Homelessness grows as globalization boosts housing costs

News Analysis

With a master’s degree from Northwestern’s prestigious Medill School of Journalism, Nolu Crockett-Ntonga—a former White House correspondent for National Public Radio—doesn’t fit the typical profile of what one might expect from the homeless population. And yet, that is precisely what happened to her shortly after she returned stateside to care for her ailing mother.

“Initially I had wonderful jobs with good pay and great benefits,” said Crockett-Ntonga, who lived in South Africa for nearly a decade before settling in the Washington, D.C. area.

“But from 2005 to 2011, I kept getting laid off from the nonprofits where I worked. I always believed that I would have a job as long as I wanted to work. Alas, I was wrong. I applied for more than 300 jobs!

“I attended every workshop on how to get a job. I did everything the professionals said to do, but I did not get a job, and got only a handful of interviews. I sunk into depression. Unemployed, with no cushion, I tapped into my always meager retirement fund, believing in my heart that surely I would eventually get a job! But no.

“The rent at my two-bedroom apartment,” Crockett-Ntonga continued, “was $1,500 plus utilities at the time of my eviction. I’d paid rent and utilities on time for more than three years when I lived there with rent going up between three to five percent each year.

“My savings were running out. I talked to the property manager about the possibility of me paying half the rent amount. My proposal fell on deaf ears. They probably laughed at the idea.

“Sadly, I was evicted on October 18, 2011,” said Crockett-Ntonga. “My property was literally thrown curbside on the street. Walkers-by began picking through my possessions. If this could happen to me, then it is obvious that something is tragically wrong with our housing system.”

Indeed. The U.S. owes its growing problem with homelessness almost entirely to a global economy that increasingly treats virtually everything—food, water, housing, medical care—as an investment rather than the material basis for a decent standard of living. After shipping the value-added sectors of the U.S. manufacturing economy offshore, Wall Street’s financiers began a generation ago to scour the globe for new commercial opportunities, hoping to make a buck.

This has accomplished two things: First, it has gutted workers’ wages worldwide as employers search for workers who will most cheaply do the work. And secondly, it has raised the price on virtually everything, from a kilowatt of electricity to a bushel of corn to the rent on a one-bedroom condo.

The median sales price for homes in cities from Minneapolis to Miami to Manhattan has increased by more than 50% since the onset of the Great Recession in 2008, and rents have risen by 150% since 2010. Similar to Africans who have been priced out of their country’s food markets, Bolivians who can no longer afford water, or Columbians who are protesting proposals to raise the price of everything from coffee to sugar to gas, a growing number of working class Americans have found themselves unable to afford the rent.

One-in-four U.S. households today spend more than half of their monthly income on rent, and another six million are considered cost-burdened, meaning that they pay more than a third of their income on rent.

Unsurprisingly, just as the rising cost of food sparked hunger in Africa, the soaring cost of housing has led to an increase in U.S. homelessness. Government statistics estimate that there are more than 550,000 homeless people nationwide, although many activists believe the numbers are far higher. Even less surprising is that the axe has fallen heavily on African Americans, historically the last hired and first fired.

Compounding matters was the market for subprime mortgages that targeted African Americans, especially those with higher incomes. Blacks were more than twice as likely as Whites to be saddled with a predatory subprime mortgage during the real estate boom that collapsed in 2008, and nearly four times more likely in New York City.

The results are record low rates of homeownership for Blacks. Before the onset of the pandemic, 44% of Black families owned their home, compared with 73.7% of White families, according to the Census Bureau. According to a study by the Redfin real estate brokerage firm of metropolitan areas with more than a million residents, that gap is widest in Minneapolis where 25% of Black families own their home compared with 76% of Whites.

When the real estate bubble burst in 2008, the Obama administration held a fire sale of foreclosed homes owned by the government-backed lender Fannie Mae, effectively offering relief to the banks rather than homeowners. Wrote The Atlantic magazine:

“Between 2011 and 2017, some of the world’s largest private-equity groups and hedge funds, as well as other large investors, spent a combined $36 billion on more than 200,000 homes in ailing markets across the country. In one Atlanta zip code, they bought almost 90% of the 7,500 homes sold between January 2011 and June 2012; today, institutional investors own at least one in five single-family rentals in some parts of the metro area, according to Dan Immergluck, a professor at the Urban Studies Institute at Georgia State University.”

As a result, the number of empty properties nationwide has increased by nearly 1.1 million since 2010, leaving 17 million homes—or 12% of the nation’s housing stock—vacant. That means that there are 59 vacant homes for every homeless person in the country.