Move and Start Over

Schools are often directly affected by the resources of the community in which they are located. This reveals itself as a wide disparity in educational resources between rich and poor neighborhoods, as more affluent neighborhoods pay more property tax-a usual stream of revenue for school districts. A recent study of families who participated in the Move To Opportunity (MTO) program, revealed that school reforms are helping to bridge this gap in resources. Those who moved to neighborhoods with less poverty did only slightly better than those who did not move away from high-poverty areas. The study credits part of this lack of difference with "aggressive school reforms." Ironically, many who moved stayed in the same school district. Those that moved to a different school district were more likely to do better academically.

Picture J.J. from the 80's television sitcom, Good Times, saying "DY-NO-MITE!"
A New York Times article describes ambitious (explosivef) plans in Flint, Michigan. Due to city shrinkage and many foreclosures, some areas of the city are falling into urban decay. The city has plans to raze entire city blocks in order to "start over," and shift remaining tenants into a new development. What do you think about this? It is quite a variation from urban renewal.
.
.
.

What makes a public housing development troubled? (The above image is an unfair stereotype). I ask in all honesty. An article in the Washington Post about stimulus help for public housing stated that troubled housing developments would not be denied funds, but would receive more direction and oversight concerning the spending of the stimulus funds.
Nevada is seeking to follow Utah's lead in creating a database for affordable housing. I checked out Utah's (preceding link), and was surprised that my wife and I qualified for a nicer place with cheaper rent. The only problem is that it is substantially farther away, and I detest moving!

Something old, something new (title in APA format)

The old...
I am sick of talking about the roots of the current economic crisis, but truthfully, I know that my opinion far outstrips my understanding, so this article by Doug Robinson enlightened me. (Yes, I know it's opinionated as well, but some of the points seem to fall in line with what Lucas says, so I tend to believe they lean towards the objective truth.) In the creation of the Community Redevelopment Act back in 1977, politicians were seeking to help people get homes that lived in crime-ridden areas where banks wouldn't loan money. The intent seems noble. However, according to the anonymous banker that Robinson interviewed, over time, government stiff-armed banks into lowering their lending standards. Next, government-backed Fannie Mae and Freddie Mac bought up many of these sub-prime loans, selling many of them to investment firms. Our classmate, Lucas, makes a good point in saying that greed on both sides fueled the buying of these government-secured loans. They were worthless, yet had the promise payout, so why not throw caution to the wind and buy them up before someone else got their hands on them? Government's intent was noble, but their implementation was extremely flawed. Sound financial principles should not be discarded. We have witnessed what happens when they are.


The new...
This story was encouraging. After his duplex went unrented for a few months, an anonymous landlord decided to house a family (affected by the economic downturn) with children, rent free, if they were committed to getting back on their feet. He also put $5,000 in furniture in the house, which the family will take with them when they leave. He is also providing them with a van to use. Other businesses helped out, decorating the place. Volunteers helped put furnishings together. A business owner remarked that she just had to get involved when she heard about the charitable venture.
Yes, this helps only one family, yet the goodwill spread by it (through capitalism, no less!) can have a domino effect. Way to go private sector!
.
.

http://www.zazzle.com/private_property_t_shirt-235035825732209243

My aunt remarked the other day that a house is something that people do not have an innate right to. It sounds cold, but I have to agree with her. I do think that we as a people should help those who are truly down on their luck, help them have shelter. As mentioned before, I think the private sector (habitat for humanity, community homebuilding) can do this more efficiently. When the the government does it, multiple bureaucratic organizations take their cut of the revenue, driving up the cost to taxpayers. Unfortunately, Obama wants to lessen the charitable tax credit, which will have a negative impact on giving to private organizations that help people.

One of the issues at the heart of the affordable housing debate is the issue of private property. With the government continually backing more mortgages than ever before, the line between public and private property is getting blurrier all the time. Star Parker makes an insightful comment about where the blurring of this line could lead, in her column in the Deseret News today. In light of the outrage of the AIG bonuses paid to executives, and the government threatening regulation of executive pay (regulations which were not part of the stimulus money given to AIG), Parker remarks: "Or maybe we should check if families whose mortgages we bail out are going on vacation or out to dinner."

Think about it!

Companies like AIG regularly pay out bonuses; it's how their business operates. Pay for performance is a common policy in the private sector. Too bad our government officials are not paid based on performance.
If the government doesn't like how AIG handled their bail-out funds, then they should have attached more strings to the money.

HONESTLY...
we should not have bailed out these companies with taxpayer dollars in the first place. Fannie Mae and Freddie Mac should be dismantled. Let's get the government out of the mortgage industry; look where their meddling has gotten us!

Star Parker cites a "new study...the International Property Rights Index." It correlates national prosperity with security of private property. The nations that do a better job of securing private property are more prosperous. Enough said.
-
-
-
-

I am a big fan of Lucas' blog. Read it! His February 21st post proposes a more long-term vision for the housing crisis instead of a quick fix. He also uncovers discrimination in the proposed plan to aid struggling homeowners.

Now for a few brief updates. [Wow it is snowing like crazy! I am grateful to have an affordable place to live-even if I am renting!]

SB115, a bill that would aid manufactured (mobile) homeowners with moving their domicile in the event of the land they park on being sold, passed with a 2/3 majority, so it will likely be signed by the governor. One of the main motivations for the passage of the bill is the short term lease-30 days-that many mobile home owners are limited to signing. The other concern is that residents of mobile homes tend to have less means and/or are elderly, often without the funds required to move, especially under such short notice. Opponents of the bill worry that this sets a precedent for taxing some to benefit others. We already do this, in the forms of Medicaid and assistance for needy families. The article also mentioned that there is a national effort underway that would allow mobile homeowners to form coalitions and "purchase land from park owners" (Palmer, 2009).

H.B. 82, which would aid teachers in the purchase of a home, is stuck in the House Rules Committee, and does not look like it will make it this session. Teachers are underpaid and overworked (albeit during a 9 month work year). I'm not sure if this is the best way to help them, but something needs to be done to attract the talented individuals that are not willing to accept the low salary.

H.B. 83 has been tabled (last updated February 23), but it looks like both state houses have voted in favor of it by an overwhelming margin. This bill would raise the income limits that qualify a homeowner or renter for tax relief, in the form of a homeowner's or renter's credit . It would also increase the size of the credit for both. The increase in the credit is marginal, just over 5%, but every little bit helps in this tight economy. My wife started making her own rice milk and granola to help cut our expenses.

Read the linked article

Photo taken from CURE website

Star Parker is a smart, flame-throwing, unapologetic conservative. She has experience what it is like to be a single mother on welfare. Her opinion column in today's Deseret News, entitled: Leaders should at least be honest with taxpayers on economy, gives insight and provides a voice of warning in the midst of the recent housing crisis. She bemoans the culture of conspicuous consumption and government intervention with mortgages. She founded CURE, a black conservative think tank that espouses personal responsibility, one of the values at the heart of the mortgage crisis affecting millions of families.
_
--
---

How did we end up here?

President elected Obama announced his $75 billion plan (on top of the 400 or so billion in losses absorbed by Fannie Mae and Freddie Mac) to help about 7 to 9 million homeowners. If you split 75 billion equally among those 9 million homeowners, each one would get just over $8,000. How is this going to work? Many of these homes that are in danger of foreclosure cost hundreds of thousands of dollars. In light of that, what will $8,000 do? Apparently, there is more money at the president's disposal-I heard at least a couple hundred billion or so.

How did we get here in the first place? During the 19th century, people moving to the western frontier built their own homes. Shelter is one of the basic human necessities. How are we, in the 21st century, on the verge of evicting millions of homeowners, essentially depriving them of this right to shelter? How did housing, which used to be a simple one-room structure built of rough-hewn trees, get so complicated?

What is government's responsibility in guaranteeing shelter? That depends on who you ask. 1)Some would say that it is to provide every person a very comfortable standard of housing.
2)Others would say government should provide only a minimum standard of housing.
3)Yet others say each person is responsible for their own housing.

With this latest bailout, it seems our country is moving frighteningly close to number 1. I fall somewhere between 2 and 3. People need housing, and we should be able to provide this in what is still the richest nation on the earth. However, if we provide everyone with a very comfortable standard of housing, there will be no incentive for them to work to attain that standard and contribute to society. This latest bailout is a nasty redistribution of wealth. The whole premise of this country is that people have the liberty to earn the standard of living that they desire. Inherent in this premise is the unavoidable aspect of RISK. We cannot eliminate this element of risk. Risk and reward go together like peanut butter and jelly.

This mortgage crisis is complex. It started with cheap money, which led to speculation. This speculation, coupled with government coercing lenders to make sub-prime loans (hey, everyone deserves a very comfortable standard of housing, right?) to many who could not afford the monthly payment is at the root of this problem. What kind of sense does this make, to get families into homes they cannot afford? It spells bailout. President Obama said today that people need to live within their means. Where is the motivation to do this when government shields people from the consequences of doing just that? Would we be in this crisis if we simply provided less-fortunate people with adequate housing, instead of prematurely moving them into being homeowners? Homeownership assumes risk. The government cannot assume this risk for all homeowners. My sister has been married for 5 years. She and her husband have 2 children, but they are still renting an apartment. I am 36 years old, married for 5 years, and I have never owned a home. I would love to own a home, but I am not ready to assume the risks associated with homeownership, and I don't expect anyone to assume them for me.

Yes, there are some people who are in need of help, that have truly fallen victim to this mess. Yet, government is not going to come to the rescue of the people that really played by the rules, that did not buy more home than they could afford.