On the role of Local Government in the Housing Market

Intersting article here about a local suburb that is buying up foreclosed homes, and remodeling them for re-sale.

As a proud owner of a 1959 Rambler, I can vouch for the value and solidity of these homes. They are well built, and the structure and floor plan lend themselves to easy addition & expansion. We bought ours in 1995 right before our wedding. At first our plan was to live here for a few years to build equity, and then move up into something newer and bigger. But a funny thing happened. We started planting roots. We found a parish we felt at home in, and started making connections to our post-war inner ring suburb. As time passed we kept re-investing our savings into our home, updating it, making it into “our home”. We watched housing prices soar, the exurbs boom, and we become more and more content to stay here. It wasn’t big, but it was big enough. We kept asking ourselves “how much more do we really need?”. We talked of adding on when kids came, but when they did, we procrastinated. Around about my daughters 8th birthday it hit me, why bother adding on when they’ll be moving out in another 10 years?

In a way, we bought a home smaller than we thought we’d need, and over time grew into it. We’ve been here 14 years now, and it is Home (with the capital H). We’ve become part of the neighborhood now, and have watched it change around us. New families have moved in, as others have moved out. I worried that we’d see a lot of foreclosures in the neighborhood, but so far, so good. Our area seems to be small enough to have escaped the mortgage crisis.

Which brings me back to the article. I am heartened to see people placing value in older and smaller homes. Maybe its indicative of a new found appreciation for limits. But I am a bit concerned about whether or not this is the proper role for a local government to fulfill.

In his book a Humane Economy, Wilhelm Ropke makes the argument that government is a necessary precondition for a free market to function. Without structure, and laws, and the protection of property, laissez-faire is impossible.

I agree with his point, but I think I might even take it a step farther. I think in some sense that local government is a part of the market. This article hints at it. Local Government has a vested interest in maintaining the local economy. As a government by, of, and for the people it must support and encourage business that promote jobs for its citizens. It also has an interest in promoting and supporting the creation and sustainability of affordable housing. But does that mean it should also enter into the market by buying, remodeling and reselling homes? Is that a proper role for government, and a proper use of tax dollars?

I can see both sides. On the positive note, it is good to see a suburb take a pre-emptive initiative to maintain its housing stock. I know of many cities (Buffalo, Detroit, Minneapolis) that have seen some neighborhoods decay to a point where homes became vacant and unlivable. Ultimately these three cities stepped in to buy foreclosed properties just to bulldoze the homes so that they would cease to be eyesores, and havens for crime. I think a strong case can be made that improving the homes adds value into the community for the remaining residents that will provide a market incentive for them to stay.

On the other side I can sympathize with the argument that the local government is not justified to take the money raised from home owners through property tax, to buy and play in the housing market. That is not the function of government. Presumably, if there is a market for these homes a private developer will step in, buy them, remodel them and resell them. The government will be less efficient in doing so than the market, and may in fact lose significant money in the process as it is acting not out of a market driven demand for these houses, but out of a centralized plan. By interfering in the market prematurely, these homes may be fixed up, and sit vacant, or be sold at a lower price that drags down the value of surrounding homes, and ultimately has a negative effect on the local tax base.

So I am conflicted. It’s nice to see someone doing this. But should it be the local government? I would appreciate some comments and input.

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On the Virtues of Ignorance – and the Fellowship of the Ring

No, this is not another post about the scarecrow from the Wizard of Oz, although I believe that the old Wizard would be in agreement with the sentiments about to be expressed. It’s an endorsement of an ignorance based worldview, as something that our civilization desperately needs.

Ignorance as a virtue? I can’t think of anything that sounds more ridiculous to our post-modern sensibilities. My first exposure to the "Virtues of Ignorance" came from the Wendell Berry essay The Way of Ignorance. Berry makes an eloquent argument that the problem at the core of mankind’s current troubles is the post enlightenment, blind faith in the power of science, and man’s ability of reason to solve all problems that we face. To my knowledge, Berry is not the first to make this argument, just the first to use the term Ignorance as something to be praised.

Simplifying the argument here, what Berry and others are advocating is acceptance, and recognition of limits. This is revolutionary talk in our culture. We have been conditioned to never accept limitations, being schooled from our earliest days that “we can be anything we want to be.” Now, if we are all honest with ourselves, I think we would admit that experience has taught us we can’t. There are many things I wanted to be, but was unable to become for reasons as simple as my physical, social, and mental limits. That is why I was not the starting quarterback for the University of Notre Dame. Heck, I wasn’t even the starting quarterback for Notre Dame H.S.

What Berry and others are advocating is an abandonment of the enlightenment ideology that man can sit upon the throne of God and control his own destiny. As the past 200 years of history has demonstrated, when man places himself on the throne, with the best of intentions to bring about paradise (whether social, economic, political, or scientific) the result is totalitarianism, and the creation of hell on earth. Despite the best of intentions for a Great Leap Forward, A Workers Paradise, Liberty-Equality-Fraternity, etc… the end result is always Satan sitting on the throne overseeing a reign of terror.

An ignorance based worldview is a return to pre-modern thought, that mankind, as a created being, has real and tangible limits. In mythical terms, our fall from grace happened when we ate from the tree of the knowledge of good and evil. Our hubris to see as God sees, resulted in our exile from the garden. Pride is the original sin.

What acceptance of our limits means is understanding that we are not divine. We are created in the image and likeness of God, and blessed the gifts of reason, and free will. These gifts are meant to be used in service of something larger than ourselves. This is the core of Stewardship. “As each one has received a gift, use it to serve one another as good stewards of God’s varied grace” (1 Peter 7:10).

The fundamental flaw of the post enlightenment, humanist worldviews, be they Marxist, or Libertarian, are that they view reason, and will as the confirmation that man is a self contained individual and beholden to nothing larger than himself. In a culture dominated by such a belief system, community is impossible. I believe that with the exception of sociopaths, human beings know in their gut that such a worldview is false. Despite our daily immersion in a culture that holds selfish individualism up as the ideal, most of us think and act to the contrary. We are hard wired to seek community, to share with one another our joy and our suffering. In the end, community will prevail, because it is the truth, it is who we are and how we were created to be.

History is not a linear progression towards liberal, individualism, and secular humanism, despite what our culture tells us. In the end, the bonds of brotherhood, and sacrifice will win out. But not because we will it so. For to think that we, as humans, are capable of achieving community, and retuning to Eden with our own free will is to make the same mistake as our enemies have. Tolkien illustrated this the best. In the end the fellowship of the ring, despite their achievements and sacrifices, only succeeded by grace. Frodo when standing before the fire with the ring, hesitated, and fell prey to the temptation of power. Had not Gollum bit off the ring, and fallen into the flames on accident, evil would have prevailed. For while our spirit is willing, our flesh is weak. Only God’s grace can ultimately save us. We must acknowledge our ignorance, and helplessness with humility if we are ever to find peace.

What’s so new about “The Luxury City”?

Interesting article over at The American http://www.american.com/archive/2009/may-2009/the-luxury-city-vs-the-middle-class/

describing the ongoing transformation of urban cores into enclaves for the rich, as cities and developers focus on attracting aging baby boomers, and young, single professionals into high cost, high tax condo’s and developments. Meanwhile, the middle class continues its long exodus to the suburbs, and the working poor are crowded into urban pockets. I fail to see how this is any different then what has been going on for the past 30 years in the cities mentioned in the article (NYC, San Francisco, LA)

Minneapolis is also loaded with brand new (<10 year old) lofts, and condo’s. Most of them have gone into former industrial areas on the edges of downtown, and have no doubt helped to revitalize the tax base. However, it’s not as if blocks of homes are being torn down and replaced. The city, in particular, the downtown core, is and has always been more conducive to life without children. The suburbs of the 1920’s are places like Highland Park, ComoPark, St. Anthony Park in St. Paul, and Linden Hills in Minneapolis. These are the same neighborhoods that have been among the top of the housing market since the 1980’s. Moving further out, the post war inner ring suburbs like Richfield, Golden Valley, St. Anthony, Edina, and St. Louis Park, that once represented the limits of the city, are today seeing reinvestment, and younger populations moving in. Much ink is wasted on the Exurb McCastles that have been thrown up far out from downtown, but the fact is that despite the long commutes, these communities (and I use the term loosely) are still linked economically with the Metropolitan core. It’s not as if the middle class is migrating back to Main Street USA, to take over the family building and loan, and ask for Aunt Bea to help watch Susie and Jimmie.

This urban trend turning downtowns into playgrounds for the rich, while the poor are concentrated into ghetto’s, and the middle class moves to the suburbs to raise their family has been going on for at least 100 years. It is an outcome of the capitalist economic system, and it will not change until something fundamental in the economy is changed. It is no more sustainable now, than it has ever been. Am I missing something?

Go West Young Man…

A very thoughtful meditation on the meaning of place, and the gravitational pull of “home”, from the perspective of a professional academic over at Chronicle

http://chronicle.com/jobs/news/2009/05/2009052201c.htm

As I have said before, I have the same bittersweet memories of 20 Prospect Avenue. It is a place that shaped and formed who I am. I left not because of a desire to get away from any small town – small minded confinement, (although I admit to having those thoughts) but because of a belief that my mission in life was to “better myself” by getting a college degree, and gaining professional employment. I call it the George Bailey Syndrome http://en.wikipedia.org/wiki/George_Bailey_(fictional_character) Alas, no death in the family caused me to stay behind to save the Building and Loan.

The economic climate of Western New York in 1990 was abysmal, which is pretty much what it is today, and has been since the 1970’s. I was raised to believe that I should make the most of the opportunity to move up in social class. I was the first person in my family to get a 4 year degree, and now the first to get a Master’s. I have absolutely no regrets about it. But the price of achieving it was surrendering my ties to place, and enlisting in the global meritocracy. I did so willingly, but without many alternatives. When I graduated I had two job offers, and a lot of debt. The offers were from the same transnational engineering firm, one for a position in their Corporate HQ in suburban Hartford, CT, and one for a position as a field service engineer. I leapt with both feet and chose the one that required 100% travel.

It seemed to me to be a gift. Wander the country from job to job, all expenses paid. Over the course of the next 4 years I would spend from 3 days, to 3 months, working and living in 40 different states. My job was to provide technical service, and consulting at coal burning power plants, and paper mills, sometimes as part of a team, but more often alone. This led me to places as diverse as Paducah, KY, Chicago’s & Philly’s South Side, Mobile, AL, Nekoosa, WI, Morro Bay, CA, Washingtonville, PA, Price, UT, Colstrip, MT, and Lawrence, KS. For all of the homogenization of American culture that has occurred, I can tell you first hand, the U.S. is still home to a wonderful diversity of local culture. It is a beautiful country, and American’s would be wise to visit it sometime.

I must say I loved it. As a working tourist, I had many a lonely night, but I learned more about the world, and myself, in my 4 years of rootless wandering that in my 4 years of college. But through all of those travels, the thing that I always yearned for was roots. I knew that no matter where I was at the moment, my time there was short. I was an outsider to the people and places that I visited. As much as I might fall in love with the beauty of the Appalachian’s, or red rock canyons of Utah, they were not my home, and my accent and history betrayed me to the locals. My transience prevented me from making a connection to people and place. I lived everywhere, and therefore I lived nowhere.

Whenever I crossed paths with my colleagues who also lived the transient life, we would share dinner, and drinks, and stories, and come to know each others pasts and dreams in a way we couldn’t with the locals we encountered. We loved the freedom, and money that our position brought, but most of us hoped to find a way to plant roots. Ultimately, one by one, we would tire of our life on the road, and find a place, or more likely, a pretty face, that led us to drop out.

And so Andy from Corpus Christi found an Iowa girl in KC. Kent from Michigan brought a girl from Massachusetts back to the family business in Michigan. Cathy from Worchester returned to the orbit of her Irish Catholic family. Sarah from Connecticut landed in Indianapolis. Rajesh from India quit to attend Kellogg where he met a girl from Detroit. And on, and on. We either abandoned our careers to move back home, or we kept our careers and settled somewhere else.

As for me, I met a girl from Wisconsin, and settled in St. Paul. A place about as close to home as I could get culturally, and economically, if not geographically. The descendants of Germans, Irish, Poles & Ukrainians help it to feel like Western, N.Y. But I miss the crazy Sicilians of my hometown, who never made it this far west. And I still can’t thaw the icy demeanor of the local Scandinavians. After 15 years it is home now. Soon I will have lived here longer than I did at 20 Prospect. So why will it never replace 20 Prospect in my heart? I think because it is the place and culture in which we are raised that forms our identity and sense of self. Minnesota has become home, but it can never be “Home”. That will always be 20 Prospect. Even though it belongs to another family now, it still exists inside of me and it always will.

Someday Minnesota will mean the same thing to my children wherever they eventually end up. I’d like to tell them to stay here and never leave, but when the world knocks on their door and calls them out, who am I to tell them no? No one in the last 4 generations of my family has been born and died in the same place. Despite my desires to preserve a piece of place and call it home for generations, it is a nostalgia for a past that has never existed in our family, and doubtless ever will. It is the 2nd law of Thermodynamics. Water runs downhill, heat flows from hot to cold, children move away, and borders fade into memory.

Decoration Day

Another Memorial Day weekend comes to an end on the Front Porch. Sitting here watching the sun set, with a belly full of berry cobbler, I am watching the wind blow silver maple “helicopters” down the street. Another sure sign that summer has begun. (The Maple seeds, not the belly full of cobbler)

Happy Decoration Day everyone. God Bless all those who have given their lives in service to a love for home, and all those who continue to.

New Suburbanism…

Interesting article on the decline of shopping malls over at the WSJ (hat tip James Lileks. At the risk of schaudenfreude, I have to say it made me smile. There’s a certain irony to hear someone say

“For towns and cities that are home to dying malls, the fallout can be devastating. Malls hire hundreds of workers and are significant contributors to the local tax base. In suburbs and small towns, malls often are the only major public spaces and the safest venues for teenagers to shop, hang out and seek part-time work.

Commonly, “the mall will be a meeting place, or, in some cases, like a city center,” says Carl Steidtmann, chief economist at Deloitte LLP. The deterioration of a mall can spawn broader problems, he notes. “It can become a crime magnet.”

So essentially, the suburban mall is dying the same death that it inflicted on Main Street. Not a bad thing, as despite the opinion of “The chief economist at Deloitte LLP”, I have never visited a mall that provided a sense of community. In fact, a Mall’s sole purpose was a temple to consumerism. Spend, spend, spend, and don’t you dare loiter around. This ain’t public property you know.

Yes, there is a sadness about seeing any decline in a local economy. And yes, jobs and livelihoods are being lost, and real humans will suffer, which is never a good thing.

The question that I have though is, “What is killing the malls?” The article does not lay the blame on the current recession. That has just accelerated an already existing trend. Malls have been closing for years. (The link is a tribute site to one of the original malls here in my neighborhood) It closed for good in 2004, after a long, slow death. What replaced it? Why Main Street Inc. A faux downtown populated by chain restaurants, coffee shops, and a WalMart. Just like the small town of my youth! (kidding. As Kaufmann has eloquently detailed, the small town mainstreet of my youth was bulldozed for a mall in the 70’s.) No, the malls are dying at the hands of… malls in Main Street clothing. How sneaky. Yes, the Borg assimilates all.

Speaking only from my personal experience of the Apache Plaza / Silver Lake Village developments I can tell you the following. No one walks there. The faux main street is essentially an island in a sea of parking lots, whereas the Mall was an “enclosed” island in a sea of parking lots. It is more convenient to be able to drive in quickly, park, go to the one store I want to shop at, and then leave. No more parking in the Goofy lot, and walking 1/2 mile to the Mall Entrance, then another half mile past the Orange Julius and Spencer Gifts to get that greeting card at Hallmark. Yes sir, progress. They could only improve on it if they found a way to make the whole experience into a drive through. (Don’t think they aren’t trying.) Then again, isn’t that what the Internet is doing for us already? Why even get into the car when you can shop from home in your boxers?

Sigh… sorry. Didn’t mean to get so preachy. (Steps down off his soap box). Where I am going with this is back to my earlier comments on Front Porch Republic, that what will ultimately unlock the potential of New Urbanism is human scaled economy. Developments like Silver Lake Village are not human scaled economy. The business that are there are franchises of large corporations. While the owner is a local, and the people that work there and shop there are locals, a large share of the profits are taken out of the community rather than being re-invested into it. What localism needs is to find a way to have locally owned business compete with transnational corporations on their own merit. I truly believe that until they can, the best that local economy can achieve is small, niche businesses where place and quality can justify higher expense. (Microbrews, Community Supported Agriculture, and you local Coffee house spring to mind)

In future postings I will continue to explore this question, “How can a local business compete economically with global transnational corporations?”

These are the kind of developments that give New Urbanism a bad name, because what they really are is New Suburbanism.