Who remembers Netscape?  In 1994, it was the first successful Internet browser, opening the World Wide Web to millions of newbies. Its dominance was short, as it was soon supplanted by the evil genius of Microsoft and Internet Explorer. And how about Myspace? Once upon a time, it was the social media site, with millions of users. Along came young Mark Zuckerberg and The Facebook, and poof–it was as if Myspace never existed. And we are left to wonder if the world would have been a better place if Netscape and Myspace had been more resistant to invaders.

And that’s the feeling I had last night, staying up late to watch Hillary Rodham Clinton appear on the Tonight Show with Jimmy Fallon. Hillary, the former First Lady, Senator, and Secretary of State who in 2016 was vanquished by Donald Trump.

Ms. Clinton sat to Jimmy’s right in her power pants suit, smiling and appearing very comfortable as she talked with Fallon about politics, and viruses, and yes, plugging the new Hula documentary about her–well, who appears on the Tonight Show if they don’t have something to plug? She wasn’t mean, she wasn’t spiteful, she didn’t rip into Bernie (though I have heard there is some of that in the documentary.) Her mentions of Trump were cutting without being cruel, just making it clear that he was not a competent leader in a time of national and worldwide conflicts.

I understand that Hillary is not a perfect person. She was embroiled in enough controversies to wonder if there was ever any smoke with all the fire. Her 2016 candidacy has been bisected and trisected and totally dissected. Her campaigning in the wrong states, her being perceived as more of an ice-princess than Frozen’s  Elsa, Bill’s runaway runway dalliance with Attorney General Loretta Lynch, James Comey’s botched email server announcements,  and of course the “baskets of deplorables” all contributed to her stunning election night flop. (Yes, I know she won the popular vote–so what?)

But oh, what could have been. Even if much of her agenda would have been stymied by a Republican congress, there would be no trade wars, no walls, no cages. There would be a viable State Department, a well-staffed CDC, an unthreatened Affordable Care Act, and we never would have heard of Brett Kavanaugh or Christine Ford. And people living in downtown’s Trump Tower wouldn’t have to worry about the price drop on their condos.

Even if Ms. Clinton were the incumbent Madame President, I suspect Bernie would still be running a primary campaign. So be it. The Democratic candidate would be facing off against a saner Republican. I wouldn’t be worrying quite as much.

Netscape, Myspace, Hillary Rodham Clinton. Memories of better times.

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Over the past few weeks Fareed Zakaria*  has given his take on Bernie Sanders’ “Magical Thinking On Climate Change” and his “Scandinavian Fantasy”. This has inspired me to take a look at Bernie’s Fairyland Housing Plan.

Now, believe it or not I do try to avoid getting too political on this blog. I might criticize some of Chicago’s Alerdermen’s real estate market interference or specific governmental economic policies but I usually stop short of criticizing higher level political candidates. But then I came across Bernie Sanders’ proposed housing policies and these are just too outrageous to take a pass on. After all, I could give myself a dispensation on this one since it could conceivably become government policy and then I’d have to pontificate on it.

Bernie’s theme is Housing For All. Kinda like a “chicken for every pot” but much more expensive. His first proposal is to…

Spend $2.5 TRILLION to build 10 million permanently affordable housing units

Yep. $2.5 trillion. 10 million units. Let that sink in. He’s not exactly specific on where that money is going to come from. That’s a whole other discussion but it can’t be good though, in all honesty, you get some of the money back when you rent or sell the homes.

How much of the initial investment you get back depends upon how much of a discount you decide to apply in an effort to make these homes affordable. As I mentioned a while ago, and Bernie mentions this as well, you have people who spend 50%+ of their income on housing. Therefore, in order to make their housing affordable (that would be 30% of their income) you would need to discount the price or rent of their homes by 40%. Hey, I just crunch the numbers.

Now, how do you intend to keep these homes “permanently” affordable? Do you tell the buyer/ landlord what they can resell or rent the house for in the future? If that’s the case what motivation do they have to properly maintain the house?

Oh…and the average cost of these homes would be $250,000, which is about what Zillow says is the median home value in the country. Cost vs. Value. So these would not be your basic affordable home but, rather, an above average home that regular people save up for and spend a significant portion of their income on. I guess the government would also achieve no economies of scale in building such a massive number of homes. But, hey, it’s the government. What do you expect?

Also, consider that there are only about 5.34 MM existing homes sold each year and 682,000 new homes sold. So you can look at this a couple of different ways. 10 million units is about a 1.7 year supply of all homes sold or a 14.7 year supply of new homes. Imagine what dumping that kind of supply on the market would do to the real estate market – but I guess housing would definitely become more affordable. Hey, I just crunch the numbers.

Oh…and one of the side benefits of this program is that it’s going to “create millions of good-paying jobs in the process”. Hello. Does this guy not know what’s going on? With the current level of construction there is a critical shortage of skilled tradesmen. So I guess we can create millions of unfilled jobs but unfilled jobs don’t build houses.

Incidentally, to make his case Bernie points out that “the median rent has increased by more than 60 percent since 1960. That has got to change.” You know what? He’s right. Looks to me like landlords have gotten screwed over the last 60 years and need to raise their rents. A 60% increase in 60 years works out to about an annual average of only 0.8% when I know inflation has averaged at least 3%/ year in that same time frame. Hey, I just crunch the numbers.

Protect tenants by implementing a national rent control standard

There’s more than just rent control in this part of his proposal but I want to just briefly touch on the rent control aspect. I say briefly because I’ve actually covered this topic before: Chicago Voter Support For Rent Control A Huge Mistake and there’s no point in repeating myself here. If you don’t believe me that rent control is a horrible idea there has been plenty written on the subject elsewhere.

However, I will point out that since New York recently changed their rent control laws, making it harder on landlords to raise rents, real estate investors have fled New York. Predictable consequences.

Bernie does try to mitigate some of the problems with rent control by allowing rents to increase at the greater of 3% or 1.5 x the consumer price index and allowing landlords to apply for waivers if they’ve made significant capital improvements. The only problem with the waivers is that it sounds like a bureaucratic nightmare. Imagine every renovation generating a waiver request and then trying to determine what rent increase is appropriate for the given improvement. And even if you get past that one of the leading causes of rent increases is surely a gentrifying neighborhood. So all a landlord needs to do is renovate the apartment to the standards of the higher income residents and…voila…the rent is unaffordable for the original, lower income residents.

Of course, Bernie doesn’t like gentrification either so he has a plan for that too:

Combat Gentrification, Exclusionary Zoning, Segregation, and Speculation

I’ll just focus on the gentrification and speculation plans. First, Bernie wants to “Place a 25 percent House Flipping tax on speculators who sell a non-owner-occupied property, if sold for more than it was purchased within 5 years of purchase.” There are no further details but the way that statement is written indicates that even if it sells for 1% more there would be a 25% tax – and we could only hope that the tax applies to just the profits.

And what about people who buy properties and renovate them? How would the tax apply to them? I would hope that the renovation costs could be added to the purchase price but then do they get to earn a profit on the investment of their time without being subject to this tax? The last thing we need to do is kill the renovation business because this is a significant source of new housing supply and contributes to the revitalization of neighborhoods cluttered with neglected homes.

Furthermore, this would kill the burgeoning iBuyer business that makes all their money from buying homes and then reselling them at a small profit. That profit merely compensates them for the property marketing, the holding costs, and the risk they take on.

In addition, Bernie wants to “Impose a 2 percent Empty Homes tax on the property value of vacant, owned homes to bring more units into the market and curb the use of housing as speculative investment.” You know…there already is a tax on vacant homes. It’s called property tax and other holding costs. Why do we need to impose an additional 2% tax on them. If these homes are vacant it’s for a good reason. If it would be profitable to rent them out the owners would be doing it already.

This Empty Homes tax would also hurt the iBuyer business since their homes are vacant while they are trying to sell them. But what about the individual home seller that moves out of a house and puts it on the market? Does this tax apply to them as well?

I’ve only picked on some of the more disturbing elements of Bernie Sanders’ housing plan but there are plenty of other problems lurking there. The plans may sound initially appealing to someone who wants the government to fix all the perceived unfairness in the universe but once you spend more than a minute thinking about these proposals you realize that they are far too simplistic and dangerous.

* Fareed Zakaria is the host of CNN’s Global Public Square. I love this guy. He’s pretty level headed, very smart, and his show provides great perspective and information. He leans only slightly left in my opinion. His My Take segment at the beginning of each episode is basically the video version of his weekly Washington Post editorial.

#RealEstate #AffordableHousing #Bernie2020 #BernieSanders

Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.

On the first Sunday of each month a group of veteran actors and showbiz folks come together at the Prop Thtr under the marque WRITERS ALOUD. The format is simple: four or five members of the group take to the stage and read their work.

Since the event is at a theater, in front of an audience, here is the critic’s review from the aisle seat in row two.

Impressive display of talent and verve confirms
there is no expiration date on the joy of being alive.

It’s inspiring to watch old dogs play like puppies, doing the tricks they know so well. Between the lines of the sketches and autobiographical memoirs is the wisdom of perspective, the writing spiked with wit and wry humor to ease the inevitable pain. The common theme is renunciation of the corrosive notion that the actors are archaeological relics and an insistence that their voices remain relevant and listened to with respect.

Defying the wrinkles and the chronology, aging is viewed not as the ending but as the beginning of many compelling entries to be added to their list of credits in the Playbill of life. Being old enough to remember Bette Davis they are not oblivious of her famous line, “Growing old is not for sissies,” but they much prefer the more positive bromide, “How old I am is not as important as how I am old.” They share both the heartaches and the palliative, the ability to laugh at themselves.

For these Energizer Bunny seniors the issue is not feeling old; it’s making a daily effort to stay young in heart and mind. The theatrical group is an enviable example of what a number of scientific studies conclude, simply feeling younger has been linked to increased vitality and productivity, as evidenced by the writing and telling of their stories.

What adds to their likeability is the lack of presumption and self-importance, having realized that authenticity, not top billing, is the lasting homage. They don’t complain about no longer “being in the game,” they create their own, every first Sunday of the month.

Recap: Highly recommended: four stars.

I don’t think any of the men and women in attendance at the theater are readers of my weekly “Cheating Death” posts on the ChicagoNow blog, but these folks not only are cheating death they are defying it, brimming with life. I felt so privileged and inspired to be in invited to their group.

Being on the monthly program was a challenge, and a hoot. I read a piece about a time in my life that described a wildly careening, high speed personal bubble of time when I worked in New York. It was fun to share a slice of my life from those hectic years but the best part of participating was the charge of creative energy, the flutter of nervous excitement, the wonder of watching myself on stage as I turned ten minutes of real time into a glimpse of a colorful history.

It was incredibly energizing to be with contemporaries who are still playing in the game of life rather than sitting around waiting for the Time’s Up whistle to blow. It was a challenge to go on stage and read my story, but for me it was a metaphor for participating in life; a forceful reminder, to stay fully alive we must stay relevant.

It’s difficult to resist languishing backstage, particularly if you’re not a natural extrovert, but it is essential to put yourself out there, wherever ‘out there’ may be. It’s literally a matter of life and slow death.

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