Point Austin: When a House Is Not a Home

One sign that the housing market is still in pretty bad shape is that when protesters show up at a home builder's office doorstep – it's no longer there. That's what happened Monday for a group of union activists who wanted to send a message to Centex Homes, heretofore locally headquartered out on Highway 183 North. At least, that's where it was until last weekend, when the company's recent merger with Michigan-based Pulte Homes resulted in the closing of the Austin administration office. Centex management has scurried back to Dallas – layoffs and consolidation continue under the Pulte Homes umbrella, now the biggest national home builder after the August $1.4 billion stock deal.

The protesters – folks from the national Laborers' International Union of North America as well as the Austin-based Workers Defense Project – were hoping to demand that Centex take responsibility for paying some construction workers who have been stiffed by Centex subcontractors. At the last minute, the protest was shifted to a nearby sales office, on the development site where the work actually occurred – surprise, no response from Centex.

It was pretty much the same story the next day in Dallas, where the Alliance for Home Buyer Jus­tice campaign took its national pilgrimage to the Centex headquarters there (now a subsidiary of Pulte), demanding that the company "take responsibility" for its role in the national financial crisis. Reportedly, the group chanted outside the building, inflated a pig balloon, and then marched into the Centex offices – where they were quickly escorted out again by security cops. But maybe, just maybe, they planted a small public seed of doubt about the roles that huge corporate builders now play in the national housing market.

Baiting the Gorilla

The actions were all part of LIUNA's Build America So America Works tour that began in Los Angeles Dec. 1 and runs through 10 cities in all, ending next week at Pulte's national headquarters outside Detroit, in Bloomfield Hills, Mich. The union, which claims 500,000 members nationally, has put together a coalition of workers, homeowners' associations, and other groups to press the industry to make changes in its building, marketing, and employment practices. They've targeted Pulte as what the business press now calls the "800-pound gorilla" in the new homes market – the Centex merger, while smaller companies have been declaring bankruptcy, suggests Pulte is trying to weather the economic storm by expansion and forging a larger market share.

More specifically, the campaign charges: "With subprime and exotic mortgages, Pulte victimized homebuyers. With its employment practices, Pulte victimized its workers. Pulte made record profits off the crisis, and even now, the multi-billion dollar corporation is taking $450 million in taxpayer-funded bailouts." Pulte has rejected LIUNA's claims, dismissing them as simply the rhetoric fueling a nationwide union organizing campaign. A St. Louis Pulte subsidiary has sued the union after a protest there, charging physical harassment and violation of labor laws. (St. Louis is the Thursday stop on this week's campaign.)

Building a Bigger Bubble

What's most striking about the campaign is its fledgling attempt to forge an alliance between construction workers, often at the bottom of the industrial labor chain, and new homebuyers, generally much more affluent and arguably even on the other side of the economic tug-of-war – boosting labor costs on the construction end inevitably means higher prices on the consumer side. That inherent tension was evident Monday night in the closing event at a Downtown hotel (attended mostly by tour participants), where a large panel of speakers juxtaposed homeowners' associations and lobbying groups with Hispanic construction workers. The common interest, the speakers argued, was to reform the home building industry to achieve: 1) fairer labor practices; 2) affordable, sustainable, and independent mortgage policies; 3) sound construction and defect standards; and 4) sustainable, public-interest development policies that serve the whole community interest, not just the companies' and stockholders' bottom line.

It's a sizable and complex menu, and when asked what they are hoping to accomplish in specific terms, the speakers most often cited "getting home builders to accept accountability" as a catch-all for a whole range of changes that would vary from state to state – most lamentably in Texas, where consumer protections are so poor the homeowners' lobby cites as its most important recent victory the Lege decision to abolish the agency supposedly created to protect homebuyers' interests. The Texas Resident­i­al Construction Commission was so hopelessly compromised by industry influence that the fiction of public interest couldn't be sustained. (Labor protections in Texas, of course, are essentially nonexistent.)

Monday night's anecdotal testimony ranged from construction workers denied their lawful wages to self-described "upscale" homeowners complaining that their wealthy subdivisions were being financially undermined by cheaper homes on smaller lots – not necessarily people in the same social action universe. (Pulte and Centex actually got off fairly easy; the evening's most popular whipping boy was KB Homes.) Most illuminating was the information that the biggest home builders have essentially been transformed into huge financing companies, managing every aspect of the initial purchase, padding the loan deals with fees and restrictions – and then remarketing the often-subprime loans as "mortgage securities" to third parties, thereby washing their hands of the construction transaction and also contributing their enormous share to the instability of the financial markets.

When the housing bubble inevitably burst, the homeowners and workers at the bottom were left holding the rubble, and major players like Pulte are now buying up the remaining pieces for the next expansionist real estate cycle. The most stunning story was out of Buckeye, Ariz. – the president of a homeowners' association there said that of 311 homes in his development, more than 150 are foreclosed or abandoned. That's a dire story no doubt repeated across the country, and it's difficult to imagine a fix that doesn't involve massive, federally subsidized refinancing of those mortgages to restabilize those communities.

Oh, wait – that's why we gave the banks all that bailout money. So they could reinvest in our communities and stave off financial collapse. Of course, from their perspective and that of the home building/financing giants, one man's collapse is another man's – or corporation's – opportunity.