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. Hemet, a suburb of Riverside, California, with a population of 84,000, ranked eighth on EIG’s most distressed small-and-mid-sized-cities list. In Hemet, according to the group’s report, employment fell 15.5 percent between 2011 and 2015, while it grew 9.4 percent nationwide. The number of businesses in Hemet dropped 4.8 percent over that time period. The median home price, at $237,000, is still 30 percent lower than it was in 2006.
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. Now that the dust of the recession has cleared, it is evident that the geography of poverty has changed in America. Hemet is emblematic of just how fast—and just how dramatically—this has happened…
Hemet problems are in some ways particular to the areas that suffered the most during the housing bust. Suburbs far away from Los Angeles, Las Vegas, and Phoenix, where people bought homes during the “drive til you qualify” housing boom, were plagued by a high number of foreclosures in the bust. After the homes went through foreclosure, they were purchased by investors and rented out, creating new, low-cost rentals. Before the recession, 63 percent of homes in Hemet were owner-occupied, today just 54 percent are, according to Census data…
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.
While the fate of Hemet is tied here to the housing bubble of the late 2000s, it also represents the culmination of two older and widespread trends:
- The suburbanization of poverty.
- The economic issues facing a number of American suburbs with limited tax bases and lower-income residents.
The end of the article – the last paragraph quoted above – is depressing yet it is hard to see how many of these distressed suburbs will move ahead. They face a number of challenges, including just a lack of knowledge regarding how suburban areas can face significant economic and social issues. (In contrast, Americans tend to associate such problems with big cities.) There are a number of ways the communities could turn around but each option is fairly unlikely: a major employer with good jobs moves into town; a philanthropic organization or wealthy resident is willing to dump large sums of money into developments or changes that would benefit the whole community; state or federal governments come up with new programs or monies for suburban communities like this; or metropolitan revenue sharing is instituted and some of the money present in wealthy suburbs is made available to communities that desperately need it.