Well, good afternoon and welcome to Akron Roundtable.

Its great to be in beautiful downtown Akron here, where we've been holding our signature event- And we're looking forward to today's presentation.

In consideration of the speakers in the audience, if I could ask you to silence your electronic devices, that would be greatly appreciated.

The Akron Roundtable proudly promotes community dialog and networking and remains committed to our mission to bring the world to Akron.

We invite individuals with diverse backgrounds and life experiences to speak on relevant topics, to inform and educate our community, consider other perspectives, and encourage us to take action.

And Akron Roundtable will always stand firm on the principles of the First Amendment.

I'd like to encourage our title- I'd like to acknowledge our title sponsor, State and Federal Communications, which is instrumental in making our mission financially possible.

Speaking of financial support, I'd like to invite Dominic Wright, who's also an Akron Roundtable board member, to the podium, to share some information about our upcoming fundraiser, Tableau.

Dominic- - Thanks, Barry.

Thanks, Barry.

Yeah, it's good to see everybody in attendance today.

And thank you for coming out.

As Barry said, my name is Dominic Wright.

I am a Akron Roundtable board of directors member, vice president at the J.P.

Morgan Private Bank.

And on weekends, I'm a collegiate football official.

But don't worry.

I'm not here to throw flags today.

I'm here to invite you to our 2025 Akron Roundtable annual fundraising dinner on Saturday, October 18th at Firestone Country Club.

We are thrilled to host some greats of the gridiron and Cleveland Browns legends Eric Metcalf, Greg Pruitt and Frank Stams.

Please join us as we celebrate Cleveland football history, and we celebrate some heroes of the game and get behind the scenes stories of their story careers as Cleveland Browns players.

There are fliers which I'm holding up here at your table with more information on this event and how you can make a reservation.

With so many options available, ranging from individual young professional tickets to corporate tables, we hope there's a great option for each of you to attend.

However you choose to join us, please know that your generosity by attending this fundraiser will help Akron Roundtable bring exceptional speakers to the Northeast Ohio region.

Scan the QR code on the flier or go to AkronRoundtable.org to learn more.

I thank you, and I look forward to seeing you all out at Firestone Country Club.

October 18th.

Thank you Dominic.

Today's guest speaker is Charles L Marohn Jr, founder and president, Strong Towns.

The title of Chuck's presentation is Escaping the Housing Trap.

Mr.

Marohn has agreed to take questions from the audience following today's conversation.

And Mac Love, Akron Roundtable board member will moderate the Q&A.

To submit a question, please refer to the brochure on your table, or you can refer to the QR codes that will be projected here on the screens.

If you'd like to submit a question, and you can do that any time during the presentation.

If you don't have an electronic device with you, there are note cards on the table You can write your question on that, and one of our staff members will come around and collect your questions.

Our asker technology is made possible by a gift from the Greater Akron Chamber.

And we appreciate their their support.

Today's program sponsor is Summit County Land Bank.

And, Patrick Bravo, executive director of the Summit County Land Bank, will introduce Chuck Patrick- I think you were in your last bite of your lunch.

So, sorry.

Sorry I didn't give you more warning there.

Thanks, Patrick.

Appreciate it.

- Thank you, Barry, and good afternoon, everyone.

It is my great pleasure to welcome you to today's Akron Roundtable luncheon.

I'm honored to join you in continuing this important tradition of convening leaders, thinkers and doers who help shape our communities.

And I thank you for being a part of this community that really leans into tough challenges with practical, local solutions.

Today, we are privileged to hear from someone whose voice has become one of the most influential in conversations about how our cities and neighborhoods can thrive in the 21st century.

Charles “Chuck” Marohn is the founder and president of Strong Towns, a nationally recognized nonprofit organization dedicated to helping communities.

Become financially resilient and built to last.

A professional engineer and land use planner, Chuck has traveled the country challenging conventional wisdom and development infrastructure and housing, and offering practical, people centered alternatives, changing the way that communities think about growth and neighborhood vitality.

He is the author of several influential and highly regarded books, including “Strong Towns: A Bottom Up Revolution to Rebuild American Prosperity,” and “Confessions of a Recovering Engineer.” His newest work, “Escaping the Housing Trap: The Strong Town Response to the Housing Crisis,” could not be more timely, as it tackles one of the most pressing issues facing communities across America today.

How do we create housing that is both attainable and resilient, while avoiding the financial pitfalls of past approaches?

This book and the Strong Towns philosophy more broadly reminds us that solutions to the housing crisis are not only about building more, but about building wisely, sustainably, equitably and perhaps more importantly, differently than before.

Chuck's work resonates here in Summit County, where we are deeply engaged in questions of neighborhood stability, affordability and long term community strength.

Please join me in giving a warm Akron Roundtable, welcome to today's distinguished guest, Chuck Marohn.

- Thank you so much.

It is very nice.

It's more than nice.

It's wonderful to be back here in Akron.

I realized that I've not been here since before the pandemic.

And I spent quite a bit of time before then here.

I don't think I know we're going to talk housing today, and that's the that's the topic I want to dig into.

And that's the one that, I think is the most urgent.

But we could do this for a long, long time on a variety of things.

I don't know, is there is a city or really a region in the country that is more, kind of primed for a Strong Town's approach, both, Needing and, both needing the kind of bottom up, incremental step by step by step.

Let's keep doing this approach.

And also having the collection of innovative, thoughtful people that are doing it, that we can hold up as examples.

So I'm excited to be here.

Let's talk housing.

When we think about housing today, we see that there are two conversations going on.

The first conversation is about housing as shelter.

How do we get people into a place that they can afford?

How do we get people who don't have homes into homes?

How do we allow people to be able to move up and live good, lives?

The American dream.

The other conversation about housing is the conversation about finance.

Yesterday we had interest rates dropped for the first time in a while.

That has been a big, tumultuous thing between the president and the Federal Reserve and this big political fight.

We're talking about privatizing Fannie and Freddie.

Now, again, these are all conversations around how we finance housing and how housing as a financial product relates to our overall economy.

In one of these conversations.

Housing prices must fall.

Housing prices are too high.

They're unaffordable.

They're unattainable.

Housing prices need to come down in the other conversation.

Housing prices, cannot be allowed to fall because of housing prices go down.

It creates off this this chain of events that has this really negative impact on our economy.

This tension between these two conversations is the the the essence of the housing trap.

It's the place that we have gotten ourselves to where we literally have housing that broadly people cannot afford.

Everybody, no matter what price point you're in, is being asked to stretch in order to get into housing.

Everybody is feeling this to one degree or another.

And on the other side of the equation, if housing prices not just drop but even slow down their upward acceleration, we see all kinds of things happen in the financial sector, in the banking sector in unemployment and what have you, this chain effect.

This is where we are stuck.

To understand this trap, and we need to understand it so we can plot a course out of it to understand this trap.

We really need to look at the way we financed housing before the Great Depression, because all of us are very familiar with the system we have today.

You'll get a 30 year mortgage.

Pay it off.

It's going to be sold off.

You're going to pay your mortgage to some entity you've never heard of.

We all, like, live in this situation.

We all get it and it seems normal to us.

But if we went back 100 years ago, this was not the way housing was financed.

And in fact, housing has never been financed this way throughout all of human history.

Prior to the Great Depression.

Housing finance was done exclusively at local banks.

If you wanted to buy a home and you were going to get a mortgage to do that, you would have to have a 50% down payment to a local bank.

You were going to get a loan that was financed over three years, four years, five years with a balloon payment at the end, and you would be expected to pay interest only over the course of that loan.

The idea would be that you would pay whatever the market interest rate was, and at the end it would roll over into a new market rate, interest rate, and on and on and on.

And sure, you could pay it down, or you could pay it off, or you could save up money and pay down that balloon.

But the idea was they, local bank wanted you to have a lot of skin in the game.

Didn't want to take risks with all your neighbors money.

And so they were going to require this type of a situation.

The Great Depression created a lot of tumult, not just in our economy in general, but in the housing market in specific.

In fact, when, the Great Depression started, we saw, banks failing and banks were failing generally because of housing debt and housing related debt.

Understand what happened just from a dynamic pricing standpoint.

If this is a chart doesn't have numbers, I'm showing you something in theory.

If you have a house and you went to get a mortgage on it, the bank would loan you 50% of the housing value.

What happened to housing values in the Great Depression?

They went down right.

So let's say you had that three year, four year, five year balloon payment that was coming due and your plan was to just roll that over and refinance it.

Well, the problem was when your house value dropped, the bank was only going to lend you 50% of the new value.

You see the obvious problem here?

Your balloon payment, the amount you owe, is actually greater than the amount that the bank will lend you.

And so you are expected to come up with that difference in cash today in the middle of the Great Depression where we had 25% plus unemployment.

Massive dislocation.

You know, this was really, really hard for people to do.

And so what happened was a lot of people who had been making their payments could continue to make the payments at the rate they were making them.

had, you know, followed the rules and done everything right.

Lost their homes when they lost their homes.

What happened to the house?

The bank didn't keep it right.

The bank sold it on to a declining market with an excessive amount of homes for sale.

What did that do to prices?

It dropped them further.

What did that do to the next person who had to refinance it made their gap bigger and on and on and on.

We were in what economists call a deflationary spiral, where the more and more people who were trapped in this deflation, the more housing prices went down, the more housing prices went down, the more people that trapped in the deflation.

One of the things that the FDR administration did early on was to try to stop this decline.

In the first 100 days, they went to local banks and they said, hey, instead of foreclosing on people, sell that loan to us, the federal government will buy that loan.

We'll keep people in their house.

They then went to local banks and they said, we want you to write more home loans.

We want you to actually, help us keep people in housing.

Ill tell you what.

Instead of requiring a 50% down payment, require, a 60% or 70% or, I'm sorry, the other way, a 40% to 30%, a 20%.

We the federal government will have an insurance plan where we will create insurance for you so that if you lose money on this, we'll make you whole instead of, a three year for your five year loan.

How about a 12 year loan?

How about a 15 year loan and not have it just be interest only, but have it make amortization, have it, have it pay down the loan over time.

In fact, we'll create a secondary market.

We'll create this entity that we now call Fannie Mae, that if you make a loan that qualifies in certain ways, we will, buy that loan from you if you ever need cash.

If you ever find yourself short of cash, you can turn that cash, that loan in an instant.

Cash by selling it to us, the federal government.

What this series of policies did is it stopped that deflationary spiral.

It stopped that downward halt of housing prices.

It allowed people to stay in their homes.

It brought all the kind of stability that that creates.

And I'm going to use a word right now, that I think is a fair word to describe this.

This is a very moral set of policies when it comes to, allowing people to live a decent life, following the rules and having things work out for them.

What we discovered, though, was at the end of World War two, the economists around the president and really informing economic policy in the country were very freaked out that when the war ended, we were just going to slide right back into the Great Depression.

We're all taught today in junior high that the thing that got us out of the Great Depression was World War two, which is an insane way to look at economics.

Only an economist thinks this way, right?

Culturally, you know, hey, we're in really hard times.

It's difficult.

Yay!

Global war.

Tens of millions dead.

You know, ration meat and gas and all this.

Only economists look at this as, like, happy times, right?

But they were freaked out that when the war ended and we demobilized.

All these troops, we shut down all these industries of war.

That as Paul Samuelson, one of the chief economic adviser to the president, said in a memo, we're just going to go right back into the depths of the Great Depression.

That's not what happened, though, is it?

We did something completely different.

What we did is we took that industrial might.

We took that, human capital that we had, and we repurposed these tools that had worked so well to keep housing prices from going down.

We repurposed them to make housing prices go up.

We created an economy that would grow very, very quickly by investing in cities as machines of growth.

Not just things like we subsidized interstate highways, the construction of major infrastructure, the buildings of sewer systems and water systems and what have you.

But we also created an expanded secondary market for homes.

We said instead of, paying a 30% down payment, how about 20?

How about ten?

How about five?

How about none?

How about down payment assistance?

Instead of having interest rates at 8%, could we make them seven?

Can we make them six?

Can we make them three?

Yesterday we moved it down to what, four and a quarter or something like that.

All of these policies, were designed to make it easier for more people to borrow more money and ultimately to pay more for housing.

Let's be clear.

This was wildly successful.

We still today nostalgize the couple of decades after World War two as being this period of time where broadly, economically speaking, we experienced tremendous growth.

I'm not making a social commentary here, and please don't read into that on, the morality of this growth and the distribution of it.

But if you're an economist and you step back, the numbers in a macro sense were really, really clear, right?

And in fact, it formed the basis really of all of our economic thought since then, at the end of World War Two, our debt and my PowerPoints are always done on, on a PC, and we put them on a mac and it screwed up this slide.

So bear with me.

for some reason, it's a little bit off, but I'm going to tell you what these lines are.

That line going down.

That's the one I want you to look at first.

The one that goes up, that's our GDP after World War two.

This is the first 25 years, 1945 to 1970.

What we can think of is like the first generation of suburban expansion, the first generation of this brand new way of building cities in America.

We're going to turn cities into machines of growth.

Pump money into housing.

Pump money into infrastructure.

And we're going to grow, grow, grow.

That yellow line there that goes from the bottom left to the upper right.

That's what happened to GDP.

Massive explosion of wealth in this country.

This bottom line here now is what happened to our public debt at the end of the Great Depression in World War two.

Our public debt was at all time highs in that two and a half decades after World War two.

It grew slightly, but it didn't grow all that much compared to how fast our gross domestic product, how how fast our economy grew.

And so that line there that you see, that goes from the top left to the to the up on top, to the lower on the bottom right.

That is our debt to GDP ratio.

That's the one that economists look at.

And let me just give you that top kind of summary of this slide.

This is the US economy growing its way out of debt.

So when you hear today politicians and you will hear this from Republican politicians and Democrat politicians at all levels, when we are in hard times, when we are in a difficult place, what do we do?

We grow our way out of that problem, that lesson- Yeah I see we got- You guys can handle this.

I'll stand up here.

That lesson about growth came right out of the end of.

World War two, where we literally blew.

Our way out of debt.

Here's the thing that is not usually part of the story.

We didn't really grow our way out of debt.

We actually shifted our debt.

What we saw is that instead of the government taking on debt, as they did during the Great Depression to fight World War two, what we did instead- Oh, this one?

Thats a cute little one.

Check check check.

Oh, that's a weird.

I'll make this work, all right, because I'm a professional.

What we did at the end of World War Two instead is we shifted the debt to the private sector.

Private mortgage debt went up over 1,100% in a two and a half decades after World War two.

The way we fueled growth was by having American families take on debt, to build new homes, to, acquire new property, to construct this, first generation of suburban expansion.

I want to show you.

And we could spend hours on this chart here.

I'm a, I apologize.

I'm an engineer, so I like charts.

I know not everybody does.

I'm going to tell you a story about this one.

So if you don't like charts, you can just listen to the story.

This is a plot of what is called the Case Shiller Home Index.

This is an index that goes back to the 1890 that looks at home values in relationship to incomes over time.

If you think of, peoples, you know, if your income doubled tomorrow, what that means is that you could buy a bigger house, you could buy more house, you could pay more for a house if everybody's income doubles.

What that means is that we all would just pay twice as much for the same home, right?

And so what this does is it kind of looks at housing prices in relationship to income.

As incomes go up, housing prices also broadly go up.

So the ratio between the two stays pretty flat.

If you look at right after world this goes from 1945 to 2008.

If you look right after World War two, what you see in this chart is a steady downward decline.

What that is, is that is the efficiencies of scale that you saw in early suburbanization.

So think about like computers and flat screen TVs today.

Our experience broadly with those things is that as our economy becomes more efficient, those things become cheaper, right?

As supply lines become tighter and we figure out how to do this more efficiently.

What happens is that prices go down.

That's what you saw in the first couple decades after World War two.

We were figuring out how to build homes at scale, how to manufacture them like we were manufacturing Model TS and what have you.

Two decades, three decades earlier.

And so prices steadily went down.

But when we got to the end of the 1960s, early 1970s, we ran into this problem with inflation.

We have experienced this now a little bit for ourselves post-pandemic.

What happens to interest rates when inflation goes up?

Interest rates also go up.

And if you think of this not from a government standpoint, but think of this from your own standpoint.

If inflation is, say, 10% a year, that means your purchasing power is declining by 10% a year.

If you're going to lend someone money, you're not going to lend them at 2%, 3%, 4%, because you're just going to lose purchasing power year after year after year.

You're going to ask for a higher interest rate.

So the more instability there is in the value of our currency, the more interest rates go up.

I want to point out something to you, and I won't go deeply into it because I know it's a bit technical, but ride with me here.

If you go back to the pre Great Depression banks and your loans that you were giving out were three year, four year, five year loans that would then roll over and reset what that allowed you to do as a local bank is adjust to interest rate fluctuation.

If interest rates were really low and you made a loan and then they went up, you were going to be in a lot of trouble as a bank because you would have to pay a lot of interest to attract depositors.

But you were only getting a little bit of interest on your loan.

So what the rollover did is it allowed you to stop the bleeding and reset your portfolio at a at market rates.

That's how banks stay in business.

What we did in the Great Depression by creating 30 year loans is we made it impossible for local banks to do that.

If I have a 30 year loan at 5%, and all of a sudden the market rate of interest that I have to pay is 7 or 8%, I've got to pay 8% to keep depositors, but I'm only getting 5% back on my loans.

I am slowly bleeding to death.

And what you see at the end of the 1960s is, is inflation.

And then banks starting to hemorrhage, loans stopped, housing construction slowed down, housing purchases slowed down, and housing prices dropped dramatically.

The federal government steps in.

I'm going to call this the first inflationary bubble right there.

The federal government steps in and the federal government bails out the local banks.

They create an entity called Freddie Mac.

They create an entity called Jenny Mae.

They start buying up more of these mortgages, not just the ones that met certain criteria, but they expanded the criteria.

They tried to make it easier for people to again borrow more, pay more for housing.

This worked to restabilize prices, but we wound up in a second inflationary bubble at the end of this one in the early 1980s, we raised interest rates really, really high and brought housing prices back down.

To recover from that.

We did something that today I think we would call, the deregulation approach.

Let's take the requirements that we have for screening loans and bundling loans and what have you, and let's deregulate those markets.

Again, we could do ours on the S&L scandal, but you can see how, the S&L bubble, followed that.

And then, of course, we're all more familiar with this one, which is really a bubble of decentralization, the idea that if we could just pump more liquidity into the market, if we could just create these kind of efficient products to aggregate risk across broader areas, risk would ultimately go away and disappear.

And what we ended up doing is creating the biggest financial bubble, in history.

Here's what I want to point out to you.

After you have that period of decline in housing prices, that that efficiency being wrung out, what you see is the amplitude of the bubbles increasing, right?

With each of those amplitudes, what you are seeing is an increasing financialization of our system.

Housing is going from being less of a product that you purchase in a local market, at a local bank, and more of a financial product that is traded and swapped on international markets and has become the foundation of our system.

In fact, in the 1980s, in a deregulation system, one of the things that the federal government did was said, if you are a bank and you own these things called mortgage backed securities, which is a bundling of a bunch of mortgages together, if you own that, as a local bank, you can treat that as a reserve, as if it were cash.

This created an insatiable demand for mortgages.

Ultimately, what this means is that in our market today, these are financial products.

Now they are also shelter.

And we experience them here locally, day to day as shelter.

But the way that our market experiences them is financial products.

Single family homes are a fantastic financial product.

We have figured out how to build them in very similar ways, in similar markets or in different markets across the country.

You can take that mortgage product, you can sell it onto a secondary market.

Bundlers will buy that, bundle them together, chop them up into securities, sell those securities off to banks to hold as their reserves, to pension funds, to, you know, other people trying to save money and leverage money.

Those will be bet against rehypothecated.

There's all kinds of financial instruments that are derivative of the basic mortgage, that product on the right, the five over one the whether it's a a condo unit or apartment building, whether it's low income or luxury.

Those things also are great financial products.

There's a secondary market for them.

They can be similarly bundled, similarly put together, in the way that we see with mortgages.

Because of this, there's an unlimited amount of money that can flow into these two products.

And these two products dominate our market, not because this is where the demand is, but because this is what we can finance easily.

The way to think about this in human terms is we all are under the illusion that when we go out and buy the home, we are the purchaser and the home is the product.

That might be true on a very intimate local scale, but on a macro economic scale, the scale that counts in terms of policy, the scale that Jerome Powell and Donald Trump have been arguing about for the last three months.

The question is not what the product is.

It's who is the product.

The product that everyone's fighting over.

The product that is driving prices is your willingness to dedicate three decades of your income to retiring a bond payment.

That's the thing that drives prices.

That's the thing that affects the market.

I showed you this chart.

It went up to 2008.

It's important to recognize that here's where we're at today.

The amplitude is just higher this time.

And I want you to do this for yourself.

The next time you're hearing anyone who you consider to be knowledgeable on economics and the markets talking about housing, listen to how they talk about the post.

2000.

You know, post 2000 era.

They will all every economist, whether it was Alan Greenspan or Ben Bernanke, Janet Yellen, whatever person at the federal Reserve down to your local bank, they will all talk about 2000 to 2008 as a housing bubble.

Those same exact people we'll talk about 2010 to today as a housing recovery.

How do you recover to a bubble condition?

What does that even mean?

When I said early on that, you know, the way we got out of World War, the Great Depression was World War two.

And those are economists kind of projecting their set of values onto us that we've all kind of ingested.

We use the term housing recovery as well, even though all of us recognize that, you know, the bubble.

And let's be clear, what is a bubble?

It is a distortion of reality.

So to recover to a bubble condition is to recover our financial unsustainability.

What we have done, and what our policies are broadly across the board, is to continue to make it easier for more people to borrow more money and ultimately to pay more for housing I, I can take us back to the last, presidential election where we had two candidates and both of them were focused on housing as an issue.

One of those candidates wanted to approach it by, making it easier for people to pay more, to buy housing with, down payment assistance.

Other forms of in a sense buyer assistance, well well help you make your down payment, well get you a lower interest rate, will get more favorable financing for, you know, specific groups that we want to work with and favor.

There is another presidential candidate, whose vision was, you know, what we could do?

We could privatize Fannie and Freddie, because they were brought into receivership in the 2008 market collapse.

We could make them private entities again so that they could make what, in a sense, are riskier loans, longer term loans, things like 40 year mortgages and 50 year mortgages because if you can't afford to finance that house over 30 years.

Instead of lowering the price, why don't we just finance it over 40 years or 50 years?

Because then it'll make the monthly payments cheaper for the same price.

If we look at both of these candidates visions, at the end of the day, what they were about is making it easier for Americans to pay.

Really, really high prices for housing.

This is no longer the answer.

I use the word moral when I describe what we did during the Great Depression, and I guess I do that as an olive branch, because I don't think what we did was evil.

And I think all of us in a similar position would have looked at that in a, you know, national calamity and desperation and said like, yes, we need to do this.

But since the end of World War Two, we've taken these tools and we've repurposed them to make the economy grow.

It was like the easy button that we could press over and over and over.

And what is resulted in is a situation we have now where housing prices can't go down or destroys our economy.

But housing prices have to go down because people cannot afford the housing that we have.

If we start with the idea or we recognize that these are financial products primarily, what happens is an interesting observation comes out of it.

I've taken just a normal bell curve.

Don't read into this too much.

I'm just trying to demonstrate a concept here.

If we look at capital distribution in the housing market, what we see is that almost all of the money that is available for building housing is for these two financial products.

These are 98% plus of what is built in our economy today.

If you want to, you know, you can have any color model T you want.

As long as it's black.

You can have any kind of house you want, as long as it fits into one of these two financial products.

There are slight derivations on this.

We sometimes, you know, we can build we've made it so we can build duplexes with some of the things on the left.

We've made it so we can build mixed use buildings with some of the financial products on the right.

But these are, you know, variations on a theme.

If we look on the far end of the spectrums, what we see is that wealthy people have no problem financing housing.

They just don't.

They're able to pay for it.

They're able to borrow money against it.

They have a whole different kind of financial system that works for them.

No one's really worried about them.

But it's that other end of the spectrum, that entry level house, that very, very cheap, affordable entry level get us in the door kind of thing where there is enormous demand in every market in this country.

There is tremendous, tremendous demand for this.

And there is no financing for these products.

And subsequently very, very few of them get built.

And when we see them get built, they're usually built as some type of aberration where somebody is losing a lot of money to do it.

This is where we have an opportunity, particularly as innovative people working together in a local community to actually really effect substantive change.

And let me just say, I hope you walk out of here today thinking that the macro market is pretty whack.

It is.

It's a mess.

Don't waste your time trying to fix it.

It doesn't not want to be fixed.

And we have so much other stuff to do.

That little circle on the far left, that's what we can fix today.

There's a lot of tools that we can bring to bear to make it happen.

That's where we should be spending our time and our energy.

What do those places look like?

That.

That circle on the left.

What am I envisioning when I'm talking about that?

Well, we have a lot of people who own single family homes today that don't use hardly any of the bedrooms that they have.

In fact, two thirds, two thirds of all households in America are one and two person households.

Two thirds of the homes we have in this country are single family homes.

So what that means is that we have a huge number of people who are living in houses with two, 3 or 4 bedrooms where they really only use one.

They are, they are have too much house.

Now, a lot of these places also are people who themselves are struggling.

Anyone in this room who owns a house knows that a house is a pain in the rear right?

I got to fix the roof.

I got to fix the heater.

I got this plumbing issue.

Someone's got to mow the yard.

Someone's got to shovel the snow.

On and on and on and on.

And what we see a lot of times is that particularly as people get older and their incomes kind of shrink in spending power, that a lot of these maintenance things become really, really burdensome.

What we see in other parts of the world, what we see in the past in the United States, is that it was very, very common.

Is very, very common for people to rent out a bedroom to literally like, take and put an exterior door on one of their rooms, put in a kitchenette, close it off to the rest of the house and rent it out as a separate unit.

For us today, that would be a duplex that would need all kinds of special permitting and special rules.

It would not meet certain codes.

It would have all this kind of owner's thing you'd have to go through to do what is just basically making good use of the house.

And let's go back to this idea of moral.

I put a picture of a very beautiful elderly woman up there.

Right.

We can all empathize with this person who maybe is living alone in a place, has a neighborhood that they like.

Our society today would say, you know what you should do?

You should move to a home or a community somewhere else.

And this person will say, but I don't want to.

I go to church up the street.

I have friends in this neighborhood.

I have memories in this house.

I don't I don't want to leave it.

Well, then you're just going to have to suffer and not have any money and let your roof go bad and let your furnace fail and what have you.

The reality is, is that allowing someone to live in this house with them on their terms and their conditions, someone who can then also help them shovel that sidewalk in the winter or mow that yard.

Someone that will be there if they need to go to the grocery store or, you know, an emergency to the hospital, someone who can help them by paying rent, accomplish these other things that they want to do in life.

This is much more moral than a reverse mortgage, which is like slowly taking your house as again, a financial product.

This is a backyard cottage.

I know planners call these ADUs.

Don't call them ADUs.

It sounds like a disease that you catch.

A backyard cottage is, again, a very simple thing.

My mother in law, we don't we don't want to put my mother in law in a home.

She's, you know, wants her independent living instead of having her move into our house or, you know, ask her to go live somewhere else.

We're just going to build us another cottage in the backyard and allow her to live there.

She can come over and watch the kids.

She can have dinner with us when she chooses.

She can have her own place.

We, we have our privacy.

She has hers.

It's extremely dignified way to live.

Now take that and say instead of mother in law, say college student or divorcee trying to get their life back together or.

And just, like, fill in the blank.

This is an entry level housing unit.

It allows people to get a start.

It provides income for the person who lives in that house.

It allows them to solve problems that they have.

This is a starter house Today, we often call these things tiny homes or we put some other kind of cute little label on them.

In my community, where I'm from, city in central Minnesota.

We actually have an ordinance about tiny homes.

If you want to build a house that is 405 hundred and 600 square foot, we freak out.

You have to meet all the requirements of a house.

Then you have to meet all subpart A through M of the tiny house code.

You've got to go ask permission from your neighbors.

You have to genuflect in front of the planning board.

You have to do all these things to build what anyone else through history would call it a tiny, a starter house.

I've been all through your neighborhoods.

Your neighborhoods are full of these.

Most of them are no longer 405 hundred, 600 square foot.

Because what happens when you buy into a starter house is you're getting started.

You save up a little bit of money, you put an addition on, you have a kid, you put on a second story, the neighbor comes over and helps you go over and help your neighbors.

We thicken these things up.

We can walk through your historic neighborhoods and see 1,000, 1,200, 1,500 square foot homes that started out just like this.

Today, if you want to build a 1500 square foot home, you can't start with 400ft.

You have to get a 30 year mortgage.

You have to show that you have had stable income for a long time.

You have to take on a debt that is bigger than what you want.

That's what we require you to do.

You have to build more house than you actually need at the moment, and then grow into it, as opposed to build a house that you can afford and then expand the house as your wealth and capacity expands.

We need to get back in the business of building starter homes.

Your neighborhoods are crying out for them.

You have all kinds of gaps in your neighborhoods where you have sewer and water and sidewalk and road.

That's all in place that needs TLC.

That needs tax base.

That needs people who love the place.

If we can build more of these, we can invite more people into our neighborhoods to be that difference.

So I've just laid out a vision for where there's a gap in the marketplace and what that gap looks like.

I want to talk about how we as a community, as a city, as a place, solve this gap.

What we talk about is three things that are needed.

The first is, code reform.

The second is an ecosystem of incremental developers to build the houses.

And then third is local financial support.

And let me let me say something about Strong Towns before we go any further.

One of the kind of core insights of Strong Towns is that local government is the way we work together in a place.

It's the highest form of collaboration that we have as a community in our society today.

We are kind of taught or pushed to look at local government as the lowest form of government on a food chain of governments.

We have the federal government.

They're really, really powerful and important.

Then we have the state.

They're less so, but they're more important than the regional government.

And then at the bottom, the algae is local government.

We don't look at it that way.

We think that the proper role of local government and really this is the founder's vision of local government.

This is local government at its best.

It's the way that we all come together and get things done.

Now, in a community like this, there's going to be lots of civic organizations.

There's going to be lots of neighborhood groups.

There's lots of other layers underneath local government.

Local government is the way we work together to collectively do things.

This is an action for us to do collectively.

So let me, in the few minutes I've got left, go through what some of these things look like.

Because code reform, we actually put out a toolkit.

I've been traveling around now for a year and a half talking about escaping the housing trap.

And one of the things I found early on is that even people who had read the book said, Chuck, I read this book.

I see what you're telling us to do.

How do I get started?

You told us like we need to fix our codes.

We need to get developers out there building this stuff, and we need to help finance it locally.

But I don't know where to start.

And so what we have done is we're putting together three toolkits on here's like the start.

Here's where you get going.

So the first toolkit came out last January.

I will give you this website at the end again too.

So don't feel like you have to get it right now.

But it is six policies, six regulatory reforms that we need to change about how we do business at City Hall in order to make it easier to build these entry level units.

We need to allow single family home conversions by.

Right.

So it should be really simple Easy for that person to, rent out their spare bedroom.

It should be, like, super simple for them to do that.

We need to make backyard cottages allowed everywhere.

And, you know, there's different ways to go about doing this.

I think some of your core neighborhoods are going to be more receptive to this right off the bat.

I would start in those places and expand beyond that.

But we need to get to a place where this is a very simple thing to do.

We need to legalize starter homes.

There shouldn't be a burden if your house is small, to build it.

If it meets all the other codes and all the other regulations.

Minimum lot sizes are a bizarre, part of the suburban zoning codes that we've been given.

And changing that, allowing existing neighborhoods the flexibility to be redesigned to meet, needs is really, really important.

Parking mandates, are the last one are the next one, and then the last one.

We need to streamline the approval process.

We actually have recommended that for these entry level units, for these simple things, we need to have 24 hour permit turnaround.

These things are so simple and so easy that there should be no regulatory friction in getting them done.

Let's just go out and build them.

A lot of people want to make regulatory reform around housing, the next, like universal fight, the next big thing we argue about.

There's all kinds of, people, you know, having having meetings and, and and fights over this or that.

To me, this is the most boring revolution, right?

It's literally like, let's go in, let's tweak some of these codes.

We're not trying to solve every problem in our zoning books.

There's many, many, many.

We're just trying to fix a couple of things.

And those couple things are not scary.

So if you are with me on this, what I recommend to people is make all of this not scary to people.

If you download our Housing Ready toolkit, you'll see that every example we use of the type of person, the type of family, the type of impact they have.

They're very and I'm going to say this and you can try to be generous with me.

Picture the worst like Nimby.

I hate all change.

I don't want this.

I'm scared of this or this or this.

We're trying to frame this so that that person thinks we're boring.

So all of our imagery is just very Ma and Pa America apple pie.

The way we talk about this is grandma moving into the backyard.

The way we have this conversation is just very, very normal and plain.

We do not want to trigger anyone's, gut reaction.

We just want to say, hey, this is super boring.

We're just making this little change so that we can build a few more units in these places.

This is a approach about getting it done.

All right.

The next toolkit comes out next week.

So we are, ready to put the second one out.

The second one is about how we go about, supporting an ecosystem of developers to do this work.

How do we get people off the sidelines and building those entry level homes?

Because I'm going to tell you something.

The single family home builder, they don't want to work on the the little homes, the the track builder who wants to go build 40 homes in a subdivision.

They're not interested in doing the backyard cottage and the duplex conversion and and for good reason.

Their capital flow is really simple.

Their profit margins are very predictable.

Their market is a very easy one to do.

If you're a condo unit builder.

You might have a little bit of challenge here or there, but your margins are generally bigger and you've got a very clear business model too.

We oftentimes go to those developers and say, we want you to build a different product, and I want you to recognize that's like going to an auto dealer saying, we want you to build toasters.

It's actually like a different thing.

What we need is we need to recognize that there is a lot of people in our community who will build toasters.

There's a lot of people in our community who will build those entry level housing units.

Where are they?

They're on the sidelines.

They're not doing it today when they could.

So who's an incremental developer?

It's astounding because in every community we go to, there's all kinds of entrepreneurial people that would do this.

I have been in your neighborhoods.

I have talked to people, many, many people who said, oh, I would love to dot, dot, dot buy that house and decline, fix it up, turn it into a duplex, resell it.

I would love to build a backyard cottage in my place.

I would love to build a small home in between these two houses where there's a gap, but I don't because.

And there's always a reason why developing is really complex.

There's all kinds of different things that go into doing this.

There's, construction, there's finance, there's regular- regulations, there's all these different things.

And everybody who goes into this has a a gap somewhere in their own knowledge.

And so what we talk about is how do we make it easier and more inviting for these people to step up?

This is a quote from the book that's going to come out next week.

I would like to share a lot more with you, but like the last thing they do are good graphics.

So all I have is text, which I hate slides, with just text, but let me read this one.

When we ask the question of what's holding these incremental developers back in city after city, we heard the same stories and they weren't about opposition or denied permits.

They're about getting lost, getting worn down and giving up.

What we need to do is make it easier for people who want to step up and do this, to step up and do this and when, Let me let me make this statement.

When we're talking about a city like Akron, where we have a lot of people here who are struggling, what we also have with that struggle is a lot of people who are really, really entrepreneurial, incredibly entrepreneurial.

They have to be entrepreneurial because that's how you make it day to day to day.

When we give people who are entrepreneurial the capacity to step up and do little things, they do.

It's absolutely astounding.

So next week, and I'll give you the address at the end on where to sign up and get it.

So you get it delivered when everybody else does.

We'll have the final version of the second toolkit out, and it will go through all the things we need to do at the local level to help and assist people in stepping up.

I'm at time, so I just want to go through this one real quick.

Finance is the third toolkit, and let me give you the standard that we use.

Cities cannot be the dumb money at the card table.

We cannot be the ones expected to step in and take all the risk and lose all the money.

If we are going to finance the entry level units at scale, cities have to be able to do this at a profit.

And I don't mean at maximum profit or maximize profit.

What I really mean is they need to break even on each one, because recognize if you break even on each one that you do, you can do it as many times as people walk in City Hall.

That's the trick to making this work.

There's some places that have figured this out and done this really well.

In Muskegon, they're now using tax increment financing on entry level homes to essentially make people's permit, down payment.

If you want to move into a small entry level house in an existing neighborhood in Muskegon.

They will pay your down payment for you using tax increment financing.

Again, they're not losing any money on this.

They're making it back on the taxes that you're paying.

They're just taking the taxes you're paying and using it to pay off a loan for your down payment.

If you flip the house or leave the house early.

They claw back some of that.

So it's really meant for people who want to stay in the neighborhood and be a stable part of the, of the community.

This is a been really successful in making housing more affordable for people, especially that entry level housing.

In Minnesota, we have a program to do kind of a similar thing with special assessments.

We're all familiar with special assessments around.

I go and build your road and then you get a bill for it.

We can actually use that same thing, for housing.

The interesting thing about that is that the government can get very low rates.

Where in the market you can't, and the government becomes the secured, interest holder on the property.

You all know that if you have a mortgage and then a second mortgage, if you default, the first mortgage gets paid out first and then the second mortgage with a special assessment process.

And, with the tax increment financing process, the city becomes the primary mortgage holder.

So the city gets paid out first, then the bank, then the second bank.

So these are very, very low risk.

And in Florida we've seen philanthropy actually join with local governments, to cosign on loans, to reduce the bank's risk.

A lot of banks are willing to make these loans, but they're worried about the risk, particularly in some neighborhoods.

There's a whole, you know, book about redlining and risk and what have you.

This is kind of an intentional thing for us as a community to say, yeah, we believe in this neighborhood, we believe in this place, and we're going to reduce that risk.

So.

This is the book.

And I want to give you the last slide here.

If you go to strong towns that are housing ready, you can get that first tool kit right now.

And if you do that, you will be on a list to get mailed with the second tool kit.

Next Friday, I think when it comes out.

Thank you so much.

This has been great.