Pension Funds: One Of The Many Causes Of Housing Shortages, Homelessness

 I started a long post trying to show that homelessness isn't a local issue.  Well, sure, the impact is local, but the main causes are outside the control of local politicians.  While that post sits around (maybe forever) waiting for me to make it perfect, an article in Sunday's LA Times gives a great example of how greed and uncontrolled capitalism set up a structure that makes many ordinary folks with money in pension funds unwitting accomplices to the high cost of housing.  From the LA Times:

"At the Shady Lane Apartments in the suburbs east of San Diego, the carpet could be worn, the appliances old. But with some of the cheaper rents around, the complex was a relatively affordable home for an increasingly priced-out working class.

Then, in 2021, the nonprofit that owned the 112-unit property sold it. In less than three years, the new owners raised rent for vacant units 21 percentage points more than landlords in nearby neighborhoods, according to data from a real estate research firm. On average, available homes at the complex went from less expensive than the surrounding area to more expensive.

Existing tenants saw change too. Rubin Flournoy, a supervisor at a city water treatment plant, said he’s seen his rent climb roughly twice as much annually since the sale. What he didn’t know was that the new owners had a surprising funding source: people like himself.

The El Cajon complex had been sold, according to research firm CoStar and commercial loan reports, to a giant real estate investment fund managed by the private equity firm Blackstone. Investors in the fund include the California State Teachers’ Retirement System and other public pension funds across the country.

There's the bind.  Pension and other such funds, like the Alaska Permanent Fund, are supposed to be invested to increase the value of the fund.  For pension funds, the purpose is to be able to pay pensions once people retire.  An important goal.

But few fund managers worry too much about the social and environmental impacts of the funds they invest in.  Some have started to pay attention to these issues - generally called ESG (Environmental, Social, Governance).    Republican legislators have started introducing legislation demanding punishing companies that use ESG criteria in investing.   [This is a Forbes article and I assumed I'd be blocked.  They said it was 1 of 4 free articles.  Clear out your cache regularly]  It seems Republicans are against regulations except when they aren't.  

Now, this was a short and easy post to write (and I hope to read).  Store it in that part of your brain that monitors housing and homelessness issues.  And the negative side effects of unregulated (or loosely regulated) capitalism.  

Also check on the funds your money (personal or pension or Permanent Fund, etc.) is invested in.  

I did look at the Alaska Permanent Fund Investments and the Alaska Teachers Retirement Fund (2021), but I couldn't find Blackstone.  But such funds could be hidden somewhere I didn't know to look.  I did find that Blackstone bought the Alaska Permanent Fund's infrastructure portfolio for $1 billion.   I didn't go much beyond the headline because of a paywall. (Giving them my email address is a kind of paywall to me.)