
Landed (YC W16) on why teacher home-ownership is central to improving schools - lebanon_tn
http://blog.landed.com/teacher-homeownership-is-central-to-improving-americas-schools-3/
======
gregatragenet3
If they focused on home ownership for educators teaching medicine they could
achieve the trifecta! Markets in which government has decided 'everyone must
have this' and subsequently interfered/distorted until they've created
bubbles/crashes..

I'm pessimistic that encouraging anyone to take on more debt then they could
ordinarily obtain is a helpful thing in the long term.

The post talks about how educators find their rents unaffordable - how does
getting them out of an unaffordable rental into an unaffordable mortgage make
their situation any better? If anything it makes their situation worse.
They'll be locked into a mortgage for a house bought in a bubble. If they have
an opportunity to move for a better position or more salary they'll be unable
to do so.

~~~
jra6
I similarly struggle with that pessimism. I mentioned below that our primary
goal is to even access to homeownership across people who make similar
incomes.

A big component of housing-related credit is equity (ie. collateral). Many
parts of that dynamic are very rational -- having equity is a proxy for
financial responsibility (you know how to save money, or have access to other
people who don't mind occasionally gifting you equity). Having equity also
buffers the lender from loss when housing prices cycle, which is a very
important part of building resiliant financial infrastructure.

I think our high-level argument is that for a very specific group of people
(tenured employees) in very specific places (urban diversified economies that
are resistant to land bubbles), there is opportunity to push the edges of the
box.

~~~
monk_e_boy
What do you think of teachers who re-train and get a different job? Around 30%
of newly qualified teachers do this.

~~~
jra6
Our investment follows our educators regardless of what they do afterwards. I
do think that less educators would re-train if they had more financial
security in their chosen profession.

------
jra6
[One of the co-founders of Landed]. This post doesn't really talk much about
what we do. What we do is run down payment assistance programs for private
schools and public school districts to help their teachers become financially
secure near the communities they serve.

That's a mouthful! The economic problem here is that if you're a median wage
household in a city like SF, NY, DC, etc. you will struggle to save enough
money to make a conforming down payment while paying rent. Most of our
teachers get trapped in a cycle of their wages increasing at the exact rate of
their household expenses.

Homeownership in cities is not for everybody. But for those community members
who are making a very long-term commitment to a place with very predictable
salary schedules, locking in your housing payments is an important part of
your security. In the absence of rent controls (which we can talk about at
length on why they are often misguided), homeownership is the only form of
insurance on rising housing costs.

As an owner (especially in California thanks to Prop13), you can be protected
from the failure of all levels of government to build sufficient housing for
rising economic activity in cities.

~~~
greyhoundmatt
The fact that you are praising Prop 13, which is a large factor in the unequal
funding of schools and has exacerbated the exact problems that you refer to in
your blog post, is supremely​ troubling. I'd welcome a more in depth
explanation on your thoughts on Prop 13.

~~~
jra6
I think when I came to California, I shared your position on Prop13... namely
that it was a unnecessary market distortion that distributed wealth from the
new to the old that ultimately worked against the apparent intent of the
legislation (to make California more affordable).

I've sinced developed a more nuanced view. I believe Prop13 for owner-
occupied, primary residences is perhaps flawed, but something I believe two
reasonable people can disagree on (happy to explain more fully). I believe
Prop13 for anything else has absolutely no rational justification and needs to
be overturned at the earliest opportunity.

~~~
ScottBurson
I'll offer my view. First, I absolutely agree that it should have been limited
to primary residences -- extending it to rental and commercial property is
lunacy that wasn't even justified by the primary selling point (keeping fixed-
income seniors in their homes).

Secondly, I contend that the limit should never have been on the amount of tax
levied, only on the amount of tax that actually had to be paid in a given
year. The locality would receive a lien on the balance which would be paid
only when the property was sold. (The lien could also be capped at 1/3 the
selling price, to answer objections that it might become so large as to make
it uneconomic to sell the property at all. I suggest this because whenever I
float this proposal on HN, someone comes along and fixates on that
possibility, which is actually extremely unlikely; the market would have to
tank very severely for this cap to come into play.)

This way, fixed-income seniors could stay in their homes just as long as Prop.
13 allows them to, but localities would still get their money.

~~~
TulliusCicero
This is a brilliant solution.

------
bradleyjg
This post is a bait and switch. The title and first few paragraphs talk about
America, but all the analysis is focused solely on the Bay Area. No
justification is given for why the results for the Bay Area should be
generalizable for America writ large.

There's nothing wrong with focusing on the Bay Area, that's certainly a big
enough problem to tackle. But the title, graphics and first few paragraphs
should be changed to reflect that.

~~~
jra6
I don't disagree with your comment -- none of us are necessarily great blog
writers :).

I would say the way we think about this is that there is both a cyclical and
structural housing problem in American cities. The structural piece is that:
1\. there is a limited supply of land in near proximity to economic
opportunity -- most of this land is concentrated in cities. 2\. cities need a
wide variety of people to live in them to function properly. 3\. even if we
paid all of those people a median wage, the median person will struggle to
accumulate significant wealth while paying rent. 4\. the banking system cannot
be expected to take low down payment risk without making the entire system
vulnerable to another housing crash. 5\. therefore if no 3rd party equity
exists, then the only people that will be able to acquire any land holdings
will be the sons/daughters of those with existing land holdings
(intergenerational wealth transfers)

~~~
wbl
And this isn't a problem if cities permitted adequate housing growth and
goverments didn't encourage detached single family homes in urban areas with
massive subsidies.

------
futun
Be very careful of the word "home ownership". It means different things to
different people.

Much like the weasel-word "affordability" (which means better access to
credit, and not cheaper prices) "home ownership" means "mortgaged, bank-owned
properties". Both terms mean debt slavery and a preservation of the status quo
(ie: property owners stay rich. buyers, mortgagers and prospective buyers
remain poor).

What is needed is cheaper housing.

Not "affordability" or easier-to-access debt.

The way to get cheaper housing is to destroy housing as an investment class.
And the way you do that is by taxing 2nd and 3rd properties at increasingly
higher rates.

~~~
esoterica
> And the way you do that is by taxing 2nd and 3rd properties at increasingly
> higher rates.

And then those taxes end up getting passed on to renters, who are on average
poorer than their home-owning counterparts.

~~~
dimva
This would be the case in an efficient market, where the risk-adjusted
economic profit of renting out homes is close to 0. This is not the case
because San Francisco artificially restricts supply of housing. This causes
rents to be determined solely by (small) supply and (large) demand. Increasing
taxes would not decrease supply of housing or increase demand for it, so it
would just serve to decrease the excess economic profits landlords are making.

~~~
cmdrfred
You can't really say that without knowledge of how high those additional taxes
would be. If the costs rise to the point that a reasonable profit for the
level of risk involved can't be made then prices would certainly have to rise
irrespective of demand. I suspect given the nature of ever rising taxation in
most municipalities that introducing this tax even in a modest form would
increase perceived risk[0] of property ownership enough to increase average
rents.

[0]If the cost of an unoccupied property or a nonpaying tenant goes up, rents
will likely go up in response.

------
jedberg
I live in the Bay Area and my wife is a teacher. I know a lot of Bay Area
teachers. And the ones that live anywhere close to the school they work at are
all married to engineers, without exception. That's the only way they can
afford to live near school.

~~~
jra6
You certainly have to be a dual income household to have a chance of making it
as a teacher in the Bay Area. That said, educators in Mountain View are paid
reasonably well ($80,000 - $130,000). Two educators can still afford to buy a
home reasonably close to Mountain View, they just can't save money fast enough
for a $200,000+ down payment while concurrently paying rent.

One of the first homes we did was a principal in Oakland. He was just able to
make it work on a single income.

~~~
monk_e_boy
If you could wave a magic wand to fix housing for teachers, what would the
solution look like?

~~~
jra6
In California, I would eliminate Prop 13 for landlords (which would increase
teacher salaries 20%-30%). To me, that's a no-brainer. The other no-brainer is
decreasing political barriers to additional density.

Everything else requires trade-offs. \- If you allow educator salaries to
track property values instead of CPI, you create massive inequities between
school districts. Maybe a regional inflation index that includes housing
costs? \- If you raise salaries, you have to raise taxes. \- If you build
teacher-specific housing, you're just passing the buck to the next profession.

Regardless of all the above, I think you'll need mechanisms for people to
share the investment risks of expensive land ownership. I'm not sure mortgage
insurance is the best mechanism -- hence Landed.

~~~
gm-conspiracy
"If you raise salaries, you have to raise taxes"

This is not necessarily true, as the assessed value of all land in the area is
"increased", additional tax revenue is gained without "raising" taxes. As
assessed values fall, the chances of a budget shortfall increase.

To me, increase density as a solution to affordability, is as effective as
adding additional highway lanes to reduce traffic congestion.

------
clairity
from a purely capitalistic perspective, i can understand that providing
financing of this sort could be of some economic value, but i worry that it
simply continues to exacerbate wealth disparity by funneling more money to
already wealthy financial institutions under the guise of helping teachers and
children.

rather than this type of roundabout financing, the economics can be
straightforward: school districts in wealthy areas should just pay their
teachers more. and it sounds like they are, at least in some districts,
according to co-founder jra6 elsewhere on this page: "...educators in Mountain
View are paid reasonably well ($80,000 - $130,000)...".

even so, the idea that teacher homeownership is the central problem for
schools is quite a stretch. poverty and a dozen similar issues are much more
likely the central problems for schools, not teacher homeownership.

~~~
jra6
I don't disagree -- I definitely struggle with this. The problem we are
solving shouldn't exist. We should live in an society where people with equal
incomes should have equal access to credit.

The reality is though that intergenerational wealth transfer are the primary
way people acquire the necessary equity to buy homes (they get help from Mom
and Dad). So I think you need both... both higher incomes, and mechanisms that
create intermediary stages being renting and owning.

And on being a stretch, don't disagree. I feel the incentive is to be
provocative beyond reasonableness, so apologize for that! Public schools in
America are suffering death from a thousand cuts. I will tell you though that
when urban school turnover (largely as a result of rising housing costs) is
now up to 25%/year... it becomes your primary issue pretty fast.

~~~
bkohlmann
Are intergenerational wealth transfers the primary means to down payments
across the Bay Area or the US? The latter doesn't comport with my friends
experience, but I'm always easily persuaded by hard data. Any references?

~~~
jra6
The hard data is piss poor. It's largely self-reported data collected by media
agencies. Just google "Bank of Mom and Dad", there are lots of poorly done
studies. This one is okay:
[http://paa2005.princeton.edu/papers/51443](http://paa2005.princeton.edu/papers/51443)

The reason it's poor is because everyone has an incentive (bank, broker,
parents, you) to under-report the parental funds. Parents send the gift money
in advance (3 months to be exact), banks look the other way to meet equity
requirements and the transaction takes place.

------
ada1981
I appreciate the effort here, but in general I don't think more fine grained
mechanisms of offering selling debt to the lower classes is going to help long
term.

Perhaps if you put upper limits on the assets of the people who can invest,
but that seems unlikely.

Also, home ownership tends to be one of the "liabilities disguised as assets"
that middle / upper middle class people love to buy.

Since our economy appears to be heading towards a post labor society with a
massive divide between rich and poor, what exactly is the utility of educating
kids to work in an economy that won't exist?

Seems to me the core skills we ought to help facilitate are creativity,
maintaining an authentic self, emotional and Relational mastery, cooperation /
democratic citizenry, permaculture, eco-regenerative architecture..

Instead of the industrialist model we have now, perhaps we ought to be
teaching them how to develop, integrate and share technology into eco-
regenerative housing and permaculture farms.

Use the education resources to purchase land, kids can help learn to build and
work cooperatively along side adults, in a democratically run community.

You provide cool tiny-homes to anyone who needs them. And build them together,
learning all sorts of great skills as you go along.

I am adivising & working on 2 such pilot projects in Costa Rica right now with
a group of accomplished intellectuals (some of whom you may know). Costa Rica
was chosen for a number of reasons including climate, mental health of
population and a lack of a standing military.

We aim to develop a globally connected network of such projects in a neo-
tribal model that fits with the emergent archaic values as post-modernism
gives way to a more holistic and connected world.

Happy to invite any of you down to check out the property if you like,
anthony+cr at 175g . com

Ps, I hope Landed helps some people, at least in the short term, and also that
there passion to serve underserved populations with integrity continues no
matter the success / failure of this particular manifestation.

~~~
sudosteph
Cool tiny homes with electricity and running water, I would hope? Because if
not, it sounds like you're just advocating for families to live in poverty and
have their children work on farms instead of attending school. Which sounds a
bit... backwards.

I mean, the idea of a commune is hardly a new one. Socialists and religious
folk have been at that game for a while, so I wonder how you think plan to
differentiate meaningfully.

Also, > a neo-tribal model that fits with the emergent archaic values as post-
modernism gives way to a more holistic and connected world.

Holy cringey buzzword mashup Batman! Sounds like the market appeal here is for
the vaccine-denier crowd. I don't think many people here would agree with
"archaic values" being an innately good thing. I read that sentence and I can
only think of the short, brutal lives human beings experienced during the era
of tribalism. Not of something holistic and connecting.

I'm also a bit amused that you say you chose Costa Rica for it's "lack of a
standing military". I worry that might be interpreted in a less-than-positive
way by the government there.

~~~
ada1981
The idea of an archaic revival is the return to more connected communal living
with the best that technology has to offer. Our property in Costa Rica is now
the worlds largest permaculture farm and we also have high-speed fiber optic
cable.

I'd imagine the primary differentiator is that I'm advocating for one where
the founding values are best scientifically supported practices for health and
community vs. a religious text or cult leader.

"Holy cringey buzzword mashup Batman!" >> Check out Don Beck's work on psycho-
social development if you aren't familiar with the words / concepts.

Costa Rica is proud of its non-aggressive position and welcome other folks who
aren't interested in supporting a militaristic global agenda.

------
hanoz
Homeowner property wealth is a ponzi scheme, enriching early adopters and
money lenders at the expense of wealth generators - like teachers. Helping
people get on at bottom, while it may help them outbid their compatriots,
ultimately benefits the higher ups to the detriment of everybody else.

~~~
jra6
Land is like any commodity of fixed supply. It is increasingly valuable as
incomes and inequality grows. Until such a time that the supply/demand dynamic
in cities is significantly altered, it will be valuable (whether it is
properly priced is another matter altogether).

I guess I'd rather live in a place that has more distributed ownership of
land, rather than less :)

~~~
DesiLurker
No land is plenty, even in markets like bay area, its the schools that are
limited commodities. add to that various building restrictions and you have
perfect recipe for the mess SV is in.

I recall around 2006 Elizabeth warren did a study for most markets in US and
found for every single point deviation in school performance there was 2 point
deviation in housing cost. translation people are mortgaging themselves to the
hilt to get the best opportunities for their kids. commute is the second
factor. essentially people extend their commute till they can afford the
house/school.

------
HarryHirsch
But what do they actually do, and why do you need a startup to do it? Hanover,
NH has a housing price problem, but Dartmouth College offers subsidized
housing to its faculty. Why can't school districts do the same?

~~~
lnanek2
The blog post doesn't say, but if you dig through their site you eventually
find an explanation. Go here then click on "how it works":
[https://landed.com](https://landed.com)

No idea why the direct link to that is broken.

Anyway, it looks like, they pay your down payment, then take 25% of any profit
when you sell.

~~~
xrd
Fascinating. I'm curious if this will work, strong(er) incentive to not sell
and unlikely that a teacher will receive a sudden windfall permitting them to
move. But, maybe if they are a part of the success story of a neighborhood,
they can share the increase in their equity with Landed.com. I love the long
term bet that is happening here with this startup and their customers.

------
maerF0x0
Homeownership is a luxury, not a right. Its still within reach in many
locales. If the locals value education as a product they will bid it up.

I dont see how this isnt just the market telling educators they should go
elsewhere?

~~~
dcosson
> Homeownership is a luxury, not a right.

Why do we spend $100+ billion per year of tax payer dollars subsidizing luxury
purchases? (via the federal mortgage interest deduction)

~~~
toomuchtodo
That's chump change compared to the subsidies through FHA, Fannie Mae, and
Freddie Mac. The US government plays a direct role in subsidizing
homeownership _because it creates community cohesion_.

~~~
maerF0x0
someone cannot have community cohesion as a long term renter? Anecdata to
illustrate the point. A friend of mine and his family rented their home for
something like 20 yrs. It often makes sense to have people not buy. The
capitalization for a house can be long in the past, meaning that the cost vs
rent is very favorable to the landlord.

Similarly, the only reason to sell an asset is when you think you can make
more money on the equity elsewhere. If its true that the landlord can take
their equity elsewhere for a better return, maybe the renter (soon to be
owner) should be investing elsewhere?

Also, afaik young people are increasingly mobile, meaning they're going to be
giving a large portion of their equity (either downpayment or profits) to real
estate agents' commissions, banks closing costs, legal fees, etc etc.

if housing is not affordable, its probably because of artificially (or
temporarily) restricted supply.

~~~
toomuchtodo
The data doesn't agree with your anecdotes. Millennials will move out to the
suburbs just like their parents did to have a yard for their kids.

[http://www.curbed.com/2016/6/21/11956516/millennial-first-
ti...](http://www.curbed.com/2016/6/21/11956516/millennial-first-time-home-
trends-suburbs)

------
sna1l
When you click on how-it-works on the navbar from the homepage, it navigates
to the page as expected. But if you refresh then you get a 404. Looks like
there isn't a SSL certificate on the first load, but when you refresh or
navigate to the link directly there is ([https://www.landed.com/how-it-
works](https://www.landed.com/how-it-works)).

------
zazpowered
This is kinda like point.com right?

------
chrisseaton
Did you know I can't find a single link from this blog article to your
website?

Even the link at the bottom which says 'landed.com' actually links to
'blog.landed.com'! And then there's actually text that says 'www.landed.com',
which isn't a link! Why do you do this?!

It's brought up lots of HN and I can't believe people still do it. You've got
me reading your blog, but you aren't going to link to your website? Presumably
the whole point of the blog is to get people interested in what you're doing,
but you aren't going to link to it? It's madness!

Edit: actually there is just one - in the author's profile at the bottom.
There isn't one in any of the layout of the blog page, or the blog front page.

~~~
jra6
Shamefully poor tech competencies! Come help us! :)

~~~
bjterry
You should put your e-mail in your Hacker News profile so people can contact
you!

------
fiatjaf
This argument is so wrong in so many ways it will end being absolute truth
because no one can explain its full wrongness in less than 50 hours.

------
vogelke
Articles like this are embarrassing. Here's how to fix the schools:

1\. When a parent withdraws their kid from a school that's not doing the job,
the parent's money GOES WITH THEM to whatever other school they ultimately
choose.

2\. If any kid in any class disrupts the class and prevents anyone else from
learning, the teacher informs the principal. The principal says "Yes,
sir/ma'am, I'll take care of it", removes the kid from the room, places them
in a different room, and informs the kid's parents.

3\. If any kid in any classroom verbally threatens or physically assaults a
teacher for any reason at all, the kid is immediately expelled. Any lawsuit
over this by any parent is dismissed via lack of standing to sue, and the
parent pays the school's court costs.

Problem solved.

If you work at a school that can't seem to fire incompetent teachers, you'll
be out of business and good riddance.

If you teach at a school, your word is SCRIPTURE when it comes to a disruptive
or dangerous student. That means you have the last word about when or whether
a student is returned to your class, not the pricipal or the board or some
parent who can't discipline a kid.

If you're a parent and your little snowflake can't handle the concept of
"don't hit the teacher and don't start screaming in class", you are free to
educate him yourself.

~~~
djtriptych
This is wrong on many levels. Here are some problems.

1a. This policy favors parents who can pick up and leave a school (and ship
their kid somewhere else) if they're not happy with it. For low income
parents, school often doubles as day care and this may not be feasible.

1b. We are ignoring the reason why this school might be failing your kid.
Maybe it's a bad school. Maybe your kid has an undiagnosed learning
disability. If it's the latter, and we flood the hardest-to-teach students to
the best schools, what happens? In real life, schools have to worry about
composing teachable classrooms, and this policy is a great way to destoy that
balance.

2\. This policy, in practice, will likely prove to be both sexist and racist.
Boys are WAY more likely to disrupt classrooms especially at a young age. This
policy is a good way to segregate the sexes. Not that that's necessarily bad,
but certainly its an undeclared side effect. On the race front, black kids are
way more likely to be punished harshly for similar offenses as white kids. Who
determines what is disruptive and what's kids being kids? Why on earth you
think any (every??) teacher is qualified to make these distinctions is beyond
me. When you're talking about public dollars, this matters.

3a. Please show me a successful school where this policy is 100% implemented.
It's absurd. For teenagers, you are dealing with people at the most
emotionally volatile time of their life. Any school system should seek to
first serve the student, and this policy flatly fails that test. Also, why
just physical assault against teachers? What about physical assault against
other students? How about sexual assault? Hate crimes ok? How about libel or
slander? Kids, it turns out, will be kids. There's a reason we don't let them
vote or drive or buy guns. Zero-tolerance policies are unlikely to be
enforceable without devastating effects on outcomes.

3b. A 1-strike policy of expulsion for outbursts will guarantee a higher
dropout rate, which costs taxpayers (that's you) hundreds of thousands of
dollars in lost tax revenue over the dropout's lifetime. Still a great long-
term idea?

I could go on.

