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Wed, Feb

RFK Jr’s Housing Policy Gives Republican Mega-Donor a Pass

VOICES

NATIONAL POLITICS - At a time when working Americans struggle to make ends meet on multiple fronts, one cost-of-living crisis stands out as particularly dire: the national housing crisis. In our largest cities, decades of systemic underbuilding—de facto mandated by bans on multifamily housing—have made housing a nightmare for longtime residents and newcomers alike. But the housing crisis extends well past New York and San Francisco: Extreme inequality and poor monetary policy have made it difficult to rent and own homes across much of rural and suburban America. The crisis has been exacerbated by the rise of corporate home ownership, which has put housing security further out of reach for working Americans. 

Since launching his quixotic presidential candidacy, Robert F. Kennedy Jr. has made the issue of corporate homeownership central to his campaign. On the campaign trail, Kennedy has notably criticized investment firms BlackRock, Vanguard, and State Street by name, arguing they will someday be able to “outbid your children.” But interestingly, Kennedy’s railing against corporate homeownership has not extended to the firm that best embodies the encroachment of finance into housing: Blackstone

It’s unlikely Kennedy’s hands-off approach to Blackstone is a coincidence. Since originally entering the race as a reactionary candidate running in a Democratic primary, Kennedy has been accused of being a Republican plant. Given that Blackstone CEO Stephen Schwarzman is a Donald Trump-loving Republican mega-donor, it’s pretty easy to connect the dots on Kennedy’s rhetorical silence. In the 2022 cycle alone, Schwarzman gave over $35 million to congressional Republican campaigns. If Kennedy was serious about combating the rise of corporate homeownership—or the perception that he’s a de facto Republican candidate, for that matter—he would call out Blackstone’s nefarious influence by name.

With prospects for homeownership in coastal metropolitan areas increasingly unrealistic for middle-class Americans, Blackstone and other private investors’ push into the Sunbelt threatens remaining opportunities for homeownership. 

It’s a shame, really, because at a time when Blackstone is pushing even deeper into the housing market, it would be useful to call attention to the company’s detrimental impact. The time of Blackstone being content with its status as a commercial real estate giant is long gone. Since the financial crisis, the company has established a strong presence in everything from predatory rent-to-own schemes to student housing. Blackstone’s seemingly insatiable quest for dominance in the rental home market has been met with criticism in and outsidethe United States.

Blackstone’s early push into housing occurred in the aftermath of the subprime mortgage crisis, when it profited handsomely off home foreclosures. Like other major institutional investors that have pushed into housing, Blackstone has taken advantage of strict zoning laws that constrain the development of new housing. Invitation Homes, owned by Blackstone from 2012 to 2019, even acknowledgedin an SEC filing that it invests “in markets that we expect will exhibit lower new supply.”

At a time when home prices in key markets continue to skyrocket, Blackstone and similar firms have caused further pain by accelerating the corporatization of U.S. homeownership. In America’s Sun Belt, a macroregion known for relatively affordable middle- and working-class housing opportunities, private investors’ impact has been particularly dire. By one metric, over a third of homes bought in markets including Atlanta, Phoenix, and Charlotte were made by corporate investors in the first quarter of 2021. 

With prospects for homeownership in coastal metropolitan areas increasingly unrealistic for middle-class Americans, Blackstone and other private investors’ push into the Sunbelt threatens remaining opportunities for homeownership. Given the evidence that corporate homeownership efforts disproportionately target housing stock in Black-majority neighborhoods, these schemes threaten to further exacerbate the racial wealth gap.

As negative headlines surrounding Blackstone’s housing push mount, it’s no surprise that the company has desperately tried to reclaim the narrative in its favor. Blackstone has aggressively touted Home Partners of America, a rent-to-own company acquired in 2021, as a service to help tenants eventually own their own properties. Given that around 85% of renters of single-family homes by one estimate wouldn’t qualify for a mortgage, it’s not hard to see the program’s appeal. 

But rather than giving renters a shot at the American dream, tenants in Home Partners’ properties have faced nightmarish housing conditions, made worse by high prices and predatory contract terms. Even worse, this has often been accompanied by harm to tenants’ credit scores, putting the dream of homeownership even further out of their reach. 

The harm caused by Blackstone’s efforts to dominate rental housing extends beyond tenants and prospective homebuyers. First launched in 2017, the Blackstone Real Estate Income Trust (BREIT) has come under fire by regulators for its unconventional, if shady, investment structure. Funded largely through borrowed money—BREIT “invests with roughly 50% borrowed money” with a focus on rental apartments in Sunbelt communities, perTheWall Street Journal—BREIT’s limits on redemptions amid investor discontent has caught the ire of the SEC.

It’s not hard to see why: A trust that aggressively limits withdrawals in the face of investor discontent should not be trusted to continue its expansion in one of the country’s most crucial economic sectors. In a congressional testimony earlier this year, Duke law professor Gina-Gail S. Fletcher compared BREIT’s unethical practices to that of FTX, the notorious crypto hedge fund founded by Sam Bankman-Fried.

Given that Republicans were only able to capture the House by the narrowest of margins in 2022, it’s easy to make the case that Blackstone CEO Schwarzman’s millions played a decisive role. Amid the Republican-induced chaos of the 118th Congress in the House, party lawmakers have pushed hard for policies that would make the housing crisis even worse. This includes Republicans’ push for cuts to housing assistance and efforts to sabotage the Consumer Financial Protection Bureau (CFPB), a federal agency that has fought hard for tenants. While Kennedy has cried foul about supposedly disproportionate media criticism of his campaign, his silence on Blackstone is yet another mark against taking him seriously as a candidate.

(Aidan Smith is a political consultant and commentator. His work focuses on issue areas including federal personnel, competition policy, and foreign policy. This article was first published in CommonDreams.org.)