Overmanwarrior's Wisdom

Official Site of Rich Hoffman. Connecting the dots in a complicated world.

Real Estate at Lakota: The Beauty of Captialism shown at Costco

with 6 comments

I truly do feel sorry for the real estate agents who used to look at the school districts of Lakota, Mason and Fairfield, Ohio to help sell their homes. Because the housing bubble collapsed, and values have plummeted back to reality, it has forced many to look at other aspects of their communities for value beyond the schools, because communities are not just for young families just beginning their lives, but are for the adults who still remain long after the children have grown. And that reality has been difficult for many to grapple with as the changing economic situation has forced a re-evaluation of many values.

To the neurotic parent who believes that their child is somehow the responsibility of the community to raise and care for, or the real estate agent who wishes an easy home sale off such neurotic parents, your luck has run out, and you are learning that the world in fact did not revolve around you like many thought the sun once did around the earth, but that it is you who serve the community. You are not unwelcome. We do want you to sell homes, and we do want you to buy them. We also want you to enjoy the shopping, the restaurants, and the businesses that make up our community, but you must understand that it is the earth that revolves around the sun—and this is a devastating realization for the selfish school levy supporter.

I have never said once that Lakota could fail as a school during my fights against higher taxes. I have always expected Lakota to be among the best in the state even if at its very best it will fall well short of my personal standards since it thrives as an institution of collectivism, as all public schools do. But I have said that the cost of public education should be cheaper while the quality remains high. An example of what I expect from Lakota and Mason is for them to learn from the Costco business model where that wholesaler is able to offer all its products to customers at a 15% reduction on average, which is the job of its purchasing agents. Costco still offers excellent quality products, but at a much lower price than most anywhere else, and in public education this should be the goal.

I was thinking of Lakota while I was at Costco with my wife the other day, and I realized that if Lakota were to remain a great school in these changing economic times, it would have to find a way to lower its costs while still providing a superior product. That is the name of the game, and the success of how that game is played will dictate the future real estate value of our communities. High taxes just aren’t attractive to new buyers who may not see the kinds of value increases that took place in the Southern Ohio since the 1980’s.

I often wondered how long people thought real estate values would escalate as they have over the last 20 years. When I was in high school gas was under $1 per gallon and a $100,000 home was a mansion. These days $100K doesn’t buy you much of a home and gas is close to $4 dollars per gallon, all in just a very short time, which points to the mismanagement of the economy by the government in general. The home expectation in the Lakota School District is that the costs should be at least $250K to $500K and that simply isn’t sustainable. Home buyers are realizing that there just aren’t enough buyers to drive up the cost of their homes making the property ownership a good investment that outpaces the taxes with levy approvals. This means that once a buyer buys a home, they may not be able to sell it for more than their purchase price even if the school is excellent. So other aspects of the community must be made more appealing, such as lower tax costs, and a more business friendly community with less red tape from meddling trustees and zoning boards.

It’s not because I’m old that prices are so much different today. It’s all about inflation, not just at the Federal Reserve, but of the perception of what we get out of the investments. Many baby boomers have thrived with the low-interest rates and plentiful jobs America had through the 90’s when Bill Clinton and all his scandalous ways operated with a Republican house and senate to balance the budget and maintain that the era of big government was over. This was Clinton riding on the coat tails of Ronald Reagan’s economic policies of the 80’s and Alan Greenspan’s handling of the Federal Reserve.

During this time, there was a lot of money to be made, and baby boomers made it by selling properties and buying new properties with the equity of their investments building fortunes with foundations as stable as a house of cards. Greenspan was a very devote fan of Ayn Rand and was part of the Objectivism circle she had in New York, and even with the influences of a mixed economy, and a gradual push for more and more socialism in America, Greenspan held the economy pretty well together until his departure in 2006. That is when Ben Bernanke took over and by 2008, America slipped into a recession as a number of economic bubbles simply collapsed from years of pressure.

The criticism of Greenspan was that he was naive as to the sheer greed of individual investors and corporations who were prone to take the money and run instead of behaving like Reardon from the classic book Atlas Shrugged, or the principles of Howard Roark in The Fountainhead, both novels that Greenspan loved dearly. But such greed is due to other social factors and not the merits of capitalism, which are directly derived from weaknesses in a mixed economy, with a bit of capitalism sprinkled here and there for show and tell, with socialism making up the structure. As Greespan pushed for privatization of Social Security and other government programs, Democrats pushing socialism prevented those discussions, and the spending spree of the Bush Administration caused Greenspan to use every economic trick available to hold off the inevitable bubble from collapsing. But without Greenspan, Bernanke was no match, and the real estate bubble burst and the nation has plummeted into a depression.

The greed of the self-interested wither it be the Bilderberg group of world financial powerhouses using Bernanke to their ill intentions, or the desire of socialists like President Obama to collapse America under a George Soros plan to destroy America and give rise to a one world government headed by The United Nations where scoundrels and cut throat politicians like Bill Clinton is positioning himself for a key position within that new government, the rules have changed. It can no longer be taken for granted that just a few economic tweaks will solve all our problems, or a company can simply hire a lobbyist in Washington to fend off the political looters from stealing all their corporate profits.

Real solutions are needed in this modern age beyond just shuffling money from one place to another.  During the time of Greenspan residential real estate was sold almost exclusively on the school system it resided in, and now that has changed. Teachers unions not recognizing the changing economic factors continued to strike and make labor threats to drive up their wages, because they saw an opportunity to capitalize on the real estate trends. At Lakota the average teacher wage in 2001 was around $45K per year. Now just a decade later the wages are $63K per year yet nothing changed other than a strike attempt by the teachers in 2008. The service is the same, and the expectation of the community has not altered.

But those days are over. Now a community must actually work to keep itself solvent, and homes must improve on their actual value based on the merit of their competitive market circumstances, and not just the school systems they reside in. School districts themselves must do like the district governments, and that is keep their tax signature low so not to scare away investments. Local governments should not be naive on the opposite end of the political scale as Greenspan was toward private business and not properly accounting for the greed of a collective, which with all the protests members of the political left launched at Greenspan and President Reagan, they have shown to be just as greedy as the average Wall Street looter. The teachers, the fire fighter and the police officer have been just as ravenous as the executives of Enron or the Ponzi scheme of Bernie Madoff. The greed of the mob on both political sides has burst the bubble of the American economy, and now we must all survive.

Lucky for the districts of Lakota, Mason, and Fairfield, there is time to make adjustments before they end up like the have-beens of Sharonville, Princeton, and Reading. The schools could be removed from the economic equation and these areas would still be wonderful places to live because of their location and quality of living. The thing that would kill these areas in the future is in allowing themselves to be crushed by high taxes, which would then push those economies into Monroe, Trenton, and back to Middletown, which was devastated once before by the labor problems at A.K. Steel and the diminishing industry there. The solution for all these communities, particularly Monroe Schools, who is currently on an academic emergency is to take a page from the Costco playbook and find a way to offer the same product with the same quality or better, but with a 15% reduction in cost. If schools embraced that concept suddenly many economic factors would fix themselves with a fury. The only reason it hasn’t happened yet is a stubborn refusal to see the obvious—because greed stands in the way of reality in the minds of the public educrat.


____________________________________________________________

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Rich Hoffman
http://overmanwarrior.wordpress.com/2010/12/04/ten-rules-to-live-by/
http://twitter.com/#!/overmanwarrior
www.overmanwarrior.com

6 Responses

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  1. yes very sad and very true. My house is on the market. My house is worth about 10-15% less than what I paid for it 7 years ago–a financial nightmare but a reality for many–I wouldn’t imagine continuing to demand the same price–I have to adjust and have dropped my price accordingly, and lowered my expectations for what my next house will be like….
    but Mantia marches on, dismantling our schools piece by piece, after all she has to feed and she makes a tremendous wage, and its all for the children…….no reality, only arrogance…..

    NLKM

    May 30, 2012 at 12:21 am

    • Good points! You are certainly impacted by the housing bubble crash. The only people who still don’t get it are these crazy public schools. I continue to get loads of emails about Mantia from other places she’s been, and this is a pattern with her.

      overmanwarrior

      May 30, 2012 at 12:54 am

  2. I love COSTCO and find that by shopping there I can purchase quality for less. I think your point about government schools using the same philosophy is on target. Quality schools do not mean terazzo floors, atriums and teachers with PHD’s. I often wonder why the new buildings must be built so extravagantly? Why can’t the same plan be used over; thus saving the district new architectural plans over and over again? How many of these schools need to have expensive retooling and repair? Liberty Junior had to have a new roof shortly after it was built. How often does this happen? More than you know. This means the contractor is paid again and the architect is paid again. I repeat that Lakota West was built over a huge water problem. This costs thousands to maintain turbines to keep the basement from flooding plus an overnight janitor. The board was fullly aware of this problem, but chose the location against more informed voices.

    Who owned the land? Who had a vested interest in having the school built at that location. These are just a few questions that should be answered before the district receives one more cent. Millions of dollars flow through government schools with little checks and balances. The fox minds the henhouse. Those with a vested interest oversee the spending.

    sassypatriot

    June 2, 2012 at 12:41 am

    • Didn’t something similar happen over at Lebanon…the water logged property owned by “friends” of the interested parties and everything?

      Phil

      June 2, 2012 at 10:52 pm

  3. Yes, the land that the new high school was built on has water problems. Many say there was a huge conflict of interest in the transaction with the price of the open land greatly elevated. There aren’t any sidewalks and the kids are walking in the road. I fear that this situation is an accident waiting to happen.

    sassypatriot

    June 2, 2012 at 11:24 pm

  4. They should be doing something about it. Government officials should always take a look at everything, specially the welfare of the youth. You did have an interesting post, an eye opener to a lot of people.

    Metro Denver

    June 22, 2012 at 1:27 pm


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