Organizing Against Real Estate Greed

By Steve Meacham
Reprinted from Survival News

Flash! Everyone (almost) agrees there is a housing crisis. It's in the news almost daily, and many organizations with different political views have issued reports about it. Readers of Survival News will likely say, "That's obvious," but we shouldn't forget that our organizing was key to building this consensus.

The real estate industry, and many politicians, didn't want to acknowledge what market greed would do after the end of rent control and HUD regulations. They knew that thousands would be displaced, but they hoped we would go without any protest. But we have protested, over and over and over. That is the main reason the housing crisis is so clear to everyone.

Of course, the consensus that a housing crisis exists splinters as soon as we look at what to do about it. Real estate interests, while forced to agree there is a crisis, are trying to protect their market riches. The Greater Boston Real Estate Board (GBREB) issued a report in January of 2000 which defended the market and argued for relaxing restrictions on building high density buildings without any restrictions guaranteeing affordability. Give them even more profit on luxury housing, they say, and somewhere rents will go down. Many political officials, awash in real estate money, are quick to defend this position. Gov. Cellucci, for instance, issued his infamous statement that "the free market will get us out of [the housing crisis]."

In contrast to the real estate position, grassroots housing organizations like City Life/Vida Urbana, point out that the for-profit market has failed miserably to provide or maintain affordable housing for low and moderate income, working class people. Housing activists are all too aware that, at any given time, thousands of households are faced with displacement from their homes, homes they have often lived in for many years. These homes are threatened only because the market decrees that some big investor can make a lot of money by evicting them. We can refer to that as "eviction for profit."

For over a year, the Boston Tenant Coalition has been asking what would the reaction be if thousands of people lost their homes this year because of a natural disaster like an earthquake, or a flood? It would be international news. Hundreds of millions of dollars would pour in. And most important, we would demand that when homes were rebuilt, they should be built in a more secure way, able to withstand the next disaster. Code regulations would be strengthened to protect us.

When thousands lose their homes because of greed, a hiiman-made disaster based on the for- profit market we should demand the same response. We want those hundreds of millions of dollars. We should insist that homes be protected from market greed, owned by non-profits, limited equity owners, and land trusts. We should demand new regulations, rent and eviction protections, to safeguard our homes.

Thus the new debate is joined.

• How much profit is enough? Is it right to make as much profit as you can even if that means displacing thousands from their homes?

• If the unregulated for-profit market has failed so badly, why believe it will suddenly do better?

• Can we build the stable working class communities everyone says they want without limiting real estate profit?

The Housing Debate and Organizing

The debate around housing and the market is not taking place in isolation. Many of the same issues are being raised around health care, pharmaceuticals, a fair wage for labor, and international trade. Most people believe, for instance, that profit-driven health care is a contradiction in terms. Most people also accept that a fair wage is not necessarily determined by the market but must be regulated by law (minimum wage) or negotiated by unions.

This same understanding is not so apparent when it comes to affordable housing and the real estate system. Local rent regulations were defeated in 1994. 'Be State and Federal government budgets for affordable housing have declined. Congress deregulated HUD developments leading to a wave of fantastic profit-taking and the loss of tens of thousands of units.

Until recently, the entire housing discussion had moved to the right. Clinton proposed voucherizing public housing, something Reagan never would have dared do. What was once considered part of the liberal mainstream - providing longterm affordable housing for people who need it - is now a radical idea. Housing is hardly mentioned by Gore or Bush.

This conservative climate not only affects legislators and policy makers. It also affects us. It affects tenants who are trying to organize.

The goal of activists in groups like City Life is to help people organize to defend our homes and our communities against real estate greed and the forces of the market. To do that, we have to recognize some of the assumptions of real estate capitalism that are embedded in our culture, make up this conservative political climate, and undermine resistance to the outrages of the housing crisis.

Simple assumptions like "the fair rent is the market rent" are actively promoted every day. There is enormous wealth behind promoting them. Even liberal policy makers pay homage to many of them. Now, with the housing crisis so widespread, these usually unchallenged assumptions are coming under more scrutiny. Cellucci's comment mentioned earlier is noteworthy for the fact that he felt compelled to make it. The for-profit market is perfon-ning so badly that he had to openly defend it.

What are some examples of these real estate assumptions, and how do we respond.?

Some assumptions we need to directly challenge.

The fair rent is the market rent.

The assumption is that what ever the market allows is "fair." Big landlords who are trying to evict us to make a bundle like to hide behind the market. But the market is not a god- it's just a tool, a creation of a given society. If it doesn't work, it must be changed. We need unions and labor laws to try to create fair wages. We need housing regulation and tenant associations to try to create fair rents.

Don't tell me what to do with my apartment building--I don't tell you what to do with your house.

The assumption is that all property is the same. But they are not. A piece of clothing, a car, a single family home, an apartment building, or a factory are all property, but they are not the same. Most people would agree that limitations on property rights should be greater when decisions about that property affect more people.

We make a distinction between small owners whose property is also their home, whose tenants are their neighbors, and larger owners whose property is simply an investment, whose tenants are just a means to an end. The real estate industry wants small owners to identify with large ones. We want residents in a community, tenants and owners, to support each other to preserve community against extreme profit-taking.

I own the building; I can do what I want with it.

This assumption suggests that property rights are natural rights, that they are unlimited. Property rights exist only by the definition of a particular society. Societies democratically redefine property rights all the time. People generally support more restrictions on large property than on small, which is only natural.

Get government out of housing.

The real estate industry argued that if we just eliminate regulations like rent control, somehow the market will find a new balance which will benefit everyone. Of course, this is not what happened. This slogan misses other vital points as well. (a) The largest government financial program in housing is the mortgage deduction program, which disproportionately benefits the rich. (b) Most regulatory intervention by government is done on behalf of owners through a large and expensive police/court system. The main government regulation in housing is to threaten to evict by force if tenants don't pay higher rents.

Supply and demand. Increase supply of any kind of housing and prices will fall.

The real estate industry argues that when they construct additional luxury units (an increase in supply), it will lower prices. The real estate market in real world neighborhoods, cities, or regions does not work like this. Construction of luxury housing in a "discovered" working class neighborhood or city will fuel gentrification and stimulate rising rents.

If government restricts what I do with my property, it must pay me the reduced value.

This argument is used to oppose zoning, rent control, or other forms of popular real estate regulation. Yes, regulation does reduce value, but it's also true that most of the increased value of real estate is the result of government or social action. T stops, new schools, or new parks increase real estate value ... and allow landlords to raise rents. Social action to reduce crime, increase a sense of neighborhood, or avoid ethnic conflict enhance community, increase property values ... and allow landlords to raise rents. The vast increases in real estate worth that we see depend on what the community has done socially. Everyone should benefit, not just a few.

Small owners create affordable housing.

Profit-maximizing real estate firms love to point out how small resident owners in little triple-deckers create below market, affordable housing. That's true. But those owners do so by not following profit-maximizing principles. They often treat tenants like neighbors, not just as a way to make more profit. On the other hand, when the sell, they sell for market value, and tenants get displaced. Limited equity coops or condos and land trusts offer a way for individuals to own their homes while still preserving affordability for tenants and future owners.

I sympathize with you, but I can't subsidize you by charging below market rents.

Large owners look at anything less than market rent as a "loss" or a "subsidy" to the tenant. In reality, most of tenants' rent goes for some form of profit. In an absentee-owned building, tenants pay all the owners' expenses, including the principal on his loan. Tenants buy the building for the owner. Tenants create the capital with which the owner buys new buildings or invests in other ventures. Tenants subsidize the current rapid increase in real estate profits.

Organizing is Growing!

Enormous energy has gone into citizen action around the housing crisis - Boston Tenant Coalition, Greater Boston Interfaith, Mass. Affordable Housing Alliance, CDC'S, homeless groups, community groups. This has been most visible in Boston but it extends to many other communities now being affected.

Increasingly, tenants directly facing displacement are organizing tenant associations and community support networks to resist "eviction for profit." Housing activists, readers of Survival News, should put out the call that it is right, and possible, to organize to resist displacement. It's possible to defend our communities against market forces. But it will mean using our organizing to uproot conservative real estate assumptions which hold us back.

We are at a point where the for-profit housing market is like that famous emperor riding down the street with no clothes on. He is so important and powerful that no one says anything, until one child breaks the spell. We collectively have to keep asking that child's question, "Why is the emperor naked?"