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VOL. 37 | NO. 40 | Friday, October 4, 2013

‘Trickle-up economics’ boon for real estate buyers, sellers

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The late Ronald Reagan delivered some of the best one-liners, sometimes two-liners, of any modern-day president.

In a presidential debate, Hank Trewhitt of the Baltimore Sun asked then-Pres. Reagan the following: “You are already the oldest president in history, and some on your staff say that you were tired.”

To that President Reagan responded: “I will not make age an issue in this campaign. I am not going to exploit, for political purposes, my opponent’s youth and inexperience.”

It was during Reagan’s presidency that the term trickle-down economics became a household phrase, the theory being that if taxes were cut for the wealthy, the monies would be invested in growth and expansion thereby creating jobs.

Some argue the theory proved successful, while others see it as a complete failure. As Congressman Jim Cooper often explains in such cases: “Why do you think they call it politics?”

Mayor Karl Dean is often seen supporting Democratic candidates and, as is the case with Nashville mayoral candidates, was not forced to declare a political party during his campaign.

The fact that Democrats were up in arms that he would support a largely Republican charter school plan in the General Assembly would also support an argument that the mayor is a Democrat.

With that in mind, it is not surprising that Mayor Dean would espouse trickle up economics as it relates to housing in order to sustain the real estate success that his administration has enjoyed.

This theory, the opposite of trickledown economics, is assisting Nashvillians in their quest for what Dave Ramsey, who does not sound like a Democrat, would call “financial peace.” According to the New York Times, he called it that – oh, I don’t know – about 14 million times.

On Sept. 19, 2013, Mayor Dean recognized the Nashville Empowerment Center, which, after its first seven months serving Nashvillians, assisted its 500th client since opening March 12, 2013.

Since its inception, the Financial Empowerment Centers have held more than 1,100 individual counseling sessions.

Mayor Dean appointed Erik Cole as director of the program that was in part funded by a $1 million, three-year grant from New York Mayor Michael Bloomberg’s Philanthropy and Living Cities Fund.

Cole has a history of service to the city after serving two terms, eight years, in Metro Council and having been involved in a number of activities since that time.

In a recent presentation at the Nashville Rotary Club, Cole explained why the city would benefit from the program, noting that the poverty rate in Nashville is 19.3 percent in spite of all the city’s financial accomplishments and a state poverty level of 18.3 percent and U.S. level of 15.9 percent.

In Davidson County, he added, 30 percent of the children live in homes with annual incomes of less than $23,550.

This number reflects an increase in child poverty since 2007, when Nashville was at 24.7.

And, one of the most startling facts is that 72.8 percent of Metro Nashville Public School students are eligible for free and reduced-rate lunches.

As for general overall financial health, 11 percent of Nashville households are unbanked, while 22.5 percent are underbanked.

In New York, where a similar program was launched in 2008, 19,000 New Yorkers have reduced their debt by $9 million and saved $1 million.

In the case of the Financial Empowerment Center, one of President Reagan’s most oft-quoted quips misses the mark: “Government is not the solution to the problem: government is the problem.”

Of course, he is dead on with the current Congressional mess.

In Nashville, the mayor’s office is working in partnership with United Way of Metropolitan Nashville and has two locations, one in the Casa Azáfran Community Center and one on Foster Street.

With the success the Financial Empowerment Center is experiencing, the real estate market will soon be the beneficiary of the fruits of the FEC’s labor – trickle-up economics.

Rosa Moore of South Nashville entered the Center on March 19 and has reduced her debt and managed to increase her savings from zero to $4,000. Rosa will soon be in the housing market.

Those who buy $80,000 homes allow the sellers to buy $145,000 homes, and those sellers will buy $200,000 homes as they trickle up the home ownership ladder. When housing flourishes, jobs are created, and those returning to the workforce have an ally in their quest for financial empowerment.

Sale of the Week

The Lipscomb area is on fire again. If David Lipscomb stopped by for a class, he wouldn’t recognize the environs housing his campus.

The home at 1107 Woodvale Drive is another of Ryan Miller’s renovations, which he describes as a “WOW renovation to the studs.” He then takes a poke, or dig, if you prefer, at some of the two-houses-per-lot builders: “Don’t settle for a home on a tiny lot- this home has it all and a yard.”

The home has 3,128 square feet with four bedrooms and three and a-half baths. It sold for $660,000, $100 more than list price.

Former Vanderbilt basketball stud Jay Lowenthal slam dunked the buyer into the house, beating the full-court pressure from other less formidable agents.

Miller, who is with The Lipman Group Sotheby’s International Realty, boasted appropriately that “pretty much everything is new – mechanicals, electrical, plumbing, insulation, drywall, cabinets, appliances, bathroom windows, etc.”

Richard Courtney is a partner with Christianson, Patterson, Courtney, and Associates and can be reached at richard@richardcourtney.com.

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