Tag Archives: Lifestyle

How Pricey Urban Meccas Become Crime-Ridden Ghost Towns

As the exodus gathers momentum, all the reasons people clung so rabidly to urban meccas decay.

The lifestyle you ordered is not just out of stock, the supplier closed down.

(Charles Huge Smith) If there is any trend that’s viewed as permanent, it’s the enduring attraction of coastal urban meccas: despite the insane rents and housing costs, that’s where the jobs, the opportunities and the desirable urban culture are.

Nice, but like many other things the status quo considers permanent, this could reverse very quickly, and all those pricey urban meccas could become crime-ridden ghost towns. How could such a reversal occur?

1. Those in the top 10% who can leave reach an inflection point and decide to leave. The top 1% who live in enclaves filled with politicians, celebrities and the uber-wealthy see no reason to leave, as the police make sure no human feces land on their doorstep.

It’s everyone who lives outside these protected enclaves, in neighborhoods exposed to exasperating (and increasingly dangerous) decay who will reach a point where the “urban lifestyle” is no longer worth the sacrifices and costs.

It might be needles and human feces on the sidewalk, it might be petty crime such as your mail being stolen for the umpteenth time, it might be soul-crushing commutes that finally do crush your soul, or in Berkeley, California, it might be getting a $300 ticket for not bringing your bicycle to a complete stop at every empty intersection on a city bikeway. (I’ve personally witnessed motorcycle officers nailing dozens of bicyclists with these $300 tickets.)

It might be something that shreds the flimsy facade of safety and security complacent urban dwellers have taken for granted, something that acts as the last grain of sand on the growing pile of reasons to get the heck out that triggers the decision.

Not everyone can move, but many in the top tier can, and will. Living in a decaying situation is not a necessity for these lucky few, it’s an option.

2. Those who have to leave when they lose their job. A funny thing happens in all economies, even those with central banks: credit-cycle / business-cycle recessions are inevitable, regardless of how many times financial pundits say, “the Fed has our back” and “don’t fight the Fed.”

As I’ve noted here numerous times, a great many small businesses in these pricey urban meccas are one tiny step from closing: one more rent increase, one more bad month, one more regulatory burden, one more health issue and they’re gone. They will move to greener pastures for the same reason as everyone else–they can’t afford to live in urban meccas.

Once enough of the top 10% leave (by choice or because they can no longer afford it), the food/beverage service industry implodes. Wait staff and bartending have been a major source of jobs in these urban meccas, and when hundreds of struggling establishments fold due to a 10% decline in their sales, thousands of these employees will lose their jobs and the prospects of getting hired elsewhere decline with every new closure.

The vast majority of these service employees are renters, paying sky-high rents that unemployment can’t cover. They will hang on for a few months and then cash in their chips and move to more affordable climes.

3. Once the stock market returns to historic norms, the gargantuan capital gains that supported local tax revenues and spending dry up. WeWork is the canary in the coal mine; from a $50 billion IPO to insolvency in six weeks.

Once tax revenues plummet (no more IPOs, hundreds of restaurants closing, etc.), cities and counties will have to trim their work forces to maintain their ballooning pension payments for retirees. This will leave fewer police and social workers available to deal with everyone with little motivation (or option) to leave: thieves, those getting public services and the homeless.

4. Housing prices and rents are sticky: sellers and landlords won’t believe the good times have ended, and so they will keep home prices and rents at nosebleed valuations even as vacancies soar and the market is flooded with listings.

Neighborhoods that had fewer than 100 homes for sale will suddenly have 500 and then 1,000, as sellers realize the boom has ended and they want out–but only at top-of-the-bubble prices.

Ironically, this stubborn attachment to boom-era prices for homes and rents accelerates the exodus. As incomes decline, costs remain sky-high, so the only option left is to move away, the sooner the better.

By the time sellers grudgingly reduce prices, it’s too late: the market has soured. The Kubler-Ross dynamic is in full display, as sellers go through the stages of denial, anger, bargaining and acceptance: they grudgingly drop the price of the $1.2 million bungalow or flat to $1.15 million, then after much anger and anguish, to $1.1 million, but the market has imploded while they processed a reversal they didn’t think possible: now sales have dried up, and prices are sub-$800,000 while they ponder dropping their asking price to $995,000.

Vacant apartments pile up, as the number of laid-off and downsized employees who can still afford high rents collapses. (Recall that tens of thousands of recent arrivals in urban meccas rely heavily on tips for their income, and as service and gig-economy business dries up, so do their tips.)

5. As the exodus gathers momentum, all the reasons people clung so rabidly to urban meccas decay: venues and cafes close, street life fades, job opportunities dry up, and yet prices for everything remain high: transport, rent, taxes, employees, etc.

Friends move away, favorite places close suddenly, streets that were safe now seem foreboding, and all the friction, crime, grime and dysfunction that was once tolerable becomes intolerable.

6. In response to deteriorating city and county finances, local government jacks up fees, tickets, permits and taxes, accelerating the exodus. How many $300 tickets, fees and penalties does it take to break the resolve to stick it out?

7. Those on the cusp cave in and abandon the mecca. Once those who had the option to leave have left, and those who can no longer afford to stay leave, the decay causes those on the cusp of bailing out to abandon ship.

Renters move out in the middle of the night, homeowners who have watched their equity vanish as prices went into free fall jingle-mail the keys to the house to the lender and small businesses that had clung on, hoping for a turn-around close their doors.

8. Each of these dynamics reinforce the others. Soaring taxes, decaying services, declining business, rising insecurity and stubbornly high costs all feed on each other.

And that’s how pricey urban meccas turn into ghost towns inhabited by those who can’t leave and those living on public services, i.e. those too poor to support the enormously costly infrastructure of public spending in the urban mecca.

Source: by Charles Hugh Smith | ZeroHedge

What’s Hot: Home Trends in the Pipeline for 2018

Every industry tracks innovations in its field, and housing is no different. As a real estate pro, here are the need-to-know products and services promising to transform homes and your clients’ lifestyles over the next year or so.

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The big-picture view on housing trends in 2018 center around integrating technology and creating healthy and connected living environments. That’s why building materials, systems, and products that speak to these concerns are expected to generate greater buzz in the coming year. And with more generations living under the same roof, home-related features that provide an extra pair of hands or calming—even spiritual—influence are also being enthusiastically embraced. Here’s a sampling of coming trends that are important to understand and share with clients.

The Rise of the Tech Guru

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Why now: Smart homes are getting smarter, with homeowners increasingly purchasing devices and apps that perform tasks such as opening blinds, operating sprinkler systems, and telling Alexa what food to order. But not all these helpers speak the same language, nor do they always work together harmoniously. “Even plugs and chargers aren’t necessarily universal for different appliances and phones,” says Lisa Cini, senior living designer and author of The Future is Here: Senior Living Reimagined (iUniverse, 2016). Also, with more devices competing for airtime, Wi-Fi systems may not be strong enough to operate throughout a home, which results in dead spots, she says. “What many homeowners need is a skilled tech provider who makes house calls, assesses what’s needed, and makes all the tech devices hum effortlessly at the same time.”

What you should do: More buyers want to see listings updated to take advantage of all technological possibilities from the moment they move in. Add a home technology source to your list of trusted experts. You might even be able to offer a free first visit as a closing gift.

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Smart Glass Adds Privacy, Energy Savings

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Why now: As more homes feature bigger and more numerous windows, homeowners will naturally look for ways to pare down the energy costs, lack of privacy, and harmful ultraviolet rays that can accompany them. Next year, glass company Kinestral will begin offering a residential option to their line of windows and skylights. Called Halio, the technology allows users to tint glazing electronically up to 99.9 percent opacity. The company claims this can eliminate the need for blinds, shades, and curtains. “You’ll be able to tell Alexa to tint your windows, which will also provide privacy,” says Craig Henricksen, vice president of product and marketing for Halio. He notes that previously, the commercial version only offered the choice between yellow, brown, or blue casts, but that they’ll now add in an appealing gray tint to the mix. Windows come in a variety of sizes, and contractors can install the cable and low voltage system required to change the tinting. Homeowners can control the tint by voice command through an app, manual operation with switch, or with preset controls. Henricksen says Halio can save homeowners up to 40 percent off their energy bill, and that while the initial cost is around five to six times greater than similar low-E glass, the fact that traditional window treatments won’t be needed means the investment gap narrows.

What you should do: This is an important option to keep in mind if buyers are unsure about big, long runs of windows in a listing. It may make sense to price out options for your particular listing to help home shoppers understand how much it might cost to retrofit the space with such technology.

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Spiritual Gardens That Lift the Soul

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Why now: Homeowners have long seen their gardens as a place for quiet reflection, so choosing plants and designs that have a physical tie to spirituality is a natural next move. The trend may have started with Bible gardens, which use any number of the more than 100 plants mentioned in the Christian text to populate a restful repose. “So many are good choices because they are hardy, scented, edible, and can withstand harsh climates and environments,” says F. Nigel Hepper, with the Herbarium at the Royal Botanic Gardens in Kew, England, and author of Illustrative Encyclopedia of Biblical Plants (Inter-Varsity Press, 1992). But people of all faiths, or even those simply drawn to botanical history, can appreciate such spaces. “Around for generations, they feed the body and the soul,” says landscape designer Michael Glassman, who designed such a garden in the shape of a Jewish star as a meditative spot at one of Touro University’s campuses. He filled it with mint, pomegranate trees, sage, and other plants that are mentioned in ancient religious texts. Hepper says labeling and providing detailed context to plantings can transform a miscellaneous, obscure collection into an instructive experience.

What you should do: Find out if your local area has a peace garden that could provide examples of this trend. Homeowners might also find inspiration on the grounds of hospitals and assistance care facilities, which often create healing gardens for patients and family members.

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Kitchens That Do More Than Just Look Pretty

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Why now: An emphasis on eating fresh, healthy foods may mean more frequent trips to grocery stores and farmers markets, but it could also change the architecture of our kitchens. Portland, Ore.–based designer Robin Rigby Fisher says many of her higher-end clients want a refrigerator-only column to store their fresh foods, installing a freezer or freezer drawer in a separate pantry or auxiliary kitchen. The container-gardening industry is vying for counter space with compact growing kits that often feature self-watering capabilities and grow lights. Fisher is also getting more requests for steam ovens that cook and reheat foods without stripping them of key nutrients, though she notes that these ovens can cost $4,000 and have a steeper learning curve than conventional ones. Homeowners also want to be able to use their kitchen comfortably, which means having different or variable counter heights that work for each member of the family, ample light for safe prepping, easy-to-clean counter tops, and flooring that’s softer underfoot, such as cork.

What you should do: Be able to point out the beneficial elements of appliances and features in your listing, such as the antimicrobial nature of surfaces like quartzite and copper.

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Home Robots to the Rescue

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Why now: With lifestyles that seem busier by the day and many families inviting elders who require assistance to live with them, robots that can perform multiple services are gaining in popularity. IRobot’s Braava robots mop and vacuum floors, while Heykuri’s Kuri robot captures short videos of key life moments, including pets’ antics when owners are away. Some robots offer health benefits that mimic real pets, which the U.S. Centers for Disease Control and Prevention says can lower blood pressure and cholesterol, says Cini. She says Hasbro’s Joy for All line of furry robot dogs and cats can provide companionship for the elderly with dementia.

What you should do: Ask buyers about pain points in their current homes that might be mitigated by these new interactive technologies.

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Black Is the New Gray

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Why now: Palettes change all the time, and some feel the interest in black is a welcome contrast after years of off-whites, grays, and beiges. The hue is coming on strong in every category—appliances, plumbing fixtures, lighting, metal finishes, hardware, and soft goods, according to commercial interior designer Mary Cook of Mary Cook Associates. She appreciates black’s classic, neutral, sophisticated touch and notes it can be a universal mixer. “Black is a welcome accent in any palette,” she says. Marvin Windows and Doors launched its Designer Black line this year, incorporating a hip industrial vibe. Designer Kristie Barnett, owner of the Expert Psychological Stager training company in Nashville, loves how black mullions draw the eye out toward exterior views more efficiently than white windows can. Kohler has released its popular Numi line and Iron Works freestanding bath in black. Even MasterBrand cabinets are available in black stains and paints. For homeowners who prefer to step lightly into the trend, Chicago designer Jessica Lagrange suggests painting a door black.

What you should do: Suggest black accents as an option for sellers looking to update their homes to appear more modern.

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Air Locks Preserve Energy, Increase Security

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Why now: Incorporating two airtight doors has become a popular way for homeowners to cut energy costs. The double barrier helps keep outside air from entering the main portion of the house and provides a better envelope seal. “We rarely design a house nowadays without one,” says Orren Pickell, president of Orren Pickell Building Group in Northfield, Ill. It’s not just energy homeowners save, though; Pickell says it also supports the trend of more people shopping online. “It keeps packages safer than being left in full view” because delivery services can leave them inside the first door. Homeowners will need a minimum area of five feet squared in order to make this work. Costs vary by project size but it could run homeowners as much as $10,000 to add a small space beyond a front or back door. This usually costs less in new construction or as part of a larger remodeling project, Pickell says.

What you should do: If homeowners are thinking about making changes to their main entryway, be sure to alert them to this trend so they can decide if it makes sense to incorporate it. It may be expensive, but it’s not likely to go out of fashion anytime soon.

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Maximized Side Yards

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Why now: As a national trend toward smaller lot sizes combines with surging interest in maximizing outdoor space, one area that’s often neglected is the side yard. But designers are beginning to pay attention, transforming these afterthoughts into aesthetically pleasing, functional places that buffer a home from neighbors, says Glassman. He suggests growing plants such as star jasmine, climbing roses, and clematis vertically along the siding or a fence. He has created a pleasant pass-through to a backyard, with meandering walkways flanked by ornamental grasses or honeysuckle. Homeowners who have extra space here might consider adding a small recirculating water feature or a tiny sitting area.

What you should do: Pay special attention to side yards when evaluating a home that’s about to go up on the market. Sellers don’t need to spend much to make this space stand out, and any little thing is better than the feeling that the space has been “thrown away, since real estate is so valuable,” Glassman says.

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Battery Backup Systems Offer Resilience

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Why now: Any home owner who’s experienced a weather-related disaster, such as hurricanes, forest fires, and torrential downpours, understands the peace of mind that comes from having systems in place to help withstand Mother Nature’s worst punches. One example of this is a battery backup that integrates into a home’s electric system and operates during power outages, says architect Nathan Kipnis of Kipnis Architecture + Planning in Chicago. The backup batteries can store either electricity from the grid or renewable energy generated onsite by solar panels or other means. A key advantage is that the system doesn’t create the noise and pollution you get with an old-school generator, because it doesn’t use natural gas or diesel fuel. While they’re generally more expensive than traditional fossil fuel systems, prices do continue to drop.

What you should do: Understand the difference between a battery backup system and a typical generator, even if you’re not working in an area that sees frequent extreme weather events.

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Missing Middle Housing

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Why now: Architect Daniel Parolek, principal at Opticos Design in Berkeley, Calif., sees a solution emerging for the mismatch between demand and the housing that’s actually been delivered over the last 20 to 30 years. “Thirty percent of home buyers are single, and their numbers may swell to 75 to 85 percent by 2040, yet 90 percent of available housing is designed for families and located in single-family home neighborhoods,” he says. Parolek says builders must fill in this demand with smaller housing of 600 to 1,200 square feet, usually constructed in styles such as duplexes and cottages communities, and preferably in walkable areas. He cites Holmes Homes’ small townhouses at Daybreak in South Jordan, Utah, as an affordable transit-oriented development that follows missing middle principles.

What you should do: Know where existing missing middle housing may be hiding in your community, so you can help buyers of all ages seeking smaller homes. Also, look for opportunities to invest, either for yourself or your clients, in a type of housing that will likely see more demand than supply in the coming years. 

By Barbara Ballinger | RealtorMag

Wanted: Licensed Contractors To Build In-house Marijuana Grow Rooms

People want to grow at home, but it’s not always safe

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Grow closets could become the new hot amenity in home construction

Medical marijuana is legal in more than 20 U.S. states, and places like Colorado, Washington, Oregon, Alaska and Washington, D.C., have decriminalized recreational marijuana use for adults over the last few years. Marijuana advocates say this has led to an expanding industry in the home remodeling business: creating rooms in homes in which to grow pot.

But finding a contractor who would be willing to put a “grow room” into a home was nearly impossible until recently. Such rooms need, among other things, high-voltage metal halite electric lamps, high-capacity intake and exhaust fans to maintain carbon dioxide and oxygen levels, along with the proper heavy-duty electrical wiring and plumbing in a suitably-sized room.

“No contractor would touch stuff like this a year ago,” said Eli Bilton, the chief executive of the Attis Group, an online marijuana supply company in Portland, Ore. “They didn’t want to be on a job site where cannabis plants were around,” he said.

So people who wanted to build a grow room had to learn how to do it themselves, or pay somebody to do work without the proper permits.

Fire investigators say grow rooms in homes, especially those built by amateurs without licensed contractors are a hazard. Some operations contain 800 to 1,000 pot plants in a 2,500 square foot home. Post legalization, many amateur pot growers continue to rig their homes with unsafe grow rooms while hoping to get rich quickly, said Bilton. “They don’t engineer and design correctly,” he said.

A single home of that size could produce enough pot in a year to net as much as $1.5 million once it’s harvested and sold according to Victor Massenkoff, an arson investigator with the Contra Costa County Fire Protection District in Pleasant Hill, Calif., about 20 miles east of San Francisco. California accounts for nearly half of the sales of pot in the U.S., according to ArcView, a San Francisco-based marijuana industry research firm.

Dave Perry, a property loss insurance lawyer from Littleton, Colo., said the increased use of electricity is the primary cause of most fires, as most home growing operations need as much as 600 amps of power, where a typical home only uses about 200 amps of power. And without a licensed electrician, a house could be rewired improperly, resulting in an overload. In Colorado, a year after marijuana was legalized in 2012, there were 20 marijuana-related fires, which jumped to 32 in 2014, and 50 in 2015, according to Perry.

Even more dangerous is the spread of something called hash oil or “honey butane oil,” which is a super concentrated oil containing 95% tetrahydrocannabinol, or THC, the drug that creates the high in marijuana. A one-inch vial of honey butane oil can sell on the streets for as much as $4,000 and cost as little as $100 to produce. But the drug needs large amounts of highly flammable butane to produce and has led to explosions and fires in homes when the butane finds an ignition source in a home like a pilot light, says Massenkoff.

Still, experienced contractors who work within the building code and permits process are beginning to build grow rooms in high-end developments, which can cost up to $2,000 to complete.

Bilton says that in Oregon many licensed contractors will build grow rooms now that marijuana is legal. “It’s becoming part of our culture here in Portland,” he said. “You’re more likely to know somebody who’s involved in the growing industry so it’s more acceptable now,” he said.

For example, in Washington, D.C., after voters in the District approved an initiative in November 2014 that legalized recreational marijuana use for adults beginning this February, Eric Hirshfield, a real estate developer, is adding grow closets to some of his condominium projects.

Hirshfeld said he used a licensed electrician to beef up the wiring for the lighting and the exhaust fans as well as plumbers to ensure the proper drainage. He also ensures that the closets are built small enough to hold just six plants, the maximum allowed by D.C. law.

“I like to include a unique amenity in each of my condo projects like a wine cooler or a dog washing station and this year the grow closet is the hot amenity for 2015,” Hirshfield said in an interview. “It’s a sign of the times,” he said.

by Daniel Goldstein in Marketwatch

The Next Housing Crisis May Be Sooner Than You Think

How we could fall into another housing crisis before we’ve fully pulled out of the 2008 one.

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When it comes to housing, sometimes it seems we never learn. Just when America appeared to be recovering from the last housing crisis—the trigger, in many ways, for 2008’s grand financial meltdown and the beginning of a three-year recession—another one may be looming on the horizon.

There are at several big red flags.

For one, the housing market never truly recovered from the recession. Trulia Chief Economist Jed Kolko points out that, while the third quarter of 2014 saw improvement in a number of housing key barometers, none have returned to normal, pre-recession levels. Existing home sales are now 80 percent of the way back to normal, while home prices are stuck at 75 percent back, remaining undervalued by 3.4 percent. More troubling, new construction is less than halfway (49 percent) back to normal. Kolko also notes that the fundamental building blocks of the economy, including employment levels, income and household formation, have also been slow to improve. “In this recovery, jobs and housing can’t get what they need from each other,” he writes.

Americans are spending more than 33 percent of their income on housing.

Second, Americans continue to overspend on housing. Even as the economy drags itself out of its recession, a spate of reports show that families are having a harder and harder time paying for housing. Part of the problem is that Americans continue to want more space in bigger homes, and not just in the suburbs but in urban areas, as well. Americans more than 33 percent of their income on housing in 2013, up nearly 13 percent from two decades ago, according to newly released data from the Bureau of Labor Statistics (BLS). The graph below plots the trend by age.

Over-spending on housing is far worse in some places than others; the housing market and its recovery remain highly uneven. Another BLS report released last month showed that households in Washington, D.C., spent nearly twice as much on housing ($17,603) as those in Cleveland, Ohio ($9,061). The chart below, from the BLS report, shows average annual expenses on housing related items:

(Bureau of Labor Statistics)

The result, of course, is that more and more American households, especially middle- and working-class people, are having a harder time affording housing. This is particularly the case in reviving urban centers, as more affluent, highly educated and creative-class workers snap up the best spaces, particularly those along convenient transit, pushing the service and working class further out.

Last but certainly not least, the rate of home ownership continues to fall, and dramatically. Home ownership has reached its lowest level in two decades—64.4 percent (as of the third quarter of 2014). Here’s the data, from the U.S. Census Bureau:

(Data from U.S. Census Bureau)

Home ownership currently hovers from the mid-50 to low-60 percent range in some of the most highly productive and innovative metros in this country—places like San Francisco, New York, and Los Angeles. This range seems “to provide the flexibility of rental and ownership options required for a fast-paced, rapidly changing knowledge economy. Widespread home ownership is no longer the key to a thriving economy,” I’ve written.

What we are going through is much more than a generational shift or simple lifestyle change. It’s a deep economic shift—I’ve called it the Great Reset. It entails a shift away from the economic system, population patterns and geographic layout of the old suburban growth model, which was deeply connected to old industrial economy, toward a new kind of denser, more urban growth more in line with today’s knowledge economy. We remain in the early stages of this reset. If history is any guide, the complete shift will take a generation or so.

It’s time to impose stricter underwriting standards and encourage the dense, mixed-use, more flexible housing options that the knowledge economy requires.

The upshot, as the Nobel Prize winner Edmund Phelps has written, is that it is time for Americans to get over their house passion. The new knowledge economy requires we spend less on housing and cars, and more on education, human capital and innovation—exactly those inputs that fuel the new economic and social system.

But we’re not moving in that direction; in fact, we appear to be going the other way. This past weekend, Peter J. Wallison pointed out in a New York Times op-ed that federal regulators moved back off tougher mortgage-underwriting standards brought on by 2010’s Dodd-Frank Act and instead relaxed them. Regulators are hoping to encourage more home ownership, but they’re essentially recreating the conditions that led to 2008’s crash.

Wallison notes that this amounts to “underwriting the next housing crisis.” He’s right: It’s time to impose stricter underwriting standards and encourage the dense, mixed-use, more flexible housing options that the knowledge economy requires.

During the depression and after World War II, this country’s leaders pioneered a series of purposeful and ultimately game-changing polices that set in motion the old suburban growth model, helping propel the industrial economy and creating a middle class of workers and owners. Now that our economy has changed again, we need to do the same for the denser urban growth model, creating more flexible housing system that can help bolster today’s economy.

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Dream housing for new economy workers
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Energy Workforce Projected To Grow 39% Through 2022

The dramatic resurgence of the oil industry over the past few years has been a notable factor in the national economic recovery. Production levels have reached totals not seen since the late 1980s and continue to increase, and rig counts are in the 1,900 range. While prices have dipped recently, it will take more than that to markedly slow the level of activity. Cycles are inevitable, but activity is forecast to remain at relatively high levels.  

An outgrowth of oil and gas activity strength is a need for additional workers. At the same time, the industry workforce is aging, and shortages are likely to emerge in key fields ranging from petroleum engineers to experienced drilling crews. I was recently asked to comment on the topic at a gathering of energy workforce professionals. Because the industry is so important to many parts of Texas, it’s an issue with relevance to future prosperity.  

 

Although direct employment in the energy industry is a small percentage of total jobs in the state, the work is often well paying. Moreover, the ripple effects through the economy of this high value-added industry are large, especially in areas which have a substantial concentration of support services.  

Petroleum Engineer

Employment in oil and gas extraction has expanded rapidly, up from 119,800 in January 2004 to 213,500 in September 2014. Strong demand for key occupations is evidenced by the high salaries; for example, median pay was $130,280 for petroleum engineers in 2012 according to the Bureau of Labor Statistics (BLS).  

Due to expansion in the industry alone, the BLS estimates employment growth of 39 percent through 2022 for petroleum engineers, which comprised 11 percent of total employment in oil and gas extraction in 2012. Other key categories (such as geoscientists, wellhead pumpers, and roustabouts) are also expected to see employment gains exceeding 15 percent. In high-activity regions, shortages are emerging in secondary fields such as welders, electricians, and truck drivers.  

The fact that the industry workforce is aging is widely recognized. The cyclical nature of the energy industry contributes to uneven entry into fields such as petroleum engineering and others which support oil and gas activity. For example, the current surge has pushed up wages, and enrollment in related fields has increased sharply. Past downturns, however, led to relatively low enrollments, and therefore relatively lower numbers of workers in some age cohorts. The loss of the large baby boom generation of experienced workers to retirement will affect all industries. This problem is compounded in the energy sector because of the long stagnation of the industry in the 1980s and 1990s resulting in a generation of workers with little incentive to enter the industry. As a result, the projected need for workers due to replacement is particularly high for key fields.

The BLS estimates that 9,800 petroleum engineers (25.5 percent of the total) working in 2012 will need to be replaced by 2022 because they retire or permanently leave the field. Replacement rates are also projected to be high for other crucial occupations including petroleum pump system operators, refinery operators, and gaugers (37.1 percent); derrick, rotary drill, and service unit operators, oil, gas, and mining (40.4 percent).  

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Putting together the needs from industry expansion and replacement, most critical occupations will require new workers equal to 40 percent or more of the current employment levels. The total need for petroleum engineers is estimated to equal approximately 64.5 percent of the current workforce. Clearly, it will be a major challenge to deal with this rapid turnover.

Potential solutions which have been attempted or discussed present problems, and it will require cooperative efforts between the industry and higher education and training institutions to adequately deal with future workforce shortages. Universities have had problems filling open teaching positions, because private-sector jobs are more lucrative for qualified candidates. Given budget constraints and other considerations, it is not feasible for universities to compete on the basis of salary. Without additional teaching and research staff, it will be difficult to continue to expand enrollment while maintaining education quality. At the same time, high-paying jobs are enticing students into the workforce, and fewer are entering doctoral programs.  

Another option which has been suggested is for engineers who are experienced in the workplace to spend some of their time teaching. However, busy companies are naturally resistant to allowing employees to take time away from their regular duties. Innovative training and associate degree and certification programs blending classroom and hands-on experience show promise for helping deal with current and potential shortages in support occupations. Such programs can prepare students for well-paying technical jobs in the industry. Encouraging experienced professionals to work past retirement, using flexible hours and locations to appeal to Millennials, and other innovative approaches must be part of the mix, as well as encouraging the entry of females into the field (only 20 percent of the current workforce is female, but over 40 percent of the new entries).

Industry observers have long been aware of the coming “changing of the guard” in the oil and gas business. We are now approaching the crucial time period for ensuring the availability of the workers needed to fill future jobs. Cooperative efforts between the industry and higher education/training institutions will likely be required, and it’s time to act.

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Today’s Hottest Trend In Residential Real Estate

The practice of multigenerational housing has been on the rise the past few years, and now experts are saying that it is adding value to properties.
by Lauren Mennenas

The practice of multigenerational housing has been on the rise the past few years, and now experts are saying that it is adding value to properties.

In a recent Wall Street Journal article, several couples across the country are quoted saying that instead of downsizing to a new home, they are choosing to live with their adult children.

This is what many families across the country are doing for both a “peace of mind” and for “higher property values.”

“For both domestic and foreign buyers, the hottest amenity in real estate these days is an in-law unit, an apartment carved out of an existing home or a stand-alone dwelling built on the homeowners’ property,” writes Katy McLaughlin of the WSJ. “While the adult children get the peace of mind of having mom and dad nearby, real-estate agents say the in-law accommodations are adding value to their homes.”

And how much more are these homes worth? In an analysis by Zillow, the homes with this type of living accommodations were priced about 60 percent higher than regular single-family homes.

Local builders are noticing the trend, too. Horsham based Toll Brothers are building more communities that include both large, single-family homes and smaller homes for empty nesters, the company’s chief marketing officer, Kira Sterling, told the WSJ.

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High Stakes in Dracula’s Transylvania

House hunters are turning to Romania’s central region of Transylvania, popularized by the tale of Count Dracula. Restrictions were lifted this year on local purchases of local real estate by European Union nationals. Bran Castle, above, in Bran, Brasov county, is marketed as the home of Count Dracula, but in reality it was a residence of Romanian Queen Marie in the early 20th century.Romania draws foreign buyers looking for historic mansions and modern villas in resort areas

Count Dracula, the central character of Irish author Bram Stoker’s classic vampire novel, eagerly left for England in search of new blood, in a story that popularized the Romanian region of Transylvania. Today, house hunters are invited to make the reverse journey now that Romania is a member of the European Union and that restrictions were lifted this year on purchases of local real estate by the bloc’s nationals.

Britain’s Prince Charles, for one, unwinds every year in Zalanpatak. The mud road leading to the remote village stretches for miles, with the clanging of cow bells accompanying tourists making the trek.

Elsewhere in the world, the heir to the British throne occupies great castles and sprawling mansions. In rural Romania, he resides in a small old cottage. His involvement, since 2006, in the restoration of a few local farmhouses has given the hamlet global popularity and added a sense of excitement about Transylvania living.

A living room in Bran Castle, a Transylvania property marketed as Count Dracula’s castle. The home is for sale, initially listed for $78 million.A living room in Bran Castle, a Transylvania property marketed as Count Dracula’s castle. The home is for sale, initially listed for $78 million.

Transylvania, with a population of more than seven million in the central part of Romania, has a number of high-end homes on the market. And, yes, one is a castle. Bran Castle in Brasov county is marketed as the home of Count Dracula. In reality it was a residence of Romanian Queen Marie in the early 20th century. In 2007, the home was available for $78 million. The sellers are no longer listing a price, said Mark A. Meyer, of Herzfeld and Rubin, the New York attorneys representing the queen’s descendants, but will entertain offers.

Foreign buyers had been focused on Bucharest, where there was speculative buying of apartments after the country joined the EU in 2007. But Transylvania has been luring house hunters away from the capital city.

A guesthouse on the property in Zalanpatak, Transylvania, that is owned by Britain’s Prince Charles. His presence has boosted interest in Romanian real estate.A guesthouse on the property in Zalanpatak, Transylvania, that is owned by Britain’s Prince Charles. His presence has boosted interest in Romanian real estate.

Transylvania means “the land beyond the forest” and the region is famous for its scenic mountain routes. Brasov, an elegant mountain resort and the closest Transylvanian city to the capital, has many big villas built in the 19th century by wealthy merchants. A 10-room townhouse from that period in the historic city center is listed for $2.7 million. For $500,000, a 2,200-square-foot apartment offers rooftop views of the city and the surrounding mountains.

A seven-bedroom mansion in the nearby village of Halchiu, close to popular skiing resorts, is on the market for $2.4 million. The modern villa features two huge living rooms, a swimming pool, a tennis court and spectacular views of the Carpathian Mountains.

The village, founded by Saxons in the 12th century, has rows of historic houses across the street. Four such buildings were demolished to make way for the mansion, completed in 2010.

A $2.4 million mansion is for sale in Halchiu village.A $2.4 million mansion is for sale in Halchiu village.

“Rather than invest a million or more to buy an existing house, the wealthy prefer to build on their own because construction materials and work is cheaper,” said Raluca Plavita, senior consultant at real-estate firm DTZ Echinox in Bucharest.

Non-EU nationals can’t purchase land outright—although they may use locally registered companies to circumvent the restriction—but they can buy buildings freely, said Razvan Popa, real-estate partner at law firm Kinstellar. High-end properties are out of reach for many Romanians, who make an average of $500 in monthly take-home pay.

The country saw a rapid inflation of real-estate prices before 2008, on prospects of Romania’s entry to the EU and the North Atlantic Treaty Organization, as well as aggressive lending by banks. Values then fell by half during the global financial crisis.

The economy is stronger now, with the International Monetary Fund estimating 2.4% growth this year. But the country is still among Europe’s poorest. Its isolation during the dictatorship of Nicolae Ceausescu gave it a bad image.

The interior of the seven-bedroom Halchiu mansion, which was built on the site of four traditional Saxon homes.The interior of the seven-bedroom Halchiu mansion, which was built on the site of four traditional Saxon homes.

“Interest in Romania isn’t comparable with Prague or Budapest where some may be looking to buy a small apartment with a view of Charles Bridge or the Danube,” said Mr. Popa, the real-estate lawyer.

The international publicity around Prince Charles’s properties offers a counterbalance to some of the negative press Romania has received in Western Europe, which is worried about well-educated Romanians moving to other countries to provide inexpensive labor.

The Zalanpatak property is looked after by Tibor Kalnoky, a descendant of a Hungarian aristocratic family. The 47-year-old studied in Germany to be a veterinarian and, after reclaiming family assets in Romania, has managed the prince’s property and has hosted him during his visits.

These occasional visits are enough to attract scores of tourists throughout the year to the formerly obscure village in a Transylvanian valley. The fact that few street signs lead there, that the property offers no Internet or TV and that cellphone signals are absent for miles, seems only to add to the mystery of the place.