Ethics and Real Estate

What is real property?

• Land, buildings permanently affixed to land, and fixtures

  • (Contrast to personal property and intellectual property)

• Commercial versus residential

U.S. Founded on Real Estate - Unique legal problems - 1

Considered “unique” for purposes of contract damages and can sue for specific performance

U.S. Founded on Real Estate - Unique legal problems - 2

Has its own records system to track ownership and restrictions

U.S. Founded on Real Estate - Unique legal problems - 3

Detailed and advanced system of laws regading rights, transfer, restriction, encumbering, etc.

“Why are you so obsessed with me?” - Community

• Reduction in crime

• Increased levels of civic engagement

• Neighborhoods stablize

“Why are you so obsessed with me?” - Economic

• Increased wealth (both personal and intergenerational)

• Ability to save and retire

Issues - Access and Affordability

Lack of Units

Long Beach needs to develop an additional 26,500 units by 2029

Issues - Access and Affordability

Affordability

Nearly half of households are cost burdened. Capped at rental to households at 60% of AMI

Issues - Access and Affordability

No Path to Ownership

Comparing 2020 average income to median house price, monthly payment for house purchase would represent ~73% of household take-home pay

Issues - Access and Affordability

Situation is not improving

Average rent increases ~17% on YTY basis; using 2022 numbers, monthly mortgage payment is now more than 100% of take-home pay

Issues - Access and Affordability

In Summary

Efforts at housing development focus on low or very low income, or very high income, and new developments face length and costly blocks to development (environmental, NIMBY, permitting, zoning, taxes)

Solutions and Detriments

Increasing Density Allowed

• Helps with numbers of units, and is better for environment

• Increases crowding, burdens infrastructure, is not “community preferred”

Solutions and Detriments

Reduce Down Payment

• There is a reason we require ‘skin in the game” (we learned our lesson from 2008)

Solutions and Detriments

Reduce Permitting Burdens

• Not as many environmental/safety guarding mechanisms in place

Solutions and Detriments

Subsidize Affordable Housing

• Increases taxes

Solutions and Detriments

Reduce Real Property Taxes

• Many of our social programs (especially education) rely on real property taxes

Gentrification - 1

Neighborhood redevelopment/migration causes current community residents to be priced out

Gentrification - 2

Typically affecs minority and poorer communities at higher rates Gent

Gentrification - 3

Typically residents are bought by corporate developers, investors, etc. furthering income inequality

Safety and Progress - 1

Redevelopment typically is done in communities with high levels of disrepair, which often contributes to high crime, low safety, and low access to healthy foods

Safety and Progress - 2

Developers take on costs of fighting urban decay so government does not have to

Safety and Progress - 3

Property rights allow owners to dispose property as they please

Real Estate and Inequality - 1

“Manifest Destiny” lead to land being seized by combination of force and “finders keepers.” Reparative agreements (40 acres and a mule) not honored

Real Estate and Inequality - 2

Until relatively recently, women and non-White persons were prohibited from owning land. Even after slavery was declared illegal, restrictive covenants privately furthered inequalities

Real Estate and Inequality - 3

More recently, redlining perpetuated value differences in predominantly minority communities. Even still, vast differences in appraisal values for minority homeowners (though such practices are illegal)