America's looming housing crisis

Danielle and kristen sills are the perfect first time home buyers they've upped their budget and widened their search of the boston area but the last house they bid on had 29 offers it sold for about 70 or 80 thousand over what the asking price was and it was a 1200 square foot home finding an affordable apartment was hard enough before the pandemic right but now things are even worse some are calling it a crisis the shortage is now critical affordable so-called class c apartments are 96 percent occupied nationally when they go shopping the inventory the active listings they can choose from are down about 30 percent from this time last year that's just a staggering shortage of homes on the market right now he compares this with what happened during the subprime mortgage crisis a decade ago millions of homeowners defaulted on their mortgages and investors came in to buy the properties and convert them into rental housing so you're going to see a lot more of this soon [Music] as you watch this video you're probably sitting somewhere with a roof over your head for many of you it's probably your home either that or you're watching it work in which case i applaud you for stealing back some of your extracted value shelter is one of the most critical needs of almost every species on earth including humans it's integral to the american dream a modest home with a white picket fence two and a half kids and so on homelessness is rightly seen as something society needs to address as most decent people feel that no one should go without shelter in our modern era and yet despite the importance of housing and the significance we place on having somewhere to call home it seems that the us is on a collision course with another housing crisis it may not take exactly the same form as the housing crash of the great recession but it is coming and it's not looking good in this episode we'll explore the state of housing in the u.s and consider what factors are feeding this growing problem before we get into the causes of this looming housing crisis let's take a look at a few statistics if you look at the housing market today you'll notice a few things first there aren't many single-family houses to be had people just aren't selling the houses that do go up for sale are snapped up incredibly quickly typically within a week or even a couple of days having to offer tens of thousands of dollars over the listing price has become the norm if you want to actually have a chance of having the winning bid if you owned a home and you put it up for sale today odds are you'd have at least a handful of offers by the end of the day and many of them would be well over the asking price month-over-month price increases are now exceeding even the absurd levels we saw in 2006 and we all know what happened shortly after that what's going on here a big part of the problem is that the housing market is incredibly short on supply pace of housing production has slowed dramatically contributing to an already serious lack of housing this is partly due to a shortage of construction materials and partly just a continuation of the trend of producing fewer and fewer homes per year as of 2021 the us faces a shortage of roughly 7 million homes that's a lot of demand but a housing shortage isn't the only problem here the big picture is this young people are trying to buy affordable homes but the prices for even the most modest quote starter homes are out of reach these prices have been driven up by institutional money pouring into the housing market to snatch up homes as investment properties including the homes of those recently evicted during the pandemic to make matters worse some large investment firms are lobbying to end eviction protections so that they can acquire even more houses adding to the housing demand and homelessness problems at the same time with single family homes out of reach for the average working american the media has begun trying to frame perpetual renting as a good thing something that benefits young people the problem there is that even renting is becoming prohibitively expensive there are now officially zero counties in the entire country where a worker earning the federal minimum wage can afford a one-bedroom apartment even for those making significantly more than minimum wage things are looking pretty grim there's a common joke that goes something like the bank said i couldn't afford an 1800 a month mortgage so now i pay 3 000 a month in rent the cherry on top is the true unemployment rate if we take the lysep definition for unemployment someone who is looking for a full-time job that pays a living wage but cannot find one then the true rate of unemployment in the u.s currently sits at a staggering 23.7 percent so even if quote affordable housing were available it likely wouldn't be affordable because nearly a full quarter of americans can't find a job that pays a living wage with that context out of the way let's look at how these problems combine to form the perfect storm for economic meltdown we'll start with everyone's favorite bad guys the billionaires it should come as no surprise that the people putting in bids at 60 80 100 000 over asking price are not your average person they're typically the ultra wealthy usually through investment firms or other real estate poaching groups let's take charles coke as an example one of the billionaire koch brothers charles has donated millions of dollars to three conservative organizations spearheading the push to eliminate covet eviction protections this alone would be reprehensible but since the beginning of the pandemic he's also been heavily investing in real estate snatching up homes left and right to add to his massive portfolio of assets among them the homes of the evicted and desperate in april 2020 he dumped 200 million dollars into amherst holdings a company which brags that has acquired over 30 000 homes since 2012. koch real estate investments was also among the investment groups that recently bought an ownership stake in smart rent a landlord technology company charles koch is not alone in this scheme billionaires investment firms and giant corporations are buying up as many homes as they possibly can which is driving prices way beyond the reach of the average american and they're also betting big on the lucrative future of the rental market it should be clear that very few normal people are going to be able to afford to make offers on homes that exceed the asking price by tens or even hundreds of thousands of dollars but some media outlets would have you believe that giant real estate firms aren't the bad guys here for example vox put out an article saying things like everybody wants to blame blackrock and wall street isn't to blame for the chaotic housing market to give them the benefit of the doubt yes obviously everything has multiple variables which influence material reality but it's a little on the nose to say blackrock is good actually when the ceo of vox investor general atlantic is on the board of directors at blackrock and even if that weren't the case the vox article makes some strange assertions claiming for example that institutional investors just aren't that interested in single-family homes this is demonstrably false as firms like blackrock have bought up hundreds of thousands of single-family homes since the great recession and they continue to hold them hostage on the rental market then there's airbnb if you go on vacation odds are you'll find dozens of cute freshly renovated two-bedroom units to choose from entire neighborhoods empty except for out-of-state license plates there's no such thing as an affordable home anymore they've all been bought up whether by institutional investors or wannabe real estate moguls and turned into airbnbs or rentals and very few new ones are being built in fact there's a new trend of building suburban neighborhoods not with the intention of selling the homes but of selling the entire development to investment firms who then rent out the houses vox isn't the only instance of media trying to manufacture consent for endless renting the wall street journal says it's generational preferences that are pushing young people to rent instead of buying a home but it's not preference at all most young people would love to have the stability of owning a home especially when mortgages are now typically much lower than rent prices in the same area but they've been priced out of home ownership and now it's looking like they're going to be priced out of renting too companies that have a stake in people renting are pushing for an end to home ownership bloomberg says things like rising real estate prices are stoking fears that homeownership long considered a core component of the american dream is slipping out of reach for low and moderate income americans that may be so but a nation of renters is not something to fear in fact it's the opposite they end their article with this country was always more about new frontiers than comfortable settlements anyway which translates as you will suffer and never be able to afford a home and that's good because it's the american way so we have entire generations of americans no longer being able to afford single-family homes we have rapidly increasing rent prices to the point where an eviction crisis is very likely large corporations are buying up all the available housing and actively trying to get more people evicted so they can snatch up their homes too new communities are being developed not to be used for affordable housing but explicitly for the purpose of making a new suburban renter class that is held hostage by landlords and faceless investment firms and the media is telling us that actually this is what we want and that stability and building equity is bad this all adds up to one serious economic crisis looming on the horizon it's always hard to predict exactly what form the fallout will take but it's usually a safe assumption that the brunt of the suffering will fall upon those who have little say in the matter lower income people who are just trying to get by the major players who are manipulating the market and causing these problems will suffer no consequences and if the great recession is anything to go by they will actually dramatically increase their wealth at the expense of the rest of the population well this all sounds pretty bad what's the solution here how can we avoid another massive economic collapse historically speaking we can't capitalism is built on the maintenance of cycles of boom and bust and they're fairly predictable in their timing these crises are becoming more frequent and more damaging to the average person but also more lucrative for the ruling class and if we know anything about capitalism it's that when the ruling class is benefiting from something it will not change without a massive drawn-out struggle if you're a young person or a person of any age really if you're looking for a home i don't think it would be wise to try to buy one now i know it's easy to say save more money but do what you can to squirrel away a few bucks here and there rent will continue to go up but the chaos surrounding single-family homes can't last forever it's unsustainable even in the fairly short term i think a crash of some sort is likely and hopefully if we can ride out the storm housing prices might come down somewhat afterwards the giant real estate firms will have added many new properties to their portfolio but it's very unlikely that they will have bought them all once supply chains recover from the pandemic construction materials become more available and the home buying frenzy dies down a little bit hopefully there will be some homes available for first-time buyers in the meantime we have some actions we need to take first we need to push back against the media talking points about generational preferences and the benefits of renting they support a predatory exploitative status quo that we should not accept if they want us to rent we need to demand affordable apartment housing with rates that only increase with inflation not at the whims of parasitic landlords we also need to remember that once upon a time owning a home was within reach for just about every american back in the 50s a suburban home only cost two or three times the average salary which meant that not only could people easily afford them they could pay them off in a matter of a few years rather than over the course of three decades like almost everything else under modern capitalism housing has shifted from being seen as a basic necessity to a valuable commodity from which the wealthy can extract massive profits the best thing we can do right now is continue to fight evictions organize tenants unions to build bargaining power against the landlords fight for higher wages across the country and support our neighbors however we can you are an individual but you're also a member of one of two classes either the working class or the capitalist class if you do not own the means by which capital is produced a factory an office building a block of apartments a large company you are a member of the working class and that means your fight is the same as the people at risk of eviction or who make 7.25 an hour or who can't afford their medical bills only by acting in solidarity with your class can you make a significant impact if you do own the means of production if you have wealth at your disposal we need you too we wouldn't have had marks without angles donate to mutual aid funds buy and distribute copies of socialist books use your free time to help in whatever ways you can everyone has a role to play and in the housing crisis or any other fight organizing is key to victory