From the very beginning, I have been hoping that the opponents of Measure V would challenge the charge I’ve been making that high-density condominium projects downtown will have a very negative impact on home prices.
Up until Glenn Lambdin’s lawsuit, no one did. Even when someone wrote a letter to the Editor attacking my first column, she did not dispute my core argument regarding the negative market impact of high-density development. She tacitly conceded I was correct. Glenn Lambdin, however, took me on.
What is most gratifying for me is to see just how powerful the opponents are that I’m facing. What I’m referring to are the “false and misleading” accounts of the recent trial printed in the Pasadena Star News and the Sierra Madre Weekly. You must have a lot of power and money to get newspaper reporters to lie for you, even if they are lies of omission.
Here is what happened at the trial of Glenn Lambdin’s lawsuit. I know. I was there.
First, it must be pointed out that Glenn Lambdin sued to have NINE sentences stricken from our arguments. When the Judge began the trial, she informed both parties that she would hear arguments on only two. There was nothing to dispute in the other seven. They were neither false nor misleading. Three of those seven sentences, I might add, are charges about the impact of high-density condominium projects on neighboring home values.
When Mr. Lambdin’s attorney attempted to open an argument on those seven sentences, the Judge cut him short. She told him he was wasting the Court’s time, and she pointed out that the Measure V opponents used a style of language similar to ours. His argument was absurd.
We lost the argument for only ONE sentence, which was in our rebuttal, not in our main Arguments for Measure V - “The cost of elections on development projects can be passed onto developers and not be borne by the taxpayers.” Why did we lose? Because the City of Sierra Madre does not currently have an ordinance enabling it to pass on election costs to developers, so the sentence was stricken due to the use of the present tense verb “can.” Had we used the future tense verb “will,” the sentence would have been allowed. (By law, the Judge cannot change the wording, only strike the sentence or allow it.)
Two things need to be pointed out here. First, other communities with similar provisions as Measure V have enacted ordinances that pass on election costs onto developers. Second, Measure V provides for votes on development projects only at regularly scheduled city elections, every two years. No special elections are allowed.
I personally believe the primary purpose of Glenn Lambdin’s lawsuit was to discredit the charge I‘ve been making that high-density condominium projects downtown will severely undermine home values in Sierra Madre. No one can directly refute my position since there are no reputable experts or reliable data to support their argument.
So the only weapons they have to fight with are lies and deceit. Glenn Lambdin, the Pasadena Star News and the Sierra Madre Weekly have just given you a perfect example of that.
Friday, March 2, 2007
Friday, February 23, 2007
It's All About The Money
I want to start off by saying I have a lot of respect for realtors. Handling real estate transactions is a difficult, high-pressure job. I, personally, would have never bought my home without the help of a realtor. And no matter how popular the Internet gets, nothing can replace the human touch a realtor brings to the transaction.
I reserve my endorsement to the realtors who deal with the parties involved, face to face. And I will further limit it to true professionals, not people in it for a quick buck. I will not extend it to the brokers and agency owners behind the scene who really call the shots. They’re another matter, altogether, to be dealt with on a case by case basis.
In the very first column I wrote for this paper, “Selling (Out) Sierra Madre”, I alluded to the high-density condominium projects in our downtown having two aspects. First, the condos would have to be designed and built to undercut the market. How else would you generate sales in a market that’s the slowest we’ve seen since the bottom of the last crash 10 years ago? Second, creating a rapid decline in home values could have a very beneficial effect for realtors.
A story appeared on the front page of the February 13th LA Times titled “It’s Their Default Position” that clearly illuminates the second premise. The story describes the real estate “crash” that’s beginning out in Riverside and San Bernardino Counties, and how a real estate agency is exploiting it. They target homeowners who are behind in their payments.
The story follows the activities of two new realtors, one, a former route salesman for Peet’s coffee, and the other, a former body shop estimator who states his reason for getting into real estate as being; “It’s all about money.” However, the sentence that sums up their attitude best comes from their broker/boss. “Home Center Chief Executive Ron Barnard says that personally, he finds foreclosure sad, even tragic. ‘But as a business owner, I think it’s great. ’ ” Need I say more?
There are two major complications in real estate being reported in the financial press. One is the ever-growing glut of housing, especially condos. The other is the failure of mortgage lenders to correctly assess the risks of their exotic, sub-prime lending practices. This latter problem extends all the way to Wall Street, with problems developing in mortgage backed securities, a subject the LA Times story also touches on.
The thing everyone needs to understand is how ruthless the people are we’re dealing with. Did Joe Mosca get on the City Council through the help and planning of developers? What exactly are the opponents on Measure V capable of? I don’t know. But if we’re not careful, the disaster that’s developing out in Riverside and San Bernardino Counties will be coming to Sierra Madre.
A direct link to "It's Their Default Position."
I reserve my endorsement to the realtors who deal with the parties involved, face to face. And I will further limit it to true professionals, not people in it for a quick buck. I will not extend it to the brokers and agency owners behind the scene who really call the shots. They’re another matter, altogether, to be dealt with on a case by case basis.
In the very first column I wrote for this paper, “Selling (Out) Sierra Madre”, I alluded to the high-density condominium projects in our downtown having two aspects. First, the condos would have to be designed and built to undercut the market. How else would you generate sales in a market that’s the slowest we’ve seen since the bottom of the last crash 10 years ago? Second, creating a rapid decline in home values could have a very beneficial effect for realtors.
A story appeared on the front page of the February 13th LA Times titled “It’s Their Default Position” that clearly illuminates the second premise. The story describes the real estate “crash” that’s beginning out in Riverside and San Bernardino Counties, and how a real estate agency is exploiting it. They target homeowners who are behind in their payments.
The story follows the activities of two new realtors, one, a former route salesman for Peet’s coffee, and the other, a former body shop estimator who states his reason for getting into real estate as being; “It’s all about money.” However, the sentence that sums up their attitude best comes from their broker/boss. “Home Center Chief Executive Ron Barnard says that personally, he finds foreclosure sad, even tragic. ‘But as a business owner, I think it’s great. ’ ” Need I say more?
There are two major complications in real estate being reported in the financial press. One is the ever-growing glut of housing, especially condos. The other is the failure of mortgage lenders to correctly assess the risks of their exotic, sub-prime lending practices. This latter problem extends all the way to Wall Street, with problems developing in mortgage backed securities, a subject the LA Times story also touches on.
The thing everyone needs to understand is how ruthless the people are we’re dealing with. Did Joe Mosca get on the City Council through the help and planning of developers? What exactly are the opponents on Measure V capable of? I don’t know. But if we’re not careful, the disaster that’s developing out in Riverside and San Bernardino Counties will be coming to Sierra Madre.
A direct link to "It's Their Default Position."
Saturday, February 17, 2007
Joe Mosca
One of the principal arguments the opponents of Measure V are using is that we should defer decisions about community planning to our elected officials. There’s one major flaw in that argument. We tried that, and it failed.
In last year’s election for City Council we had a broad slate of candidates. The three candidates that expressed reservations about the Downtown Specific Plan and who promised the people a referendum on the final draft won a landslide victory. The people had spoken, and their wish was clear.
We thought we were safe. Whatever decisions and compromises our City Council made, the residents would have a final say in the matter. When Joe Mosca broke his campaign promise and reversed his position on the DSP referendum, it registered a 12 on the community Richter scale. He terrified us. And his betrayal galvanized our community.
I’ve heard a lot of opinions about Joe Mosca, all the way from he’s a mole the developers planted, to he’s young, inexperienced, and politically naive. Whatever your choice, he’s a disaster. Not just for the voter’s who trusted him, but also for the side he’s gone over to.
Joe Mosca’s betrayal took compromise off the table. He almost single handedly put Measure V on the ballot.
Compromise is what politics is all about. His removing the possibility of compromise has brought us to the degree of political polarization we currently face in Sierra Madre.
What was Joe Mosca thinking? What makes him think he has more experience, maturity, and wisdom than the residents who voted for him. Whatever he thinks, he’s wrong.
Joe Mosca started off his tenure on the City Council a hero and became, in a few months, one of the most despised residents this community has ever seen. That takes real talent. The real tragedy is he’d still be everyone’s hero if he just used his head.
There has been a major failure of Joe Mosca to grasp the political realities of Sierra Madre. Regardless of party affiliation, when it comes to Sierra Madre itself, the vast majority of residents are conservative. Sierra Madre is a family community. We have no desire to become another Old Town Pasadena. We want a town that’s safe, secure, and prosperous, a place where our kids can congregate at Bean Town after school and in the evening without us having to worry about them.
The signs of a reversal in the real estate market were clear last Spring. Everyone saw it. We need to maintain the value of our homes. As long as the homeowners feel prosperous, the contractors and building tradesmen who do the additions, remodels, and maintenance on our homes will have work. And if we keep Sierra Madre a desirable place to live, the realtors will have a strong housing market and an income, however modest, to get them through to the next boom.
My greatest fear is that they’ll kick out Taylor’s Meats, bulldoze Howie’s, and get a building started. Then, the crash will come all work will cease, just like 1990.
Given last April’s election, the outcome of the vote on April 17th seems predictable. So Joe, if you want to be a hero again, here’s my suggestion. Resign!
Get out of the way and let this community heal the gaping wound your poor judgment inflicted. Run again if you want to. Maybe we’ll give you another chance, but, for the sake of everyone, end the nightmare you’re betrayal created. And let the City Council, once again, become the community forum it should be.
In last year’s election for City Council we had a broad slate of candidates. The three candidates that expressed reservations about the Downtown Specific Plan and who promised the people a referendum on the final draft won a landslide victory. The people had spoken, and their wish was clear.
We thought we were safe. Whatever decisions and compromises our City Council made, the residents would have a final say in the matter. When Joe Mosca broke his campaign promise and reversed his position on the DSP referendum, it registered a 12 on the community Richter scale. He terrified us. And his betrayal galvanized our community.
I’ve heard a lot of opinions about Joe Mosca, all the way from he’s a mole the developers planted, to he’s young, inexperienced, and politically naive. Whatever your choice, he’s a disaster. Not just for the voter’s who trusted him, but also for the side he’s gone over to.
Joe Mosca’s betrayal took compromise off the table. He almost single handedly put Measure V on the ballot.
Compromise is what politics is all about. His removing the possibility of compromise has brought us to the degree of political polarization we currently face in Sierra Madre.
What was Joe Mosca thinking? What makes him think he has more experience, maturity, and wisdom than the residents who voted for him. Whatever he thinks, he’s wrong.
Joe Mosca started off his tenure on the City Council a hero and became, in a few months, one of the most despised residents this community has ever seen. That takes real talent. The real tragedy is he’d still be everyone’s hero if he just used his head.
There has been a major failure of Joe Mosca to grasp the political realities of Sierra Madre. Regardless of party affiliation, when it comes to Sierra Madre itself, the vast majority of residents are conservative. Sierra Madre is a family community. We have no desire to become another Old Town Pasadena. We want a town that’s safe, secure, and prosperous, a place where our kids can congregate at Bean Town after school and in the evening without us having to worry about them.
The signs of a reversal in the real estate market were clear last Spring. Everyone saw it. We need to maintain the value of our homes. As long as the homeowners feel prosperous, the contractors and building tradesmen who do the additions, remodels, and maintenance on our homes will have work. And if we keep Sierra Madre a desirable place to live, the realtors will have a strong housing market and an income, however modest, to get them through to the next boom.
My greatest fear is that they’ll kick out Taylor’s Meats, bulldoze Howie’s, and get a building started. Then, the crash will come all work will cease, just like 1990.
Given last April’s election, the outcome of the vote on April 17th seems predictable. So Joe, if you want to be a hero again, here’s my suggestion. Resign!
Get out of the way and let this community heal the gaping wound your poor judgment inflicted. Run again if you want to. Maybe we’ll give you another chance, but, for the sake of everyone, end the nightmare you’re betrayal created. And let the City Council, once again, become the community forum it should be.
Monday, February 12, 2007
Safety First
One of the most common things I hear people say about Sierra Madre is that, as soon as they enter the community, they feel a sense of peace and security. I feel the same way. It’s another world here. It isn’t? Well that’s not an accident. The people who live and work here have created the unique character of Sierra Madre through a lot of hard work and dedication. And foremost among those special people are Officers of the Sierra Madre Police Force.
When you read the Police Blotter, you get the feeling that nothings happening here. But the feeling of security in this town is an illusion, an illusion that has been created by a police force that’s doing an outstanding job. A job they perform with quiet dedication.
The truth is Sierra Madre is located in on the edge of a jungle. A jungle that grows more dangerous and violent with each passing day. The stabbing that occurred in Memorial Park last month sent chills down my spine. It told me the gangs know we’re here. And we are a very fat target. They’ll be back, with reinforcements.
The police need our support now. They are grossly under paid. All they are asking for is to be compensated at the same level as the lowest paid police department in the San Gabriel Valley. And no new revenues will be needed to do this. All that is required is for Public Safety it be made a priority in this community.
Our City Council has refuses to do this. I think the reason is obvious. They want to out-source police services. They’ll say it’s cheaper to do it that way. Well, you get what you pay for, and Public Safety isn’t a place to scrimp, not in this valley. Besides, if you start out-sourcing our public services, why now just let Pasadena annex us. Watch what happens to home values if that happens, when the developers finally get total control.
They’re our cops, and we need to keep it that way. They know us. We know them. They know this town like the palm of their hand. They can smell trouble before it gets into our community and into our homes. You’re not going to get that with a bunch of hired mercenary’s from other places.
So, a lot of volunteers and I are going to be out knocking on doors and asking you to sign a petition to put their very modest requests on the ballot as an initiative. Please open your doors and hearts and help us out. The community you save will be your own.
When you read the Police Blotter, you get the feeling that nothings happening here. But the feeling of security in this town is an illusion, an illusion that has been created by a police force that’s doing an outstanding job. A job they perform with quiet dedication.
The truth is Sierra Madre is located in on the edge of a jungle. A jungle that grows more dangerous and violent with each passing day. The stabbing that occurred in Memorial Park last month sent chills down my spine. It told me the gangs know we’re here. And we are a very fat target. They’ll be back, with reinforcements.
The police need our support now. They are grossly under paid. All they are asking for is to be compensated at the same level as the lowest paid police department in the San Gabriel Valley. And no new revenues will be needed to do this. All that is required is for Public Safety it be made a priority in this community.
Our City Council has refuses to do this. I think the reason is obvious. They want to out-source police services. They’ll say it’s cheaper to do it that way. Well, you get what you pay for, and Public Safety isn’t a place to scrimp, not in this valley. Besides, if you start out-sourcing our public services, why now just let Pasadena annex us. Watch what happens to home values if that happens, when the developers finally get total control.
They’re our cops, and we need to keep it that way. They know us. We know them. They know this town like the palm of their hand. They can smell trouble before it gets into our community and into our homes. You’re not going to get that with a bunch of hired mercenary’s from other places.
So, a lot of volunteers and I are going to be out knocking on doors and asking you to sign a petition to put their very modest requests on the ballot as an initiative. Please open your doors and hearts and help us out. The community you save will be your own.
Numbers Don't Lie
“ Housing Glut Gives Buyers Upper Hand”. This was the headline of an article in the January 25, 2007 edition of the Wall Street Journal. Interesting. A market that was referred to as the “real estate boom” 15 months ago and a “cooling market” 8 months ago, is now described as a “housing glut”.
The article provided data for 28 major metropolitan areas, including Los Angeles, where the inventory of homes for sale increased by 59% in 2006. The most distressed markets are Miami and San Diego, and the cause is the massive condo glut. In San Diego, there are now “more than 10,000 condos available for sale in new building, projects under construction or properties being converted”. Condo prices declined by 15% to 20% in 2006, with the article stating “it’s hard to measure price changes because sellers often give incentives such as free upgrades or help with closing costs that aren’t reflected in the price.”
In the January 16, 2007 press release from Dataquick, the main source of real estate market data for California, Dataquick’s President is quoted as saying; “We are watching the San Diego market carefully, sales and price trends there have tended to lead the region.” With the 100 to 150 condos proposed for downtown Sierra Madre, you might say the cancer that is destroying the San Diego real estate market is attempting to metastasize and spread to our community.
Sierra Madre does not exist in a vacuum. Its small town character belies the fact that it is a component of Los Angeles County and the Southern California Region. However, as an independent entity, we have the power to prevent the real estate crisis that’s moving north from San Diego from entering our community.
During the real estate crash in the early 1990’s, several areas of Los Angeles were not seriously affected. Sierra Madre was one of them. Possibly the least affected area, however, was the Hollywood Hills. That came from two factors. First, the entertainment industry did not suffer from the financial losses that hit areas around military bases and defense related industries. Second, and more importantly, The Hollywood Hills were built out decades ago, and further large-scale development is impossible.
I research everything I write in my columns, thoroughly. And in all my work I have never found any data or expert opinion that would support an argument for high-density housing projects in our downtown. All these projects will do is degrade our quality of life, depress home values and hurt homeowners. And homeowners are the vast majority of residents in this community. However, I can easily see how these high-density housing projects would help downtown property owners, developers, and the local real estate agencies. So, would City Council members, Buchanan, Joffe, Mosca, and the rest of the clique supporting these projects please show all of us what they are basing their position on.
The article provided data for 28 major metropolitan areas, including Los Angeles, where the inventory of homes for sale increased by 59% in 2006. The most distressed markets are Miami and San Diego, and the cause is the massive condo glut. In San Diego, there are now “more than 10,000 condos available for sale in new building, projects under construction or properties being converted”. Condo prices declined by 15% to 20% in 2006, with the article stating “it’s hard to measure price changes because sellers often give incentives such as free upgrades or help with closing costs that aren’t reflected in the price.”
In the January 16, 2007 press release from Dataquick, the main source of real estate market data for California, Dataquick’s President is quoted as saying; “We are watching the San Diego market carefully, sales and price trends there have tended to lead the region.” With the 100 to 150 condos proposed for downtown Sierra Madre, you might say the cancer that is destroying the San Diego real estate market is attempting to metastasize and spread to our community.
Sierra Madre does not exist in a vacuum. Its small town character belies the fact that it is a component of Los Angeles County and the Southern California Region. However, as an independent entity, we have the power to prevent the real estate crisis that’s moving north from San Diego from entering our community.
During the real estate crash in the early 1990’s, several areas of Los Angeles were not seriously affected. Sierra Madre was one of them. Possibly the least affected area, however, was the Hollywood Hills. That came from two factors. First, the entertainment industry did not suffer from the financial losses that hit areas around military bases and defense related industries. Second, and more importantly, The Hollywood Hills were built out decades ago, and further large-scale development is impossible.
I research everything I write in my columns, thoroughly. And in all my work I have never found any data or expert opinion that would support an argument for high-density housing projects in our downtown. All these projects will do is degrade our quality of life, depress home values and hurt homeowners. And homeowners are the vast majority of residents in this community. However, I can easily see how these high-density housing projects would help downtown property owners, developers, and the local real estate agencies. So, would City Council members, Buchanan, Joffe, Mosca, and the rest of the clique supporting these projects please show all of us what they are basing their position on.
Tuesday, January 30, 2007
Risky Business
Dataquick, the company that supplies the LA Times with housing activity statistics, released their report for December last week. The headline was “Southland home sales: New price peak, slowest December in ten years”. Now that doesn’t sound too bad until you look at the numbers in detail.
Home price appreciation was 3.3% for the 6-county, Southern California region. However, when corrected for the 2006 inflation rate of 3.24%, home price appreciation was .06%, not exactly the stuff headlines are made of. What’s more disturbing, though, is the data for San Diego County. Most economists consider San Diego to be the region’s bellwether. And the median home price there declined at an inflation-adjusted, annual rate of -9.6%. Ventura’s decline was -9.1%. Orange and San Bernardino counties just about broke even. Only LA and Riverside showed modest gains of 3.3% and 1.9% respectively. And according to the experts, we have a couple of years to go before the market begins to stabilize.
The correction has begun. Affordable housing is on the way. We don’t need government intervention or greedy downtown property owners, developers, and real estate brokers to aggravate the problem. Lower prices and a record supply of vacant, available homes are already here according to the Wall Street Journal. Thing’s are going to be bad enough without further over-development making it worse.
If you want to see what could happen, go to www.dqnews.com. Go down the left side of the home page and click on “ARCHIVED ARTICLES”. On the page that comes up, click on “1995 Releases”. Then click on the first article under “1995 Releases”, “California Homes Being Sold at a Loss”. The article, Dataquick’s first press release, says that, in May of 1995, 30.7% of the homes sold went for less than what the sellers had paid for them. That’s an improvement over April, when 32.4% were sold at a loss, or May of 1994 when the figure was 35.4%. The personal tragedies in those figures are unimaginable for those who did not go through it. It should be noted, however, that one of the cardinal rules of economics is that history repeats itself.
People will say; “It’s different this time. Back then, cutbacks in defense spending caused a recession, and Southern California lost thousands of jobs.” My answer to that is the same one Christopher Thornberg gives in the closing remarks of his video presentation. There has never been a real estate boom in history of a magnitude like the one we went through in the first half of this decade. Never! And there’s no historical precedent for the exotic financing that supercharged it.
We are in dangerous, uncharted waters. All I am suggesting is that we proceed with caution rather than “full speed ahead”, like council members Buchanan, Joffe, Mosca, and the rest of the pro-development clique are dictating. They must be insane, or else, utterly ruthless.
Home price appreciation was 3.3% for the 6-county, Southern California region. However, when corrected for the 2006 inflation rate of 3.24%, home price appreciation was .06%, not exactly the stuff headlines are made of. What’s more disturbing, though, is the data for San Diego County. Most economists consider San Diego to be the region’s bellwether. And the median home price there declined at an inflation-adjusted, annual rate of -9.6%. Ventura’s decline was -9.1%. Orange and San Bernardino counties just about broke even. Only LA and Riverside showed modest gains of 3.3% and 1.9% respectively. And according to the experts, we have a couple of years to go before the market begins to stabilize.
The correction has begun. Affordable housing is on the way. We don’t need government intervention or greedy downtown property owners, developers, and real estate brokers to aggravate the problem. Lower prices and a record supply of vacant, available homes are already here according to the Wall Street Journal. Thing’s are going to be bad enough without further over-development making it worse.
If you want to see what could happen, go to www.dqnews.com. Go down the left side of the home page and click on “ARCHIVED ARTICLES”. On the page that comes up, click on “1995 Releases”. Then click on the first article under “1995 Releases”, “California Homes Being Sold at a Loss”. The article, Dataquick’s first press release, says that, in May of 1995, 30.7% of the homes sold went for less than what the sellers had paid for them. That’s an improvement over April, when 32.4% were sold at a loss, or May of 1994 when the figure was 35.4%. The personal tragedies in those figures are unimaginable for those who did not go through it. It should be noted, however, that one of the cardinal rules of economics is that history repeats itself.
People will say; “It’s different this time. Back then, cutbacks in defense spending caused a recession, and Southern California lost thousands of jobs.” My answer to that is the same one Christopher Thornberg gives in the closing remarks of his video presentation. There has never been a real estate boom in history of a magnitude like the one we went through in the first half of this decade. Never! And there’s no historical precedent for the exotic financing that supercharged it.
We are in dangerous, uncharted waters. All I am suggesting is that we proceed with caution rather than “full speed ahead”, like council members Buchanan, Joffe, Mosca, and the rest of the pro-development clique are dictating. They must be insane, or else, utterly ruthless.
Wednesday, January 24, 2007
Selling (Out) Sierra Madre
There isn’t a housing shortage in California. Sure, according to Dr. Christopher Thornberg, former head of the UCLA Anderson Forecast, there’s a “shortage of low rent apartments, for low income households, mostly from Latin America.” But, other than that, there’s a glut. Thornberg points out that in 2005 there were 2.5 new homes built for each new household in this state. Around 10% of those 5.7 million vacant homes The Wall Street Journal reports are in California.
We are awash in empty, available homes. So why are the developers so anxious to build high-density condominiums in downtown Sierra Madre, in the slowest real estate market in a decade? The answer is simple. During the real estate boom, home prices got driven to levels far beyond what the economic fundamentals, i.e. incomes, jobs, etc., would support. Exotic financing also helped. But the phenomenon that drove the boom was psychological. People paid outrageous prices for homes because they expected them to go even higher. So now we have a bubble, and our economic salvation lies in letting the air out slowly.
The UCLA Anderson Forecast expects home prices in California to remain constant for the next 5 years, a soft landing. Their one exception is for homes in areas where there’s new construction. And their reason is, with highly inflated prices, developers can sell new homes in existing neighborhoods at deep discounts and still make obscene profits, while pulling the rug out from under current home prices.
The effect is two-fold. The developers make a fortune off the condos while crashing the market and providing a buying opportunity for speculators.
What bothers me most, though, is that certain members of our City Council and City Administration keep acting in favor of developers and speculators while placing the interests of Sierra Madre homeowners in greater and greater peril. They justify this by saying they need more revenue.
But property tax revenues went up right along with the median home price and record home sales during the boom. It’s been a revenue windfall for the government. So, what’s up? Why are some of our city officials throwing caution to the wind?
At the very minimum, there is an appearance of impropriety in their behavior. I’ll go into that further next week. In the meantime, I suggest you watch an informative and entertaining presentation by Dr. Christopher Thornberg that’s available through Google Video. Just go to video.google.com and search on the name “Christopher Thornberg”. It’s called “Economic Roundtable.”
Watch it, and you’ll get an excellent education in real estate economics. If you have trouble finding it, send an email to me at SierraHombre@verizon.net, and I’ll send you a direct link. (This is the direct link.)
We are awash in empty, available homes. So why are the developers so anxious to build high-density condominiums in downtown Sierra Madre, in the slowest real estate market in a decade? The answer is simple. During the real estate boom, home prices got driven to levels far beyond what the economic fundamentals, i.e. incomes, jobs, etc., would support. Exotic financing also helped. But the phenomenon that drove the boom was psychological. People paid outrageous prices for homes because they expected them to go even higher. So now we have a bubble, and our economic salvation lies in letting the air out slowly.
The UCLA Anderson Forecast expects home prices in California to remain constant for the next 5 years, a soft landing. Their one exception is for homes in areas where there’s new construction. And their reason is, with highly inflated prices, developers can sell new homes in existing neighborhoods at deep discounts and still make obscene profits, while pulling the rug out from under current home prices.
The effect is two-fold. The developers make a fortune off the condos while crashing the market and providing a buying opportunity for speculators.
What bothers me most, though, is that certain members of our City Council and City Administration keep acting in favor of developers and speculators while placing the interests of Sierra Madre homeowners in greater and greater peril. They justify this by saying they need more revenue.
But property tax revenues went up right along with the median home price and record home sales during the boom. It’s been a revenue windfall for the government. So, what’s up? Why are some of our city officials throwing caution to the wind?
At the very minimum, there is an appearance of impropriety in their behavior. I’ll go into that further next week. In the meantime, I suggest you watch an informative and entertaining presentation by Dr. Christopher Thornberg that’s available through Google Video. Just go to video.google.com and search on the name “Christopher Thornberg”. It’s called “Economic Roundtable.”
Watch it, and you’ll get an excellent education in real estate economics. If you have trouble finding it, send an email to me at SierraHombre@verizon.net, and I’ll send you a direct link. (This is the direct link.)
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