Our American Discourse, Ep. 19: Imagining a Future That’s Better Than the Past

Nationalism is experiencing a resurgence. Global cooperation is under attack. Xenophobia is ascending from all corners of the Western world. “Populists” speak openly about returning to the past. What happened to the future? What happened to the optimistic vision of overcoming the differences between us, coming together, and building a better world? Wouldn’t you like to hear someone make that case? Better yet, we found someone who’s investing real money to make it happen.

In this episode, philanthropist Nicolas Berggruen shares his vision of a progressive, cooperative future where people and technology work together to build an inclusive, intelligent society.

Continue reading “Our American Discourse, Ep. 19: Imagining a Future That’s Better Than the Past”

Our American Discourse, Ep. 11: Transit-Oriented Development

Time and time again, we hear that we’re living in an “urban renaissance.” People are moving back into the cities, and cities are once again building the things that people want. But where should they go? In an age of congested freeways and greenhouse gas emissions, gentrification and concentrated poverty, suburban sprawl and all sorts of inequality, where is the best place to build, to live, to walk, and to shop? One answer has been touted to address all those problems: near public transit.

In this episode, we define, describe, and debate “transit-oriented development” with Seva Rodnyansky.

Mr. Rodnyansky is a Ph.D. candidate in urban planning and development at the Sol Price School of Public Policy at the University of Southern California. Prior to joining USC, he served as a senior consultant for Booz & Company. He holds a Bachelor’s in economics, urban studies, and mathematical methods in the social sciences from Northwestern University.

To listen to this episode of Our American Discourse, click the orange arrow in the Soundcloud player at the top of this post. Or you can download it and subscribe through iTunes, Soundcloud, or Google Play.

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“Our American Discourse” is produced by Aubrey HicksJonathan Schwartz, and myself, and mixed by Corey and Ryan Hedden.

Reader Request: Are Foreclosures Good?

A reader asks: I read your comments about the need for an improvement in the housing market before the economy can improve. I live in a community of 900 single-family homes. Prior to the collapse of the real estate market in 2007, we had an occasional foreclosure and resale. The buyers of foreclosed homes appeared to move at breakneck speed to repair broken window panes, patch driveway potholes, replace dead shrubbery, and bring maintenance of their newly purchased homes up to high community standards. Since the commencement of a program to help struggling homeowners to remain in their homes, we have about 10% of our homes occupied by assisted homeowners with lowered mortgage requirements. The owners remain in possession of their homes, but they lack the funds required to improve their appearance. The result is that the 10% of poorly maintained homes lowered prices for the 90% of homes that are in good condition. Is this the solution to our problems suggested in your remarks?

Foreclosures lower prices. They increase the inventory of unsold homes, putting pressure on sellers to get rid of them. The longer they sit on the market, the more they deteriorate. As they force prices down, homeowners start owing more than the house is worth, and they stop making payments, resulting in yet more foreclosures. It’s a vicious cycle, and it affects the entire neighborhood.

One study from the 1990s found that, if you lived in Chicago, each foreclosure within an eighth of a mile of you lowered the value of your home by 0.9 percent. A more recent study found the effect to be even stronger during the 2008 crisis. Foreclosed properties in Massachusetts sold for 27 percent less than similar non-foreclosed properties. These foreclosures tended to pull down the prices of neighboring houses by $192,000. Many other studies have confirmed this effect.

So, if foreclosures have increased the value of homes in your neighborhood, you are a very fortunate exception to the rule.

And, if you’ve been disappointed by the poor maintenance of some of your neighbors, keep in mind that that ain’t nothin’ compared to the deterioration that usually follows foreclosures.

Even more important than such “spillover effects” is the direct effect a foreclosure has on the family being kicked out of their home. According to one recent study:

…an increase of 100 foreclosures corresponded to a 7.2% rise in emergency room visits and hospitalizations for hypertension, and an 8.1% increase for diabetes, among people aged 20 to 49.

Each rise of 100 foreclosures was also associated with 12% more visits related to anxiety in the same age category. And the same rise in foreclosures was associated with 39% more visits for suicide attempts…

Of these foreclosure victims, 2.3 million are children. According to a recent report, another 6 million children are at risk of being thrown out of their homes, if we continue to allow this foreclosure spiral.

This suffering is unnecessary and unproductive. It lowers the value of our homes, it prolongs our economic weakness, and it is, by any reasonable standard of justice, just plain cruel.

Much of it, moreover, is downright illegal:

As Michael W. Hudson documents in his behind-the-scenes book The Monster, these multibillion-dollar mortgage empires grew at astronomical rates by purposely hiring inexperienced salesmen whom they could “brainwash”; teaching them how to find and take advantage of uneducated, vulnerable borrowers in financial distress; ordering them to lie to, spy on, and hide critical information from borrowers; creating a culture that encouraged salesmen to forge documents and lie to regulators and underwriters; and firing anyone who didn’t employ as many of these unethical and illegal tactics as possible to increase loan volume.

These were expert con artists, perpetrating fraud on a level unseen since the vicious dog-eat-dog days of the late nineteenth century, back when consumers couldn’t even trust food not to poison them or medicine not to kill them. Unrestrained capitalism is a dirty business.

Corporations want us to believe that they will regulate themselves, that no firm with a reputation for shoddy products will stay in business for long, but we’re not that stupid. Our eyes are open, and the millions of fraudulent loans make it impossible to look away.

The Monster is to our generation what Upton Sinclair’s The Jungle was to an earlier age: a warning, a call to action, a witness to injustice so widespread that the reader is continually shocked at how human beings can be so cruel, so callous, so sociopathically greedy.

Surely no harm can come to the value of our homes from prosecuting these criminals. Indeed, bringing them to justice is the one of the best ways to prevent a recurrence of this disastrous crisis.

Don’t Ask a Journalist to Explain Real Estate Economics to You, Part I

No offense to David Streitfeld, but I won’t be asking him to manage my investments anytime soon.

Streitfeld, a New York Times reporter, declares, “Real Estate’s Gold Rush Seems Gone for Good.” He interviewed several economists who warned that “home ownership will never again yield rewards like those enjoyed in the second half of the 20th century” — or, at least, that’s the conclusion he drew from the interviews.

Streitfeld asked all the right people. Dean Baker told him, “People shouldn’t look at a home as a way to make money because it won’t.” Robert Shiller said, “People think it’s a law of nature” that home prices must go up, but it isn’t. Barry Ritholtz warned, “People shouldn’t be holding their breath waiting for it to happen again.”

All three of those guys predicted the housing crash. They know what they’re talking about…but does Streitfeld?   Continue reading “Don’t Ask a Journalist to Explain Real Estate Economics to You, Part I”