Tag Archives: Rental housing

Double Whammy on the Desperate in Ontario

ACORN Canada Board Meeting

Hamilton         The ACORN Canada board and annual general meeting was in full force before the biennial convention was scheduled to begin in Hamilton, Ontario. Hamilton is a former steel-making, industrial city along Lake Ontario, roughly midway between Toronto, the queen city of Canada, and Buffalo, New York.  Hamilton is having a revival of sorts, but that has also meant more pressure on affordable housing for low-and-moderate income families in the city.  It wasn’t long in the leadership meeting before these issues came front and center in the conversation.

Lower income families are caught in a double bind on housing between rapacious landlords trying to take advantage of galloping gentrification and new anti-poor policies of the conservative government in the province led by Doug Ford, something of a Trump-wannabe.  In Ontario clawbacks are still king, unlike British Columbia where ACORN led a victorious campaign to stop “clawbacks,” which are forced deductions in welfare-related payments to offset any income received by recipients of aid.

We’re not talking big money, but it’s critical for family support.  In Ontario, a single person on welfare receives $656 monthly; a single person with one child, $941; and a couple with two children, $1,173. A single person on ODSP or Ontario Disability Support Program receives $1,098 monthly; a single person with one child, $1,515; and a couple with two children, $1,791.  Getting a little bit extra in some month would be a godsend, and certainly if the policy were designed to support independence, rather than acting punitively towards the lower income, it would be seen as a godsend.

Landlords in Hamilton, like one of the largest in the downtown area, Malleum, with whom ACORN has been campaigning, specialize in evicting renters or renovictions, claims that apartment units are being renovated in order to remove tenants.   One of the main tactics in renovictions has been to offer tenants a couple of hundred dollars in moving or relocation money by making the case that they are going to be evicted anyway, so they might as well take the money to move because of the extra expense.

The Hamilton ACORN leaders told the story of one of their members, named Elizabeth, who had agreed with Malleum to relocate and find another place, and accepted the money to pay for the move.  She duly reported her changing address and the moving payment to the welfare.  The day she moved she went to collect her check and found that it was zero.  The province had clawed back every cent claiming that the moving money was actual income, leaving her with nothing but the double whammy of extra expenses for moving and relocation and no income support for the month.  Outrageous!

The leaders bounced around various ideas to stop this two-pronged attack on lower income families.  Could they block this at the Hamilton level, since it was unlikely that they could win at the provincial level?  Could they get a credit union to create an account or have some other third party, take the payments when negotiated fairly rather than used to facilitate evictions, so that the money would not count as income?

One-minute leaders were talking about policies like rent control, landlord licensing, inclusionary zoning, and other anti-gentrification measures to protect tenants, but the next minute they were dealing with the real-world immorality and family crises fomented by existing policies with little purpose other than to punish.

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Corporate Ownership is Squeezing Rents in Some Cities

Source: the Coalition for Affordable Housing Protestors in front of Blackstone Group’s office in Santa Monica

Milwaukee       Looking city to city, part of what is driving rents up to record highs and exacerbating the affordable housing crisis is the critical intrusion of large corporate ownership of single-family homes in some markets in addition to larger developments where they have always been a factor.  The ACORN Home Savers Campaign has monitored this development in Memphis and Atlanta, but a recent piece in Bloomberg by Noah Smith confirms our deepest concerns.

The backstory here is the one we all know well.  The housing meltdown in 2007-2008 as part of the Great Recession led to millions of foreclosures of single-family homes.  The rate of homeownership in the United States plunged from a record 69% before the crash to as low as 63% in 2016-2017.  Fannie Mae and Freddie Mac dumped these homes in auctions.  Some of these tranches were acquired by bottom feeders who wanted to off load them with various predatory contract for deed or rent-to-own schemes that have been the primary target of the ACORN Home Savers Campaign.  In other cases, big private equity and corporate players bought the homes, perhaps originally hoping to flip them, but later coming to the conclusion that with minor repairs and upgrades they could milk them as cash cows for significant returns.  Furthermore, in some markets where they were able to achieve density, despite still being a relatively small player in the overall US housing market, they could trigger significant rent increases in entire neighborhoods.

As the Amherst Capital chart in Bloomberg shows, we are talking about some big boy operators here starting with Blackstone, which is huge in Memphis for example, and including the notorious Cerberus among others like Tricon.  Furthermore, the buying frenzy in this part of the market is increasing with researchers finding almost 9% of the rental housing market now under corporate control, even though the biggest dogs have less than 1% they are consolidating.  Frighteningly, reports indicate that they have also begun to securitize these rent-bearing properties for investors which triggers a cycle that bears no good tidings for renters, affordability, or the cities where they are concentrating, particularly in the Sun Belt.

If you think I’m Cassandra here, then wrap your minds around Smith’s warning signals in Bloomberg that corporate control…

could contribute to the rent crisis now afflicting many of the nation’s big cities. Wall Street landlords may also compromise quality. Their local dominance may afford them the luxury of simply ignoring tenants’ needs, especially in cities without strong protections for renters.  But the most troubling impact could be on the American Dream of homeownership. Increasingly, young Americans looking to buy houses will be competing with big corporate landlords. There are a number of reasons that competition will not favor the aspiring homeowner. Big landlords have cheap financing at their disposal — securitized bonds, REIT share sales — while individuals have to rely on mortgages. Big landlords may also value a house more, due to the high rents that their local market power lets them to squeeze out of tenants.  Most Americans tend to have the bulk of their wealth in their houses. If fewer young Americans are able to buy homes, they’ll miss out on house price appreciation, and the gains will go to corporate shareholders, who tend to be rich people. Thus, the rise of the Wall Street landlord model may put a damper on U.S. middle-class wealth accumulation.

For tenants and potential homeowners, none of this is good news, and I would argue with Smith that these developments pose real national dangers.

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