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If they focused on home ownership for educators teaching medicine they could achieve the trifecta! Markets in which government has decided 'everyone must have t

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 10y ago
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 10y ago
  What do you think of teachers who re-train and get a different job? Around 30% of newly qualified teachers do this.
  - jra6 10y ago
    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.
  - douche 10y ago
    Going into even more debt for a second degree is a dangerous decision. I'd hope that they retrain for a career that at least has the potential for paying them a wage that would make them financially independent. I know too many people in my generation who didn't take such prosaic economic considerations into account until it was too late, and are staring down the barrel of a couple hundred k in student loans in their late twenties.
- gregatragenet3 10y ago
  Still don't understand how this helps - moving someone from a financially-straining rental situation, where their obligation is a year (or if forfeiting their deposit - a couple of months) into a financially-straining mortgage situation where they are locked in for ~30 years, and taking on additional financial risk. I spent 30sec or so w/ craigs, zillow, and a random mortgage calculator - and ran numbers for an example area, santa clara. Monthly it would be cheaper to rent then making a mortgage payment. Summarizing what I saw on the site - It looks like it is structured as a 0% loan (to cover 50% of the mortgage down payment) with a 10 year term. An additional aspect of the deal is that 25% of the gain/loss when sold is shared w/ Landed. There seems like there's high risk of default when the home is foreclosed, or the educator sells at a loss and doesn't have the cash for repayment. But not an insurmountable problem unless there's a housing downturn. And even then, that risk can be mitigated by having a few good lobbyists to ensure there's another TARP program. Sorry.. got a little sarcastic by the end of the paragraph. I'm not saying you won't be successful. Providing debt to people has probably been the best way to make money in the last 100 years! But I question the premise that it is in a low-asset-individual's interest to convert from rental to 'ownership'. And not specifically in your case - but in general. I don't believe the dogma that it is in the best interest of all (or most) individuals in all (or most) situations to take on the debt to buy a house.
milesrout 10y ago
Agreed - if you can't get enough high-quality teachers because they can't afford to live in an area, raise salaries until you have enough high-quality teachers that can afford to live in the area.
snarf21 10y ago
Yeah, this is a ridiculous treatise. My mom taught 2nd grade for over 30 years and trust me, teachers buying houses is not what is wrong with education. Like most things, if you want better employees, try paying them more. The problem is that most school districts are already upside down so they want to pay as little as possible and cut costs. We really need to get rid of tenure but given the current climate, all teachers would be fired after five years to hire new graduates. We need a complete system overhaul. Helping teachers get loans in super expensive markets doesn't fix our problems and I agree with you that it actually makes it worse.

jra6 10y ago

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 10y ago
What do you think of teachers who re-train and get a different job? Around 30% of newly qualified teachers do this.
- jra6 10y ago
  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.
- douche 10y ago
  Going into even more debt for a second degree is a dangerous decision. I'd hope that they retrain for a career that at least has the potential for paying them a wage that would make them financially independent. I know too many people in my generation who didn't take such prosaic economic considerations into account until it was too late, and are staring down the barrel of a couple hundred k in student loans in their late twenties.
gregatragenet3 10y ago
Still don't understand how this helps - moving someone from a financially-straining rental situation, where their obligation is a year (or if forfeiting their deposit - a couple of months) into a financially-straining mortgage situation where they are locked in for ~30 years, and taking on additional financial risk. I spent 30sec or so w/ craigs, zillow, and a random mortgage calculator - and ran numbers for an example area, santa clara. Monthly it would be cheaper to rent then making a mortgage payment. Summarizing what I saw on the site - It looks like it is structured as a 0% loan (to cover 50% of the mortgage down payment) with a 10 year term. An additional aspect of the deal is that 25% of the gain/loss when sold is shared w/ Landed. There seems like there's high risk of default when the home is foreclosed, or the educator sells at a loss and doesn't have the cash for repayment. But not an insurmountable problem unless there's a housing downturn. And even then, that risk can be mitigated by having a few good lobbyists to ensure there's another TARP program. Sorry.. got a little sarcastic by the end of the paragraph. I'm not saying you won't be successful. Providing debt to people has probably been the best way to make money in the last 100 years! But I question the premise that it is in a low-asset-individual's interest to convert from rental to 'ownership'. And not specifically in your case - but in general. I don't believe the dogma that it is in the best interest of all (or most) individuals in all (or most) situations to take on the debt to buy a house.

milesrout 10y ago

Agreed - if you can't get enough high-quality teachers because they can't afford to live in an area, raise salaries until you have enough high-quality teachers that can afford to live in the area.

snarf21 10y ago

Yeah, this is a ridiculous treatise. My mom taught 2nd grade for over 30 years and trust me, teachers buying houses is not what is wrong with education. Like most things, if you want better employees, try paying them more. The problem is that most school districts are already upside down so they want to pay as little as possible and cut costs. We really need to get rid of tenure but given the current climate, all teachers would be fired after five years to hire new graduates. We need a complete system overhaul. Helping teachers get loans in super expensive markets doesn't fix our problems and I agree with you that it actually makes it worse.