How’s the Market?

I don’t know if you’ve been watching the news, but the price of eggs has gone sky high. Apparently, the Avian flu has wiped out scores of birds, and the increasing costs of fuel and feed have only made matters worse. I was at the Lucky supermarket recently, and the egg cabinet was down to about 15 dozen white eggs in Styrofoam containers. Gone were the free-range, brown, or locally sourced eggs. If you wanted eggs, you could take the ones offered or go home. Since politicians rarely let a good crisis go to waste, here’s my prediction for the months ahead (in the spirit of Tommy Wayne Kramer). Given that eggs are a staple, and everyone should have access to them, I expect the federal government will soon announce the Department of Eggs, an agency responsible for assuring that eggs remain available to all Americans. The agency’s work will start with well-intentioned, if counterproductive, laws intended to make eggs safer and more accessible, but in fact, will simply make them more expensive and harder to come buy--with fewer varieties to choose from. The fledgling department will implement price controls in hopes of keeping eggs affordable. They will then expand their scope to oversee the size, color, source, and manner of production to prevent another catastrophic egg shortage. Eventually, they’ll realize that their laws didn’t work exactly as planned, but rather than undoing bad regulation, they’ll pass more to offset the problem. How do I know all this? Because I have been in real estate for 47 years and this is how the government works. It brings to mind one of my favorite quotes from Ronald Reagan: “A government bureau is the nearest thing to eternal life we'll ever see on this Earth!” In the housing market, regulation has made construction so expensive that we have a nationwide housing shortage. And since the laws of supply and demand are immutable, this shortage has sent housing prices soaring. Between zoning restrictions, building codes, and other limitation, it costs more to build a house than you can sell it for. In California, new residential construction requires dual pane windows, indoor sprinklers, and solar panels (never mind that your house sits in shadow of mountain with no sun). Houses must be built in areas zoned for residential and funds are only available to build low-cost housing for the economically underprivileged—even though the cost to build those units doesn’t make economic sense. So back to our egg analogy, the Department of Eggs will make sure that size, color, source, and manner of production are controlled. Only large or extra-large eggs will suffice (no one should be forced to manage with puny eggs). Eggs will be limited to white ones because an ill-informed bureaucrat noticed that many chickens who laid brown eggs had Avian flu. Chickens and their eggs will not be allowed to cross state lines, as this will limit the spread of disease. And chicken farmers will be expected to comply with new zoning laws that require an eighth of an acre per chicken to assure the healthiest of chickens, and therefore, the best-quality eggs. Egg inspectors will be expected to check on an ever-expanding list of quality measures (just like building inspectors). When the egg regulations intended to solve the current crisis impair our ability to buy eggs at a reasonable price, the government may respond with subsidies, or maybe rationing. Do you really need a dozen eggs a week? And don’t even dream of selling your eggs to someone without an egg-selling license—that’s a felony. Since eggs will be such a sought-after good, the Department of Eggs will have to expand its scope once again, this time to safeguard eggs. Because of the shortage of eggs, a black market will blossom. All egg trucks will need an armed guard to prevent hijacking. And on it goes. Hopefully, I’m all wrong about this. But wouldn’t it be nice if elected officials spent some time removing counterproductive regulations from the books instead of continually looking for ways to interfere with markets that are perfectly capable of taking care of themselves? If you have questions about property management or real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery. Dick Selzer is a real estate broker who has been in the business for more than 45 years.

How’s the Market?

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