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Opinion Editorials

Will gas prices delay the housing recovery?

Debating the theory that gas prices cause the housing bubble to burst, pitting Santorum against a seasoned real estate veteran and exploring what is and is not having an impact on housing.

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On Monday, Republican candidate, Rick Santorum suggested at a campaign rally that the 2008 spike in gas prices caused the housing bubble to burst and could very well do something like that again.  I personally can say having been in the business for a number of years prior to 2008,  that the market was already well in to decline when the spike in gas prices occurred, so I don’t totally buy in to his theory.

I am more inclined to accept the over simplified but probably accurate Warren Buffet theory that we were building houses at a faster rate than households were forming, the ole supply and demand conundrum.  I also will throw my hat in to the ring and say that the point where a few select markets imploded causing conventional lenders to quit writing the 100% loan (summer of 2007 I believe) is the point that we were really in trouble nationally.  Home buyers  had been conditioned to expect to enter the market with often less money up front then it would take to get in to an apartment and no one was saving for a down payment.

The 2008 rise in fuel costs, coupled with the the US appetite for big SUV’s and well over 50% of the US housing stock being in the suburbs, it’s reasonable to assume the spike had to at least have had some negative impact on our indusry.    The question to ask now is; will this current surge in fuel prices  stall what has already been a tantalizing slow swing of the housing pendulum in the right direction?   I’ve been looking for some economists to post up some sort of forecast or theory on this and so far nothing other than it doesn’t appear builders expect a major spike in building costs as of yet.
Sticking my neck out with some theories of my own

A basic reality of the US,  is that the infrastructure of most US cities and communities was developed to be “car” centered.  I have been a willing participant in the efforts Nashville is making to try to  to change this reality but it’s clearly not an easy process and it is going to take years to rectify.  My point is, cars aren’t going anywhere for some time.  Therefore, if getting from point A to point B continues to become less affordable, there are three basic options as I see them:

1) limit your driving (not always doable)

2) get a more fuel efficient car (36% of the population according to a AAA survey are going this route)

3) cut expenses elsewhere

All of these will have an impact on housing as far as I’m concerned

Option 1 – limit driving could impact real estate in that more buyers, if they can afford it, will likely look to buy close to where they work and play.   It will also mean potential rise in demand for the planned communities that have greater access to retail and entertainment within walking distance.  I also expect to see some increase in demand for communities with reasonable access to public transit and/or lanes for pedestrian traffic to move safely around.  Unfortunately, it could also delay recovery in the suburbs if the subdivisions really don’t offer convenient access to anything.

Option 2 is worth noting because consumers realize now that there is much greater costs to owning a car then simply your car note and insurance.  Fuel efficiency  is now a major consideration for consumers in the market for a car and the market has shifted to offer more options.  More home buyers are asking to see utility bills prior to purchase and this is an indicator to me that there is also a shift in how the average consumer is perceiving the cost of owning a home as well.  That being said, I think the number of consumers actively considering energy efficiency in their home purchasing criteria will grow AND I think the cost of getting to and from work will also become a factor in how the consumer will evaluate the cost of home ownership.

Option 3 – cutting expenses elsewhere is the least sexy and not really what most Americans like to do.  Again, I think this could impact the housing industry because more and more consumers are becoming aware that some homes are built more efficiently than others.  If I were going to cut expenses, I would prefer to cut my electric bill over my wine  budget any day of the week.

A recent poll conducted by ABC-Washington Post found 63% of respondents experienced financial hardship from the recent rise in fuel prices.  36% said it had caused extreme hardship.   Since Americans are not quite ready and/or able to give up their cars and changing habits can only help to a point, suburbs with little walkable or convenient retail infrastructure could really suffer in the short term.  In addition, this could also delay first time home buyers entering the market because it will take them longer to come up with some up front money.

However, I also think that this will be a catalyst for many consumers to shift strategies when they do buy a home.  They may consider commute cost over commute time,  opt to sacrifice size for proximity, and seek higher efficiency over fancy finishes.  Since 2008, consumers have gravitated away from SUV’s and the automobile industry responded quickly.  It is very likely the housing market is ripe for an equally dramatic shift in demand and gas prices could be the fuel that ignites the change.   The question is are we poised to make the adjustment as well?

Anna Altic – Village Real Estate Services. I’ve called Nashville home for the last 15 years and have been practicing (practice being the key word here) real estate for just over 6 years. In the fall of 2007, I went to a local German Festival that had a home tour, including a LEED certified property, and I instantly became enamored with the idea of eco friendly living (ok, so I’d had a little beer and the dual flush toilet rocked my world). I have since devoted much of my time and energies in to studying and espousing the benefits of better building technology within our local residential market and my proudest accomplishment thus far has been successfully leading the initiative to get over 25 green features added to our MLS search fields.

Opinion Editorials

The secret to self improvement isn’t always about improvements

(EDITORIAL) Self improvement and happiness go hand in hand, but are you getting lost in the mechanics of self improvement?

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fitness happiness

Think back to your New Year’s resolutions. Now that it’s summer, how many of them are you still keeping? Think about which ones stuck and what went by the wayside.

If you’re like most of us, you had big plans to make yourself better but didn’t stay the course. I’ve only managed to keep one of my resolutions, but it isn’t always easy.

I want to take a look at why we can’t keep our goals. I think we’re always on a journey of self-improvement. It’s easy to get obsessed with reading self-help books or trying to learn new things. We want to be better. This spring, I went through a Lent study with a group of people. Lent is a time of growth and self-reflection, just six weeks. And yet many of us are struggling to keep up with the daily reading or maintaining a fast of something we willingly chose to give up.

Why do we fail?

I think we fail because of three things.

You might think I’m going to say something like we fail because we don’t have willpower, but I think that is the farthest thing from the truth. I’m no therapist, but I’ve read the literature on alcohol and drug rehab. It’s not willpower that keeps a person sober. It’s community. One reason I think we fail at our goals is that we don’t have a cheerleading team. I believe that we need people on our side when we’re trying to improve.

Secondly, I think we fail because we want immediate results. We have this mentality that things should happen quickly. I’ve written about this before. It’s like you workout once and want that swimsuit body. We get frustrated when we don’t see results right away. So, we move on to the next pursuit.

Do your goals lead to happiness?

Failure can also be because self-improvement goals don’t always lead to being better person. We do a lot of things because “we should.” Your doctor might think you need to lose weight. Maybe your boss wants you to be a better speaker. Meditation should make you a better person. Maybe you ran a marathon, and now you think you need to run an ultramarathon because that’s what your best friend did.

What makes you happy isn’t always what you should be doing.

Your doctor might be right, but if you’re choosing to lose weight because you want to make your doctor happy, you’re probably not going to stick with a program. If you’re trying to learn Spanish to make your boss happy, again, you’re probably not going to enjoy it enough to really learn. If you’re chasing after goals just to say you’ve done it, what value do your achievements bring to your life?

If you’re obsessed because you “should” do something, you’re going to get burned out and fail. Whether it’s New Year’s resolutions, a self-improvement project or giving up meat for Lent, you need solid reasons for change. And if you give something a try that isn’t for you, don’t soldier on. You don’t need to spend years taking yoga classes if you don’t enjoy it.

When something becomes a burden rather than bringing benefits, maybe it’s time to take a look at why you’re doing it.

When you don’t know why you’re knocking yourself out to be better, maybe you need to figure out a reason. And if you feel as if what you’re doing isn’t enough, stop and figure out what will satisfy you.

I’ve been doing a lot of meal prepping on the weekends. Sometimes, I want to quit. But it pays off because I have less to do throughout the week. It might seem like a burden, but the benefits outweigh the burdens. I’ve been able to eat much healthier and use more vegetables in my meals, which is the one goal I’ve been able to keep. I have some good friends that help me stay on track, too. I choose to eat more vegetables for my health. I think it’s a combination of all these things that is helping me meet my goal this year.

Don’t give up on making yourself a better person. Just don’t become obsessed over the program. Look at the outcome. Are you pursing happiness on a treadmill or are you really working to find happiness?

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Opinion Editorials

What I wish I knew about finances in my 20s

(EDITORIAL) They say money makes the world go round. So, let’s discuss how to be smart with finances before it’s too late.

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finances

Being in my early twenties, something I’m still getting used to is the fact that I’m making my own money. This is not to be confused with the babysitting money I was making 10 years ago.

Twice a month is the same routine: I get my paycheck and think, “Wooo! We goin’ out tonight!” but then I snap back to reality and think about what that money needs to be put towards. The smallest part of it going towards fun.

It’s been tricky to really start learning the ins and outs of finances. So, I do what I usually do in any type of learning process? I ask for advice.

I used to be fixated on asking those more advanced in age than I what they wish they knew when they were my age. Now that I’m determined to learn about finances, that question has been altered.

I reached out to a few professionals I know and trust and they gave me solid feedback to keep in mind about building my finances, about what they wish they had known in their 20s. However, I don’t think this only applies to those just starting out, and may be helpful for all of us.

“It’s important to simply know the value of money,” says human resource expert, Nicole Clark. “I think once you start earning your own money and are responsible for your housing, food, etc. you realize how valuable money is and how important it is to budget appropriately and make sure you’re watching your spending.”

Law firm executive director, Michael John, agrees with Clark’s sentiments. “I wish I had kept the value of saving in mind when I was younger,” explains John. “But, still remembering to balance savings while rewarding yourself and enjoying what your efforts produce.”

There are so many aspects of finance to keep in mind – saving, investing, budgeting, retirement plans, and so on and so forth.

In addition to suggesting to spend less than you make and to pay off your credit card in full each month, Kentucky-based attorney, Christopher Groeschen, explained the importance of a 401k.

“Every employee in America should be contributing everything they can into a 401k every year, up to the current $18,000 maximum per person,” suggests Groeschen.

“401ks present an opportunity for young investors to 1) learn about investing and 2) enter the market through a relatively low-risk vehicle (depending on your allocations),” he observes.

“An additional benefit is that 401ks also allow employees to earn FREE MONEY through employer matches,” he continues. “At the very least, every employee should contribute the amount necessary to earn the employer match (usually up to 4%) otherwise, you are giving up the opportunity to earn FREE MONEY. Earning FREE MONEY from your employer that is TAX FREE is much more important than having an extra Starbucks latte every day.”

Whether we like it or not, money is a core aspect of our daily lives. It should never be the most important thing, but we cannot deny that it is, in fact, an important thing. It’s tricky to learn, but investing in my future has become a priority.

This editorial was first published in May 2018.

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Opinion Editorials

How strong leaders use times of crises to improve their company’s future

(EDITORIAL) We’re months into the COVID-19 crisis, and some leaders are still fumbling through it, while others are quietly safeguarding their company’s future.

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strong leaders

Anthony J. Algmin is the Founder and CEO of Algmin Data Leadership, a company helping business and technology leaders transform their future with data, and author of a new book on data leadership. We asked for his insights on how a strong leader can see their teams, their companies, their people through this global pandemic (and other crises in the future). The following are his own words:

Managers sometimes forget that the people we lead have lives outside of the office. This is true always, but is amplified when a crisis like COVID-19 occurs. We need to remember that our job is to serve our teams, to help them be as aligned and productive as possible in the short and long terms.

Crises are exactly when we need to think about what they might be going through, and realize that the partnership we have with our employees is more than a transaction. If we’ve ever asked our people to make sacrifices, like working over a weekend without extra pay, we should be thinking first about how we can support them through the tough times. When we do right by people when they really need it, they will run through walls again for our organizations when things return to normal.

Let them know it’s okay to breathe and talk about it. In a situation like COVID-19 where everything is disrupted and people are now adjusting to things like working from home, it is naturally going to be difficult and frustrating.

The best advice is to encourage people to turn off the TV and stop frequently checking the news websites. As fast as news is happening, it will not make a difference in what we can control ourselves. Right now most of us know what our day will look like, and nothing that comes out in the news is going to materially change it. If we avoid the noisy inputs, we’ll be much better able to focus and get our brains to stop spinning on things we can’t control.

And this may be the only time I would advocate for more meetings. If you don’t have at least a daily standup with your team, you should. And encourage everyone to have a video-enabled setup if at all possible. We may not be able to be in the same room, but the sense of engagement with video is much greater than audio-only calls.

We also risk spiraling if we think too much about how our companies are struggling, or if our teams cannot achieve what our organizations need to be successful. It’s like the difference in sports between practice and the big game. Normal times are when we game plan, we strategize, and work on our fundamentals. Crises are the time to focus and leave it all on the field.

That said, do not fail to observe and note what works well and where you struggle. If you had problems with data quality or inefficient processes before the crisis, you are not fixing them now. Pull out the duct tape and find a way through it. But later, when the crisis subsides, learn from the experience and get better for next time.

Find a hobby. Anything you can do to clear your head and separate work from the other considerations in your life. We may feel like the weight of the world is on our shoulders, and without a pressure release we will not be able to sustain this level of stress and remain as productive as our teams, businesses, and families need us.

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