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There have been too many conservative articles here lately and it’s time for a change. Right-wingers love slogans like “The Market Knows Best,” “Let Capitalism Reign,” Deregulate to Elevate,” and more. But what if unbridled capitalism is not always the way? Nowhere do we see this more than in the affordable housing crisis overtaking much of America. This isn’t a knock on capitalism itself as capitalism brought America to great heights but this is a knock on Hyper-capitalism. The following are a few ways this hyper-capitalism is creating an affordable housing crisis and some solutions to the affordable housing crisis.
Speculation by Hedge Funds
Housing prices have soared to astronomical values since COVID-19 emerged in 2020. Even in Boston where I was based until recently, housing has increased by approximately thirty percent since 2020. That is not even the worst of it. Look at Florida, Texas, and North Carolina, and you’ll see price increases of forty to fifty percent in the last few years.
While many factors contribute to this rise in home prices, speculation and investment by hedge funds are a large reason for this astronomical increase, particularly in the sunbelt states and Southeast. In some areas of Orlando, Tampa and Jacksonville, institutional investors account for around thirty percent of new home purchases. How can the average person compete with deep-pocketed hedge funds? Austin and Dallas have seen thousands of homes purchased by institutional investors.
By allowing unbridled capitalism, we are pushing the American dream further from each passing generation. Their goal is for us all to become corporate cogs in their machine where the sole focus is profits over people.
We will go to our corporate job to work ourselves to death for a soulless corporation, rent in our corporate-owned house, and then in a dystopian future die a corporate death when we are no longer of any use to society.
The Republicans may have no problems with this future but I do. Kamala Harris has advocated for solutions to the affordable housing crisis. She wants to curb excessive purchases by hedge funds and investors in areas of the country where prices are rapidly rising. I know all of this is scary talk to conservatives but it is the only way to preserve the American dream for future generations.
Capitalism unchecked is a system that can play to people’s worst impulses. Ruthless corporate raiders are coming from the boardroom into your family living room.
Housing has turned into being treated as a commodity rather than a basic human right. Yes, some will argue, “Well, why do you have the right to live in a particular neighborhood? If you cannot afford a certain area, move to one where you can afford it.”
This view is rather short-sighted. If you make it impossible for people to live in a given area where do you expect your teachers, nurses, janitors, waiters, etc, to live to service your needs? They will only be willing to commute so far for a minimum-wage paying job. You’ll end up with places that only consist of the very wealthy who can afford it and the very poor who subsist on government housing and benefits. The lower to middle class will be completely priced out of large swathes of the country.
The Necessity of Government Regulation
Homes are being bought to maximize profit rather than providing housing for people. We need to get back to providing the basic needs for the American people. It may involve the government regulating certain abuses by major corporations, but overall, society will be better off for it. Housing prices soaring thus making it difficult for lower to middle-income individuals to afford housing is a society that benefits no one.
The Americana idealized in paintings and postcards with that sense of community disappears when homes become investment vehicles rather than places to live. Capitalism unchecked is a system that can play to people’s worst impulses. Ruthless corporate raiders are coming from the boardroom into your family living room.
One easy fix that can be implemented to limit the impact of hedge funds in certain areas of the country is to limit bulk purchases. Regulations can restrict or limit the number of single-family homes that institutional investors can buy in a given area. This will keep them from dominating a local market and inflating the prices for lower to middle-income buyers. Immediately putting a dent in the major markets that hedge funds are buying into by limiting their purchasing power.
When hedge funds buy up these houses and turn the community into a community of renters with a near monopoly on housing they can jack up the rental prices. So you now have people who cannot afford to buy a house and can also barely afford to rent a home.
These major institutional investors are resetting the rental market rates by buying up whole neighborhoods. If previously the rents were one thousand dollars now with their monopoly they are resetting it to two thousand dollars. This type of behavior must be stopped and since they will clearly not limit themselves the only answer is effective government regulation.
They will even hurt established homeowners in these communities. Hedge funds are only in the business of making money, and if there is an economic downturn, they will dump these houses faster than you think. This will tank the prices of the homes in the community, and the lucky few who were able to buy while these hedge funds were buying up the homes will be deep underwater.
We are allowing hedge funds to enter and manipulate our housing market all because we hold this sacred idea that we must not interfere with capitalism lest we be called socialists.
Neglect of Low Income Housing
A second way that free market principles are impacting the affordable housing crisis is that they are causing neglect of low-income housing. The free market often will not incentivize the construction of affordable housing units. Developers would rather focus on higher-end projects that give higher returns. Affordable housing units would be completely overlooked if it were not for government intervention.
As a student at NYU, the New York City government attempts to keep a certain proportion of a building affordable. This is especially necessary in a city such as NYC, where housing is at a premium. In a purely free market system where profit is the only driver, developers would have no reason to build affordable housing.
Due to this, the US Department of Housing and Urban Development estimates that we are at the point in American history where households are experiencing severe housing cost burdens. This is defined by households that have to spend at least thirty percent of their income on housing and in a growing number of cases up to fifty percent.
The government must put its finger on the scale and work to incentivize the building of this type of housing. Some ways the government can do that is to as we’ve discussed incentivize developers but also they can modify zoning laws, directly invest in housing, and streamline the approval for developing housing units.
Free Market Leading to a Lack of Consumer Protections in Housing
Lastly, do we want to live in a world where we are at the mercy of unscrupulous landlords? Free market principles in housing often lead to a lack of regulation and consumer protections. I thought the Boston landlords were bad, but the New York City landlords put them to shame.
When you allow the free market alone to dictate, landlords can operate with impunity. Often, this leads to poor living conditions, exploitative rent increases, and no accountability. Should someone be forced onto the street just because a landlord feels like raising the rent five hundred dollars on a whim one year? I have never heard more stories of price gouging relayed from friends than I have seen in New York City during the last two years.
And this is supposed to be a liberal city.
I would hate to see how it is in Florida, Texas, or Georgia. The government must step in and protect its citizens from predatory practices.
It does not say anywhere in the constitution that the United States must be a free market. As I stated earlier, I do not disagree that capitalism is the currently ideal system. However, the Republican party and certain segments of the right have gone overboard on this notion that if you have any government regulation you are trending towards socialism.
To ensure that all Americans have fair and equitable access to housing, the government must step in and regulate to curb the worst excesses of certain population groups. When profits go ahead of people we are one step further from ensuring a more perfect union.
Do you think government regulation is necessary to even out the housing market? Is unbridled capitalism wreaking havoc? If you liked this article check out her other article Thank You President Biden.
