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Slumlord Paradise

California’s rental market has always had its share of slumlords renting substandard units for premium prices for years or even decades with little or no maintenance or improvements. These predatory landlords get away with it because there are no basic quality standards for rental housing, no regulation and/or no enforcement of regulations in the private rental market. The result is pervasive slum housing. These are properties that have not been renovated to warrant any increase in rent based on value, as measured by quality. With some exceptions, people are now paying extortion prices for units with the same filthy carpet, antiquated appliances, and dated décor from the 60s and 70s, and sometimes 80s. And while some landlords do the cheap cosmetic fixes such as putting in new carpet, or painting the walls, many don't bother. This housing (and rental housing in general) is now renting for 30 to 50 percent more than before 2007, or in some cases, double.

 

Meanwhile, some homeowners, particularly in hot markets such as San Francisco, have added closet-sized studios in their garages, many of which are illegal, which they rent for the same price as legitimate studios. Furthermore, studios now regularly rent for one-bedroom prices. Some homeowners have converted backyard sheds to “studios,” while others rent units without cooking facilities, windows, or ceilings high enough to stand up straight. In owner-occupied units and shared housing, it is common to see rental ads with language in the line of “looking for a tenant/housemate who is never home.” It is also common to see ads where potential tenants have to give their life story and detailed schedule to determine their compatibility with the household, something that would normally be discussed in an interview. In other words, it is now seemingly a privilege to rent substandard housing at the highest prices the market has ever seen, and it is best, from the landlord’s or housemate’s point of view, if you aren’t there, either. Because what landlords want and increasingly are getting is “money for nothing and checks for free.” All during a recession and ongoing economic stagnation where many people are out of work or underpaid and least able to afford such rents. So how can landlords get away with it?

 

As we know with the “market,” the value of something is what people are willing to pay for it. Housing, being a necessity of human life, is inelastic in this regard; that is, inelastic to the point of revolution. Therefore, landlords, having all the power (and judging by their predatory rent-seeking behavior, no moral conscience), push rents up to the maximum of what people can afford. In effect, they operate as an informal cartel with monopoly control of a resource. In practice, this means they are free to set prices as they see fit, so they end up by taking most, if not all, of their tenants’ spare income, sometimes to the point of forcing tenants to cut back on other necessities such as food. As a result, tenants take second and third jobs and become the working poor to avoid becoming the working homeless, a class that is growing every day. This predation increases inequality as wealth is continually transferred from workers to the property class. Most of this money does not find its way back into the productive economy, resulting in long-term economic stagnation.

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