There was a period in the development of capitalism in which states and capitalists felt constrained to make cities affordable for people, if not livable, to produce infrastructure that would facilitate the reproduction of a working class. But this is no longer the case; such a class is no longer necessary in large numbers in the age of drones and deindustrialization, and whereas previously rent was a necessary weapon to ensure that workers showed up to work the next day, needing to earn something in order to pay for the roof over their heads, today rent is used not to keep workers in cities but to push them out. There is no surer confirmation of the absurdity of capitalism than the fact that one of the chief effects of the economic crisis of 2008, besides persistently high unemployment and an ongoing wave of foreclosures, has been a massive explosion in rent prices across many US cities. In the neighborhoods hit hardest by mortgage crisis, neighborhoods whose composition is primarily black and Latino, those who were not excised by foreclosure are now being squeezed out by rent. To the income lost from unemployment one subtracts a new amount lost to rising rents. Landlord, banker, boss — everyone gets a piece. The explosion of rent prices in the Bay Area is the effect, first, of the massive amount of capital set free by the crisis, unable to find any productive outlet. Once the real estate market began to bottom out, the capital that had been pooling found its level and poured in, buying up all the houses from which people had been evicted. In the new loan-averse banking context, where most people with modest means have a hard time getting a home loan, profit taking in the real-estate market occurs increasingly through rentals. Instead of the mortgage-backed financial instruments that precipitated the crash of 2008, now Wall Street has created a new class of rent-backed assets to funnel capital toward the purchase of houses for rent by big institutional buyers. REO Homes, LLC, an investment firm, has bought up over half of the foreclosures in West Oakland; after making a few repairs, it can rent these out for prices that are at the very top of the range for the area. None of this would be possible without the surge in demand; the main driver of rent inflation is the fact that San Francisco and Santa Clara County together added over 50,000 new tech jobs from 2010 to 2013, jobs that pay a median income of around $100,000. The effect of this new money on the rental market has been catastrophic. In Oakland, the average price increase is something like 15%; in San Francisco, 10%. But these are averages, and we all know areas where rent is easily 50% higher than it was two years ago. These rent increases encourage real-estate speculation, since they indicate money to be made by landlordage as well as rising home values. researchanddestroy.wordpress/2014/04/15/land-and-liberty/
Posted on: Sun, 20 Apr 2014 20:18:13 +0000
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