Category Archives: Sociology

Flipping houses stats – up then Great Recession then up then down again – and questions

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How many houses have been flipped in the United States in the last fifteen years? Here are some of the stats:

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In the first three months of 2020, 7.5% of homes sold in the United States were flipped, according to a June report from real estate research firm ATTOM Data Solutions. That’s the highest rate since 2006 and a jump from 6.3% at the end of 2019.

Home flipping rates had dropped drastically in 2007 and began to gradually recover in 2010. The number of flipped homes sold in a quarter peaked around 100,000 in 2005, and while it was on the rise in recent years, a decline began in the second quarter of 2019. In the first quarter of 2020, 53,705 single-family homes and condos were flipped, according to the report.

Profit margins have also dropped since 2019, hitting the lowest return-on-investment since 2011. After plummeting with the national economy between 2006 and 2008, profit margins on flipped homes grew at a steady rate until 2017. But since then, return-on-investment has been on a decline.

Still, it’s too soon to fully grasp how the coronavirus pandemic will impact the house flipping market through 2020 and beyond, ATTOM chief product officer Todd Teta said in a statement.

Flipping homes is by now a well-known process due to TV shows and personalities plus its spread throughout the United States. Yet, alongside other phenomena featured on HGTV and among certain groups (such as tiny houses), it can be hard to know how widespread a phenomena is.

Not surprisingly, these stats suggest flipping homes is connected to broader economic conditions: flipping increases when property values are high and repairs to a home can pay off in a sale. When times are tough and property values stagnate or even drop, there is less money to be made in flipping homes.

In the data above, it would be helpful to see how the national trends compare to patterns in particular places. Does flipping work in the hottest markets where prices are already high (limiting who can flip)? What about Rust Belt communities in good and bad times? Suburbs? Urban neighborhoods? I would guess there is a lot of variation across communities.

It is also worth considering what happens to the housing stock in places where flipping does or does not take place. If flipping happens, older housing stock gains new life. If it does not, do these homes simply keep sliding into disrepair?

Finally, this article starts with an example of a family involved in a flipping business but says very little about the role of small flipping businesses or more corporate operations. Even if flipping activity declines during tougher economic times, does it present opportunities for some to buy up properties to flip later? How do the profit margins differ across different kinds of flippers? Are smaller firms or family-owned flippers viewed more favorably by communities than corporate entities?

Treating suburban communities as another consumer good to choose among, Part Two

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With the New York Times sharing suburban communities to choose among, I argue this could have long-term consequences for how suburbanites think about their community and social life. In short: treat suburbs like objects to consume and suburbs and suburbanites will struggle to form, develop, and maintain community. Here is why:

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  1. Suburban community is often anchored in moral minimalism. With an attitude of leave each other alone, community is relatively shallow. The emphasis on each resident making the best choice for them could hinder efforts to build community. Consumerism encourages individual choices and often says less about and provides fewer opportunities for collective action.
  2. Making a choice among places of where to live could encourage people to more easily move away from places and/or limit their investment into each community. Purchase one suburb, throw it away when it no longer works for you or no longer meets expectations or another looks more attractive. Suburbs can be picked up and discarded at will, limiting commitment from residents and community members.
  3. Consumerism works through consumers making choices based on the resources they have available. This sorts people based on resources and makes it easier to justify different outcomes – and inequality –  by what resources people had coming in (which can be the result of social and individual factors). For example, one historian highlighted the shift in the 1960s from language about segregating by race or ethnicity to economic resources and social class.
  4. Consumer goods need to be differentiated from other competing consumer goods. The sort of analysis from the New York Times – fairly common in real estate sections – can put a spotlight on a few New York area suburbs and it is very difficult to provide an overview of all suburbs. While suburbs do indeed have unique characters, they also share similar traits compared to other places. Yet, for each of the suburbs highlighted, there are dozens of other suburbs with similar characteristics as well as other unique features. Going even further, trumpeting a few suburbs only might push more residents there while depriving other suburbs of possible residents. Highlighting particular features of places can reinforce statuses and traits and encourage agglomerations of both amenities and a lack of resources. In the long run, this pits suburbs against each other when they actually have multiple common interests and residents need particular services and options.

Articulating a different conception of social life beyond consumers making choices and could be more productive in the long run for nurturing the involvement of residents, deeper social connections, and stronger suburban communities. As I have heard said by multiple scholars, consumers take while citizens benefit as well as have responsibilities to others and the whole.

Treating suburban communities as another consumer good to choose among, Part One

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A recent New York Times article made the case for why prospective suburbanites might choose to live in specific desirable communities in the region. Many suburbs have particular characters and ways they differentiate themselves from other suburbs.

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Yet, this is an consumeristic approach to suburban communities. Does the typical suburbanite look at all the possible options and then select one that meets specific criteria? I doubt it. Here are a few of the factors that likely come into play:

1. Resources. How much money do they have for housing? This is a key sorting mechanism.

2. Information from social networks. What do people they know say about a community?

3. Quality of local schools and other local amenities and features (parks, crime, noise, density, family-friendly aspects, etc.).

4. Distance to work/commuting distance. The average commute is just under half an hour so staying within a particular radius and avoiding traffic congestion for held or potential jobs matters.

5. The status of the community. Which ones are known favorably (and not)? If you were moving to the New York City region and knew little about the suburban options, which communities would emerge?

6. Proximity to family if present in the area. Why move to Montclair if family members all live in New Canaan?

Even with all of these factors, it may take time of living in a suburb before a resident gets a sense of what is unique, different, and/or desirable.

Tomorrow, I will consider what this approach of searching for the best suburb could lead to.

Filling empty shopping mall space with Amazon

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Amazon might be coming to a shopping mall near you:

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The talks have focused on converting stores formerly or currently occupied by J.C. Penney Co. Inc. and Sears Holdings Corp., these people said. The department-store chains have both filed for chapter 11 bankruptcy protection and as part of their plans have been closing dozens of stores across the country. Simon malls have 63 Penney and 11 Sears stores, according to its most recent public filing in May…

Amazon fulfillment centers wouldn’t draw much additional foot traffic to the mall, though some employees could eat and shop at the mall. That is why landlords have preferred to replace department stores with other retailers, gyms, theaters or entertainment operators. Yet many of these tenants are struggling to survive during the pandemic and aren’t in expansion mode.

Simon would likely rent the space at a considerable discount to what it could charge another retailer. Warehouse rents are typically less than $10 a square foot, while restaurant rents can be multiples of that. Depending on when the leases were signed and their locations, department-store rents can be as low as $4 a square foot or as high as $19 a square foot…

Malls’ strategic locations often make them attractive as distribution hubs. Many are near main highways and residences. Amazon has already acquired the sites of some failed malls and converted them to fulfillment centers. FedEx Corp. and DHL International GmbH have done the same.

Dying shopping malls need businesses willing to rent space. But, as the article notes, Amazon is an odd choice: they are partly responsible for the decline of traditional retailers, they may or may not bring in customers for other businesses, and they can ask for lower rental rates. But, what choice do many malls have?

I am trying to imagine former shopping malls that become Amazon centers with more life to them than the typical warehouse setting. The former department stores and other retail spaces can mimic large warehouse spaces while the walkways, fountains and other features, and occasional other tenant provide variety and recreational space for employees. Think tech campuses with a warehouse/shopping mall feel. Or, go further: as shopping malls consider adding residential space, why couldn’t Amazon convert some of the mall space into living quarters for workers? (Perhaps this also lends itself to dystopian visions.)

Not mentioned here: how local governments would like the conversion of retail or restaurant space – good for sales tax revenue – to warehouse space.

Suburbanites, backyard fences, and signaling status

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I recently saw a request for users of a nearby park to stay on park property and not go into the yards of neighbors when there to attend sporting events. The particular area in question is surrounded on two sides by homes, one subdivision built roughly five decades ago and one roughly three decades ago. The earlier subdivision has more modest suburban dwellings – roughly 2,000 square feet, two car garages, split-levels, colonials, ranches, most homes with siding – and almost all of the yards backing up to the park have fences. See the image below:

Fences

The more recently constructed homes are larger: 3,500 square feet, a mix of two and three car garages, more brick, stone, and gables. Few of these homes have fences facing the park.

Residents, businesses, and communities use parts of the physical environment to demarcate boundaries. This park sits between several different kinds of communities. Even though it is located in a well-off suburb, there are clear gradations of social status in these dwellings.

With the fences, I wonder if this is a kind of conspicuous consumption on the part of the homeowners with more expensive properties: “We don’t need a fence to be separate from the park.” Indeed, multiple homes have nice patios, tables, and outdoor equipment near the park and very visible. In contrast, the older homes have deeper backyards and more cover – even without a fence. Could this simply be a legacy of a past era where fencing was more common or does it signal something about how suburbanites want to interface with a nearby park?

More broadly, suburbanites have multiple ways to signal their status without actively telling anyone anything. This can range from the facade of their home (with McMansions aiming to impress) to the vehicles parked in the driveway to the landscaping to the size of the lot. And near highly trafficked or public areas, the urge to look good may be hard to resist.

 

Historian Thomas Sugrue on the complex suburbia of today

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In an interview, historian Thomas Sugrue discusses what the suburbs are today:

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That said, while in the aggregate, suburbs are more diverse, the distribution of nonwhites isn’t random. Metropolitan America is not a place of free housing choice. It’s still very much shaped by deep patterns of racial inequality and a maldistribution of resources. A lot of the nonwhite newcomers to suburbia live in what I call “secondhand suburbs” — places that have become increasingly unfashionable for whites, often older suburbs closer to central cities, with declining business districts and decaying housing stock.

And just as the distribution of minority groups across suburbia is not random, the distribution of whites across suburbia has really significant political implications. We’re seeing a suburban political divide quite different from the one that played out after World War II, when well-to-do, middle-class and even some working-class whites living in suburbia found common ground by looking through their rearview mirrors with horror at the cities they were fleeing. By the early 2000s, you have growing divisions among white suburbanites. The whitest suburban places are often at the suburban-exurban fringes — places where middle-class whites who are attempting to flee the growing racial diversity of cities and nearby suburbs are moving. By contrast, many of the older suburbs, particularly those with late 19th-, early 20th-century charming housing and excellent schools, have been attracting well-to-do and highly educated whites…

But suburbs didn’t freeze in time circa 1950 or 1960; they continued to evolve and transform. And those transformations were largely overlooked by political commentators, journalists, social scientists, novelists and pop culture. You saw, for example, beginning in the 1960s and expanding in the ’70s and ’80s, the emergence of clusters of multifamily housing — apartments, townhouses and condominiums — in suburban places. And as the housing market opened, a lot of new immigrants chose suburban places as points of settlement because suburbs offered access to jobs. In the post-WWII period up to the present day, most American job growth has been in suburban places — office parks, industrial parks, shopping malls, stores, restaurants, the construction industry, all sorts of service jobs. And those changes are crucial to understanding the remapping of metropolitan America. They capture a more complex reality than the post-WWII image of the suburbs….

One of the consequences of that are the fierce battles over even modest or token efforts to bring diversity to predominantly white suburban school districts, and really significant opposition to the construction of multifamily housing. And it’s not even couched in the rhetoric of class. It’s not, “I don’t want multifamily housing in my neighborhood because I don’t want lower-class people living here.” Instead, it’s, “This is going to change the character of the neighborhood,” or “It’s going to jeopardize my property values,” or “It’s going to bring congestion.”

A few quick thoughts:

  1. For a definitive history of white flight as it played out in Detroit (and contributed to the current landscape), read Sugrue’s The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit.
  2. See earlier posts on complex suburbia, the various visions Americans today have of suburbs., and suburban NIMBY arguments.
  3. This reminds me that the image of 1950s suburbia is so pervasive as part of the American Dream and yet it has only some connections to current realities. Why does this image live on? It was incredibly powerful (postwar success, baby boomers, tremendous growth and sprawl), repeated and critiqued endlessly (numerous cultural products on both sides for decades), and some would like to continue or recreate what happened then. History rarely works this way; even if it were possible to recreate similar conditions, people are now different and society has changed.
  4. There is a lot more here for academics and others to explore about desirable and undesirable suburbs. Now that suburbs are more diverse in race, ethnicity, and class, the sorting within suburbs is a powerful force. Do wealthier people primarily select places through personal networks? How do residents of a metropolitan region come to know about and regard other communities (and how do communities try to “subtly” signal what they are)?

During COVID-19, wealthier people now less mobile than poorer people

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Researchers found changes in mobility patterns among Americans of different income levels during COVID-19:

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Writing in the journal PNAS, researchers from several California universities describe how they used anonymized cell phone location data and census info to show a dramatic reversal in how mobile Americans have been this year. Before Covid-19 struck, rich Americans moved about more than poor Americans—they can always afford to travel. But between January and April, that flipped. Rich folk are now far more likely to stay completely at home than poor folk: The study found that 25 percent more high earners stayed completely at home during the pandemic, compared to the number of them who had stayed home before. That increase was only 10 percent among low earners. And that has major implications for how we as a nation can fight the pandemic.

“In the early stages of the Covid-19 pandemic, there was a clear mobility response across the board,” says University of California, Davis environmental economist Joakim Weill, lead author on the paper. “In the US, everyone started to stay at home more. But we also found that there is a clear differential between wealthier communities and poor communities, where individuals in wealthier neighborhoods tended to stay at home much more than people in poorer neighborhoods.”…

Close to half of the wealthiest Americans stayed completely at home on weekdays in April, compared to less than 40 percent of low-earners. The poor traveled farther distances on average: In the same month, people who live in lower-income areas traveled between 5 and 6 kilometers, while the rich traveled closer to 4. The rich nearly halved their visits to recreational and retail areas in April, while the poor cut their visits by only a quarter—perhaps because their jobs required them to return to work there.

To be clear, the researchers can’t definitively say why the data shows this dramatic discrepancy, but they can begin to speculate. For one, essential workers often earn lower incomes, like clerks at grocery stores and pharmacies. Indeed, the US Bureau of Labor Statistics has found that among Americans 25 and older with less than a high school diploma, just 5 percent teleworked in June. On the other hand, 54 percent of Americans with a bachelor’s or more advanced degree were able to work remotely.

Social class is connected to mobility, health, and a whole lot of factors in social life. The anonymized cell phone data also seems to align with other patterns: those who can leaving certain big cities as well as differences in COVID-19 cases across communities and racial and ethnic groups.

As the article goes on to note, the fact that anyone can contract COVID-19 is not the same as saying everyone has the same likelihood of contracting COVID-19. Those with resources have more options in how to respond to crises plus more options when it comes to treatment. These differences are generally present regarding health but a large pandemic reveals some of the underlying patterns that deserve attention.

Rasmussen poll finds few Americans want the federal gov’t involved in deciding where people live

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New poll data from Rasmussen suggests Americans would prefer the federal government not be involved in where people can live:

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The latest Rasmussen Reports national telephone and online survey finds that 83% of Likely U.S. Voters say the federal government should not play a role in deciding where people can live. Just 10% disagree. (To see survey question wording, click here.)

Sixty-five percent (65%) still say it is not the government’s job to diversify neighborhoods in America so that people of different income levels live together. But that’s down from 83% when Rasmussen Reports first asked this question in mid-2015 as the Obama administration prepared to release its new housing regulations. Twenty-three percent (23%) now say that diversifying neighborhoods is a government role, up from eight percent (8%) five years ago…

Twenty percent (20%) of blacks and 21% of other minority voters feel the federal government should play a role in deciding where people can live, but just six percent (6%) of whites agree. Seventy-one percent (71%) of whites say it is not the government’s job to diversify neighborhoods, compared to 52% of blacks and 53% of other minority voters.

Interestingly, voters who earn $100,000 or more a year are more supportive of government neighborhood diversity efforts than those who earn less.

A few quick thoughts:

1. I do not know the accuracy of this data. I do not think this is a survey question that is regularly asked of a national population.

2. That said regarding #1, it does seem to align with patterns in the United States. Housing is a very localized issue and involvement from the federal government is not often viewed favorably. Part of the appeal of suburbs is local control and exclusion. A diverse vision of suburbia may not catch on.

3. As I argued earlier in the week, even though attitudes may have improved regarding outright housing discrimination, this does not mean there are not ways to keep people out of communities or neighborhoods.

4. It is a little strange that Rasmussen asked directly about different income levels living together and not also about different racial and ethnic groups living together.

5. If we cannot tackle the issue of residential segregation – which is an outcome of the attitudes in the poll – it will be very difficult to address race.

Naperville named best place in the US to raise a family

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Niche’s 2020 rankings put Naperville at the top of the list of best places to raise a family. Here is how they rated the large suburb:

NicheNapervilleJul2020

This is not an unusual plaudit for Naperville; a variety of publications have rated Naperville highly over the last two decades (previous posts here, here, and here). The community is wealthy, has a lot of amenities, and grew tremendously in the last few decades of the twentieth century.

Still, it is interesting to see what Niche says is better or worse about Naperville. Schools excellent. Housing good – not the cheapest suburb in the Chicago area but Midwestern and Southern home values are cheaper compared to coastal locations. Lots of good things for families. Good nightlife. Good diversity (perhaps for suburbs but not so much among America’s bigger communities).  Crime and safety is the lowest – though still a B- – even as Naperville is one of the safest big communities in the country!

Across rankings of communities, Naperville tends to do well. Whether it can maintain this reputation remains to be seen as city leaders and residents consider possible changes in future decades to a suburb that has little land remaining for single-family homes or low-density housing.