There is a storm on the horizon. Rootless corporations, major financial institutions, and the federal government are poised to fundamentally change the way Americans live by separating them from property ownership. The peculiar conjunctures of our time are paving a winding road to villeinage, with each turn bringing to clearer view the future of rent-serfdom awaiting most Americans.
As the nation locked down last year, rent protections that continue today sheltered tenants from eviction. Independent of intentionality, these measures kneecapped mom-and-pop landlords—individuals who are more likely to own single units, homes, and duplexes. “The long-term concern here, over the course of a few years, is that a growing share of mom-and-pop landlords will be forced to sell and rents will go up,” Peter Hepburn, an assistant professor of sociology at Rutgers University who researches housing inequality, told Bloomberg News. “There’s a lot of private equity interest and a real possibility of growing consolidation.”
Many smaller landlords report vulture-like solicitations to sell from major real estate firms waiting to swoop down on the carcass. With more than 6 million renter households behind on rent, they feel as if the system is stacked against them, and for good reason.
Accompanying eviction moratoriums last year was the CARES Act. Americans took home stimulus checks, but wealthy hedge fund investors and real estate firms silently reaped billions in tax breaks while mom-and-pop landlords received comparatively little assistance. Among the financial giants that have taken a renewed interest in real estate is BlackRock, the world’s largest money manager.
BlackRock is powerfully connected both in America and abroad. It recently became the first global asset manager licensed to start a wholly-owned onshore mutual fund business in China. Domestically, Chief Executive Larry Fink has raised a shadow government of former Treasury Department officials to insulate BlackRock from regulators.
The firm’s influence is felt everywhere; it has even recently dipped into progressive politics. By using its voting power to compel Walmart, Dick’s Sporting Goods, and Kroger to stop selling or severely restrict the sale of firearms and ammunition, BlackRock has practically enacted a de facto form of gun control. In April, it announced a racial audit to determine how it may have “contributed to racial inequities in the financial system.”
According to the Urban Institute, homeownership is already expected to decline over the next two decades, fueled by higher prices pushing more people toward renting. Now ordinary Americans are increasingly competing for a roof over their heads against the permanent capital of companies such as BlackRock and J.P. Morgan Asset Management, which are buying single-family homes from real estate developers at double what the middle class can afford. Indeed, the country’s largest homebuilders are betting on America becoming a nation of renters, pouring billions into the built-to-rent sector with the backing of banks and private investment firms.
Entire neighborhoods are gobbled up as the stage is set for what John Burns Real Estate Consulting is calling “another speculative investor-driven home price bubble.” The firm estimates one in every five houses sold in many of the nation’s top markets is bought by someone who will never move in—in other words, as a speculative investment, often made by financial firms. Similarly, data from the Redfin real estate brokerage firm show investors bought about one of every seven homes in the first quarter of 2021. There’s even an emergent Silicon-Valley-to-Wall-Street pipeline in which private equity firms work with tech companies to buy homes before the public ever lays eyes on them.
Neoliberal media outlets like Vox have attempted to dispel concerns over Wall Street’s role in financializing homeownership, which is the foundation of the middle class. The solution, they say, is for Americans to get over their bigotry and love of open spaces, and marry mass immigration with mass real estate development, turning American residential areas into stack-and-pack metropolises, home to one billion atomized consumers. Of course, William E. Ford, chief executive of General Atlantic, Vox’s major stakeholder, also happens to be on the board of Blackrock.
Meanwhile, some hail the rise of new forms of “ownership” in fractional ownership models, wherein people would own stock in entities that hold commercial and residential properties in their area. But this is nominal ownership; neighborhood real-estate investment trusts given in exchange for the financialization and further materialization of the body politic.
Others point the finger at the Federal Reserve as the party responsible for these trends. Capital, they say, is merely capitalizing on cheap mortgage financing. But this misses a salient point: institutions like BlackRock and the Fed are joined at the hip.
As the markets strained amid the pandemic last year, Chair of the Federal Reserve Jerome Powell and Treasury Secretary Steven Mnuchin were in close contact with Fink at BlackRock. In March, Mnuchin held scores of calls on the eve of the Fed’s unveiling of a policy package featuring its first ever program to buy corporate bonds, according to reporting by The New York Times. BlackRock was selected to purchase agency commercial mortgage-backed securities secured by multifamily-home mortgages on behalf of the Fed. In other words, a private firm was charged with implementing the government’s pandemic response.
By January 2021, the Biden administration had selected several BlackRock alumni for posts: Brian Deese, Adewale “Wally” Adeyemo, and Michael Pyle. Deese previously served as BlackRock’s global head of sustainable investing and was chosen to head the National Economic Council. Adeyemo, Fink’s former interim chief of staff, was named Janet Yellen’s top deputy at the Treasury Department. Pyle, BlackRock’s global chief investment strategist and an Obama administration veteran, joined as chief economic advistor to Vice President Kamala Harris. Deese played a part in dismantling the American automotive industry, while Pyle served as BlackRock’s media mouthpiece.
In the background of this, the Biden administration declared war on the suburbs, setting its sights on single-family zoning. Its killing machine is the Department of Housing and Urban Development.
The first shot was fired with the reinstating of an Obama-era fair housing rule temporarily undone under former President Donald Trump. Its purpose is to enforce the 1968 Fair Housing Act, which had already undermined constitutional property protections. The new rule to “affirmatively further fair housing” gives it lethal teeth.
Euphemistically put by HUD Secretary Marcia L. Fudge, the rule “will require every local government that accepts federal housing dollars to make concrete and meaningful commitments toward affirmatively furthering fair housing.” Plainly put, communities that don’t comply with the racial equity agenda by refusing to allow high-rise apartments, low-income housing, and high-density zoning in their neighborhoods will lose billions in federal funding. Under this thinking, a safe, clean community is a symptom of the disease of “structural racism”; blighting it with the squalor and anomie of the city is the cure.
“A house with a white picket fence and a big backyard for a Fourth of July barbecue may be a staple of the American dream,” explains a sympathetic USA Today reporter, “but experts and local politicians say multifamily zoning is key to combating climate change, racial injustice and the nation’s growing affordable housing crisis.”
Resistance is not only futile—it is “racist,” and HUD will financially strangle communities that resist their dispossession.
The “why” for Democrats is obvious. They win elections in cities, especially in big cities. This is the iron law of politics for our time. Bringing the city to where you live means increasing their electoral power. The annihilation of single-family zoning would also provide a boon for corporations and investment firms that are now in the business of buying up neighborhoods and consolidating properties into rentals. Areas traditionally zoned for single-family housing would, luckily for Wall Street, be invaded by apartment buildings and multifamily units. “While investors have been buying more single-family homes during the pandemic, they still have the biggest market share in the multifamily sector,” according to Redfin.
The Romans, Machiavelli noted, saw problems from afar, and these trends have coalesced to form brooding storm clouds on the horizon. Cynics, ideologues, and capital are forming a front, aided by the zeitgeist and farce of anti-racism. Yet few sound the alarm, and fewer still have a response apart from downplaying or even celebrating our becoming a nation of renters.