Corporate landlords buy superyachts while California tenants drown under excessive rents

OPINION – While Californians 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 uncovered the extravagant spending of Big Real Estate executives with a kind of 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.” Apparently, real estate developers and corporate landlords are “turning the world into a playground for the ultra-wealthy.” Meanwhile, poor and middle- and working-class tenants can’t afford food and face homelessness.

So, since rent control reins in corporate greed, it’s easy to figure out why ultra-rich Big Real Estate executives so vehemently oppose it. New York “retail magnate” Jeff Sutton just spent $25 million on his daughter’s wedding in Italy while 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.

Then there’s Blackstone CEO Stephen Schwarzman, whose company spent millions to kill two rent control ballot measures in California. He owns a Porsche 911, an Audi A4, and a BMW 645 CI (among others) while the United Nations deemed Blackstone one of the key companies fueling the global housing affordability crisis.

And then, of course, 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.” Developer Larry Silverstein, for example, was able to grab a yacht called “Silver Shalis” for a reported $30 million in 2010.

It’s no wonder that rent control movements across the country are gaining ground, with recent victories in California, Minnesota, and New York.

Big Real Estate executives can lay out mountains of cash for their multimillion dollar toys and parties because they rake in billions through excessive rent increases which are either poorly regulated or not regulated at all.

Zillow, the real estate website, found that in cities where people spend more than 32 percent of their take-home pay on rent, a spike in homelessness follows and leads to an increase in unhoused individuals dying on the streets of places like Los Angeles.

It’s no wonder that rent control movements across the country are gaining ground, with recent victories in California, Minnesota, and New York. Housing expert Stephen Barton notes, “When the housing market is as dysfunctional as it is in many parts of California, 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 which found that rent control is a key tool to stabilize California’s housing affordability crisis (experts at USC and UCLA agree).

The good news is that we can push back against Big Real Estate’s predatory business practices. Housing Is a Human Right and its parent organization, AIDS Healthcare Foundation, are sponsoring the “Justice for Renters Act,” a 2024 ballot measure that expands rent control in California. When voters pass the initiative, local officials can pass updated rent control policies that curb Big Real Estate’s greed for second and third luxury houses, helping hard-working Californians remain in their only homes.

Patrick Range McDonald is the award-winning advocacy journalist for Housing Is A Human Right, the housing advocacy division of AIDS Healthcare Foundation.