From the Tuesday July 9 USA Today Money Section: “Big investors have poured more than $10 billion into the single family home rental market in recent years… The biggest, the Blackstone Group, has bought 29,000 homes in 13 markets, 25,000 of them in the past year.” Of the top 10 cities with the highest institutional investor purchases of rental housing three are in my state of Florida (Lakeland with 29%, Miami with 22% and Orlando with 19%). So, as the subprime and “I flip, you flip” bubble bursts, the sharks move in to become like their counterparts from hundreds of years earlier: Land lords! Didn’t you all know where that term came from? Search your history books and learn how a feudal society looked way back when. You had the barons and other gentry owning these vast estates of land. They then rented some of the farm land out to their tenants, or Serfs. The serf worked the land and either gave part of his crop back to the Lord of the manor, or simply paid him his rent in cash. Of course, most of the serfs merely worked for the barons and rich gentry, in their mines or factories…. Or as servants in their mansions.
Go and get the 1993 Claude Berri film Germinal, based on the novel by Emile Zola. It captures the essence of life as a serf, renting housing and working the mines owned by the baron of the manor. The film reveals the labor injustices when one lives in a feudal market with no union to protect him or her. This is the type of society our dear America has been drifting back into these 30 years or so. The weakness of the labor movement goes hand in hand with the rise of residential rental properties. You see, it really is common sense: The less you earn or have in savings, the less likely you will own your place of residence. Or, in another way of looking at things, the more you must pay out of pocket for your health care, the less you can afford to own and maintain your own housing. Isn’t that what feudalism was all about?
So, there you have it. When less than 10% of private sector workers are unionized, and the ones that are have unions that suck up to the boss, the door is opened for a feudal-like society. When more and more of you and your kin folk work part-time jobs so the corporation can save on benefits etc… you get my drift don’t you? The low income slum neighborhoods that we all drive past from time to time (as we keep our car doors locked and windows closed) are slowly becoming the poster child for the rest of us. This writer lived in corporate owned rental housing when we moved to Indianapolis in the mid 90s. We shopped around and found this beautifully adorned housing complex. Their model apartment was something out of some Norman Rockwell scene. They even had two racquetball courts at the clubhouse and a little mini gym! So, we signed a one year lease in late November. The week before Christmas, my wife was at the kitchen sink preparing dinner, and suddenly the entire faucet just popped off shooting water all about! At about the same time, there was this tremendous Midwestern storm hitting us. As if in a Woody Allen movie, the ceilings in our living room and master bedroom just rained down water… so powerful that we needed to lay pots on the floor to catch it. Bottom line to this story: We realized later on that the Chicago Corporation which had recently purchased this complex two years earlier did absolutely no structural repairs — only lots and lots of fresh coats of paint throughout.
What we need in this country, and in every nation for that matter, is no such thing as absentee landlords. The American dream was a great idea when families would buy a two family home and rent out one apartment to help with the mortgage. That is not what I am talking about. You know what I mean, don’t you? My wife and I, before we made the move to Indianapolis, lived in an absentee landlord house on Long Island, NY. The landlord owned 19 such houses, and he would do as little as necessary to upkeep them. We shared this old house (originally built as a one family) with an elderly couple living downstairs. The stairway to our apartment had no banister, so my Mom could not make it up the stairs to visit us. The refrigerator had arthritis, it was so old. The bathroom had tiles on the side of the tub that were falling into it… and we were paying top dollar for this place. No lease was asked for, because the landlord knew that he could rent this place within a day for two of advertising it, such was the market for rentals on Long Island at that time (probably worse now). When the first winter blizzard came, the landlord expected me to shovel the walk and steps. I called him up and told him I had a bad back and would not do so. Silence on the other end. So I added, “Well John, you must know the law and the codes better than I do. I guess if my wife or myself, or anyone walking by in that one foot of snow outside your house, happens to fall and get hurt, you will be legally liable.” His son came by within one hour with their snow blower.
We need to look at better and more viable ways to house our citizens. Why not have local towns and cities buy up the rental properties and charge the tenants a fairer price? On top of that and this is key, have the local governments that would own the rental properties offer the tenants a deal: “We will put aside a nice portion of your rent toward a down payment for you to own this place in the near future.” Do you think that the tenant might very well take better care of that place? Do you think that without a profit being made on all rental properties, that the charges would be considerably less? You want real economic stimulus? Multiply the millions of Americans who now rent housing by the 30 to 40 percent they each will save every month when profit is taken out of the equation. A family that now pays an absentee landlord $1000 a month for a small home will most likely only have to pay $600 or $700; that’s an extra few hundred dollars monthly added to their bank accounts.
Call me a socialist, or even a commie radical. Bottom line: the only sharks I wish to see are those in the aquarium.