Month in review: October
[Previous months in review available here: Sep, Aug, Jul, Jun, May, Apr, Mar, Feb, Jan-06, Dec-05.]
October is the time to reap
In a month that we associate with resumption of studying, I offered a series of essays, starting with a half-century’s worth of learning compressed into three easy blog posts: The 50 year trends in affordable housing, Part 1, physical, Part 2, financial, and Part 3, public policies, focusing among other things on the false syllogism that affordable housing is hard to build, easy to manage:
With property management seen as a low-skill sinecure, small wonder that most owners managed their own property, so Bill & Ted’s Excellent Development Company spawned its affiliate, B&T Excellent Management.
Ex-cell-ent!
In 1977, the largest affordable housing property owner/ manager had about 7,500 apartments (it was either Glick or Carabetta). By 2006 the largest apartment owner/ managers have 300,000 (AIMCO and Equity Residential vie for the honor).
The race to scale in ownership fueled and was fueled by the race to scale in financing. With that scale came renewed emphasis on squeezing the pips, both financially and in terms of resident service. With that came professionalization of the people who worked for the growing firms.
That increase in ecosystemic complexity and specialization is echoed in a three-part essay on OCC’s recent guidance requiring lenders to provide better consumer disclosure, in A duty to whom? Part 1, the stimulus, Part 2, the economics, and Part 3, the response, and taking respectful issue with the Mortgage Bankers Association:
Much though I like the MBA and count its CEO, Jonathan Kempner, among my long-time professional friends, I cannot agree here. Most people are not numerate, and you have to spell it out to them.
Many people have trouble seeing the numbers!
Indeed, that is a consultant’s job, to be expert to the client’s amateur, so that the client makes a wise and informed choice. Additionally, disclosure — like sharp boundaries — strengthens markets and increases overall volume and efficiency. Every time government has pushed markets toward transparency, they have prospered long-term.
Indeed, as I pointed out in Fuzzy boundaries are bad boundaries, bright-line tests — if feasible! — not only improve customer confidence, they tend to expand business activity overall because markets like certainty and consistent, stable rules.
“In a knife fight? No rules!”
Meanwhile, in Gotham City, MetLife continued its breakneck pace to sell Stuyvesant Town, and I speculated as to MetLife’s motivations and likely responses in Billion-dollar battle: Part 6, the orchestra warms up, Part 7, the conductor’s unpublished score, and Part 8, rent control’s hidden free riders.
How many
[Previous Stuy Town posts can be found here: 1, starting gun, 2, opening bets, 3, what's at stake, 4, paging the cavalry, and Part 5, must the public pay?]
My
From
Can’t develop in the blue … or the green
In gloomier news, I reported on
The observant herd was standing stock-still.
Why would I take a chance when I could just chew my cud?
Willie Kathryn Suggs, the sales agent for Ms. Gwinn’s house and for the first group of HomeWorks houses in
“We kept telling them that this is going to change, and nobody believed me,” Ms. Suggs said. “I was begging people.”
Nobody was moving. And the city needed some people to move. Hence the core principle:
First movers should receive extra incentives.
Because when the smart animals move, the herd follows.
Within a few years, as news media account celebrated some of the program’s successes, 1,000 to 2,000 people signed up for lotteries for a chance to buy one of a few dozen houses being offered at a time, with Harlem properties typically attracting more prospects than those in Brooklyn, city officials say.
When the herd moves, the whole neighborhood rises.
Today, Ms. Suggs believes that the city program transformed the neighborhood.
This blog spends a lot of words on markets and their multi-cellular genius, as illustrated theoretically by the emergence of vendors anywhere there are travelers, in A service at every junction, and a more practical example, the economic value of perceived eco-friendly building in Green…is GOOD, Part 1 and Part 2.
We don’t use green screens any more, Gordon
Aside from program development consulting, AHI is committed to research, which we are happy to acknowledge when done by others, as in Six tips for program design:
About halfway through his provocative albeit unstructured book The Anglosphere Challenge, verbally peripatetic author James C. Bennett briskly lists (pages 136-137) six terrific, cogent rules of thumb for state intervention, applicable to affordable housing.
Six useful points!
1. Avoid self-deception. Admit that interventions have a price. “We know that this act will carry a price. We accept that price consciously for the sake of a social goal.”
Any time government pokes its finger in the market pie, that not only changes market behavior, it imposes additional costs on the marketplace. Although government can reduce deadweight and torque through use of outcome compliance rather than process compliance, some level of ‘background’ financial entropy is inescapable.
Finally, during September, AHI and I hosted a British study tour, whose adventures I described in Studying the curious Yank, in situ. On Halloween, I offered a housing dictionary, translating English to American and vice versa.
We have trick or treat …
.. and they want a penny for the Guy.
