Turning the heat on corporate landlords is a win-win proposition
Turning the heat on corporate landlords is a win-win proposition
Nevada is a perfect case study.
Welcome to a Wednesday edition of Progress Report.
I was in upstate New York this past weekend to report on a new unionization campaign at a major corporate employer. I had a lot of great conversations with people about their work conditions but the most thought-provoking chat I had was with a worker that had just returned from a Christian rock festival further upstate.
It made total sense that he was there — the union is organizing to win workers better pay and conditions. Making more money polls pretty well with people across the political spectrum! That means there’s an opportunity to sew the seeds of solidarity and engage people in a non-political way, especially in a time of hyperinflation due to corporate greed. The political party pitch should come at the end. There’s an upside to showing up everywhere (so long as it’s safe).
On that note, tonight’s newsletter is about the battle between working people, corporate real estate interests, and the politicians that are doing their best to keep their donors happy.
After both the Uvalde massacre and the fall of Roe vs. Wade, Democratic leaders began to push the narrative that the far-right’s grip on government policy would galvanize Democratic and independent voters to show up en masse in November. Just under a month later, polling shows that abortion rights and gun control are indeed weighing more heavily on the minds of many voters, but the electoral impact of this new urgency around these issues is likely to be limited by a severely gerrymandered Congress and a struggling economy.
In a poll conducted by Ipsos/FiveThirtyEight and released last week, a whopping 60% of respondents listed inflation as their number one concern heading into the midterm elections. Gas and food prices are the obvious culprits and receive much of the media attention, but surging housing costs also play a huge factor in the overall inflation rate.
For many Americans, paying rent has gone from a manageable burden to nearly impossible. For Democrats, with no real legislative victories to brag about or tangible relief to offer voters right now, attacking the cost of housing represents both a righteous battle to wage and an opportunity to seize the populist mantle against readymade villains ahead of November.
(Yes, I’ve made this point before, but it’s even more true now than it was in March when I first outlined the argument. Politics is about repetition, after all.)
Defining the Villain, Recognizing the Heroes
Corporate landlords and real estate developers have raked in record profits throughout the pandemic and into this dire housing crunch. They inspire a rare unity amongst Americans, three-quarters of whom want to see governments provide more protections against evictions. With so many homes now owned by private equity funds and faceless corporations, it plays into the larger message of elite corporate greed driving inflation and misery.
“On the local level, people want to hear that you have a solution that'll make their lives easier,” says Laura Martin, the executive director of the Progressive Leadership Alliance of Nevada (PLAN) Action Fund. “They don't want to hear all of this pontificating about abortion and guns and Christian values. They want to know that their lives will be okay.”
Martin isn’t blasé about the various societal ills beleaguering the nation; PLAN is a coalition of nearly 30 grassroots organizations that work in communities across Nevada, organizing and advocating for policies that advance economic and racial justice. Members are constantly engaged with members of their communities, holding events and knocking on doors. Housing has come up over and over again in front stoop conversations, and for good reason: Nevada is experiencing one of the worst housing crises in the country.
Nevada is in many ways a perfect example of how housing will impact both this fall’s elections and potential realignments of deeper state power structures. Nominally blue in recent years, the state will host hotly contested elections for governor and US Senate; special interests have been blocking popular reforms; and a growing housing justice movement is motivating and mobilizing working people in support of tangible policies that would have an appreciably positive impact on their lives.
In North Las Vegas, the powerful Culinary Union Local 226 recently submitted the signatures to qualify a ballot initiative that would institute rent control in the city of more than 250,000 people. The initiative would also set a legal precedent that could lead to statewide action on rent, upping the stakes even further.
How They Got Here
The numbers are stark: Nevada ranks first in the nation with 81% of its extremely low-income households experiencing severe cost burden (i.e. paying more than 50% of monthly income on rent), and it’s dead last in the nation with just 18 affordable and available housing units per 100 extremely low-income residents.
These aren’t small sample sizes, either. Around one-fifth of Nevadans are considered extremely low-income, and even for those making above that threshold, the market is often prohibitively expensive; the average rent price has soared by more than 20% since May 2021, while the cost of buying a home has been cranked up by 25%.
Though the Covid pandemic set off a spike in housing prices nationwide, the roots of the dire crisis gripping Nevada reach back all the way to the early 1990s, when people and developers began pouring into the arid, sparse state. The proliferation of cheap mortgages made the state ground zero for the foreclosure crisis that took place in 2007-08, then a victim of policies intended only to help banks survive the consequences of their catastrophic decisions.
“There were just a lot of houses sitting empty, and rules were passed to make it easier for these homes to be purchased and rented out or flipped, and now we're at the point where it's being taken advantage of,” Martin says. “We even hear from elected officials complaining about the number of homes in their communities that are purchased by out-of-state corporations and private investors that are not from Nevada, who are buying multiple homes and making them into Airbnbs or Vrbos.”
Nevada experienced the most severe and sustained foreclosure crisis in the United States, which set the stage for the current crisis. The number of homes in Las Vegas purchased by investors soared by 105% in 2021, the largest increase in the nation. In the fourth quarter of last year, nearly 30% of homes purchased in the city were bought by investors. Unsurprisingly, Nevada had one of the highest foreclosure rates in the entire country in the third quarter, as clear an example of cause and effect as you can find.
For so many Nevadans, foreclosure meant having to rent the home they previously owned and make monthly payments to a landlord. Covid wallopped Nevada’s service-based economy, driving working people further into debt and putting them in the crosshairs of corporate landlords that have been assisted by one of the most exploitative and unjust eviction laws in the nation.
Whereas every other state requires landlords to begin legal eviction proceedings, Nevada’s summary eviction law puts the onus on struggling tenants to file objections in court to losing their homes.
Here’s a description of the process from the Nevada Independent:
If a tenant receives a seven-day eviction notice for non-payment of rent and fails to file an affidavit in court by the end of that timeframe, no summons, complaint or hearing is required for a landlord to receive approval to evict the tenant.
Advocates across Nevada have spent the past two years trying to pressure the Democrat-led state government to repeal the antiquated law, only to be repeatedly rebuffed by lawmakers en thrall to real estate interests. In 2021, the legislature kicked the can down the road by commissioning a “study” of the law, and this year, they simply ran out the clock.
There have also been concerted efforts to limit brazen acts of corporate greed and vulturism, which have also fallen short in a housing market that still resembles the wild, wild west.
“There aren't a lot of rules around how much you can raise the rent or how many applications you can accept at $50 and $75 a pop per rental application,” says Erika Washington, executive director of the advocacy group Make It Work Nevada. “You can still accept as many applications as you want, knowing that you're not renting to all these people.”
The legislature has not passed any consumer protections on those applications, either.
What Comes Next
To Martin, the cowardice came as no surprise — developers, real estate companies, and their political operations together gave more money to Nevada politicians than donors from any other industry during the 2020 election cycle, and they hold particular sway in Las Vegas and Reno, where they’ve long controlled the economic development.
“We helped draft some really good bills, like cutting back on fees — we found some landlords are writing into their leases that they can charge you to use the built-in microwave oven, charge you to use light bulbs, just ridiculous stuff,” Martin says. “So it was cutting back on things like that. And ironically, it was Democrats in the legislature who killed those bills, because they themselves are realtors.”
Both real estate lobbyists and politicians have instead tried to address the problem by building more and more housing units in a broiling desert state that is quickly running out of water and burning up in wildfires that grow more dangerous every year. Some lawmakers, including US Sen. Catherine Cortez Masto, even support selling off public lands to private developers that would build subdivisions across the southern part of the state.
“They're building further south, trying to push as far close to Red Rock as possible,” says Washington. “They know you can build these masterplan communities and make a lot of money.”
In the meantime, the state has been besieged by Airbnb rentals, as Martin noted, and a growing number of units sit empty — in 2019, more than 127,000 homes sat empty in Las Vegas alone. Governor Steve Sisolak recently announced the creation of the oddly named Home Means Nevada program, which will use $500 million from the federal government to pay private developers to build 1,700 affordable units and fix up more than 7,000 more.
Without context, those numbers may look like a decent start, but Las Vegas alone is short some 80,000 affordable housing units. Building alone won’t solve the problem, especially as available land continues to be sucked up by luxury housing development.
With legislators refusing to budge on anything that might dent the wallets of corporate speculators and big landlords, the focus has turned to the North Las Vegas rent control initiative, which is formally known as the Neighborhood Stability Ordinance.
The proposal would limit rent increases to 5% per year, which has of course been decried by landlord lobbyists despite being a relatively healthy bump. With more nearly two-thirds of Nevadans indicating their support for rent control in a poll released in April, passing the initiative shouldn’t be all that difficult; the bigger challenge to overcome may be the uncertain application of a legal principle called Dillon's Rule, which limits the powers of municipalities.
Gov. Steve Sisolak has been outspoken in his support for the initiative, both on legal and policy grounds, and has even suggested its success could spur the state legislature to move on some kind of similar policy. He’s also promised to pursue bad corporate landlords that have been abusing the state’s housing supply. If nothing else, it’s very smart politics for a governor in a tight re-election battle.
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It is a (dishonest?) myth that housing is unaffordable because corporations buy Airbnbs. Housing is incredibly expensive ANYWHERE in California, do you think there are people going on vacation in Tracy or Bakersfield? No, it's because of the first rule of economics: Supply vs Demand. The reality is that population grew much faster than new housing in the past decades because local administrations continued the antihousing racist and elitist policies started with single family zoning that created a shortage that ultimately hurts lower classes. This is the typical situation of older and richer people rigging the market and hoarding resources at the expenses of every one else. You have many refreshing ideas but unfortunately you still have the same ideological bias, as many progressives, that the free market is always bad and corporations are always to blame when in this case it's (fake) progressives running Dems cities like San Francisco, that pretend to be for the poor by making developers the enemy while defending the interests of people living in wealthier low density neighborhoods with policy that are also terrible for the environment.