MJP –
A local study was able to trace the causes of the housing problem and found that Blackstone is now driving up rent in California.
Last week, a fresh report surfaced in San Diego, California, accusing the business Blackstone of being a part of the affordable housing crisis.
The paper titled “Helter Shelter: How Blackstone Contributes To and Profits from California’s Broken Housing System” was put together by the Private Equity Stakeholder Project and the Alliance of Californians for Community Empowerment.
The investigation states that since acquiring the properties three years ago, Blackstone has increased rents by nearly twice the market average at over sixty of its apartment buildings in San Diego County.
According to the research, rents increased from 13% to 79%.
A 38% rise was recorded on average.
The average rent went up from $1,700 to almost $2,300.
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“These properties were some of the last affordable housing properties available in a city that’s already suffering from an affordable housing crisis,” said Jordan Ash, the report’s author.
As soon as Blackstone acquired them, the rents were hiked.
This report is timely, coming shortly after the San Diego County Board of Supervisors decided to investigate the role of corporate landlords in the city’s housing crisis and consider legislative action to curb the acquisition of large tracts of property by Wall Street firms.
According to Ash, Blackstone is acting legally, but the legislation only permits rent increases up to a certain point for existing tents, which provides the corporation an incentive to evict residents, which is indeed happening.
“More regulation is required,” he stated.
Everyone needs a safe place to live, that much is certain. Housing is a fundamental human right, in our view.
Businesses should be able to earn a profit, but not at the expense of people’s ability to pay for housing.
A representative from Blackstone provided CBS 8 with the following statement:
In actuality, the average rent in these San Diego neighborhoods is 20% lower than the market average.
Our ownership has led to a 40% boost in resident review scores and a retention percentage that is much higher than the national average.
Over 44,000 repairs, including those that were previously neglected, have been completed, thanks to our investment of around $100 million, which has improved the living circumstances for thousands of San Diego citizens who reside in our neighborhoods.
Some important takeaways from the research on Blackstone‘s aggressive rent increases are as follows:
With about 350,000 rental units in the US and many more across the globe, Blackstone is the biggest landlord in the country.
Since 2021, Blackstone has added more than 256,000 units to its residential real estate empire through a series of aggressive acquisitions.
- Blackstone purchased 66 rental properties in and around San Diego, California, in 2021, for a total of 5,800 units. Almost twice as much as the average rent rise for all apartments in the San Diego market, which was 20% over this period, Blackstone has raised the rent at these properties by 38%, from $1,696/mo. to $2,339/mo. Particularly significant, reaching 79% in a few buildings owned by Blackstone, has been the growth.
- Blackstone offered renters who were in arrears a voluntary eviction postponement that lasted until August 2022. Following that, Blackstone began evicting tenants all around the United States. If Blackstone were a landlord in California, they would be financially motivated to evict their current tenants rather than pay the state’s cap on rent increases, which does not apply to new tenants. Even though the renters owed only one month’s rent in several instances, Blackstone nonetheless proceeded to evict them.
- A lack of new buildings and the persistent affordable housing crisis are two factors that Blackstone frequently emphasizes to investors as contributing to its earnings. There is a “structural shortage of housing has resulted in pricing power for rental housing assets,” according to a letter Blackstone sent to stockholders in 2023. “The good news is multifamily construction is now down about a third,” said Blackstone President Jon Gray during last year’s quarterly results call.
- Opposition to measures to cap rent rises in California has received millions of dollars in funding from Blackstone. To counter rent control ballot initiatives, Blackstone contributed more than $7 million in 2018 and 2020. Contributions to Blackstone did not originate from corporate PACs or the company’s management but rather from investment pools, such as the University of California and the California Public Employees Pension Fund.
- The data shown here strongly suggest that Blackstone sets its property rentals using RealPage’s YieldStar technology. As an example, “the property uses the revenue management system YieldStar.” was one of the specific applications stated in a 2021 prospectus for a trust securitized by Blackstone-owned multifamily properties. As a result of allegations of unlawful price-fixing, RealPage is facing legal action from the attorneys general of Arizona and Washington, DC. Additionally, the attorney general of North Carolina has initiated an investigation into the anti-competitive actions of RealPage.
