Real Estate is Politics
I was told once that if I was in real estate, then I was in politics. I casually dismissed the statement as ‘whatever you say, I don’t want to be involved with politics’. Over time I have come to realize just how intertwined our real estate industry has become with politics. I’m not here to talk about McCain vs Obama and how the president will affect your house value or the capital gains tax for investors, this post is about local politics.
Local Politics Affect Your Real Estate Market
Whether it’s a new zoning law, subdivision regulations, or impact fees, local politicians have a huge affect on your local real estate market. As an example, city or county elected officials have the power to enact impact fees. An impact fee is a fee that is implemented by a local government on a new or proposed development to help assist or pay for a portion of the costs that the new development may cause with public services. Who do you think really pays for the impact fees…the developer, builder, or homebuyer? Right, the homebuyer will have these costs passed through to them and a house priced at $200,000 before impact fees will now be $210,000 (assuming $10K impact fee per lot). This makes you wonder about price appreciation in a growing area with impact fees? The other side of the coin has the land owner’s taking the hit as developers are not willing to pay as much for their property to offset the impact fees. Either way, it just doesn’t seem like a free market price when governments’ makes such rules. Local politicians often times represent special interest groups, such as no-growth nimby‘s, who can have a huge effect on your ability to earn a living. Suppose every new law, zoning change, and new development approval/denial was hanging on the vote of a commissioner who was won election with help from a no-growth special interest group. Do you think the real estate industry will flourish under their leadership? Probably not. You’d be well-served to pay attention to who is running in your local elections and be sure to spread the word to other Realtors to support the right candidates.
Realtors Need to Understand Local Politics and Policies
Tomorrow, our local Realtor association will be addressed by one such no-growth commissioner and I’m willing to bet an ice cream cone for everyone who reads this that at least 90% of the Realtors in attendance will either a) have no idea who the speaker is or b) have no idea he was elected by a no-growth special interest group. His presentation will cover changes to the our local subdivison regulations. One particular sticky point is changing the private property owner’s rights to subdivide their acreage 4 times without needing a county review to be allowed to happen only once every 3 years. In other words, stifling growth by delaying subdivision of acreage tracts. I hope that our audience catches on to this and ask questions such as, why this change is needed, especially in a down market where no one is risking new development? why limit private property rights? etc…
How Do You Make a Difference
Knowledge is the difference maker. First, you must be informed of the local political scene in your market. Start by reading the local newspaper (odds are they have not gone online yet and you’ll be forced to get ink on your hands to learn most of this stuff). Follow the local races for mayor, commissioner, council positions, etc… Meet with your local city and county managers. Ask them questions about growth policy. Show up at council meetings, county hearing, etc.. and see for oyurself who is voting for what and ask why. Share what you learn with other Realtors, contact your local Realtor association and inform them of the issues at hand. Ask for support for the right candidates and issues.
Raise awareness by blogging local about politics! Why ice cream in the title? Because I love ice cream.
September 15, 2008 at 7:07 pm
I read the whole thing looking for the ice cream tie-in because, I too, am a slave to this frozen temptress. Even when it’s bad, it’s still pretty damn good. Great advice for agents looking to keep on top of local happenings and manage the rocky road of local politics (ugh…sorry).
Based on your post, I’m suggesting a make-your-own-sundae bar at the next council meeting.
Dig in, Governor!
September 15, 2008 at 9:22 pm
Thank you for an outstanding post and reminder! Politics touches nearly every facet of our lives – personal and professional.
A sampling – impact fees, grantor’s tax, water tap fees, mil rates, schools’ budgets, growth management, transit and transportation – the list is endless; every single one of these affects our business in one form or another.
As Realtors and bloggers, it is important to know about, and to educate our readers about issues that affect property values, quality of life and so much more.
Take the time to go to a public meeting – it’s fascinating what impact seemingly innocuous and impotent conversations can have on everyday life.
September 15, 2008 at 9:28 pm
This is great insight. I’ve been an active RPAC contributor and believe in the system when applied to the local level. It’s been a real challenge to get other realtors to understand taht elections, especially local elections have a significant impact in their long term business.
All the stuff that Jim noted is VERY true and VERY important. Poorly applied “smart growth” and other bad programs hurt everyone. The real problem is that too many agents are only looking 30 days out to the next closings and not looking years away during a career to see how the decision of the elected officials effect them adn their clients on many different levels.
P.S. I LOVE Ice Cream!
September 15, 2008 at 10:29 pm
Brad: A very timely and exceptionally encouraging article. It amazes me how apathetic we’ve become, especially when we have such a vested interest in the process/decisions being made that can directly affect our financial well-being. I’ve been involved in a huge tidelands issue in a nearby community, where we’ve been fighting against State bureaucracies and departmental red tape. If we’re successful, it would have a major positive impact on future land development. We need to be intimately involved in the local political process!!!
September 16, 2008 at 2:42 am
You makje a great point, and one that is worth yelling through the Blogiverse at the top of your lungs – Ice Cream may be the perfect food
But there is another point you made, about the need to have representation in Local politics – that is even larger than the post might indicate – If it weren’t for REALTOR associations on the local , state and national level, our industry would face even more challenges than we do today (which are certainly sufficient). Not onyl through RPAC, but also through RPIC , there are staff and volunteers working diligently to see that we are represented everywhere we need to be – in fact if you were to go to realtor.org you would see no less than 74 issues NAR is following under the Government Affairs tab – some of which certainly might be worth blogging about
September 16, 2008 at 3:12 pm
Politics is a subject I think most Realtors prefer to ignore or leave to others to sort out. However, I was inspired by the ovation received when I challenged our local commissioner at this morning’s meeting and the general interest by our members present. It seems Realtors care about the issues and want to have a voice (many are now showing up tonight at the public hearing), but just need a push in the right direction, someone to rattle their cages or someone to champion their causes. I encourage everyone to become more aware of local politics and how they relate to real estate (almost everything does). It starts with awareness and then action follows.