Billionaires Fueling Housing Crisis, New Report Reveals!

A newly released report on Monday quantifies what many Americans have long suspected,” stated advocates for economic justice who conducted the study: “The daily challenge of affording housing is exacerbated by the overwhelming influence billionaires exert on the market.”

The Institute for Policy Studies (IPS) collaborated with Popular Democracy to produce a detailed 71-page document namedBillionaire Blowback on Housing. This investigation aims to address the mounting concerns about Wall Street’s role, as voiced by Democratic vice presidential candidate and Minnesota Governor Tim Walz earlier this month, in “purchasing homes and driving up prices.”

The study reveals that a limited group of affluent individuals and their investment branches, managing “enormous wealth pools,” have invested significantly in “predatory investment and parking wealth in luxury housing,” heavily contributing to the issues of soaring rents, unattainable homeownership, and homelessness.

According to the document, billionaires are “intensifying existing problems” within the housing sector.

The authors challenge conventional notions about the causes of the housing crisis, marked by a record-high homeless population in 2023 with over 653,000 people without homes; half of the tenants spending more than 30% of their income on rent, thus burdened by costs; and a drastically increased gap between the income necessary to afford a house and the actual house prices.

“The real estate sector would have you believe that the crisis is purely a supply and demand issue,” the report states, suggesting that regulatory changes are needed to allow more affordable housing construction. However, with 16 million vacant homes in the U.S.—28 for every person without a home—the truth is “the owners of concentrated wealth… are having a more noticeable impact on residential housing, leading to price inflation, market distortions, and inefficiencies.”

Highlighting the U.S. real estate market’s “new role as a global tax haven,” the number of empty homes in certain areas surpasses the number of homeless people partly because affluent investors are buying properties and intentionally leaving them empty, according to findings by IPS and Popular Democracy.

“The truth is that the owners of concentrated wealth… are having a more noticeable impact on residential housing, leading to price inflation, market distortions, and inefficiencies.”

For instance, in 2017, Los Angeles had over 93,500 vacant units and roughly 36,000 homeless individuals, with vacancies serving as “a structural characteristic of the market thanks to a small class of wealthy investors engaging in speculative financial activities.”

Billionaires and their investment companies, such as Blackstone—now the world’s largest corporate landlord—are also “exploiting the tight low-income rental market, the shortage of publicly funded affordable housing, displacement following the foreclosure crisis, and barriers to homeownership to venture into renting single-family and multifamily homes, and purchasing mobile home parks,” the report notes.

In a section of North Minneapolis, private equity firms like Pretium Partners “acquired blocks of single-family rental homes, imposed additional fees on rent, and then neglected property maintenance and care.”

Blackstone now possesses 300,000 residential units across the U.S. and nearly doubled its portfolio in 2021. With $1 trillion in assets, it controls 63,000 single-family homes, 149,000 apartment units, and 70 mobile home parks.

The corporate ownership of rental housing “has failed to provide stability, especially for working-class households and communities of color,” according to the report. “Corporate landlords have focused their predatory investment tactics—property flipping, rent gouging, habitability violations, and evictions—in lower-income communities of color.”

Chuck Collins, co-author of the report and director of the Program on Inequality and the Common Good at IPS, stated that the billionaire class and its private equity firms have “severely disrupted” the housing market.

“This is not your grandparent’s gentrification but a hyper-gentrification driven by concentrated wealth inflating land and housing costs, expanding short-term rentals, and treating housing as a commodity for speculation or wealth storage,” Collins explained. “The billionaires are displacing the millionaires, and the millionaires are unsettling the housing market for everyone else.”

The report urges policymakers to broaden social housing—housing developed by the government or nonprofit entities to ensure housing as a human right that cannot be sold for profit.

Funding for social housing could come from imposing mansion taxes, regulating predatory real estate practices, and taxing billionaires.

Local communities can also protect residents and generate funds for affordable housing through measures including:

• Implementing “Housing First” programs to rapidly provide permanently affordable housing to the homeless and end the criminalization of homelessness;
• Restricting corporate ownership of housing and enacting laws for ownership transparency so corporations can no longer covertly buy up neighborhoods;
• Enacting ordinances that give apartment and mobile home tenants the “first option to buy” when their communities are put up for sale;
• Prohibiting owners from keeping units vacant for extended periods; and
• Establishing local Offices of Social Housing and Social Housing Development Authorities to serve as supportive infrastructure, incorporating the input of tenant unions, organizations for the homeless, and other affected community members.

“Billionaires view housing as a means to enhance their profits, rather than a basic necessity for survival. This current system doesn’t serve our communities,” said Analilia Mejia and DaMareo Cooper, co-executive directors for Popular Democracy. “We need to improve. That begins with redefining our systems to prioritize the needs and wishes of working families over billionaire investments and speculation. We must protect renters’ rights and significantly increase the availability of permanently and truly affordable quality housing.”