Lead Story… The first step in solving a problem is admitting there is a problem to begin with. If you are in the residential real estate development industry in California and/or a regular reader of this blog, you are likely well aware that California has a massive problem with high development impact fees that make it very difficult to build new housing that people can afford (if you want to know how we got to this place, click here.) In being close to the problem it’s easy to forget that much of the general home buying public does not even know what an impact fee is, nor do they care. I would assume that the extent of most people’s knowledge about home prices in the Golden State is that housing supply is scarce in California, not much gets built in desirable areas due to land use restrictions, the weather is really nice here and the economy is good, therefore it’s expensive.
IMO one of the first steps to generating real, meaningful push-back against excessive impact fees is to educate the general public on just how high fees are. I know what you are probably thinking right now and you’re right: no consumer wants to listen to another boring, boilerplate financial lecture. However, there is an easy way to accomplish this objective that one of my partners at Landmark, Steve Sims pointed out earlier this week: itemized pricing.
When you purchase a new home today, the builder will typically break out the base price and any available options and upgrades minus any discounts in their marketing material. Steve’s idea is simple: builders could itemize pricing on their marketing material by showing the base price net of the impact fees, then they would add in the impact fees as a separate line item just like they would an upgrade. The total advertised price of the home doesn’t change at all but the buyer is now aware that he or she is paying $40k-$80k in impact fees that are substantially impacting their purchase price. This should sound familiar if you’ve ever purchased a car since it’s similar to the way that auto dealers represent pricing on their lots.
I know that this is just a token step nor have I looked into the legality of it. However, an informed consumer is an empowered consumer and I believe that a lot of California home buyers are in the dark about where all that money that they are spending for a new home is actually going. I would wager that they won’t be too happy about it once they find out. Consumer advocacy groups should be in support of such a proposal since it increases transparency when it comes to the largest economic decision that most people make in their lifetimes. Hopefully, this is something that the BIA will be willing to take a closer look at.
A Different Approach: Vocational coding schools are offering a different job path for middle America and providing a gateway to flexible well-paying employment opportunities that didn’t exist just a few years ago.
It’s Not Working: Four years in, Japan’s era of ultra-accommodative central bank policy including negative interest rates isn’t working and may even be having the opposite impact from what was intended.
Wishful Thinking: Whether you like globalization or not, there is no denying that it has increased productivity.
Headwinds: Foreign investors have tons of capital that they want to invest in US real estate. However, rising interest rates, a maturing real estate cycle and shifting geopolitical and regulatory environment present looming challenges.
Unicorn: SoftBank is set to invest over $3 billion in co-working start-up WeWork which pushing it’s valuation to over $20 billion.
Hanging in There: The latest FHFA home pricing data indicates that rising interest rates are not slowing down home prices (yet).
Sea Change: As the home ownership rate continues to dip, America is increasingly becoming a country of renters and landlords.
Everything Old is New Again: Apple and Samsung have an unexpected new challenger to their smart phone empires. Feature phones similar to old Nokia and Motorola models have seen 2 straight years of rising global shipments and are making gains in emerging markets where price sensitivity and battery life are big issues.
Underdog: How traditional car companies are beating Silicon Valley when it comes to autonomous cars.
Chart of the Day
Source: Housing Wire
Nope: The ‘chicken’ in Subway’s ‘chicken’ sandwich only contains around 50% actual chicken DNA. The article didn’t say what else was in there but in light of Subway’s sketchy past, this or this would probably be good places to start.
Well, Where Was He Supposed to Put Them? A man was arrested for smuggling 54 Xanax pills in his rectum, because, Florida. (click on link for epic mugshot)
Lawyers Delight: The world’s first cannabis-infused gym scheduled to open in May in San Francisco. Generally speaking, I have no issue with people smoking pot but plaintiff’s attorney’s are going to have a field day with this when someone inevitably gets injured. (h/t Ingrid Vallon)
Pay Up: A $20 debt lead to a melee at a Girl Scout cookie stand because, Florida.
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