TOP TEN WAYS Property Owners Can Solve the Housing Crisis

We are all in this together.

In our society, people who rent their homes are becoming increasingly vulnerable to the thrashings of political whims. Even those who reliably pay their rent on time or early every month could suffer an unexpected loss of their home due to legal wranglings over the home. The result is that a majority of Americans currently have unstable sources of housing. Our entire system of funding homes, regulating rentals, funding healthcare, funding education is now, like a laser beam, destroying the capability for citizens to afford housing.

U.S. Census Bureau, HUD Sept 2020

With the advent of credit scores as a determination of your ability to pay rent, it has become easier for landlords to find the “non payers” and refuse to rent to them. It is apparent, though, that with the power they have, the credit bureaus require significant oversight to protect citizens, renters and property owners alike, from being crushed under the wheels of the massive monopolies who have the power to destroy their lives with the flick of a pen. I think having this system is great as it allows people to experience repercussions for not keeping their word. It allows them to become up to date with their bills, create a budget, and figure out how to handle the inevitable unexpected bills by saving money. In a word, it gives accountability and power to renters, to citizens.

Unfortunately, many people who have a bad credit score have it because of unpaid medical bills. And there is the problem. The credit score is tied inevitably with every other decision we make as a society. Creating a society where people have the opportunity to excel, to save money, to become a part of a strong middle class, should be our common goal. With the exception of the interests of a small handful of ultra-wealthy sociopaths, we all do better when the playing field is fair.

Landlords can count on their rent.

Renters can count on having a roof over their heads.

We can all then focus on our greater lives.

Oligarchs own an increasing percentage of the home units. I would contend that since 4 out of 5 homes rented in the United States are owned by small business people, often those who rent a home they previously lived in, that the downward slide of our society into the “greed is good” pit of despair is reaching its ugly talons into the beating heart of our nation’s economy; housing. Having a society where the homes are mostly owned by wealthy oligarchs who slurp them up by the tens of thousands every time our economy wanes can not be the path we take. Or we will surely fail as a nation.

Here are 10 economic issues, the repair of which will solidify the rental business and solidify renter’s security and ability to establish a safe and comfortable home. I encourage property owners to find a way to participate in the repair of any of these issues. Do you part to create a sustainable industry for the foreseeable future.

  1. We must allow small business owners to compete fairly for foreclosures. When these waves of foreclosures hit, the banks, understandably, want those bad properties off their books as quickly and easily as possible. This means they often bundle the properties, selling them for pennies on the dollar to billionaires.

The problem with that is it has allowed the foundational wealth of our nation, the home, to gravitate to the wealthiest owners. These wealthy owners have a few million sitting around to buy a bundle of properties and often unload the undesirable properties to small business owners, keeping the gems for themselves. It is a system which has devastated our real estate markets and has led to a two-tiered home system across the nation. Smaller, nice neighborhoods with strong prices and vast swaths of low cost, low rent, low quality homes for the majority.

2. We must rein in predatory lenders, including and especially our big banks. When I was a child, I distinctly remember my father explaining why 10% was the maximum interest anyone could charge, “Because the mob charges high interest rates.”

The fact is, our big banks have literally become the mob.

Not only through grossly illegal actions by banks like Deutsche Bank and others, still to be fully elucidated, but by the behavior of every bank who charges 25% and more for credit cards.

They have literally become a mob, determined to suck every last dollar out of the pockets of ordinary middle class citizens.

Their illicit behavior was hidden by rising home prices of the 1990’s through 2008, when citizens would run up their credit cards and then take loans against their homes to pay it… repeatedly. Citizens did not understand that their behavior, conducted in dark shame, was the same as all their neighbors. Keeping up with the Joneses cost them everything and they had no way to know all the other Joneses were doing the same.

When the housing crisis of 2008 hit, the fake middle class was revealed in its entirety, yet we continued down the same road without dealing with the credit problem.

The gingerly way we treat these criminal banking enterprises in comparison to how we treat the hard working consumers of our nation, who are the heartbeat of our economy, is pathetic at best.

3. Landowners must acknowledge and act on the fact that a strong middle class is financially important to them.

If your renters cannot pay their rent, you have a failing business model.

Additionally, the people hardest hit by the wage inequities of the last 40 years are renters. The damage to our nation by these low wage policies are hitting directly at the business model of rental properties. One and the same.

https://www.epi.org/publication/charting-wage-stagnation/

Here is a great overview of how the involvement of social services prior to the removal of the tenant results in more compassionate evictions. A handful of brave people stood up for these renters at great sacrifice to themselves to make a more just and equitable society.

Landlords, be that guy.

https://medium.com/retro-report/what-happens-when-a-sheriff-refuses-to-evict-db4f11c942d4

4. Stop talking about small business owners in the same category as monolithic billionaire businesses. They are not the same thing and they do not have the same needs, goals, or desires. This is apparent in every type of business but particularly important in the real estate realm. Media, begin repairing your show notes now to NEVER make this mistake again. It is unfathomable that you equate Coca Cola with my neighbor who owns 3 rental properties. Not. The. Same. The media stars really need to get out of their billionaire-infested cocoon once in a while. No, often. That goes for our legislators, too.

5. Raise wages to a living, sustainable rate. Since Reagan began our middle class’ decent to poverty, the ultra wealthy in our nation who own chains of restaurants, department stores and the like, have worked hard via their lobbyists to keep wages low. They have frozen wages at 1970’s to 80’s levels but have reaped the rewards of a dramatically increased productivity. This has a small handful of people wealthy beyond recognition.

The historical counterbalance to the oligarch’s lobbyists was unions. Unfortunately, attacks on unions has led to the average worker having no power, declining safety, and no way to address the declining wealth. The disingenuous propaganda programs designed to make these very workers despise those who would help them (think: “Right to work”) have been successful. It is important that a balance of power exists, the balance of business rights and worker’s rights. The tilting of that balance for decades now has caused the table to turn over. Corruption in unions cannot be tolerated (think: police union) but the concept of unions must be a part of the equation.

https://www.epi.org/publication/charting-wage-stagnation/

Corruption is our common enemy.

Corruption is our common enemy.

Corruption is our common enemy.

Corruption is the core of our nation’s rot.

6. Tax the billion dollar businesses and billionaires the same as you tax a person who owns 10 rental properties or the person who rents those homes.

https://www.epi.org/publication/charting-wage-stagnation/

7. We must teach life skills like budgeting, home buying, healthy lifestyles to every student in our public schools. Until we do that, the people who grow up in financially illiterate homes will not have a fair shake at the mythical American Dream.

The Educational system, already under great pressure from oligarchs who want to destroy it, must somehow find time in the system for students to learn life skills. That is how we create a level playing field. And don’t just give it lip service, make this class shine. For most of the students, this may be the most important class they ever take.

8. Recognize that being poor is very expensive. There is a hill one must summit to get to the other side of “affordable life.” In conjunction with the credit score system, people who are poor or who have bad credit scores pay a lot more for everything. It is very expensive to have a bad credit score. That may be fine if we were dealing with a level playing ground, but if your child getting a tonsillar abscess at the age of 4 determines your entire future financial condition, we have a problem. Fixing healthcare funding is a way to make that playing field level. It is crushing much of our middle class, a Russian Roulette game of finance that can attack any family at any time. If you have not experienced it, know that this is simply luck, not your inherent financial prowess. I have seen extremely wealthy families lose their entire fortune over a health issue. That is an untenable condition of our economy and must be repaired.

9. And the number one item besides having adequate income that influences renter’s ability to pay rent: Health care bills. We must fix our healthcare payment system. Our current system of obtaining health insurance through employment has simply failed.

https://www.epi.org/publication/charting-wage-stagnation/

Just as the banks have become a literal mob, so have the insurance companies. By using complicated mathematical formulas, they have become like a Casino, heads I win, tails you lose. With these formulas, combined with a conservative economic bent (meaning they avoid loss at all cost, even the cost of their neighbor’s lives) they have turned the insurance industry into a massive Casino empire.

At least at the Casinos they give you a cocktail and a fake smile.

Notice how, when clinics attempt to negotiate a price that will allow them to be financially sustainable, the heavy handed insurance companies refuse to pay for “out of network” costs, in an attempt to anger the consumer at the doctors and clinics.

This is an extremely heavy-handed, mob-like behavior on the part of the insurance companies and reflects their confidence that the average consumer does not understand their immense wealth in comparison to the little clinics they are crushing (who are currently risking their lives to save patients with little to no support). They depend on the erroneous assumption citizens have that doctors are “wealthy” in comparison to them. Take a look at the annual compensation for insurance executives. Most citizens cannot tell the difference between a million and a billion. Our human minds were not built to comprehend this vast difference.

And it is in that inability to comprehend, that crack in the cognitive system, that insurance companies violate our human right to exist.

https://www.fiercehealthcare.com/payer/health-insurance-ceos-took-home-a-hefty-pay-day-2018-how-does-compare-to-their-employees

Healthcare funding must be repaired. It appears clear that any soft efforts to repair our “healthcare as a business” model have sorely failed and are bringing down our economy, including our ability to house citizens, as a core problem.

10. Healthcare bills are the number one reason a renter has a poor credit score but student loans are problematic, too. We must fix the way we develop drugs and we must fix our education funding system. Right now, the healthcare “mob” has designed a system where they have infiltrated our universities to guide and demand certain kinds of research which could be beneficial to creating a new “blockbuster drug” resulting in billions of profit. The American taxpayer and the students at the university pay for these studies and the corporations just take the information, monetize it, advertise it and voila! A new drug.

Unfortunately, I suspect this system has greatly impaired our ability to create cures for diseases but most pathetically, have resulted in citizens paying for their medications twice: Once during the research phase and once at the pharmacy.

Another symptom of the oligarchy, the ability to siphon massive sums of money out of the pockets of people who are ill and desperate for repair. No one person did this all, it is a sum of the profit driven healthcare system we have. It is the erroneous idea that the profit will drive cure. It has been fully debunked and must be changed.

Working to repair this system, which will inevitably mean creating a public health system (yes, get over it, that is what has to happen) and a publicly funded drug system, are core concepts of keeping people housed in affordable housing.

BONUS TIP: We must repair the educational funding structure in our nation. Lobbyists for the banking industry made the discharge of school loans in bankruptcy impossible. When it happened, I jumped up and down, screaming, “People, stop this madness!” Unfortunately, most Americans and the media yawned, unaware of the danger of this lobbyist-funded legislation. This legislation caused the banks to forego normal patterns of determining creditworthiness because, like any mob, they could force blood out of a turnip, now legally mandated. That must be reversed so graduating students have a fair shot at the American dream. Relegating corrupt “fake universities” to the dustbin of history would help, too.

***

I hope these concepts help real estate investors, legislators, and citizens to understand the direct line from our oligarchy, begun in the 1980’s with devastating regulations designed to make the rich, richer and the middle class poor, to our current devastating national housing crisis.

Renters need adequate wages to pay their rent and economic protections from healthcare bankruptcies, excessive educational expenses, and predatory credit businesses. It is that simple.

The coming months, when millions of Americans have the rent bill or the mortgage bill due, will be a test of our determination to sustain the strong middle class created post WWII or to collapse in an oligarchical mess. It will challenge our ability to bring down the mob that has sucked up our nation’s middle class dollars. And it will determine whether the owners of your rental home will be hard working middle class fellow citizens or will be the mob.

Our choice is clear. Get to work.

***

Credits:

I’ve included graphics from the Economics Policy Institute, thank you for sharing your data with us all!!! https://www.epi.org/publication/charting-wage-stagnation/

And FierceHealthcare: https://www.fiercehealthcare.com/payer/health-insurance-ceos-took-home-a-hefty-pay-day-2018-how-does-compare-to-their-employees

Census Bureau graphic from https://www.census.gov/construction/nrs/index.html

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