Tonight we're here to hear.

Dan M.R.
Gluck talk on the topic what's next.

Prognosis and prospects for housing and
urban form after the crisis we are taking

a page from something that happens in many
Commonwealth universities where newly

promoted professors talk to a campus
wide audience about their work and

try and promote cross-fertilization and
interdisciplinary dialogue.

I feel privileged to work with in Iraq for
many reasons but

most particularly because of his impact
on the students that he works with.

Three of Dan's advisees have won
national awards in the last two years.

The student Planning Association
recognized his excellent classroom

work by naming him the outstanding
teacher in the school of city and

regional planning in two thousand and
ten and two thousand and eleven and I

want to read you something that one of his
students said in conjunction with that.

Dr M.R. Glocks commitment to
his students is legendary.

While these courses
are rightfully very challenging.

He is equally demanding on himself.

Students are advisees will find
their inquiries answered promptly

oftentimes improbably so and

thoughtfully and can expect that
deadlines will be honored without fail.

Importantly even though Dr M. a Glock has
quite strong and well founded opinions

on his field of expertise students
who disagree with his conclusions or

policy prescriptions and always expect
to be treated with the utmost level

of respect and fairness it should surprise
no one that the student body elected him

as the best teacher amongst
the faculty in two thousand and ten.

And is the author of three

books on neighborhoods community credit
and foreclosures including most recently

the two thousand and nine volume
foreclosed high risk lending to regular.

Nation and the undermining of
America's mortgage markets published

by Cornell University Press.

You couldn't miss the table
out back with a stack of them.

The end has spoken in many
venues including testimony

before the Board of Governors of
the Federal Reserve System and the U.S.

House of Representatives Subcommittee
on domestic policy

in his start here at Georgia Tech
since two thousand and five and

I'm delighted to present
him to you in America.

Thank you.

So.

Can people hear me.

Yeah I want to thank everybody for
coming out.

I particularly want to thank Bruce.

Not just for tonight for making me
the guinea pig of this new tradition.

But also for
just really making this program and

the new school of city and
regional planning.

A much stronger program than
when I got here not not through

new people there are some new people and
that helps but

just through cohesion through
process through deliberation and

most of all through really
recognizing the opinions and

the standing of students something
that I haven't seen done the way.

Bruce does it.

And I also want to think.

Melinda and greasy for
helping organize this and

doing the hard work of organizing it and
then I want to thank my colleagues scarp.

Colleagues also College of
Architecture colleagues but

even more than Bruce I want to thank
the students past and president.

Present.

Coming here I came from a place where
I taught undergraduate students and

graduate students and I had good students
I taught three different places both as

a jump and full fat.

And I good experiences but

I did not ever find the kind
of students that I found here.

Being gauge meant the interest.

You know when you study foreclosures for
five or ten years sometimes

day to day things get a little rough in
terms of looking for something positive.

And I came back from teaching and
when you teach statistics to students who

maybe it's not their first choice
of class that they want to be N..

I came back from statistics class this
afternoon to find this on my door

and you know and some of the people
responsible are in the room and.

It's just been a real delight to work with
folks and also to see folks come back.

Folks that I've you know.

Helped get through and folks that I've
enjoyed going through the process with so

that's my most important Thanks.

But back to the topic at hand.

I don't know how many people have
have gone through the play no exit.

It's a horrible horrible
thing to go through.

It's a very good play actually but it's
the most depressing play I've ever seen or

read.

And you know I was thinking about this and
I found this street sign and

I said No not next exit no exit and
I'm picturing the play is

about three people stuck in a room
with no windows and no way out.

And they're basically they
realize they've died and

they've wondering what comes next.

And they realize that their eternity is be
stuck dealing with each other and living

with each other and you know I thought
about this and I thought about that and

I'm picturing Larry Summers Tim Geithner
and the head of HUD.

Sean Donovan in the play no exit
during the foreclosure crisis.

Meaning this thing is going on and on.

On and on.

It is going to come to an end.

But it's going to come to an end in a way
that really I think does transform things

and it's much more than a foreclosure
crisis now it's a housing crisis.

But what I'm going to say it's
it's really a crisis that

I think is going to
reshape neighborhoods and

if we don't do something bigger than
what I think we're going to do.

Unfortunately I think it's going to
be mostly changes for the worse.

And so I'm going to throw
in a positive note here and

there but in this political climate.

You know one of my students today in
my housing policy seminar said and

I was talking about how you know the myth
that the Community Investment Act

cause the foreclosure crisis is still out
there and two years ago I would have said

well that's not going to survive because
there's so much good research going on.

That's going to disprove it.

The facts are going to weigh that down.

It's just my guest speaker for
the class called me the other week and

said I'm in the supermarket and
my conservative cousin is telling me that

theory cause the foreclosure
crisis what do I do and you

know I could not answer the student who's
saying how do we change people's minds.

If evidence doesn't do it.

How do we change people's minds that
we have to do something about not just

the foreclosure crisis and
the housing crisis but

the jobs crisis which
right now are inseparable.

So I'm going to come up with
policy prescriptions but

the charge to you all and
I know there's not enough of you is

to do what you can to spread
the evidence and make

people feel like there's an urgency to
do something about some of these things.

Because if I had to I had to say I you

know normally I'm somebody who who avoids
what I call pigs fly Policy Analysis.

You know what that is that's when you
propose things that will never happen.

It's academics really call it first.

Best policy analysis where you
propose the first best solution.

I have void that usually
because I want to be pragmatic.

But tonight I'm going to propose some

big things that are politically
going to be very hard to do.

Why because the problems are so
severe and the future to me is someone

else is so
dependent on what we do about this stuff

that I think we do have to aim big and
not just nibble around the edges.

So I'm going to talk about some of the
impacts particularly impacts that I think

people are talking about some of them are
some of them are things people are talking

about but impacts of the crisis on
households the economy neighborhoods and

metropolitan equity by Metropolitan equity
I'm really going to be talking about

the sorting of people throughout
the metropolitan area by income primarily.

And I think the foreclosure crisis
has some real implications for

that and
then I'm going to switch to policy.

I'll probably be spending two thirds
of the time on the first bullet and

then I'll be talking about what
we need to do right now and

this is the really hard part because I
don't think there's the political will

to do it right now longer
term I'm more optimistic

that we can move in some of
the directions I'm recommending.

And we have made some progress.

I think already particularly in
terms of consumer protection

towards making some
good long term reforms.

Let me start with impacts on
households in the economy.

And this is from a Pew Charitable Trust
study that came out this summer.

It's using federal data
on household net worth.

Basically your balance sheet
your household balance sheet and

this is data from just two thousand and
five to two thousand and nine for

years and really it's data from two
thousand and six to two thousand and

nine because household balance sheets
were not falling in two thousand and

five to two thousand and
six they were falling.

From two thousand and
six to two thousand and nine.

Why because of the housing crisis
because of housing values.

Most folks predominant
asset as most folks I

think know intuitively is the house
they own if they own a house.

And what we saw is the most rapid
declines in household net worth.

We've seen since the one
nine hundred thirty S..

Overall in really this these three

short years we saw household net worth
declined by almost thirty percent but

very skewed in terms of who's household
net worth was declining at what rate.

This shows that folks of color so

much larger percentage declines in
household net worth than Whites

sixty five fifty three fifty
four percent declines.

Whereas whites only saw sixteen percent
only saw sixteen percent declines.

That's five percent a year that's a lot.

Now if you look at the bars themselves

this is the absolute the actual
magnitude of the household net worth.

You see that Hispanics and
African-Americans were starting out with

a lot and not worth compared to whites but
these were big gains over

what you would have seen in one nine
hundred ninety or one nine hundred eighty.

We had seen significant
increases basically blacks for

a time had negative net worth.

And what we see also is
that where Asians actually

beat out whites in terms of net worth
within those three years four years.

They are now well below whites
what you'll also notice is that

Hispanics were hit somewhat
harder than blacks Asians

were hit hard part of this is
the geography of the foreclosure crisis.

Where did the foreclosure crisis
hit property values the most

California Florida Arizona.

Nevada large Hispanic
populations all of those states.

But then within metropolitan areas where
did the foreclosure crisis hit the worst

communities of color black and Hispanic.

Now I go to what basically
the regional economic effects.

There's been a lot of talk this week in
the press about something called negative

equity or underwater homeowners because
of a change to a federal program.

In some metropolitan areas Las Vegas.

Three out of four homeowners are and
have what are called upside down loans

where their mortgage is worth
is larger than their home value.

This isn't just about foreclosure.

This is about Regional Economics.

There's a really good op ed in
The New York Times coincidently today

by an economic historian saying
we can talk about investment.

But the reality is for good or ill and
I know is planners you you want to

you don't want too much over
consumption and I agree with that and

we did too much consumption during
the early two thousand for sure but

the reality is two thirds of our
economy is consumer expenditure.

And when people are underwater
on their homes by fifty percent

seventy five percent
even twenty five percent.

There's a lot of evidence
that they cut way back and

that's what we're seeing we're
seeing what's called the D.

leveraging people
are incredibly insecure and.

Even if they aren't and

they want to fix up their house
a little bit in a reasonable way or

they want to they need a little
bit of income smoothing.

It's not an option because the only
asset most folks have that they can

borrow against is their house.

We did way too much of it
in the last two decades.

Especially the end of the ninety's
in the early two thousand

it went way the other way we are now
the pendulum has swung way back so

that all of these folks that's
basically not an option even if you

have there are available income to easily
afford a home equity loan to add that

addition onto your house and you really
need to especially because you can't move.

You cannot get a home equity loan right
now if you're in negative equity.

What does that mean that means
the construction industry

in lots of places a is
at a total standstill.

But also this psychic effect of feeling
like you have to pull back on your

spending when you know you're
fifty percent underwater

the third mechanism which actually
I think is the weakest of the three

The evidence is mixed on how strong it is.

Is when people are underwater
they can't move easily to a but

to a job in another city and.

It turns out that the evidence on that is
they can if they go through foreclosure

and it turns out the evidence is.

You know people are in such desperate
shape they are going through foreclosure.

If they need a job.

But I think the bigger issue is
what it means to the households

ability to spend what
they kind of would even

you know before the boom in
a more kind of even times.

And Georgia is is kind
of not at the top but

in a bad situation metropolitan Atlanta
is quite a bit higher than this.

Where at about fifty five percent of
homeowners underwater the next thing

is probably the most painfully obvious
one to a lot of people in this room.

Is vacant properties.

We have.

This data is Postal Service data on
vacant properties that HUD puts out and

the latest they have put out is the third
quarter of two thousand and ten.

We saw sizable increases in vacant homes
in arm in almost all large metropolitan

areas and Dallas is the only Metro
here that did see an increase and

most of the increases are on
the order of fifteen twenty percent.

Some like Riverside or
more like fifty seventy five percent.

This underestimates the problem.

Why because the the vacancy at
the beginning of the crisis.

If kind of before
the crisis really hit hard.

Before properties went into what's
called the Ario or bank on stage

that vacancy was mostly short term
vacancy six months three months.

What a lot of housing economists would
call frictional vacancy just turnover this

vacancy the red stuff a lot of it
is twelve month vacancy twenty four

month vacancy in a lot of places these
properties are sitting and rotting.

And that's even even in

higher income communities we have a lot
of half built subdivisions with it with

properties that were never sold and
those properties are probably functionally

functionally obsolete because
of damages to foundations

all kinds of problems that happen when
you leave a property empty for two years.

Within metropolitan areas.

And Atlanta is not to
a typical from lots of places.

We are one of the higher vacancy
rate metros what you see is

three types of places with really
high vacancy rates one is inner

city lower income communities
neighborhoods and in this case.

That is.

You know basically the west
side in the southwest side.

Especially those are twelve percent and
above vacancy rates by census tract.

If you go down to the black group
you're going to see twenty five and

thirty percent vacancy rates then you've
got relatively high vacancy rates and

a lot of what I would call working
class moderate income suburbs

Cobb County Gwinnett County Fulton County.

Clayton County and then the third area is
that kind of ex-urban fringe overbuilding.

During the boom.

We actually had high vacancy rates
in these places before the visit

before the crisis because there was so
much speculative building going on but

it just went up afterwards.

I am lest to be honest I am less
concerned about the vacancy rates

out here I think that stuff will kind of
sit there and rot probably then surely

then surely maybe getting getting knocked
down a lot of it is quite sparse.

I know it causes fiscal stress for

communities who have kind
of counted on that revenue.

I'm not minimizing or
ignoring the problem.

But I am much more concerned
about the vacancy rates and here.

One of the reasons is I
see the vacancy rates

as and the foreclosure problem
concentrated in those places as

contributing to a heightened level of
economic segregation which will also

correlate with racial segregation to some
degree through a couple a few mechanisms.

Both from the vacant property side but
also from the home

ownership side and I just want to spend
a couple minutes explaining this chart.

I don't have a lot of evidence for this.

I have a Ph D. student in the back who is.

Working on the red for
his dissertation sort of.

But he might he might
not drop that way but

I think we have some early evidence
that this may be happening.

The first is we have a long history
of exclusionary housing policies or

not using the term exclusionary zoning
because it's much broader than that

exclusionary housing policies
that middle income and

upper income communities
particularly usually suburbs but

not always suburbs to be
parts of cities that exclude

rental housing as much as they can and
not high end rental housing.

I'm talking about moderate
income rental housing

those those systems are going
to be geared up as any

pressure to turn foreclosed
homes into rental housing mts.

For one thing.

Many of these communities don't have
that many foreclosures to begin with.

Especially the upper income communities.

But when they do.

There are going to be a variety of
forces that are going to already

Anecdotally I can point
to are being rolled out

occupancy laws stricter
enforcement of housing codes.

Beyond the level that would be
applied to owner occupied housing.

Why because you can't really zone out
rental housing you can own out multi

family housing but you can't easily
zone out single family rental

housing but
owner to rental conversions of detached

single family homes is going to be
highly discouraged in those communities.

That's one mechanism.

The more important one.

I think is the fact that we most
foreclosures both in the core and

outside are in low and moderate income
neighborhoods or at least moderate income

neighborhoods in the ex-urbs they're
not in the higher income ex-urbs John.

That doesn't mean there aren't some.

Well what that means is a lot of those
properties especially in cities like

Atlanta this is less the case in
California and some other places.

But a lot of those foreclosures are what
I would call low value foreclosures

low value homes they're being
sold to investors fairly rapidly

as they go through the foreclosure process
they're not going through the foreclosure

process all the time
depending on the state but

once they get to bank ownership
the low value ones are sold quickly.

They're sold to home.

They're not sold to homeowners they're
sold eighty ninety percent to investors.

Some of those investors will turn around
invest in them turn them into good quality

rental housing but in a lot of these
neighborhoods the market rate rental

price that you can get for
a single family home is so

low that it will not make sense
to maintain the property.

If it's detached single family house.

What does that mean the people
who will buy those homes and

rent them out if the rent them out at all.

Some of them are sitting vacant
because people speculated.

Will be disinvested meaning they will
instead of putting in five hundred dollars

a month to maintain them like they
should or three hundred four hundred

they'll put in two hundred because
that's what they need to make money

that's going to drive those properties
into the ground and it's going to create

the stigma that we worry about with rental
housing which is that's bad housing.

We don't want that in our
neighborhood without subsidy.

I'm not convinced we can do large scale
conversion of single family homes and

lower income neighborhoods or moderate
income neighborhoods without negative real

negative effects the red part
is the homeownership part.

And the red part basically says
credit markets have tightened ups of.

Early and they have the pendulum
has swung way too far.

We are the F.H.A. is applying
standards that they never applied yet

during the crisis F.H.A.
loans pretty much did fine but

they're ratcheting up
the credit score requirements.

They're beginning to ratchet up the down
payment requirements at least they're

trying to they're ratcheting up fees
the Federal Housing Finance Agency

which governs Fannie Mae and Freddie Mac.
are causing them to do that because

they're ratcheting up their requirements
and if the F.H.A. doesn't follow them up.

They're going to end up with seventy
five percent of the mortgage market and

they don't want that.

So a lot of people who
could have gotten loans.

Well before the subprime bubble.

When mortgage lending was doing fine and
was rational cannot get loans today.

That means a lot of and these are mostly
moderate income families those families

have without access to homeownership the
way most metropolitan communities are and

Atlanta's included in
that have less options

in terms of where they can live because
of the geography of rental housing.

And if increasing supply
is going into concentrated

places they're going to be
effectively steered to those places

on top of this the narrow I don't have
shown because the graph just got too big.

Is the folks coming out of foreclosure
their credit histories are trashed.

They have low credit scores bad
finances corporate landlords

higher end properties even
middle level properties.

Number one criteria they're using
to screen tenants credit scores

folks are going to be steered
towards these same properties.

If they have bad credit not steer
directly but steered systematically.

That's what they're going to be left
with some evidence indirect I grant you.

During there's some really well known

still Urban Research
came out in the ninety's.

On the growth of economic segregation some
people would call it concentrated poverty.

It is essentially but it's also
just general economic segregation.

That showed it was increasing
since the seventy's dramatically.

Then the same author of the book a book
called poverty in place by going to him

he did soon as the two thousand census
he said great the trend is reversed

the number of people living in high
poverty neighborhoods which is what these

green line show which are neighborhoods
with forty percent poverty rates or

above has gone down a lot and
this was a signal of greater diversity

in suburbs access to people getting
access to less poor neighborhoods

some gentrification maybe some of that
was not seen as a great thing but more

income diversity more options for people
of where to live more opportunity for

people especially poor people then
the American Community Survey comes out.

Which is this funky data set that
is a rolling kind of a rolling

average of data from two thousand and
five to two thousand and nine so.

The methodology this will excuse me when I
say think of it as two thousand and seven.

But it.

You know roughly think of it as
two thousand and seven data and

what these folks at
the Urban Institute and other folks.

Found was boom concentrated
poverty is back up

even higher than the one
nine hundred ninety level.

Turns out by percentage of
the population it's a little lower but

it's still way up over
the two thousand level

when you look at where it's
happening where concentrated poverty

where the number of folks living in
high poverty neighbors has gone up.

It's the red dots and I looked at this
map and I called Ralf and I said Ralph.

Most of those places are where
the foreclosure crisis hit first

people think of the foreclosure crisis
hitting in two thousand and seven.

It's true on a national level.

That's right.

But it landed had a foreclosure crisis
people in this room know that goes back to

two thousand and three two thousand and
four two thousand and

five when I was right after I got
here I did a presentation error see.

Plotting foreclosures going up from two
thousand and two to two thousand and five.

These are places the upper Midwest Denver

and the southeast where foreclosures

were going up well before they were going
up in places like California and Florida.

Why because property values hadn't
stopped going up and that was

suppressing foreclosure rates because
people could sell their homes defaults

were going up but foreclosures weren't
property values were not going up in these

places significantly very slowly and it
did not suppress foreclosure rates Denver.

Big foreclosure boom was before any of
these other cities why because the dot com

bust city incredibly dependent on dot
com companies saw foreclosures boom in

two thousand and two through two thousand
and four and then they actually came down.

Basically I'm hypothesizing at this point

that some of this increase in concentrate
poverty is due to some of these mechanisms

coming out of foreclosures and
vacant properties and the rich resorting.

I mean this area of
California which is is now.

Now you know foreclosure
foreclosed property central

it's the central valley of California and.

But for the foreclosures didn't get
to the bank own foreclosure and

sale stage until at least two thousand and
nine.

So this if I will bet
somebody that if we come

back to this data in two thousand and
ten centered around two thousand and ten.

This is all going to be read.

Lots of informed speculation but
we'll see.

Now I want to switch this shift
to the kind of housing policy

discussion coming out
of some of the stuff.

Some of it is from this work some
as from some of my other work and

some of it's from other people's
work that I've synthesised here.

These are what I'll call
axioms my axioms of

housing policy right now
kind of the realities.

This is where I go away from
the pigs fly analysis a little bit.

First we have to acknowledge
whether we like it or not

we're not going to be building a ton
of housing in the next ten years and

the housing we've got was mostly built

from the one nine hundred
forty to two thousand and six.

During that time.

Homeownership rates were quite high.

They were low in the first part of
the century twentieth century and

between the F.H.A. and
the growth of unions in the middle class

homeownership rates went up by
about twenty percentage point.

Very quickly in the thirty's and
forty's and

it basically in the forty's and fifty's.

That means a lot of urban design.

And of course a lot of the rental housing
was all multifaith was mostly multifamily

and highly concentrated in some big cities

like New York City San Francisco
other places Chicago.

But in most places.

Homeownership rates in a lot of
metros homeownership rates are more

like seventy five percent and
that is all detached single family.

Those neighborhoods those houses were
never designed to be Runnels those that

mean we never had single family rental
No a big chunk of the south side and

west side of Atlanta even before the
crisis was single family rental housing.

But it was not good housing.

Why because of this problem of economies.

It's just not as efficient to manage

the tap single family rental
as multifamily rental.

So we've got to figure out what to do with
this housing and we can't pretend we can

reinvent the housing stock especially in
the next ten years when their capital

markets are just not going to support
that in a huge way we can nibble.

You know and I'm not saying we shouldn't
support multifamily development and

concentrated condos or

whatever it is but we've got the housing
stock we have to some degree.

The corollary to this
is a very talked about

is that private market scattered
site single family rental housing.

In less that subsidized
has a really mixed record.

A lot of you know.

Not very attentive landlords
a lot of bad housing.

I've already brought up the third point
meaning many high opportunity localities

that's housing speak for places that
have jobs nearby good schools access to.

Transit retail not too far.

Places other people call them
communities of choice places we'd like

moderate income folks low income folks to
be able to live more if they choose to

a lot of those places have
restricted rental housing and

we're going to continue to restrict
rental housing in many different ways.

My bright spot for

at least most folks in this room
I think is that in the near term.

We probably don't have to worry too much.

This may be obvious to a lot of

people that the financial
markets in the next ten years.

I do not think are going to be revving
up again to finance large scale

speculation rapid flipping of homes
not that homes aren't being flipped.

But flipping of homes at high values.

Rapid gentrification or rapid sprawl.

So that's to some degree
super some people.

That's a good thing.

I think maybe we've gone a little too far
in that direction in that it's going to be

hard to do urban regeneration good urban
regeneration projects without a little

bit more access to credit
something that I think is almost

never talked about and it's in a piece I
got I had copy that Melinda copied for

me from urban studies that just came out

is that rental housing in the U.S.

market rate market rental housing for
moderate income and Loan come folks.

It's a landlord system and I'm going
to give you some evidence on this.

It's if you're an investor in
rental housing it's a great

thing if you're a renter.

It's not a good thing and
it's not just about is your property

maintained it's about do
you have any stability and.

I think the qualitative research on
housing choice shows pretty equivocally

that for moderate income folks.

Stability is number one they want
to place that they can stay and

that their kids can stay in the same
schools they're not thinking about most

folks are not thinking about
making a killing on their house.

The reason they go to
homeownership is they want control.

They want a place that they can control.

And then finally we can talk about
shifting resources from the mortgage

interest deduction to the the affordable
housing trust fund that's

been waving around for five or six years
but you know the mortgage interest

deduction with a property tax deduction is
on the order two hundred billion dollars

We can't even get a billion dollars for
the affordable housing fund.

You know the notion that if we kill
the mortgage interest some people speak.

Well we'll kill the mortgage interest
deduction that will free up money for

rental housing.

Yeah right.

Right.

It's that's where the pigs fly comes
in it's in this climate and for

the foreseeable future that
money is either going to go to

the Defense Department or
to reducing the deficit.

This is where I say when
you compare the U.S.

rental market to other
industrialized countries.

We don't look good from
a renter's perspective.

This is the percentage of the population
receiving housing allowances

in industrialized countries and
we're down there with Poland

the Czech Republic Spain Italy
the poorest countries in Europe.

Austria is a little bit and
Norway are also quite low.

But we are well behind our kind
of main competitor countries.

Unfortunately I think they're headed
towards us not us headed towards them.

This severely understates I
think the disproportion and

subsidy those this is just
counting housing allowances.

I think this is the most important chart
a most important lesson the O.E.C.D.

did an index of kind
of tenant friendliness

of landlord tenant law in thirty
two industrialized countries.

Basically they looked at ten
insecurity whether people can be

are kind of protected by landlord
tenant law from being evicted

easily whether they can have
multi-year leases controls against.

Rapid increases in rent
that have no justification.

Thirty two countries that are not all
shown here Guess where we come in

thirty two meaning
the least tenant friendly.

Landlord Tenant Laws.

Now you for your in San Francisco.

It's a you're you're more like over
here right there are places where.

Tenants are in much better shape but
in Georgia not so much.

I think this is very important because

when people talk about shifting from home
ownership to rental they're thinking

mostly about the financial risk of
homeownership given what's going on.

They're thinking about other things.

The difficulty of getting
out of homeownership.

If you're in negative equity.

But I think a large amount of
folks at least in the moderate and

lower income spectrum want stability want
control of where they live they yearn for

that they've you know families in
particular that makes a big difference

whether you have kids or
not you know when I moved to cater for

Michigan moved to this
area we rented indicator.

I wanted to rent forever.

I love the little house we rented six
months later they were booting us out

because they're moving back into the house
and I'm not going to alienate my.

My six year old from Macon or
switch schools.

So I want to stand to
cater went looking for

more rentals single family
rentals at student housing.

Yuck.

So we bought a house.

I want to you know we like the schools
we wanted to stay there for a while.

Now what should we do like I
said a little bit of pigs here.

Number one.

Because I get this question every time
I do a talk like this is aren't jobs

the most important thing.

Well it's kind of a no brainer they
may not be the most important but

they're one of the most important.

If we don't have something
to stimulate the economy.

It's going to be hard to get
out of any of the housing mess.

We're not going to form households.

We have five million vacant properties
we should know only have two or

three million at the most.

We need to have household formation
to occupy some of those properties.

And we need to have young
people moving out of their base

parents' basement basically.

I also think immigration is an excellent
way to solve some of this problem.

Don't quote me on that
if the politicians are.

I think very important is
we have a system right

now where the major policymaker on access
to credit is the head of this agency

called the Federal Housing Finance Agency
and that's an independent agency which

can be a good thing but they have this
person has absolute really has absolutely

no accountability to the president
almost no accountability to Congress.

They are charged with conserving he is
charged with conserving the assets of

Fannie Mae and Freddie Mac..

He interprets that in a very myopic he's
an accountant he interprets that a very

what I consider my opaque perspective of
keeping short term losses to a minimum.

So he will not agree to
reduce principal on loans.

He's kicking and screaming into this
new program to try to allow people to.

To refinance who have negative negative
equity even if they are current on

their mortgages and he's true.

He's actually I think ruined
the program by requiring them to

shorten the term on their mortgages.

My friend in D.C. I guess he's quite
pale and calls him the mortician and

I said that's appropriate because
he's in bombing the housing market.

I know it's a technocratic thing but
I do think you know the F.H.A.

I think is just following their lead.

They know if they go above fifty
percent of the mortgage market

they're going to get in
trouble with Congress and so

they're doing what they can to stay
below that I think actually the F.H.A.

is a great case history of how government
can do great things in times of crisis.

If it weren't for the F.H.A.
during this crisis.

They went from three percent of
the mortgage market to fifty percent of

the mortgage market very very quickly.

If it weren't for them we would
be even in much much worse shape.

We need a major program of principal
reduction and that's about as politically

likely right now as it is me being called
up to play for Georgia Tech football.

But that's what we need
because not just for

helping people individual homeowners but
for freeing up

regional economies in very large parts of
the economy California Florida Nevada.

These are major parts of our economy and
as those economies

get freed up there will obviously be
spillovers to other regional economies.

We need a major subsidy stream
to address vacant housing.

It's out there proposed I think it's vague

enough right now to still have good
prospects of being a good program.

I'm a little negative on what
administrative agencies have done with

pretty good ideas in this realm meaning
the neighborhood stabilization programs.

Me I think they've been good programs and
in the base intent but they've been so.

Ham strong in various ways
that I think they've been much

less effective than they could be.

But what should project rebuild is
a fifteen billion dollars proposal on

the jobs bill to basically
purchase properties.

It has to be bacon properties
not just foreclosed properties.

There's only half a million
foreclosed properties in the country.

There are five million vacant properties.

People if you read listen to the media
you think they're all piling up on banks

books banks are selling them
are flowing through the banks but

then they're ending up empty
at least in places like.

The southside of Atlanta.

Just because they get off banks' balance
sheets see a lot of people are saying this

is a good program to get the properties
off of Fannie Mae's balance sheets

that should not be the goal of project
rebuild the goal of project rebuild

should be to get the properties either
knocked down where they're not needed or

re used somehow either as housing or
something else.

It has to be a flexible program be able
to be used for lots of different things.

Minimal kind of allocation you
can only use ten percent for

demolition you can only use
you know what drives me crazy.

What how did without true.

With the industry programs and
the big change.

Supposedly is to allow private developers
to receive money from this program.

That's dangerous.

But I think on net is a good
thing as long as it's not

subsidizing stuff that's already
happening because eighty percent of

foreclosed properties are going to
investors slash developers already and

nothing's happening with
lots of them in California.

I think that market is kind of going
OK those properties are being turned

into rental It might be that not
the most affordable housing.

But but in places like the southside of
Atlanta investor buying homes by itself.

There need to be strings attached.

I know that sounds like bureaucracy.

There needs to be some quid pro quo.

In making sure that subsidy gets placed
in properties that are actually utilized

all their money needs to go directly to
localities to knock buildings down and

to land bank them longer term stuff.

We need to preserve a strong what I would

argue is a strong Federer all in
the secondary mortgage market.

There are a lot of calls it's
in the papers every day.

Particularly out of the House of
Representatives to get the federal

government completely out of
the secondary mortgage market.

The only experience we
have with that really is

the subprime bubble and I don't think
that's really something we want to aim for

the reason we need it is because
without it we put at risk.

The long term fixed rate loan which is
kind of a proven risk limiting mortgage

product and because by having at least
a strong federal role I'm not so

sure some proposals are out there for
weak federal roles but

a strong federal role will remove
control the risk in the mortgage market

by not buying super risky loans

if the federal government just becomes
a guarantor to people bind loans.

I am less convinced that some of that risk

won't just be shifted on
to the federal government.

Whereas if they're actually buying them
they can inspect they can look they can

say no and the G.S. sees worse sensually

government enterprises before nine hundred
sixty eight it was only one at that time.

Fannie Mae stated look so

the second big bullet is we need
a renewed attack on an economic and

racial segregation I talk to
my housing policy class about.

About integration fatigue.

How about and I have to say.

I think it's real people really don't
care about seem to care as too much about

racial segregation as at least as much as
they did when I went to graduate school

but economic segregation at least
among planners seems to be alive and

well as a concern and

whether it's racial economic segregation
the same tools can be used to fight it.

The Federal level we need much
more aggressive enforcement

the Fair Housing Act I've seen
some of that in the last year.

Owing to the civil rights head
at the Justice Department

who took a while to kind of get on
board at the state local level.

This is where planning comes in we
need to really be careful about

what local governments are doing
in terms of occupancy codes in

terms of enforcing court terms of
ratcheting up housing code enforcement.

I'm all for housing code enforcement but
if people start.

I've seen articles about people
who have targeted housing code

enforcement on rental properties.

That's dangerous.

That's exclusionary.

Rental property should not be
held any higher bar than owner

occupied properties for sure.

We need inclusionary zoning programs and
we need something called source

of income protection colleague of mine
at Columbia just came out with a paper.

Showing that localities with what
are called source of income protection

ordinances see or
see much wider distribution

of what are called housing choice voucher
recipients Section eight recipients.

Why because these localities
tell landlords that if someone

comes to you with a housing choice voucher
you can't say I don't accept those.

We can do that.

Locally we can do that regionally we can
do that statewide stay I would argue for

the state wide approach
if possible otherwise.

As it tends to be.

They had one in Grand Rapids
where I taught for a couple years

Grand Rapids had one but the problem
wasn't Grand Rapids had plenty of housing

choice voters it was the suburbs and
they didn't have such an ordinance.

Finally for
we need obviously in the most kind of

does here is durable and
broader support for affordable housing.

I'm all for it.

I think it's the hardest challenge.

I do think there are things we can do
that might not cost a lot of money.

I think if we really can't get more
money for affordable rental housing.

We have to face the hard decision and
this will bother.

This is highly controversial is do
we take housing choice vouchers

which cover about fifteen or twenty
percent of the eligible population for

housing choice vouchers and
restructure them into an entitlement or

near in title meant so that everybody
at that income level gets a voucher.

That's worth less money.

It's a distance.

I think it's a discussion we have
to have it is being had in D.C.

whether it can go anywhere or not.

There are certainly places especially
in high cost markets where housing

choice vouchers for particular families
are worth a lot of money and I could see

spreading that over three or four families
to get much more coverage of that program.

We have to think about the same thing for

something like the low
income housing tax credit.

It's a fairly deep subsidy.

It helps a lot of people but
it could help more people.

If it were a thinner subsidy.

We need to

find ways to support shared equity housing
options these are Community Land Trust

limited equity co-ops particularly
federally we need to make sure the F.H.A.

will finance people buying
homes through such vehicles and

locally and
statewide we need to make sure.

Or property taxation doesn't penalize
them because in some places and

I want to ask Bert about Fulton County.

In some places you to community land
trusts are being taxed as if they're

regular fee simple home ownership which
will result in a much higher tax and

effectively make the communal
interest not feasible and

I have at least one former student here
who did a nice paper on the topic.

Finally we need to address this
issue of the US being the laggard

on tenant protection and I'm not
suggesting we're going to get rent control

all over the place or even that we should
but we do need more rights for tenants.

We need to figure out ways you know some
foundations are interested in trying to

figure out ways to encourage
multi-year leases over

single year leases to provide folks
with more stability and frankly.

Yes to put some onus on owners to say

I want to raise the rent because
which is what happens in lots of

Western European countries they they
raise rents because they need to raise

rents they don't raise rents just
because the market will bear it.

That's it.

And I'm open for questions.

Or disagreement.

No comments I said a number
of controversy old things.

It was.

I got I got one in the back
in the white shirt.

Can you say who you are just so.

The comedian mortgage model or the can.

Well the key mortgage model

every is pretty complex it does
involve more full recourse type

mortgages meaning you're kind
of on the hook for the mortgage.

Even if your property value if you go
through foreclosure and your your value of

your house is less than your mortgage
you have what's called full deficiency.

I'm not convinced that really makes much
of a difference in terms of it ties people

down and so actually it could make
the negative equity position much worse

because it will make it harder for
people to exit homeownership.

So I think that could be a real problem.

I think with a highly mobile
economy like the U.S.

has that depends on
lots of labor mobility.

It's probably not a good idea on
the other hand the Canadian mortgage

housing corporation is basically
very similar to the F.H.A..

In lots of ways and
I think it's been remarkably successful.

The non those are guaranteed mortgages
people say well they don't have

they don't have the G.S. sees no but

they have a very but thirty percent of
the market is guaranteed mortgages.

The rest of the mortgages are held
on banks' balance sheets.

And that's similar to the European model.

In finance through bonds and
other kind of deposits and

I think that's that's can be a good thing.

There are lots of complicated reasons that
that isn't getting any traction here.

What's called the cover bond approach.

For one thing we have a Federal Deposit
Insurance Corporation that doesn't want

to give up to do covered
bonds which basically means

you make mortgages you hold them on
your balance sheet you raise bonds that

are collateralized secured
by those mortgages.

Well the F.B.I.
See wants those mortgages as collateral

wants to be able to seize those
mortgages if the bank goes bad.

So we have lots of conflicts.

Very complicated stuff that will take
a long time I do think cover bonds

are a possibility going for but I don't
see it as as a fundamental solution.

Here or here.

One.

I.

Will.

Note that there are.

They're very.

One I know.

Well I think the OP is or.

Is.

Or.

I'm not saying that there isn't.

I mean forty percent of the Cleveland
housing market is scattered site family

single family Randall.

It exists.

It's lousy housing.

And that are all it I'm sure
there's room to do that.

I will wait and see to see how good
the housing is that comes out of our area

right now I know I know it's a hot topic I
was just at a conference couple weeks ago.

This Out.

I heard.

Why it is that.

Other.

Realize they are out there.

Now it really is

the right.

Right to a Right right.

And I know some local governments
are working on this locally.

I'm a little worried that
they're giving away the store.

Because there's so much pressure to
do something about those communities

meaning there's a lot of
interest in subsidizing that and

I'm a little worried that it's out
of to some degree desperation but

I would agree there's
lots of potential there.

The least purchase point
is Phil shaving here.

Now there is a lead author on
a little publication he did with me

a couple years ago kind of
surveying lease purchase.

I think it's certainly a reasonable
approach fraught with danger and

meaning and Frank can tell you about it.

Lots of room for abuse.

I have a colleague who traced
a lease purchase racket.

Into Lido.

That just devastated lots of families
by taking large deposits and

then evicting them quickly.

We had something called land contract
financing that was it still exists but

it was very big in Chicago.

In the seventy's and
basically led to the N.T.

redlining movement with the contract
buyers league because of all the abuses.

So I'd say go for it.

I want to see lots of regulation.

It's really a vulnerable population.

Meaning you can charge people lots
of fees make them think they're

building equity they miss a payment boom.

They've lost all their equity.

I think we I think I mean Cleveland
Housing Network is the classic example

self-help in North Carolina
is trying to roll it out.

I think doing it under a nonprofit makes
me not worry about the regulation side.

Long as it's a reputable nonprofit.

But to make it bigger scale.

I think we need regulatory infrastructure.

Right.

Yeah I don't think that's
what's pushing them out.

We can have an empirical debate I think
San Francisco is the most desirable place

to live in the country and the land values
are extremely high and I don't think

changing the tenor protection laws would
really affect that on your first point.

I don't think that's correct either.

I think that I don't know about San
Francisco's laws I know when you're up.

In Germany in particular if you put money
into a building you can raise rents and

you can raise rents to more than cover
the improvements in the building so

it may be a particular design of
a particular kind of protection law and

certainly there are rent control laws
that have been really badly done

in New York says A is a joke and terms of
the display the horizontal equity of it.

But there are also places I think
particularly in Europe where it's been

done very well and.

I don't see too many
negative consequences.

Don.

But here we're three or.

Because

they want you.

Here.

Right.

So.

We're.

So yes but what about.

The.

Lives.

As it is like all of the.

What do we call you believe right.

Right.

I don't know.

Well.

I think we'll find a lot.

Yes you're right.

Right now.

Well right now you're almost.

I know you did this.

There's no doubt that in certain political
context especially state policy.

I would say state policy context and
in Georgia your There's only so

much to day to day that a practicing
planner can do on the other hand

as a at particularly a land use plan or
a regulatory plan or

a development plan or who can get
working on a Community Land Trust and

make sure that they're dealing with any
property tax issues that might impede it.

I think has significant opportunities to
say here I'm going to carve out a space

where I can do something and contribute to

a more sustainable housing ten your
choice that provides opportunities.

So I think there are opportunities
are there more opportunities

in certain states than others.

Certainly.

But.

I think you know we can address long tax
credit policy through to some degree

through DCA If we need to focus on certain
types making sure it's that those.

Dollars are distributed in good
ways I think we can effect.

At least around the edges.

And through development practice
as opposed to regulatory practice.

I think we can make very
concrete sizable steps but

my goal here was to kind of talk
mostly about federal policy.

Yes sure.

Go and.

When you say explain more James I'm not
I wasn't quite clear in the question.

Right.

Well for one thing as the here's
a good leads back to Don's point for

one thing we can fight bad practice
meaning fiscal impact practice where

that's really dumb fiscal impact
models say an apartment is bad for

a community because it brings in
families and it has low taxes.

Well yes when you do very short term
accounting myopic accounting that

turns out to be but where do we get a lot
of property taxes from commercial property

where is commercial property
come from from density.

Where does density come
from from apartments right.

So part of it is improving practitioner
stuff and making the arguments and finding

a better MOT and fiscal impact model to
say in the long run our property tax base

especially going forward or were headed
towards sixty or maybe below zero percent

homeownership rates is to make sure
we're not left out of the rental market.

Because the rental market is going to
be the name of the game for a while.

I will other questions comments.

Mostly.

In.

Just to get back to local
planning make sure that anybody

who says housing choice vouchers cause
crime is going to put in their place.

We have a really good study out of N.Y.U.
right.

Just a couple months ago that
totally debunks that myth that was

kind of promulgated in The Atlantic
magazine a couple of years ago.

They tend to follow crime.

Meaning their people end up in high
crime neighborhoods the causation

is reversed in that Atlanta article.

I think cop on the block is fine but
I've I remember

a program that was available in Chicago
in the ninety's when I was there.

It got mixed take up rates
often we take up rates in

the neighborhoods where it was needed
the most so there was a lot of clustering

in neighborhoods that
were already pretty safe.

But I would really like to
see source of income and

this goes to the tenant protection stuff
to best not done locally best done state.

OK.

Otherwise you create you know
more access to housing choice

vouchers in the places where
they're already most prevalent.

So we want to address it from a county
level at least ideally a regional or

state level.

I know that's harder.

But that's the first best
approach as with rent control.

Where.

You.

Yeah yeah.

Right right.

Now to be honest I think that is just
mostly about and I may be wrong.

I've talked to one or two people about
this and other folks may know more

is that's mostly about a general
this general hyper conservative

conservatism of the F.A.A.
and not wanting to do anything different.

Anything.

Right right right.

That's right that's right.

So I I don't know of any kind
of loan performance data that

either you know there's this that
there's one little study that

I think you know about on foreclosures and
kind of walkable communities.

But other than that there's not a lot
of evidence one way or the other.

But I don't think there's
any evidence against it.

Certainly there have been some high
profile mixed use development failures.

So whether that's influencing
them I don't know.

So sorry to not have a better answer.

And there is there is the recent
development that the G.S.C.

these are seriously
considering energy efficiency

kind of energy bills in underwriting
which I think is a good thing.

So there is some positive movement

basically taking energy
costs into account.

To.

Location of fish and
sea was such a failure that

I mean it was a failure not in that
the loans did bad it was a failure and

that nobody did it but that was
because anybody could get a loan and

they didn't need a location efficient
mortgage to get a loan and they could go.

A bigger loan from a subprime lender
than they could from a location fission

I think it's you know it was definitely
on Sean Donovan the list when he came in

I have not heard much about it.

It's obviously there are some
bigger things that are or

more pressing issues that have been
going on in the back in the sweater.

I didn't see you.

Sorry.

What is what is.

So it's not down that much if
you hit sixty nine percent and

it's down to sixty five point nine
It's clearly going down farther.

Some people say it will go to sixty
some people are projecting lower.

I.

Look at one of the reasons subprime
lending did so well and Iris lending did

so well is growing income inequality
people did not have as much money

to consume housing and so debt to income
ratio as were ratcheted up to allow people

to buy housing and then that that had
a feedback effect on housing prices and

made them go up but basically if
this is why have jobs at the top.

If we don't get money
in people's pockets and

we have conservative the very conservative
mortgage underwriting we are going to

see a continued fairly Persepolis decline
I don't know where it's going to stop.

So we both need to get money in
moderate income people's pockets and

relax the mortgage underwriting
the kind of evidence based.

I mean my problem right now is that
policies are being made are not based on

evidence are being made because
that's what we think should happen.

We have lots of good evidence that
down payments of five percent

as long as there's nothing else going
on in the mortgage are fine but

they don't cause high default rates the
F.H.A. is did fine during the crisis even.

The property values were going down their
foreclosure rates kind of held the only

big foreclosure problems they had is
when they refinance subprime loans.

Well of course those loans are going
to go bad at higher rates but

that was that was a deliberate policy
trying to rescue some of those homeowners

but the home purchase loans they
made survived quite well so

we have evidence that three and
a half percent down payments work.

In whether we can get back to that
evidence based stuff and say look

at what really caused the problem is when
you had this feature of this feature in

this feature combined and especially
when you had no income documentation.

We should never go back to that.

Except in I don't know there
could be some bizarre cases but

I've never heard a good argument for
it frankly.

Even professionals and
you know I heard migrant

workers I'm like well I don't think most
migrant workers should be buying homes.

So other than you know no one no

income documentation that one by itself
is a is a singular killer of a loan.

The other ones that you
usually layering of risks.

I credit score really high
credit score a piggyback loan

you know no down payment then
you start seeing problems.

Patrick.

You know.

That's

a really good question.

I'm going to have to.

Probably say I have to think about that
last question first part of let me say

this and

I'm going to get some developers probably
are to I'm against age restricted housing.

It's the only exclusion to
the Fair Housing Act And

I don't think it should be there.

Meaning you can't discriminate against
people with kids under the one thousand

nine hundred changes Fair Housing Act.

Except for age restricted housing.

There's To me it was just
lobbying that put that in.

I think it's a bad idea.

We shouldn't segregate based on age.

Yeah I mean I just think it's a bad
idea to keep people apart based

on age it's just it's just a bad from
not from an economic perspective but

from what it says about our society.

But you also have this problem
of a lot of these communities.

If they build that I'm real worried about
their fiscal future and some people in

the room probably have better sense of
this a lot of places are going towards.

Seniors not paying property taxes.

Or being heavily excluded
from property taxes.

So if you go towards age restriction and
you get up a lot and

you go towards forty or fifty percent of
your population being age restricted they

can vote in no property taxes for
themselves and I think that's

that's a concern I have I know some
people who would do that right now.

I think I'm being flagged here.