The 1 Percent’s Houses Are Getting Bigger and Swankier While Average Americans Struggle To Make Rent

Today’s gigan­tic class cleav­ages bring to mind Matthew 8:20, where Jesus describes his per­se­cu­tion: ​“The fox­es have holes, and the birds of the air have nests, but the Son of man hath not where to lay his head.” This descrip­tion could increas­ing­ly also apply to the wrong end of our lop­sided cap­i­tal­ist soci­ety, which shows itself nowhere more clear­ly than in housing.

The Wall Street Jour­nal has char­ac­ter­is­ti­cal­ly thor­ough report­ing on the cur­rent hous­ing mar­ket, in which it observes ​“a severe short­age of midti­er apart­ments,” mean­ing those ​“aimed at the work­ing class.” This ​“dearth of low­er-priced apart­ments” has dri­ven up rents for low­er- and mid­dle-income-earn­ers, with a mar­ket seg­ment aver­age of $845 a month — a daunt­ing fig­ure for many of today’s part-timers and even full-timers.

The rea­son for this ​“severe short­age” is pure mar­ket eco­nom­ics: ​“Con­struc­tion costs are gen­er­al­ly too high to jus­ti­fy build­ing new com­plex­es for low- and mid­dle-income ten­ants. …The dif­fer­ence in costs between installing gran­ite coun­ter­tops and stain­less-steel appli­ances is so slight com­pared to buy­ing land and installing ele­va­tors that econ­o­mists say devel­op­ing a lux­u­ry apart­ment and a midti­er one comes out rough­ly the same.” This has meant that ​“the sup­ply of less expen­sive apartments…had decreased 1.6% since 2002. Over that time, high-end apart­ment inven­to­ry has increased 31%.” Not sur­pris­ing, since rents for the high­er-income occu­pants aver­age $1,702. This isn’t exact­ly a glow­ing review of capitalism’s alleged abil­i­ty to meet con­sumer demand, regard­less of income level.

These mar­ket dynam­ics are espe­cial­ly impor­tant for today’s gen­er­a­tion of young ​“mil­len­ni­als,” as the busi­ness press observes they tend to rent more, ​“younger Amer­i­cans either can’t afford to buy a house or don’t want to.” They’re will­ing to accept small apart­ment sizes also, and for rea­sons that reflect the eco­nom­ic real­i­ties of the new gen­er­a­tion: ​“They have dimin­ished expec­ta­tions, less access to financ­ing and a strong desire to stay in cities.” The ten­den­cy for nor­mal work­ing fam­i­lies to be squeezed by high rents out of safe neigh­bor­hoods, or into tinier spaces, is anoth­er exam­ple of the invis­i­ble hand giv­ing the finger.

Con­do or castle?

On the oth­er hand, a con­ve­nient place to observe how the oth­er side of the mar­ket works is ​“Man­sion,” a week­ly sec­tion of the elite-ori­ent­ed Wall Street Jour­nal, which pro­files var­i­ous dif­fer­ent play­ground prop­er­ties of elite man­age­ment and the 1%. Like a lot of print and online media that cov­er hous­ing, it’s part jour­nal­ism of lifestyle trends and part naked sales pitch. But the win­dow it pro­vides on the day-to-day life of the rul­ing class is fascinating.

A con­spic­u­ous Man­sion head­line, ​“Mas­ters of the Uni­verse,” refers to the infa­mous phrase used to describe Wall Street pow­er-bro­kers. But this ref­er­ence is to the incred­i­ble scale of high-end mas­ter suites, ​“With square footage that rivals the aver­age Amer­i­can home.”

The fea­tures are gob­s­mack­ing: ​“Ameni­ties have includ­ed every­thing from small kitchens to beau­ty salons and pedi­cure sta­tions. Some clients have request­ed pri­vate pools just off the mas­ter, sep­a­rate from the home’s main pool.” At anoth­er devel­op­ment, pri­vate suites have sep­a­rate ​“laun­dry rooms, small gyms or Pilates areas and ​‘super clos­ets’ with­in the mas­ter.” These super clos­ets are their own embar­rass­ment of rich­es: ​“clos­ets have evolved from util­i­tar­i­an stor­age spaces to show­pieces mod­eled after design­er stores, with fire­places, seat­ing areas and sep­a­rate dress­ing rooms.” Illus­trat­ed with enor­mous col­or pho­tos (often soft­ware-gen­er­at­ed in the small print), you can eas­i­ly see that sev­er­al of these con­do and man­sion designs have bed­room suites that alone exceed the medi­an mod­ern US house size of 2300 square feet.

Else­where, the Man­sion sec­tion observes that in New York City’s always record-set­ting prop­er­ty mar­ket, ​“At least two new devel­op­ments in Man­hat­tan are ask­ing $1 mil­lion for a sin­gle park­ing spot,” not fail­ing to notice that this is ​“about four times the cost of an aver­age sin­gle-fam­i­ly home in the U.S.” Spaces can be had for less, but these par­tic­u­lar con­crete patch­es are asso­ci­at­ed with units sport­ing super-high price tags themselves.

A more old-world exam­ple comes from the Finan­cial Times, where a recent edi­tion of its high-liv­ing Town & Coun­try sec­tion pro­files a Scot­tish Duke with a fair-sized cas­tle in the Argyles. The Times is eager to show a self-effac­ing, sta­tus-dis­re­gard­ing pic­ture of the Duke, encour­ag­ing us to see the par­tic­u­lar­ly ludi­crous insti­tu­tion of Anglo-Scot­tish aris­toc­ra­cy with Down­ton Abbey post-sta­tus charm. But the local his­to­ry is more real­ist: ​“To the dis­tress of some Inver­aray res­i­dents, the whole town was moved in the 1770s to give the cas­tle a more seclud­ed setting.”

Today His Grace is most con­cerned with fend­ing off the increas­ing­ly left-lean­ing Scot­tish Nation­al Party’s pro­pos­als to increase the tax on land­ed estates like his, and split up the great fam­i­ly for­tunes — although estates man­aged through cor­po­ra­tions are exempt. But while he hopes to avoid any split­ting of his assets, the Duke also con­fess­es he sel­dom uses his castle’s two-sto­ry library: ​“I’m just not a book person.”

For the urbane Lon­don CEO need­ing a break from city noise, the WSJ Mag­a­zine rec­om­mends the ​“Soho Farm­house,” actu­al­ly a fan­tas­ti­cal­ly expen­sive mem­bers-only rur­al retreat with a coun­try club, ice rink, horse sta­ble, foot­ball field, event barn, boathouse and ten­nis courts. To ease rich mem­bers into their relax­ation time, ​“a hid­den cam­era scans license plates as guests enter the prop­er­ty,” and ​“guests are hand­ed cock­tails as their vehi­cles are whisked away…guests can spec­i­fy their height and foot mea­sure­ments when check­ing in online to ensure that they are giv­en prop­er­ly sized bicy­cles and Welling­ton boots for their stay.”

Know­ing its audi­ence, the mag­a­zine men­tions an ​“Added bonus: If guests don’t want to make their own cock­tails, they can sum­mon one of two 24-hour rov­ing milk trucks that have been con­vert­ed into portable bars with bar­tenders on hand.” Look, no one appre­ci­ates the appeal of a rov­ing bar more than me. But 160,000 kids will die from cheap­ly-treat­able diar­rhea-relat­ed dis­eases this month, and these fun cash-burn­ing nov­el­ties are pret­ty obscene to African moth­ers watch­ing their kids die from con­di­tions that could be cured for far less than an executive’s arti­san cocktail.

No vacan­cies, more vagrancies

But the gap­ing chasm in hous­ing class­es is most dra­mat­i­cal­ly seen by com­par­ing the often-men­tioned num­ber of emp­ty hous­es and apart­ments, rel­a­tive to the num­ber of home­less cit­i­zens liv­ing on the streets or shel­ters around the Unit­ed States. Real num­bers can be looked up — the Cen­sus Bureau’s home­own­er­ship sur­vey found that in the first quar­ter of 2015, 17.3 mil­lion hous­ing units were vacant, exclud­ing prop­er­ties only vacant for part of the year. (Notably, the Man­sion sur­vey of gigan­tic mas­ter suites notes that these con­dos and man­sions will often ​“most like­ly be a sec­ond res­i­dence for the poten­tial buyer.”)

The num­ber of home­less Amer­i­cans is of course some­what hard­er to pin down, with the Depart­ment of Hous­ing and Urban Devel­op­ment in its Annu­al Home­less Assess­ment Report for 2014 (the most recent avail­able) find­ing 578,424 peo­ple home­less on a giv­en night. How­ev­er this HUD num­ber is con­sid­ered to be at best incom­plete, as its ​“point-in-time” data report­ing tends to under­es­ti­mate the issue. Non­prof­its and advo­ca­cy groups like the Urban League approach the num­ber in a longer time frame, try­ing to esti­mate how many peo­ple expe­ri­ence home­less­ness over the course of a year. The num­bers found through this approach are star­tling­ly dif­fer­ent, with old­er research sug­gest­ing num­bers around 2.3 mil­lion, reflect­ing high turnover among the home­less population.

The most gross cal­cu­la­tion from this data would sug­gest a ratio of 17.3 mil­lion year-round vacant units to 2.3 mil­lion home­less, or about 7.5 units per home­less indi­vid­ual. Using the HUD’s more con­ser­v­a­tive ​“Home­less­ness mea­sured on a sin­gle night” data would give us an even more insane 29 homes or apart­ments for each home­less person!

Obvi­ous­ly, num­bers any­thing like these point to a huge­ly irra­tional eco­nom­ic sys­tem, where peo­ple, includ­ing fam­i­lies with kids, are spend­ing the nights in dan­ger­ous shel­ters or on the streets while mil­lions of emp­ty apart­ments and hous­es sit silent­ly still.

This stag­ger­ing inef­fi­cien­cy of hous­ing mar­kets throws the irra­tional­i­ty of cap­i­tal­ism into stark relief. Much like crum­bling bridges and the unem­ployed con­struc­tion work­force, the mar­ket economy’s fail­ure to bring these eco­nom­ic fac­tors togeth­er is pret­ty damn­ing. Were Christ to return in our cap­i­tal­ist epoch, He’d need to ante up a lot more than the Word to find a place to lay His head — unless He, like oth­er young Amer­i­cans, had ​“dimin­ished expec­ta­tions” for housing.