But at least Ron Moeller lives in the house he owns near Lead and cares enough about it to run for Legislature and fight for continued government subsidy of his flammable forest shack. The increase in investors scooping up residential properties and turning them into rentals can lock in poor community conditions:
There are bullet holes in all kinds of places in the North Minneapolis neighborhood where former city council member Don Samuels lives.
Across the street from his house is a car with oddly placed stickers on the back. He said the stickers are there to cover up the holes.
Down the block are two homes on opposite sides of the street, each with lots of bullet holes in their siding. Samuels said one of the homes belongs to a local landlord who, like many landlords here, doesn’t pay much attention to crimes committed at their properties. The other belongs to a homeowner with two kids who were caught in the crossfire between the renter across the street and a gunman in a car.
“Yeah, that’s what happens on our street here,” he said. “That’s what happens when you live in a heavy rental community where behaviors are not managed.”
The strategy of landlords here is to maximize profits by minimizing maintenance and renting to people who wouldn’t complain to authorities about substandard living conditions, according to Samuels. Sometimes those are people with eviction records who can’t find housing elsewhere, and sometimes they’re criminals [Tu-Uyen Tran, Kim Eng Ky, and Libby Starling, “Understanding the Rise of Investor-Owned Homes,” Federal Reserve Bank of Minneapolis, 2021.11.12].
…while locking out working homebuyers and even small-scale landlords:
Most of the growth in investor ownership in the metro area has been with very large investors, those owning 50 or more properties. In 2006, these investors owned less than 1 percent of all investment properties in the metro area. In 2021, they owned 11.6 percent, with high concentrations in North Minneapolis, central and eastern St. Paul, some nearby suburbs, and outer suburbs far from the urban core, such as Chanhassen and Lakeville. This increase comes primarily at the expense of small investors, those owning two to nine properties. They were and still are the most numerous class of investors, but their share of investor-owned properties owned has fallen from 87.1 percent in 2006 to 68.7 percent in 2021…. Medium to large investors have also increased their holdings but not as dramatically as very large investors [Tran, Ky, and Starling, 2021.11.12].
Regular homebuyers and moms and pops looking to supplement their income by acquiring one or two rental properties bought on bank financing have trouble competing with big investors who walk into real estate offices with great gobs of cash:
“Historically, the vast majority of these investors have been mom-and-pop landlords, but after the 2008 bust … we saw institutional investors and other funds enter this market,” said Karan Kaul, senior research associate for the Housing Finance Policy Center at the Urban Institute.
“If you’re a first-time homebuyer and you’re depending on a mortgage that takes two months to close and you’re competing against someone who’s making a cash offer, you’re at a disadvantage right off the bat,” Kaul said.
David M. Dworkin, president and CEO of the National Housing Conference, said that cash offers typically make up about 25 percent of the market but that over the past year, the proportion soared to nearly 1 in 3. “This is having its worst impact on first-time homebuyers, who generally are more dependent on mortgage financing and have limited budgets,” he said. “It’s hurting millennials. … It’s also hurting people of color who are trying to become homeowners.” [Martha C. White, “Who’s Outbidding You by Tens of Thousands of Dollars for That Home of Your Dreams? A Hedge Fund,” NBC News, 2021.07.21].
Kaul notes the same deeper market problem that this smart June 2021 Vox article by Jerusalem Demsas highlights: institutional investors, who still control only a small fraction of the housing market, are only capitalizing on the more fundamental problem of low housing supply. But Demsas recognizes that whatever other solutions we pursue to providing more affordable housing may be fouled if we don’t keep institutional investors’ share of the market small:
Institutional investors’ incentive to profit and return as much as possible to shareholders is a reason to cut as many corners as possible…. [E]ven if it might be easier to monitor larger entities, it’s not clear that anyone would actually do that. And in the absence of government watchdogs, tenants would face much larger asymmetries of power than they would with small landlords. An army of lawyers and bureaucracy, for instance, could make it more difficult for tenants who have complaints or are being serviced with unreasonable fees.
And if real estate prices continue to appreciate, that means the growing wealth will be concentrated in the hands of these corporations. If these homes were owner-occupied, they would be concentrated in the hands of homeowners. In a Washington Post op-ed last year, Sen. Elizabeth Warren and Carroll Fife, the director of a California-based housing nonprofit, argued that allowing another “private equity real estate grab… would again give Wall Street carte blanche to use a national crisis to enact a massive, generational transfer of wealth from vulnerable Americans to corporations.”
There is also the concern that since these single-family rentals are concentrated in certain markets, institutional investors could gain market power and raise rents as they face diminishing competition from other landlords [Jerusalem Demsas, “Wall Street Isn’t to Blame for the Chaotic Housing Market,” Vox, 2021.06.11].
Housing, like food and sex, gets worse when commoditized. Letting our corporate overlords extend their dominion to our living space as well as our working space means less liberty for all but the richest Americans. Maybe we can persuade candidate Moeller that he should include a cap on investor-owned housing in his campaign to protect South Dakota homeowners from corporate oligarchy.
Investment in real estate is not just for the rich or exclusive to Republicans.
Our Lady of the Arroyo and this old man are finishing the remodel of Neighbor Nancy’s house and plan to do short term rentals there marketing to traveling nurses and the film industry. We’re dealing on two additional properties, too hoping to capitalize on the blossoming housing market.
Maybe it is time to live up to our pronouncements that housing is a human right. Expensive housing and the threat of homelessness combine to exploit low-wage workers.
Hear, hear for the spokesperson we know only as “O”.
“I have spent six years reflecting on the state of European society and I still can’t think of a single way they act that’s not inhuman and I genuinely think this can only be the case, as long as you stick to your distinctions of “mine” and “thine”. I affirm that what you call money is the devil of devils; the tyrant of the French, the source of all evils; the bane of souls and slaughterhouse of the living. To imagine one can live in the country of money and preserve one’s soul is like imagining one could preserve one’s life at the bottom of a lake. Money is the father of luxury, lasciviousness, intrigues, trickery, lies, betrayal, insincerity, – of all the world’s worst behavior. Fathers sell their children, husbands their wives, wives betray their husbands, brothers kill each other, friends are false, and all because of money. In the light of all this, tell me that we Wendat are not right in refusing to touch, or so much as to look at silver?” – Kandiaronk of the indigenous Wendat nation – Canada 1703
Wait until the change state law so they don’t need neighbors permission to put mega-plexus. SF will become one large apartment complex. They are gearing up to have 0% TIFs and a refund on excise taxes to contractors. We may get more housing but the savings will never trickle down to the consumer.
Even in South Dakota, subsidized rural housing along with subsidized reliable public transportation could solve a great deal of the cost of housing.
Well there is always the French way with Aristocracy. That’s why they are so sneaky now.
You are correct Jerry. Rural Housing should also include cooperative and individual home ownership programs. State government is nowhere on Housing generally and rural housing specifically.
Jerry, SD Housing has plenty of rentals, apartments and houses, in my home town and they are all full. I’d say 1/4 of the town is lower income housing, maybe more. The problem is they rent for outrageous amounts and most are dumps. I’m a caregiver and go into homes that wouldn’t pass inspection anywhere else. Had my foot go through the floor in an entryway and 2 weeks later, the skunk next door peeked his head through looking for water. This house is one bedroom across the street from the railroad tracks, and the slum lord gets $650 a month for it. The renter pays $150 and will never complain for fear her rent will go up, a veteran on a fixed income. This slumlord owns over 35 houses here (town of 3000) and has milked the taxpayers for hundreds of thousands of dollars and has exploited so many people in need.
The formula is to buy a dump at auction for 10 – 20 thousand. Put another 10 thousand into it with some paint and new roof so it looks good from the outside. Rent it with SD Housing formula anywhere from $500 – $1800 and never have to spend another penny on it. It’s a racket but perfectly legal. And with subsidized housing folks, the landlords DO NOT have to supply air conditioning or window treatments.
And then we have Our Highness in Pierre spending $13,000 just on rugs for her mansion. My client would appreciate one of the old rugs to replace the cardboard she uses to cover the hole in her entry.
V, you’re correct of course. The problems with subsidized anything is that those tax dollars are not supervised. Be it farm giveaway programs for sitting on your arse, pentagon bloat F-35’s and the latest boondoggle, the B whatever to be based at Ellsworth. The issues of substandard subsidized housing is just a feel good for saps with no meaning other than encourage corruption and waste.
Housing Authorities on the reservations are a good start to be looked at for direction, but they too have limits on what they can do given the enormity of homes they must supervise and maintain with budget restraints. Add energy for heating and cooling into the mix and you can see there is not enough money to do what is necessary. As you note, this is not a racial housing issue, it’s a low income issue. (Citizens in Spain currently can qualify for subsidized assistance to install solar panels for heating and cooling their residential homes that are their primary homes). Almost a quarter of the total labor and material for a complete heating and cooling system, why can’t this be done here? Why don’t we insist on this for our future?
Reliable subsidized public transportation could bring economic benefits all the way around. Light, reliable rail into the city and then as system of busses to business areas, hospitals and other economic light industrial areas. That is where the TIF’s would actually do some good.
Until then V, we will watch the continued decline, waste and the corruption you are witnessing.
With help from former Homestake land manager now Sturgis real estate broker, Denny McKay, former US Senator Tom Daschle sold out the people of South Dakota and the tribal nations trapped within its borders by drafting legislation holding Barrick harmless in Whitewood Canyon.
Actor Kevin Costner bought a 687 acre parcel at the Preacher Smith Monument after the success of Dances With Wolves but was ostracized afterwards by the tribal nations signatory to the Fort Laramie Treaty. It was known as the Un-Dunbar property until he sold it last year.
Again and again the greed of capitalism (crony capitalism of government contracts especially) show a failure of an economic system that begs for “socialism” answers. This is not how other nations do social support. That we allow our government — especially our GOP friends — to underfund and create the incompetence to justify their “government is ineffective” dogma as a justification for staying IN power is mind boggling.
Spot on O, Here is Paul Krugman on Europe.
“Americans have a hard time learning from foreign experience. Our size and the role of English as an international language (which reduces our incentive to learn other tongues) conspire to make us oblivious to alternative ways of living and the possibilities of change.
Our insularity may be especially damaging when it comes to countries with whom we have a lot in common. Western Europe is our technological equal; labor productivity in northern Europe is just a little below productivity here. But Europe’s policies and institutions are very unlike ours, and we could learn a lot by looking at how those differences have played out. Unfortunately, any suggestion that Europe does something we might want to emulate tends to be shouted down with cries of “socialism.” https://www.dailykos.com/stories/2021/11/30/2066769/-Paul-Krugman-What-Europe-Can-Teach-Us-About-Jobs
The old country can teach us a lot when it comes to our failures to our people and how we have been exploited. “Give me your tired” is a lot of baloney now and even that is becoming unaffordable due to price gouging and market manipulation. A couple of company’s run the whole show here.