Living Deregulation…

I hear a lot of complaining from a lot of people about the homeless. I hear a LOT of “explanations” for WHY those people are homeless. Some of the explanations are valid. Some are stupid. But here’s one people NEVER talk about because they don’t hear much about it.

I rent a house I’ve lived in for nine years. The previous landlord died and left the property to his kids who turned around and sold it. There are four houses – four families – on the lot. The new owner wants more money. Maybe needs is more accurate. Whichever it is, we’ve been told to move along – so we’ve started looking. Without boring you with the details of why, we prefer a stand-alone house to an apartment. We’re not demanding. We’re not particularly picky. We DO have some extra considerations most people don’t have but our focus, so far, has been on stand-alone houses. So…just for “fun” I thought I’d share the current math.

The rental agencies around here use a formula. It’s pretty basic. The household income must be three times the rent. Simple, yes? If you don’t meet that requirement, they won’t even talk to you. Hell, I made a mistake on a pre-screening form and lost out on a potential viewing. I tried to contact the company and explain my error but they just ignored me, presumably because they already had enough proper applications to choose from submitted by people who didn’t make a mistake. (Damn it!)

So here’s that math. Don’t worry. It won’t hurt. You, anyway. As it stands today, the entry level rent for a 2 bedroom house in Sonoma County is $2,300/mo. Three times that amount? $6,900/mo! Wow, $6,900/mo sounds like a LOT. In fact, $6,900/mo comes to $82,800/yr. The average work year for a standard employee is calculated at 2,080 hours per year. Little more math and…hey, in order to rent an entry level, 2 bedroom house in Sonoma County, CA one must make $39.81/hr.

So the choice for a person who wants or needs to stay near their families/support networks and the place they grew up? An apartment. Fortunately, there’s “relief,” there. For a 2 bedroom apartment, one “only” needs to make $31.15/hr or $64,792/yr. Now, these aren’t the upscale parts of Santa Rosa or even “Beverly Healdsburg.” This is just Sonoma County. ANYWHERE in the entire county!

Based on information from Payscale.com, the average hourly rate in Sonoma County is $22.32/hr. Certainly it explains why so many people flee Sonoma County. They have no choice. In my case, though, my income is tied to my business which does NOT move with me. I can leave but my work stays. Then what do I do?

Yeah, I know, this is a “me” problem. I only mention it because I think the next person I hear dismissing homelessness as a “choice” is going to get an earful. The problem I face isn’t because I did anything wrong. It’s not because of big government. It’s not high taxes and it’s not too many effing regulations! The problem I (WE, because there are countless of us in the same boat, here…) face is the direct and measurable result of allowing pooled investment funds (hedge funds) to buy up all the available housing as it comes on the market. Unregulated greed, pure and simple. It’s the direct result of conservative policies of deregulation. This is what “trusting business to do the right thing” actually looks like.

This is not a long-standing problem. The hedge funds were only allowed to start buying single family homes in 2011, the result of all the empty houses after Wall Street artificially inflated the housing bubble that crashed in 2007. The “market” was trying to maintain the artificially inflated housing values rather than let them drop back to where they should have been so banks were stuck holding all the empties and afraid more empties would show up if the equities dropped. People who had bought at the top of the market were leaving their homes as they found themselves underwater in the equity, whether they could pay the mortgage or not, a practice that became known as “strategic walkaways.”

So the hedge funds started buying the houses. The practice, at the time, was “sold” as a solution. The groups that could buy the inflated price houses would, then rent those houses out. But the “solution” has become a far more deadly disease. This process began only 11 years ago. In that time, one hedge fund has bought so many single family homes they could house the entire population of Iceland. ONE company! There are LOTS of these greedy little groups out there, all preying on the less advantaged and undermining the stability of the entire society. Oh, but…profits!

This seems like a good time to remind everyone of the axiom that business operates in a completely amoral environment – but any entity or group that behaves amorally ends up behaving immorally. It is the responsibility of the society in which the business operates to define the limits of the operation through regulation.

The solution, of course, is to return to regulations. Deny the hedge funds the ability to buy the housing and require them to divest in single family homes over a very short term. This would have the effect of flooding the market with single family housing. That, in turn, would cause the artificially inflated prices of those properties to drop back to realistic levels and make it possible for individuals to again buy homes. As the home prices dropped, rents would become realistic again as well. Stability would return. Homelessness would be reduced…

That one bit there? The part about causing “the artificially inflated prices of those properties to drop back to realistic levels?” One of the main goals of my prescribed solution? THAT’S the reason they’ll never do it and THAT is the only failing of government in this situation – their refusal to behave as the referee in the market.

I’ll tell you this: I know that Reagan created the homeless problem in the first place by throwing all the mentally ill patients out into the streets. I know that drug abuse – often created by the pharmaceutical corporations – has exacerbated the problem. But now I ALSO know that there could be people out there working and earning $30/hr and STILL be homeless because they can’t meet the minimum requirement – anywhere – in Sonoma County. Is it right that $30/hr should classify someone as “working poor” and render them homeless?

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