Author Archives: legallysociable

With banks and lending institutions owning so many homes, housing values will be lower for several years

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Foreclosures are not just an immediate problem; the New York Times reports that the number of foreclosed homes now owned by banks and mortgage lenders are likely to depress the housing values for years to come:

All told, [banks and mortgage lenders] own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.

Five years after the housing market started teetering, economists now worry that the rise in lender-owned homes could create another vicious circle, in which the growing inventory of distressed property further depresses home values and leads to even more distressed sales. With the spring home-selling season under way, real estate prices have been declining across the country in recent months…

Over all, economists project that it would take about three years for lenders to sell their backlog of foreclosed homes. As a result, home values nationally could fall 5 percent by the end of 2011, according to Moody’s, and rise only modestly over the following year. Regions that were hardest hit by the housing collapse and recession could take even longer to recover — dealing yet another blow to a still-struggling economy.

Not good news for those who want to sell a home in the near future. It is interesting that we now hear very little about this at a policy level. There are certainly other important pressing issues in the world (jobs, gas prices, military actions, Republican candidates for President?) but housing values affect a lot of people.

At the same time, I have heard and seen new advertisements from the National Association of Realtors. I wonder why they are running these ads now: are they worried that more people will rent rather than buy? Is there an uptick in the number of people who are trying to combat lower housing values by selling the home on their own? Do they feel that there might soon be changes in public policies, perhaps through measures like limiting or getting rid of the mortgage-interest deduction, that would limit the government’s promotion of homeownership? And interestingly, these advertisements have stressed that homeownership helps create jobs.

Do NBA players really make a difference in their community?

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In the course of watching the NBA playoffs, I’ve seen a lot of commercials about how NBA stars are active in their communities. While this might be good PR, do we know anything about whether these efforts have any effect? Perhaps the NBA doesn’t care as long as they portray the image that they desire…but I suspect many of these occasional forays into the neighborhood are just that.

I suppose people could cite particular athletes that are active in the community. They do exist. But on the whole, do these professional sports leagues really care about structural inequalities and the average citizen’s daily fate? Perhaps a more foundational question is to even ask whether they should even as the commercials try to suggest that they do.

Questions to ask about the wealth gap in the United States

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The income and wealth gap (also here for information about wealth) in America has grown in recent decades. But rather than simply decry this trend, a sociologist suggests that we should ask some questions:

When it comes to division of wealth, the topic is best tackled by asking questions rather than making statements, according to Mike Dalecki, a professor of sociology at the University of Wisconsin-Platteville.

“How big a gap should there be?” he said, of the wealth divide in the U.S.

“At what point does that gap become so great that we start to have serious societal problems?” Dalecki asked…

How much money do people need to make per year to be satisfied?

If the nation’s wealth divide continues to expand, is there a failure in the economy itself or the ways the rules are written?

Should the wealthiest people pay more taxes?

At what point will they be taxed so much they leave for a different state or country?

These are some good questions because they address larger issues: how do these figures relate to American values and policies? What is an appropriate gap in wealth and how far should we go through measures like taxes to try to limit this gap? These questions link the wealth gap to larger structural and cultural concerns that should interest many Americans. These are the kind of questions I like to ask my Introduction to Sociology courses because they then have to think about how this issue of inequality relates to their thoughts about a “good” or “just” society.

I also think the emphasis here on wealth, instead of just income, is helpful. Income gives you part of the picture but wealth is more accurate measure of the resources people accumulate over time and then can pass on to their descendents. This wealth gap is particularly stark between racial and ethnic groups.

Quick Review: Waiting for Superman

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I recently watched the documentary Waiting for Superman, a film that received a lot of media attention after it was released late last year. It does try to take on an important on-going problem: how to improve American schools? This is an issue that one can hear average citizens, politicians, college professors and others discuss frequently. Here are my quick thoughts about this film’s take on the issue:

1. The framing of the issue in the opening and conclusion of the film is quite effective. Toward the beginning, we meet several students who want to go to the better schools (often a magnet or charter school) in their school districts. But since they are not alone and these schools are attractive to many families, the students have to go through a lottery. At the end, we see the results of the lottery. This is the question that is raised: should a child’s educational opportunities be left to chance in a lottery? Get into one of these elite schools and life will likely be good; not get in, and children can be doomed to terrible schools that are termed “drop-out factories.”

2. While the documentary hits on some possible reasons behind the problems of American schools (No Child Left Behind, bad neighborhoods, tracking), the main emphasis here is on two things:

2a. Teachers are a problem. The idea pushed by the documentary is that the bad teachers need to be replaced and unions resist this process. Michelle Rhee, the attention-getting superintendent of the Washington, D.C. schools is followed as she tries to make a deal with the union involving merit pay for the good teachers. Interestingly, we don’t really see evidence from districts where teachers are not as unionized – does this help improve student performance?

2b. Parents deserve choices in schools. This involves magnet or charter schools within districts plus other operations such as the Harlem Children’s Zone and KIPP schools.

2c. I wish they had put these two ideas together more: so how do teachers operate within these “better” school settings? How are teachers trained and encouraged within these settings? What exactly about these schools boosts student performance – is it just the teachers?

2d. I also wonder how all of this might be scalable. Later, the documentary talks about raising expectations for children and Bill Gates talks on-camera about having the right “culture” in the schools. How might this fit into the idea about American schools being more of a competition-based system versus a country like Finland that pursues more equal outcomes across the spectrum of students?

3. Even though most of the documentary is about inner-city schools, it also follows one “average” suburban girl and the suggestion is made that even suburban schools are not doing that well. This is backed up with data showing that American students are the most confident among a group of OECD nations but their scores are behind those of many nations. Additionally, it is suggested that these suburban schools are not preparing students well for college where a good number find that they need to take remedial courses. Since many Americans likely are influenced by school district performance as they look to move, what exactly is going on in these suburban schools that needs to be fixed? Outside of the exemplar schools held up in the movie (magnets or charters, KIPP, Harlem Children’s Zone), are there any good schools? Is the whole system so broken that no school can really succeed?

Overall, I was a little surprised by the message and who I have seen support it: improve the pool of teachers (and fight the unions!) and offer parents and communities more choices of schools that are more effective in providing educations. Considering what I often see blamed as the problems of schools, No Child Left Behind or funding disparities, this is a change of pace.

At the same time, I wonder about whether these two solutions are really the answer. Are they band-aids to the issue or would they really solve educational problems in America? I keep coming back to the idea of residential segregation, the concept describing how races and social classes live apart from each other. Life chances are better for people growing up in wealthier, more educated settings but of course, these people can buy their way into such settings and avoid others. Would school districts near me, say in Naperville, a suburb that takes great pride in its schools, really go for the idea of charter or magnet schools? Do they even really need them?

At the very least, this documentary raises some interesting issues and a different perspective on a problem for which many wish to find a solution.

(This film was well-received by critics: it is 89% fresh at RottenTomatoes, 99 fresh out of 112 total reviews.)

Acquire the bookstore chain to get the digital reading device

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With the recent bankruptcy of Borders (see some reaction here), who knows how long Barnes & Noble might be able to hold on (and the news wasn’t good last August). But at least one businessman thinks B&N would make for a worthwhile purchase:

Barnes & Noble is well-situated to get a piece of the action: the company claims that the Nook already accounts for one-quarter of the e-book market. (Amazon’s rival Kindle product accounts for over 70 percent, although neither company discloses actual sales figures.)

Candidly, the Nook’s success is important, because more competition in the space will help keep prices in check and spur innovation. Sony also has a credible market entrant with its Reader product.

Malone’s company Liberty Media offered $17 per share Thursday — or about $1 billion — for a 70 percent stake in Barnes & Noble, a 20 percent premium over the Thursday closing price. Investors greeted the news warmly, pushing Barnes & Noble shares up over 30 percent — yes that’s higher than Malone’s bid! — in midday market action Friday. As a result, Malone will likely have to sweeten his offer to at least $20 per share.

In a statement announcing the offer, Liberty described Barnes & Noble as being at the “forefront of the transition to digital.”

While there is a lot of talk about how all of this affects bookstores and reading, I would love to see more about what this might mean for all brick-and-mortar businesses. The saving grace for Barnes & Noble is this particular digital reader which is well-positioned in a burgeoning market. In the near future, the B&N stores might disappear even as corporate name goes on through this device.

More broadly, how many other companies are actually creating digital content or devices rather than simply putting a Facebook page together and slapping the Facebook logo on all of their commercials?

When you don’t like a teardown home, call it a McMansion

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A local official in the Philadelphia suburbs writes about a Lower Merion site where a notable older home was torn down and now a home home is being constructed. What is interesting here is how the official describes how preservationists are using the term “McMansion” as part of their criticism of the new house:

Those who criticize the Kestenbaum residence built in La Ronda’s place are trying to deflect blame for their own failure over many years. Their use of terms such as “McMansion,” “McMonstrosity,” and “cookie cutter” demonstrates ignorance of what Kestenbaum is actually building.

I have toured the construction site and can report that Kestenbaum is building a home befitting the historic traditions of craftsmanship and old-world elegance that are hallmarks of the Main Line estates of yesteryear. The home is made of hand-chiseled stone, with extensive masonry work and important architectural details throughout.

The home bears no resemblance to the cookie-cutter McMansions found in expensive tract housing elsewhere in the Philadelphia region. To so characterize the Kestenbaum residence is insulting, incendiary, and ignorant.

I have met the neighbors of the new Kestenbaum home. I have spoken to property owners with a real interest in what happens in their community and their neighborhood. Their reaction to the new construction is consistent with what I have reported. The responses of so-called neighbors described recently in The Inquirer are in fact those of a few preservationists who are continuing to pursue their one-sided agenda, regardless of whom they hurt in the process or what falsehoods they promote.

It seems that the use of the term “McMansion” is quite effective here, hence the response from this local official. The term suggests that the new home is a “cookie-cutter” home lacking in appropriate architecture. Compared to the older home that was on the site (and you can read a bit more about it here), preservationists see the new home as a travesty (see an example here). Overall, this new home is likely quite different than the suburban McMansions that one might expect to find not too far away. But by using this pejorative term in a teardown situation (an older home replaced with a newer home), preservationists have tied this new home, however nice it may be, to negative images of the exurbs.

This story also provides an example of questions that pop up in communities throughout the United States: what exactly should be done with older homes, particularly well-designed estates?

Finding community at the office

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In a new economy where workers are “free agents” or “portfolio workers” among a relatively high unemployment landscape (at least in the United States), could workers be missing community life at work as well as the regular paycheck?

In the late 1990s the world of work moved away from security and towards freedom.

A job for life was out. Work became splintered, spliced and diced: contract, sub-contract and casual labour, part-time, sessional and seasonal, project-based, freelance and temp work emerged, as the frequencies and rhythms of work became subject to the vagaries of the economy.

Richard Sennett, a professor of sociology at the London School of Economics, described it as ”new economy” work – the work of flexible capitalism where ”workers are asked to behave nimbly, to be open to change on short notice, to take risks continually”…

The experience of being a highly mobile new economy worker is as Sennett says: being continuously exposed to risk can eat away at your sense of character. You are always ”starting over”. And just like your employment, your witnesses are not long-term. The writer Karen Blixen (better known by her pen name, Isak Dinesen) used this line for one of her characters: ”I was constantly in flight, an exile everywhere.”

Sometimes flight cannot be helped. But community helps stave off the feeling of being exiled, of drift.

Some interesting thoughts here. As I have talked to college students, the new economy jobs are what they want: they want to be able to use their skills, to flourish (which may be different than being happy), and to be able to set their own pace and priorities. Of course, these goals can be difficult for many to obtain in the early years after college. Additionally, many of them do want to find a community to be a part of, a place where they can fit into and still be somewhat autonomous. So perhaps this commentary is really about a larger issue: how do modern people who seek after individualistic goals also find enough community so that they don’t become alienated from society? And are there groups or companies that do this better than others?

This reminds me of what one might hear from college faculty: the job of a professor offers a balance between these two goals. We enjoy our jobs because it offers freedom (to study what we want, to have some say over our own schedules) but also places us within an academic context that runs on a very predictable calendar with regular interaction with others.

The commentary also notes the role technology can play: we can be apart from others but are seemingly connected through devices like cell phones or platforms like Facebook. But these seem less like “true” community and more like community of our own choosing, calling whom we want or making “friends” with whom we want. This is quite different than what might go on in an office:

Yet there can be a joyous, awful, wonderful cacophony when you don’t get to choose – the possibility of a richer, messier, wider community; a mosaic of quirks, histories, personalities. Look around your office – they are all there.

This not getting to choose, however, seems to go against all modern sensibilities: it is one thing to put up with others but it is another to do this without any other options.

The quick reference to television show The Office is intriguing. Throughout the course of the show, there is little indication that the employees want to leave. At the same time, there are very few (if any?) moments where the workers make a conscious decision to stay because they really like the community of people there (versus liking one or two people). It is too bad we don’t see more of these characters given options where they could leave but they choose not to because they realize who they are living behind. Perhaps this is too much to ask: if workers are given brighter opportunities elsewhere (money, benefits, chance for advancement, etc.), perhaps they will always go for that over any community ties.

Study human flourishing rather than happiness

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A well-known psychologist suggests we should study human flourishing rather than just happiness:

In theory, life satisfaction might include the various elements of well-being. But in practice, Dr. Seligman says, people’s answers to that question are largely — more than 70 percent — determined by how they’re feeling at the moment of the survey, not how they judge their lives over all.

“Life satisfaction essentially measures cheerful moods, so it is not entitled to a central place in any theory that aims to be more than a happiology,” he writes in “Flourish.” By that standard, he notes, a government could improve its numbers just by handing out the kind of euphoriant drugs that Aldous Huxley described in “Brave New World.”

So what should be measured instead? The best gauge so far of flourishing, Dr. Seligman says, comes from a study of 23 European countries by Felicia Huppert and Timothy So of the University of Cambridge. Besides asking respondents about their moods, the researchers asked about their relationships with others and their sense that they were accomplishing something worthwhile.

Denmark and Switzerland ranked highest in Europe, with more than a quarter of their citizens meeting the definition of flourishing. Near the bottom, with fewer than 10 percent flourishing, were France, Hungary, Portugal and Russia.

Studiers of happiness tend to ask about two areas: immediate happiness and longer-term happiness, typically referred to as “life satisfaction.” But Seligman is suggesting that these questions about satisfaction don’t really move beyond the immediate mood of the respondent. Additionally, the questions need to be adjusted to account for relationships and whether the respondent feels a sense of accomplishment in life.

It is interesting to see some of the cross-country comparisons. How might national or smaller cultures influence how individuals feel about life satisfaction? In the long run, do people actually have to be accomplishing something satisfying or is it more about perceptions? Can living a decent life in the American suburbs be ultimately satisfying for Americans or do they just think that it should be?

I wonder how these findings line up with earlier findings that religion leads to higher levels of life satisfaction.

(I also wonder if people think that the language of “flourishing” seems archaic or overly humanistic.)

Attempting to set up an American style home lending system in Russia

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Housing and mortgage industries can be quite different across countries. While many Americans might be quite used to our system (even though the system of 30 year mortgages we know now was a product of the mid-twentieth century), what happens when you try to apply the American system to another context? A sociologist looked at how this worked out in Russia after the collapse of the Soviet Union:

The new government tried to create a housing market by replicating the American housing system, essentially using the Federal National Mortgage Association, or Fannie Mae, as a template to encourage Russians to take out mortgage loans.

“This was all designed by USAID, one of their biggest foreign aid programs ever,” Zavisca said. “It was an American model of what a housing market is: home ownership and securitized mortgages.”

Supposedly all of that privatized housing and wealth would spur the natural development of a housing market. Those who felt they had more housing than they needed would look to trade down and use the leftover money for other things. The private sector would emerge to produce housing for those who had been left out.

“That didn’t really happen,” Zavisca said.

Housing construction declined by 70 percent from 1992 to 2002, the first decade after the Soviet era. The construction industry in Russia has evolved to cater to wealthy and well-to-do middle class clients who could pay with cash, but there is a lack of trust by both contractors and consumers. No one wants to pay up front and wait, or deal with credit.

Unlike Americans who for decades have willingly taken on 30-year mortgages to buy housing, Russians have largely balked at the notion. Even when young families were offered a $10,000 credit, roughly a year’s wages and the equivalent of $60,000 in the U.S., toward the down payment for a house, Zavisca said there was little interest.

“Few Russians are willing to take out mortgages because the risk of foreclosure is unacceptable, and because they view interest payments – which they call overpayments – as unfair. As one Russian put it: ‘To enter into a mortgage is to become a slave for 30 years, with the bank as your master.'”

That hasn’t stopped Russians from going into debt, though. They may be averse to mortgages but they love credit cards, small consumer loans and point-of-purchase store credit.

“In my interviews, people there often compared credit card debt favorably to mortgages, the inverse of here in the U.S., where mortgages are viewed as virtuous and responsible.

“Russia is completely the opposite. It may be a legacy of Soviet entitlement to housing, where housing is viewed as a right to them. Even thought the Soviet government owned the housing, people thought of it as their own and had the right to pass it down to their children, or swap with someone who wanted to trade with you.

“It was a kind of quasi-marketplace. It just wasn’t financialized.”

She said Russians find it odd that Americans call themselves “homeowners” from the day they close on a mortgage loan. For Russians, ownership only begins after all debts are paid off.

This suggests that our system may be more cultural than anything else. It goes beyond just being used to a particular set of economic and financial tools regarding homeownership; these instruments are backed by a particular set of cultural values that sees mortgages, and working hard to reach the point where one can afford a mortgage, as acceptable. The Russians may have a point here: one doesn’t technically own a home until the mortgage is paid and with the high rates of American mobility (moving roughly every 5-6 years on average), many homes are never truly owned.

It would be interesting to hear how Americans, in USAID or elsewhere, explained why this didn’t work in Russia. Have we tried implementing similar policies elsewhere and if so, how did those situations work out?

An architect places the McMansion in a box of mirrors

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An architect recently spoke at Dartmouth and discussed his thoughts about McMansions:

Cruz showed the audience his representation of “McMansions,” or luxury suburban residences, which have become a large part of the ideal American home. Cruz’s “McMansion,” exhibited at museums throughout the nation, is a small plastic model home placed in a box of mirrors. The image repeats into infinite space, epitomizing the monotony of traditional suburban landscapes.

Alternatively, citizens can come together to create new plans for their neighborhoods, Cruz said.

“The mythology of the American dream of ownership has become unsustainable,” Cruz said. “We need to rethink ownership, and rethink how a small house can become a small village.”

Cruz is well-known for his research on the Tijuana-San Diego border and most recently received the Ford Foundation Visionaries Award, which recognizes leaders’ efforts to improve economic opportunities. He is currently a public culture and urbanism professor at the University of California, San Diego, where he co-founded the Center for Urban Ecologies.

It sounds like Cruz defines McMansion in these ways: they are luxury homes, meaning they are expensive and have a lot of features, and they are monotonous (“cookie-cutter”) when placed with a bunch of similar houses in a neighborhood.

Here is a little more about Cruz’s 2008 work titled “McMansion Retrofitted” at the San Francisco Art Institute that emphasizes the spaces created in the suburbs by recent Mexican immigrants:

McMansion Retrofitted, 2008
Plastic model, pedestal with mirrors, and two videos
Courtesy of Estudio Teddy Cruz…

The areas of San Diego that have been most impacted by this nonconforming urbanism are concentrated in its first ring of suburbanization. At a moment when developers and city officials are still focusing on two main areas of development—on one end, the redevelopment and gentrification of the downtown area and, on the other, the increasingly expansive suburban sprawl resulting from an equally high-priced real estate project supported by an oil hungry infrastructure—it is the older neighborhoods of San Diego’s midcity that remain depressed and ignored. It is here in the first ring of suburbanization that immigrants have been settling in recent years, unable to afford the high rents of the downtown area’s luxury condos or the expensive “McMansions” of the new suburbs, though providing cheap labor for both.

Interesting – Cruz’s preferred neighborhoods sound quite vibrant and diverse. You can read more here about Cruz’s thoughts on how immigrants are changing neighborhoods in San Diego. Also, Cruz has in the past been involved with converting McMansions to multi-family housing (though this home is 70,000 square feet – more of a mansion or a castle).