Affordable Housing Crisis Growing Globally

(Reuters/J. Herrmann)
“Commerce alley” and “hawked for $28 million” by property giants: Berlin’s rising rents have many very afraid of affording their rent or losing their homes

Chicago    When affordable housing is in the headlines, it’s a safe bet that it is not prompted by a concern for low-and-moderate income families, but maybe we can take a lemon and make it lemonade, as activists are doing in many cities.

Here’s the context.

  • According to Knight Frank, a London-based real-estate consultancy reported in the Wall Street Journal: “Across 32 major cities around the world, real home prices on average grew 24% over the past five years, while average real income grew by only 8% over the same period.”  Reading between the lines, when home ownership becomes an affordability crisis for middle- and upper-income families, then “Katie bar the door!”
  • Despite governments in Canada and Australia adding taxes aimed at second-home and transient investors, affordability is still out of control. In Sydney, Australia the average price for a home is 12 times the median income for middle-class families.
  • Rent control is gaining ground as families come to terms with elusive home ownership dreams. There are drives in California, Berlin, and London for example and the Swedish election turned on deregulating rents.  Spain’s government recently capped apartment rent increases as well.

Berlin, Germany, might be the sharp point of the spear.  There tenant advocates are collecting signatures for a ballot proposal that would force the city to expropriate all private, for profit landlords that own more than 3000 apartments.  According to reports, the Berlin mayor has also proposed buying around 50,000 apartments from private owners and his party wants to freeze rents over the next five years.  Germany has a unique system of contracting with private landlords to provide housing for lower income families on extensive multi-year contracts rather than building more public housing as sort of a different twist on Section 8 housing subsidies in the United States.  Nonetheless, taking such units over totally would be huge.  Large landlord combines, as we found in Frankfurt several months ago, are often beneficiaries of so-called public-private partnerships which contract with these rental conglomerates in Germany to build and then manage the units making their size and operations increasing controversial.

The lack of a national housing program or much of a local one complicates the response in the United States.  An easily observed irony that is depleting the construction of affordable housing in many cities is the double standard allowed for AirBnb in commercial rental complexes as opposed to neighborhoods, making some condo and luxury apartment construction projects mini-hotels when they are not able to price their units to sell on the market, the AirBnb loopholes balance their books and fuel more of the same faux market-rate development.  This is easily observed in New Orleans and many other cities.

Meanwhile in Germany the effort to collect 170,000 signatures is ongoing.  The ballot initiative would not be binding, but would state public interest clearly, and that is worrying builders and others.  Perhaps this is the kind of message we need to send everywhere in order to finally force some real attention to the issue and programs that deliver mass solutions for affordable and decent housing.

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Good News for Mexican Workers on the Other Side of the Wall

Striking workers

New Orleans    How about some good news for a change?  Yes, I’m with you.  I found some in a surprising place on the other side of the proposed wall between Mexico and the Untied States and in all places in Matamoros, right across the river from Brownsville, Texas.

If you’ve ever been to Matamoros, you already know that they are desperate for some good news down there on the other side of the Rio Grande Valley.  The city has a special place for me because a million years ago it offered my first experiences in that great country.  I was driving down there in one of my old junkers with a dog and a tent curious about the valley and came across the bridge from Brownsville for several hours into another world.  More recently in another century, we drove through the city after Katrina headed toward the central high plains of Mexico, but I’m still shocked to read that Brownsville reportedly has 500,000 residents now.

What doesn’t shock me is the fact that a key driver of the city’s economy is its proximity to the United States and the maquila plants that fabricate all manner of things for export back to the US.  It almost goes without saying, but I’ll be Mr. Obvious, that the attraction for foreign manufactures is cheap labor.  The good news though is that something is being done about all of this partly due to the election of the left leaning new president, universally called AMLO, Andrés Manuel López Obrador, who has created the climate for more worker justice and fair labor laws.  He has proposed raising the minimum wage national by 16% to around $5,30 a day and on the border to $9.20 a day.  Maquiladoras earn about $2.40 per hour compared to US manufacturing workers make more than $20 per hour by comparison.

Mostly though it has to do with a wave of strikes by over 55,000 maquiladoras in the 115 plants around Matamoras demanding 20/32:  a 20% wage increase and a one-time bonus of 32,000 pesos or $1655.   This has become a movement and according to many including Susana Prieto, a lawyer and one of the strike’s primary backers and organizers, 85 companies have settled while five are still on strike, including Coca-Cola.  Prieto, an advocate of an independent labor movement given the past record of the traditional, party-connected union federation, is hoping to push the movement to expand to other border cities, including Juarez where she has practiced labor law and led successful strikes in recent years.

According to the Wall Street Journal these strikes are spreading.   Walmart, the largest private sector employer and a determinedly anti-union force globally, recently “reached an agreement with a union representing some 6,500 workers to grant a 5.5% wage rise and a productivity bonus, the company said. Workers had recently demanded a 20% rise among other benefits.”

Let’s hope this movement comes north!

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