Monthly Archives: March 2009

Habitat for Humanity: Millard’s gift

The great mission of Habitat for Humanity has been on my mind because its founder, Millard Fuller, recently passed away. He was a friend of my father’s, and also a friend of my sister Betsie, who lived near the Fuller family at Koinonia Farms in the 1960’s. Millard’s inspiration for the idea of Habitat for Humanity grew out of volunteer building projects in Koinonia Farm’s tight-knit community.

I corresponded with Millard a little in regards to specific building projects, but I didn’t meet him until 1998, a year after my father died. Millard told me that he and my father had written many hundreds of letters to each other. I was shocked by that, but Millard had a good explanation. He said that both he and my father always punctually answered their correspondence and neither of them knew how to stop the back and forth flow.

Millard (and his wife Linda) founded Habitat for Humanity (HfH) in 1976. Since then, one family at a time, one house at a time, HfH has made a huge impact on tens of thousands of lives throughout the world. Today, Habitat for Humanity has built more than 300,000 homes, housing more than 1.5 million people in more than 3,000 communities worldwide. Millard was the force of nature whose vision, energy and perseverance made this happen. Of course he didn’t do it alone, but it wouldn’t have happened without him.

Over the years, I have worked on a number of Habitat for Humanity homes, including several big “blitz builds” in which homes are built at an accelerated pace. The last one I worked on with our local community (almost 500 volunteers) was built in eight days from foundation to completion.

I am as proud of that home as any our company has built in the last 35 years. It was built with the same spirit of collective pride, neighborliness, and generosity that built most of the houses, barns, churches and town halls in the early years of our country. When we once again reach out to our neighbors and build homes this way, it’s a reminder of who we are as Americans, as humans. The layers of quality, authenticity, dignity and beauty built into that home—like most HfH homes–seem endless, though it is equally simple, plain and humble.

I am a builder because I know from personal experience the transformative difference that a good quality home can make to the lives of individuals and families. But in the special partnership of Habitat for Humanity projects, the builders and the homeowners seem to benefit equally. Millard knew this to be a fact and a strategy. Knowing that there were no losers in the philanthropy and volunteerism that builds homes for needy families, he was always forward and bold about asking people to give time, money or both. People don’t regret giving to help those with a need for a better place to live, but working side-by-side with others who are doing that same thing, for the same reason is pure, unmitigated joy.

Millard Fuller will be remembered. He sowed seeds of hope and human dignity that have grown, flourished, spread and now can’t be stopped. Along with tens of thousands of others, I too am in his debt.

What will happen to the suburbs?

The financial collapse is giving us a sneak-preview about what might eventually happen to many of our nation’s suburbs. Half-finished new developments have been abandoned. Waves of foreclosures on existing homes are crashing against the shoals of millions of shattered dreams. Desperate people are just cutting their losses and leaving. Most of the tragic stories are taking place in the newer outer suburbs where the deal on the mortgage loan was as misleading as the home’s actual value, which was as poorly built as its location was wrongly designed. People are leaving partially because the homes and the communities weren’t worth fighting for. Underneath the surface, there never was much real value. This was always true, but it took the complete unraveling of a hyper-connected Ponzi scheme for the truth to become so startlingly evident.

There’s a whole lot of talk now about what will happen to the suburbs. Richard Florida examines the topic in much detail in an excellent article in Atlantic Magazine, How the Crash will Reshape America. In his view, the suburbs are surely doomed and will have to be reconfigured in most cases, and perhaps even abandoned in others.

Suburbanization—and the sprawling growth it propelled—made sense for a time. The cities of the early and mid-20th century were dirty, sooty, smelly, and crowded, and commuting from the first, close-in suburbs was fast and easy. And as manufacturing became more technologically stable and product lines matured during the postwar boom, suburban growth dovetailed nicely with the pattern of industrial growth. Businesses began opening new plants in green-field locations that featured cheaper land and labor; management saw no reason to continue making now-standardized products in the expensive urban locations where they’d first been developed and sold. Work was outsourced to then-new suburbs and the emerging areas of the Sun Belt, whose connections to bigger cities by the highway system afforded rapid, low-cost distribution. This process brought the Sun Belt economies (which had lagged since the Civil War) into modern times, and sustained a long boom for the United States as a whole.
But that was then; the economy is different now. It no longer revolves around simply making and moving things. Instead, it depends on generating and transporting ideas. The places that thrive today are those with the highest velocity of ideas, the highest density of talented and creative people, and the highest rate of metabolism. Velocity and density are not words that many people use when describing the suburbs.

Florida is convinced there will be a redistribution of the population, morphing toward density, coalescing toward connectedness and efficiency. It can be resisted, but it’s likely he’s right about there being certain inevitability to a transition that fits the opportunities and constraints of our era.
Allison Arieff has a good discussion on her blog, By Design, on the same topic. Along with authors Ellen Durham-Jones and June Williamson (Retrofitting Suburbia), she imagines suburban areas being essentially remodeled to increase their density and create more localized mixed-use possibilities. These are hopeful, helpful ideas. Remaking what we have is the best possible outcome.
But there will be a storm before the calm. We’re getting a glimpse of that now. We don’t change our habits easily. It takes something like a convulsive shock for us to give up our fantasies.
As fantasies go, we can do better. Suburbia is not the best definition of the American Dream.
Many years ago, I worked as a framing carpenter, helping to build suburban tract homes on Colorado’s Front Range. While I got some satisfaction from slinging my big hammer, my heart was already convinced that the suburbs weren’t a sustainable concept. I knew it because I had intimate knowledge of what little they were made of and how poorly they were put together. I knew it because I drove out to the remote construction sites in a borrowed car, burning fuel that I couldn’t afford even when it was 1960’s cheap, having come from my home in the old central city area where I could get to anything I needed to do on foot. I knew it because everything about the suburban areas I worked on were inauthentic concoctions, propped up by dreams that were hard-sold on promises grabbed from thin air at will, and inflated as necessary. With the hyped deal, all the buyers got a spectacular view, unlimited privacy, perfect neighbors and happiness that would flow as surely as cascading Rocky Mountain spring water.

I didn’t have a particular vision for how the demise of the suburbs would play out, but I didn’t have to go far to see some of the historical possibilities. I grew up not far from the very visible, but long-abandoned remains of Colorado’s gold rush era. For my parents, hauling us off to visit the ghost towns left over from the late 19th century mining boom was the perfect parental trifecta: cheap entertainment containing both fascinating history lessons and potent morality tales. I am one of eleven children, so the cheap entertainment part was critical. We went often to places like Cripple Creek, Victor and St. Elmo.

Those were mysterious and eerie. You could pretend to inhabit what was left of the houses, imagine what it was like to be in the tiny jails, or conjure the raucous crowd inside a saloon that by then had no roof and a crumbling floor. But to really get in touch with the allure that brought tens of thousands of people to make their way to those high-mountain towns; you could catch a touch of their gold fever just by poking around in the slag piles at the mouth of every mine hole. Even as I child, I could feel the urgent hope-against-hope that caused so many to suspend rational behavior for a thin dream about easy money.

In the space of about 10 years at the end of the 19th century, Cripple Creek grew to a city of 35,000 people. Victor’s story is similar and it grew to a population of over 18,000. Only a few people actually got rich in these towns; for the rest, it was usually a dreadful bust. So the fall of these mining towns was even quicker than their rise. Just like the homes being abandoned today, when the jobs disintegrated and the hope of wealth disappeared into someone else’s bank accounts, people just left.

The gold rush towns were built furiously fast because of the blind hope for heaps of money, not to enrich life with quality and beauty, and those priorities showed by the time I walked their empty streets with my young siblings. They were once big, sprawling towns with houses, barns, stores, saloons, and more (not many churches, though), but much of the physical evidence was completely gone by the early 1960’s, which was actually quite fortunate. The buildings were flimsy and mostly made of wood, and since they generally didn’t even bother with masonry foundations, thousands of buildings just moldered back to earth.

If you’re going to build badly, it’s best if the ruins are biodegradable.

As a young carpenter, I had all of this to think about as I drove nails into wood to build homes that couldn’t last. I’d seen flimsy buildings and the very same framing methods in the mining towns. What we did in building the tract homes wasn’t greatly different; they just had more finish materials to help hold them together. I tried to overcome the circumstances and do good work, but I couldn’t help but envision the fate I had seen in the ghost towns.

But what about the ruins? With all the concrete, plaster and synthetic materials, we’ve got a lot of cleaning up to do, or history will judge us pretty harshly. Like quality, ephemeralness ought to be a commitment.

Yes, adjust home loan value…

Yesterday, I wrote that I thought the Obama housing plan is inadequate because it only proposes to lower interest rates and doesn’t address the larger issue of adjusting principal, or the actual value of the asset. I was gratified to see in the New York Times this morning that their editorial board agrees with me about the deficiency in the plan:

The idea is to lower the monthly payment on a loan by modifying its terms, which is the right goal. The problem lies in the way loans will be modified. Mr. Obama’s plan emphasizes lowering monthly payments by reducing a loan’s interest rate, which certainly will allow many people to stay in their homes, in the near term at least. What it won’t do is make staying there a wise move. And it’s not the best way to guard against re-default.

A better way to lower the monthly payments for these people is to reduce the principal remaining on the loan. That way, the payments become affordable and, as equity is rebuilt, the borrower has both an incentive and the means to keep current.

They didn’t describe the mechanism for adjusting the principal, but went on to say that the new bankruptcy law may allow judges to make the modification for those who must go that route. Still, for many others, a fair adjustment based on an appraisal a few years from now seems to me still a reasonable approach.

However it’s done, doing something more is VERY important, as emphasized in the NYT editorial:

The Obama plan will make mortgage indebtedness more manageable, but ultimately the debt itself needs to be greatly reduced. The sooner we as a nation move in that direction, the better.

Housing plan falls short

I’m disappointed in the Obama administration’s plan to help troubled homeowners. The details were announced yesterday. I expected a more creative plan because it seems quite clear that stopping the foreclosures and stabilizing housing values are among the most vital ingredients for getting the economy on the road to recovery. The Obama plan will help, but I fear it won’t be enough to make the dramatic difference that’s needed right now. It does too little, not too much.

The problem is that while it focuses on reducing interest payments, which is good, it has no mechanism for actually readjusting the value of the home for which the payments are made. Our economic crisis was triggered by the convergence of ill-conceived loans and the precipitous drop in home value when the housing bubble burst. Suddenly, homebuyers were making payments on something worth far less than their total mortgage would indicate. Simultaneous with much of their personal net worth evaporating, interest payments readjusted upward, still reflecting the previous bubble value, but also leaving behind the original, deceptively low interest rate. So, struggling homebuyers are faced with two problems: high payments camouflaged in the sub-prime loan swindle and highly inflated loan values caused by market madness.

By only addressing one side of the problem, I don’t think enough homeowners will have the necessary incentive to continue making their payments. While the Obama plan will allow a large group of them to pay less per month, in the long run, they will still be buying something worth less than its ultimate cost. Despite the better interest rate offered in Obama’s plan, I think many people will find that continuing to pay while that disparity remains will be too discouraging, if not foolish.

In my earlier post, in which I proposed a simplified plan, I suggested that payments be reduced to one-third of income, and that the time period for the loan be extended beyond thirty years. This strategy is very similar to the Obama administration’s “Plan 2.” I too suggested a readjustment after five years, as does the Obama plan, but not of the interest rate specifically, but rather to a market-corrected loan value based on an appraisal to be done at the later date. By then, the appraisals should be neither inflated nor deflated by the skewed conditions of either the past bubble or the current recession.

In my proposal, I thought it would be best to reserve the housing recovery money to pay the difference on the loan values five years from now, helping both the lenders and borrowers in a fair manner. In the meantime, the payments would be more affordable and the homebuyers would have an assurance that ultimately their home would be correctly valued. The catch, of course, is that the homebuyers would have to remain in their homes and make the payments in order to eventually benefit in a real monetary way from government support. They’d have to give to get.

I’m sure there are complications to the solution my simple mind could conjure, but I had only myself alone in the shower, not a gathering of the nation’s top economists, with all the data and statistics at hand. I wish those guys had been bolder and more imaginative. The plan that will silence all the naysayers is the one that will work. This one doesn’t make me optimistic.

But I hope I’m very wrong.