In March, 2022, Pew Research released a study showing that in 2020, 23% of Americans spent more than half their income on rent. Since then, rents in most parts of the country have gone up 16% (because they could). Safe to say, the income of those 23% did not go up 16%.
Rent increases play a major role in the current round of inflation. Though the percentage of increase in rent (inflation) was greater than most other items; the media has said little to nothing about rent increases. This when 36% rent nation-wide and >60% rent in most cities.
Rent increases have literally taken food off tables, precluded purchase of prescription drugs, postponed dental and medical visits, meant no new clothes, … Rent increases of the order we’re seeing are wreaking havoc with lives; with the economy. Yet, no one is doing anything about. Where is government when you need it? Equity firms have become America’s landlords. As they freely admit, they are raising rents because they can.
Markets never seem to work well when it comes to the essentials. So why hope? Much (if not all) of the current housing crisis is attributable to this waiting for Godot. Most of the modern world figured this out forty and more years ago. Meanwhile, in our own little bastion of capitalism, marketism, financialism, or what you may call it, calls for action are met with the reality of private equity firms like Blackstone becoming the nation’s landlord(s). Not really a market; more take it or leave it. Not working!
Blackstone, nee TeamHealth of Emergency Room (ER) fame, will now correct our housing problem. In much the same way that you are now more likely to die while waiting in the ER waiting room after being screened by security; you are now more likely to die in a homeless encampment after receiving your ER bill which isn’t covered by your health insurance because of course and being evicted for not paying your rent.
If you are lucky enough to survive the ER whose main purpose is to provide the hospital with liability protection and windup in a nursing home, guess whose? Good old private equity at your service. Good luck! You are going to need it because there won’t be enough help to feed, bathe, or rehabilitate you. You are at the hazard of the die, and good genetics. In worst case; those you leave behind haven’t a snowball’s in hell. Because one shell of the Equity owns the building, another the land, another the business, and all the personnel are contractors. So off we go. In a handbasket.