‘The Accidental Economist’ with Jack Kern: The Sequestration Follies
- Oct 02, 2013
“I am”… I said
To no one there
And no one heard at all
Not even the chair
—Neil Diamond, 1971
There is ultimate comfort in politics in the fact that current polls don’t matter when it comes to judging one’s actions. History gets to decide who was right and wrong. Within the realm of the federal sector, one that has the most influence on coastal multifamily markets, there is a lot of finger pointing going on right now. It seems the idea of shutting down the government, despite the additional cost, has been both reviled and cheered by certain members of the citizenry. In some instances, more moderate organizations are starting to show that most of the economic activity is created in metropolitan areas by not surprisingly big and small town mayors, governors and community groups. This economic quagmire is immediately having two major effects—it embarrasses the country in the eyes of our international trading partners, and it has a deleterious effect on consumer confidence. Between the two, the apartment industry needs high levels of consumer confidence. An astounding number of residents come from foreign nations. I doubt they want to stand in the immigration lines any longer than necessary, and many probably think if they wait, rents will be lower. As our Congress has demonstrated, the rule of law is supplanted by the laws of supply and demand, or is it demand and demand? The resident decision to lease or renew month-to-month is the actual cost of sequestration for apartment owners. Empty units are going to get more attractive as owners struggle to convince residents that everything will be OK. I’d also expect to see the return of concessions and easy transfer and cancellation policies. This disagreement is here for the long term, and no end in sight will make the economy sink and residents return back to their ancestral homes, thus avoiding rents.
If a tree falls in the woods, no one hears the inevitable sound, and if a politician says compromise for the good of the country, no one is listening. Let’s hope the residents are listening to us when we tell them it will get worked out soon enough.
Jack Kern is the research editor of Multi-Housing News and Commercial Property Executive. Being a local in D.C., he sees congressmen and senators all the time, mostly in the neighborhood and the local grocery store. On a recent outing, one of the members tried to convince Jack that earmarks had their place in politics. Jack will be working to throw the bum out during the next election cycle.