Friday, December 28, 2018

Friday, December 21, 2018

Lowering Medicare Qualifying Age to 62 wil allow Millions to Retire Early, Opening up Millions of New Jobs!

While the first qualification age to trigger Social Security benefits is 62, the qualifying age for Medicare is 65 (certain exceptions are there: qualifying by disability; SS-eligible spouse turning 62, etc.), thus forcing millions of willing retirees to wait until the Medicare to kicks in at 65, to avoid having to walk into the expensive COBRA/health insurance trap. 

Therefore, the Federal Government must seriously consider lowering the Medicare age to 62 for all SS-eligible employees to allow and incentivize early retirement. So, what are the potential advantages? Let's consider these:

1. The Simultaneous Trigger of Social Security and Medicare at 62 will Allow Willing Employees to Retire from the "Full-time" Workforce at 62 -- This will free up millions of jobs. Again, in order to qualify for the proposed "Medicare at 62" one must simultaneously trigger the SS benefits at 62, thereby ensuring permanent retirement from the "full-time" workforce. Of course, if one decides to return to the full-time workforce at a later date, one must return all of the benefits earned (in line with the current SS law). In fact, in order to reduce "experimentation" with early departures from the full-time workforce, an additional (post retirement) surrender penalty could be assessed on both, thus minimizing the possibility of the system being gamed as a temporary make-shift retirement mechanism.

2. The Simultaneous Trigger will Create Millions of Jobs for the New Graduates -- Since most people retire from "long held" jobs, those jobs tend to be "career" jobs. Most companies try to fill the long-term career jobs with new graduates, via their 1-to-3 year training programs (e.g., engineer trainee, management trainee, analyst and research trainee, marketing trainee, etc.), with the objective of indoctrinating the candidates into their unique corporate cultures. When the new graduates go through these structured training programs, they become more knowledgeable and visionary employees, generally with long-term association with their companies. Also, in today's fast-changing technological environment (as AI and Robotics have already taken over), the new engineering graduates are far more critical for the labor force than their senior counterparts as most of whom would need vast re-training. The simultaneous trigger will, therefore, allow senior employees, unwilling to be retrained, to take the early retirement and move on.

3. The Lower Replacement Wages will Help Hire More New Graduates -- By virtue of sheer longevity the retirees usually command some of the highest salaries in the industry. Since the new graduates would be hired at significantly lower wage levels, the replacement ratio might be higher, perhaps 3 new hires for every 2 persons retiring. Let's not forget that baby boomers still comprise the largest generation (of course, millennials are expected to outnumber the baby boomers by 2020), making the congestion/relative strength of this age group (meaning the number of employees comprising this age group of 62 to 65 relative to the competing groups on the labor force) simply enormous and powerful. Even if a small percentage of this group, say 20%, is enticed to retire at 62 every year, an unprecedented job boom would be in the offing. Now, add the higher replacement ratio to it and it's an unprecedented plus, plus!

4. New Retirees Needing to Supplement Social Security Incomes will still have Access to the Part-time Jobs to be Vacated by the New Graduates -- From time time, it may so happen that a small percentage of these retirees might need to supplement their social security incomes with part-time jobs. Just the way these retirees would pave the way for millions of high-paying career jobs, they would have access to tons of the part-time jobs the new graduates would leave behind, leading to a very healthy and complementary continuum. Given the wealth of knowledge and expertise these retirees are bestowed with, a sizable percentage might even consider part-time teaching and training jobs, a vast majority of which would otherwise remain perennially unfilled, especially in rural areas.

5. Housing in Sunbelt will be Big Beneficiary of the New Beginning of Early Retirement -- To escape the high cost of living in big metropolitan areas, a big percentage of these retirees will move to the sunbelt, creating a new housing and economic boom there. Undoubtedly, the housing construction, including the adult retirement communities, would be the single biggest beneficiary of the influx of new retirees. Retirees are not known to be flippers and gamers of housing so their arrival would not force the house prices to skyrocket assuming, of course, the new construction keeps pace with the growth in retirement population. Likewise, as the early retirees leave the major metropolitan areas the housing trade-up would accentuate, welcoming the arrival of the new entrants into the labor force, with plenty of start-up housing to choose from. 

6. The New Generation of Early Retirees will Significantly Boost Leisure and Recreational (Adult Lifestyle) Industries -- The creation of this new generation of early retirees with significant disposable income will provide a big boost to the leisure/travel and recreation industries as a whole. From vacation homes to new autos to hospitality to airlines to Amtrak to cruselines to recreation vehicles (RVs), etc. will all benefit from this new-found economic class. Better yet, their presence will wholesomely complement the leisure and vacation industries; for example, airlines, hotel chains and cruiselines that heavily discount their off-peak inventories may not be forced to the old marketing practice anymore, meaning the arrival of early retirees might help smooth out off-peaks leading to year-long consistent and predictable traffic patterns, with big growth in revenue and enhanced profitability. Medicare-participating HMOs and AARP will also see a big growth in membership populations.

7. The Job Boom among Millennial and Early-Gen Y will provide a Gigantic Boost to their Lifestyle Industries -- While the early retirees will bolster spending in leisure, the counter story could be as exciting as well. Considering millennials and early-Gen Y (born between 1995 and 1999) will fill in the vacancies to be left behind by their senior counterparts, their enhanced spending power will be a big boon to the (trendy) lifestyle industries like techs and gadgets, fashion and professional garments, alternative health and beauty, etc.  The housing industry will see the beginning of a new replacement cycle: many older homes, subject to local zoning and variances, will be replaced by the trendy multifamily; downtown revitalization will get massive boosts; the traditional suburban homebuilders will  fight for a piece of the fast-expanding urban housing pie, etc., the sum-total of which will contribute to a new economic and cultural boom in urban areas. Atop this boom, the early-Gen Y's entry into corporate America will be the new silver lining.  

8. Fast-growing Mid-range Companies will Finally get to Compete for Top Talents -- Fast-growing mid-range companies do not necessarily get to compete for the top talents as they are generally competed away by the large-cap companies. This new job boom, resulting from the departure of early retirees, will see massive growth in high-paying career jobs, potentially trickling down to mid-to-smaller companies over time, making them more competitive in the global marketplace. While the lack of modern technical skills in our workforce originally paved the way for the H1B foreign workers, the arrival of the new home-grown STEM graduates will greatly reduce the need for those foreigner workers going forward. In order to nurture the massive young talent pool, most companies will return to the traditional long-term training programs, allowing young talents to adapt to their unique (corporate) cultures. Companies armed with better trained and modernized workforces will be more innovative and productive, resulting in significantly lower turnovers.

9. Higher Replacement Ratios will Make the Program (Medicare at 62) Revenue Neutral, but Cost-sharing could be an Option to Make up any Temporary Shortfall -- The higher replacement ratio - three new entrants for every two retirees (studies needed by GAO) - will make the program revenue neutral, if not revenue positive, but a cost-sharing  could be an option to manage any temporary shortfall could be passed through to the retirees by way of cost sharing (for example, 15% pass through at 62, 10% at 63 and 5% at 64, etc.). Even if it comes down to some sort of cost sharing, it would be a far better option than the COBRA or individual insurances. On the positive side, in the event of a cost sharing, the participating HMOs (most likely) might offer to pick up the tab to shore up their enrollments. 

Uncle Sam, please ask Congress to lower the Medicare Age to 62. It's a no-brainer.


Thank you,

Sid Som
President, Homequant, Inc.

Sunday, December 9, 2018

Why Some Bosses Bully the Superstars

General Attributes of Bully Bosses

a) Exhibit extremely mean and vile behavior towards the targets – generally a handful of employees within the department/hierarchy.

b) Malice is rarely performance, work or ethics related.  

c) Enjoy (sadistic) pleasure in maligning targets in meetings in front of colleagues and others.

d) Insignificant stimulus triggers their bi-polar behavior towards the targets, often followed by an indecent and tangential rant.

e) Evaluate targets poorly with very derogatory narratives, atrociously ignoring their actual and on-record performances.

f) Enjoy humiliating targets with deliberately antagonistic stance and actions, systematically removing them from all major tasks, projects, groups and committees.

g) Relocate (or constantly threaten to relocate) targets to unfitting setting.

Why Some Bosses Bully Existing Superstars
Answer – Inferiority Complex

1) Incompetent bosses (hired or promoted due to high-level connections, nepotism, political appointments, etc.) often suffer from serious inferiority complex in managing the highly competent staff members (“superstars”).

2) Unfortunately, some of those incompetent bosses (who are also inherently angry and arrogant) grow into bullies fearing significant resistance from within.  

3) As a result, those bullies aggressively target the superstars (to start with), routinely walking down on the curve until the mission has been accomplished.

4) They even entice the “safe” enthusiasts (none is ever safe with these bullies!) to collaborate alongside, jointly reining in on the top targets, promptly and decisively.

5) Peers remain mum, to avoid having to cut a sorry figure with the power backing the bully.

6) The higher-ups usually look the other way, paving the way for least resistance – for a collective and glorious victory. 
7) The hand-picked investigators of the top bullies are sometimes accomplices too, protecting the evil and sacrificing the coveted.

Why Some Bosses Hire Superstars and then Bully Them
Answer – To Steal Domain Knowledge

8) The bullies that are obsessed with visibility and cheap credit often resort to this strategy: They hire industry experts and when the department shows potential, they start to exhibit their true color.

9) Of course, until then, they tend to be very quiescent, generally polite and encouraging – just to accentuate the pace of delivery, i.e. transfer of knowledge/know-how and implementation. 

10) These bullies realize that the presence of the superstars lowers their image and power so they strike at the first opportune moment.

11) Additionally, they trade on the fact that the superstars, unlike the other employees, would not stick around too long should the situation deteriorate, so they intensify the assault, often exponentially, to accentuate the pace.

What Happens When the Superstars are Bullied

a) The non-confrontational folks easily give up, accepting the writing on the wall. They start searching for new jobs, including within the same organization.

b) Depending on the atrocity being inflicted, some even quit without landing new jobs, knowing very well it’s easier to switch than having to start afresh.

c) The confrontational counterpart (without the union backing, etc.) wishfully lingers on, evaluates legal rights, and explores other avenues including therapy – until, of course, the inevitable hits the fan!

d) The other confrontational kind (with backing) tries to survive with the needed help from the backers – outcome is usually a toss-up depending on the power of the local leadership.

e) These superstars are the ultimate producers, taking utmost care of the concerned consumers around – mostly selflessly. Their departure often leaves a long-term vacuum.

f) The cycle (of violence) continues until a seismic shake-up in management or an unprecedented external pressure/ movement pushes them off the cliff!

Workplace Bullying Institute – 2017 Stats

(Click on the image to enlarge)

Don't let these bullies destroy your career. Report them to appropriate authorities, including unions. Good Luck!

Disclaimer - The “bully bosses" portrayed here are hypothetical in nature and any likeness to  any individual or entity is strictly coincidental. The author is not offering this presentation as professional services advice in any shape, form or manner whatsoever. Every institution is different, so seek the advice of a competent professional before making any changes to your existing program(s).

Sid Som, MBA, MIM
President, Homequant, Inc.

Wednesday, December 5, 2018

A Good Office Valuation Site allows Comparison of Values ccross All Office Classes

(Click on the image to enlarge)

Based on the quality of construction, architecture, size, amenities, location, stories, tenancy, view, upkeep, etc. office properties are classified into three major categories: Class-A, Class-B and Class-C. Accordingly, their rental rates are significantly different, with A class properties (save Trophies) commanding much higher rental rates than their lower counterparts. Similarly, B and C classes rarely attract upscale ground floor retail and triple-A office tenants.

Of course, in major cities, a limited number of Trophy properties (for example, One World Trade Center in NYC Downtown and Empire State Building in Midtown) exist as well. Trophies generally fetch higher rental rates - both retail (ground floor) and offices than Class-A's in the area. They tend to be architectural masterpieces as well. Empire State Building in Midtown Manhattan needed half a billion (perhaps millions more) in rehab capital to restore it to its old glory.

I used to produce these sample valuations as I own and operate the site, to avoid having to deal with any copyright issues. The site is mobile-friendly so no additional Apps are needed (just access the site from Safari on iPhone and it will become a perfect App). It's also totally FREE and NO login/registration of any sort is required. 

In order to value an office property on this site, all one needs to know is the general location, rentable square feet and a few general property characteristics, all of which are easily obtainable online. Once these data elements are available, users can have the system process the valuation in 60 seconds or less. 

This system is designed for the Pros and Non-Pros, offering a "Quick Look" valuation and is intended to complement the traditional valuation, and not replace it. 80 Major Office Markets in the US and Canada are currently covered. 

Just click on the market of your choice on our homepage and follow the prompt. If you need help, use 'TRY IT' from the homepage. Here is the link to

What the Experts are Saying:
“I checked out and I have to say that its awesome.  This is a classic case of good things come in small packages.  I was excited to see that the [XXXX] market is included.  I could see this being a very handy tool for investors, appraisers, portfolio managers or just average Joe’s who like to dabble in Commercial real estate.   For my own purposes, I selected different parts of Long Island and different sub groups of properties and I was astonished at how much flexibility and how quickly I was able to retrieve accurate values without the need for full blown work ups.  The fact that I can get a valuation right on my device in about 60 seconds is a breath of fresh air.  I will be using SkylineValue regularly!”     

Should the Taxable Status Date be Forward or Backward?

While most property assessment experts are wrestling with the frequency of the assessment cycle, meaning whether properties should be assessed annually or every three years, etc., I have a completely different perspective on this issue.

Proper market information and data hold the key to produce a fair and equitable roll. The real estate market, like the stock market, has become extremely volatile (rises fast or declines fast), making it increasingly difficult to produce a futuristic roll with the backward-bending market data. Since the Taxable Status Date (or the Valuation date) is generally a futuristic date, the available market information and data tend to be quite inadequate to develop proper predictive (mass appraisal) models that, in turn, generate the assessment roll. Case in point: many taxing jurisdictions utilizing mass appraisal modeling generally build their models in August and September with the available data, targeting the next January as the status date (assuming the valuation and status dates are the same). At that point, because of the usual 3-month lag in recording and validation of sales, the most recent sales in the modeling data-set would cover, at best, June-July, leaving an enormous predictive gap of at least six months. Worse yet, a vast majority of those arm’s length sales would have been contracted in the first and early second quarter of the year, leaving a small percentage of the questionable investor/distressed cash sales to represent the recent state of the market.

With a market as volatile as this, and considering the structural shift to higher risk-taking resulting in continued higher volatility going forward, those futuristic rolls are tantamount to crapshoots in the name of mass appraisal modeling. Granted, today we have more mass appraisal experts all around the world, thanks to organizations like IAAO, as well as more advanced econometric and operations research techniques, but the higher modeling expertise and advanced techniques could not be the proxy for the lack of market data around the status date. Simply put, nobody has the crystal ball in simulating a volatile market six months in advance. That experimentation would be okay to write a thought-provoking paper or article, but is totally unacceptable to experiment with an assessment roll involving most taxpayers’ biggest financial investment.

Again, the only way we can achieve the goal of a fair and equitable roll under the changing market conditions (let's face it, market volatility is here to stay) is if we move away from the predictive mode and settle for a known event. The guesswork in the name of predictive modeling (most modelers understand the MRA process, but do not understand the advanced Time Series modeling) forces modelers as well as the management to undertake a gigantic gamble to predict out values 2 to 3 quarters later.

After having spent, off and on, twenty-five+ years in automated valuation modeling and mass appraisal, I have come to the conclusion that the dialogue should be about the taxable status “date” – should it be a forward date or a backward date? I am of the opinion that it should be a backward date so we do not succumb to the void created by the lack of market data. The CAMA/AVM modelers must have the necessary data, adequately covering the status/valuation date, under their belts before they even get started with the modeling process. This lag would also allow the field staff ample time to inspect all sales (and related permits) ahead of the modeling season. Thus, the modelers would have access to all of the valid sales (preferably inspected) for the allowable period. Modeling, therefore, would not be a predictive game anymore, eliminating the need for any futuristic gamble whatsoever. 

In other words, I am trying to reinvent here the combined benefits of David Ricardo’s 200-year old theory of comparative advantage and Laureate Joseph Stiglitz’s theory of markets with asymmetric information. In terms of market information, jurisdictions with futuristic status/valuation dates have an inherent comparative disadvantage vis-à-vis their counterparties.

Needless to say, this concept will also help dismantle the oligopolistic stronghold of the few law firms, paving the way for a significantly reduced volume of assessment appeals. Furthermore, we will not lose sleep worrying over how we could ever justify the drastically lower COD’s for the modeled sale periods in relation to the subsequent periods within the same assessment cycle. This would also minimize the need for any annual sales ratio/equalization study. I do, however, understand the short-term statutory and logistical issues, but then again, we owe our taxpayers a fair and equitable tax roll.

At the end of the day, do taxpayers really care if the status date is 01-2018 or 01-2019? Honestly, most taxpayers have no clue what that even means. All they are interested in is a value truly reflective of the market (which is where Assessment comes in). If we are capable of delivering that, we will have achieved our goal. Eventually the protests would be reduced to err in data only, removing the need for the mass (appeal) filers from the system, altogether. The concept of refund liability would be a thing of the past.

--Sid Som, MBA, MIM
President, Homequant, Inc.

Tuesday, December 4, 2018

A Good Office Valuation System helps Break-down the Monolithic Office Classes

Class-A Max

Class-A Mid

Class-A Min
(Click on the image to enlarge)

The traditional commercial appraisal requires that office properties be classified into one of the following three broad categories: A, B or C. In reality, the classes are not that monolithic. On the contrary, there is significant diversity within each class, requiring sub-classifications.

That is why, we developed the SkylineValue office valuation system with three additional sub-classes (Max, Mid and Min) within each class, offering our users the flexibility to identify the class more precisely with a sub-class, leading to more meaningful and statistically significant valuations.

The above graphics show how the differentiation takes place. Though these are all Class-A properties with similar basic attributes (size, type, age and office tenancy), there are significant qualitative differences (sub-location, land, parking, view and type of retail) that vastly differentiate them even within this monolithic office class, resulting in large price variations. In addition to the World Class Retail (on the ground floor) and View (generally waterfront), Trophy and Class-A Max properties tend to be on Over-sized lots with better Parking facilities. Therefore, lumping all of them together simply defies meaningful market valuations.

I picked the above graphics from, a "quick look" office valuation site I own and operate, to avoid having to deal with any copyright issues. It produces such valuations in less than 60 seconds each. The site is mobile-friendly so no additional Apps are needed (just access the site from Safari on your iPhone and it will work as an App). It's totally FREE and NO login/registration of any sort is required. 80 Major Office Markets in the US and Canada are currently covered.

Just click on the market of your choice on our homepage and follow the prompt. If you need help, use 'TRY IT' from the homepage. Here is the link to

What the Experts are Saying:
“I checked out and I have to say that its awesome.  This is a classic case of good things come in small packages.  I was excited to see that the [..........] market is included.  I could see this being a very handy tool for investors, appraisers, portfolio managers or just average Joe’s who like to dabble in Commercial real estate.   For my own purposes, I selected different parts of Long Island and different sub groups of properties and I was astonished at how much flexibility and how quickly I was able to retrieve accurate values without the need for full blown work ups.  The fact that I can get a valuation right on my device in about 60 seconds is a breath of fresh air.  I will be using SkylineValue regularly!” 

Homequant Offers Custom Sales Ratio Study for SFR Rental Portfolios