by Andy High
During the recent boom years in 2003-2005, sellers were calling the shots – dictating prices and terms to multiple bidders who were knocking down their doors in many markets.
Today, with the real estate market slowing in many parts of the country, all the market fundamentals show that buyers are now in the driver’s seat. Consider the facts: prices are competitive, interest rates are very affordable, there are plenty of homes in all price ranges to choose from and sellers are ready to bargain.
So why are many prospective home buyers having second thoughts?
It appears they are letting emotions overtake common sense. For instance, many home owners who are looking to sell and trade up to a better house are hesitating because they have seen the value of their current home drop from peak levels.
“If my neighbor sold his house for $250,000 six months ago, why should I have to settle for $225,000 today?” But waiting out the market to recoup a $25,000 “loss” could prove to be a poor decision.
While the value of the buyer’s house may have fallen, that so-called loss has probably already been more than offset by a reduction in the price of the home he is thinking about buying. Furthermore, if he waits too long, he may lose out on the price advantage that currently exists.
First-time home buyers who are choosing to “play it safe” and keep renting are essentially postponing the opportunity to build household wealth. Also, in the current marketplace, with rental vacancy rates tightening, they can probably expect to see a healthy increase in the rent they pay. No one can accurately predict the peaks and valleys of the housing market. If you sit on the fence and wait for the absolute best deal, you could end up literally waiting for years, and in the meantime miss out on the opportunity to become a homeowner while prices are moderating.
Not to be overlooked are the tremendous tax benefits received by homeowners as they accumulate equity in their homes. History shows that buying a home is one of the very best financial investments available to a typical household, and a relatively small downpayment enables the buyer to see appreciation on the entire value of the property.
Though local housing markets periodically adjust according to overall economic conditions, over the long term real estate has consistently appreciated. On a national level, home appreciation has historically risen 5-6 percent annually. At that rate the value of a home doubles every 13 years. Not only is homeownership a stepping stone to a future of financial security, it provides a permanent place to call home and enormous personal satisfaction.
In today’s housing market, the real risk is in waiting to buy a home. We know that interest rates are low today. We know that home prices are leveling off and even declining in some markets. We know that there are plenty of homes on the market to choose from. We know that sellers are willing to bargain. And we know that builders are willing to offer attractive incentives to get your business.
Any or all of these favorable variables could change for the worse six months from today.
By Lester Smith
I am going to address an important issue that no one is talking about. Actually an issue that is difficult for someone to articulate and not get into “politically correct” trouble. It is an issue that will be the promised land for workers; hell for employers; and, full time employment for management labor lawyers like me. It is a topic you need to understand. It will make you listen more closely to what Hillary and Obama have been saying.
Most of these new laws have already been drafted and are waiting to be rolled out. Some have been on labor’s agenda for years. They all are titled in important sounding but devious words. Here are a few:
“The Employee Free Choice Act”;
“The Patriot Employer Act”;
“The Respect Act”; and
“The Working Families Flexibility Act”;
There are more but lets look at these few.
Employee Free Choice Act
The Employee Free Choice Act is not new. At the start of the most recent session of Congress this bill passed the House but as you might guess got stuck in the Senate because of the reality of a Presidential veto. Plus, Labor decided to back off because it is a “political year” and if a Democratic President is elected passage will be a “no brainer.”
This law is not about “Free Choice” at all. The law will end 75 years of employee free choice in secret ballot elections conducted by the National Labor Relations Board. It is in these neutral elections wherein employees have been free to decide if they want Union representation in their work place after a Union comes in and organizes and campaigns among the employees. In those elections the Union to win only needs 50% +1 of the vote. In these campaigns an Employer can campaign too – but really under the current law the employer does so with both hands tied behind his back.
Under the Employer Free Choice Act if 50% +1 of the employees sign a union representation card or petition and the Union takes those sometimes questionable signatures to the NLRB, the agency will not hold an election but instead certify the Union as the collective bargaining representative.
And, the Employee Free Choice Act has another kicker. For first time, at the end of the bargaining process for a collective bargaining contract the Employer will not be allowed to take a strike. Instead, first time negotiated contracts will be decided by “arbitration.” Under this scheme, you can be sure initial Union demands will be high and this process extremely inflationary. As you may know outside arbitrators love to split the baby. We have seen this happen in the Oregon public sector with “interest arbitrators” in situations where public employees cannot strike (by the way, this same “card check” law was passed by the Oregon legislature this past session for public employees).
Patriot Employers Act
The Patriot Employer Act is another high sounding law with bad implications for employers and good ones for Unions. The bill was introduced last August in the Senate by Barrack Obama. It is devious. For a 1% tax credit on corporate profits the “patriotic employer” to get the tax break must:
1. Agree not to outsource work overseas;
2. Provide employees with a pension plan;
3. Pay at least 60% of employee health insurance premiums; and
4. Agree to remain totally “neutral” in any Union organizing efforts;
In neutrality situations even with the current NLRB election process Unions win 90% of the time. And, so under this alleged patriotic law the U.S. would have two kinds of corporate tax rates. One for Union companies and one for non-union companies.
The RESPECT Act
The Respect Act (Re-Empowerment of Skilled and Professional Employees and Construction Tradeworkers) Act includes a long agenda of items desired by Unions. Basically this bill will bring significant amendments to the National Labor Relations Act. This law has worked so well that it has not been seriously amended since 1959. Among other things parts of this Act will:
1. Change the 75 year old definition of a Supervisor and bring more workers into Union collective bargaining agreements. This is true “sour grapes” and the proposed comes from Union dissatisfaction about a set of NLRB cases the Union’s actually won.
2. Potentially allow for Minority Unions within a work force. This could be true where a Union already is in place among the majority of the employer’s employees or even if a Union is not present. Logic tells us that dealing with one Union should be enough. Now it could be a multiple of Unions!
3. Add new penalties, financial and otherwise to employers where unfair labor practices are committed. Such things as where an employer is found not to have bargained fairly or in good faith with a union; or, where an Employer discharged an employee for their alleged protected, concerted or union activities.
4. Kill off the right for an Employer to have strike replacements when faced with the Union’s strike. Remember how President Reagan replaced the flight controllers? The Unions are still mad about that. If a Union strikes it wants it both ways. First no strike replacements. Second federal and state unemployment benefits for strikers. Again, this is a concept that is clearly inflationary. In my judgment I can envision where this change to the law could actually create the option of a strike or forcing the employer to go to arbitration about contract terms as described above.
5. Killing the Reserved Gate Doctrine. This involves a Union hated US Supreme Court ruling that comes from a case that allows for the creation of a separate gate at construction projects where one union on the job site has a dispute with one of the many employers that may be working at the common site. This rule has allowed the non impacted union workers of the other employers on the site to continue to work by the establishment of special neutral gates reserved exclusively for those non-impacted employers. This amendment would end the common sense behind the rule and impose “Union Solidarity.”
Working Families Flexibility Act
One more little gem to mention is the “Working Families Flexibility Act.” This is known as “the Union of One” bill and is supported by both Senators Clinton and Obama. The law would require an employer to negotiate in good faith with an individual employee who desires some change in certain conditions of work such as days, hours, the location, etc. The bill includes a five step procedure that requires meetings between the employer and the employee. If the employee’s request is not granted the employer must provide written reasons to the employee that include:
1. The costs to the Company if it agreed to the change;
2. The effect the change would have on customer demand; and
3. The impact of the change on the overall financial resources of the Company.
And, in the procedures used in the five steps the employee is entitled to submit written documentation and to have with them a representative of his/her choice such as an attorney or union representatives. Violations will have monetary penalties. Can you imagine what this little bill will do to an employer’s human resources department? Double them in size?
Can you believe the potential horrors behind these innocent sounding proposals? Will they pass? The Employee Free Choice Act and the many of the amendments to the NLRA are a lock. The Patriot Employer and Flexibility Acts are very strong possibilities.
Labor has been waiting a long time for this moment when all the stars line up with the legislative and executive branch. Of course, all these new laws coupled with a Democrat dominated NLRB and a Democrat appointed NLRB General Counsel will make an employer’s plight in coming years quite unbelievable. And, there will be countless changes in other employment laws. For example wage and hour laws and even the Family Leave law will change. The latter involves unpaid leave now, but you can be sure that will become paid leave!
By Jim Thompson,
Exec. Dir. Oregon State Pharmacy Association
With another session of the Oregon Legislature complete, major emphasis was on healthcare where results showed the more effort government puts into healthcare reform the more the pattern stays the same. As we tilt at windmills in moving toward universal healthcare, one pattern stands out above all others—the continuous and disproportionate rise in healthcare costs as compared to the overall economy. Perhaps it is time to look at health care reform in a more analytical light.
The one “accomplishment” in many years of “reforming” healthcare has been to build a monstrous pile of bureaucratic red tape interfering with the doctor patient relationship and continuously driving costs higher.
We have instituted a complex of third party payers and process managers who interfere in every area of healthcare delivery resulting in higher costs everywhere and tremendous profit to the outside players. Health insurance premiums and drug costs keep increasing while the infrastructure of delivery is eroding. The third party elements of healthcare are breaking the back of the system.
There is only one approach to sorting out the problem that has any hope of working and, in a business adverse government climate, it is the least likely to be applied. We need a thorough audit of the flow of healthcare dollars to establish where they are going and how much is going outside the patient/physician/pharmacist direct delivery network.
For instance, at a time when drug costs to the consumer are soaring we are increasingly implementing at system of outside pharmacy benefit managers whose job it is to coordinate the drug delivery system at the expense of the patient and pharmacist while siphoning off huge profits to be invested in new Mercedes. These organizations have little or no transparency but it is increasingly apparent that they are very good at negotiating price reductions from pharmaceutical companies, which they keep. They work the system for drug company kick-backs, which they keep. They restrict the reimbursements to pharmacies which are forcing many of our smaller and rural pharmacies out of business. And they restrict patient access to medications which interferes in the patient/physician relationship and often results in poorer quality care. After all of these “efficiencies” are added up they trot off to the bank with the cash they have scooped out of the healthcare system. This is not about healthcare reform—it is about cost shifting and profit taking. Take out the huge profit motive and they would all be gone tomorrow.
In Oregon and nationally we have a shortage of primary care physicians, nurses, pharmacists, and many other healthcare providers with heaviest impact in rural areas. A contributing factor in this shortage is increasingly longer work hours with decrease in pay and/or profit. Restricting access to medical care may well decrease costs overall but it is poor societal policy in the face of discussions about universal healthcare.
With the billions of healthcare dollars going out to third party operations, the new Medicaid reimbursement plan for prescription drugs will reimburse pharmacies at up to 36% less than their acquisition cost for the drugs according to the Congressional Office of Management and Budget. While this will save the government money, it will certainly force pharmacies out of business in communities with high Medicaid populations unless they refuse to fill Medicaid prescriptions. Not many businesses thrive while selling their goods at 36% less than their acquisition costs with no allowance for overhead. You would think that if the government is paying 36% less than acquisition costs for drugs the cost would go down. Government is now involved in roughly two-thirds of all healthcare spending, through Medicare, Medicaid, and other programs.
Maybe the lesson comes from history. I wasn’t that long ago that most Americans paid cash (or chickens) for basic healthcare services and had insurance only for major illnesses and accidents. The whole system was simpler and more direct and had incentives to keep the costs down. At present, most pharmacies and physician’s offices have no patients paying cash for prescription drugs and services.
When government and other parties get involved in healthcare management, the costs spiral out of control. The answer is a simpler, free enterprise system that encourages all of the players to keep the costs down. Whenever there is someone else in line to pay the bill, and outside influences controlling the system, you can be assured that the bill will be too high—especially if the process is over-regulated.
by Andy High
Many of you may not know but the Legislature gave school districts taxing authority without requiring a vote of the people. In 2007, the Legislature passed the SB 1036 which allows school districts to charge a construction excise tax. This allows school districts to charge up to $1.00 per sq foot on a house and $.50 a sq foot on commercial buildings with a max of $25,000 and $.25 per sq foot on industrial with a max of $25,000.
School districts can’t pass these fast enough. As the housing economy is slowing drastically, it makes no sense to be adding these types of taxes. These types of policies will continue to drive up home prices up throughout Oregon and drive businesses out of Oregon who want to expand.
By Britt Storkson
Governments today are finding it increasingly difficult to raise taxes without major public outcry and threats to their re-election. Not satisfied with cutting spending to stay within what they receive in taxes governments don’t just go away – they go somewhere else to separate taxpayers from their money.
Often that somewhere else is monopoly utilities…Water districts, power companies and the like. There they can raise rates under the guise of funding the rising costs of providing that utility.
Many times the problem with a law is not what is in the law but what isn’t in the law. In the case of monopoly utilities there is no law governing where they spend the money they collect in rates. They don’t have to spend it just to provide the utility. They can spend it wherever they want.
The money you pay for water rates, for example, can go to fund homeless shelters, to certain individuals and even to things that many of us don’t think should get any funding at all such as abortion clinics.
A particularly egregious example of this “end run” around accountability exists with Electric Co-operatives. Electric Co-operatives are state sanctioned monopolies that are your sole power providers in certain areas, again determined by the state. You don’t have any choice who you buy your electric power. You are forced to buy power from whoever the state says you should buy power from even if other power providers are available.
Co-operatives (Co-op’s) are private, non-profit corporations supposedly “owned” by the members or “ratepayers” – those who buy their power from them. The problem is that by statute, the members have no rights whatsoever.
Unlike public agencies Co-op members do not have the right to attend Co-op board meetings or even to know when and where board meetings will be held. Members do not have the right to any information about the Co-op including financial information or even the general managers’ pay and benefits package. Co-op’s are not regulated by the Oregon P.U.C. (Public Utility Commission) and its rates are not subject to P.U.C. review or member comment.
Power rates are not the same for all ratepayers for the same power. Some power customers pay next to nothing for while others pay much higher rates. The net effect is that ratepayers pay higher rates to subsidize those granted “a break” on their rates.
Board of Directors elections are held by the Co-op and the votes are counted by the Co-op. There is no independent verification by the county clerk or anybody else. That means that one does not become a board member unless the board wants them as a member. Here in The Dalles Wasco Electric Co-operative has two board members are currently serving on the board unlawfully in violation of the Wasco Electric bylaws term limits provision.
If co-operative boards do anything unethically – or even illegally there is no legal remedy. Say that a co-operative board gives themselves each $100,000.00 in violation of the bylaws provision that states that the board members shall not be paid. First of all, with the secrecy provisions in place its unlikely anybody outside of the board would know about this. But in the unlikely event that somebody outside of the board did find out about it what are the ratepayers going to do? They can’t do anything. The board members are indemnified by statute (ORS62) and there is no penalty for disregarding the bylaws provisions. Remember the board can spend the money it gets from ratepayers anywhere it wants. It’s just like taxation only a power company instead of a government is used to separate you from your money. A very unaccountable power company instead of a minimally accountable government.
With unaccountability comes new problems. Wasco Electric Co-op’s policy ends up being to sue in order to get private property on which to place their property lines instead of negotiating with the owner. Wasco Electric will also sue anybody who questions anything they do. Not only do ratepayers get abused when they pay their bill they get abused by the Wasco Electric Lawyer.