CAA forum: Professor, housing expert reflect on economy, impacts of housing shortage
ONTARIO — When it comes to the economy, things are neither booming nor busting, says Professor Jay Prag of the Drucker School of Management.
Prag and Steve PonTell, chief executive officer and president of National Community Renaissance, spoke at the California Apartment Association’s Professional Property Managers’ Forum on Tuesday, Aug. 9.
The CAA Greater Inland Empire event attracted about 80 rental housing professionals to the DoubleTree Ontario Airport.
The good news is that Prag disagrees with the opinion of some economists, who are predicting another recession looming in the distance for the U.S.
He said that a condition “just isn’t there,” like the sub-prime housing crisis was prior to the last recession, which negatively impacted every aspect of the market.
On the downside, there are also no signs to show that we will experience growth anytime soon, and things will continue to move along slowly.
Prag’s not a fan of looking at the national unemployment number, which is at 5 percent currently, as a marker for a strong economy. He explained most of the recent jobs are low-paying and part-time. They won’t increase disposable incomes and inject the market with higher consumer spending rates.
Prag also touched on how a Hillary Clinton or Donald Trump presidency might affect the economy.
Clinton supports a $15 minimum wage and looks to increase the tax rate on the top 1 percent.
The professor, who also spoke to CAA last year, has said: “I think minimum wages are absolutely catastrophic for the very people that policymakers claim to be trying to help — working-class people. You cannot show me a $15 minimum wage that doesn’t kill jobs. It’s just not possible. There are just too many people whose productivity for the company isn’t worth $15.”
On upping the tax rate on the super-rich, he said the maneuver failed in Europe. A few years ago, it was attempted in France, and the top millionaires began to move away, prompting abandonment of the tax hike after six months.
Prag said that Trump’s policies would actually be okay for businesses. Prag, however, didn’t explain how because he said, “You can’t trust anything that comes out of Trump’s mouth, and he has no chance of winning anyway, so it would be a waste of time.”
The second speaker, Steve PonTell, discussed how the housing shortage is negatively impacting the economy. He focused on what it means to the multi-family housing industry.
He explained that people have very little disposable income when they are allocating more than 50 percent of their earnings to pay record-high rents. If the supply of housing doesn’t increase, rents will continue to climb, further hurting consumer spending, PonTell said.
He called on the audience of multi-family housing industry members to tell local policymakers that increasing housing supply is essential to the local economy. Cities live and die on their sales tax revenue, so increasing consumer spending by increasing housing supplies is a message that needs to be shared.
That message resonated with Forrest Lloyd, a CAA member since 1984.
“[PonTell] encouraged us to be proactive in correcting the problem by attending city planning meetings and educating our elected officials,” Lloyd said after the forum. “Jay and Steve’s talks complemented each other. My wife and I look forward to next year’s Annual Economic Forecast.”
At the end of the event, Matthew Buck, CAA vice president of public affairs, thanked both the speakers and the audience.
“CAA works diligently on behalf of members to educate local elected officials on the benefits of multi-family housing,” Buck said, “and member support plays an important role in how effective we are.”