American households and leaving the nest

My name is Maria. I’m part of the housing.com staff, and I'm currently based in Quito. Ecuador is a delightful little country, but there are definitely some cultural differences that have me scratching my head from time to time.

Many young, single, upwardly mobile Ecuadoreans with college degrees and well-paying jobs opt to live with their families rent-free into their late 20’s and beyond. As an American, this seems more than unfathomable to me. My whole life up to 18 was waiting for that majestic day when I could break free from the shackles of my comfortable suburban home and become a yuppie (young urban poor person). I’ve lived in the crappiest apartments, in the shadiest parts of town, with the sketchiest room mates, all of which was a thousand times more awesome than the idea of moving back in with my parents.

Here though, many of my Master’s-degree-wielding, espresso-drinking, independent-film-watching compatriots leave work at 5 so they can make it home in time for the traditional family sit down dinner. There was a time in our history, and not so long ago, when leaving the nest was reserved for quite few occasions: manifest destiny and death. The average American household in 1900 contained 4.6 people, and probably reflected a multi-generational makeup: children, parents, whatever grandparents were still around, and maybe a stray cousin or two. Since 1900, the landscape of American households has (unsurprisingly) changed significantly, with Census survey data documenting the shrinking of the American home.

So what’s the cause of this ever-decreasing household size? I blame the media, but other likely sources probably include things like: an increasing proportion of American youth moving away to go to college, the greater social acceptability of grandparents living alone or in assisted living facilities, and the pretty widely accepted notion that living with your parents at any point past 25 makes you, well, kind of a bum. Ultimately, modern American families are not bound together by economic necessity as in times past. In the past hundred years, children have gone from an asset (go plow the fields!) to a liability (tuition is how much!?). Care for the elderly can be outsourced from the family home because of things like improved government services, higher disposable incomes, and 401k’s.

Glancing back at the chart, it’s not news that the population has steadily increased since 1900 (and correspondingly, the number of households), and that the average household size has decreased, but what is intriguing is that this trend may be coming to a halt, and even slowly reversing. Comparing percent changes in the average household size yields an interesting result.

From 1910 to 2000, the average household size decreased about 5% per decade, resulting in a cumulative 46% decrease in household size from 4.6 to 2.6. In 2010, it showed no change from 2000, and may have even increased slightly. Where does that leave us now?

This post-recession fallout may likely have negative implications for our economic recovery in terms of reduced housing demand, but culturally and socially, its unclear what consequences may result. Will an increase in multi-generational households strengthen the America’s nuclear family ideal and reinforce traditional values? Will young adults leaving the nest later result in the protracted financial independence of generation Y? Is it weird to have to share a bathroom with grandma? If Ecuador is any indicator of things to come: yes, no, and probably.

Making and Mixing Compost Tea

Jeffrey Westman, co-founder of Grow Biodynamic Consulting, discusses biodynamic farming and his company's flow form system for making and mixing compost tea. Compost tea is a liquid solution made by steeping compost in water. It is used as both a fertilizer and can be a very effective method to restore and improve soil health. Using one of their flow forms is an extremely efficient way to mix and aerate  your compost in order to make a high quality compost tea. An efficient tool for not only vineyard operators and their "500 prep" field preparations but also for the more modest needs of the urban gardener.

West Coast Green 2010 Andy Mannle

Andy Mannle, Education Director for West Coast Green 2010 Conference discusses this year's theme "Power of Ten" -- which celebrates the exponential change generated by collective intelligence.

What Do We Do with Fannie and Freddie? The Politics of Change

What Do We Do with Fannie and Freddie? 

Housing, Housing Policy, Housing Authority

The Treasury Department and the White House held the first major conference devoted entirely to housing finance last month. While tougher origination standards are still within earshot of the House Financial Services Committee, the core topic of the conference was what to do with Fannie and Freddie (the GSEs). With the financial overhaul behind congress, the push is on to find a political and economic consensus. Until now, the administration’s view has been that the GSEs should be scaled down as intermediaries which serve the “underserved” and should otherwise abandon their portfolio activities. However, it is uncertain at the outcome of this conference whether or the White House will take the middle road to addressing the issue.

The political dynamic of the problem takes three dimensions. First, the lobbying at the local, state and federal level by the allied housing industries is significant. As an example, in just the first two quarters of 2010, over 782 individual lobbying reports were filled with the Office of the Clerk of the U.S. House of Representatives. This represents just over a half a billion dollars in lobbying expenditures devoted entirely to housing. Second, the Democrats have generally voiced their supported for keep the GSEs as a backstop for providing conduit securities activities for middle income mortgages for the cross-section of the country. This in a sense would return the GSE’s to the original rationale for the creation of Fannie Mae. However, some fiscally conservative democrats have cited the argument long made at the Federal Reserve that the premium associated with an implied government backing has not translated into across the board lower rates, as this premium has been largely manipulated to the benefit of Fannie Mae’s portfolio and stock holders. For just this reason, there is a growing bipartisan consensus for scrapping all of Fannie Mae’s portfolio activities. The minority of critics who challenge this ideaargue that systematic risk is almost unavoidable and that the GSE’s hedging activity actually reduced market volatility.

The third political prong is associated with the Republican and libertarian position that the GSE’s should be entirely scrapped. The foundation of this argument is two fold. First, they argue that GSE’s are inherently unable to mitigate the moral hazard risk by virtue of their chartered ownership structure. Second, they argue that risk is not appropriately priced in the market due the implied backing of the government. Some economists have extended this price distortion argument to argue that the U.S. offers too many subsidies to housing as it is. Is it possible that our homes are even more overvalued relative to what we thought had already been undervalued?

For this reason, if only for the rhetorical impact, the politics of winding down the GSE’s may ultimately rest on the immediate financial impact that constituents would feel if the GSE’s disappeared over night. Perhaps for this reason, the H.R. 4889: GSE Bailout Elimination and Taxpayer Protection Act has only garnered 21 sponsors in the house — just a fraction of the total Republican support expected. As it stands, the U.S. government controls 95% of all mortgages either through FHA insurance or GSE loan purchases. This begs the question: would elimination of GSE market activity all together freeze the system? One analyst at Barclay’s Capital sees the scenario like this. In the process of privatizing, the delinquent portfolio is pushed to the forefront where it is grossly undervalued by the market. Likewise, because of the guarantees associated with these delinquent pools, the government would just be giving away money even if they sold at a relatively steep discount to UPB. In fact, it would be so undervalued that it would take a Resolution Trust type entity to manage the assets. At this point, you are just recreating an organization that already exists within the GSEs. The analyst goes on to argue that without the government guaranteeing mortgage purchase in the secondary market, regulated entities and foreign governments which are mandated by law to purchase investments within a government class of assets would be prohibited from further investment.

This is a worst case scenario in the political near term with mid-term elections coming up this year. So playing it safe by reorganizing the public equity of the firms and by eliminating portfolio “hedge fund” activities may just be the outcome for the GSEs. The conference taking place today at the Treasury Department is made up of a variety of academics, pundits and industry stakeholders. While this high profile event demonstrates a commitment towards innovative solutions by the White House, it is unlikely that anything substantive beyond the aforementioned will emerge as a guiding point for the administration. It is quite possible that the administration has made up its mind and that it is simply paying lip service to the far left who wants to revamp GSE as another CRA vehicle and to the far right who can’t be left out of the picture because they know their populist libertarian rhetoric strikes a chord with voters in key states this fall.

Best Web Sites for Finding Housing in London

What are the good web sites for finding housing in London?  Several people have emailed us asking this question recently. We performed an informal inquiry. Here's our list of the top six UK-based web sites for finding a place to live in London. 

  1. Globrix.com - With Web 2.0-ish user experience, Globrix, claims to be the largest search engine for "property, flats and houses for sale, rental property, flat shares and new homes". Large inventory of for sale and rentals.
     
  2. Primelocation.com -  Search for for sale or rental properties.  This is "estate-agent" service" which means what the British call realtors. In fact, Primelocation service feels a lot like the UK's version of Realtor.com.  Lots of properties, downside is you have to register. They also have an iPad app

  3. Nestoria.com - Very simple user interface.  Search tool for properties for sale and rent. The search box uses auto-suggest which is helpful if you're not exactly sure how you want to search.
     
  4. Zoopla.co.uk - This service reminds us of some of the features you'll see on U.S.-based property search sites Trulia & Zillow.  A little more data focused than the other sites. Seems to be a property listing aggregator.
     
  5. Gumtree.com -  Works a lot like Craigslist. Started in 2000 as a local London-based classified ads and community site. Acquired in 2005 by eBay's Kijiji (renamed Ebay Classifieds) service, Kijiji is Ebay's answer to Craigslist. Find room shares, etc.
     
  6. London.Craigslist - Not to be outdone, Craigslist always makes a strong option. When we visited, there were plenty of listings. Downside was the inability to sort results by neighborhood.
     
  7. Rightmove.com -Just launched an iPad app. Nothing very distinctive about this site. But it does seem to have a lot of inventory. 

     
    Please drop us a line if you have any suggestions on additions we should make to our list.

Case-Shiller shows signs of weakness in Q1 of 2010

Home prices fell in the first quarter compared to the fourth quarter, but were up 2 percent from the market's trough in the first quarter of 2009, according to the latest Standard & Poor's/Case-Shiller National Home Price Indices report released today.

Data through March 2010 shows that U.S. National Home Price Index fell 3.2%, but remains above its year-earlier level. Housing prices have rebounded from crisis lows, but recently the market has seen renewed weakness as tax incentives are ending and foreclosures are climbing.

The S&P/Case-Shiller Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States.

 

 

 

Oakland Real Estate Market Analysis - Part #2

This is part two in a series of short videos where the panelist's conversation continues on the current condition of the U.S. housing market and what makes Oakland's housing market different.

Some of the questions discussed in this segment are:
 

  • Has the market hit bottom yet?
     
  • How to know if we are out of it, and if we’re not, when we will be?
     
  • What are the opportunities out there given the state of the economy?
     
  • Is Oakland unique to the current influences on the state of the economy or not? If so, why or why not?
     

Oakland Real Estate Market Analysis - Part #1

 Back in February, a forum of local real estate consultants convened at the Ellington condominium building, a new high-rise, multi-unit residential building located in Jack London Square, Oakland, CA.

 This is part one in a series of short (2min - 5min) videos where the conversation centers on the U.S. housing market in general and the Oakland real estate market in particular. Also talked about is where the Ellington it is currently positioned in the Oakland market. The consensus seemed to be of the opinion that the units at the Ellington represent very good value for the asking price. One point made to this substantiate this view was that the units are currently priced at about 65-70% of what they would cost to build. 

 The Ellington is clearly a high-quality building. In terms of design and construction, no multi-unit residential building of its type in all of Oakland gets very close. The reality is they won't be producing a lot buildings with kind of construction quality any time soon. Which is another reason why units here make an attractive investment.

 Most of the units have killer bay views and Oakland cityscapes. The neighborhood, Jack London Square, while in need of some more foot traffic, has a lot going for it now. Blue Bottle Coffee, for example, just put a stake in the ground as they are a new property owner down the street on third.

 The Ellington building is a cast-in-place concrete structure with a precast and glass exterior. The ground floor is reserved for retail space. There are four levels of parking and 12 stories of condominiums. Amenities include a 50-foot pool, spa and a fitness center.

 

 

San Francisco Park(ing) Day 2009

The first Park(ing) Day was launched by Rebar in 2005, right here in San Francisco. Watch our latest Streetfilm to see how San Francisco re-purposed parking spots during Friday's Park(ing) Day. Just imagine if bike parking and expanded outdoor café seating took over our automobile-filled public spaces every day. (Courtesy: Streetfilms.org)

 

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