8/2024 Blog Topic: Will national focus on housing change things in Marin?

Written on . Posted in Blog, Recent News

August 2024

The Presidential election is in full swing, and the candidates are aggressively promoting their policies and differences to win your vote. One of the many topics both candidates are addressing is housing, in response to the major increase in home prices since 2020 (and longer for regions like the Bay Area). A second, related issue is the recent settlement by the National Association of Realtors (NAR) regarding commissions paid to Buyer’s agents, which Plaintiff’s cited as inflating the cost of homes. From MEF’s perspective, the issue in Marin County (and the Bay Area) has always been one of supply and demand, which ultimately manifests itself in the price of housing, which we know to be high. The high cost limits access, and that is among the main reasons housing is top of mind in communities, because the issue can turn from an economic one (supply and demand) to a social one (who gets to own a home?).

Now that housing and access to the “American Dream” is an election issue, it is fair to wonder whether the national attention might make any difference locally. As it relates to the NAR settlement, it remains to be seen if there will be any material impact on prices. It’s possible since Sellers were responsible for funding the Buyer commission (via paying the Selling Agent both commissions), that any savings will stay in the pocket of the Seller. It’s also possible that Buyers end up spending more money because they must pay for services related to the transaction (Agent or otherwise). And then there are the potential unintended consequences that always emerge when a longstanding business norm is disrupted. In summary, despite the perception that home buyers got a win in the NAR settlement, we do not yet know if the change will result in any better access to homes.
The Presidential candidates are offering very different approaches to increasing access, all of which remain hypothetical at this stage and could require various levels of approval, from Congress on down to your local jurisdiction. However, both candidates agree that increasing supply is the key approach. Former President Donald Trump has suggested that the Federal government should make federal land available to developers to build more homes including affordable units, and that the broader effort to tackle inflation, leading to lower interest rates, will spillover to lower mortgage costs. Vice President Kamala Harris has provided a bit more detail in how she would tackle the issue, including a promise to increase supply of homes by 3 million units, largely by reducing the regulatory burdens that slow permitting and construction, and to increase home ownership opportunities through a $25,000 subsidy for first-time homebuyers.

On the surface, it is difficult to evaluate the local impact of either plan. For example, even when mortgage costs were extremely low (sub 3%), housing remained expensive and scarce in Marin County. Further, we do not have large swaths of federal land that could be “sold” to a developer without major controversy among Marin residents. A subsidy of $25,000 on a home selling for $1.5 million would have limited, if any, impact and that specific proposal has been called out by economists as likely perversely raising home prices. Where possible impact could be felt is on the desire to loosen regulations that would facilitate more building, but the issue of local control has been, and remains, controversial in Marin County. Just see the response to the State of California’s Regional Housing Needs Allocation.

In a bizarre way, the national focus on housing elicits a “welcome to our world” response in Marin, but it’s also possible that such focus might unlock new ways to increase access. Something to watch.
Mike Blakeley, CEO
Marin Economic Forum

7/2024 Blog Topic: Financial literacy might be the most important service to provide in Marin

Written on . Posted in Blog, Recent News

July 2024

Talk to any Marin-based, non-profit serving our low to moderate income (LMI) population and they will cite several difficult life challenges that their clients face. These range from the obvious like homelessness, mental illness, unemployment, and others that make some of our fellow residents vulnerable. One of the less visible, but very impactful, challenges is poor financial literacy, which can lead residents to make poor decisions with their limited resources.

Financial literacy can best be described as “the ability to understand and use financial skills to make informed decisions about money.” (Investopedia, 2024). Under that definition, it’s more than just our LMI population that might suffer from poor financial literacy, but it may affect this population more acutely. For example, Americans household debt level, which includes credit cards, auto loans, student loans, and mortgages primarily, hit a new record high in June 2024. We do not argue here that debt is a bad thing per se, but we know a greater portion of disposable income among LMI populations goes toward debt service, leaving fewer funds available for other essential needs. For example, one study from the St. Louis Federal Reserve showed that the credit card balances among the lowest income populations in the U.S. are as much as 85% of monthly income.

When the Marin Economic Forum held stakeholder focus groups during the development of the “Marin County Economic Vitality Strategic Plan (EVSP)”, the issue of financial well-being and lack of financial literacy training in schools frequently arose as an issue for residents. A greater number of people of color cited this issue specifically in focus groups comprised of residents from Marin City and San Rafael. Accordingly, the EVSP includes an action item to increase access to financial literacy training in Marin, and in languages beyond English.
To be clear, there are resources available to our lower income populations, both public and private resources. The Marin County Office of Education hosts several online resources intended to help students in the broader career pursuits. But this requires individuals to seek out and self-instruct, which can be a barrier. Another example is “Sparkpoint”, delivered by Community Action Marin, that provides personal coaching to individuals on such important items as creating budgets, managing debt loads, or learning how to properly file tax returns. There is a consensus within the non-profit community that their clients benefit from the individual attention that their programs provide, otherwise the resources available may not be utilized or understood, as finances can be challenging to understand and manage.

Anyone who has found themselves at one time or another under financial strain can probably trace that challenge back to a poor decision or lack of awareness, such as overspending, not understanding the impact of interest rates on debt, or how to save for emergencies. However, these types of issues are more difficult to overcome if you do not understand finance, don’t speak English, or have limited resources to begin with. The Public Policy Institute of California and the James Irvine Foundation did a survey in 2021 asking California residents if they could handle a $1,000 emergency. Almost 30% of respondents with incomes of $40,000 and below said it would be “impossible” or “very difficult.” These respondents and people in the same situation may have had some bad luck along the way but it is a good bet they may not have had the benefit of learning about financial literacy. If we want our fellow Marin residents to enjoy some sense of economic security, financial literacy must be integrated in other training, such as job and life skills.
Mike Blakeley, CEO
Marin Economic Forum