Power

Evict the rich

The one neat trick to solving the housing crisis: give the things owned by the rich to the poor.
Power

Evict the rich

The one neat trick to solving the housing crisis: give the things owned by the rich to the poor.

We’re in a nationwide housing crisis. Gentrification gets headlines for good reason: the influx of capital to major cities (and not-so-major ones) has caused an increase in homelessness and rising rents that squeeze everyone. But the crisis extends everywhere, from small towns to the exurbs of cities like Miami and Las Vegas as corporations like Blackstone Group buy up huge swaths of housing and raise rents. Each year, an increasing number of Americans spend more than 30 percent of their incomes on rent.

The most frequently proposed solution to the crisis, from New York to Detroit to San Francisco, has been to build more housing. There’s a growing “Yes In My Backyard” (YIMBY) movement, especially in the Bay Area. Its proponents theorize that if we build enough units of luxury housing, eventually housing will trickle down into affordable territory. In some cities, there’s a slightly more progressive solution: new luxury housing comes with the promise of affordable or semi-affordable housing. New York, for example, now requires developers of large housing projects to set aside 20 percent or more for affordable housing. But the pushers of market-friendly solutions, and even most affordable housing activists, miss a central point in the housing debate: we already have enough housing in this country. The problem is not supply. It’s just that the supply is owned by the wrong people. From downtowns to suburbs, there’s a glut of vacant housing and land owned by the rich. The one neat trick to solving the housing crisis: give the things owned by the rich to the poor.

The richest neighborhoods in many cities are also some of the most vacant. If you walk around Midtown Manhattan or Downtown Brooklyn on a weekday evening and look up at all the residential luxury skyscrapers that have cropped up in the last decade, you might notice they’re relatively dark. In the stretch of Manhattan between Park and Fifth Avenues and 56th and 59th Streets, 57 percent of apartments were vacant at least ten months a year, according to a New York Times analysis based on data from 2012. Buildings from 60th Street to 63rd Street were also only around 50 percent occupied. Across the country, even in smaller cities, downtowns are being filled with tall, expensive, and often empty apartment buildings. The apartments in the flashiest of these buildings, like the towers rising along 57th Street in New York (now sometimes called Billionaire’s Row) are often bought by the LLCs of the uber-rich, and they’re used more as investment opportunities than as places to live.

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So why do we keep building so much vacant luxury housing? It’s a simple function of how capitalist land markets work. With demand for housing high and government intervention and spending on affordable housing low, land prices have no reason to drop. If a developer buys a plot of land in, say, Cleveland for $1 million, there’s no reason the lot next to his or hers will be sold for less per square foot, and so whatever developer purchases that land will have to build something that extracts $1 million, plus profits, in rents or sales.

Why do we keep building so much vacant luxury housing? The answer is capitalism.

This is not a new phenomenon — it’s one of the central theses of Frederick Engels’ 1872 treatise, “The Housing Question:” if there’s no purposeful depression of prices on land, housing prices have no reason to become cheap. The land at the center of cities will always go up, until they are unaffordable to everyone but the richest.

Urban land is experiencing a kind of domino effect right now: land gets more expensive, so developers build more expensive buildings to pay off their purchase; more expensive buildings attract higher land values around them, so developers must build still more expensive buildings; and the process continues until you’re left with an excess of luxury housing, and people paying more of their incomes in rent than they ever have.

And that, in part, has led us to the housing crisis we’re in today, in which there’s a surplus of vacant luxury apartments and more people in need of housing. There are more than 61,000 homeless people in New York, the highest level since the Great Depression. While the city government is trying to do something about the crisis, creating thousands of apartments each year affordable to low- and middle-income renters, it’s not nearly enough: 2.5 million people applied for the 2,600 apartments made available through the city’s affordable housing program in the last year — about 1,000 applications per apartment. The fact that one of the most progressive cities in the U.S., which is currently spending more than any other city in the country on housing, is falling so short in addressing the crisis speaks to the radicalism needed for an adequate response.

So how do we get housing into the hands of the poor? Imagine a Venn Diagram: In one circle is empty housing built for and/or owned by the upper classes, and in the other is everyone who needs housing. The answer is obvious. Merge the two circles by giving the vacant housing and land owned by the rich to the poor. The problem is there’s little political will in hyper-capitalist economies to take over privately owned land. But as the housing crisis continues, that’s changing.

In June, after the London public housing project Grenfell Tower in London caught fire, killing dozens, Jeremy Corbyn proposed taking over the unoccupied apartments of the rich and giving them to the victims of Grenfell. People applauded the City of London for buying up unfinished luxury housing complexes to house Grenfell’s victims. It was a small sign that housing redistribution is becoming politically palatable.

There’s little political will in hyper-capitalist economies to take over privately owned land. But that might be changing.

Governments were once more comfortable with publicly owning land and property. In the 1980s, New York owned more than 60 percent of Harlem’s residential housing, and held onto it until it could figure out a way to sell the housing stock in a way that benefited the neighborhood. After Hurricane Katrina, New Orleans began snapping up abandoned properties, as did Detroit as the city emptied out over the last decade, and especially after its bankruptcy in 2012. But instead of keeping that land public, or developing it into affordable housing, each city has instead sold most of it at bargain-basement prices to private owners. Wayne County, which encompasses Detroit, has made hundreds of millions of dollars off its citizens’ foreclosures over the last few years by selling them to investors.

What the housing crisis calls for is a rejiggering of government priorities: instead of selling off land whenever possible, governments could theoretically keep it, and develop it into affordable housing. In New York, there are tens of thousands of lots that could be developed, according to non-profit Picture the Homeless. Most are being held off market until developers get around to turning them into something (most likely luxury apartments). The government should declare them blighted and seize them instead. Eminent domain is a constitutional right of every U.S. governmental body, and it is relatively simple: a government can decide any piece of land under its jurisdiction would be better used for a public purpose than a private one, and pay the residents or business of that land “just compensation” (which has been defined differently by different courts) for taking the property.

Municipalities use eminent domain more than you might expect. In 2015, New York took over 75,000 square feet worth of properties in Coney Island to build part of an amusement park. And in 2009, the city drew years of protests when a court ruled it could seize people’s apartments and brownstones to build the Barclays Center in Brooklyn. If eminent domain could be used for a sports stadium, a good court case could be fought if it was used for public housing.

What the housing crisis calls for is a rejiggering of government priorities.

Philadelphia is currently using eminent domain to take more than 1,300 private properties and develop them into a mix of market-rate and affordable housing units. The move is causing controversy among proponents of private property, but it’s the kind of bold action cities will need to turn to more if they want to build the amount of affordable housing needed. Another option would be to do what Hugo Chavez did when he came to power: seize the land owned by the rich, not pay them for it, and give it to the poor. Chavez did not seize all private property, nor did he ban all wealth in Venezuela, but instead took land that was being farmed by poor Venezuelans but owned by a small group of the country’s rich and built farming cooperatives on it. Doing that here, of course, would create political unrest; Venezuela is not doing too great these days (though it's unclear how much its land policies have to do with its current problems). But as America’s housing situation shows, a capitalist solution to these problems will always prove inadequate.

It might be politically unfeasible to take over land and housing owned by the rich in the U.S. right now, but many other developed capitalist economies have realized that government control over housing and land is the best way to reduce housing costs. The through-line of successful anti-gentrification policies across the globe is massive government involvement in land and housing: In Germany, city governments control higher percentages of land, and only release land when there are population booms. That effectively depresses the land market, and makes housing cheaper. In Singapore, 80 percent of the populations lives in public housing. In cities where private housing has dominated—New York, London, San Francisco, Austin, nearly everywhere in the Western world—housing is in crisis. The solution is an uncomfortable one for politicians in an age of limited government: cheap housing necessitates more government control.

Peter Moskowitz is a freelance journalist.