Who Profits from Crisis?
In Los Angeles, and across the United States, the COVID-19 pandemic has expanded and exposed social and economic inequalities. It has also become starkly apparent that such inequalities are structured through racialized risk, the disproportionate and systematic exposure of working-class communities of color to unemployment, unsafe jobs, eviction, homelessness, displacement, and wealth loss.
Already, the COVID-19 pandemic has become an opportunity for the upward redistribution of wealth, adding billions to the coffers of hedge funds and tech-billionaires.
In this research brief, we draw attention to how crisis serves as the opportunity for housing grabs, by which we mean the unregulated acquisition of residential property by powerful corporate actors. Already, the COVID-19 pandemic has become an opportunity for the upward redistribution of wealth, adding billions to the coffers of hedge funds and tech-billionaires. We anticipate that such wealth accumulation will accelerate in the immediate aftermath of the pandemic, with devastating impact on communities vulnerable to racialized risk.
With a focus on Los Angeles, we show how the Great Recession set the stage for a signiﬁcant expansion of the corporate control of residential property in working-class communities of color and argue that there will be a similar capitalization of distress in such communities over the next few years. This research brief is also the ﬁrst robust analysis of the different types of corporate landlords active in Los Angeles and the varied strategies of profit-making that they deploy.
Our findings are the following:
1. There is a distinctive geography of racialized risk in Los Angeles, most evident in working-class communities of color with high rent burdens. We group at-risk zip codes into four regions: South Central Los Angeles, Koreatown/Westlake, Hollywood/ East Hollywood, and the San Fernando Valley. We ﬁn d that “company landlords”landlords listed as limited liability companies (LLC), limited partnerships (LP), or corporations (Inc.)—have come to own large shares of residential units in these at-risk zip codes.
2. Analyzing assessor parcels data between 2005 and 2015, we find that residential unit acquisitions by limited liability companies (LLCs) increased significantly in these neighborhoods in the wake of the Great Recession, peaking in 2012.
3. We go behind the LLC to uncover the Wall Street landlords and local landlord-developer empires that drive such housing grabs. We ﬁn d that corporate control of residential property is established and maintained through various strategies including dominance in the single-family rental market, mass acquisition of foreclosed properties, destruction of rent-controlled housing, and running eviction machines to displace tenants.
4. We argue that housing grabs must be understood as state-sanctioned racial violence rather than as an aggregation of individual profit-making decisions by landlords. The enactment of eviction and foreclosure relies on the mobilization of armed police in the interest of landlords, backed by well-resourced landlord lawyers. Housing grabs are enabled by policies of deliberate deregulation, which also extend to financial lenders and the banking industry. Rewarded through bailouts and government-sponsored securitizations after the Great Recession, these real-estate and financial actors continue to be enabled in their profit-making on crisis.
The implications of our research findings for recovery policies and plans are clear:
- It is necessary to protect rent-burdened tenants in communities vulnerable to housing grabs. Otherwise there will be mass displacement of an unprecedented scale. The meager protections currently in place channel resources to landlords, not tenants. They also convert rent into debt, deepening racialized risk for tenants through the violence of debt collection.
- It is time to dispense of the myth of “mom and pop” landlords. Corporate landlords, ranging from Wall Street private equity firms to local real-estate empires, are protected from market risk and exert unchecked power in housing markets, often hidden behind a web of LLCs. Housing justice necessitates the appropriate regulation of such landlordism, an end to profit-making on the pain of eviction and displacement, and the pre-emptive mitigation of housing grabs. Crucial to holding corporate landlords accountable is having access to transparent data on their ownership schemes and on the lenders who finance them.
A research brief to warn of the increase in corporate control of residential property in Los Angeles since the Great Recession
Published by the UCLA Luskin Institute for Inequality and Democracy
By Terra Graziani, Joel Montano, Ananya Roy, and Pamela Stephen
Cover illustration and design by Lettwrs Layout by Andrés Carrasquillo