Situated at the center of Hampton Roads, Norfolk provides a glimpse into the problem. Most of Norfolk’s residents rent, 60% of residents in the city rent compared to those than own their own home. Of that 60%, over half pay more than 30% of their paycheck in rent. So half of all renters in Norfolk are “rent burdened,” a category defined by the federal government as someone who pays more than 30% of their annual income on rent alone.

Meanwhile, the price of renting an apartment in Norfolk has ballooned in recent years. The going rate for a one bedroom apartment has increased by nearly 55%, from an average $712 a month in 2014 to $1,100 a month today. In the past five years Norfolk’s rent has increased over double the pace of San Francisco’s. In 2021, rental prices for a one-bedroom apartment are up over 8%. At the same time, the average wage of a renter in Norfolk is $18.4- barely a scratch above Virginia’s upcoming $15 minimum wage

Cash out all these numbers and the situation becomes clear: The average renter in Norfolk is paying around 36% of their income to rent. The story gets worse the less you make. If one lives in Norfolk and makes minimum wage,  $7.50 an hour, to be able to afford a modest 1 bedroom apartment they would need to work 112 hours each week.

Much of this data is pre-COVID, which has had a disproportionate impact on low-income renters, especially renters of color who were laid off as a result of economic drawdowns. That said, due to COVID-19, by January 2021 around $50 billion worth of unpaid rent had built up nationally, much of it owed by low-income renters who were already struggling to make ends meet. The rapid jump in rental prices combined with stagnant wages, massive layoffs of low-income workers, and an ever-widening wealth inequality gap, has slowly transformed Norfolk into a city where more than half its people are struggling to survive, a city that is slowly becoming unlivable.

This problem isn’t a Norfolk problem or even a Virginia problem. It’s a national problem. Across the United States, nearly half of all renters spend more than 30% of their income on rent. This holds true for rural households as well. Half of all rural renters cannot afford their rent. In fact, there is not a single state anywhere in the nation where a full-time minimum-wage employee can afford to rent a one-bedroom apartment. For many, renting a home, let alone owning one, is out of the question.

So what is happening to all the affordable housing? Across Hampton Roads waves of private equity firms are aggressively buying up middle and low-income affordable housing properties. They are renovating the units, hiking up the rental prices, shirking maintenance responsibilities, and evicting tenants, in order to reap hundreds of millions of dollars in profits for their shareholders.

So what is happening to all the affordable housing? Across Hampton Roads waves of private equity firms are aggressively buying up middle and low-income affordable housing properties. They are renovating the apartments, hiking up the rental prices, and shirking maintenance responsibilities. As a result, financial firms are reaping hundreds of millions of dollars in profits for their shareholders, while low-income tenants barely able to afford their rent in the first place are pushed out of their homes. It’s like gentrification but much worse.

We can call this a crisis, but that isn’t the right word. A crisis implies something out of the norm, something unexpected or unpredictable. COVID-19 is a crisis. The critical moment around housing we are facing now is not a crisis, it is a ‘crisis’ by design.

The list of players who have moved into the landlord business includes the usual suspects: JP Morgan Chase, UBS, Blackstone, and Invesco. But lesser-known financial firms have recently begun a shopping spree for multifamily homes in Hampton Roads explicitly targeting areas where housing supply is scarce, land is in short supply, employment hubs are staffed, and transportation corridors are nearby.

Hampton Roads is proving to be the right spot. From 2018 to 2021, the region has seen an increasing amount of apartment complexes across the region acquired by anonymous global equity firms. Kushner Cos. and Cedar Grove Capital, both private firms out of New York; the Blue Rise Group, a private-equity firm out of New Jersey; Heritage Capital Group, an international private-equity firm; Steadfast Cos. an international financial firm; and Capital Square 1031, a Virginia-based firm have collectively purchased around $650 million worth of apartments in Hampton Roads, totaling nearly 1,200 units.

When financial firms purchase apartment complexes they do so in order to generate the maximum amount of profit for their shareholders and investors with little concern for the people who live there. They do this by renovating the units, adding on amenity surcharges, raising rental rates, and ultimately evicting long-time tenants who cannot afford to live in their homes anymore. Steadfast Cos., who targets seniors and middle-income renters, spends about an average of eight to nine thousand dollars on renovations in order to charge higher rents. Despite a federal moritorium on evictions, Steadfast has filed for 28 evictions in 2020 according to Private Equity Shareholder Project, a non-profit industry watchdog. At one affordable housing complex purchased by Capital Square, the firm boasted a 254% return on investment through implementing their “value-added strategy,” which includes renovations and maximum rent hikes. Capital Square recently bought two apartment complexes in Hampton Roads, including the 288-unit affordable housing complex Woodshire Apartment Homes in Chesapeake. Capital Square has filed for two evictions since the pandemic began.

While many financial firms are eyeing middle-income and luxury units in the region, affordable housing has become a lucrative target as well. CAPREIT, a large financial firm which counts thousands of affordable housing units among its billion-dollar portfolio, has recently purchased a lot of three multifamily buildings in Norfolk and Newport News. CAPREIT’s CEO Andrew Kadish has noted their strategy is to target affordable housing for “nurses,” “firefighters,” and “police officers,” who cannot afford to live in the city they work in. Kadish adds they seek a sizeable return on their investment by lowering occupancy from 100% to 95% by  “charging max rent,” as well as tacking on additional “amenity fees.” This past year CAPREIT took $10 million in PPP loans and is currently evicting two renters, as well as processing 32 debt collections in Virginia.

CAPREIT’s ‘max-rent’ model is one being echoed in Portsmouth. In March of 2021, Blackfin and GMF Capital, a real estate/private-equity partnership, purchased 452 affordable housing units across the majority-poor majority-Black area of Portsmouth, including Independence Square and Crescent Place. This adds to their portfolio in Portsmouth with Pepperwood Townhomes and Town Point Landing Apartments, as well as Westover Station Apartments in Newport News, a 108 unit affordable housing apartment complex. In all Blackfin/GMF control 868 affordable housing units in Hampton Roads. Blackfin’s goal in buying up affordable housing is to “find value for its clients and stakeholders through focused renovations, active asset management, and asset repositioning.” In 2019, Blackfin and GMF purchased the income-restricted Coastline Apartments in Virginia Beach,  significantly renovated them, and inflated the rental price.

Alongside CAPREIT and Blackfin, Starwood Capital recently took control of two low-income apartment buildings in Newport News in a bid to expand their already sizable affordable housing portfolio in the region. Starwood Capital is the 22nd largest apartment landlord in the U.S., with properties and investors that span the globe. According to SEC filings reviewed by the URC, as of December 2020, Starwood owns seven affordable housing complexes in majority-black neighborhoods across Hampton Roads, totaling over 1,097 units. Starwood Capital alone owns almost half as many affordable housing units as exist in Norfolk.

To make matters worse, Starwood’s real estate arm is notorious for wreaking havoc on renters by financially exploiting tenants with evictions and demurring on rental maintenance. In a 2016 investor call Colony Starwood, now merged under Starwood Capital, boasted their 25 percent cut in property-management costs. Their cost-saving innovations made life hell for tenants. Flooded carpets, moldy walls, and backed-up sewage were included by shifting upkeep and repair costs onto tenants, such as “insect control…replacing air filters…repairing broken glass…and repairing sewer and sink backups," as well as not returning security deposits. Since the pandemic began, Starwood Capital has filed for over a dozen evictions.

On a deeper level, as affordable housing shifted into the portfolios of wealthy investors our understanding of housing shifted along with it. The financialization of housing has transformed the home into nothing more than a financial instrument, subject to the same brutal bottom-line algorithmic logic as trading stock options. The Sun is setting on the local landlord. Today, the rental market is owned, operated, and dictated by the inflow of dark money into corporations whose sole responsibility is to generate profit for their global cohort of shareholders, many of whom have probably never stepped foot in Hampton Roads. Wall St. is the landlord now. And they are getting bigger every month, slow bleeding the families of low and middle-income renters with rent hikes, evictions, and nickel-and-dime schemes. Poor communities, especially those of color, have been transformed into what Columbia professor Saskia Sassen calls a “geography of extraction.” By Sassen’s account, these communities are treated like mines, with financial firms extracting everything they can from its residents before moving on to the next neighborhood.

Hampton Roads is not alone in this problem. Across the globe, the picture looks much the same. In 2015, financial groups bought up over $600 billion worth of the world’s property. By 2016, they owned over $1 trillion in real estate. Today, financial firms own $163 trillion worth of residential real estate. More than double the entire world’s GDP has flown into just residential real estate, lead mostly by private-equity firms. As Push director Fredrik Gertten notes, “if you live in a house where you can actually afford to pay the rent, you should be worried because they are looking for you.”

While private-equity firms continue to snatch up affordable apartments across Hampton Roads, federal tax policies have only given them a shot in the arm.  In 2017, the Trump Tax Cuts and Jobs Act included in the bill a program called Opportunity Zones (OZs). The brainchild of billionaire Sean Parker’s Economic Innovation Group, Opportunity Zones identify census tracts where the poverty rate is 20%, and median family income is less than 80% of the State. The goal is to attract private investments into OZ’s by offering companies 0% capital gains tax if they invest in an OZ for 10 years or more. At first glance, it might look like a good opportunity to leverage private money to spur economic growth in poor neighborhoods, especially communities of color. By other accounts, “it’s gentrification on steroids.” In reality, Opportunity Zones open the door for even more private equity firms to buy up even more real estate in poor areas, only this time they don’t have to pay taxes on their profit.  

Nearly 40% of the Nation’s total supply of public housing is in an Opportunity Zone. About 40% of all people living in public housing are now living in designated Opportunity Zones. By the end of 2019, Trump’s Council of Economic Advisors said that about $75 billion worth of private money has been raised to redevelop opportunity zones. If the past couple of years of redevelopment and rising rents are any prediction as to what is going to happen in Opportunity Zones, then we know what the picture will look like: demolishing the homes of poor, predominantly Black residents, hikes in rent, displacing long time residents, and increasing corporate ownership of more parts of cities.

Hampton Roads is home to 34 Opportunity Zones, 16 are in Norfolk. Norfolk also has seven public housing neighborhoods, four out of Norfolk’s seven public housing neighborhoods are in Opportunity Zones, including the entire St. Paul’s Quadrant. At this time there is no indication as to whether or not Norfolk will leverage funds from private equity firms to redevelop public housing. However, financial groups have shown an interest in recent years to acquire low-income affordable housing as means to generate substantial profits. Capital Square, one of the private-equity firms making purchases in Hampton Roads, states that their specialty is investing in Opportunity Zone redevelopment. They have made good on their mandate by building three new luxury condos in Richmond’s Scott’s Addition, a designated Opportunity Zone.

In a recent webinar between HUD and municipal housing authorities, HUD representative Melissa Lafayette noted that communities told HUD that they were “fearful” OZ’s were going to “displace longtime residents” of their cities. The only response HUD gave: “time will really tell what the end result is to communities.”  

There are a number of federal policies designed to keep balance in the rental market. For one, the government has put in place policies designed to protect low-income renters and help them find a home. One program, Section 8, also known as the housing choice voucher, is designed to help low-income renters live in neighborhoods they might not otherwise be able to afford on their own. The intention of Section 8 is to diversify neighborhoods and break cycles of racialized generational poverty. The renter pays 30% of their salary to rent, and HUD covers the rest of the cost. The problem? The program is riddled with roadblocks- principle among them is getting on the list for a voucher. In Norfolk there are 18,000 eligible families for Section 8, Norfolk only has the budget to serve 3,000 of them. In part, this is because rent increases have outpaced federal funding for the program. Even if one gets a Section 8 voucher a tight rental market driven by inflated rental prices often means landlords do not want to rent to low-income renters using a voucher. By HUD’s own account landlords routinely “discriminate against voucher holders.” It only became illegal for landlords in Virginia to discriminate against low-income renters in July of 2020. The irony is that even with Section 8, the responsibility to pay 30% of one’s income to housing still leaves the voucher holder “rent burdened” by the government’s own definition.

In 1607 European settlers arrived on the shores of what would become Virginia. Eyeing an opportunity for profit, they took the land from indigenous nations, rapidly redeveloped it, and kicked out the people who were living there for generations. Some time later, the settlers rented the land back to the indigenous nations, but at a much higher price. 400 hundred years later, that same enterprising spirit is working its way through affordable housing. What we are seeing today in Hampton Roads and across the country is a tenacious part of American DNA that has brought us to a tipping point on affordable housing. We might only be aware of the problem in its current state- rent hikes, evictions, opportunity zones- but the problem of housing has been with us since the beginning.         

The task of keeping housing affordable in Hampton Roads can seem daunting. But it is in these moments that the collective resilience of a city is tested. Below are concrete steps that can be taken right now to slow the financial monopolization of housing, stop evictions, and keep Hampton Roads livable.

Corrected: A previous version of this article claimed firms had spent $650 billion on apartments in Hampton Roads. That number is $650 million.

1) Rent Control. Tell your city council you want rent control. Virginia is one of the only states in the south where the State legislature has not preempted city councils’ power to change housing laws. This means the decisions about who gets to live where and for how much is heavily influenced by the local city council. Rent control caps the rate at which landlords can increase the rent over a period of time. This helps keep rental prices stable and keeps families from being evicted. Rent control is a start, but it’s not perfect. Rent control does not limit increases in rent due to major building repairs. This helps to ensure landlords perform routine maintenance on apartments but also can be exploited by financial firms performing extensive building renovations.

2) Zoning Laws. Tell your city council to update outdated zoning laws. The majority of residential land in Virginia is zoned for single-family use. This means only a detached single-family house can be built on that land, prohibiting the construction of affordable apartments. With single-family homes out of reach for most low and middle-income residents, the need for building more affordable apartments has never been greater. Updating zoning laws to move away from single-family zoning can help spur construction of more affordable housing.

3) Inclusionary Zoning. Like single-family zoning, asking your city council to mandate ‘inclusionary zoning’ can go a long way in offsetting a lack of affordable housing. Inclusionary zoning requires that newly constructed apartment buildings dedicate a portion of their units to low-income renters. For example, inclusionary zoning would mandate that in a newly built 100 unit apartment building 30% or 30 units be priced specifically for low-income renters, not at the market rate. This has the effect of ensuring low-income renters are not priced out of newly built units. Inclusionary zoning can also break cycles of geographically concentrated generational poverty, as well as secure homes for low-income renters in wealthier areas. This ensures access to better schools, health services, and transportation.

4) Hold Corporations Accountable. The United Nations High Commissioner for Human Rights has made it clear that financial firms infringing on access to affordable housing is a violation of human rights. They call on governments and individuals to hold these firms accountable. What does it mean to hold corporations accountable? It means divesting from groups that exploit the most vulnerable among us and manipulate people’s homes for profit. As an individual, you can close accounts with groups speculating on residential real estate, and pull your money out of publicly-traded REITs (Residential Estate Investment Trust). The UN identifies Blackstone as an “egregious” violator of human rights, others include Morgan Stanley, Credit Suisse, UBS, and Goldman Sachs. If you work somewhere with a retirement plan, or have a pension, find out where your money is being invested and tell your pension fund to divest. If you are a student, find out where the college invests its endowment and lobby the fund managers to pull their money firms buying up affordable housing. Many places of worship also have invested endowments. If you attend religious services, ask where your money is being invested.

5) Keep Learning. Keep Educating. Keep Speaking Out. The financialization of affordable housing is a problem that has steadily grown more pernicious in the past two decades. Private-equity’s buy up of multifamily homes in Hampton Roads is a crucial detail in the challenge of affordable housing, but it isn’t the whole story. A key part of overcoming this challenge to our community is to keep learning about the hurdles of affordable housing. Educate others on the challenges facing Hampton Roads. And speak out about the changes we need to make in order to keep us from being squeezed out of our homes.