RENT OUT-OF-CONTROL - While more and more Americans struggle to pay wildly inflated rents, Big Real Estate executives are splurging on superyachts, car collections, and even a private audience with superstar rapper Drake.
The Real Deal recently reported about the massive spending by developers and corporate landlords, noting that they’re “turning the world into a playground for the ultra-wealthy.” Meanwhile, as they keep charging outrageous rents with little to no regulations to rein them in, poor and middle- and working-class tenants can’t afford food and face homelessness.
The Real Deal, a kind of trade magazine for the real estate industry, wrote about the extravagant spending of Big Real Estate executives with an obvious glee: “Expensive boats and private islands are nice, but there’s nothing like a party. Anyone in the industry can tell you that real estate wealth shines most when the elites put on a night to remember.”
That led to the revelation that New York “retail magnate” Jeff Sutton spent $25 million on his daughter’s wedding in Italy, and developer Ben Ashkenazy hired superstar rapper Drake to perform a hit song at his daughter’s bat mitzvah at the Rainbow Room in New York City.
The Real Deal went on to giddily report that Blackstone CEO Stephen Schwarzman, whose company spent millions to kill two rent control ballot measures in California, owns a Porsche 911, an Audi A4, a Mini Cooper, and a BMW 645 CI. Housing Is A Human Right reported this month that Schwarzman also owns a sprawling countryside estate in England and posh mansions in New York, Palm Beach, Saint-Tropez, and Jamaica. The United Nations deemed Blackstone a key company that’s fueling the global housing affordability crisis.
Then there are the superyachts.
“In the rich folks’ toy box,” The Real Deal wrote, “the superyacht is nothing new. What is new is an unprecedented surge of purchases. Some 887 of them were sold last year, almost double the number sold in 2020, leaving the wealthy to contend with a shortage and seemingly endless waiting lists.” (There didn’t seem to be a tongue in cheek in that sentence.)
But developer Larry Silverstein was able to grab a superyacht, called “Silver Shalis,” for a reported $30 million in 2010.
Big Real Estate executives can lay out mountains of cash for their multi-million-dollar toys and parties because they rake in billions through excessive rent increases, which are either poorly regulated or aren’t regulated at all.
In the meantime, Zillow, the real estate site, found that in cities where people spend more than 32 percent of their take-home pay on rent, a spike in homelessness follows. That’s led to an increase of unhoused individuals dying on the streets in Los Angeles and other cities.
It’s no wonder that rent control movements across the country are rising up, with recent victories in New York, California, and Minnesota.
“When the housing market is as dysfunctional as it is in many parts of California,” housing expert Stephen Barton noted, “tenants are effectively subsidizing landlords with rent payments above what a fully competitive market would allow landlords to charge.”
Barton co-authored a UC Berkeley study that found that rent control is a key tool to stabilize California’s housing affordability crisis. Experts at USC and UCLA found the same thing.
But as California rent control ballot measures Proposition 10 and Proposition 21 have shown, Big Real Estate will shell out tens of millions to stop rent regulations so they can keep buying superyachts, mansions, and fancy cars. Americans, however, are becoming increasingly overwhelmed by skyrocketing rents and angry at corporate landlords – and want rent control or rent stabilization. The real estate industry’s obscene spending may soon come to an end.
(Patrick Range McDonald is a best-selling author and award-winning journalist. A longtime staff writer at LA Weekly, McDonald is now the advocacy journalist for Housing Is A Human Right, the housing advocacy division of AIDS Healthcare Foundation, and a contributor to CityWatch.)