks, or these storage units) as a good, recession-proof investment. As the consolidation of these industries continues, the presence of a de facto social credit score becomes impossible to ignore – and increasingly impossible to escape.
The message seems clear: reality will only get harsher under the whip of the private equity firms Americans have allowed to swallow their country whole unless something is done to reverse the centralization of financial power. “Americans’ biggest failing is that they confuse confidence with competence,” Carla said, summing up what she believes to be “a brutal mistake that is the source of capitalism’s most tragic consequences today.” As millions of Americans slide down the ladder of dispossession greased by the saliva of hungry banks, sold a bill of goods only to find the American Dream ends when they wake up, many of them would no doubt agree.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.