Tuesday, September 8, 2020

In Defense of Picket Fences


In Defense of Picket Fences

 | Sep 03, 2020 | Housing

Re: Populism and Picket Fences

In a recent Commons post, Wells King argues against the Trump administration’s recent gutting of the Obama-era rule U.S. Department of Housing and Urban Development (HUD) rule, Affirmatively Furthering Fair Housing, more widely known as AFFH. He characterizes the action of largely scrapping the rule, as opposed to merely revising it, as a case of the administration bowing to “upper class NIMBYism.” I respectfully disagree.

First, some context. Obama administration HUD officials created and implemented AFFH in 2015. And they did this very quietly, for they were well aware that AFFH was radical in its intent, and that its ultimate outcome would prove extremely controversial. Indeed, although AFFH was billed as an attempt to foster “economic integration,” it was actually a deliberate effort to re-engineer America’s suburbs according to the federal government’s preferred and preconceived racial and ethnic composition. The rule sought to use racial quotas, densifying housing and creating “little downtowns” in the suburbs with business districts built around transportation centers.

Democratic presidential nominee Joe Biden proposes to take this concept even further with a housing plan that couples the premises of AFFH with Sen. Cory Booker’s (D-NJ) proposal to end single-family zoning in the suburbs. This would allow high-rise apartment complexes and other forms of dense urban development to migrate outward into areas that were formerly restricted to construction of detached, single-family homes – long the paradigmatic symbol of the American Dream.

After tinkering with AFFH for several years, the Trump administration recently announced that it would withdraw it nearly in its entirety.

Wells thinks that gutting the rule was a misstep – that a revised AFFH could have been used as an effort to incentivize deregulation at the local level, and increase the housing supply through monitoring and “naming and shaming” areas that are deemed to permit too much single-family zoning. This, he argues, would have been a boon to working families that he claims are excluded from the suburbs due to single-family zoning that inflates housing costs.

While he may be right about pockets of high housing costs, nationally, he’s wrong to think that it’s solely because of single-family zoning laws – and that bureaucratic meddling will right the situation. Here’s why.

Working families prefer single-family housing

One big assumption about reducing single-family zoning in the suburbs in favor of urban-style construction is that working families would jump at the opportunity to move from dense city-style living to… dense, suburban-style living.

The statistics tell a different story. Strict local zoning generally reflects the preferences of communities. But those preferences stem not from racism or classism, as is occasionally asserted. Broadly speaking, families of all kinds prefer neighborhoods with single-family homes to the dense urban environment many want to leave behind.

A move to the suburbs is the goal for millions of families because of its myriad benefits: more space to raise a family, more physical safety, more control over education and better schools, and more long-term financial security that comes with owning property. These aren’t the demands or requirements of rich people; they’re aspirational for working class families, as well.

Consider that millennials, who as a generation have the least wealth of the previous two, are consistently demonstrating a preference for lower-density living arrangements. 80 percent of millennials aspire to homeownership. Reflecting that, 80 percent of millennial population growth has been in the suburbs since 2010. This is, in part, because they want to raise families in the space that single-family living provides. Indeed, U.S. Census data show that people living in high-density neighborhoods have fewer kids and are less likely to be married.

Immigrants, too, are increasingly moving to the suburbs for the same reason. According to census data analyzed by the Brookings Institution, 61 percent of America’s immigrants live in the suburbs of the country’s largest cities. Jill Wilson, of Brookings’s Metropolitan Policy Program, told the Atlantic, “Immigrants are going for the same thing that everybody else is — an affordable place to live, good schools, safety, closeness to jobs, as jobs have also moved out to the suburbs. It’s made it more practical for people to live farther out… they’re following patterns of the larger population.”

In Atlanta, more than 70 percent of African Americans and Hispanics live in the outer suburbs, where single-family housing is the rule, not the exception. Between 2000 and 2016, the African-American population in the exurbs and suburbs grew by 4.4 million. Two-thirds of the African Americans and Hispanics in 53 metropolitan areas with more than 1 million residents live in lower-density housing in the city’s outer bounds.

In other words, families of all income levels want and prefer the benefits of single-family homes, the type of housing there would be less of without the zoning laws that keep dense high-rise apartments from springing up anywhere a corporate developer decides to plant a flag.

This is not NIMBYism. NIMBYism is Ted Kennedy and William Koch rejecting an off-shore wind farm because it ruins the view from their yachts. The genuine preferences and aspirations of working families for space in a single-family home – not a cramped apartment in a high-rise – to raise a family and build community should be prioritized, not dismissed.

Making renters of those who want to be buyers

Much of the push to restore AFFH is predicated on the notion that single-family zoning, in restricting the construction of dense pack-and-stack housing, inflates home prices and keeps working families out. Suburban home prices are rising, but so are most urban home prices.

There is also the point that buying in the suburbs is still often cheaper than both buying or renting in the city. Case in point: Millennials are calling the suburbs home, in part, because they’re being priced out of popular big cities.

Millennials as well as working families aspire to homeownership in the suburbs. The type of development pushed by AFFH, nonetheless, would simply push subsidized units or high-density rentals, making long-term – or even permanent – renters of individuals who would rather buy homes and set down roots in a community.

The working class benefits

The crux of the populist appeal of terminating AFFH lies in who benefits. The towns that would be most impacted by the rule’s return wouldn’t be the Malibus or the Greenwiches, which have the means to fight prospective high-density developments in court, or simply pick up and move.

Rather, AFFH would torment the already diverse working- and middle-class suburbs, populated with families who aren’t politically connected or resourced. These working families inevitably end up as the guinea pigs of technocratic meddling because they’re without the means to combat it.

Under AFFH, it’s working class families – not white-collared individuals in posh gated suburbs – that would be forced to live with the rule’s consequences. Their communities would be quickly overrun by high rises and their schools would become overcrowded. All the while, DC bureaucrats would finger wag at them, insisting their lives had been improved.

With Trump-style populism, sturdy, working class families are the heroes – not the rich, politically-connected professionals who can afford to sidestep the regulations the rest of us are forced to endure. Rescinding AFFH won’t keep working families out of the suburbs. Far from it. It ensures that their dream – the one that involves a house, a yard, and yes, a white picket fence – remains alive and very much attainable.

Tuesday, September 1, 2020

New York Times Magazine Article; "A $60 Billion Housing Grab by Wall Street"

 New York Times Magazine Article; "A $60 Billion Housing Grab by Wall Street" - Hundreds of thousands of single-family homes are now in the hands of giant companies - squeezing renters for revenue and putting the American dream even further out of reach

Below is another recommended article entitled; "A $60 Billion Housing Grab by Wall Street". It reveals the large numbers of single-family homes snatched up by Wall Street Firms during the Great Recession. (Warning: It is a very long article.)

The article illustrates the appetite that Wallstreet and Big Real Estate have for investing in single-family homes.  It brings home the real possibility that the 2020 housing legislation, which we have been opposing, could encourage real estate developers, real estate investment firms, and real estate rental corporations to buy up single-family homes, convert them to multifamily complexes (duplexes, fourplexes, and larger) and turn them into rental properties. 

During the current recession, many households are falling behind on their mortgage payments. This could lead to many single-family homes being put on the market or else being foreclosed on and then being bought up by Big Real Estate (a repeat of the Great Recession), resulting in another Wall Street windfall at the expense of homeowner's loss of wealth equity.

Excerpt from CalMatters article by Senator Nancy Skinner entitled "Let's stop another Wall Street takeover of single-family homes":

"The Great Recession sparked a massive transfer of wealth in California and the rest of the nation. It happened on courthouse steps around the country when an estimated 5 million U.S. families lost their homes due to foreclosure. Many of those foreclosed homes were sold in bulk at auctions, and for the first time, large numbers of single-family homes were snatched up by Wall Street firms.

This corporate scheme led to Wall Street establishing a new and wildly profitable asset class, “single-family home rentals.” Today, big corporations own an estimated $60 billion worth of single-family housing in the United States."


Excerpt from the below article entitled "A $60 Billion Housing Grab by Wall Street":

" “Neighborhoods that were formerly ownership neighborhoods that were one of the few ways that working-class families and communities of color could build wealth and gain stability are being slowly, or not so slowly, turned into renter communities, and not renter communities owned by mom-and-pop landlords but by some of the biggest private-equity firms in the world,” says Peter Kuhns, the former Los Angeles director of the activist group Alliance of Californians for Community Empowerment."


A $60 Billion Housing Grab by Wall Street - Hundreds of thousands of single-family homes are now in the hands of giant companies - squeezing renters for revenue and putting the American dream even further out of reach

By Francesca Mari
Published March 4, 2020

had Ellingwood wasn’t really in the market for a home in the summer of 2006. But when his best friend came across an intriguing listing in Woodland Hills — a bedroom community in Los Angeles County’s San Fernando Valley — the two men decided to visit on a whim.

Entering the property beneath the canopy of a grand deodar, Ellingwood, a big man with a gentle presence, felt as if he had been transported to a ranch house in Northern California, much like one he often visited as a child, all old growth and overgrown greenery — olive trees, citrus trees, sycamores and redwoods. He and his friend meandered past a pond to an inviting teal house built in 1958, “a whimsical masterpiece,” Ellingwood told me. Inside there was a “captain’s quarters” — a room designed to look like the hull of a boat with a built-in water bed and drawers — and numerous stained-glass windows that the couple who owned it had made themselves. The pièce de résistance depicted a faerie woman with flowing hair whose fingers turned into peacock feathers. Behind the house were a couple of small buildings, one of which was office-size — a meditation “Zen den,” Ellingwood thought. The other was an A-frame, Swiss-chalet-style granny unit above the garage, where the owner displayed a toy train collection.

“The house was not in amazing shape,” Ellingwood said. “It needed some help. But I loved it. I wanted it immediately.”

One of Ellingwood’s goals had always been to buy a house by the time he turned 30 — a birthday that unceremoniously came and went six months earlier. When Ellingwood began speaking to lenders, he realized he could easily get a loan, even two; this was the height of the bubble, when mortgage brokers were keen to generate mortgages, even risky ones, because the debt was being bundled together, securitized and spun into a dizzying array of bonds for a hefty profit. The house was $840,000. He put down $15,000 and sank the rest of his savings into a $250,000 bedroom addition and kitchen remodel, reasoning that this would increase the home’s value.

Suddenly adulthood was upon him. He married on New Year’s Eve, and his wife gave birth to their first child, a son, in April. When his 88-year-old grandfather, an emeritus professor of electrical engineering at the University of Houston, had a bad fall, Ellingwood urged him to move into the house for sale just across his backyard. The grandfather bought the house with his daughter, Ellingwood’s mother, and the first thing they did was tear down the fence between the two properties, creating one big family compound. In 2009, Ellingwood’s older sister bought a house around the corner.

But shortly after the birth of Ellingwood’s second son, in June 2010, his marriage fell apart. He and his wife each sued for sole custody. To pay his lawyer, he planned to refinance his house, and his grandfather advanced him his inheritance. By 2012, Ellingwood had paid his lawyer more than $80,000, and in the chaos of fighting for his children, he stopped making his mortgage payments. He consulted with several professionals, who urged him to file for bankruptcy protection so that he could get an automatic stay preventing the sale of his house.

In May 2012, Ellingwood was driving his two boys to the beach, desperate to make the most of his limited time with them, when he got a call. He pulled over and, with cars whizzing by and his boys babbling excitedly in the back seat, learned that he had lost his house. He had dispatched a friend to stop the auction with a check for $27,000 — the amount he was behind on his mortgage — but there was nothing to be done. Because Ellingwood began to file for bankruptcy and then didn’t go through with it, a lien was put on his house, his “vortex of love” as he called it, that precluded him from settling his debt. The house sold within a couple of minutes for $486,000, which was $325,000 less than what he owed on it.

In the months after, though, Ellingwood was graced with what seemed like a bit of luck. The company that bought his home offered to sell it back to him for $100,000 more than it paid to acquire it. He told the company, Strategic Acquisitions, that he just needed a little time to get together a down payment. In the meantime, the company asked him to sign a two-page rental agreement with a two-page addendum.

It was clear from the beginning that there was something a little unusual about his new landlords. Instead of mailing his rent checks to a management company, men would swing by to pick them up. Within a few months, Ellingwood noticed that one of the checks he had written for $2,000 wasn’t accounted for on his rental ledger, though it had been cashed. He called and emailed and texted to resolve the problem, and finally emailed to say that he wouldn’t pay more rent until the company could explain where his $2,000 went. For more than three months, he withheld rent, waiting for a response. Instead, the company posted an eviction notice to his door.

Ellingwood hired a lawyer and reported to the Santa Monica courthouse on his court date with all of his cashed checks in chronological order. When the judge called his case, the lawyer for Strategic Acquisitions asked to have a moment to review the paperwork. After marking each of Ellingwood’s checks off the accounting ledger, the lawyer concluded that the company had, in fact, erred. Strategic Acquisitions had grown so big so fast that it could barely keep its properties straight.

But it would only get bigger. Strategic Acquisitions was but one of several companies in Los Angeles County, and one of dozens in the United States, that hit on the same idea after the financial crisis: load up on foreclosed properties at a discount of 30 to 50 percent and rent them out. Rather than protecting communities and making it easy for homeowners to restructure bad mortgages or repair their credit after succumbing to predatory loans, the government facilitated the transfer of wealth from people to private-equity firms. By 2016, 95 percent of the distressed mortgages on Fannie Mae and Freddie Mac’s books were auctioned off to Wall Street investors without any meaningful stipulations, and private-equity firms had acquired more than 200,000 homes in desirable cities and middle-class suburban neighborhoods, creating a tantalizing new asset class: the single-family-rental home. The companies would make money on rising home values while tenants covered the mortgages. When Ellingwood reached out to Strategic Acquisitions in the winter of 2013 to buy his house, it was no longer interested in selling. Ellingwood asked again a year later; the company didn’t reply.

Over the next seven years, Strategic Acquisitions would turn over management to Colony Capital, and Colony’s real estate holdings would merge with a series of companies, culminating in the Blackstone subsidiary Invitation Homes, making Invitation Homes the largest single-family-rental company in America, with 82,500 homes at its height — and 79,505 homes after Blackstone sold its shares at the end of last year. Ellingwood, however, could hardly distinguish among the various L.L.C.s he paid rent to: Strategic Property Management, Colony American Homes, Starwood Waypoint, Invitation Homes. The offices changed cities, downsized staff, hiked rents and imposed increasingly punitive fees. Ellingwood was required to submit his rent in different ways — online, certified mail, cashier’s check, in person — with slightly different rules, by the 1st, by the 3rd. The leases grew in length from four pages to 18 to 43 as the companies doubled down on strictures and transferred more responsibilities — mold remediation, landscaping, carbon-monoxide detectors — onto the renter.

Ellingwood didn’t know it at the time, but his story was to be the story of millions of renters around the country, the beginning of a downward spiral into the financial industry’s newest scheme to harvest money from housing.

Wall Street’s latest real estate grab has ballooned to roughly $60 billion, representing hundreds of thousands of properties. In some communities, it has fundamentally altered housing ecosystems in ways we’re only now beginning to understand, fueling a housing recovery without a homeowner recovery. “That’s the big downside,” says Daniel Immergluck, a professor of urban studies at Georgia State University. “During one of the greatest recoveries of land value in the history of the country, from 2010 and 2011 at the bottom of the crisis to now, we’ve seen huge gains in property values, especially in suburbs, and instead of that accruing to many moderate-income and middle-income homeowners, many of whom were pushed out of the homeownership market during the crisis, that land value has accrued to these big companies and their shareholders.”

Before 2010, institutional landlords didn’t exist in the single-family-rental market; now there are 25 to 30 of them, according to Amherst Capital, a real estate investment firm. From 2007 to 2011, 4.7 million households lost homes to foreclosure, and a million more to short sale. Private-equity firms developed new ways to secure credit, enabling them to leverage their equity and acquire an astonishing number of homes. The housing crisis peaked in California first; inventory there promised to be some of the most lucrative. But the Sun Belt and Sand Belt were full of opportunities, too. Homes could be scooped up by the dozen in Phoenix, Atlanta, Las Vegas, Sacramento, Miami, Charlotte, Los Angeles, Denver — places with an abundance of cheap housing stock and high employment and rental demand. “Strike zones,” as Fred Tuomi, the chief executive of Colony Starwood Homes, would later describe them.

Jade Rahmani, one of the first analysts to write about this trend, started going to single-family-rental industry networking events in Phoenix and Miami in 2011 and 2012. “They were these euphoric conferences with all of these individual investors,” he told me — solo entrepreneurs who could afford a house but not an apartment complex, or perhaps a small group of doctors or dentists — “representing small pools of capital that they had put together, loans from regional banks, and they were buying homes as early as 2010, 2011.” But in later years, he said, the balance began to shift: Individual and smaller investor groups still made up, say, 80 percent of the attendees, but the other 20 percent were very visible institutional investors, usually subsidiaries of large private-equity firms. Jonathan D. Gray, the head of real estate at Blackstone, one of the world’s largest private-equity firms and the one with the strongest real estate holdings, thought he could “professionalize” the fragmented single-family-rental market and partnered with a British property-investment firm, Regis Group P.L.C., as well as a local Phoenix company, Treehouse Group. Blackstone “would show up with teams of people and would look for portfolio acquisitions,” recalled Rahmani, who works for the firm Keefe, Bruyette & Woods, known as K.B.W. (K.B.W. sold some shares of Invitation Homes during its public offering.)

Throughout the country, the firms created special real estate investment trusts, or REITs, to pool funds to buy bundles of foreclosed properties. A REIT enables investors to buy shares of real estate in much the same way that they buy shares of corporate stocks. REITs typically target office buildings, warehouses, multifamily apartment buildings and other centralized properties that are easy to manage. But after the crash, the unprecedented supply of cheap housing in good neighborhoods made corporate single-family home management feasible for the first time. The REITs were funded with money from all over the world. An investment company in Qatar, the Korea Exchange Bank on behalf of the country’s national pension, shell companies in California, the Cayman Islands and the British Virgin Islands — all contributed to Colony American Homes. Columbia University and G.I. Partners (on behalf of the California Public Employee’s Retirement System) invested $25 million and $250 million in the REIT Waypoint Homes. By the middle of 2013, private-equity companies had raised or spent nearly $20 billion on single-family real estate, and more than 100,000 homes were in the hands of institutional investors. Blackstone’s Invitation Homes REIT accounted for half of that spending. Today, the number of homes is roughly 260,000, according to Amherst Capital.

“There’s no way of looking at the ownership of properties and understanding who owns them ultimately,” says Christopher Thornberg, a founding partner of the research firm Beacon Economics. While Invitation Homes and American Homes 4 Rent became publicly traded REITs, as far we know “the big money is still in private equity,” he says. (Progress Residential and Main Street Renewal are two such companies.) “They are completely subterranean. They’ve got multiple layers of corporations within corporations within holding companies.”

Colony Capital, the Los Angeles-based private-equity firm run by the Trump megadonor Thomas J. Barrack Jr., didn’t have as much money as Invitation Homes. As a result, it was choosier, says Peter Baer, the founder and chief executive of Strategic Acquisitions, the company Colony contracted to acquire homes. From early 2012 to 2014, Strategic bought nearly 3,000 homes for Colony. Ellingwood’s home was one of the first. Baer told me he was instructed to buy “conventional product” in the price range of $300,000 to $600,000, typically three- or four-bedroom homes in good school districts that would be easy to rent — i.e., the types of homes desirable to first-time home buyers. Invitation Homes sought similar opportunities. (Some REITs developed software to evaluate public

How did you think it would end?

Thursday, August 13, 2020

Marinwood CSD considers a statement supporting Black Lives Matter


I will address your letter at the meeting but first, I think you should have an opportunity to amend your comments.   The letter is clearly outside the scope of Marinwood CSD business but even though your thoughts are well intentioned, it will only serve to open a wound and bring further negative attention to our community.

I support your goal of racial harmony and in fact I have pointed out disparity where it exists in our community and elsewhere.  I am involved with the "No on Prop 16" campaign. I was an early supporter for the name change of the Dixie school district although I strongly disagreed with the divisive tactics used by the name changers.  We are not a racist community but try to tell that to the mob.

I think your letter will have the OPPOSITE effect of what you want.  It will only serve to spotlight our community and create discomfort for many neighbors.  Black lives matter is a sentiment that virtually everyone in our community agrees with.  "Black lives matter" the political movement is far different.  It uses violence, intimidation and divisive rhetoric that breaks communities apart.  

We were close to violence when the BLM protesters went to the house of the Marinwood Man. 

In Novato on July 11th, BLM marchers harassed elderly women having lunch. 

Do you want to encourage more of these incidents?

If you must write the letter, I ask that you consider ways to soften your message to emphasize compassion but strip away the BLM rhetoric and do it as an individual and not on behalf of the Marinwood CSD board.  We know from violent BLM encounters nationwide, that kneeling  and rhetoric doesn't work.  It only encourages conflict.   Leadership and action works.  Let's find real ways to involve more cultures and people in our recreation programs instead. People having fun together cures conflict.



We question the wisdom of the Marinwood CSD enlarging its mission to serve other communities instead of Marinwood residents.  After all, it is only Marinwood CSD residents who pay the taxes, salaries and pensions of our employees.  Why should we subsidize communities outside our jurisdiction?  I believe that we should focus on Marinwood CSD residents first and do outreach with our regional business only if it makes business sense to do so.

Marinwood CSD meeting August 11, 2020