San Francisco, CA—Capitalism cannot and will not provide adequate housing for the working class. In the ferociously gentrified San Francisco Bay Area, where the median price of a single-family home now exceeds $1.6 million (sf.curbed.com, 4/5), more than seven thousand people are homeless (San Francisco Chronicle, 6/28). With an acute shortage of shelter beds, the number of homeless camps has exploded. Thousands—including families with children—are living in cars, tents, parks, abandoned buildings, outside bus stations, or in the streets.
Many homeless people, including both teachers and students, have jobs but cannot afford a lease in a city where the average one-bedroom apartment rents for $3,334 a month (rentjungle.com, June 2018). Thousands more are housing-insecure. They face impossible rent increases and are headed down the eviction-to-homelessness pipeline.
Yet countless houses and apartments in and around San Francisco sit empty. And the technology exists to build thousands more. How is this catastrophe possible?
The Bay Area housing crisis can be traced straight to the anarchy of capitalism. Silicon Valley mega-firms like Apple, Google, and Facebook build huge production facilities with no plan for housing and support services for their workers. Between 2012 and 2016, more than 373,000 new jobs have been created in the Bay Area—and only 58,000 new housing units permitted. Since 2011, the competition of high-salaried tech workers for scarce housing stock has doubled the median price of a home, squeezing out lower-paid workers. Empty lots and “tear-down” properties in Silicon Valley sell for over $1 million.
What the profit-crazy millionaires and billionaires cannot anticipate, for all their fancy technology, is that the working class—citizens and non-citizens alike—will fight back and unite in a multiracial force to confront their oppressors, and ultimately to smash the inhuman profit system.
“American Dream,” R.I.P.
For a very few generations, the American Dream of home ownership looked like an answer for many workers in the U.S. Ownership meant housing security and the accumulation of wealth. Passing this wealth down to one’s children allowed for upward mobility. After World War II, U.S. capitalism was rapidly expanding around the world. Within the U.S., the real estate industry was making money hand over fist. Both suburbia and undeveloped areas in cities like Oakland saw massive development of single-family homes. In the 1950s and 1960s, supported by anti-racist struggles and unionized jobs, some Black workers who left the South in the Great Migration bought homes in the Bay Area’s flatlands. Immigrant workers bought homes in Fruitvale and Chinatown.
But the American Dream was always color-coded. Banks, real estate interests, and the federal and state governments enforced racist redlining to segregate neighborhoods. The racist exploitation meant that Black, Latin, and immigrants workers were forced to pay higher interest rates for mortgages—or could not qualify to buy a home at all.
A recent article in the SF Business Times reported that HUD (the U.S. Department of Housing and Urban Development) has now defined the minimum annual income for “affordable housing” for a family of four in the Bay Area at $117,400. Which means that the great majority of Latin, Black, immigrant, low-wage, and non-union workers need not apply!
Why capitalism can’t build its way out of the housing crisis
Capitalism invests in housing only when it generates an ever-increasing profit. Beginning in the late 1970s, sections of the working class started losing ground in wages and buying power. Concentrated among Black, Latin, Asian, single heads of households (predominantly women and new immigrant workers), the wealth gap has continued to widen. Since the 1970s, the “hourly inflation-adjusted wages grew only 0.2 percent per year. In other words, though the economy has been growing, the primary way most people benefit from that growth has almost completely stalled…Large wage gains have accrued to workers at the top…and wages have been declining or stagnant for the bottom half of the income distribution” (Harvard Business Review, 10/24/17). Meanwhile, the cost of housing (workers’ largest family expense) has risen by 73 percent for a two-bedroom home (rentjungle.com, June 2018).
After the U.S. subprime mortgage market collapsed in 2007, inequality reached new extremes. The resulting flood of foreclosures robbed the working class of billions of dollars of wealth. Oakland was among the hardest-hit cities, with more than 35,000 homes lost between 2007 and 2012. Evictions and displacement from rental properties soared as well. The so-called American Dream was now a waking nightmare for the working class—and a new golden new dawn for the rapacious pigs of finance capital. (See box on Blackstone.)
According to the Metropolitan Transportation Commission (MTC), the shortage of affordable housing “is a primary driver of all our transportation problems.” At the current rate of new housing construction, an MTC study estimated that Oakland residents would have to wait until the year 2295 to house its projected population in 2040!
Because of racist gentrification and decades of “urban removal,” the Black population of San Francisco declined from 13 percent in 1970 to less than 6 percent today (Seattle Times, 5/11/15). Oakland is now following a similar trajectory. With 94 percent of new development now reserved for market-rate or luxury properties, Oakland has lost more than 30 percent of its Black population since 2000. Immigrant families are also leaving in droves, with landlords using the threat of ICE to evict them or raise their rents.
The working class fights back
Bay Area homeowners and renters are uniting in an anti-displacement chapter of the Alliance of Californians for Community Empowerment (ACCE). Most of the organization’s struggles focus on keeping workers in existing housing and blocking the displacement-and-eviction-to-homelessness pipeline.
To stop evictions, ACCE members organize with direct action and phone blasts against individual landlords and big Wall Street investors. Recently, more than 30 members took over the Blackstone/Invitation Homes office (see box) in Sacramento and succeeded in getting a rent increase reduced from $250 to $60. One family avoided foreclosure, while three others remain in their homes at reasonable rents.
ACCE is building a mass movement to restore and expand rent control. It’s also organizing a campaign to push landlords to sell distressed properties to a collection of “socially conscious investors” or land trusts to enable affordable rentals or mortgages, with families owning their homes but not the land.
Reform and Revolution
“Housing is a human right.” “Housing for people, not for profit.” These are common chants when ACCE members and friends turn out to confront landlords, the politicians who protect them, or real estate bosses like Blackstone\Invitation Homes. The chants follow the communist principle that all workers deserve decent housing. These actions are limited, however, because they focus on the needs of individual tenants, not on system change or the destruction of capitalism. Battles around evictions and rent control don’t solve an essential capitalist contradiction: Shrinking workers’ wages can no longer purchase what the working class produces, the basis of capitalist profit.
Getting involved in these struggles has given Progressive Labor Party members the opportunity to raise our communist politics about the limits of capitalism. Some ACCE members joined us on May Day, while others came to a demonstration against the separation of immigrant children from their parents at the Richmond Detention Center.
While celebrating our reform victories, members of PLP point out that the many battles over the years have yet to guarantee housing as a working-class right. To accomplish that, we must destroy capitalism and replace it with communism: no money, no buying or selling of commodities like housing. Instead of running the economy for profit for a few, we will organize and distribute collective production based upon the needs of the entire working class.
*****
Blackstone Equity Group: Housing Racketeers
Blackstone Group\Invitation Homes is the world’s largest private equity firm. Based on proprietary logarithms, the company calculated that areas like Oakland, with high job growth and a shortage of housing, had the greatest profit potential. After the crash of 2007, it made wholesale bids on auctions of “distressed loans” and amassed a portfolio of 82,000 homes. As a result, Blackstone captured the wealth lost by individual homeowners in foreclosure. The filthy rich got richer; the working class was devastated.
In 2017, Blackstone became the dominant player in the rental market in Alameda, an island city in the San Francisco Bay that connects to Oakland with bridges and a tunnel. Blackstone bought the 615-unit Summer House apartment complex, the largest in Alameda, for $231 million. Now its management company is initiating mass rent increases and evictions.
In the 1940s, in another part of Alameda, public funds built housing for military and shipyard personnel, most of them lower-income Black, Latin, or immigrant workers. In 1958, the Alameda Housing Department demolished the 760-unit Chipmen housing project and sold off the publicly owned parcels to private speculators, who subsequently developed the Summer Homes. Some owners gamed the federal government to obtain low-interest loans. Some deliberately allowed the housing to deteriorate and then tried to evict their tenants. Finally, in 2005, Kennedy Wilson bought the complex for $87 million and spent $30 million in renovations. Between 2006 and 2016, they also filed the highest number of unlawful detainers in Alameda, the first step to eviction. In 2017, they finally sold the complex to Blackstone for $231 million, a tidy profit (East Bay Express).
This process is labeled “gentrification.” We can see it for what it is: capitalist maximization of profit off the backs of a working class that is desperate for housing and stratified and divided by wage differentials.