Say NO to Rent Control!

Let’s talk about rent control. Spoiler Alert: I’m not a fan. Rent control has been a controversial housing policy in the United States since its arrival in the 20^th century. The actual practice and implementation of rent control is inefficient, unfair, and counteractive. Yeah I said it!

Proponents argue that rent control is necessary in order to protect tenants from paying unreasonable rents and in order to provide access to decent housing. Wake up people it causes more problems than good! Don’t get me wrong; I’m all about affordable housing. Rent control is NOT the answer to our housing problems. No way Jose!

It's time to break it down. Rent control is economically counterproductive. With rent control in place, landlords struggle to make a reasonable return on their investment. Rent control is unfair for property owners of rent-controlled units. Because rent-controlled housing is not considered profitable, landlords might convert their property into a higher revenue producing development. This action reduces the number of rental housing available to the large population of renters.

Rent control exacerbates the housing shortage problem. Often times, landlords turn rental housing into condominiums or commercial uses. From the property owner’s perspective, it does not make sense to own property that is not profitable.

Furthermore, landlords have little incentive to maintain rent-controlled properties. As a result, housing quality and maintenance in rental housing dramatically declines. It would be foolish for a landlord to spend extra money on building repairs when he or she is not earning a fair profit. In worse cases, housing deterioration occurs. As a result, more and more landlords neglect their rental buildings. Hello, slum housing!

Rent control means no income restriction. Rent control was created to protect low- and moderate- income tenants from extreme rent increases. That’s funny since there is no income check to determine who should benefit from the perks of rent control. In fact, even multimillionaires receive protection under rent control. In other words, an individual earning a mere $20,000 per year could potentially spend the same amount on housing as an individual earning $100,000 per year. In my book, that’s not okay!

 Rent control does not necessarily help low-income people. There is no reason why we should be helping individuals who are more than capable of paying market rate rent. It’s absurd!

Lastly, rent control causes discrimination. Landlords often discriminate against tenants that are likely to stay for long periods of time. Retirees and couples with children receive the brunt of the discrimination. Because landlords can increase rents between vacancies, many landlords evict tenants for any possible reason. Rent control causes displacement as landlords remove tenants in order to raise rents. Does that seem fair to you?

So what I’m saying is rent control is an inefficient and detrimental housing policy! The social and economic cost of rent control completely outweighs any short-term gains that may exist. Rent control does not preserve affordable housing for low- to moderate-income households. Instead, it causes more burdens on the poor.

We should focus our attention on increasing the housing supply and providing low-income individuals with direct financial housing assistance. The government should increase the number of programs that subsidize the development or redevelopment of affordable housing. Rent control is an outdated policy that cannot be justified as a solution to our housing crisis! 

My Social Bookmarking Soul Mate

Even though I haven’t been able to find my real life soul mate (sad face), I have found my cyber soul mate. His name is Philip Rothman. I might not know what he looks like, where he lives, or what his favorite color is, but I do know that we have very similar interests. We both like long walks on the beach, watching movies, and laughing… just kidding, he is not my romantic soul mate. Unfortunately, I didn’t find him on eHarmony! But, like any great soul mate, we have a lot in common.

I found Philip through handy dandy Diigo. I went to “My Networks” and clicked on “Search Diigo users of interest”. Under “By Tags”, I typed in “housing” in the search engine. Diigo searched its users for people who were interested in topics related to housing. After searching a few pages, I stumbled upon Philip. He caught my eye. Some of his top tags are “financial crisis”, “recession”, “employment”, “housing”, “health care”, “real estate”, “monetary policy”, “forecasting” and “regulation”. While his tags are a little heavy on the financial side of things, he bookmarks a lot of sites and articles pertaining to housing.

Philip has a total of 2025 public bookmarks. He last bookmarked in 2010. I’m not sure why he hasn’t bookmarked recently, but he used to be very active with his bookmarking. Philip bookmarked almost every other day. He seemed to be very thorough with his bookmarking. He regularly commented on most of his bookmarks. Some of his comments are brief while others are very extensive and thorough. He came across like he was very passionate and fascinated with the housing and financial markets.

Back in April 21, 2010, I found it interesting that he bookmarked a blog post from Calculated Risk. Calculated Risk is currently on my blog list. I find the blog very educational and intriguing. I guess it’s true, great minds DO think alike! Philip is also very interested in professional blogs. He has a tendency to bookmark blogs from New York Times, WSJ, and Bloomberg. I also find these professional blogs helpful when I am researching information on housing.

Philip introduced me to Real Clear Markets. I had never heard of this website before. Ever since Philip directed me to it, I can’t get enough! It discusses news related to business, economics, housing, and finance. Every day Real Clear Markets posts different articles from TIME, The Economist, BusinessWeek, MarketWatch, Forbes, and Washington Post, to name a few. It is nice because you can go to one site to see what popular publications and newspapers are talking about. You can quickly see top stories and important news. It saves a lot of time. This site could be very useful to my readers! Thanks Philip!

Even though Philip has not bookmarked in a while, he frequently bookmarked during the housing crisis. It could be useful to go back and see what he was bookmarking about during that time. Past articles are just as important as current news pertaining to housing. It is interesting to track what blogs and other publications were predicting and commenting on when the bubble burst.

Foreclosures on the loose!

Foreclosures! Foreclosures! Foreclosures! AHHH! The sound of the word makes me cringe! When will the madness end? Will we ever get out of this mess we call the housing crisis? Who really knows? But as always, there are many predictions on the matter.

Even though hundreds of thousands struggling homeowners have been helped by the $26 billion mortgage settlement, it will bring even MORE foreclosures… and the madness continues.

Here’s the problem, folks. As lenders were waiting for the settlement to be determined, they held off on repossessing homes. As a result, there was a backup of troubled loans. Many of these foreclosures should have been filed in 2011. Instead, 2012 will be hit with a crap-load of foreclosures (pardon my French). Now that the settlement has been figured out, banks will start to reach out to delinquent homeowners to figure out which loans can be saved.

Daren Blomquist, vp of RealtyTrac predicts

“new [foreclosure] filings will climb from 1.9 million in 2011 to between 2.2 million and 2.5 million this year”.

Blomquist goes on to say:

"We think what we saw in 2011 was artificially low foreclosure numbers"

This is unfortunate to hear since the foreclosure rate went down 34% last year. Just as you think we are climbing out of the ditch, we fall right back in. Without a doubt, the increase in foreclosures will cause plenty of problems in the short term. I’m hoping this is a minor bump in the road. My optimistic self believes it is all part of the recovery process.

However, foreclosures have a devastating effect on housing markets. A concentration of foreclosed homes can drastically affect the property values of the entire neighborhood and community. Foreclosed homes become vacant and eventually become distressed and blighted. Non-foreclosed homeowners begin to leave the neighborhood as home values begin to spiral down. It creates a vicious cycle. REOs sell for half as much as a non-foreclosed property. A multitude of foreclosed homes leave neighborhoods in shambles.

Let’s take a look at Las Vegas, the poster-child for foreclosures. The entire city has taken a major hit. Las Vegas claims the top 5 hardest hit zip codes in the United States. A neighborhood in North Las Vegas had an astonishing 2,469 foreclosure filings in 2011. Yikes!

Even though the $26 billion mortgage settlement will cause an increase in foreclosures, it could help millions of struggling homeowners get back on track. $17 billion will go to reducing the principle owned by underwater homeowners and homeowners who are behind on their mortgage payments. It is estimated that the principle reduction will affect about 1 million homeowners.

I’m not saying its going save the entire housing market, but I do think it will help the situation. Anything at this point would make a difference! Unfortunately, most people need a greater principle reduction. It is unclear how far the money will actually go.

I guess it’s up to the Housing Gods to decide. Let’s keep our fingers crossed! 

Trifecta

Hello world:

Lets begin this blogging journey by taking a step back to 1949. Random I know, but brass yourselves! In 1949, the United States passed the American Housing Act (I’m sure that’s the first thing that popped into your mind). The 1949 Housing Act was one of the largest national housing policies in the United States. It expanded the federal governments’ role in mortgage insurance, urban renewal, and the construction of public housing. Its objective was to create a “decent home and a suitable living environment for every American family”. Keyword… “EVERY”. *Cough* ya right *Cough*.

Funny, since its now 2012 and this goal is far from being met. Come on America! It’s time to get it together! Millions of households are living in dwellings above their means or have no kind of shelter at all. Housing costs WAY more than it used to (rough times).  In the 1960s, food constituted for one-third of a household’s budget. Today, food constitutes one-seventh of a family’s budget (I guess that makes sense…Del Taco does offer a delicious 49 cent taco). The costs of housing, healthcare, and childcare have all risen disproportionately. For the purposes of my blog and my overall sanity, I will only be focusing on housing. Ha! Like that’s an easy task!

So, you are probably wondering who I am and how am I qualified to talk about the housing crisis? First off, lets be clear people—I’m not claiming to be an expert of any kind. However I do have an invested interest in the housing market. I am currently majoring in public policy with an emphasis in real estate development. Sounds pretty fancy! Now, you are probably wondering why should I listen to a college kid? Well, I suppose you don’t have to. It’s a free country…last time I checked! But if you want to read or learn more about issues pertaining to housing, then you have come to the right blog… aka it’s going to be a life-changing experience!

Housing is a topic that I find myself thinking about and researching often. My blog will focus on how we got ourselves in this current predicament and how we can improve the overall housing problems in the United States (super easy to figure out!) I will examine and critique current housing policies and programs in order to get a better understanding of how things can be fixed. Affordable housing has always been a problem. A household should spend no more than 30% of their annual income on housing. Public housing, HUD section 8, inclusionary zoning, and rent control are all housing programs that are meant to increase affordable housing options. They all have good aspects and intentions, but they all have shortcomings. As a result, slum housing and homelessness continue to exist. With the burst of the housing bubble and the collapse of the sub-prime mortgage system, our housing crisis has become even worse (shocker!). Millions of Americans cannot pay off their mortgages. Foreclosure rates continue to rise while home values continue to depreciate. Home construction is at an all time low.

Oh me, Oh my! Sounds to me like the world is coming to an end…Oh wait, it is! We have until December 21^st to solve this housing crisis!!! We can do it…NOT! Sorry, I’m being kind of a Debbie Downer, but there are so many problems with housing. It can be overwhelming. I can’t help but get carried away. But I am genuinely optimistic that things will improve with time. We have to have a little faith…right? Maybe I am being naïve, but I still have hope.

Profile:

What could be better than a doctor specializing in the housing market? To me, it doesn’t get much better! When it comes to short term and long-term illnesses pertaining to housing, Dr. Housing Bubble can cure any problem! Well not really, but he/she is on top of his/her housing news. I’m not sure who the mastermind is behind this blog, but this person is very informed. The doctor posts daily responses on new developments in the housing and real estate world. Dr. HB (we are on a nickname basis) shares his/her opinions and frequently references news articles pertaining to housing. Like a podiatrist or an optometrist, Dr. Housing Bubble specializes in Southern California real estate.

Because Dr. Housing Bubble is a real doctor (obviously), the blog is pretty academic in nature. It’s the most scholarly blog I’ve ever come across! Let’s be real, he uses graphs in almost every post! Even though the content is heavy and can often times be overwhelming, Dr. HB talks about housing in a relatable and comprehensible way. Every once in a while, he/she will throw in a joke or a sarcastic comment to lighten the mood. In a past post, the doctor complains that sellers, agents, and bank handlers often do not fix up homes before they attempt to sell them. Doctor HB jokes that the grass is so unkempt and high that “a California mountain lion could be living there”. Okay, it’s not the funniest joke you’ve ever heard, but it still makes things more enjoyable to read.

Like any great doctor, he/she frequently gives advice to people looking to invest in real estate. The Doc makes sure to give the most relevant and accurate recommendations based on the information at hand. Doctor HB has many clients that follow his/her blog. He/she is a pretty renowned housing doctor. The good thing about the doctor is that you don’t have to wait for an appointment! (sorry, bad joke)

Even though the blog uses lots of real estate jargon, you don’t have to be a real estate expert to understand the content. In a recent post, Dr. Housing Bubble states:

“The desire to buy has not been removed from the current market but the psychology surrounding American real estate has definitely been shattered”… “This is why even with low interest rates and many homes available to purchase, home sales are still anemic”.

Dr. Housing Bubble is a mastermind at analyzing current housing trends. The Doc always has an explanation for most things that happen in the housing world. He blames top real estate associations for overstating sales:

“Not so much of a shock here but you have to realize that one of the top associations for real estate basically is saying they were off on their bread and butter business for years.  This is like a doctor saying he over diagnosed 15 to 25 percent of his patient with a severe illness.”

It’s clear that Dr. HB knows what’s up? Dr. Housing is often critical of our housing problems and realizes who is at fault. Like Dr. Housing Blog, I hope to make my blog informative and stimulating. My blog will be more on the informal side, but still present concrete information. While Dr. Housing Bubble focuses solely on the housing bubble, I plan to touch on deep-rooted problems within housing such as affordable housing and homelessness. It’s going to be the real deal! Get excited!

Voice Critique: 

He goes by Chuck Ponzi… well at least that’s his name in the blogging world. I’m pretty sure he’s not actually related to Charles Ponzi! (I sure hope not!) Either way Chuck is the writer of “Southern California Real Estate Bubble Crash Blog” (it’s a mouthful, I know). While he hasn’t written a recent blog post in sometime, good old Chuck Ponzi caught my eye. Chuck is a true character. He doesn’t hold back. He is opinionated. He is confident. He says it like it is.

Chuck is certainly not shy. He is the epitome of cynical and sarcastic. However, he is still likeable and relatable. The way he puts words together paints a vivid image for the reader. He is witty and truly a very funny guy. Most of his posts are filled with mockery and ridicule. In the post entitled, “No Frog March for Mozilo”, Chuck rips into Angelo Mozilo. Chuck shows no mercy.

Chuck rarely disappoints. Even if you had no hard feelings towards Mozilo to begin with, by the end of this post you hate him too! In fact you hate the entire financial sector! You are automatically on Chuck’s side. He certainly has a way with words. Chuck uses very strong language to evoke a feeling of disgust and disdain. His diction is very descriptive and filled with insults (e.g., “trash-filled piece of financial garbage” “rich fools” “gold-plated toilets, “porn parties”, “fine the crap out of him”). His writing is pretty informal. He often uses parentheses and caps lock to get his point across. Chuck ends the post with “Couldn’t happen to a nicer guy, too.” It doesn’t get anymore sarcastic than that! He even compares a picture of Mozilo to a picture of the Grinch. I’m not gonna lie, Mozilo has found his doppleganger!

While most of his posts are filled with insults and sarcasm, Chuck’s post, “Buying a house” is endearing and helpful. He talks about the process of buying a home for his family. He is eager to help.

Chuck writes…

“In the end, we waited over 6 years before becoming homeowners again, we found that the emotional decision to buy a home is quite powerful for people that have already owned; it was for us”.

He ends the post with…

“Feel free to ask any questions that you might have in the comments; I will be as honest as I can”.

Under that sarcastic façade is a passionate guy ready to give advice to others. He almost becomes sensitive and conscious of others’ feelings. But don’t get too used to nice Chuck! In the very next post, he is right back to his normal cynical self!

Voice Post...Chuck Ponzi!

He goes by Chuck Ponzi… well at least that’s his name in the blogging world. I’m pretty sure he’s not actually related to Charles Ponzi! (I sure hope not!) Either way Chuck is the writer of “Southern California Real Estate Bubble Crash Blog” (it’s a mouthful, I know). While he hasn’t written a recent blog post in sometime, good old Chuck Ponzi caught my eye. Chuck is a true character. He doesn’t hold back. He is opinionated. He is confident. He says it like it is.

Chuck is certainly not shy. He is the epitome of cynical and sarcastic. However, he is still likeable and relatable. The way he puts words together paints a vivid image for the reader. He is witty and truly a very funny guy. Most of his posts are filled with mockery and ridicule. In the post entitled, “No Frog March for Mozilo”, Chuck rips into Angelo Mozilo. Chuck shows no mercy. Below is the infamous post! (I know it’s long but trust me it’s totally worth it)

Chuck writes…

“After Mozilo sold Countrywide, the most trash-filled piece of financial garbage to some rich fools who soon became parted with their money, many in the bubble blogosphere assumed that at the very least, some criminal activity had taken place by CEO Angelo Mozilo who had reaped more than $300 Million (yes, you read that correctly) in sale of his stock.

Imagine all of our surprise when not only did nothing happen, but we heard nothing of the matter whatsoever. What ever happened to financial fraud?

Well, at least the SEC had enough presence of mind to fine the crap out of him and get a settlement check. Hurry, quick, I would cash it right away, but don’t spend it all in one place, you might need to hire some people to investigate all of the other financial frauds you’re responsible for finding. (Madoff, Stanford, etc)

Actually, I just hope they don’t blow it all on gold-plated toilets and Porn Parties.

Either way, I’m glad to see SOMETHING happen. Couldn’t happen to a nicer guy, too.”

See I told you it was entertaining! Chuck rarely disappoints. Even if you had no hard feelings towards Mozilo to begin with, by the end of this post you hate him too! In fact you hate the entire financial sector! You are automatically on Chuck’s side. He certainly has a way with words. Chuck uses very strong language to evoke a feeling of disgust and disdain. His diction is very descriptive and filled with insults (e.g., “trash-filled piece of financial garbage” “rich fools” “gold-plated toilets, “porn parties”, “fine the crap out of him”). His writing is pretty informal. He often uses parentheses and caps lock to get his point across. Chuck ends the post with “Couldn’t happen to a nicer guy, too.” It doesn’t get anymore sarcastic than that!

While most of his posts are filled with insults and sarcasm, Chuck’s post, “Buying a house” is endearing and helpful. He talks about the process of buying a home for his family. He is eager to help.

Chuck writes…

“In the end, we waited over 6 years before becoming homeowners again, we found that the emotional decision to buy a home is quite powerful for people that have already owned; it was for us”.

He ends the post with…

“Feel free to ask any questions that you might have in the comments; I will be as honest as I can”.

Under that sarcastic façade is a passionate guy ready to give advice to others. He almost becomes sensitive and conscious of others’ feelings. But don’t get too used to nice Chuck! In the very next post, he is right back to his normal cynical self!