June 24, 2024

As Renters Move In and Neighborhoods Change, Homeowners Grumble

Across the street, the Osborne family has been tenants for two years, moving in after the previous owner lost the house in a foreclosure. They are happy to have a decent place to call home but, like many renters, they have not done much to improve the appearance or join the community. And they are not alone: the family behind Ms. Holcomb, the one two doors down, and several in the cul-de-sac across the way are among the renters who have been supplanting homeowners in this blue-collar, suburban neighborhood as investors buy single-family homes and convert them to rentals.

“Used to, we knew our neighbors,” Ms. Holcomb said. Then she gestured toward the few remaining owner-occupied houses nearby. “Except for the two that have been here, I don’t know any of my neighbors.”

Across the country, a growing number of single-family rentals provides an option for many who lost their homes in the housing crash through foreclosure and for those who cannot obtain a mortgage under today’s tougher credit conditions. But the decline in homeownership is also changing many neighborhoods in profound ways, including reduced home values, lower voter turnout and political influence, less social stability and higher crime.

“When there are fewer homeowners, there is less ‘self-help,’ like park and neighborhood cleanup, neighborhood watch,” said William M. Rohe, a professor at the University of North Carolina at Chapel Hill who has just completed a review of current research on homeownership’s effects. Even conscientious landlords and tenants invest less in their property than owner-occupants, he said. “Who’s going to paint the outside of a rental house? You’d almost have to be crazy.”

Despite signs of a recovery in the housing market, the country’s homeownership rate is still on the decline. In Memphis, it has fallen from roughly 65 percent of families in 2005 to about 55 percent now, according to the Census Bureau.

In hundreds of neighborhoods that once attracted first-time home buyers, investors have stepped in, buying up tens of thousands of homes for the rental market. That has helped put paying tenants in a number of homes that were vacant or becoming eyesores. And many of the new tenants say they are eager to buy a home at the first opportunity and share the same concerns as homeowners about maintaining a safe and healthy neighborhood for their families and children.

But it has also raised the ire of some homeowners whose tidy subdivisions have changed, seemingly overnight, into a parade of strangers.

Hillshire was built in the late 1970s, its single-story, three-bedroom homes designed with no particular architectural pedigree, but not ticky-tacky identical. As a young mother of two, Ms. Holcomb, a medical practice administrator, chose the neighborhood because of its school district, paying $73,000 for her home in 1996. The homeowners interviewed for this article tended to have steady middle-class incomes; several were retired military and police officers. Among the renters, who pay about $900 to $1,000 a month, were several construction and restaurant workers, with lower, less reliable earnings.

On a recent evening, parents pushed strollers and lawn mowers droned, children played on a tire swing and in one driveway, a longtime resident and his grandson tinkered with the fat tire of a slick red drag racer.

But there was a seedy underside. Jimmy Fumich, a homeowner and air-conditioner repairman, said he had been in court that day as a witness in an animal cruelty case against a neighbor, a renter, who had left a dog chained to a stop sign in the heat. She was already in trouble, he said, for breaking into an empty house on the block. Mr. Fumich, who is Ms. Holcomb’s brother, mentioned a couple of meth houses and one that had been used as a brothel. All were rentals. Police department records show that major crime in the area, which does not include drug offenses, has actually gone down since spiking in 2010.

Still, Lea Ann Braswell, the captain of the neighborhood watch, recounted a recent episode in which a teenage girl, whose throat police said was cut by a young man carrying a sword, sought refuge on Ms. Braswell’s doorstep.

“We used to have hardly anything happen,” she said.

Asked how many renters were active with the neighborhood watch, Mr. Fumich said, “Zero.”

Article source: http://www.nytimes.com/2013/08/29/business/economy/as-renters-move-in-and-neighborhoods-change-homeowners-grumble.html?partner=rss&emc=rss

Endowment Fund, Run by Mark Yusko, Limits Withdrawals

But now investors in the fund, the nine-year-old, $3.3 billion Endowment Fund, are finding it was much easier to get in than it is to get out.

The fund, run by Mark Yusko, the charismatic former chief of the endowment for the University of North Carolina at Chapel Hill, sent letters on Friday to investors saying it was limiting the amount of money that could be taken out each quarter. Investors withdrew more than $1 billion, or about a quarter of the fund’s assets, this year through September, according to a filing with the Securities and Exchange Commission.

Investors generally have been disappointed with hedge fund returns for the last couple of years because many have lagged the gains made in the stock market. Investors have pulled about $13.2 billion, or 2 percent of total assets, from hedge funds for the year through August, according to estimates by BarclayHedge and TrimTabs Investment Research. The firms estimate that in the 3,000 hedge funds that they track, assets have fallen 28.7 percent from their peak of $2.4 trillion in 2008 through a combination of weak performance and withdrawals.

But hedge fund investors and lawyers said the move by the Endowment Fund was one of the first forms of gating, or reducing the ability of investors to take out their money, since the financial crisis. Then, several large hedge funds gated, angering their investors who could not get access to their money.

The troubles at the Endowment Fund are a black eye for Mr. Yusko, a frequent speaker at investment conferences who, after leaving the University of North Carolina in 2004, built a substantial hedge fund empire that at its peak in 2008 controlled $22 billion in assets. Today, he oversees $14 billion.

Mr. Yusko declined to comment on Monday.

He started the Endowment Fund in 2003 with Salient Partners, a Houston firm that managed money for wealthy individuals. It is a fund that invests in dozens of other funds, including some run by prominent managers who have stumbled in recent years, like John A. Paulson, Philip A. Falcone and Eric Mindich.

Several experts were quick to say they saw the gating at the Endowment Fund as a reflection of what that fund had invested in, not as a general trend among funds. About 35 percent of the fund’s assets are invested in real estate, energy and private equity assets — investments that the fund simply could not exit quickly if investors were to demand their cash.

The substantial redemptions in the Endowment Fund follow several years of weak returns. For the 12 months ending late August, the fund was down 2.5 percent, compared with an 18 percent gain in the Standard Poor’s 500-stock index and a 0.9 percent decline in the average hedge fund. Over the last five years, the Endowment Fund returned 5.7 percent annually, lagging the 7.7 percent gain by the S.. P. 500 and the 7.3 percent annual gain by the average hedge fund.

“Hedge funds, as an asset class, have underperformed the stock market and there are definitely some investors out there who feel like they haven’t been invited to the party,” said Stewart Massey, a partner at Massey Quick in Morristown, N.J., which invests money for individuals and institutions.

But the fees investors have paid the Endowment Fund for its lukewarm performance have been considerable, up to about 3.5 percent a year. Additionally, the underlying funds can receive as much as 25 percent of any profits they make.

On top of that, some of the fund’s investors who came in through Merrill Lynch financial advisers may have paid as much as a 2.5 percent upfront fee, similar to what is charged for other funds, according to internal Merrill Lynch documents.

A spokesman for Bank of America, which acquired Merrill Lynch in 2009, declined to answer specific questions about the Endowment Fund. But he did confirm that the wealth management arm of Bank of America on Friday changed the Endowment Fund’s status from “open,” to “on hold,” meaning that wealthy investors could not put any new or additional money into the fund.

Article source: http://www.nytimes.com/2012/10/31/business/endowment-fund-run-by-mark-yusko-limits-withdrawals.html?partner=rss&emc=rss

When Twitter Blocks Tweets, It’s #Outrage

But this week, in a sort of coming-of-age moment, Twitter announced that upon request, it would block certain messages in countries where they were deemed illegal. The move immediately prompted outcry, argument and even calls for a boycott from some users.

Twitter in turn sought to explain that this was the best way to comply with the laws of different countries. And the whole episode, swiftly amplified worldwide through Twitter itself, offered a telling glimpse into what happens when a scrappy Internet start-up tries to become a multinational business.

“Thank you for the #censorship, #twitter, with love from the governments of #Syria, #Bahrain, #Iran, #Turkey, #China, #Saudi and friends,” wrote Björn Nilsson, a user in Sweden.

Bianca Jagger asked, almost existentially, “How are we going to boycott #TWITTER?”

Zeynep Tufekci, an assistant professor at the University of North Carolina at Chapel Hill, took the other side. “I’m defending Twitter’s policy because it is the one I hope others adopt: transparent, minimally compliant w/ law, user-empowering,” she wrote.

Twitter, like other Internet companies, has always had to remove content that is illegal in one country or another, whether it is a copyright violation, child pornography or something else. What is different about Twitter’s announcement is that it plans to redact messages only in those countries where they are illegal, and only if the authorities there make a valid request.

So if someone posts a message that insults the monarchy of Thailand, which is punishable by a jail term, it will be blocked and unavailable to Twitter users in that country, but still visible elsewhere. What is more, Twitter users in Thailand will be put on notice that something was removed: A gray box will show up in its place, with a clear note: “Tweet withheld,” it will read. “This tweet from @username has been withheld in: Thailand.”

Think of it as the digital equivalent of a newspaper responding to old-fashioned government censorship with a blank front page.

“We have always had the obligation to remove illegal content. This is a way to keep it up in places where we can,” said Alex Macgillivray, general counsel at Twitter. “We have been working on this awhile. We needed to figure out how to deal with this as a company.”

The majority of Twitter’s 100 million users are overseas and it has several offices abroad working to expand its business and drum up local advertising. Twitter’s president, Jack Dorsey, said this week that it would open an office in Germany, which prohibits Nazi material online and offline.

The announcement signals the choice that a service like Twitter has to make about its own existence: Should it be more of a free-speech tool that can be used in defiance of governments, as happened during the Arab Spring protests, or a commercial venture that necessarily must obey the laws of the lands where it seeks to attract customers and eventually make money?

Tim Wu, a professor at Columbia Law School and author of “The Master Switch,” said the changes could undermine the usefulness of Twitter in authoritarian countries.

“I don’t fault them for wanting to run a normal business,” he said. “It does suggest someone or something else needs to take Twitter’s place as a political tool.”

Professor Wu urged the company to use discretion: “Twitter needs to be careful not to be in a position where it’s no longer helpful to a rebellion against oppressive governments. It needs to remain its old self in some circumstances.”

Twitter’s policy of allowing its users to adopt pseudonyms made it particularly useful to many protest organizers in the Arab world, and its chief executive went so far as to call it “the free-speech wing of the free-speech party.”

But Professor Wu wondered aloud if the new policy would have allowed Egyptians to organize protests using the service.

Article source: http://www.nytimes.com/2012/01/28/technology/when-twitter-blocks-tweets-its-outrage.html?partner=rss&emc=rss