Internal strife hitting NAHB

After losing some fairly large political battles on Capitol Hill, the nation's home builders are looking for someone to blame, and in those cross hairs is the National Association of Home Builders, or the NAHB.

There's a very interesting post over at HousingCrisis.com, run by Big Builder editor John McManus, discussing some internal strife between larger and smaller members of the NAHB. John also discloses parent company Hanley Wood's relationship with the NAHB (Hanley Wood got its first big break contracting with the NAHB to publish Builder magazine, which is sent to all members). I also used to work for Hanley Wood's Market Intelligence division and have spoken at the magazine's Big Builder conference, so I've known John for a few years.

In a nutshell, the difference focuses on larger builders pursuing their own agenda -- chiefly an extension of carrying back tax losses from 2 to 5 years -- separate from the NAHB. Since the largest builders account for well less than half of all new home sales, smaller builders are contending that if large builders are encouraged to dump their land holdings for a loss -- which was rampant in 2008 -- then that drives down the price for all land, including theirs. This issue could potentially split up NAHB members into two camps -- those with high volume, and those without.

Given that builder members are charged for membership based on the number of homes they build, the larger public companies can often provide a significant chunk of an chapter's revenues. Has the time come for these behemoths to simply take their marbles and go elsewhere?

From the post:

For the moment, the battle for more substantial stimulus measures has run its course.

Now, it seems, some of them are going after each other. For, in the wake of the charged, 24/7 lobbying blitz that concluded with Congressional reconciliation of a $790 billion stimulus bill on Friday, Feb. 13, second-guessing and defensiveness have flared up, opening up chronic wounds among long-polarized parts of the industry group.

This week, National Association of Home Builders leadership broadcast to its 200,000 members an aggressive defense of its strategies and its record of effectiveness among elected officials and new Adminstration policy-makers.

At the same time, the trade group distributed a series of documents and has them posted on the members-only pages of the nahb.org Web site that appear to try to rally member support amid a divisive exchange with a small but powerful part of the home building universe–high production builders.

The documents chronicle a controversy whose most recent focus is a scrap over whether net operating loss carry backs would be extended. It’s an issue that home builders have been fighting for among elected officials practically since many of them started reporting quarterly losses in the second half of 2006. But this latest go-round has had a particular sting to it...

Click here for the rest of a very intriguing post.

12% of all mortgages and 48% of sub-prime mortgages in default

I'm still waiting for a perp walk of those people who were responsible for the sub-prime debacle, because they had to have known how these loans would end -- badly. According to an AP story, 48% of adjustable-rate, sub-prime mortgages and 12% of all mortgages are in technical default. But now the pain has spread to people who can't pay because their lost their jobs as well as those who bought more home than they could afford:

A stunning 48 percent of the nation's homeowners who have a subprime, adjustable-rate mortgage are behind on their payments or in foreclosure, and that's not the worst of it, new data Thursday showed.

The reckless lending practices in states like Florida, California and Nevada that were the epicenter of the housing crisis are no longer driving up the nation's delinquency rate. Instead, the foreclosure crisis now is being fueled by a spike in defaults in states like Louisiana, New York, Georgia and Texas, where the economies are rapidly deteriorating and thousands are losing their jobs...

A record 5.4 million American homeowners with a mortgage of any kind, or nearly 12 percent, were at least one month late or in foreclosure at the end of last year, the Mortgage Bankers Association reported. That's up from 10 percent at the end of the third quarter, and up from 8 percent at the end of 2007...

The news comes a day after the Obama administration kicked off a new program that’s designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.

Borrowers, however, are being advised to be patient in their efforts to get help because mortgage companies are likely to be flooded with calls...

Meanwhile, debt-strapped homeowners unable to afford their mortgages could get their monthly payments lowered in bankruptcy court under a controversial element of President Barack Obama’s housing rescue plan.

The legislation is part of a broader housing package scheduled for a House vote Thursday. It’s the toughest piece of Obama’s efforts to prevent foreclosures — a stick to go with the many carrots he is offering the mortgage industry to help borrowers afford their home loans.

Former KBHome CEO Karatz indicted with fraud

Former longtime KBHome CEO Bruce Karatz, who helped build the public company into one of the county's largest home builders before stepping down after a scandal related to back-dating stock options, has now been indicted by a U.S. Attorney's office on fraud charges. From a Yahoo! Finance story:

The U.S. attorney's office says the former chairman and CEO of KB Home has been named in an indictment charging him with conspiring to defraud the homebuilder and shareholders through a stock option backdating scheme.

The U.S. attorney for the Central District of California said Thursday Bruce Karatz faces several counts of mail, wire and securities fraud and making false statements in reports filed with securities regulators.

Prosecutors also accuse Karatz of concealing the scheme to inflate the value of his stock options from an internal investigation.

Karatz stepped down in 2006 after it was disclosed that he benefited from favorably dated stock option awards.

He settled civil charges of backdating stock options in September.

Inman News suggests 10 ways to reform buying/selling of real estate

The editors of the real estate news site Inman News have introduced a list of 10 suggested reforms for residential real estate. I happen to think these are all very interesting, but of course those who've learned to game the system in their favor are already writing in with howls of protests. There are LOTS of things to be fixed in this country, and I think it's courageous of Inman, which depends on tens of thousands of subscriptions from real estate brokers' Web sites, to at least start a dialogue.

From an editor's note: Inman News has compiled a list of 10 reforms for the real estate industry. The list incorporates ideas shared by readers in our Roadmap to Recovery project, in which we asked you for your input. We were overwhelmed with the response. The compilation below is our best effort to summarize these reforms.

The suggested reforms are listed below -- in order to read the full posting you need to have a subscription to the site:

1. Create a more effective regulatory framework for real estate and mortgage professionals.

2. Reform the mortgage origination process.

3. Promote a more efficient real estate industry, reducing costs and promoting services that favor the consumer.

4. Ensure competition and transparency in the way real estate agents are compensated.

5. Consolidate MLS information into a single national database.

6. Real estate professionals should provide buyers and sellers with vastly improved market analytics.

7. Reform the mortgage securitization process.

8. Reduce settlement services costs, regulate bundling of services to prevent price gouging.

9. Ensure affordable housing, smart development.

10. Remove barriers to alternative business models.

The impact of half-finished projects in California

One primary reason I've been banging the drum that there just wasn't enough proper due diligence done on new home projects during the boom (or what was done could be considered fraudulent due to the manipulating of data leading to patently false conclusions) was the impact on these half-finished projects to surrounding neighborhoods.

Whether in Hollywood, Oakland or out the suburbs of the Inland Empire, everyone suffers for the actions of relatively few people. And while many projects were ceased simply because of a lack of funding, some should never have been built in the first place due to lack of demand at the price points required to buy the land. From an L.A. Times story:

Nearly 250 residential developments with a combined total of 9,389 houses and condominiums have been halted in California, according to research firm Hanley Wood Market Intelligence. The units, worth close to $3.5 billion, were in various stages of development.

Now, many are in bankruptcy or have been foreclosed by lenders. Developers have halted sales on an additional 370 new-home developments -- about 30,000 units worth $11.9 billion...

In Hollywood, a chain secures a seven-story building still sheathed in yellow insulation panels and surrounded by steel scaffolding.

The Madrone condominium and retail complex at Hollywood Boulevard and La Brea Avenue had been scheduled for completion this spring.

But the developer, John Laing Homes, stopped answering its phones weeks ago and on Feb. 19 filed for Chapter 11 bankruptcy protection.

Across the street, Tony Boon worried about the effect on Pink Pepper, a Thai restaurant he manages. He had hoped that residents, shoppers and employees at the complex would stop in for meals. Now his customers gaze out on the stagnant site.

"It should have been a beautiful building, but it's just kind of an eyesore," he said...

On the edge of Old Pasadena, the Pasadena Athletic Club and an office building on Fair Oaks Avenue were demolished to prepare for a six-story hotel, condominium and retail project. Work halted last year when financing fell through, the developer's attorney said.

The dirt lot sits empty, surrounded by a chain link fence and green plastic netting.

In the Lincoln Heights neighborhood of Los Angeles, the contractor stopped work more than a year ago on Fuller Lofts, a $20-million transformation of a 1920s-era Fuller Paint warehouse into condos on San Fernando Road.

The developer, Livable Places, has gone out of business and blames high construction costs, tightening credit for home buyers and a glut of competition...

Of course no one ever says, "We really didn't know what we were doing. Our timing, prices and sales assumptions were all 100% guesswork." Such honesty would be refreshing!

Click here for full story.

Commercial renters now worrying about defaulting landlords

For awhile now, I've been warning would-be renters of homes and condos to do some of their own sleuthing to make sure they won't get a knock at the door in the middle of the night from a Sheriff armed with orders to vacate the premises. If a deal is good too good to be true -- such as a four-bedroom home renting for the same or lower price as a typical two-bedroom apartment -- then perhaps additional research is warranted.

Now it seems that tenants of office properties are starting to wonder about the financial strength of their own landlords. From a story in the New York Times:

Office landlords have always scrutinized the financial stability of prospective tenants, but now they are finding themselves under the lens.

Prospective tenants are asking for financial statements from landlords, hoping to avoid companies that might default on their mortgages and leave tenants at risk of losing the space. Tenants are also more wary of subleasing space, and are tending to flock to buildings with stable owners...

During the recent era of cheap money that led to the real estate boom, many investors bought their office buildings at high prices with extensive debt, hoping to flip the building quickly. Some landlords calculated their cash flow too optimistically, intending to lease poorly performing office buildings at high rents to maximize their profit, and are having trouble paying their debt, in some cases falling behind on payments...

Marisa Manley, president of Commercial Tenant Real Estate Representation, said there are reasons for an office tenant to worry about a landlord’s losing the building. Money given by landlords to tenants to customize their office space, generally paid as an allowance over a period of time, could be lost, and in the current market, brokers said that money from landlords could be equivalent to $70 a square foot. Also, services in the building could deteriorate, Ms. Manley said.She suggested that tenants demand that landlords offering tenant improvements put the funds in escrow or in a letter of credit, which means they could not be seized in a bankruptcy proceeding...

What will the Boomers' loss of wealth mean to the building industry?

With 401k balances reduced by up to 50% or more and housing prices down by 30% to 40% in many markets, most Baby Boomers find their current wealth to be far less than it was just a couple of years ago. So what will that mean for their retirement plans -- including moving to other areas? A story at BuilderOnline.com tells more:

Many baby boomers who contemplated easing into retirement may now find themselves in far more precarious financial straits in the wake of a collapse in the value of homes that, for a sizable number of boomers, were their primary nest egg.

A new study by the Washington, D.C.-based Center for Economic and Policy Research (CEPR), attempts to quantify how much of boomers' wealth has been severely eroded by the double whammy of plunging house prices and stock values, potentially leaving them little to retire on other than Social Security and other government-funded benefits. The study's findings raise questions about the wisdom of fiscal policies attempting to reduce those benefits, and challenges notions about homeownership being the most effective way to accumulate wealth, given the propensity of housing bubbles...

The median wealth of 55 to 64 year olds in 2004 was $315,400. CEPR projects that this wealth will fall to $168,800 in 2009, or to $143,200 in the worst-case scenario. The average wealth drop would be 29% to $708,000. Even at the top wealth quintile, the average falloff is projected to be 25% from $3.8 million.

The 45 to 54 year old group is generally less affluent to begin with, so the hit it has taken from the downturn in the housing market is starker. The study projects the median wealth of this group will erode by 41% to $101,800 in 2009. In the worst-case scenario, the decline would be more than 45%. This group's average wealth will decline 36% to $408,500, with the losses in scenarios two and three notably larger. For example, in the second scenario, median net wealth in 2009 is $94,200 (a drop of 45 percent) and the average net wealth is $387,900 (a drop of 39 percent).

This age group's median equity in real estate was $83,600 in 2004, but that's fallen drastically since. For instance, in the first scenario, median real estate equity in 2009 is projected to be $27,100—a drop of 68%—while in the third, median equity is projected to be only $6,600, or a loss of 92%. The projected decline for 55 to 64 year olds from their 2004 equity median of $142,000 will range from 47% to 63% in 2009.

The wealth of baby boomers could be further compromised when they are trying to sell their houses. The CEPR study states that only 2.6% of 45 to 54 year olds had less than 6% equity in their primary residences, meaning they'd have to bring cash to a closing when selling their homes in 2004. This year, however, 17% to 28% of each wealth quintile (depending on which they fall into) would need to bring cash to close a resale in 2009. Even households at the top of the wealth ladder won't be immune: In 2004, no households in the top quintile of the survey had less than 6% equity in their primary residences. By 2009, between 10% and 20% of the most affluent households in this age group would need to bring cash to a closing...

The authors of the study conclude that, because of the housing bubble, millions of American families opted not to save during what is considered to be their peak saving years. "Even families in the fourth quintile are only projected to have $215,800 in wealth in 2009 in this scenario. In short, as a result of the collapse of the housing bubble, the vast majority of baby boomers will be approaching retirement with little wealth outside of Social Security."

The authors insist that the government needs to do more than simply let bubbles run their course, which is what they assert the Federal Reserve did during the last housing bubble. They also state that it "should apparent from these projections" that proposals calling for reducing Social Security and Medicare "are unrealistic given the financial situation of those near retirement."

The study's findings, say its authors, "should make clear" that owning a house isn't always the surest path to building wealth. And who is to blame for the mess homeowners find themselves in? Owners, in part. But the authors point accusatory fingers at "the economists and policy professionals who designed policies that pushed homeownership."

Retail tenants starting to fight or flee

It seems as if the current economic recession is now firing up the 'fight or flee' response in some retailers' hypothalami: when landlords refuse to negotiate leases, store owners are teaming up, filing for bankruptcy protection or simply gathering up their belongings and fleeing in the middle of the night. It's happening in downtown Los Angeles, in San Diego and elsewhere.

Firstly, a post at HousingCrisis.com on this new trend summarizes stories from Mish, Calculated Risk and, finally, what's happening in the apartment market from Multi-Family Executive.

Secondly, while conducting research for an upcoming economics conference in San Diego on April 14th, I came across this story in the San Diego Union-Tribune on what's going on in that city's waterfront Seaport Village:

Merchants at the eclectic Seaport Village shopping complex are seeing something they've rarely seen amid the T-shirt shops and jewelry stores: empty storefronts and liquidation signs.

There's the shop near the waterfront that once housed The Cabbage Tree. Its owners recently took the “midnight run” – emptying the gift store in the wee hours and disappearing, leaving landlord Terramar Retail Centers to try to collect on the lease obligation.

Across the sidewalk, there's the “Closed for Inventory” sign hanging in the window of Whitt/Krauss Objects of Fine Art. The art gallery filed for Chapter 7 bankruptcy in January, owing creditors for everything from a $5,640 catering bill to about $250,000 in projected 2009 rent and maintenance fees.

And a few steps away, the Big Dogs sportswear shop is holding a liquidation sale as the Santa Barbara chain prepares to close all of its 71 stores.

It's the perplexing problem afflicting many shopping malls, strip malls and retail complexes across the United States: Owners of commercial properties are trying to preserve cash flow to maintain their mortgage obligations and make a profit. Retail tenants, hard-hit by the recession, are asking for rent reductions and in some cases are shuttering their businesses and leaving empty storefronts...

Many analysts predict that retail bankruptcies and shopping center vacancies will accelerate sharply this year if the economy continues to deteriorate and consumers remain on the spending sideline. And as stores close, landlords will have trouble repaying loans.

While no one knows the ultimate price tag, as much as $1 trillion worth of U.S. commercial property could undergo foreclosure if the economy and the credit markets don't improve, according to Stanley Tate, president of Miami-based Tate Enterprises and an adviser to the Federal Reserve.

The real estate developer said landlords and tenants need to be negotiating now to work out new lease terms or other financial breaks that will allow stores to survive, and allow landlords to maintain some cash flow on properties that might otherwise be vacant.

“It's going to get worse, not better, for at least another year, and the smart landlord will do their best to work with tenants to see what they can do to keep them in business,” said Tate, who a few months ago gave all his tenants in several commercial properties a 15 percent decrease in rent.

In some cases, tenants who had weak businesses to begin with or have products particularly hard-hit by the recession can't be salvaged, Tate said. And some landlords, particularly those who bought or developed properties in the boom years, have little wiggle room to renegotiate lease terms because of their own debt, he said...

Whether some way to provide rent or other financial relief is devised, it will come too late for art gallery owner Jack Krauss.

Krauss said he approached Terramar in November about reducing his rent and fees to $15,000, with an upside for the landlord if sales improved. Krauss said he was told the company would take it under consideration, but he never got a formal response.

“A rent reduction would have made a big difference; it would have given us a fighting chance,” said Krauss, 72, whose business filed for Chapter 7 bankruptcy. “I was fighting to the end, and they (Terramar) were aware of it.”

Like many tenants at Seaport Village, Krauss, who has operated the gallery for more than 25 years, signed a personal guarantee on his lease. So his only option is to reach a settlement with Terramar or file for personal Chapter 7 bankruptcy to eliminate the rent obligation.

“This took all my reserves, my savings and the money I'd put away for retirement, and I'll probably have to sell my home,” Krauss said. “I'll have to find a good doorway to live in."

Very sad indeed.

The Ryness Company files for BK

The Ryness Company, a well-known third-party firm providing sales and marketing services to new home builders, has filed for bankruptcy protection. From a BigBuilderOnline.com story:

The troubled housing market claimed yet another victim late last week. Danville, Calif.-based The Ryness Company, a third-party sales and marketing services and market data firm, filed for Chapter 11 bankruptcy protection Friday in the U. S. Bankruptcy Court, Northern District of California...

To blame for the company's current conditions are a variety of factors, not the least of which are steep drop-offs in new-home sales levels in the company's core markets...

However, other sources familiar with the company point to some untimely acquisitions and business partnerships. In 2004, the company expanded into Arizona, Nevada, and the Pacific Northwest. A year later, the company launched Sullivan Group Real Estate Advisors, a national market research and advisory firm. And then in 2006 came the acquisition of The Marketing Directors.

But of late, many of the partnerships have crumbled. Sources at the Sullivan Group have stated that the two firms parted ways two years ago. And other local sources stated that the parent corporation has turned some regional operations, particularly in California, back over to the original owners. Not to mention growing strains with key financial sources, leading to legal issues in 2008.

However, some of Ryness' builder clients appear to be unfrazzled by the news of the company's bankruptcy. One company's Northern California group that uses Ryness for its sales staffing, indicated that it has been business as usual since the filing. In fact, management indicated that because many of the issues stem from the company's East Coast acquisition of The Marketing Directors, it expected little fallout in California. Management also added that that it is pleased with its relationship with the Ryness team and looks forward to continuing to do business with them...

Who are the most admired home builders?

Although the current state of the housing market makes it an odd time to be declaring the 'most admired home builders,' for the second year in a row, Fortune magazine compiled their list of 'most admired' companies based on input from businesspeople in all types of industries. Number 1 across all industries? A tech-related company called Apple, followed by Warren Buffett's Berkshire Hathaway.

In the home building sector, KBHome took top honors, followed very closely by Toll Brothers, which specializes in luxury housing. According to the press release issued by KBHome (which is helpful because it was hard to find on the Fortune Web site), the survey methodology was as follows:

FORTUNE’s survey partners at Hay Group, a global management consulting firm, started with some 1,400 companies: the FORTUNE 1,000—the 1,000 largest U.S. companies ranked by revenue; non-U.S. companies in FORTUNE’s Global 500 database with revenues of $10 billion or more; and the top foreign companies operating in the U.S. They then sorted the companies by industry and selected the 15 largest for each international industry and the ten largest for each U.S. industry.

The survey covers 64 industries: 25 international industries and 39 primarily U.S.-market industries. To create the 64 industry lists, Hay Group asked executives, directors, and analysts to rate companies in their own industry on nine criteria, from investment value to social responsibility. This year only the best are listed: a company’s score must rank in the top half of its industry survey.

In other words, if a builder isn't listed below, then 'better luck next year!'

Following are the Top 5 'most admired' as well as the next 'contenders.'

Most Admired

Company	Industry	Overall score
1	KB Home	6.58
2	Toll Brothers	6.53
3	Centex	6.24
4	Pulte Homes	6.06
5	NVR	5.71

Contenders

Company	Industry	Overall score
6	D.R. Horton	5.09
7	Ryland Group	4.89
8	Lennar	4.70
9	Hovnanian Enterprises	3.84
10	Standard Pacific	3.45

Finally, Fortune also compiled a list of 'least admired' companies in various sectors, which you can find here.

The survey will be published in the March 16 edition of Fortune magazine.

California gains political power

With a Democratic President now in office as well as a House Speaker, two power senators and various congresspersons chairing important subcommittees, there's been a large but potentially unnoticed shift of power from the South to California. But will these newly powerful liberals over-reach? A story in The Economist ponders the question:

THE 2008 election did not just put a new president in the White House. It also completed one of the biggest shifts in the regional balance of power in America’s recent history, draining influence away from the once-mighty South and redistributing it to the coasts. This will help determine who gets what from Barack Obama’s attempts to stimulate and reshape the economy.

The biggest winner from this internal revolution is America’s biggest state, California. Nancy Pelosi, who has been speaker of the House since 2007, is no longer restrained by a Republican president. Californians run two of the most powerful committees in the House: Energy and Commerce (Henry Waxman), Education and Labour (George Miller), plus an important subcommittee on intelligence (Jane Harman)...

Californian number-plates will not be as ubiquitous as Texan ones used to be in the White House car park. But Mr Obama has nominated several Californians to leading positions in his administration besides Mr Panetta: Hilda Solis, a former congresswoman, to run the Labour Department, Steven Chu, a former head of the Lawrence Berkeley National Laboratory, to Energy, Nancy Sutley, a former deputy mayor of Los Angeles, to run the Council on Environmental Quality.

The rise of California is matched by the fall of the South. Southern politicians have long punched above their weight in Washington. Southern Democrats such as Lyndon Johnson and Sam Rayburn dominated Congress before the civil-rights era.

The rise of the modern Republican Party projected a succession of southern conservatives to the pinnacle of power—Newt Gingrich and Dick Armey in the 1990s and Tom DeLay in the early 2000s; not to mention the two Texan George Bushes. The Democrats were so worried about their decline in the South that they ran two southerners, Bill Clinton and Al Gore, in 1992 and 1996. Now the South is as impotent as it has been for a century.

This geographical shift has brought dramatic changes in style and substance. California’s Democratic House delegation is the most diverse on the Hill, with 10 white women, nine Hispanics, four black women and two Asian-Americans. It is also one of the most left-wing, according to the voting records. It is hard to imagine a bigger change from the southern-fried conservatives who once lorded it over Congress...

The Californication of the Democratic Party carries all sorts of risks. The most obvious is that California has the most dysfunctional politics in the country. The Golden State has one of the highest unemployment rates in America, at 9.3%, thanks to its high taxes, its unions, its anti-business climate and its gigantic housing bubble. Some 100,000 people have fled the state each year since the early 2000s...

The biggest risk is overreach. Many Californian liberals are as far to the left on cultural issues as the southern Republicans were to the right. Many of them also draw their support from two groups that have limited appeal to the rest of the country, particularly to the “bitter” voters that Mr Obama had such trouble wooing in November; the fabulously rich and public-sector activists.

All this suggests that one of Mr Obama’s most delicate tasks, if he wants to prevent his party from being captured by the “left coast” in the same way that the Republicans were captured by the South, will be to contain the Californian barons...

And Mr Obama did remarkably well in the South, capturing Virginia and North Carolina and coming within five points of taking Georgia. But putting just one person with a southern drawl in his cabinet might have helped.

Housing Chronicles cited in "Carnival of Real Estate #131"

Many thanks to Dave and Julie over the 'Rev 'n You' blog for hosting the 131st Carnival of Real Estate and giving The Housing Chronicles Blog the hockey-oriented Lady Byng Memorial Trophy (most sportsmanlike) for my post on how a housing recovery must first follow an accurate pricing of land values:

Patrick Duffy presents A housing recovery must first start with land values posted at The Housing Chronicles Blog.

Good article that makes a very important point about the value of land and real estate property values. And, how buying a piece of land for development should start with good market analysis and objective setting not just an attractive little parcel of land.

Is life imitating art in "Atlas Shrugged?"

It seems that the economic malaise has helped boost sales of Ayn Rand's 1957 flagship book about capitalism under fire called "Atlas Shrugged." I became a fan of Ayn -- pronounced like "mine" and not "Anne" -- in high school, reading both this book and her book about a idealistic an architect named Howard Roark in "The Fountainhead" (which I actually liked better since it was a quicker read).

Still, both she and her more avowed disciples of objectivism can, in my humble opinion, seem a bit nutty, as if the unfettered free marketplace, dependent as it is upon the actions and behaviors of human beings capable of great greed and self-interest, is the answer to everything. From a story in The Economist:

Reviled in some circles and mocked in others, Rand’s 1957 novel of embattled capitalism is a favourite of libertarians and college students. Lately, though, its appeal has been growing...

Whenever governments intervene in the market, in short, readers rush to buy Rand’s book. Why? The reason is explained by the name of a recently formed group on Facebook, the world’s biggest social-networking site: “Read the news today? It’s like ‘Atlas Shrugged’ is happening in real life”. The group, and an expanding chorus of fretful bloggers, reckon that life is imitating art...

And with pirates hijacking cargo ships, politicians castigating corporate chieftains, riots in Europe and slowing international trade—all of which are depicted in the book—this melancholy meme has plenty of fodder.

Even if Washington does not keep the book’s sales booming, Hollywood might. A film version is rumoured to be in the works for release in 2011. But by then, a film may feel superfluous to Rand’s most loyal fans; events unfolding around them will have been dramatisation enough.

"The Fountainhead" was already made into a film version based on her 1943 book -- way back in 1949 and starring Gary Cooper.

Want to know more about Ayn and her philosophies? Check out the Ayn Rand Institute.

NIMBYs and seniors manage best through recession

Want to know the demographic magic bullets to survive recessions? According to a story in the Economist, areas with a larger share of seniors and NIMBYs -- such as California's Central Coast (i.e., Santa Barbara), its coast north of the Bay Area and some inland counties -- ride out economic troughs better than areas with younger populations:

Nowhere in California is immune to recession, but the oldest areas are proving most resistant. Of the ten counties with the lowest unemployment rates, nine, including Santa Barbara, contain an above-average proportion of people aged 65 or older. Youthful Los Angeles has shed almost a quarter-of-a-million jobs in the past year. Slightly older San Diego has lost a few thousand, while considerably older San Francisco has lost none. A map of the state’s retirees (see above) could almost double as a map of economic resilience...

California’s youngest regions are in its hot interior. In the middle years of this decade hundreds of thousands of families moved there in search of big, affordable houses. Unfortunately, many took on big, unaffordable mortgages to do it...

Health care is the only private-sector industry in California that accounted for job growth in 2008. Here, too, places benefit from having a fairly old population. The median age of people admitted to Santa Barbara’s Cottage Hospital is 55—eight years older than UCLA Hospital in Los Angeles. Although hospitals complain it is too stingy, few sources of revenue are more stable than Medicare, which paid for 44% of Santa Barbara’s patients in 2008.

In the past ten years, obedient to the findings of urban sociologists, American cities have tripped over themselves vying for young, creative people. They have revitalised downtowns and sponsored gay-pride parades. They might have been better off building retirement homes.

KBHome answers the $64,000 question with a 880-square-foot home

One thing that home builder KBHome has done during this downturn is act quickly and decisively, whether mothballing larger models and introducing smaller plans to existing subdivisions. In Houston, where bank-owned properties account for one-third of all sales, the plan is to compete on price while providing the new housing that many people prefer. From a story in BusinessWeek:

The idea is to compete with low-cost, bank-owned properties, which account for one of every three homes sold in Houston (and nationally). If the houses sell, KB will build them in other cities, targeting renters in all markets. The houses will yield higher-than-usual margins, KB says, because they have siding instead of brick and Formica countertops rather than stone. Bathrooms are lined up vertically to save copper pipe. Will the homes lure renters anticipating further home-price declines and a weak job market? KB chief Jeffrey Mezger says the mini-houses are a return to his industry's roots in post-World War II communities such as Levittown, N.Y., where 800 square feet was a typical home size.