Creative Class

On Sunday, August 29, Richard Florida was interviewed on CNN’s Fareed Zakaria GPS. They discussed The Great Reset and how cities will change as Americans adapt to a world after the recession. Click the image below to watch the interview.

Jennifer Edwards is one of many, many Americans selling their homes and trading them in for a new, more flexible, experiential life as renters.

Today, at 2 PM, I will sell my 2-bedroom Condo in Park Slope Brooklyn. This is not a new experience. I bought and sold real estate in New York City throughout the mid 1990s and 2000s, in order to put myself through graduate school, pay for my son’s private school education, and monetarily supplement my artist / college professor earnings …

I’m primed to channel my creative skills elsewhere as it seems I am perhaps [again] ahead of the trend. Two recent studies indicate that we find happiness not by owning [things] but by doing [things] …

Apply this to the ideas of ownership vs. experience and you have either a recipe for disaster or the tools to take back control of your life where you can. Changing your boss may be hard. Choosing not to take on car payments, credit card debt and mortgages, or at least minimize them, is easier.

Today, I survey my home, a rented apartment in the East Village, and thank my landlord. As I remember 14 years of ownership experiences: properties sprouting leaks, broken sewage pipes, unruly coop boards, building-wide lawsuits, and assessments. All I have to do now is pay my rent and my landlord takes on all of the headaches, the mortgage, and the maintenance of my living space. By this evening, there will be money in the bank and I will be free. I feel better already.

Here’s some video from my CNBC StreetSigns appearance with Robert Shiller.

Check out my new piece in The New Republic:

Speaking at a health care reform rally in Raleigh, North Carolina, in July 2009, President Obama declared that the worst of the recession was over. “We have stopped the free-fall. The market is up and the financial system is no longer on the verge of collapse,” he said proudly.

A year or so later, with midterm elections looming and an electorate that is as fearful and angry as any in memory, the stock market has risen, but even a breath of bad news can send it tumbling. As dismal as housing prices continue to be, they have yet to hit bottom in some places. Unemployment remains frozen at an overall level of nine-plus percent, and job creation has been anemic. If the crisis belonged to George W. Bush, the recovery has been Obama’s—and it has been a fragile and tentative one at best. Along with billions of dollars in stimulus payments, the president has spent down most of his political capital. So what is his next step?

Read the full article here.

A key aspect of resetting the U.S. economy is a shift from homeownership to rental. The U.S. homeownership rate is already coming down on its own, and metro regions with about 40-45 percent renters and 55-60 percent owners appear to have greater flexibility in dealing with economic transitions and higher levels of human capital and higher incomes as well. But rentals can also play a role in urban revitalization. It used to be that rental units were converted into condos. But now, in downtown Miami, high-end condos are being converted into rentals. And it’s bringing lots of young people, empty-nesters, and even some families back downtown, according to this Bloomberg report: (more…)

My latest columns:

More and more economic experts are saying the U.S. economy is headed for a “double-dip” recession. But actually it’s much more – and much more serious than that. Earlier this week, Paul Krugman speculated that the U.S. is headed for a Third Great Depression, noting that while recessions are relatively common and depressions quite rare, he fears our current economic circumstance is coming to look more like the Great Depression of the 1930s or the Long Depression of the late 19th century.

The first chart below from David Leonhardt of The New York Times shows the recent downturn in private-sector unemployment.

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The Case-Shiller Home Price Index projects slow growth in house prices for the next four years or so. The chart below (via The Wall Street Journal) tracks the Case-Shiller Index from 2000 through 2014.

After a slight uptick, the index is projected to decline again by about 1.4 percent this year. The cumulative increase for the next five years is projected to be 10.5 percent – or about 2 percent a year. This will make up about a third of the total loss (28 percent) from peak housing values in 2006.

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My interview with the New York Post’s Brian Moore.

To Richard Florida, calling today’s economic woes the “Great Recession” doesn’t begin to describe the tectonic forces at work. This is not simply a time when jobs are hard to find, says the urban theorist and best-selling author, who also runs the Martin Prosperity Institute at the University of Toronto’s management school. Unlike previous downturns, such as the ones that kicked off the previous three decades, he believes today’s recession is a “great reset” that will fundamentally change the work we do and the way we do it.

“Great resets are mechanisms by which technologies change, productivities improve,” says Florida, whose latest book — titled, yes, “The Great Reset” — describes current and past transformations in American society. “But most important, they’re shifts in the way we live and work.”

Read the full piece here.

A former mortgage professional writes:

I spent 10 years in the mortgage business… and I still cannot figure out why the interest on second mortgages and lines of credit is tax deductible? I used to see people buy boats and Corvettes with their lines of credit and it frosted me that all of us tax payers were subsidizing the interest. This area must be addressed. I think that a tax deduction for the interest paid on a mortgage should be limited to the primary mortgage only.