Tag Archives: economic crisis

Seeing the social layers in the foreclosure crisis through a photography exhibit

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A new photography exhibit at the Argus Museum in Ann Arbor, Michigan takes a unique look at the foreclosure crisis:

Sociology, economics, and ultimately, autobiography, are the featured artistic elements in Charles J. Mintz’s “Every Place (I have ever lived)” at the Argus I Building’s second-story museum.

Subtitled “The foreclosure crisis in twelve neighborhoods,” this Cleveland-based photographer’s mixed-media investigation into his personal history—as told through a dozen color foreclosed dwellings in the vicinities where he’s lived—is touching and telling in equal measures…

“Each work,” Mintz tells us in his gallery statement, “is a 4’ x 4’ sheet of raw plywood with two photographs that are printed on fabric. The ‘inside’ photograph is screwed in place. The top image has been made into a window shade that pulls down over the first…

“Maps on the side pieces show where you are in my personal journey. In addition, there are charts of both the changes in median family income between the time I lived there and now (based upon the 2000 census) and the changes in racial mix between then and now (based upon the 2010 census).”…

Even as the economic and sociological demographics do their part in Mintz’s story, he makes it clear that he believes race and financial position are ultimately relative to the journey. The story might have differed at another time, but from mid- to late-20th century, Mintz seeks to build a case that our American commonalities are more tightly bound than we might otherwise expect.

It is one thing to see the numbers about foreclosures, such as the fact that the foreclosure rate in Illinois is still rising, and another to look at how this affects communities and individuals within them. What sounds particularly interesting to me about this exhibit is that this isn’t just about one person. For example, in political debates and speeches, we tend to hear stories about individuals or families which are meant to put a “human face” on the larger issues. But, through connecting individuals, communities, and larger social forces, such as the artist Mintz explaining his personal experiences as embedded in communities as well as race and socioeconomic status, we can better view and understand the multiple levels of foreclosures and how different actions at each level might be needed.

In buyer’s market, some skipping the starter home and buying the big home first

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With lower mortgage rates and housing prices, some young buyers are buying the big home as their first home:

Real estate agents say more twentysomething, childless buyers are snapping up sprawling homes instead of starting out small. It’s a trend that’s gaining momentum as young buyers seize on some of the best housing deals in history. While the shift is unlikely to kick-start construction of new subdivisions filled with McMansions, it’s helping to revive sales of midpriced and upper-bracket houses. The Simonses, for instance, initially planned to spend about $200,000 on a townhouse, but ended up spending tens of thousands more once they started shopping…

Clearly, most first-timers don’t have the financial muscle to buy their dream house, but with rents on the rise, the Simonses and other young buyers face stiff competition from investors who can pay cash for inexpensive properties they can use for rentals. During August, the inventory of houses priced at less than $140,000 fell 40 percent, while those priced at more than $300,000 fell half as much, according to the Minneapolis Area Association of Realtors…

This shift to larger homes runs counter to buying trends in recent years that showed higher demand for smaller houses. When the recession hit, many builders decreased square footage and touted their homes as more efficient and economical for buyers.

But Walter Maloney, spokesman for the National Association of Realtors, said many of today’s buyers are realizing that it could take many years to gain enough equity to trade up to a costlier house, so many are planning to stay longer. Last year, the typical buyer expected to be in their house 15 years compared with 10 years in 2010, he said.

So is this a good decision or not? As we are still trying to recover from a housing crash, it may be easier to now buy a larger house. However, these purchases echo two ideas that are often credited for getting us into this housing situation in the first place: people spending more money on houses than they should (even if they are more “affordable”) and people buying unnecessarily large houses. Indeed, there are some who would argue these two things should be avoided even in the best of times.

The last part of the quote above is also interesting: are we settling into a period where Americans are expecting to be less mobile? Some data from recent years suggests the recession has slowed mobility but people are making certain decisions now as well as developing mindsets that could change mobility for years to come.

Economic crisis hits black middle class particularly hard

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The economic crisis may have hurt a lot of Americans but it didn’t necessarily hurt everyone equally. Recent reports suggest the black middle-class was particularly hard hit.

The Pew Charitable Trusts’ Economic Mobility Project recently released a report projecting that 68 percent of African-Americans reared in the middle of the wealth ladder will not do as well as the previous generation.

In August, the National Urban League’s State of Black America 2012 report found that nearly all the economic gains that the black middle class made during the last 30 years have been wiped out by the economic downturn…

From 2005 to 2009, the average black household’s wealth fell by more than half, to $5,677, while white household wealth fell 16 percent to $113,149, according to the Pew Research Center. In 2009, 24 percent of black households had no major assets other than a vehicle, compared with 6 percent of their white counterparts.

“For every $20 whites have in wealth, blacks have just $1,” said Paul Taylor, director of Pew’s Social and Demographic Trends project. “And in many cases, households get a boost because they inherit wealth from parents and grandparents. Blacks for most of history haven’t been able to accumulate that type of wealth.”

Mary Pattillo, a Northwestern University professor and expert on the black middle class, said this segment of the population is so fragile because it’s disproportionately lower middle class.

This is a reminder that the “American Dream” can be quite fragile. Even if the idea of being middle-class is quite powerful in America, tough economic times which lead to job less or housing issues can erase hard-earned material gains. Since whites had on average higher levels of wealth compared to blacks going into the economic crisis, they were able to better weather the storm.

Some residents opposed to Section 8 vouchers being used for large homes in South Florida gated communities

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Here is another side effect of the sluggish economy and housing market: some big homes in South Florida are being rented with Section 8 vouchers.

Housing advocates and the government view the turnabout as a win-win for homeowners and the poor, who have access to safer communities and better schools.

But some neighbors are aghast.

After a single mother and her nine children rented a house in the exclusive Isles neighborhood of Coral Springs, the homeowners association adopted an amendment to its governing documents stating: “No Section 8 or government leasing assistance is permitted.”

The association is threatening eviction.

Federal law does not expressly outlaw such bans. But the prohibition can’t be used as a pretext for other illegal acts, such as denying housing to people because of their race, gender, national origin, disability or number of children.

The Sun Sentinel examined federal housing subsidy data from housing authorities in Broward and Palm Beach counties and found 230 homes commanding rents of $2,000 or more, up to $3,375 a month, from Section 8 families. Typically, tenants pay about one-third of their income toward the rent and the government pays the rest.

Most of the homes were basic, modest-looking residences in unassuming neighborhoods. But about a dozen were far grander, upscale houses concentrated in Broward County’s western suburbs, including Coral Springs, Miramar and Cooper City, where one six-bedroom rental is worth $500,000.

I can’t say I’m surprised by the response of some of the gated community residents: they moved to these communities in part so they might never have to run into people with Section 8 vouchers. It doesn’t sound like this is widespread just yet but I can imagine the headline years later: racial and economic integration was achieved in South Florida through a terrible housing market that limited the ability of wealthier residents to keep out poorer residents.

Living in near poverty in the Washington D.C. suburbs

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The number of poor people in the suburbs is growing and the Washington Post takes a look at those just above the poverty line in the suburbs of Washington D.C.:

These are the folks hovering above the poverty line, just a few digits away from the cliff that drops them into the world of people we fret over and create government programs for.Poverty, in most of the cases we hear it discussed, means a household income of less than $23,000 for a family of four. But what if you make $25,000, $30,000 or even $40,000? Is that easy street?…

From 2010 to 2011, poverty rates jumped in Loudoun, Fairfax, Arlington and Prince William counties, the land of McMansions, gated communities and shiny, big-box stores.

The suburbs were built to accommodate prosperity and consumption, a life of big lawns, big cars and big dreams. It is a precipice so high that the drop — a missed mortgage that turns into a foreclosure, a repossessed car that results in a lost job — is dizzying.

Step into any thrift store and the pain is on display, right along with the used cake platters, tea sets and cocktail dresses nobody needs anymore.

A few thoughts on the full story:

1. The columnist uses an interesting term for this group living just above the poverty line: the pre-poor. Does this imply that they are inevitably on a path to poverty or could they also move upward out of this group with a new job or opportunity?

2. The story focuses primarily on thrift stores but assumedly there are other places where the pre-poor shop and gather? In other words, this sounds like an easy entree into this segment of the American populace but doesn’t give us much of the complex story of their lives.

3. Another angle on this would be to look at the social services available to those just above poverty. Are there local charities, religious organizations, and civic groups trying to help? Are these suburbs, places built for prosperity and yet seeing growing need for social services, able to help?

Hit by the recession: “Architecture revenue down 40% since 2008”

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Amongst those hit hard by the economic crisis and the downturn in the housing and building industries, don’t overlook architects:

Between 2008 and 2011, gross revenue at architecture firms fell from over $44 billion to $26 billion. More than 28 percent of positions disappeared…

Architecture is dependent on construction, which is notoriously cyclical – usually three or four times more volatile than the market, says Kermit Baker, the AIA’s chief economist and a professor at the Harvard Graduate School of Design. “It’s been devastating,” he says. “Construction activity has been down 50 or 60 percent – architecture has a long tradition of trying to survive the construction cycle, and it’s extremely challenging because architecture firms are by and large small- and medium-size firms.”…

But the highly competitive market has also encouraged innovation. The percentage of architectural firms that employ LEED-accredited professionals has doubled since 2008, from one-third of all firms to two-thirds. Baker, who helped prepare the report, says sustainable design is a way for firms to distinguish themselves in a crowded field. But it also demonstrates a larger, permanent shift toward environmental awareness…

Particularly in small practices, architecture firms are expanding their range, fostering talents in interior design, construction, or environmental planning. Again, this multidisciplinary shift reflects a desire to compete in a crowded market, but it also speaks to a larger trend toward “one-stop-shop” firms where clients can find everything they need. Progressives have been advocating closer contact between design professionals for ages, and the recession has made it pay off.

Even before the recession, relatively few homes were constructed with the aid of architects.

Thinking more broadly, economic prosperity and hardship leads to changes in the more cultural aspects of society. In response to these changes, architects have expanded into two areas, sustainability and design, which could lead to different kinds of buildings in the years to come.

Response to economic crisis: Irish government cutting support of homeownership

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A conference on housing in Ireland suggests the Irish government is reversing course and will no longer be supporting homeownership:

STATE SUPPORT for the principle of home ownership is at an end after almost 100 years, a national housing conference has heard.

Encouraging people to buy their homes had been seen by the State as a social good, as well as an economic one, but there was now a definite shift in policy, UCD sociology professor Tony Fahey said.

Tenant purchase schemes were dying out and local authorities were no longer offering loans to private buyers. The policy now is households need to be assisted by the State if they can’t afford to rent, not if they can’t afford to buy.

“It had been an article of faith for almost 100 years that home ownership was a social good and should be supported by the State . . . The historic roll the State played in putting up capital for housing won’t be repeated.”

Americans tend to think we are a nation of homeowners but there are several countries that have higher rates of homeownership. Ireland is one such country:

The highest home ownership is in Romania (96pc), followed by Lithuania (91pc), Hungary (89pc), Slovakia (89pc), Estonia (87pc), Latvia (87pc), Bulgaria (87pc), Norway (85pc), Iceland (84pc), Spain (83pc), Slovenia (81pc), Malta (79pc), Czech Republic (77pc) and Greece (76pc).

Ireland comes in at 73.7pc, while 70pc of people in the UK own their own homes.

Irish home ownership levels have dropped from a high of 79pc in the 1990s to just short of 74pc at the start of this century, according to a new book on the economy, ‘Sins Of The Father’ by Conor McCabe.

Ireland is now facing the consequences of a burst housing bubble in the last few years.

While Ireland is facing their own issues, I wonder if the US government might make a similar shift or at least pull back from supporting homeownership through public policy and government rhetoric. Thus far, it doesn’t look like this has happened much. But, if the mortgage interest deduction disappears and/or younger Americans continued to avoid buying homes, perhaps things could change quite a bit here as well.

However, even if the policies changed, this doesn’t necessarily mean the cultural value of homeownership will change quickly.

Americans react to economic prosperity by moving more?

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Amidst a number of supposed indicators of economic recovery, I found one to be particularly interesting: there was a slight uptick in mobility in 2011.

As a whole, Americans were slowly finding ways to get back on the move. About 12 percent of the nation’s population, or 36.5 million, moved to a new home, up from a record low of 11.6 percent in 2011.

Among young adults 25 to 29, the most mobile age group, moves also increased to 24.6 percent from a low of 24.1 percent in the previous year. Longer-distance moves, typically for those seeking new careers in other regions of the country, rose modestly from 3.4 percent to 3.8 percent.

I have always found American mobility numbers fascinating. In a record low year for mobility (2011), more than 1 in 10 Americans moved. Even though longer-distance moves are less frequent, even moving between residences can often be a big task.

And this story hints that some of this mobility is due to choice; when economic times are bad like in recent years, mobility is decreased but when the economy improves, people have more opportunities to move. If this is indeed the case and we take the argument further, could we suggest Americans celebrate economic prosperity and success by being less rooted and moving more?

In 2011, poverty continued to increase in the suburbs

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Here is some data about how poverty is growing in a number of American suburbs:

By 2011, 30 million residents in the nation’s 100 largest metro areas lived below the federal poverty line. That represents an increase of 1.7 million people over 2010, or a growth rate of 5.9 percent. As in previous years, that growth skewed toward suburbs. Suburban communities in the nation’s largest metro areas saw the poor population grow by 6.8 percent compared to a 4.7 uptick in cities, and accounted for almost two-thirds of the increase in the metropolitan poor population (63.4 percent). As was the case in 2010, 55 percent of the metropolitan poor lived in suburbs in 2011, which translates to 2.6 million more poor residents in suburbs than in cities.

The slowing of poverty’s upward trajectory signals a promising—if stubbornly slow—response to the recovery that began to take hold in the wake of the Great Recession, though the soft job market that has prevailed since the recession ended and the unevenness of that recovery can be seen in other troubling income trends. Between 2010 and 2011, 25 of the nation’s largest metro areas experienced a significant increase in income inequality (as measured by the Gini index), compared to 11 regions the year before. Increasing inequality affected a diverse array of regions, from metropolitan Atlanta, Chicago, and San Francisco to Kansas City, St. Louis, and Louisville. In each of these regions, inequality grew alongside rising poverty and falling incomes.

I am most interested in one trend mentioned above: the growing poverty numbers in suburbs. Not only did the poverty rate increase more in suburbs than in cities, there now over 2.5 million more poor residents in suburbs than in cities.

Of course, the growing number of poor people in suburbs are probably not evenly distributed across suburbs (or perhaps even metropolitan regions). I would guess that inner-ring suburbs have higher poverty as do working-class suburbs. How much have declining incomes and persistent unemployment hurt wealthy suburbs?

Baby Boomers can’t retire because they all bought McMansions?

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The economic crisis has changed the retirement plans of many. How might have McMansions played a role?

Financial planners on the South Shore and a new national study all point to the same troubled financial picture for people in their late 40s to their early 60s: Many are carrying so much debt from mortgages and student loans they co-signed for their children that retirement is a distant dream.

“They traded in their houses for a McMansion and bought at the higher part of market. They hocked it over 30 years, and they have little equity, if any,” said John Napolitano, CEO of U.S. Wealth Management in Braintree and 2012 president of the Financial Planning Association of Massachusetts…

The study found that the mortgage burden for baby boomers is 25 percent higher than it was for the same age group in 1990.

“In the refinance boom, mortgage brokers convinced (baby boomers) don’t stress out and sold them on a 30-year mortgages,” said Harris. “It was all about cash flow.

The article suggests Baby Boomers are also helping their struggling children. Yet, I wonder about these figures about mortgages and McMansions. This leads to two questions: (1) How many Baby Boomers really bought homes that might be considered McMansions? (2) And how many of them went into excessive debt to purchase this McMansion? For example, I would guess there are a decent number of people underwater on their regular-sized (less than McMansion size) home, particularly in certain housing markets.

This could be a classic case of McMansions serving as a whipping boy or shorthand explanation for the complicated housing market of recent years. When the term McMansion is used here, a certain image comes to mind: a house that is extremely unnecessary for the homeowners. Without seeing the actual numbers, it is hard to know this is exactly what happened but using McMansion certainly helps drive home a particular idea.