SPECIAL COUNCIL MEETING

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TonyB, you make an excellent point which I want to amplify. The program is targeting for markets that have enormous problems in establishing market demand. Therefore, the solution, which arguably, is not even a band-aid, is to destroy capacity. In turn, some how, the economic theorists like Les Landen, which is not a macro-economist, states destruction of supply will spur elevation of valuation. That point, and fallacy, I have already made, as what remains unresolved, and simply, not properly focused, is the underlying need for demand. 

And therein is the problem. Taking down houses in Middletown does nothing for demand, but diminishes  supply. If there was a reduction by 50% in supply, it would do nothing to elevate demand and valuation. A vacant lot isn't going to stimulate demand, in terms of new construction. There is an empty house now for two years, right across from Bill Triik who heads Middletown's Chamber of Commerce. Tearing down that house won't increase his valuation, as there is a glut of stable over-capacity around him.

Until Middletown can increase demand, which is highly unlikely, this program will accomplish nothing. And, it deploys capital that can be used for other purposes, into destruction that impacts only supply, but does not elevate demand. If anything, some % of funding should go to raising demand, but that is marketing, and heavy lifting, that the city cannot seem to ever get traction. The slow drip has become a fast drip, and exodus, with AK, Atrium, and others leaving. There has been no back-fill. Therein is the problem.

You bring up another good point on stabilization, but I am not certain if you mean stabilization associated with helping individuals avoid foreclosure or stimulating demand as you call it---rehabilitation. If I think I comprehend your term, the problem in that regard is quite simple. And that is you are using funds to fix up property that demand is just not there, in spite of the upgrades, and done at a capital loss, as the figures have shown. In reality, the rehabilitation efforts have driven valuation down, because the money put in makes that property, a more appealing acquisition target in a market full of over-supply, and just drives other property down associated with the investment in upgrades which aren't absorbed nor reflected, in higher price point.

This vicious cycle will never cease until demand increases. That is the chronic problem city leaders and council don't comprehend, and they simply don't know how to create market demand. Rather,its their  practices causing just the opposite, by lowering demand through higher taxation, no services, high water costs, and the other problems well documented.

Pushing a ton rock uphill by yourself at 90 degrees is an impossible task to accomplish. That is the demand problem Middletown has, the weight, the anchor, and the incline...just too steep to navigate and make progress and gain traction. One step forward, and four steps back, never gets the city up the hill to the summit. And so it continues. 

Ever get your car stuck in snow 12 inches deep, and can't get out, the tires just spinning, going nowhere? That is Middletown's housing market. Demand is the removal of snow and a pull by a pick up truck to get back on dry asphalt. Supply fixation is plowing the main roads and awaiting for the temperature to rise in a few weeks, to melt the snow, to get your car moving again on a side road not plowed. Applying the wrong tool, and wrong use of capital to focus upon the wrong end of the problem.

As Bill Clinton would say, " its the demand stupid."  (not supply) Without demand, there will be a lot of houses being torn down...about 80% of Middletown---or the fire sale, which drives valuation downward. .Snow too deep, or quicksand, but the result is the same. You can't get traction, and just spin aimlessly.      

SPECIAL COUNCIL MEETING

Middletown to support land bank