Archive for May, 2008
Graphic via the New York Times.
What a great map that accompanies a very nice NYT review of Bill Bishop’s The Big Sort.
Bishop cites research suggesting that, contrary to the standard
goo-goo exhortations, the surer route to political comity may be less
civic engagement, less passionate conviction. So let’s hear it for the
indifferent and unsure, whose passivity may provide the national glue
we need.
The full review is here.
The NY Post reports record foreclosures on high-rollers’, high-end Hampton’s properties:
Homeowners in the some of the toniest ZIP codes in the Hamptons are
facing a frightening reality – they can’t afford to foot the bill for
their high-priced homes, The Post has learned. In the first
three months of this year, banks have launched preliminary foreclosure
actions – known as lis pendens proceedings – against a record 120
borrowers in East Hampton and Southampton towns. Twenty
percent of those borrowers live in homes that are worth more than $1
million, according to figures from the Suffolk County clerk.
My first reaction was too bad: We’re talking about defaults and foreclosures on multi-million dollar loans.
But then I started thinking, why? It’s clear as a bell that the tremendous run-up in housing prices in places like the Hamptons, Miami, Naples, Florida, or other similar high-end vacation spots had little to do with demand. We’re talking speculation pure and simple. My research on real estate prices shows that local wages make up about a fifth of local income in Naples, compared to around 90 percent in Silicon Valley. What drove prices in these markets was “outsiders,” certainly – outsiders trying to make real killings on flips and speculation. With these speculative gains wiped out and virtually no mortgage market for high-end loans to speak of, real estate values in these places have a long, long way to fall.
But looking at local real estate listings many, indeed most, of these properties including ones in lis pendens are listed at prices above what’s owed on their hefty mortgages – that, is way above their current market value. Huh? The reason is simple, actually. Facing foreclosure, those holding such huge mortgages have every incentive to hold out for their price rather than cut it and then have to bring a big check to closing.
Of course markets work, eventually. Prices will start to come into line over the next year or two once large numbers of these speculative homes go back to the banks. My best guess is that they are not even half-way to the bottom yet in these markets, and may well end up somewhere around 2001 price levels before the dust setlles.
Karin Fisher has this detailed report on partnerships between how smaller colleges and their communities in the Chronicle of Higher Education:
Old mill towns and declining manufacturing centers, in the Rust Belt’s
former company towns and in the rural South, small, private liberal-arts
institutions like King’s are assuming a greater responsibility for community and
economic development. They and their alumni are raising money to purchase
abandoned buildings. They are relocating college facilities, like bookstores and
residence halls, to buoy up urban cores. They are working to better connect
faculty experts with local entrepreneurs …But unlike research universities and land-grant institutions, which have long
viewed regional economic development as central to their missions, most
liberal-arts colleges are relative newcomers to this work, and they face real
constraints. In contrast to powerhouse institutions like the University of
Pennsylvania, which is largely credited with remaking West Philadelphia, these
smaller colleges may not have the wealth to make upfront investments or to
absorb the risk incurred in such deals.The modest size of their endowments … mean that money spent on community projects must also benefit those on the campus. Faculty members are often expected to carry heavy teaching loads, leaving them with little time or inclination to engage in economic-development
efforts. In addition, small colleges typically lack the administrative structure
to support such efforts.
I’m a huge fan of Planetizen and of Bill Bishop, author of the fabulous new book, The Big Sort. Click here for a Planetizen podcast of me and Bill with Nate Berg.
Writing in the NYTimes Magazine, Bill Galston and Pietro Nivola reflect on the sort:
You are less likely to live near someone whose politics differ from
your own. It’s well known that fewer states are competitive in presidential
races than in decades past. We find similar results at the county level. In
1976, only 27 percent of voters lived in landslide counties where one candidate
prevailed by 20 points or more. By 2004, 48 percent of voters lived in such
counties.What accounts for the decline of ideologically mixed localities? Bill Bishop,
a journalist, and Robert Cushing, a sociologist, who have studied this issue,
stress that the age of “white flight” to the suburbs is over. Instead, during
the past two decades, many whites have moved to one group of cities and many
blacks to another. Meanwhile, young people have deserted rural and older
manufacturing areas for cities like Austin and Portland. Places with higher
densities of college graduates attract even more, so that the gap between such
communities and less-educated areas widens further. Zones of high education, in
turn, produce more innovation and enjoy higher incomes, generating communities
dominated by upper-middle-class tastes. Lower-educated regions, by contrast,
tend to be more family-oriented and more faithful to traditional authority.Not surprisingly, this demographic sorting correlates with a widening
difference in political preferences. What’s more, according to Bishop and
Cushing, once a tipping point is reached, majorities tend to become
supermajorities. … Polarization feeds on itself.
From The Economist.
Fareed Zakaria in Newsweek:
“Generations from
now, when historians write about these times, they might note that by the turn
of the 21st century, the United States had succeeded in its great, historical
mission—globalizing the world. We don’t want them to write that along the way,
we forgot to globalize ourselves.”
A terrific new report by Joe Cortright for CEO’s for Cities finds that:
high gas prices are not only implicated in
the bursting of the housing bubble, but that the higher cost of
commuting has already re-shaped the landscape of real estate value
between cities and suburbs. Housing values are falling fastest in
distant suburban and exurban neighborhoods where affordability depended
directly on cheap gas.
The full report is here.
Harvard’s Greg Mankiw writes in response to proposed plan by Massachusetts
to impose a 2.5% annual tax on college endowments that exceed $1
billion.
If this were to pass, here is what I would consider:
1.
Instead of expanding the university into Alston, Harvard could create a
second campus in another state. Call it Harvard South. (Put it in a
better climate than Boston, and I would be one of the first faculty to
volunteer for the move.)2. Transfer much of the endowment to Harvard South. Support Harvard North by slowly selling off land in Massachusetts.
3.
Eventually, make Harvard South the main campus, and Harvard North the
satellite. If Massachusetts state lawmakers remain hostile, close
Harvard North down entirely.I have often wondered what the
efficient scale of a university is and, in particular, whether it would
be better to create a second Harvard with the university’s wealth than
to expand the first one. Maybe the Massachusetts state legislature will
give the powers-that-be at Harvard an incentive to consider more
radical expansion plans.
And if states and cities are willing to pony up billions for convention centers and stadia, and hundreds of millions in industrial incentives for factories, how much do you think they much come up with for a Harvard, or MIT, or Stanford, or Oxford relocation. Universities are already setting up foreign campuses. Trust me, it’s just a matter of time until this game gets big.
The video from my talk at the Silicon Valley Googleplex – which was recently broadcast on CSPAN’s Book TV – is now online, here.
