6 ms·

That's easy to say, but packing up and moving simply isn't a viable option for many, many people. They're not staying because leaving is "emotionally difficult"

That's easy to say, but packing up and moving simply isn't a viable option for many, many people. They're not staying because leaving is "emotionally difficult". They're staying because leaving is financially impossible. If a homeowner's neighborhood is dying, then their home value is practically zero. And even if their house had some market value, the potential number of buyers is so small that the home could sit on the market for years, all the while incurring maintenance costs. And as the neighborhood dies, the pool of available work shrinks. Wages shrink and job opportunities dry up. Economic diversity plummets, leaving the region more exposed to sudden shocks. Towns become increasingly reliant on parasitic industries -- payday loans, gambling, furniture leasing, etc -- that further depress wealth and prey disproportionately on the structurally impoverished. Even a relatively well-off resident of a dying suburb -- someone with savings, a paid-off house, and no attachments to the area -- would be hard-pressed to finance a move to a healthier locale. And most residents of these areas -- for obvious reasons -- don't fit this profile. Most don't leave because they can't afford to leave. They don't have savings. They live paycheck to paycheck. They're underwater on their house. They're on a tiny fixed income and can't afford the cost of living elsewhere. They're a public employee two years away from a pension and, if they move now, they forfeit a liveable retirement. They're the sole caregiver for disabled family members. Their skills aren't valuable in another market. Et cetera. Too often, we assume that poor people make poor choices, without considering that they might actually be making the best of the shitty slate of options available to them. I think most reasonable people are in agreement that the suburbs -- especially industrial suburbs -- were and are an unsustainable model for development. They will need to be abandoned. But the process of that abandonment matters. If we go about it the wrong way, as we are in the Rust Belt, then we condemn the people stuck in those areas to a lifetime of poverty. And those people don't just go away when we turn out backs on them. Their problems will become our problems. So, for economic and humanitarian reasons, we need to find a responsible way to decommission post-industrial towns and relocate their residents.

DarronWyke 9y ago
This is exactly what I was thinking. I think most of the commenters here aren't homeowners. I just bought a home. Even with excellent credit I still had to put down roughly 10k on the house (which was only 3%!) -- that includes the down payment, option and earnest money, fees for stuff like appraisal, inspection, and more. 10k is a lot of money for a lot of people. Granted they can get some of that back if they sell an old house, but as you said if the house value is low to zero they can only get the land value for it, if there is any. Now they're starting over from square one, paying off a new house. And that 10k isn't even covering other expenses, like repairs I need to do, furniture (pretty much buying everything new now), moving supplies/expenses, first utilities, and more. Homeowning is not cheap, especially not upfront (though it does get a little easier beyond the initial investment).
- toomuchtodo 9y ago
  Get out of the FHA mortgage into a conventional as soon as you can [1]. It'll save you the monthly mortgage insurance, which is for the life of the loan now. [1] Keep an eye on home values 6-12 months from now; once you think you might have 20% equity, attempt to refi into a conventional. Should save you $150-200/month on the FHA monthly premium.
  - DarronWyke 9y ago
    I'm already on a conventional; I was able to get 3% because of my excellent credit and good income. I only have PMI because I didn't want to put the full 20% down. The amount saved for each monthly payment + PMI wouldn't be worth the pain associated with virtually dumping out my nest egg hitting 20%.
    - toomuchtodo 9y ago
      Ahh! Excellent news! I don't have time to be fully up to speed on mortgage guidelines, so whenever I see a down payment under 10% I assume its FHA. Congrats on the new home!
      - DarronWyke 9y ago
        Thank you. Our lending officer and real estate agent are awesome folks, so if you're ever looking for real estate in the DFW area, let me know. We were complete novices coming in and left understanding enough to practically sell homes ourselves. Plus the previous homeowner was a great guy and worked with us a lot, so we really got lucky with this one.
      - panopticon 9y ago
        > whenever I see a down payment under 10% I assume its FHA It's increasing common to see non-FHA loans in the 3% ballpark (among anecdotal evidence from my friends and coworkers who've recently purchased). My gut keeps telling me something is wrong, but no other indicators seem to agree.
    - 9y ago
xeromal 9y ago
Thanks for writing on decisions that poor have to make. I grew up in a poor family and can't stand when people don't even try to understand the plight many low-income people go through. My mom pays 200-300 a WEEK for her car. Many people on here would say that's a terrible idea and she should just buy a cheaper used car for 1000-2000 dollars, but they don't realize she needed the car NOW or she'd lose her job and she doesn't have that cash laying around. No one would give her a normal loan and none of us could afford to help her at the time. It really seems the only people in the world willing to help her are the people that need 200-300 a week to sell her a car. And that's just the car. Housing, food, clothes, and nearly everything else can be explained with the same rationale. Your line here is key: "Too often, we assume that poor people make poor choices, without considering that they might actually be making the best of the shitty slate of options available to them."
- walrus01 9y ago
  this is the case of almost everything available to the poor. go price the per-roll cost of a 4-pack of toilet paper vs. the per roll cost if you have the financial ability to maintain a costco membership and buy the giant 40-pack.
  - dragonwriter 9y ago
    The Costco membership isn't expensive to maintain (though, sure, even that can be a barrier.) Getting to Costco (which are fairly widely spaced) and transporting/storing the quantities of things that Costco often sells as the minimum quantity are probably bigger barriers.
    - 5ilv3r 9y ago
      Storage and transportation of goods from costco is difficult as well. You need extra space in both a vehicle and your home. Difficult with a big family in a small house.
    - zanny 9y ago
      Amazon also sells TP fairly cheap, and you don't even need a Prime membership if you order enough at once to get the regular free shipping. Of course, using Amazon requires Internet access, which can also be a problem. One thing I both do understand and lament is how the more impoverished communities are culturally tuned to turn on each other than work together. If your household is too poor to afford a lot of the things that are taken for granted - a working kitchen, for example - having four neighbors work together to have one working kitchen they could all share and set up time slots to use would go a long way to getting out of poverty. But you really just cannot rely on other people in those situations. Its a prisoners dilemma where the prison is poverty. It takes one person taking advantage of cooperation to ruin it.
rayiner 9y ago
Your argument is well taken, but that reasoning suggests we should stop incentivizing home ownership. Indeed, we should start treating homes like the risky non-diversified investments they are, and require home buyers to purchase insurance against the downside risk. Spending public funds on these endeavors ends up being something of a middle class bailout. Are folks who were fortunate enough to be able to purchase homes in the first place. 70% of those in the bottom 20% of the income distribution do not own their homes.
- zanny 9y ago
  Except homes for most people are not investments. They are where they live, and everyone needs one of those. It is one of the greatest flaws in modern economics that the combination of policy and scarcity makes property values such an out of control growth space. I'd love to see either state or federal buyback programs. Using the same appraisal rates used to calculate a property value when setting property taxes most states could offer to buyback properties at 80% of their assessed market value and then have redevelopment programs to reinvigorate dying neighborhoods like in the OP. It lets the poor escape dying neighborhoods much easier, and it also creates a pathway to save these dying cities for relatively low investment by creating job opportunities to fix the state possessed properties or put them to auction so they can be competitively worth fixing. Either way the state should not be out the money for very long - you have a depressed area that has terribly low property values because its an impoverished slum, let the residents sell the land off as a means to get out of that hell, and then make a deal with a redevelopment firm or use the civil engineers corps and then sell the resulting revitalized properties, hopefully after some mixed used development. That last point is probably the strongest reason why the US in particular has these widespreading "dying neighborhood" problems. Zoning for the most part has been an abject failure. It was conceived to segregate the rich from the poor and has failed to recognize that a thriving community needs work and play to intermix and develop organically. It also exists to constrain development to prevent cities from growing up and increasing density to meet population demands, all to prop up the real estate investment bubble making the semi-rich filthy rich.
  - tptacek 9y ago
SilasX 9y ago
>They're on a tiny fixed income and can't afford the cost of living elsewhere. They're a public employee two years away from a pension and, if they move now, they forfeit a liveable retirement. I keep hearing stories about this, but I thought that any such pension this absurd was illegal or retroactively corrected. Is it really possible to lose an entire pension for quitting some trivial amount of time before some cutoff? I would think that it would, at most, mean that you would delay the pension[1], or lose a few percentage points off of it, or be required to make some "down payment" before it starts. Where are these pensions where a huge value can evaporate over such a small thing? [1] e.g. under an "age + years of service" rule, each year worked gets you two units closer to retirement, and if you quit, that just means you become eligible at half speed (age goes up but years of service doesn't).
- monodeldiablo 9y ago
  I'm not an expert by any stretch, but my understanding is that plenty of pensions have steep early retirement/termination penalties, especially in state and municipal service. And if the full pension benefit was already small, any penalty may reduce it to an unlivable level. As an anecdote, a relative -- who had 25 years of public service when he was 57 years of age -- would have only received 35% of his pension if he had taken early retirement (or jumped ship to private industry) at that time. Keep in mind, also, that most public employees are ineligible for Social Security. And most of these economically distressed towns tend to be concentrated in counties and states with severe debt issues, where raiding pension funds is not uncommon. And sadly, benefit reduction continues to be an option in public debt discussions.
  - SilasX 9y ago
    Oh wow. I'm surprised that hasn't been made illegal. That creates very anti-public-interest situations (where a worker will be abused in every legal way because they know they can't quit).
    - monodeldiablo 9y ago
      Hug a municipal worker today. They deserve it.
DickingAround 9y ago
(Admittedly, I don't remember very well what it's like to be poor. That was a long time ago. I do remember how pretty much everything is designed to take money away from poor people because they're poor and their defenses are weak.) I would not expect it to be fun to loose $100k in home value moving away from an area that's dying. But that is part of being an adult and being adult enough to be allowed to make such an investment. Sometimes the investments go well. Sometimes they go poorly. And avoiding that risk is extremely easy; lots of people rent. I don't think we should bail our people's bad home investments just because they're poor. If they need to go bankrupt, there's already a process for that. And if that process is bad, we should just improve that process.
- monodeldiablo 9y ago
  I'm not sure you read my response. I'm not saying that "it wouldn't be fun" to move away. I'm saying that, for a huge swath of the residents of these areas, it's practically impossible. Logistically and financially, impossible. You're making a raft of assumptions -- they have the means to ride out a period of unemployment, or can afford the extra travel required to reach a new job in a healthy area; they can afford to rent in a healthy market; their skills transfer; they don't have a family member in long-term care in the area; they are not on a fixed income; et cetera -- because, as you say, you don't remember very well what it's like to be poor. And that's OK. I understand why you make those assumptions, and I'm happy so many people have the privilege to do so. The shitty things poor people have to put up with are all but invisible unless you're poor. Poverty has a stigma in the US that prevents us from talking openly about these issues. But once you see them, it's frustrating to hear someone say, "But [leaving] is part of being an adult," as if staying in a shitty, crime-ridden, failing municipality is a personal choice. I want to emphasize this point: If you see people living in a one of these places -- drinking lead-infused water, sending their kids to skeletal schools, miles from an operating hospital, with intermittent emergency services, with no trash pickup, etc -- remind yourself that it's extremely unlikely they're there by choice.
  - shostack 9y ago
    I want to state upfront that I 100% agree with everything you are saying about the problems, limitations, etc. of these people. My question though is--what suggestions do you have for solving this? We shouldn't prop up dying suburbs. We don't have universal basic income yet (not that that would solve for all such cases), and there don't really seem to be a whole lot of options. If I imagine myself in such a desperate situation, I feel like my only options would be to stay there while things stagnate, watching things get worse and worse while trying to scrimp and save my way to something that would let me take a gamble and move, or just pack up a few things, yard sale anything I could, buy a bus ticket, and gamble on being homeless somewhere with better opportunities. And that's if I wasn't elderly/disabled/otherwise incapable of doing this. The only larger solutions I potentially see are policy changes for social safety nets with these situations, which frankly, are going to be damn near impossible to get passed given the current government, and also the fact that a huge chunk of these places are in red states that would never do anything at the state level for these folks. Again, not disagreeing with anything you say, but is there actually a potential solution beyond "let these people and places fade away" like so many people have in humanity's past?

DarronWyke 9y ago

This is exactly what I was thinking. I think most of the commenters here aren't homeowners. I just bought a home. Even with excellent credit I still had to put down roughly 10k on the house (which was only 3%!) -- that includes the down payment, option and earnest money, fees for stuff like appraisal, inspection, and more. 10k is a lot of money for a lot of people. Granted they can get some of that back if they sell an old house, but as you said if the house value is low to zero they can only get the land value for it, if there is any. Now they're starting over from square one, paying off a new house. And that 10k isn't even covering other expenses, like repairs I need to do, furniture (pretty much buying everything new now), moving supplies/expenses, first utilities, and more. Homeowning is not cheap, especially not upfront (though it does get a little easier beyond the initial investment).

toomuchtodo 9y ago
Get out of the FHA mortgage into a conventional as soon as you can [1]. It'll save you the monthly mortgage insurance, which is for the life of the loan now. [1] Keep an eye on home values 6-12 months from now; once you think you might have 20% equity, attempt to refi into a conventional. Should save you $150-200/month on the FHA monthly premium.
- DarronWyke 9y ago
  I'm already on a conventional; I was able to get 3% because of my excellent credit and good income. I only have PMI because I didn't want to put the full 20% down. The amount saved for each monthly payment + PMI wouldn't be worth the pain associated with virtually dumping out my nest egg hitting 20%.
  - toomuchtodo 9y ago
    Ahh! Excellent news! I don't have time to be fully up to speed on mortgage guidelines, so whenever I see a down payment under 10% I assume its FHA. Congrats on the new home!
    - DarronWyke 9y ago
      Thank you. Our lending officer and real estate agent are awesome folks, so if you're ever looking for real estate in the DFW area, let me know. We were complete novices coming in and left understanding enough to practically sell homes ourselves. Plus the previous homeowner was a great guy and worked with us a lot, so we really got lucky with this one.
    - panopticon 9y ago
      > whenever I see a down payment under 10% I assume its FHA It's increasing common to see non-FHA loans in the 3% ballpark (among anecdotal evidence from my friends and coworkers who've recently purchased). My gut keeps telling me something is wrong, but no other indicators seem to agree.
  - 9y ago

xeromal 9y ago

Thanks for writing on decisions that poor have to make. I grew up in a poor family and can't stand when people don't even try to understand the plight many low-income people go through. My mom pays 200-300 a WEEK for her car. Many people on here would say that's a terrible idea and she should just buy a cheaper used car for 1000-2000 dollars, but they don't realize she needed the car NOW or she'd lose her job and she doesn't have that cash laying around. No one would give her a normal loan and none of us could afford to help her at the time. It really seems the only people in the world willing to help her are the people that need 200-300 a week to sell her a car. And that's just the car. Housing, food, clothes, and nearly everything else can be explained with the same rationale. Your line here is key: "Too often, we assume that poor people make poor choices, without considering that they might actually be making the best of the shitty slate of options available to them."

walrus01 9y ago
this is the case of almost everything available to the poor. go price the per-roll cost of a 4-pack of toilet paper vs. the per roll cost if you have the financial ability to maintain a costco membership and buy the giant 40-pack.
- dragonwriter 9y ago
  The Costco membership isn't expensive to maintain (though, sure, even that can be a barrier.) Getting to Costco (which are fairly widely spaced) and transporting/storing the quantities of things that Costco often sells as the minimum quantity are probably bigger barriers.
  - 5ilv3r 9y ago
    Storage and transportation of goods from costco is difficult as well. You need extra space in both a vehicle and your home. Difficult with a big family in a small house.
  - zanny 9y ago
    Amazon also sells TP fairly cheap, and you don't even need a Prime membership if you order enough at once to get the regular free shipping. Of course, using Amazon requires Internet access, which can also be a problem. One thing I both do understand and lament is how the more impoverished communities are culturally tuned to turn on each other than work together. If your household is too poor to afford a lot of the things that are taken for granted - a working kitchen, for example - having four neighbors work together to have one working kitchen they could all share and set up time slots to use would go a long way to getting out of poverty. But you really just cannot rely on other people in those situations. Its a prisoners dilemma where the prison is poverty. It takes one person taking advantage of cooperation to ruin it.

rayiner 9y ago

Your argument is well taken, but that reasoning suggests we should stop incentivizing home ownership. Indeed, we should start treating homes like the risky non-diversified investments they are, and require home buyers to purchase insurance against the downside risk. Spending public funds on these endeavors ends up being something of a middle class bailout. Are folks who were fortunate enough to be able to purchase homes in the first place. 70% of those in the bottom 20% of the income distribution do not own their homes.

zanny 9y ago
Except homes for most people are not investments. They are where they live, and everyone needs one of those. It is one of the greatest flaws in modern economics that the combination of policy and scarcity makes property values such an out of control growth space. I'd love to see either state or federal buyback programs. Using the same appraisal rates used to calculate a property value when setting property taxes most states could offer to buyback properties at 80% of their assessed market value and then have redevelopment programs to reinvigorate dying neighborhoods like in the OP. It lets the poor escape dying neighborhoods much easier, and it also creates a pathway to save these dying cities for relatively low investment by creating job opportunities to fix the state possessed properties or put them to auction so they can be competitively worth fixing. Either way the state should not be out the money for very long - you have a depressed area that has terribly low property values because its an impoverished slum, let the residents sell the land off as a means to get out of that hell, and then make a deal with a redevelopment firm or use the civil engineers corps and then sell the resulting revitalized properties, hopefully after some mixed used development. That last point is probably the strongest reason why the US in particular has these widespreading "dying neighborhood" problems. Zoning for the most part has been an abject failure. It was conceived to segregate the rich from the poor and has failed to recognize that a thriving community needs work and play to intermix and develop organically. It also exists to constrain development to prevent cities from growing up and increasing density to meet population demands, all to prop up the real estate investment bubble making the semi-rich filthy rich.
- tptacek 9y ago

SilasX 9y ago

>They're on a tiny fixed income and can't afford the cost of living elsewhere. They're a public employee two years away from a pension and, if they move now, they forfeit a liveable retirement. I keep hearing stories about this, but I thought that any such pension this absurd was illegal or retroactively corrected. Is it really possible to lose an entire pension for quitting some trivial amount of time before some cutoff? I would think that it would, at most, mean that you would delay the pension[1], or lose a few percentage points off of it, or be required to make some "down payment" before it starts. Where are these pensions where a huge value can evaporate over such a small thing? [1] e.g. under an "age + years of service" rule, each year worked gets you two units closer to retirement, and if you quit, that just means you become eligible at half speed (age goes up but years of service doesn't).

monodeldiablo 9y ago
I'm not an expert by any stretch, but my understanding is that plenty of pensions have steep early retirement/termination penalties, especially in state and municipal service. And if the full pension benefit was already small, any penalty may reduce it to an unlivable level. As an anecdote, a relative -- who had 25 years of public service when he was 57 years of age -- would have only received 35% of his pension if he had taken early retirement (or jumped ship to private industry) at that time. Keep in mind, also, that most public employees are ineligible for Social Security. And most of these economically distressed towns tend to be concentrated in counties and states with severe debt issues, where raiding pension funds is not uncommon. And sadly, benefit reduction continues to be an option in public debt discussions.
- SilasX 9y ago
  Oh wow. I'm surprised that hasn't been made illegal. That creates very anti-public-interest situations (where a worker will be abused in every legal way because they know they can't quit).
  - monodeldiablo 9y ago
    Hug a municipal worker today. They deserve it.

DickingAround 9y ago

(Admittedly, I don't remember very well what it's like to be poor. That was a long time ago. I do remember how pretty much everything is designed to take money away from poor people because they're poor and their defenses are weak.) I would not expect it to be fun to loose $100k in home value moving away from an area that's dying. But that is part of being an adult and being adult enough to be allowed to make such an investment. Sometimes the investments go well. Sometimes they go poorly. And avoiding that risk is extremely easy; lots of people rent. I don't think we should bail our people's bad home investments just because they're poor. If they need to go bankrupt, there's already a process for that. And if that process is bad, we should just improve that process.

monodeldiablo 9y ago
I'm not sure you read my response. I'm not saying that "it wouldn't be fun" to move away. I'm saying that, for a huge swath of the residents of these areas, it's practically impossible. Logistically and financially, impossible. You're making a raft of assumptions -- they have the means to ride out a period of unemployment, or can afford the extra travel required to reach a new job in a healthy area; they can afford to rent in a healthy market; their skills transfer; they don't have a family member in long-term care in the area; they are not on a fixed income; et cetera -- because, as you say, you don't remember very well what it's like to be poor. And that's OK. I understand why you make those assumptions, and I'm happy so many people have the privilege to do so. The shitty things poor people have to put up with are all but invisible unless you're poor. Poverty has a stigma in the US that prevents us from talking openly about these issues. But once you see them, it's frustrating to hear someone say, "But [leaving] is part of being an adult," as if staying in a shitty, crime-ridden, failing municipality is a personal choice. I want to emphasize this point: If you see people living in a one of these places -- drinking lead-infused water, sending their kids to skeletal schools, miles from an operating hospital, with intermittent emergency services, with no trash pickup, etc -- remind yourself that it's extremely unlikely they're there by choice.
- shostack 9y ago
  I want to state upfront that I 100% agree with everything you are saying about the problems, limitations, etc. of these people. My question though is--what suggestions do you have for solving this? We shouldn't prop up dying suburbs. We don't have universal basic income yet (not that that would solve for all such cases), and there don't really seem to be a whole lot of options. If I imagine myself in such a desperate situation, I feel like my only options would be to stay there while things stagnate, watching things get worse and worse while trying to scrimp and save my way to something that would let me take a gamble and move, or just pack up a few things, yard sale anything I could, buy a bus ticket, and gamble on being homeless somewhere with better opportunities. And that's if I wasn't elderly/disabled/otherwise incapable of doing this. The only larger solutions I potentially see are policy changes for social safety nets with these situations, which frankly, are going to be damn near impossible to get passed given the current government, and also the fact that a huge chunk of these places are in red states that would never do anything at the state level for these folks. Again, not disagreeing with anything you say, but is there actually a potential solution beyond "let these people and places fade away" like so many people have in humanity's past?