Diana Reddy
California now has the highest poverty rate in the country thanks to the cost of housing. Since 2005, more than 2.5 million Californians have been forced to leave the state in search of a home they can afford.
The facts are clear: Unaffordable housing is driving inequality to extremes across California. Unless there is a drastic change in how we respond to this crisis, it will eventually erode the social and economic fabric of the Bay Area and the entire state beyond repair.
Unfortunately, our elected officials still seem paralyzed, unable to act decisively or do more than offer warmed over market-based solutions that continue to treat housing like any other commodity. At the state level, prevailing supply and demand myths — captured in the “build baby build” mantra — are diverting state government from the hard truth that the market has not responded to the demand of Californian families for affordable homes — not market-rate and luxury homes.
We are told a big lie: that the solution to our housing crisis is to get government out of the way and leave it to the free market. If this strategy worked, places like Las Vegas and Houston, both lightly regulated markets, would be national leaders in housing all of their residents in decent, affordable homes. Instead, both cities have severe shortages of housing affordable to working families and rampant homelessness.
Developers build to make a profit and landlords buy units for the same reason. They are looking for good investments that generate the highest return, not for how to best provide a vital and basic social need. Why do our elected officials continue to cater to them by opposing tenant protections and refusing to require that new housing developments contain affordable units that reflect local need? Is it now the role of our representatives to prioritize private sector investors over their struggling constituents?
The signals being sent by our political leaders are being heard loud and clear on Wall Street, where a new rental empire is emerging. In recent years, foreclosed homes have been snapped up in bulk by real estate speculators and corporate landlords who turn them into rentals — thus killing the American dream for thousands by taking homes off of the homeownership market. One of the biggest owners of single-family home rentals in California are no longer mom-and-pop landlords but mega Wall Street corporations like Blackstone and Colony Starwood. Instead of predatory mortgages, we’re now seeing predatory rentals.
These new speculators in the rental market not only take advantage of the very foreclosure crisis they created, but also exploit the lack of renter protections across the state. In particular they benefit from the Costa Hawkins Rental Housing Act, passed in 1996 after a decade of lobbying by the real estate and landlord industries. Among the act’s many restrictions on tenant protections is a ban on rent control for single-family homes, allowing speculators in 2017 to turn foreclosed single-family homes into prime investment vehicles through charging exorbitant rents.
Take the Fetuu family in East Palo Alto, for example, who once owned the single-family home for 13 years that they now rent. In 2011, they were forced to sell the house to Working Dirt LLC after a predatory loan left their mortgage underwater and were subsequently given a $1,050 rent increase. Although East Palo Alto limits rent increases for tenants in multi-unit buildings, under the statewide Costa-Hawkins Act, families like the Fetuus have no protection from egregious rent increases because they rent a single-family home.
This is why families in cities across the state, which have been organizing locally for rent control, tenant protections and affordable housing, are uniting across the state to repeal Costa-Hawkins and expand state support for affordable housing. This movement extends far past the usual suspects: from grassroots volunteer groups to mom-and-pop landlords, to highly coordinated labor unions and community organizations. This broad base of organizations and activists have launched a new statewide coalition called Housing Now, made up of people that don’t have the luxury of waiting to see if the market will do what it has never done before. No more “supply and demand” as usual, we need Housing Now!
Diana Reddy is a veteran leader for Faith in Action, Bay Area (formerly Peninsula Interfaith Action), a federation of Christian and non-Christian congregations in San Francisco, San Mateo and Santa Clara counties, focused on social justice issues, including housing, immigration, education, health care and public safety. Go to housingnowca.org to learn more.
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(14) comments
It appears that Ms. Reddy's only remedy to the housing crisis in California is rent control and the government seizure of a private asset. Going after private assets of people in our community is a loser. As I and many other folks fought both San Mateo and Burlingame from initiating rent control, we realized we are quite a force. We are stronger and smarter and will fight tooth and nail against Ms.Reddy and her organization Faith in Action. We won in Burlingame and San Mateo and we will win again. Ms. Reddy must realize she will have one big fight on her hands if she tries rent control or repeal of Costa-Hawkins once again. Ms. Reddy will come against a formidable foe who can fight just as hard to prevent the seizure of our private assets.
All the commenters here so far have reacted without even considering Ms Reddy’s arguments that the free market does not work for everyone... It’s capitalism versus socialism. It’s people with 10 kids who can’t budget their money. It’s seizing private assets. (Thank you, Dan for at least acknowledging that predatory behavior by investors and lenders is contributing to the problem.)
Everyone would prefer solutions that don’t limit people’s ability to work hard and get ahead. But stop blaming it all on government regulation when many of the limitations are imposed by the free market not the government. And government is all too often supportive of the same policies. In an ideal world, there would be no need for rent control. In small town America when I was growing up, and there were no socialists to be found. What there was and a sense of fairness, a lack of the kind of overwhelming greed that consumes us today. Anyone forcing people out of their homes just to maximize profits would have rightly been considered a pariah.
No, we are not in Kansas anymore, Dorothy, but a greed-driven approach to providing housing lessens our worth as humans and ultimately hurts the nay-sayers as well as the people who are displaced. If you don’t want rent control and government intervention in the marketplace quit puffing yourself up about how big and tough and smart you are and support solutions to our housing dilemma that consider our common humanity and offer some new alternatives. Let’s hear your ideas.
And if your answer is that government is already doing enough to create more housing for people at all income levels show us the stats that support it.
I don’t always agree with her about everything, but my hat is off to Diana Reddy for caring enough to devote her energies to building a better society and not just maximizing her own net worth.
do you have any solutions that don't involve either a tax on the community or a seizure of private property Lee? If so let's talk.
She may be right on some things, but wrong for sure on many. If someone lacks enough intelligence to manage their money, then they are gonna loose in every situation almost always, no matter what it is. Sorry. Having, say, 8-10 children, doesn't help your finances. This ain't the islands. Gov't only screws things up, like my condo's Board of Directors in San Bruno. Regulation is not the end all for most things! The more you subsidize any "product" being it housing or food, only causes the net cost to increase for everyone else, no matter what their meager means(like me). I do agree that these huge companies are predatory in their rents that the darn city and county supervisors agree to. Archstone etc, charge exorbitant rents and thus profit hugely and unjustly in my opinion. Don't allow these companies to build rentals, only private ownership should be allowed.
Most folks would agree that there is a housing problem in California and in fact, it's not unique to California alone. Clearly though we disagree about the best solutions to the problem. Ms. Reddy actually alienates people with her group's socialist rhetoric and one sided 'solutions', all the while offering little to no constructive alternatives to the problem...Further, she ignores all of the money that has been spent trying to solve the affordable housing issue....such as the recent County of San Mateo decision by the Board of Supervisors to allocate nearly $44 million in Measure K dollars toward affordable housing programs in San Mateo County over the next two years....or the billions that have gone into affordable housing....from one State agency, the California Housing Partnership Website...The State of Calif has produced $13 Billion IN PUBLIC AND PRIVATE FINANCING LEVERAGED for affordable housing ...15,000 PEOPLE TRAINED....65,000 AFFORDABLE HOMES CREATED AND/OR PRESERVED...all of that done in the capitalist system that the socialist justice warriors rail against...also Ms. Reddy should watch out for her group's credibility when making tenuous claims such as...SAN MATEO COUNTY RENTERS NEED TO EARN $11,667 A MONTH TO AFFORD MEDIAN ASKING RENTS...
"...the solution to our housing crisis is to get government out of the way..." How about we just get government to TRULY represent US and NOT the almighty dollar????
"Unless there is a drastic change in how we respond to this crisis, it will eventually erode the social and economic fabric of the Bay Area and the entire state beyond repair." I hope she means drastic change to what is happening RIGHT now via Plan Bay Area. This is the Plan exacerbating everything (the more they build, the higher the rents,) she is discussing here, and OUR LEADERS KEEP PUSHING IT FORWARD while YOU fund the fallout.
WRITE YOUR FEDERAL, STATE & LOCAL POLITICIANS IF YOU ARE FED UP.
"Since 2005, more than 2.5 million Californians have been forced to leave the state in search of a home they can afford." If people can't afford to live here, they "should" go someplace where they can afford to live. Ms. Reddy mentions Las Vegas. There is plenty of affordable housing there. Not much socialism, either.
Add government regulations and rent control and the builders will stop building. Then there will really be a bigger housing shortage. Take the money from those who create wealth, and they will stop creating it.
This pseudo-theory is contrary to what the best economic science. I mean, the efficient markets hypothesis has been dead for a century--even longer if you go back to Adam Smith. But you have every right to go on believing it nonetheless.
Also, you totally miss Reddy's point about Las Vegas. As Reddy points out, Las Vegas is an example of "government getting out of the way." And yet Las Vegas still lacks affordable housing.
Diana Reddy is right. She has been one of "the boots on the ground" in housing and her viewpoint is unobstructed, unbiased and indeniable.
No fancy catch phrases here or theories whose time has run out to prove reliable.
It's time we listen to truth; truth that is verifiable and quite starkly already verified.
No more "high falootin" chatter, replete with false premises and leading to the social fragmentation that we witness everyday!
Instead, housing now!
JA, the efficient market hypothesis is alive and well in modern portfolio theory. That theory which in essence drives much of the returns in investing is a cornerstone of practice and theory in modern day investing. After all, income property is an investment and its rate of return is based on the rents and desirability of location.
It is abhorrent that carpet baggers such as these housing activists truly are, wish to strip property owners of their rights which are bestowed under the Fifth Amendment. Let the advocates and you put up risk based capital to fund their cause but keep law abiding citizens who have invested their hard earned savings out of your quest to destroy their retirement under what amounts to redistribution of income ergo socialism. How's Venezuela doing these days?
THE BIG LIE is squarely at the feet of Diana Reddy in her assessment of CA. Here are the real stats on growth with over 6% of the population being in the state illegally. There is no evidence given that the 2.5 million people who migrated out of state is due to housing. But it is a convenient data point for this socialist to state with zero backup!
http://worldpopulationreview.com/states/california-population/
Let's look at some facts about that 2.5 million which really doesn't mean all that have migrated out of California is due to housing ( a big lie). Our current estimate for California's population is nearly 39.5 million. At the last official United States census carried out in 2010, the population of California was declared at 37,253,956 which made the state the most populous in the country.
However, the vast area that California encompasses means that in terms of population density, with 251.3 people for every square mile, it ranks only 11th in the nation.
It is currently the 17th fastest growing state with a yearly growth rate of .90%.
Influences of California Population
California has a healthy natural growth rate and the gap between the birth rate and death rate is quite significant. Between 2000 and 2009, 5,058,440 births and 2,179,958 deaths resulted in a natural growth of 3,090,016.
Another significant factor is immigration: California had huge appeal in the days of the Gold Rush and that fact holds true today. Between those years of 2000 and 2009, the state enjoyed a net migration gain of 306,925 people. It’s also been estimated that up to approximately 6.3% of California’s population is made up of illegal aliens.
Putting population in perspective
The end result when taking all these figures into account is a population that is simply huge. Based on current estimates, California is larger than all but 34 countries in the world. It is also the second most populous national sub-entity, behind only Sao Paulo of Brazil
>> No more “supply and demand” as usual, we need Housing Now!
Diana, you really cannot ignore economics just like that. Exclamation marks do not get you very far. Let's use some reasoning.
Prop. 10 is not just rent control, it’s an extreme form of rent control.
By repealing Costa-Hawkins, the proponents of this proposition seek three things:
1. The ability to subject any new construction to immediate rent control – thus discouraging new housing projects;
2. The ability to impose rent control on single family homes – thus discouraging temporarily relocated people or seniors who seek to downsize from renting out their homes; and
3. The ability to impose perpetual rent control even when an existing tenant moves out – thus discouraging repair and renovation.
To sum up – the proponents of Prop. 10 seek to solve the housing problem by destroying the housing market. This blunt, blind, and economically suicidal approach will hurt tenants and property owners alike.
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