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The Places That May Never Recover From the Recession

The Places That May Never Recover From the Recession

DEC 29, 2017

Read More: https://www.theatlantic.com/business...ession/549350/

Quote:

HEMET, California—Many cities across America are doing better today than they were before the recession. This is not one of them. A decade after the start of the Great Recession, it struggles with pervasive crime and poverty.

- Hemet is not alone in its troubles. A report released this year by the Economic Innovation Group, a research group started by Silicon Valley entrepreneurs, found that one in six Americans lives in what the group calls “economically distressed communities” that are “increasingly alienated from the benefits of the modern economy.”

- Such communities have high shares of poverty, many housing vacancies, a large proportion of adults without a high-school diploma, high joblessness, and a lower median income than the rest of the state in which they are located. They also lost jobs and businesses between 2011 and 2015.

- Many of these distressed communities are located in Rust Belt states like Ohio, New York, and Michigan. They include Youngstown, Buffalo, and Flint. But there’s another type of left-behind community that’s gotten far less attention. These towns are located in the suburbs of the American west, in regions hit hard by the housing crisis—Southern California, Las Vegas, and Arizona.

- Why hasn’t Hemet found surer footing? For one thing, the region where Hemet is located was decimated by the housing crisis, with among the highest foreclosure and unemployment rates in the nation; many families are still recovering. But Hemet’s problems are also the result of structural changes in the economy—changes that have been underway for decades but were masked by the heady days of the housing boom.

- Middle-class jobs have been disappearing while high-wage and low-wage jobs have grown—but in different geographic locations. High-wage jobs are often located in big cities, while low-wage jobs are in relatively cheap locations like suburbs and small cities. — This dynamic changes the housing markets of these cities, too, with big cities getting more expensive as more high-wage workers migrate there, and low-wage workers leaving cities to seek more affordable housing in the far-away suburbs they can afford.

- “The crime level just keeps getting higher,” Toni Willden, who bought her home in 2005, told me recently, about Willowalk. The gates that keep out nonresidents get broken once or twice a week, she said. Just about everybody in town knows the code to the gates anyway—I got it by asking the clerk at the hotel where I was staying.

- Another woman, Amy Aschenberg, whose family in 2014 bought a five-bedroom home overlooking a pond, told me that she and her husband realized they’d made a mistake soon after buying their home. The gated community was filled with renters, who didn’t keep up their homes and who hosted parties late into the night, especially in the summer. Home burglaries—in the middle of the day—happened with alarming regularity.

- This gated community is an example of how some neighborhoods that were once middle-class are becoming poorer. “The lack of construction in coastal cities has forced people who are marginally educated and low-income to move inland,” said John Husing, the chief economist of the Inland Empire Economic Partnership. Median rents in Hemet rose just five percent between 2009 and 2016; in Los Angeles, they rose 20 percent, according to Census data.

- Renters aren’t necessarily bad for a neighborhood, but the transition of a neighborhood from one of homeowners to one of renters can be disruptive. When a home is lost to foreclosure and then changes hands a number of times, it can upset the community ties in a neighborhood. — When homeowners live in their own homes, they are invested in the community, and their own fortunes are bound to those around them.

- When they live far away and are renting them out, they’re often less able to put time into maintenance and upkeep. Detached single-family rental housing tends to really upset the social structure of communities. — After investors bought up single-family homes and rented them out in the Phoenix suburb of Chandler, Arizona, the neighborhoods had more service calls to police about violent crime. — The problem is not the influx of renters, necessarily, but instead the absentee landlords who don’t keep up homes.

- In the end, Hemet is stuck. The city itself can’t convince companies to pay better wages, and it has no control over the rents in big cities that are pushing people out to the suburbs. It has tried to force absentee landlords to keep up their homes, but has limited resources to do so, and struggles to smooth over its transition from a community of homeowners to one of renters. — Like many other suburbs and small cities across the country, the economic tide has turned against its residents, leaving them seemingly no path back to vitality.

- As Hemet and many suburbs like it are finding, growing poverty can lead to even bigger problems—lower tax revenues, fewer businesses able to stay put, worse services like schools and police. This, of course, makes them even less attractive for people who have other choices about where to live. Over time, the situation only gets worse. As nearby cities prosper, and the recession appears as just a bump in the road in the rearview mirror, distressed areas are still there, unable to move ahead.

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https://cdn.theatlantic.com/assets/m.../ce06cf4e3.jpg

https://cdn.theatlantic.com/assets/m...jpg?1514496185

who cares? some cheap-2000s built exurb hours from anywhere, literally in the desert?

Should these communities have been built-out to such extents to begin with? Perhaps not.

You hide behind a gate ......

Quote:

Originally Posted by harryc (Post 8032499)

You hide behind a gate ......

Nothing a cookie-cutter slash wire cutter won't handle.

The dilapidation of some undesirable homes built 15 years ago in the middle of the desert, far from jobs and services, surely signifies the death of the American Dream for us all.

Its a shame considering how expensive southern california is.

I guess there's no middle ground, only hyper expensive areas and blighted wastelands in the desert.

Quote:

Originally Posted by Dac150 (Post 8032333)

Should these communities have been built-out to such extents to begin with? Perhaps not.

That's exactly what I was going to say. Places like this have no business being built in the first place. I hate to say "good riddance," because these communities were places where people lived and made positive memories, but... good riddance.

So there’s a Rust Belt and now there’s a Dust Belt.

Some weird assertions in the article: first, poverty only increased to 20%. Sad, sure, but nothing crazy for this country. Likewise, the average home value is now in the 230k(ish)? Much stronger than many other parts of the country. And the IE isn't in the middle of nowhere it is a 4.5 million strong MSA.

I've been in these desert communities, and I think the article is exaggerating. They declined somewhat, but are still pretty desirable to working class types.

Hemet has decent incomes, moderate poverty, ok schools and not-terrible housing values. Doesn't seem like a hellscape or anything. If you have little money and want to stay in the LA area, they're a viable option.

I mean, if you have low household income, want to stay in the LA metro, value homeownership, and don't want a ghetto or some ethnic enclave where most of the residents are recent arrivals, where else are you going to live?

Quote:

Originally Posted by M II A II R II K (Post 8032681)

So there’s a Rust Belt and now there’s a Dust Belt.

The Rust belt = unsuccessful Steel/Factory/Manufacturing belt.

The Dust belt = unsuccessful Sun belt?

I have family in Riverside County, not far from Hemet and it's a matter of perspective. They've been there since the 70s and the area they're in is a traditionally single family 1950s desert ranch 1-acre lot kind of place. All around them - new subdivisions of 1000+ homes built by and for those who have been priced out of the coastal areas. One of my relatives lives near Lake Elsinore but works in construction in affluent coastal communities like Emerald Bay and San Clemente Shores - their commute over the mountains via the Ortega used to be 40-ish minutes back in the day. It's now easily two hours or more because of all the development on the Inland side.

Anyway, the blight, crime and poverty levels haven't risen to that of a Flint or Youngstown but part of the "drive til you qualify" allure was "that stuff doesn't happen here, it's far enough to keep 'undesirables' out." It's a Catch-22 - they're close enough to be part of the L.A. area but too far to attract the kind of employment base to really boost their area's economy. Whether it's Chandler, Arizona or Hemet, they pretty much look alike, feel alike and if the point is being *in* L.A. or Vegas, why bother?

Quote:

Originally Posted by Crawford (Post 8032739)

That's what I was thinking. I wouldn't mind living here if I had no choice, especially when the rest of the metro is expensive.

Quote:

Originally Posted by Capsicum (Post 8032745)

The Rust belt = unsuccessful Steel/Factory/Manufacturing belt.

Not necessarily unsuccessful, though a fallen victim of changing times. Those communities once thrived.

Too many eggs in one basket as well.

Quote:

Originally Posted by Dac150 (Post 8032903)

Not necessarily unsuccessful, though a fallen victim of changing times. Those communities once thrived.

"Rustbelt" is a completely arbitrary term that really has no real meaning. What is considered "Rustbelt" has communities currently thriving more than ever.

Quote:

Originally Posted by jd3189 (Post 8032900)

That's what I was thinking. I wouldn't mind living here if I had no choice, especially when the rest of the metro is expensive.

Hemet took its biggest hit back in the 1990s when the defense industry shrunk all over southern California. March AFB and nearby Rockwell facilities were downsized or closed. Hemet had been a bedroom community for many of these workers. It was also known as an attractive place to retire for many of those same people. It is actually in a nice grassy location up against the rear of the same mountain range that fronts the Palm Springs area on the other side. A lot of additional housing was built in Hemet during the early 2000s, and this is the housing that faced massive foreclosures. I think this article exaggerates problems in Hemet by quite a bit. I would not be surprised to see it make a comeback as a less affluent retirement mecca, but I guess that could come with a new set of problems.

Riverside County is growing at a decent clip.

Quote:

Originally Posted by BnaBreaker (Post 8032579)

I can't recall a thread that elicited so much blatantly elitist comment in this forum. It's true that these homes were probably not good investments for those who bought them but many of those people probably had little choice. They needed the room and simply couldn't afford homes with the room they needed closer to downtowns in major coastal metros.

It's so smug to simply say these places shouldn't have existed. And it's much more complicated. If you ask the question why they are filled with empty and rented homes, you find that in many cases it was because the original buyers couldn't afford to buy even here and shouldn't have gotten the toxic mortgage to do so. If you go further and ask why they did get it, you find a mixture of greed on the part of lenders and government policy that encouraged home ownership by people who should have remained renters.

One bit of the article attracted my attention: "After investors bought up single-family homes and rented them out in the Phoenix suburb of Chandler, Arizona, the neighborhoods had more service calls to police about violent crime. — The problem is not the influx of renters, necessarily, but instead the absentee landlords who don’t keep up homes. "

That's probably just wrong. The recession actually brught forth a whole new industry which was/is corporate ownership of large number of rental single family homes. There are now several REITs listed on the NYSE in this business where before the recession there were none. And these companies have both the finances and the management expertise to maintain their properties probably better than the Mom/Pop investors who formerly dominated this business. My guess is the vacant, boarded up properties are just that: foreclosed, empty and owned by a bank not in the rental home business but that just wants to be rid of them because it does NOT have the ability to manage them.