California is in the midst of a housing crisis that threatens the health and well-being of millions of people. The crisis is particularly acute in low-income communities, who overwhelmingly pay a large portion of their already-small income on housing, and communities of color, who have faced decades of legal and extra-legal residential segregation, housing discrimination, predatory lending, and exclusionary lending practices, such as redlining. While hundreds of thousands of Californians experience housing instability or have to make the choice between paying rent and buying basic necessities like food and medicine, corporate landlords are profiting from this crisis.
Equity Residential is one of the largest corporate landlords in California and the third largest apartment owner in the U.S., with 36,805 apartments across 150 properties in Southern California and San Francisco and nearly 80,000 apartments nationwide. Equity Residential is a Real Estate Investment Trust (REIT), which is an investment company that owns and often operates income-producing real estate assets. REITs get extremely favorable tax treatment, often paying little to no corporate taxes as they pass at least 90%, if not all, of their profits to their investors, who often receive tax breaks on the dividends they receive.
Invitation Homes is another one of the largest corporate landlords in California, with 12,822 primarily single family rentals in the state and nearly $16.7 billion in properties nationwide at the end of 2018. Also set up as a REIT, it is a single-family rental company controlled by The Blackstone Group, one of the largest private equity and asset management firms in the world. During the Great Recession, Blackstone bought up tens of thousands of foreclosed homes and turned them into rentals. Blackstone is one of a number of Wall Street firms that have profited from the foreclosure crisis, increasingly concentrating rentals among large corporate owners and crowding out “mom and pop” landlords.
Wall Street landlords, including private equity firms and REITs, are primarily accountable to their investors who demand returns that increase each year, resulting, in many cases, in large annual rent increases, frequent fees and high utility costs, high rates of evictions, and maintenance and habitability problems.
Moreover, the federal tax code allows these corporate landlords to avoid paying their fair share in taxes. Meanwhile, many have poured millions of dollars into California, as they do in other states, to elect politicians friendly to their interests, support legislation that furthers their interests, and defeat tenant protection legislation at the expense of millions of Californians.
Over 3 million California renter households are “rent burdened,” or paying over 30% of their income on rent, while nearly 1.6 million of those 3 million renter households are “severely rent burdened” (paying over 50% of their income on rent). In other words, over half of California tenant households are rent burdened, and one in four are severely rent burdened.