While the land relationships that dominate this society have implications for every relation in society, the recent crisis of gentrification and forced removal in low income Black communities, along with the volatile boom-bust real estate cycles, has made the struggle for adequate housing the most pronounced battleground in an increasingly intense war over the vision for the future of how we relate, prioritize and manage access to land. . . .
A report from Reuters. “With the Fed poised to hike further, the MBA forecasts that total mortgage originations will fall 35.5% this year, with a 64% decline in refinancings. ‘We have a classic case of a mortgage boom to bust cycle,’ said Gerard Cassidy, Head of U.S. Bank Equity Strategy at RBC Capital Markets. ‘As the rates go higher the refinancing business is cooling, which it always does, and is going to force a massive shrinkage in the mortgage banking business.’”
National Public Radio. “Last month, Fannie and Freddie began accepting desktop appraisals nationwide for all eligible transactions. While some questioned whether remote appraisals could be accurate, they kept deals on track at a time of wariness over in-person interactions. ‘They [Fannie and Freddie] understood they needed to keep the flow of money going and without the appraisal, [it] was going to stop the mortgages,’ said Sandra K. Adomatis, vice president of the Appraisal Institute.”
From WNDU on Indiana. “It’s a sure-fire sign of how hot the housing market is. The crowds at St. Joseph County’s Sheriff Sales are growing. ‘I had 34 sales that day and I think all but three went, sold to, you know, outside people,’ said Lt. Paul Weisser with the St. Joseph County Police Civil Division. The one-hour auction took in more than $1 million. Many of the homes sold for far more than was owed on the mortgage. ‘It’s sad to see people lose their homes but then, you know, it’s good that these investors are willing to keep these houses going, and instead of let them go down, and you know, so that part is good to see there are investors out there trying to make things better for us, you know,’ Weisser said. An additional 28-foreclosed homes are on the docket for the next sheriff’s sale May 19th.”
From The City on New York. “Squeezed by higher property taxes, soaring energy costs and unpaid rent during the pandemic, landlords of regulated apartments are hoping for the biggest increase from the city Rent Guidelines Board in at least a decade. The research also showed that 6.5% of rent-stabilized buildings in 2020 were ‘distressed,’ or had costs higher than their gross income. The percentage of distressed buildings rose one percentage point between 2019 and 2020, the report found. More than half of the distressed buildings in 2020 were in Manhattan.”
“For an eight-unit building she owns in The Bronx, Valentina Gojcaj is facing a 40% increase in her tax bill for 2022 over the previous year, she said. Many buildings are barely breaking even. For her eight-unit building, Gojcaj’s said her annual revenue is $144,000 if all the apartments are occupied and the rent is paid on time. Her actual expenses for 2021 on that building were $38,000, the property tax bill for the coming year is $57,000 and her mortgage is $48,000, leaving a cushion of $1,000.”
The Inter-Mountain. “A closer look at the numbers by LendingTree tells a more patchwork tale. Yes, the market is hot in some states. In others, there is considerably less demand. The online lender looked at the number of homes sitting vacant in each state and found that West Virginia has the fourth-highest vacancy rate in the country, at 18.12% of our 896,570 housing units. Homes in certain markets in the state — Morgantown, Wheeling, Charleston and Martinsburg, to name a few – don’t last long once listed for sale. But overall, West Virginia is struggling with vacant homes.”
From WFTS. “According to the U.S. Census Bureau, the state of Florida leads the nation with 1.68 million vacant houses. However, just because they are not occupied, doesn’t mean they’re not owned. ‘When you say 1.6 million vacant homes, that means to me there is someone controlling the market artificially,’ Tampa Bay area real estate agent Louie Talacay said. Jen Simmons is frantically trying to move to Tampa Bay from her home in New Jersey. On the surface, it appears there is a sea of empty homes for Simmons and her family to move into, but in reality, they are fighting tooth and nail to win out on just one.”
From USA Today on California. “Ron Wyghtman has watched L.A. and his small corner of Venice change drastically over decades. The 66-year-old remembers when the city saw violent crime reach historic highs in the 1990s with gangs, murders and a crack epidemic. It got safer. But now, Wyghtman says he sees it both backtracking and moving toward a new crisis. Tents and a disheveled RV now line his streets. Feces often mark the black fence that surrounds his small community. The sounds of emergency sirens echo during the dead of night and in the middle of the day.”
“Misty Keyser, 51, hears sirens almost every evening along Venice Boulevard in L.A.’s Venice neighborhood. She says for years she’s watched in frustration as leaders statewide and in the Greater Los Angeles area promise change that never comes. Instead, she says, lower-income homes were replaced by mansions and vacation homes, only further crippling the state’s housing crisis. ‘It just feels like it’s only getting worse,’ she said from the stoop of her one-story bungalow. ‘I don’t know what is needed, but we need change. We have people living outside like a Third World country. I mean, that just sounds insane. How is it still happening?’”
From CFJC Today in Canada. “Right now in B.C., buyers are at risk. Out-of-control bidding wars are putting pressure on people to waive standard conditions just to have their offer considered. Sources in the industry say that as many as 70 per cent of offers made in B.C. over the past year were without conditions, meaning people are waiving home inspections or financing approval. Even in Kamloops, realtors say more sales are being completed with no conditions.”
“One family in Nanaimo found out the hard way just how risky that can be. After paying over the asking price and waiving an inspection on their first home, they found out it had damage that would cost up to $100,000 to repair. This could easily happen to any family throughout B.C.”
The Vietnam Investment Review. “The unprecedented cancellation of the Tan Hoang Minh private bond issuance has caused an uproar in the market. The cancellation occurred after the bidding process to buy a land lot in Ho Chi Minh City’s Thu Thiem Peninsula for a record $106,521 per square metre late last year. The company soon thereafter decided to pull out of the transaction in January, forfeiting millions of dollars in deposit money.”
“SSI analyst Trinh Thai stated, ‘Some are concerned that Tan Hoang Minh might face default risk from the scandal, which could trigger a domino effect in the property sector as seen with Evergrande in China. We might need to wait for the response by Tan Hoang Minh to see how it could resolve its obligation balance to pay off debt holders in the event claims from investors come due.’”
“On the flip side, bondholders are concerned about whether their investment money will be lost and, if so, how they will recover their funds from the cancellation.”
From Bloomberg. “China’s worst Covid-19 outbreak in two years is prolonging the country’s property slump, starving stressed developers of cash and weighing on the economy. ‘One major loser amid lockdowns is the property sector, which is now in the darkest moment with lots of defaults and consolidations,’ said Larry Hu, head of China economics at Macquarie Group Ltd. ‘I’m now worried about being fired,’ said You Zheng, a 26-year-old real estate agent who had been handing out leaflets to passers by with his mask on for months. ‘It was difficult enough last month when prospective buyers were afraid of being locked in a compound during apartment viewing. Now who knows when sales can resume.’”
From Stuff New Zealand. “REINZ ambassador for Palmerston North Andy Stewart said this doesn’t necessarily mean a prolonged drop. ‘I think what we’re seeing here is a correction. We need to think about this as being the norm, as opposed to the increases in the past few years which have been abnormal. It’s a buyer’s market at the moment and so sellers need to be attuned to what the actual price of their house is. Otherwise, these properties are just left to sit.’”
“Stewart went on to say that even with this drop in prices, most buyers were already property owners, with first home buyers still struggling with increased deposit criteria and interest rates. ‘First home buyers are almost non-existent here.’”
“Youm mortgage advisor and director Craig Seton expressed a similar sentiment around first home buyers, saying the increase to a 20% threshold for first time borrowers remained a difficult obstacle to overcome. ‘It’s getting really hard to get a loan above 80% and so that deposit is really hard for people to put together.’”
Systemic risk in the property sector and early signs of Japanification threaten both its economy and alliances
Collapses of local junk bond prices signal that even tougher times lie ahead
Eminent domain has long been used to displace working-class people of color in Los Angeles, as in many cities. In a twist, a group of LA tenants is campaigning to use eminent domain to save themselves from eviction.
Hillside Villa tenants gather in front of their building in 2020. (Courtesy of Hillside Villa Tenants Association)
After trying to get an appointment for months, Rene AlexZander and four of his neighbors went to Los Angeles city councilmember Paul Krekorian’s office in December 2021. There, they met with Krekorian and members of his staff to discuss an unprecedented proposal: that the city acquire their building through eminent domain.
Krekorian heads up the committee that is currently reviewing the proposal. “I’ll never forget it,” AlexZander said of the meeting. Krekorian’s deputy chief of staff Matt Hale “looked at me and said, ‘We have to consider what’s best for the taxpayers.’ And I said, ‘We are the taxpayers!’ I called him out. I said, ‘What you’re saying right now is very insulting to us. You try to make us seem as if we’re not significant, when we really are.’”
AlexZander is a twenty-year tenant of Hillside Villa, a 124-unit affordable housing development in Chinatown, Los Angeles. The olive-green building with bright red wrought-iron balcony railings built in 1988 sits in view of several imposing new luxury apartment towers, a reminder of the recent wave of gentrification that has swept the area. For more than three years, AlexZander and his fellow tenants have waged an extraordinary fight to not only remain in their homes but to convince the city to purchase their building using eminent domain, a solution they argue would prevent displacement and create permanently affordable housing.
The thirty-year affordability covenant on the building (a condition of the tax credits and subsidized loans given to the developer in the 1980s) is set to expire, and the landlord, Tom Botz, has announced massive rent hikes that would mean de facto eviction of most tenants. Their fight for eminent domain offers a powerful template for other tenants looking to decommodify housing in hyper-financialized cities.
Eminent domain is a law that gives the government the right to seize, or expropriate, private property for public use, while compensating the property owner. The City of Los Angeles has a long, painful history of using eminent domain for highway expansion, stadium construction, and “urban renewal” efforts — usually displacing communities of color while benefiting corporate developers.
A glaring historical example is the Battle of Chavez Ravine, which resulted in the displacement of eighteen hundred families and the construction of Dodger Stadium. The land, previously held by Mexican-Americans who had gravitated there due to housing discrimination in other parts of the city, was acquired by the Los Angeles Housing Authority, primarily through eminent domain, in 1949.
The area was slated for public housing designed by modernist icon Richard Neutra that would hold thirty-six hundred units. However, with the 1953 election of conservative mayor Norris Poulson, who vehemently opposed public housing construction — and after years of the real estate lobby accusing the Los Angeles Housing Authority of communist infiltration, culminating in a referendum that banned public housing construction in the city altogether — the plans for public housing were abandoned, and City Council approved the sale of Chavez Ravine to Dodger owner Walter O’Malley in 1957.
LA County police removing resident Aurora Vargas from Chavez Ravine as she fights eviction. (Herald-Examiner Collection / Los Angeles Public Library Collection)
There’s also the case of Bunker Hill, a once-exclusive enclave of Victorian mansions (and home to Angel’s Flight, the 298-foot funicular known as the “world’s shortest railway”) that became a working-class neighborhood during the interwar period. When City Council voted to purchase the “blighted” land through eminent domain in 1959 and then sold it to private developers to spur a “renaissance” of Downtown, a total of 7,310 units were razed.
Today, Bunker Hill houses a collection of luxury residential buildings, concert venues, museums, gleaming office towers, and hotels (including John Portman’s postmodern landmark Bonaventure Hotel), and heavily policed privatized plazas. These are just two examples of the City of Los Angeles using eminent domain to benefit for-profit projects with little concern for people who lose their homes and are displaced as a result — all of which raises the question of what the city believes constitutes “public use.”
The Hillside Villa tenants argue that eminent domain, rather than being used to benefit corporate developers, should be used to ensure that tenants are able to remain in their homes in a city that is growing increasingly expensive and unsustainable for working-class residents like them. In Los Angeles County, which has an average median rent of $1,773 for a one-bedroom apartment, 75 percent of households were rent-burdened (spending more than 30 percent of their income on housing) even prior to COVID-19, while nearly half were severely rent-burdened. Meanwhile, the number of unhoused Angelenos continues to increase, reaching 66,436 in the 2020 Greater Los Angeles Homeless Count — a number that is expected to rise significantly when the eviction moratorium expires.
By fighting for the use of eminent domain to secure their right to stay put, Hillside Villa tenants are reclaiming the law in a system that is otherwise set up to protect and benefit private developers and landlords, enforced by the Los Angeles Police Department (LAPD) and the Sheriff’s Department who carry out evictions, police private property, and clear encampments. To confront the growing and intersecting homelessness and affordability crises, housing must be decommodified and reclaimed as a public good and human right, not a commodity for profit maximization — and eminent domain can help get us there.
Hillside Villa tenants at the Housing Not Cops March, April 8, 2021. (Courtesy of Hillside Villa Tenants Association)
Arriving at Eminent Domain
Initially, the Hillside Villa tenants weren’t pushing for eminent domain. They spent months trying to get their city councilmember, Gil Cedillo, involved, only to see their landlord, Tom Botz, renege on a deal with Cedillo where the city would forgive a loan worth millions of dollars in exchange for a ten-year extension of the affordability covenant. “After the whole 10-year deal went to trash, Cedillo completely shut us down,” said Leslie Hernandez, who moved to Hillside Villa as a young child and has lived there for thirty years. “He told us, ‘Well, there’s nothing else that we could do.’ But before that, we had begun working on eminent domain.” They began to tirelessly lobby a reluctant Cedillo to introduce the motion to City Council. He ultimately did in January 2020.
After receiving notice of the upcoming rent increase in 2018, the tenants, who organize in Cantonese, Spanish, and English, formed the Hillside Villa Tenants Association with support from Chinatown Community for Equitable Development and Los Angeles Tenants Union. They meet weekly in their courtyard (although currently on Zoom due to the Omicron surge), and describe each other as more like family members than neighbors.
Many have lived in the building for decades, including some tenants who were displaced when their apartments were seized through eminent domain in the 1980s to facilitate the Los Angeles Convention Center expansion. Some have lost their jobs during COVID-19, and others have passed away. Some accepted “cash for keys” deals from the landlord and moved out, fearing potential eviction.
Over the years, the tenants have staged countless protests, including in front of the homes of city councilmembers and in front of their landlord’s Malibu residence. They’ve also arranged sit-ins at City Hall and protested in front of Frank Gehry’s Walt Disney Concert Hall, which is built on land seized through eminent domain during the Bunker Hill clearing.
It has been an exhausting three-year effort, but as the tenants see it, they have no choice but to continue. Sonia Rodriguez, who has lived at Hillside Villa for nine years, said (in Spanish): “We’re fighting for affordable housing because, in my case, I have a daughter and also a grandson. And I just wonder what’s going to happen to them if this place stops being affordable.”
The upward of 200 percent rent hikes announced by Tom Botz, which would bring the rent to market rate, reflect both the catastrophic consequences of the financialization of housing that has made Los Angeles one of the least affordable cities in the United States and a center of the nation’s homelessness crisis, as well as the disastrous public-private partnership paradigm that has shaped affordable housing construction over recent decades.
Between 2010 and 2019, rents in Los Angeles County increased by a staggering 65 percent, while median household incomes went up by 36 percent — a significant discrepancy that doesn’t account for the economic devastation experienced by many renters as a result of COVID-19. Meanwhile, more than five thousand affordable units in Los Angeles County were converted from affordable to market rate between 1997 and 2018, and nearly nine thousand units have affordability covenants set to expire over the next eight years, putting even more pressure on renters as each lost affordable unit is accompanied by another low-income household in need of an affordable home.
The expiring affordability covenants stem from the government’s approach to affordable housing construction that relies on private developers to build or rehabilitate rental housing for low- and moderate-income tenants through subsidized programs like the Low-Income Housing Tax Credit (LIHTC). Under LIHTC, state governments are issued tax credits by the federal government and award them to private developers who must meet certain income and gross rent standards for a percentage of units. That percentage of units — for instance 20 percent of units that are occupied by tenants whose incomes are 50 percent or less of the area median income — must be made temporarily affordable, meaning the gross rent does not exceed 30 percent of their income. After a fixed period, the property owner is free to increase the rent to market rate, as Tom Botz wants to do with Hillside Villa. The tenants who cannot afford to pay market rate — with few places to go in a city in need of nearly five hundred thousand affordable homes — are kicked out, allowing landlords to increase their profits.
It’s worth mentioning that affordable housing landlords like Tom Botz often receive additional taxpayer money through the Section 8 voucher program, in which tenants pay 30 percent of their monthly adjusted gross income in rent, while the government covers the rest of their “fair market rent.” Both Section 8 and LIHTC, products of the neoliberal shift in federal housing policy, serve as vehicles for a massive transfer of money from the public sector into the private for-profit housing market (states must only award ten percent of LIHTCs to nonprofits). The annual budget for the LIHTC program alone is around $8 billion, while the Housing Choice Voucher Program budget for 2022 is $30.4 billion.
Privatized affordable housing is folded into for-profit developments and built when and where it suits developers. Yet the provision of housing is incompatible with a public-private approach in which profit accumulation outweighs consideration of housing need; the use value of a place to live (a basic human need) is fundamentally at odds with its hypothetical value as real estate, as Peter Marcuse and David Madden write in In Defense of Housing: The Politics of Crisis. To address the crises affecting housing in any meaningful way, housing must be decommodified and removed from the speculative market.
This can be accomplished through measures that include universal rent control and an expansion of the public housing stock. However, Nixon’s 1973 moratorium on public housing construction, which has essentially remained in place ever since — its current iteration is the Faircloth Amendment, which prohibits federal funding for projects that increase the number of units owned or operated by Public Housing Agencies as of October 1, 1999 — precludes such an expansion, making an appeal of the law paramount to any consequential housing policy proposal. (Alexandria Ocasio-Cortez had attempted to secure a limited exemption of the amendment in Biden’s faltering Build Back Better Act.)
In the meantime, eminent domain presents a unique opportunity for decommodification and for socialized housing governance structures, although in the case of Hillside Villa the post-expropriation management structure has yet to be determined. City Council would first have to pay market rate for the building, which is appraised at $46 million. As several organizers point out, that would amount to a mere fraction of the ever-increasing LAPD budget ($1.76 billion in the fiscal year 2021–2022). And, considering the price of privatized and temporarily affordable housing construction, preserving affordability is actually cheaper than building the same number of new units; $480,000 per unit (2019 figure, so likely even higher now) versus $370,000 per unit under the Hillside Villa proposal.
A delegation of Hillside Villa tenants trying to get a meeting with Paul Krekorian, October 15, 2021. (Courtesy of Hillside Villa Tenants Association)
The Potential of Eminent Domain
The Hillside Villa Tenants Association has shined a light on the inherent flaws of the privatized affordable housing program, while giving City Council an opportunity to break with the history of exploitative and dispossessive eminent domain use. They’ve also shown that organizing around eminent domain to decommodify and ensure permanent affordability has the potential to be a radical path forward for tenants at risk of displacement in Los Angeles and other cities, particularly in light of the moratorium on public housing construction in the United States. And they aren’t the only ones pursuing this path.
In Berlin, the Deutsche Wohnen & Co. enteignen campaign won a successful referendum to expropriate privatized housing from corporate landlords in September 2021, although so far, the new municipal government coalition, led by Social-Democratic Mayor Franziska Giffey, is refusing to implement it. There was also a proposal to expropriate vacant housing in California and make it affordable. And, in 2013, Green Party mayor Gayle McLaughlin pursued a strategy of acquiring and refinancing “troubled loans” through eminent domain to prevent another wave of foreclosures in the wake of the subprime mortgage crisis in Richmond, California, though ultimately the effort was unsuccessful. There are other examples of organizing to reverse the privatization and commodification of energy and water services after decades of neoliberalism, pointing to the possibility of a wider movement coalescing around reclaiming public infrastructure and provisions — including housing — through expropriation.
After a series of delays, requests for information, and dodging of tenants, the fate of Hillside Villa is currently in the hands of the Budget and Finance Committee under Paul Krekorian. If Krekorian’s committee decides to move forward with the proposal, and City Council votes to invoke eminent domain, the ramifications could extend beyond tenants securing the right to remain to potentially reshaping the way the city approaches expiring affordability covenants — but hopefully more fundamentally, how it approaches the provision of housing altogether.
While many critics, predictably, have argued that the proposal is too radical, too impractical, and too expensive, Leslie Hernandez says: “It’s just about keeping it affordable. We’re not asking for anything free.”
Traverse City Real Estate Co-Op Breaks Several Different Molds Josh Davis November 2, 2021, 5:38 pm
Slated to finish construction and open its doors in early 2022 (there’s even a live webcam feed of the construction site), Commongrounds Cooperative will have space for an independent coffee roaster, a local craft distillery, a food hall with a shared commercial kitchen for hourly rental, a childcare facility, a performing arts space and 24 apartments — 18 of them below-market rate, serving various income levels.
But what really makes Commongrounds Cooperative such an atypical project is who owns it and how it was financed. The co-op is owned by a combination of the commercial tenants that will occupy it once it opens and members of their community — their customers, employees and other supporters as well as the residents once they move in.
Housing activity accounts for 29% of GDP, but Evergrande’s debt crisis is sign that things could soon change
In China today, the buzz is all about how the government there too has stumbled into an energy crisis with widespread power cuts. Yet this and other supply shocks will eventually pass, while the $300bn (£218bn) of debt enveloping China’s second biggest property developer, Evergrande, is of greater significance. It suggests China’s long housing boom is over, and bodes badly for the increasingly troubled economy, with implications for the rest of the world too.
China’s real estate market has been called the most important sector in the world economy. Valued at about $55tn, it is now twice the size of its US equivalent, and four times larger than China’s GDP. Taking into account construction and other property-related goods and services, annual housing activity accounts for about 29% of China’s GDP, far above the 10%-20% typical of most developed nations.
Lenders are on pace to underwrite about $550 billion of U.S. jumbo home loans this year, a level last seen in the runup to the 2008 global financial crisis, according to BofA Global.
LA County police removing resident Aurora Vargas from Chavez Ravine as she fights eviction. (Herald-Examiner Collection / Los Angeles Public Library Collection) 
Hillside Villa tenants at the Housing Not Cops March, April 8, 2021. (Courtesy of Hillside Villa Tenants Association) 
A delegation of Hillside Villa tenants trying to get a meeting with Paul Krekorian, October 15, 2021. (Courtesy of Hillside Villa Tenants Association) 
