Monday Feb. 20 was President’s Day in the United States – a national holiday meant to honor those who have served the highest office in the land.
Every year, the holiday seems to spark articles about the presidency, and this year was no different. One that was particularly interesting was a 24/7 Wall St. article that compared presidential candidate Mitt Romney to past presidents in terms of the wealth amassed.
And Romney, a Republican hopeful, has done plenty of amassing. It’s estimated that he has accumulated more than $200 million of net worth. He seems uncomfortable talking about his wealth, but it’s a subject that keeps coming up in this election season.
It’s true that Romney comes from a wealthy family, but he has said that he inherited no wealth from his parents, who gave money to charity and grandchildren when they passed away. He attributes his wealth-building instead to building businesses, the most prominent one a private equity firm that held stakes in some major corporations. He’s got an MBA from Harvard, and Romney has put it to good use on Wall Street. He’s easily among the “1 percent” of Americans we keep hearing about.
In fact, according to the 24/7 Wall St. article, if elected, Romney would be the second-wealthiest president ever. The article took the estimated wealth of all the U.S. presidents throughout history and translated their wealth into today’s dollars.
It might surprise you to learn that George Washington, the first president in the country’s history, was also the wealthiest.
What may or may not surprise you is what made old George – as well as some of the other early presidents – so wealthy.
Unlike Romney, Washington wasn’t a Wall Street wheeler-and-dealer. The article estimates that his worth was about $525 million, and it pretty much came from one thing: real estate.
Washington, it’s reported, owned five separate farms on a total of about 8,000 acres. His wife, Martha, contributed to the couple’s fortune after inheriting even more property from her father when he died. No question, the first First Couple was wealthy because of their property holdings.
The second-wealthiest president, according to the article, was the nation’s third president, Thomas Jefferson. His estimated $212 million net worth could be attributed largely to his 5,000 acres.
In fact, if you go down the list of the wealthiest presidents, most of them had large real estate holdings. And not all of them were among the founding fathers. Theodore Roosevelt, the 26th president, was third on the list with about $125 million, and although he came from a wealthy family, he did own hundreds of acres of valuable Long Island land.
It would seem that even among those presidents who didn’t necessarily MAKE their fortune with real estate, most of them nonetheless wound up with considerable real estate portfolios.
There is a caveat to the list, too: John F. Kennedy, who was assassinated in 1963, never received his family inheritance. Had that occurred, he would have gained an estimated $1 billion in today’s dollars, which would have made him the wealthiest president of all time.
There might be a couple of lessons in all of this. First, it sure seems that being wealthy is a pre-requisite to becoming elected president. Secondly, the list of the wealthiest presidents is a reminder that real estate has long been a source of wealth for the wealthiest and most powerful people in the history of the United States.
Unless you were vacationing on a remote tropical island somewhere, you probably heard about what happened on February 11.
Singer Whitney Houston was found dead in a hotel room. She was 48 years old.
If you know anything about her – and if you didn’t but watched the news at all when she died – you know that she was a talented but troubled musical artist. It seems there are all too many of those throughout history: Elvis Presley, Jimi Hendrix, Michael Jackson, and Kurt Cobain, to name a few.
It’s enough to make you wonder if there’s a correlation between being super-talented and troubled. Whitney’s troubles included domestic violence and substance abuse. Her disheveled appearance and reported erratic behavior in recent years made her death, even at such a young age, shocking but not surprising. People mourned her death as soon as it was announced, yet there were “Yeah, buts” everywhere.
But you know what? As soon as all the networks and websites started airing clips of her singing the Star Spangled Banner at the Super Bowl in 1991, you stop with the “Yeah buts.” The woman opens her mouth and the sound that comes out of it makes everybody’s jaws drop. You listen and you realize that so very few people on earth can do that. The voice comes out, and you forget about the volatile marriage and the drugs. You are in awe of the talent. The rest melts away.
Maybe it’s sad that it takes someone dying before we all appreciate what talent they possessed when they were still with us. I prefer to think that early death provides the necessary jolt we need to see what’s around us. Sometimes, you have to stop the car to see the view for what it really is.
Now, cynics will say that society has a problem with what happens when famous people die young. Their lives are extinguished early, they might say, and people react as though death absolves them of their poor behavior in life. Michael Jackson comes to mind, as his death seemed to obliterate the memory of child-abuse allegations.
But famous people die all the time. And not every one of them is remembered or paid tribute to in the same manner. Fame alone is not a legacy. Talent is the legacy.
It’s important to remember that. So many people spend their time on this earth hoping and waiting for their big break. That stroke of luck that will make their lives more meaningful. They utter phrases like “I’d rather be lucky than good.” But being good is the quality that rises to the top.
Whether it’s at your career, your family life, your business or anything else, your talent is what defines you. Developing your talent is what should be expected of you, not being in the right place at the right time, or being “good enough” to get by at something. And being lucky instead of good is just hogwash.
The nice thing is that you can work on your talent. You can get better at what you do, improve, learn, grow in whatever it is your talent happens to be. You can’t work on luck, and in that regard alone, luck pales in comparison. You control what you do with your talent; you can’t control the good-fortune/bad-fortune part of the equation.
Maybe that’s what happens to the supremely talented who are found dead in hotel rooms at relatively young ages. Maybe they are so immersed in their talents that the bad fortune they can’t control gets the better of them. It’s sad, but in the end, it’s STILL their talent that’s their legacy.
So few people, when their time ends, are remembered as the best at what they did. But as Whitney’s death reminds us, being the best is what even the most troubled talents are remembered for. So shouldn’t that be what we all strive for?
Nobody remembers lucky. Everybody remembers greatness.
If you happen to know any home builders, you might know that they’re not as busy as they were five or six years ago. Last year, in fact, was a very slow year for new homes.
Recently, however, home builder sentiment picked up. On average, builders across the United States are more optimistic about the market now than they’ve been in over four years.
I had a conversation recently with someone in the home building industry, and he said that builders have held on to land even if they’re not building homes on it. This is different than how the business typically goes, as in a normal market, the carrying costs of holding the land have traditionally make it less profitable to buy, build and sell.
Builders, the man said, are waiting now for demand to become stronger before they build new homes on land they have. They do, however, expect to be busy when demand returns. It was interesting that he added demand WILL return because, he said, “homeownership still matters to people.”
It would be hard to find a real estate professional who wouldn’t agree; just about everybody in the business believes that homeownership matters, or else they wouldn’t be in the business. Sometimes, though, it’s hard to remember that as homeownership rates dip below normal levels, as they are now.
But even as homeownership rates are lower than normal, surveys indicate that people do still want to own homes. In fact, it’s often the sentiment of an overwhelming majority of people who respond to the surveys. Homeownership does still matter.
It matters in part because for most, it still remains part of the “American dream.” The real estate bubble and financial crisis might have blurred the vision of white picket fences and pies cooling on window sills, but the vision is not obliterated.
Why? Well, aside from the kind of intangible “pride of ownership” feelings that have always been used so frequently, there are still kids who need yards to play in, and solid school systems to attend. There is still a recognizable feeling of community in neighborhoods that are full of homeowners. There are still tax deductions to be had, improvements of your own to make, and the “forced savings” that paying down a mortgage and gaining equity provides.
If anything, the real estate bubble was caused by a heightened attitude that homeownership was a get-rich-quick vehicle, fueled by rapid appreciation and the ability to cash out equity almost at will. Those things aren’t so present in most markets today, yet the attitudes of people toward homeownership haven’t seemed to waver much.
In other words, dollar signs might have contributed to a spike in ownership that was above normal levels – nationwide it peaked around 70 percent – but it’s the other things that have remained that make people continue to believe in the concept of being a homeowner.
And even after the foreclosures and price drops, the majority of people surveyed still describe buying a home as a good investment. Which means that even though the idea of quick money that drove up the homeownership rate is gone, it’s not as if people are saying that buying a home is a bad investment. The reality is that it’s still a good investment, but financial reasons aren’t the only things driving attitudes about homeownership’s benefits.
And that’s the way it should be.
Homeownership does give you certain freedoms. It does allow you to plant your roots in a community you choose. It, as corny as it sounds, does provide a sense of pride and sharing in the American dream for many people.
In the words of the man in the home-building industry, homeownership does still matter to people.
Since the peak of the housing boom in the United States in 2006, home sales have declined. Despite low interest rates and affordable home prices the volume of existing home sales has been relatively sluggish, and new home construction has been way down.
One of the most-cited reasons for the low sales volume has been lenders’ tightening of qualifying standards for home loans. Recently, data have been analyzed to show that, in general, banks require higher credit scores and more documentation for home loan applicants now than they did prior to 2006. Unfortunately, as I have I have written before, that’s kind of like closing the barn door after the horses have gotten out.
At the same time, it might be a necessary inconvenience.
Truthfully, I thought that by now, mortgage lending would have loosened a bit. By now, the market should have become more normalized, and banks would have sorted out their previous messes and would want to start lending again. That’s what they need to do to make money.
Instead, there is less money to lend. The ability of financial giants to package mortgages into instruments that investors could buy has all but dried up. The federal government now backs the overwhelming majority of home loans, and the drying up of that private secondary market has led to a limited amount of money for homebuyers to borrow. With less money to lend, is it any wonder that banks are being more careful about to whom they lend it?
At the same time, lenders are being pressured by the government to reduce principal balances on bad loans they’re already carrying. Many of the nation’s largest lenders are in talks with states’ attorneys general over billions of dollars in possible settlement money to homebuyers. The same banks are now under renewed scrutiny for their foreclosure practices. All this while they battle the public perception that they were undeservedly bailed out by taxpayers.
So is it any wonder that they’ve done away with a lot of the mortgage practices that go them – or others in their business, now out of business – in hot water in the first place? If making a bunch of loans to people with credit scores of 500 and no documentation of their income, no verification of their ability to pay, was the problem, doesn’t it make sense to not make the same mistake?
As much as more careful lending has been a part of what is a slower housing recovery than many would like to have seen, is it such a bad idea to make sure the same kind of crash doesn’t happen again? Could you imagine, for example, what would happen if sub-prime loans became all the rage again? What the damage would be a few years from now if banks just started passing out money again to make the recovery faster now?
If banks were to sacrifice their long-term security just to make some short-term gains and had to be bailed out again, there might be a taxpayer revolution!
And if you think about it, tighter standards actually protect the borrower, too. Many people bought homes they couldn’t afford during the bubble, when no standards were around to tell them they couldn’t afford it. Look where those buyers are now.
In the short term, tighter standards might be uncomfortable. But in the long-term, they are probably a good thing.
That said, it’s not as if it’s impossible to get a loan these days. It takes a good credit score – in most cases upwards of 700 – and required documentation of income. Does that sound so crazy? Actually, it’s what it used to be like, before the crazy appreciation of the bubble years caused standards to fall by the wayside.
The danger is assuming that you can’t get a home loan just because you’ve been hearing that. That’s not the case. If you have a steady income, have been in the same career for a while and have good credit, you don’t even always need 20 percent down. The word that banks aren’t making loans to anybody is a myth.
But the fact that they’re not making loans to just anybody isn’t a bad thing.
