Opinion
Robert Shiller, Yale finance professor and author of “Irrational Exuberance,” a book about asset bubbles, appears to share this viewpoint.
In a Feb. 19 article by Karen Jacobs in Reuters entitled “Habitat says affordability gap persists, ” Professor Shiller is quoted as saying, “Most of us care about our children and grandchildren, and these people have to buy houses, so why would we want high home prices? We want economic growth, we don’t want high home prices.”
From the perspective of youth and millions of poor and lower-middle-class families, home prices soared far beyond the affordability level. Homeownership for these people could only be achieved through a number of gimmicks, including co-signers, no income documentation, no down payment, interest-only loans and so on.
Even as home prices continue to sink, homes and apartments in many parts of the country are still unaffordable for the majority of the local population .
As real estate values increased during the boom, so too did rents. Rental housing has long been a cottage industry for small investors, giving them a steady income and a means to retire. But to produce income for the investor, rents must at least cover the ownership costs, and the higher the mortgage, the higher the rents. So, in addition to not being able to afford a house, many people have been priced out of the rental market as well. The stories about people not being able to live close enough to their jobs to commute are legion.
Somewhat paradoxically, plummeting real estate prices are forcing rents higher because of the pressure on the rental market caused by folks leaving their foreclosed houses. And because refinancing has become so difficult, investor/landlords have not been able to reduce their mortgages to the value of their properties – so they could lower the rents they charge.
There are many suggestions floating around for how the government and housing finance industry should react to the foreclosure crisis. These suggestions range from 1) adjusting the bankruptcy laws to allow modifications of mortgage debt; 2) preventing foreclosures by providing people or communities with low-interest loans; and 3) helping homeowners modify their payments to deal with their arrearages.
For obvious reasons – tax receipts and profits among them – local governments and the housing finance industry want to prop up real estate values by any means necessary. And this, of course, is fine with existing homeowners. The higher the real estate values, the better their bottom line will be.
As you know from my opening lines, however, I believe prices ought to go in the opposite direction. While I’m all for preventing foreclosures, they are going to happen anyway, in large numbers. Why not take advantage of this opportunity to increase the stock of affordable housing?
Letting property values slide and shoveling money to nonprofit community housing groups will help to reduce the imbalance in affordable housing that the boom in property values caused to happen in the first place. As an important side effect, a policy that will encourage the creation of affordable housing will help prevent the blight caused by thousands of vacant houses resulting from the foreclosure crisis.
Finally, a massive conversion of single-family dwellings into affordable dwelling units will stimulate employment opportunities for the thousands of contractors who now are suffering right along with the rest of the real estate industry.
Attorney Steve Elias lives in Lakeport.
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- Written by: Steve Elias
Most of the folks who reside in Lake County work outside the county. In fact, the fastest growing area in all of Lake County is the gated residential bedroom community of Hidden Valley Lake.
One of the major characteristics of a bedroom community is the fact that most of the residents spend their money where they work rather than where they live – especially if there is a long commute to and from work involved. Just asking people to "shop local" is not going to change the behavior of these people.
Rather than PUSHING an agenda on the bedroom community crowd, I suggest a clever enticement. That means a plan needs to be put into place wherein this bedroom crowd comes to figure out for themselves that a change in their shopping behavior is somehow in their best interest.
It was no happy accident that The Foundation Center presentation last Monday at the Greenview Restaurant was packed. No, indeed. The event was designed to be packed. A "pay it forward" strategy was put into place three months prior to the event. Guess what? The public figured it out. People actually realized it was in their best interest to be present. Then, what did many of them do? They actually encouraged other people to attend with them. When people figure something is actually in their best interest they show up.
Make no mistake, there are a lot of worthwhile events taking place in Lake County all the time. For three years I helped coordinate business mixers for a business association – free admission, food, refreshments and nice door prizes.
You would think these mixers would be wall-to-wall people every month. Well, that was not the case. Why? I believe the reason is because the public did not themselves figure out that this repetitive event was actually in their BEST INTEREST. I now also believe that my telling them it was in their best interest did not help. No, the public needs to figure this sort of thing out for themselves. When you figure something out for yourself I believe it somehow has more value.
Want an example? Remember Mr. Whipple and that silly Charmin bathroom tissue commercial? I was in the local grocery store not too long ago and alone in the paper aisle. I decided to cross the line Mr. Whipple had drawn in the sand with his words, "Please don't squeeze the Charmin," and squeeze the tissue. But, perceiving myself to be somewhat sophisticated, I decided to squeeze the Scott tissue first and make a comparison.
So, I reached over and squeezed a single roll. I did not detect any special feeling of softness. Now, it was time to squeeze the Charmin. I decided to squeeze it in the same manner I remembered seeing Mr. Whipple do it on TV. So, rather than grabbing a single roll, I grabbed a big package from off the shelf. I gave it a healthy squeeze. Guess what? It self-inflated a little bit. I went to place the package back on the shelf. It did not fit. Well, how much is this package anyway? And, how much is a comparable Scott tissue package? Turns out they are about the same price. Only problem is I cannot fit the Charmin back on the shelf.
So, what do it do? What's easiest. I toss the inflated Charmin package into my grocery cart. Suddenly, it dawns on me what I have done. I have been tricked into getting the Charmin because I could not fit the package back on the shelf. And, that was the whole point of that not-so-silly commercial. Whoever designed that Charmin TV ad was very clever.
Most people do not read the newspaper, listen to the radio or watch TV for the advertising. They do it for the news and entertainment value. But, it is the advertising that pays those TV bills. So, does it not make sense to create memorable advertising – the kind that folks need to "figure out?"
Rather than asking local residents to "shop local," local residents should be seeing clever promotions from local businesses.
Can local businesses be clever in promoting themselves? Yes, I do believe they can. I was able to pack out that Greenview Dining Room without paying one cent in advertising. I simply tapped into a need I knew the public had and allowed them to spread it.
Any business can do this. But, they have to do three things:
1) They have to CARE about their audience.
2) They have to CONNECT with that audience.
3) They have to have a DESIGN that people can piece together and figure out.
No one should be TOLD to "shop local." They should instead "figure it out for themselves."
I might add that even the Lake County Business Services Network does not "shop local." I attended the first workshop they put on two years ago. The two keynote speakers were not even residents of Lake County. But, that did not stop them from being selected as keynote presenters.
Honest and truly, what's wrong with getting help wherever you can find it? Now that the Internet enables worldwide communication, what's wrong with getting customers wherever you can find them? If you need a doctor to treat a certain condition, do you simply do without if that doctor is not residing in Lake County? Of course not! Who would be so foolish as to not go where one can get the help he needs?
Well, this idea of helping works both ways. There are caring people around the world with expertise that can help Lake County move forward. Should we not reach out to them and allow them to reach back? Is there something amiss with Lake County reaching out to the world and vice versa? I certainly hope not.
That is one reason why Althea Garner, a former South African turned American citizen in Fountain Valley, California, donated a Ryze network called Project-Middletown to the people of Lake County two years ago. There are actually people around the world on that network who care about this area of Northern California. You can meet them online for free. You can advertise every Saturday four different ways – plain text, HTML, audio link and video link.
But, unless you happen to CARE about connecting with people who CARE about you, nothing much is going to happen on that network. Indeed, that network is sadly a reflection of life as it is in Lake County. But, that network can easily change and become vibrant if people choose to start caring about one another. This is not rocket science. It's really quite simple. Some folks call it practicing the Golden Rule. Others simply refer to it as NetWeaving.
Last Christmas I wrote an article for this publication requesting local folks share Merry Christmas wishes audibly with the world via my online broadcasting network. After all, it was people around the world on Ryze.com who went to bat for Middletown and caused the Fox News Channel to visit the town for "Middletown Days" back in 2006. All anyone needed to do was make a local phone call and speak a message of good will. Guess what happened? Not ONE PERSON living in Middletown bothered to make a local phone call and spread some Merry Christmas cheer. (For the record, I did make a call, but I am a resident of Hidden Valley Lake.)
What I cannot figure out is why Middletown folks cannot show care for folks who have obviously already shown care for them?
Perhaps folks here are unaware of the dynamics involved in passing along a passionate message? One passionate person shares a message with just three people. Each one of those individuals passes the message on to three more individuals. And so it goes exponentially. In just two weeks, it is mathematically possible to reach 4,782,696 with a passionate message. Well, people around the world are keenly aware of the power of reaching out to others - both inside and outside their local community. Want proof? Check out the Merry Xmas Middletown Channel.
From what I have experienced in the seven years I have lived here in Lake County (I relocated from Atlanta, Georgia), people here have a baby mindset. They focus primarily on themselves and wonder why others do not pay more attention to them. I know of a nonprofit organization that had two failed fundraising events because their executive board cared nothing about the burden they placed on their own volunteers. All that mattered is what the executive board wanted.
But, since it was the volunteers – and not the board members – that needed to do the work, it was not much of a surprise to me that the work did not get done. Two failed fundraisers and the dismissal of the nonprofit's sole paid employee was the result.
Caring (including lifting up your neighbor's business) matters. Connecting with others matters. Having a good design matters. If the small businesses in Lake County start doing what really matters, Lake County will have shoppers – not just locally ... but from all over the world!
Lamar Morgan lives in Hidden Valley Lake.
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- Written by: Lake County News Reports
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