Monthly Archives: July 2015

America Begins To Grow Up

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by James Stefanile, ABR, GRI, SRES, QSC, gCertified, REALTOR/Salesperson, Berkshire Hathaway Home Services New Jersey Properties, Montclair Office

The last week in June of 2015 marked, perhaps, the beginning of the end of America’s adolescence. Three momentous Supreme Court rulings and a massacre in South Carolina have shaken some immature paradigms nationwide.

My intent, here, is not necessarily to politicize this space, or to comment on the fallout from the murderous event in the South – other than an expression of sorrow – or debate the merits and philosophies espoused in the week’s legal opinions (although I may, just a little).  I’d like to focus on the real-world implications these events have on real estate consumers and, hopefully, even as we grieve in one case, how they will mature and benefit our industry.  You can read The Supreme Court’s opinions by clicking on their underlined titles.

King v. Burwell, decided Thursday, June 25th, affirmed the Affordable Care Act’s pillar provision of tax credits in the form of subsidies on the Federal health care exchanges.  If The Court had struck down those subsidies, it is generally accepted that the health care industry would have been thrown into chaos.  Any disruption of a major sector of the economy, such as health care, would have badly negative effects on the real estate industry, among others.  The continuation of this law also marks the continuation of its effect on commercial real estate which has been felt since the law was enacted.  The health care sector has made a major capital investment in real estate for health care facilities as the ACA has changed the ways providers treat patients and as health care systems have moved into new market areas.  The mergers and acquisitions The Act has prompted within the health care industry has also had a direct impact on commercial real estate development.  Office buildings and other types of commercial real estate which have been vacant or under-used are, in many areas, being converted to health care facilities or administrative centers.  The Supreme Court ruling  validates the robust demand for owning healthcare buildings. By owning shares in healthcare REITs (real estate investment trusts) investors can benefit by gaining exposure to diversified portfolios that should produce steady and now more predictable growth in years to come.

Obamacare has also had an effect on capital gains taxes on investment properties for the wealthiest among us.  You’ll note I have not gotten into the pros and cons of this law except as it relates to real estate.  I will suffice to mention it is the beginning of a more mature system which up-ended the runaway cycle of cost vs. care.  As the effects of the law become more clear over time I believe it will afford more people the opportunity to enter the real estate market because of money saved on health care and simply because they are healthy enough to do so.

On the same day, The Court ruled on Texas Department of Housing and Community Affairs v. Inclusive Communities ProjectThe issue in Inclusive Communities was whether the Fair Housing Act allows plaintiffs’ action if they can show that a government agency or private actor in renting, selling, or otherwise making housing available on the basis of race, intended to discriminate on the basis of race, or whether the Act also forbids acts that have a “disparate impact” on housing opportunities. Disparate impact means that some policy, adopted for a non-racial reason, might end up burdening minority-housing opportunities more heavily than those provided to whites; if so, the policymaker would be required to justify the policy to a court on grounds other than race.

This decision left intact and strengthened a pillar of the Fair Housing Act that seeks to erase part of another blot on this country’s conscience: discrimination in housing, segregation of areas of real estate by race, red-lining and steering, all past real estate practices.

On Friday, June 26th The Court ruled on Obergefell v. Hodges which affirmed the legitimacy of gay marriage nationwide.  Again, it’s not my intention to debate the meaning of marriage.  Everyone is entitled to their opinion of what marriage can and cannot be. Opposition to same-sex marriage is a personal opinion or belief but it has no part in law or governance.  I think this is where a lot of religious organizations go off the rails, for example, confusing the separation of government and religious thought.  The Court ruled this right to marry as a guaranteed right, not subject to popular vote – the electorate does not get to vote on granting individual rights and liberties or “the pursuit of happiness”, regardless of Republican rhetoric. 

This ruling clears the way for rights and benefits for gay and lesbian couples that resonate throughout the real estate industry, among others.  In New Jersey, for example, if gay marriage is legal so are the rights of the couple who purchase a home to be tenants in the entirety, that is, equally entitled to the property and its inheritance, as opposed to joint tenants, tenants in common or general tenancy where those rights are calculated differently.  You can read about the differences in these forms of tenancy here.  Marriage could mean greater financial stability for Americans who previously were unable to get married, which would make it easier for this demographic to qualify for a mortgage.  A reverse mortgage for a legally married gay couple will, most likely, not exclude one partner or another.  And a greater acceptance for gay people in society could also mean gay couples will be more willing to put down roots and buy a home.  It could mean there will likely be an influx of new LGBT buyers for real estate.  The tax implications for gay couples will also be far-reaching, enabling them to file jointly and have the higher marriage exemption from capital gains taxes that male/female couples now enjoy.

There are many more areas that need to be defined for these couples such as adoption, parental rights, insurance benefits, end of life decisions, housing and employment discrimination, survivor benefits in Federal Law, even after United States v. Windsor struck down Federal law denying benefits to same-sex couples in 2013, and on and on.  This ruling brings the LGBT community into the financial mainstream of American life and, if I may say, it’s about time.  I have sat in many closings where gay couples have purchased property together and their money is the same as anyone else’s and denying real-world rights and benefits to this part of our population will have a deleterious effect on real estate, apart from the fundamental issue of fairness.

Finally, the shooting of nine African-Americans in Charleston, South Carolina has re-focused the country’s attention, not only, sadly, once again, on race but on heritage as symbolically embodied in the Confederate flag.  I will indulge myself, here, a little, to take a swat at all the politicians, North and South, who equivocated on the flag’s relevance until they stuck their noses into the political wind and smelled it blowing strongly against this symbol of hatred, oppression and slavery.  That is what prompted the reversal of many of our leaders on the issue as they attempted to wrap themselves in the cloak of right and wrong.  Only one politician, South Carolina State Representative, Republican Norman “Doug” Brannon, had the courage to admit he was “ashamed” he hadn’t pushed for the flag’s removal sooner and that it took the death of his friend and colleague, State Senator Clementa Pinckney to galvanize him into action.

America badly needs to grow up around the issue of race and how it regards its legacy as a slave holding nation. The echoes of this immaturity have resonated through real estate for decades.  The United States has attempted to correct its past mistakes by passing  myriad laws including The Civil Rights Act, The Fair Housing Act, The Equal Pay Act and by creating  the Federal Housing Authority, Affirmative Action and The Equal Employment Opportunity Commission, among others.  All of these efforts have a very tangible, real world goal apart from the fairness they embody:  to insure that all Americans have an equal chance at financial success, in accordance with that person’s gifts and not based on simply who they are.  The implications for real estate are enormous if everyone enjoys a level playing field in accordance with their ability.  The Confederate flag represents no such thing and belongs in a museum as a part of our history, not flying over state capitals.  We need to move past the romanticized version of that sorry chapter in our history where a so-called noble cause was defeated.  There is nothing noble about oppression.  There is nothing noble about the attempt to keep a portion of the population out of the neighborhood.  It affects us all, in our consciences and in our pocket books.

We need to continue to mature as a people, as a civilization.  We have a very long way to go. We need to attempt to be adults when it comes to our notions of equality, which are,  presumably, embodied in our founding.  As we prepare to celebrate the birth of our independence on July 4th we need to focus on what is good for all of us in the real world of finance, ownership, opportunity and fiscal security.  The events of the last week in June are, hopefully, a step toward that elusive, grown-up goal.

Can’t get enough of my opinions? Take heart. I have another (non-real estate) blog called “The World At Large by Jim Stefanile – Thoughts On Everything Else”.

May’s post was “Saddest of Smiles”  Chapter 1 of the history of my family.  I hope you can visit:

June’s post was Chapter 2, “The Sanest One” in the continuing history of my family:

This month’s post is Chapter 3, “No Real Connection” in the continuing history of my family:


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