Tag Archives: social class

“They get McMansions, we get McJobs”

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One columnist suggests McMansions are for the few thriving in the current economy while everyone else gets low-paying jobs:

The Great Recession ended in mid-2009, but for middle class Americans the economic “recovery” never began.

Times will get harder in 2014 for thousands of families in Bucks and Montgomery counties. As reported in this newspaper, long-term unemployment benefits ceased on Saturday for 73,000 Pennsylvanians, about 6,000 of them in the two counties. These people and their dependents will have the penultimate hope ’n change experience – no job, few prospects for full-time work and no unemployment benefits.

The economic news for the majority of Americans has not been good in recent years. However, I’m intrigued by the argument about who McMansions are for. The suggestion here is that McMansions are only for the wealthy, those who have still done well in the economic crisis. Yet, the typical usage of the word McMansion implies that they are big houses for the masses, not just the wealthy. At the economic peak in the early 2000s, the idea of a McMansion meant that a middle-class American could purchase a large and ostentatious home.

At play here is the relative status of McMansion owners. Are they the nouveau riche who are trying to conspicuously present their wealth? Are they the top 10% of the population? The truly wealthy don’t need McMansions – they have mansions – but in times of more scarcity, McMansions might not be for the masses. Also, the article seems to present its criticism of McMansions from those of lower economic and social standing whereas some of the critique of McMansions in recent decades has come from the top in suggesting the owners aren’t really wealthy or don’t have much architectural taste.

Limited social mobility: 70% of those born in bottom quintile of income don’t reach the middle

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Social mobility up from the bottom is relatively limited in the United States:

The most exhaustive of these reports is Pew Charitable Trust’s Economic Mobility Project. Since 2006, the public policy organization has studied such movement up and down the socioeconomic ladder, focusing on just how much better or worse adult children are faring in terms of family income and wealth than their parents at the same age.

For the last 35 years, the news has not been good, researchers said, with the inequality gap growing ever wider. Some 43 percent of Americans raised in the bottom quintile remain stuck at the bottom as adults, with household income of less than $28,900 a year. An additional 27 percent have bumped up just one rung, earning less than $44,000 annually. Consequently, a total of 70 percent never reach the middle, the study found.

More and more, the life chances of a child are dependent on the education and income of his parents. The study found that having a college degree, being part of a dual-earning couple and building up savings and home equity were key qualities in climbing the economic ladder.

Even those who have managed to increase their earnings compared with their parents have lost ground, relative to everyone else. Only 4 percent who start in the bottom make it to the top. Access to opportunities is actually better in Scandinavia and western Europe than in the country that invented the Horatio Alger story, experts said.

So while 30% are able to move from the bottom quintile to the middle, the majority do not. Yet, the narrative in the United States is that everyone can make this move, particularly if they work hard and take advantage of the opportunities available to them.

Natural gas bus commercial misses that riding the bus is already helping the environment

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This commercial from America’s Natural Gas Alliance highlights natural gas buses in Los Angeles. The message is that the natural gas buses are better for the environment. They may be – but it misses the point that individuals using mass transit are already helping the environment (let alone traffic congestion). So having a natural gas bus is a bonus. Perhaps we would all be better off if more people were willing to ride any kind of bus in the first place.

However, given that it is difficult to get wealthier people to ride buses, we should then ask when we might have cars powered by natural gas. If natural gas is cleaner to burn, why not reduce the emissions from cars rather than focusing on the limited number of Americans who regularly ride the bus?

(I realize the natural gas buses may just be a marketing ploy. However, it is really about helping the environment, not good PR or trying to sell more natural gas, why not use natural gas to power more things?)

Is there an invisible wall keeping $1 million homes east of Western Avenue in Chicago?

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One person in Chicago real estate argues $1 million homes on Chicago’s North Side stay east of Western Avenue.

It’s as if there is an invisible wall running through the middle of Chicago, along Western Avenue all the way south of Montrose. When buyers of million dollar homes specify their search criteria they will often specify that they want to stay east of Western Avenue – or if they specify Ukrainian Village, Bucktown, Wicker Park, Roscoe Village, or St. Ben’s those neighborhoods technically stop at Western Avenue so again you are staying east of Western. And it almost doesn’t matter anyway because over the last 7 years there have been very few homes above $1 MM for sale west of Western anyway as you can see in the map below. It’s pretty dramatic isn’t it?

What could be behind this?

Well, for one you are typically getting further away from public transportation options as you move west. But then again public transportation isn’t really that much more accessible just east of Western than it is just west of Western. If you can’t walk to the el stop in 10 minutes in January you may not feel like you have good access to public transportation regardless of which side of Western you live on.

The other thing that happens as you cross Western Avenue is that you cross into a few lower income census tracts. For example if you look at the heat map from RichBlocksPoorBlocks.com you will see that there are are a few sections of Western Avenue where the median household income drops pretty dramatically as you cross the street. In the map below as the color transitions to darker green median household income goes up and as it transitions to darker red it goes down. From Fullerton to Armitage the median income is $66K on the east side of the street but $35K on the west side of the street. And from Armitage to Bloomingdale it’s $107K vs. $66K. And then from Division to Chicago it’s $67K vs. $42K.

Might this change in the future?

There is no question that eventually the area west of Western will become populated with million dollar plus homes but at that point the disparity between the east and west sides of the street may persist and the east side may just be populated with homes priced well above $1 MM. And, regardless, it looks like that day is still several years into the future. In the meantime, if you are willing to be a pioneer you can definitely find cheaper living just a couple of blocks further west.

My interpretation: neighborhoods west of Western Avenue aren’t trendy or gentrifying yet and have different demographics. In other words, there isn’t demand yet among the creative class or young professionals for nicer housing west of Western.

This could lead to some discussion about the limits of gentrification on Chicago’s north side. Just how much can it expand? What happens when it moves out of hipper neighborhoods and comes up against more lower-class or non-white neighborhoods? Right now, there are some gentrifiers who want to live on that edge between the expensive homes and poorer neighborhoods, places they might consider more gritty or authentic. But, would large numbers of people move further west? And are there enough of them? (This, of course, doesn’t even consider the negative effects of gentrification which include making housing more unaffordable, a problem in a region that needs much more affordable housing, and white residents pushing out non-white residents.)

The best ROI in hipster neighborhoods

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If you are looking to make some money in real estate, check out these hipster zip codes:

Real estate data provider RealtyTrac conjured some numbers to support what everyone already knows or suspects— that, as a developer or landlord, investing in rental housing in “hipster” nabes is a solid idea. Chicago gets three hits on RealtyTrac’s just-published top 25 list of hip zips for high return on rental properties, in descending rank: 60625 (Ravenswood, Albany Park); 60647 (Logan Square, Bucktown); and 60642 (Noble Square, River West, Goose Island). Yup, they got all the usual suspects. The above chart, interactive and expandable at the source, shows the equation for investment success in “nascent hipster markets”: a high proportion of 25-34 year-olds; a ready stock of renters; a low vacancy rate; and a climbing but still low median home price relative to average rents. Wouldn’t you know it— these are the basic conditions for any successful rental investment, almost anywhere. Why all the fuss over hipsters? Probably because the “culture” that follows this trendy group around usually matches up closely to rapid gentrification. In other words, it’s the hipster as beacon. For the frugal renter trying to stay away from big money, there’s a different use for this list. Stay tuned for follow-up RealtyTrac analysis on “top hipster zips for fix-and-flip profits.”

While hipster may appear to be a lifestyle choice, this article is a reminder of the economic conditions involving hipsters. They also have money and are interested in moving into less-than-perfect neighborhoods that have the appropriate grittiness and authenticity. Thus, a savvy investor might find properties in neighborhoods on the rise and with the influx of hipsters make some money.

It would be interesting to then look at how these investment work out over time. Getting in at the right point is important but how does that investment then work out over a long period of time? What happens when hipsters stop moving in or the neighborhood is no longer the hot one? We need to see not only this data but a ROI curve.

Analyzing the SuperZips of the Washington D.C. region

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There are a lot of wealthy and educated people living in SuperZips around Washington D.C.:

Clarksville sits in one of the nation’s “Super Zips” — a term coined by American Enterprise Institute scholar and author Charles Murray to describe the country’s most prosperous, highly educated demographic clusters. On average, they have a median household income of $120,000, and 7 in 10 adults have college degrees…

A Washington Post analysis of the latest census data shows that more than a third of Zip codes in the D.C. metro area rank in the top 5 percent nationally for income and education. But what makes the region truly unusual is that so many of the high-end Zip codes are contiguous. They form a vast land mass that bounds across 717 square miles. It stretches 60 miles from its northern tip in Woodstock, Md., to the southern end in Fairfax Station, and runs 30 miles wide from Haymarket in Prince William County to the heart of the District up to Rock Creek Parkway.

One in four households in the region are in a Super Zip, according to the Post analysis. Since the 2000 Census on which Murray based his analysis, Washington’s Super Zips have grown to encompass 100,000 more residents. Only the New York City area has more Super Zips, but they are a much smaller share of the total of that region’s Zip codes and are more scattered…

Yet many who live in these rapidly evolving communities do not think of themselves as rich or elite. The cost of living, particularly for housing, eats up a large chunk of the two incomes it typically takes to afford a comfortable home in a good school district.

Interesting look at social class today in America; those on the upper end tend to argue they worked hard to get there, deserve what they have, and they aren’t really rich (though comparisons to much of the U.S., let alone most of the world, suggests otherwise). As the article goes on to note, a number of people are concerned about what the lack of interaction with others might mean down the road.

This is a story that has developed in recent years. For example, a number of people have noted that a large number of the wealthiest counties in the United States are in the Washington region. While conservatives tend to tie this wealth to the growth of big government (and the businesses associated with it), how come scholars haven’t looked at this more closely? There have been some studies of a few areas in the Washington metropolitan area, such as Prince George’s County and its large suburban black population or the growth of the edge city of Tysons Corner or responses to growing immigrant populations in Prince William County, but little look at the region as a whole. Perhaps this is a lingering artifact of American urban sociology’s emphasis on some “traditional big cities” like Chicago, New York City, Boston, and Philadelphia and not paying as much attention to newer big cities like Washington D.C., Dallas, Houston, Phoenix, Las Vegas, and others. Do we need something like a “Georgetown School” or “Brookings Institution School” of urban sociology?

Why live in Celebration, Florida when you can live in a Disney gated community within the resort?

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Celebration, Florida gets a lot of attention as a Disney-designed New Urbanist community but there are more exclusive Disney housing options: living in a big house within a gated community inside the resort.

Walt Disney Co.’s gated community known as Golden Oak—named after the company’s California ranch—is the only place in the world where you can own a home within Disney-resort boundaries. Some 980 acres are being carved up for as many as 450 homes on the Lake Buena Vista site, a few within eyesight of the famous Cinderella Castle fireworks.

Homeownership in the development starts at $1.7 million, and homes have sold for more than $7 million. Extras include property taxes and annual fees as high as $12,000 to cover perks, which include park passes, door-to-park transportation, extended hours for visiting attractions such as the Magic Kingdom and Epcot, and a 17,000-square-foot clubhouse with a restaurant and concierge. Residents also will have access to some of the amenities, including the spa and dining rooms at the $370 million, 444-room Four Seasons resort expected to open in Golden Oak next summer…

Many homes include nods to Mickey Mouse and friends. (Disney is willing to overlook trademark violations inside the home.) The ceiling of one of Mr. Bergami’s guest rooms has a tray ceiling in the shape of Mickey’s head. Doors have carvings of the castle, Donald Duck and Goofy.

Homeowners also have the option of adding “hidden Mickeys”—as the features are known—in everything from kitchen backsplashes to stair railings. Builder Chad Cahill included an estimated 75 hidden mouse ears in a showcase home finished earlier this year. Some are tough to spot, so when the furnished $2.7 million home sells, the new owner will receive a map of the locations.

See a 2012 post about the construction of this gated community. Sounds like the gated community is all about giving the wealthiest Disney fans what they want: an immersive Disney home just a short distance away from the Disney gates.

A thought about these wealthy Disney fans: are they easy to spot at the Disney parks? We spent a day at the Magic Kingdom in Florida last year and I was struck that the people around us looked like a broad slice of middle-class America. Granted, it is not cheap: single-day tickets were over $90, the food was moderately expensive (not as bad as I thought it might be), and many people have to travel far and pay for airfare, a hotel, and a rental car. Of course, there are lots of other things to spend big money on (for example, giving your small daughter the full princess experience), but I don’t remember seeing people who were flashing wads of money and really expensive clothes or other goods. Perhaps this says more about Americans trying to downplay their wealth (we’re all middle-class) or the findings that most millionaires don’t act like stereotypical millionaires.

Gathering more support for mass transit by telling drivers it helps keep the highways clear

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The growing popularity of mass transit in Utah may be explained by an interesting pitch to drivers:

Oddly enough, one of UTA’s most effective strategies for uniting people was targeting those who don’t use public transit. The agency and its advocates pointed out that TRAX ridership saves 29,000 trips — or two full freeway lanes — in the Interstate-15 corridor every day. Road-reliant businesses like UPS ran ads explaining that FrontLines would help residents get their packages quicker by reducing traffic.

As the article notes, this is just part of the picture in how expensive new mass transit can be built. The message explained above is intriguing: drivers, you may not use mass transit, but you should support it for others so that it makes your drive easier. What is the tipping point here where you need enough of those drivers to stop driving and use mass transit versus some drivers wanting to keep driving because there is less traffic? I wonder if this could also verge into classism: those who can afford to drive and help pay for mass transit will continue to do so while those who would economically benefit from not having to drive as much will do so.

Naperville mayor names volunteer leaders for outreach to Chinese, Indian residents

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Naperville has a growing Asian population and the mayor recently named two volunteers as leaders of outreach efforts from the city to Chinese and Indian residents:

Pradel this week announced the creation of the outreach positions to be filled by Bill Liu, who will work with Chinese residents, and Krishna Bansal, who will reach out to the city’s Indian community.

“We have such a diversified city that I’ve been wanting to kind of get on the cutting edge of bringing all our groups together,” Pradel said.

The outreach managers mainly will work to answer questions for Chinese and Indian residents and help them become more comfortable with the processes and procedures of city government, Pradel said. Liu and Bansal also will connect city leadership to important groups in the Chinese and Indian communities and stand in for Pradel if he’s unavailable for their meetings and events…

Pradel said he chose to begin outreach efforts among Chinese and Indian residents because they are two of the city’s largest minority groups. According to 2010 census data, 7.4 percent of Naperville residents are Indian and 3.9 percent are Chinese.

Appointing a similar leader to begin Hispanic outreach could be next, Pradel said. Hispanics and Latinos from all countries make up 5.3 percent of Naperville’s population, according to 2010 census figures. The rest of the city’s roughly 142,000 population is made up of 76.5 percent white people and 4.7 percent blacks.

Interesting move within the diversification of the suburbs more broadly but also within Naperville. It sounds like this is primarily about business opportunities, cultural events, and transmitting information from City Hall. The business part doesn’t surprise me – Naperville is known for its high-tech and white-collar jobs as well as growth – and suburbs are always looking for ways to improve communication with residents. The cultural events side could be interesting: could there be Chinese or Indian events in downtown Naperville in the near future? It also bears watching how outreach to Chinese, Indian, and Latino residents might differ in the future as issues of race/ethnicity, social class, and cultural practices intersect.