Similar fate awaited Baltimore and St. Louis. Efforts to repopulate these cities with Middle Eastern immigrants have not met with overwhelming success. Rather than live in Detroit, they would rather live in Dearborn. My own anchor city of Paterson, NJ has many Middle Eastern immigrants, yet newer arrivals eschew Paterson for other nearby locales.
But what if there was a wholesale weakening of our housing stock as an asset class. I began to think of this as I walked my dog and rode my bike in my own neighborhood over the weekend. Just a few doors down from me are three very nice homes. Each has been on the market for sometime, only to be withdrawn in favor of rental. The homes could not sell in the market, but they could be rented. Two of the homes have gone through repeated rental market cycles. One of them is looking decidedly worse for wear. Some tenants are very much concerned with how they take care of things, others could give a hoot. The last group fell into the don't give a hoot category.But what got me of late was that some of the places in my neighborhood had gone vacant altogether and there was no rental. Then notices started to show up on properties. For Sale signs had sprung up on some of them. A friend of mine in the Real Estate business tells me that there are nearly 2000 zombie properties in Paterson NJ, and 300 or more in my own town. My town is a solidly middle class community and my neighborhood because of its community lake is usually desirable. A place where you would be able to sell your home in any market.
So I did a little local exploration and found two homes of this sort on the next block, and two more a half block over. I found Six of them in total and I only covered a couple of blocks. A friend who lives a few blocks away has one across the street, which has been vacant for 4 years and is falling into ruin. I think I will start looking at this a bit more seriously. But on Sunday my wife and I rode over to a small specialty market in the adjacent and much more affluent neighboring town. Where we feeling like sports buy a sandwich for Sunday lunch. The type of market where BMWs and Mercedes and Range Rovers populate the parking lot . As I drove and my wife ticked them off.. Oh, there is one she announced, oh, there is another one. So it is not only the Detroits of the world.. The only difference was in the size of the barns. Even in this most affluent of places there was no shortage of zombie homes. Million dollar homes vacant and falling into disrepair.
All manner of destruction befalls an unattended home, pipes leak or freeze, heating systems rust, mold grows from small leaks, vermin take up residence, people enter to strip value from the pipes and wiring, Kids vandalize the interior and soon enough sale becomes impossible until it sells for a song, all worth having been destroyed. As that value is destroyed, it can't help but destroy the surrounding value, remember the moral of Detroit.
What does this portend for our nation, which is showing a shocking reduction of home ownership. Is The American dream of home ownership is fading ? Or is it that forces that militate against individual ownership have been unleashed. Home ownership was a vehicle for wealth accumulation for much of the middle class. To think that this ideal is going or gone is quite distressing if one thinks of the overall rising tide lifting all boats theory. Household formation has dropped and percentage of ownership has also dropped. I do not believe that you can have a solid middle class without individual home ownership. There was once a theory that said , you could not accumulate wealth without having at least once in your life having paid off your mortgage. Simplistic , but probably accurate. Today we see that through multiple re-finances and home equity draws that comparatively few people achieve that end. It is not uncommon in my practise for me to encounter people carrying mortgages of a quarter of a million dollars into their retirement. In fact just two weeks ago a woman came in bemoaning the fact that their mortgage was close to that level on the strength of a refinance consummated two years ago at age 58 was impacting her desire to remain in the marriage. What happened to the money?, I asked . She had no answer and that was what disturbed her. Debt consolidation is all she could suggest.
These might be an area of concern for the next person to occupy the White House, but somehow
I think there is only one in the field who even thinks such thoughts. The others only seem to be concerned about what happens elsewhere in the world.
The saddest thing in all of this is that one of these houses belonged to a family that used to live next door to me. They sold and rehabbed one of the places into a show place , on retirement they sold and moved down south. Their once very nice home is now a wreck, for that I am saddened for they were a nice family who had sold it to a nice family. The notices visible on the doors and in the windows, the gutter falling off the front of the house. One with the mailbox full of wet junk mail, it falling over, while Old Glory flies from the flag pole even as the landscaping grows into an unruly know of vegetation, the grass popping up in the walkway cracks.do not speak well of where we are today.
Economic recovery ?
