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How the Crash Will Reshape America
February 15, 2009 8:35 AM   Subscribe

" ... the recession, particularly if it turns out to be as long and deep as many now fear, will accelerate the rise and fall of specific places within the U.S.—and reverse the fortunes of other cities and regions." From The Atlantic Online - How the Crash Will Reshape America
posted by Afroblanco (69 comments total) 15 users marked this as a favorite

 
Please God, let Jersey finally get what is coming to it. The whole state and it's freakin fake maple syrup stank!!
posted by spicynuts at 8:43 AM on February 15, 2009


So, all the imaginary growth in cities that was based on imaginary growth in finances will go away? I'm relatively okay with this.
posted by jeffamaphone at 9:21 AM on February 15, 2009


So, all the imaginary growth in cities that was based on imaginary growth in finances will go away? I'm relatively okay with this.

Ah. What about the very real people with very real lives who will be negatively impacted by this? I don't know that I could be 'relatively okay' with that. I've heard lots of people espouse the so-called "virtues" of this economic crisis, and I find it to be a glib and ultimately indefensible standpoint. Nothing about this is "imaginary."
posted by ford and the prefects at 9:40 AM on February 15, 2009 [6 favorites]


If city A is going to go to ruin, mostly, and city B is going to thrive, the lots of people in places like City A will migrate to places like City B...and that means....you fill in.
posted by Postroad at 9:41 AM on February 15, 2009


So I just picked up this issue of the Atlantic from a newstand in Toronto. On the cover, the blurb above the main article title was "The suburbs lose. The Sun Belt fades. TORONTO WINS." Then I read the article: Toronto isn't even mentioned (except in a passing reference to someone at U of T).

The cover of the US version? "The suburbs lose. The Sun Belt fades. NEW YORK WINS." which, you know, has a lot more to do with what the article actually says.

Are there more versions of this floating around out there? "PEORIA WINS," etc?
posted by chalkbored at 9:48 AM on February 15, 2009 [2 favorites]


it's just the same as the 1980s Savings and Loan crash, same causes, etc...

what will change is more knowledge via the internet about the "Fed", and more email campaigns to reduce dependence on fractional reserve fiat money banking.

However, the Euro will supplant the dollar as a 'safe haven' for world investors.

As for the "Fed". I can't see how the FOMCs which supposedly have these 'bright' economics whiz's monitoring the amerikan economy can miss this 'crash' and didn't learn from the 80s S&L crash? Again, more sunshine will be demanded by a more informed public.

The Chinese, Russians and Indians are lovin' it tho! Doubt they'll be inviting 'experts' like Jeff Sachs to advise them on economics and capitalism
posted by americana at 9:53 AM on February 15, 2009


The Chinese have lost 20 million jobs so far in this recession, if I am interpreting this correctly. I don't think they're lovin' it. The fact of the matter is, America's prosperity shields it from the worst effects of the (America-caused) recession; other nations bear the worst consequences.
posted by synaesthetichaze at 10:21 AM on February 15, 2009 [1 favorite]


I'm confused. The Chinese are loving their internal dramatic economic slowdown and the resulting mass labor dislocation? The Russians are loving their currency plummeting and their reserves evaporating?

The weakening financial situation in the eurozone will cause the euro to become the worldwide reserve currency?
posted by rr at 10:22 AM on February 15, 2009 [2 favorites]


lots of people in places like City A will migrate to places like City B

When I, as an American visitor, am enjoying the many advantages of European countries, including Canada, I've come to see that the one tremendously valuable privilege and freedom Americans have, that others don't in the same way, is the ability to simply move to another city and reinvent yourself.
posted by StickyCarpet at 10:28 AM on February 15, 2009 [2 favorites]


Middle East financial capitals like Dubai are busy Wile E. Coyote'ing off the edge of a cliff.
posted by PenDevil at 10:28 AM on February 15, 2009


I saw "Chicago Wins" in the Borders magazine rack yesterday.
posted by washburn at 10:30 AM on February 15, 2009


> Are there more versions of this floating around out there? "PEORIA WINS," etc?

If you want one that says, "DETROIT WINS," you'll have to print it yourself.
posted by ardgedee at 10:30 AM on February 15, 2009 [4 favorites]


As for the "Fed". I can't see how the FOMCs which supposedly have these 'bright' economics whiz's monitoring the amerikan economy can miss this 'crash' and didn't learn from the 80s S&L crash? Again, more sunshine will be demanded by a more informed public.

The Chinese, Russians and Indians are lovin' it tho!


*This* is what you waited a year for to open your yap?!
posted by codswallop at 10:33 AM on February 15, 2009


The Chinese, Russians and Indians are lovin' it tho! Doubt they'll be inviting 'experts' like Jeff Sachs to advise them on economics and capitalism

I suppose they'll be asking experts from online forums to advise them. I nominate americana.
posted by nosila at 10:34 AM on February 15, 2009


There's good points and bad points
But it all works out
I'm a little freaked out
Find a city
Find myself a city to live in.

posted by Meatbomb at 10:38 AM on February 15, 2009 [4 favorites]


spicynuts: as a resident of New Jersey, I cordially invite you to drown yourself.
posted by mephron at 10:41 AM on February 15, 2009


the amerikan economy

If you want to ensure that nobody will ever take you or your ideas seriously, this is how.
posted by ook at 10:46 AM on February 15, 2009 [4 favorites]


email campaigns to reduce dependence on fractional reserve fiat money banking.

This is what you think caused the crisis? Do your research. Google the tsar.
posted by allen.spaulding at 10:54 AM on February 15, 2009


If anything, our government policies should encourage renting, not buying. Homeownership occupies a central place in the American Dream primarily because decades of policy have put it there.

They told us to buy at the peak, now they are telling us to sell at the bottom. (I'm not saying we're at the bottom yet). That's not the first time I've heard this 'buy high, sell low' approach to real estate. Overall I appreciate the wide historical and global viewpoint, but he's got this one wrong. But real estate always seems to fall into the blind spot of analysts rational thinking.
posted by eye of newt at 10:59 AM on February 15, 2009


I've come to see that the one tremendously valuable privilege and freedom Americans have, that others don't in the same way, is the ability to simply move to another city and reinvent yourself.

Eh? I'm Canadian. I've moved cities three times. I'm not understanding what it is you think is not-simple about moving.
posted by five fresh fish at 11:10 AM on February 15, 2009


I've come to see that the one tremendously valuable privilege and freedom Americans have, that others don't in the same way, is the ability to simply move to another city and reinvent yourself.

Quoi? I'm American and I've moved internationally. It's a bitch, to be sure, but anyone can do it. Honestly. With the EU, you don't have to get work visas to move between member countries opening up an area nearly as geographically large as the continental US and certainly with more opportunities for "reinvention" as you get to "reinvent" yourself in an entirely new culture and not just a different city where the TV schedules are the same, only the local used car ads are different.

Really, anyone can move if they're motivated to do so. Even if you're not motivated. Hell, I've moved with no job in sight and barely enough to make the down payment on an apartment (admittedly, I had some financial assistance elsewhere... but just enough to keep eating and living indoors). It can be done. Usually the cons far outweigh the pros, which is why most people aren't just packing up every six months, but hey - some people DO.

As for "reinvention," just make a new Facebook page. Or start wearing orange pants. You don't have to MOVE to create a new image for yourself. Unless of course that image involves wearing flip flops all the time and you live in Winnipeg. Then moving might help.
posted by grapefruitmoon at 11:21 AM on February 15, 2009


Places like Pittsburgh have shown that a city can stay vibrant as it shrinks, by redeveloping its core to attract young professionals and creative types, and by cultivating high-growth services and industries.
Hah, PITTSBURGH WINS.
posted by octothorpe at 11:23 AM on February 15, 2009


I've come to see that the one tremendously valuable privilege and freedom Americans have, that others don't in the same way, is the ability to simply move to another city and reinvent yourself.

How do you mean, StickyCarpet? Why is it easier for Americans?
posted by jacalata at 11:25 AM on February 15, 2009


Ah. What about the very real people with very real lives who will be negatively impacted by this? I don't know that I could be 'relatively okay' with that. I've heard lots of people espouse the so-called "virtues" of this economic crisis, and I find it to be a glib and ultimately indefensible standpoint. Nothing about this is "imaginary."

People are glad to see perverse incentives and the structures they spawned removed from our society. That so many people responded and hung their hat on those structures is unfortunate, and we should generally try to help those people recover without reinventing the illness that put them there.
posted by a robot made out of meat at 11:28 AM on February 15, 2009 [2 favorites]


One place he missed is New Orleans. So far we are almost completely untouched by this unpleasantness; our banks took their hit in 2005 and were in relatively good shape for the collapse, and having recently lost a couple hundred thousand homes, construction continues to boom and there is if anything still a housing shortage. NOLA may not regain its pre-Katrina size any time soon, but if you're here you can find a job and you don't have to worry too much about losing it along with tens of thousands of your coworkers all at the same time.
posted by localroger at 12:08 PM on February 15, 2009 [1 favorite]


the one tremendously valuable privilege and freedom Americans have, that others don't in the same way, is the ability to simply move to another city and reinvent yourself.

As long as you have the cash to do so. It cost money to move a family. Oh...unless you're talking about the newly unemployed/foreclosed/homeless families we're in the process of creating. Then, sure, they can walk anywhere they want.
posted by Thorzdad at 12:12 PM on February 15, 2009 [1 favorite]


I've come to see that the one tremendously valuable privilege and freedom Americans have, that others don't in the same way, is the ability to simply move to another city and reinvent yourself.

One point that the article made is that our current mortgage and housing problems are negating that traditional geographic flexibility. If the housing market is frozen, if your mortgage is underwater, you can't move as easily as you could if it were just a matter of saving up for a deposit and giving notice to the landlord.
posted by jason's_planet at 12:15 PM on February 15, 2009


the news stand in Seattle says "San Francisco Wins"
posted by Glibpaxman at 12:25 PM on February 15, 2009


chalkbored: "Are there more versions of this floating around out there? "PEORIA WINS," etc?"

Well, it looks like the "original" one is New York, or at least that's the cover of the print issue displayed on their website.
posted by WCityMike at 12:30 PM on February 15, 2009


So, what are they printing in the Sun Belt? "WE LOSE!" ?
posted by a robot made out of meat at 12:32 PM on February 15, 2009


The overall winners are going to be the cities that were already winning: Dallas, Charlotte, etc. They long since hit the critical mass for business formation and job creation, and while they may cede a bit of ground for one relative advantage (property cost), the massive tax increases that political bosses have in store for the old-line major metros as their response to fiscal crisis will make their total advantage only improve.

That said, I think that the hard core of regionally-focused industries will stick: DC for government and defense, New York will stay the place for finance, the Bay Area for tech, and LA and New York will keep dividing up media, no matter what the relative cost.

The cities that need to be nervous are those that have neither an overall growth orientation, nor a core industrial base. Chicago, Seattle, Miami ... etc.
posted by MattD at 1:03 PM on February 15, 2009


If you want one that says, "DETROIT WINS," you'll have to print it yourself.

I bet Detroit does win. Short of bubonic plague, it cannot get worse.

Someone (a foreign car manufacturer?) will move into that mess, get huge swaths of prime downtown real estate for nothing from a desperate local government, get eternal tax breaks from the state and federal governments, and cash in.
posted by pracowity at 1:16 PM on February 15, 2009


Some (though not all) of these mega-regions have a clear hub, and these hubs are likely to be better buffered from the crash than most cities... Los Angeles has a broad, diverse economy with global strength in media and entertainment.

Hah! Suck it, bay area!
posted by Justinian at 1:24 PM on February 15, 2009


Thanks for pointing out this article.
Now I know I live in the mega-region am-bru-twerp.
posted by jouke at 1:50 PM on February 15, 2009


The cities that need to be nervous are those that have neither an overall growth orientation, nor a core industrial base. ...Seattle....

Uh, what? Two Boeing plants? Steel? A port that's the closest in the contiguous US to Korea? The vast light industrial sites stretching from SoDo clear into Tacoma and Lynnwood to Everett?

As for growth orientation, well, despite our best efforts there are now 3.3M people from Everett to Tacoma, almost 4M if you include the Olympia area.

Yeah, we lost our biggest bank, Boeing's laying off, Microsoft's rudderless, Starbucks may be dying, port traffic is down, and the goofy tax structure is crushing the state budget, but all things considered, we're pretty damn diversified. And I haven't even mentioned Amazon, which did learn the lessons of the dotcom bust and has applied them so well they're only having a modicum of layoffs while hiring in other areas.

We're going to be just fine in the new economy, thank you. Unless you want to move here, in which case we're the next Detroit; you should head for The City Of The Future, Portland.
posted by dw at 2:09 PM on February 15, 2009 [2 favorites]


No matter how great the economy ever gets, Chicago will never win. If New Jersey goes, so goes the cosmos.
posted by Postroad at 2:38 PM on February 15, 2009


The Atlantic Online: America, You're All WINNERS! Yes you ARE!

Special Olympics journalism at its finest.
posted by five fresh fish at 3:01 PM on February 15, 2009


The article only partially reveals one of its basic assumptions - that recovery and normalcy will come once again when we have growth, growth, growth! The author says US growth will now come from an economy creating intangibles; an ideas economy. I suppose that's fine, if you can still find people willing to trade food for ideas, or building materials and labour for ideas. Trading one idea for another leaves both parties still hungry.

This assumption seems to ignore one of the the biggest lesson of the crash. Wall St became obsessed with the synthesis and sales of things like derivatives, CDOs, CDSs etc that were increasingly divorced from the actual raw materials of wealth - resources, products, services. They did this to literally fake growth that they could then monetize as they sold these things back and forth to each other. Likewise homeowners were persuaded to tap into imaginary wealth - the optimistic future worth of their homes, to keep the consumer base borrowing and spending beyond their means and needs, again to sustain artificially high growth.

In the past decades, most people have come around to the idea that our planet is not the limitless, unchangeable, infinite resource we once thought it was. But we still apparently believe that limitless, unmanaged economic growth is possible, and will save us all. Right.
posted by Artful Codger at 3:15 PM on February 15, 2009 [10 favorites]


I've never understood the growth thing: Do you really have to grow every year forever? It's dumb and eventually will cause a crash that will end civilization as we know it, a hard reset, being thrown from the garden of eden, as it were.

Let's say you own a hardware store in a small town, and sell enough to make a comfortable living. If the town stays the same population, why would you need to expand? But it's pounded into our heads that a company that's not expanding is dying. It's stupid.

I see it all the time: small business has one successful operation, so owners open another location in the next town over, and maybe another--and then, boom, everything goes bust, business is gone, and the owners have to start over or move on. They didn't recognize that what made their one location successful was their full involvement in every aspect of the business, and that personal service and level of involvement--often the sole reason people shop there as opposed to somewhere else--is impossible to grow in most cases.

Growth takes everything charming and desirable about a business (or location, for that matter) and turns it into just another pit.
posted by maxwelton at 3:36 PM on February 15, 2009 [5 favorites]


The Atlantic Online: America, You're All WINNERS! Yes you ARE!

I haven't been this happy since Time named me Man of the Year.
posted by Horace Rumpole at 3:49 PM on February 15, 2009 [4 favorites]


The solution begins with the removal of homeownership from its long-privileged place at the center of the U.S. economy. Substantial incentives for homeownership (from tax breaks to artificially low mortgage-interest rates) distort demand, encouraging people to buy bigger houses than they otherwise would. That means less spending on medical technology, or software, or alternative energy—the sectors and products that could drive U.S. growth and exports in the coming years.

This is a lot more right than wrong. the housing bubble was a particularly frustrating set of circumstances. For years, all I heard was how important it was to own a house. And now that the bubble has burst, all I hear is how important it is to own a house. I didn't believe it than, and I don't believe it now. By renting while saving and investing wisely, many people have done pretty well without getting locked into areas that are quickly becoming financially unviable.

While there is nothing wrong with wanting to own a home, one should look to own a home for the right reasons. Buy a house you like in an area you love. Raise your kids there, retire someday, live your life. Do not buy houses for as an investment opportunity, if you make some money in equity, good for you, but do not expect your house to be an economic engine. It's not a portfolio - it's supposed to be a home.
posted by elwoodwiles at 3:51 PM on February 15, 2009 [3 favorites]


TORONTO WINS
NEW YORK WINS
Chicago Wins
San Francisco Wins


Will there be a playoff or just a BCS-like formula to determine the champion?
posted by stargell at 4:08 PM on February 15, 2009 [2 favorites]



While there is nothing wrong with wanting to own a home, one should look to own a home for the right reasons.


I'm reminded of a conversation I had with an older coworker on this very subject. In explaining my current lack of desire to be a homeowner, I noted that I'm single, not looking to get married soon, not too anxious to have kids once married, not requiring of much space (I once lived in a 6 mat room in Tokyo... and enjoyed it!), wary of the financial exposure, unwilling to tie myself down to a specific geographic area, and wanting to be able to handle any coming economic calamity, job loss, or zombie apocalypse with minimal pain and suffering should it ever (god forbid) happen.

His response? "You'll come around eventually."

Because, you know, I clearly hadn't given it much thought yet.
posted by jal0021 at 4:20 PM on February 15, 2009 [5 favorites]


Do you really have to grow every year forever?

Well, yes, you do... because the population increases, because technology advances, there is natural growth in all economic system. Trouble is that that real growth is quite small and can't be accelerated in the short term - but you can get much higher results for a short time by simply "writing lottery tickets" against "the system", knowing that when they all pay off, you can just walk away... as we've seen.
posted by lupus_yonderboy at 4:25 PM on February 15, 2009


This is a lot more right than wrong. the housing bubble was a particularly frustrating set of circumstances. For years, all I heard was how important it was to own a house. And now that the bubble has burst, all I hear is how important it is to own a house. I didn't believe it than, and I don't believe it now. By renting while saving and investing wisely, many people have done pretty well without getting locked into areas that are quickly becoming financially unviable.

While there is nothing wrong with wanting to own a home, one should look to own a home for the right reasons. Buy a house you like in an area you love. Raise your kids there, retire someday, live your life. Do not buy houses for as an investment opportunity, if you make some money in equity, good for you, but do not expect your house to be an economic engine. It's not a portfolio - it's supposed to be a home.


Yes, that's pretty much what I got from the article. Americans have this highly-romanticized view of homeownership, when in reality, I think it only makes sense as an investment some of the time. All other things being equal, I'd rather invest in some sort of equity or another. Stocks/bonds/etc are fungible and can be bought or sold at pretty much any time. Houses are a lot more complicated. I think I'd only buy a house if (A) I was in a situation where it was unquestionably the best investment I could make and (B) I genuinely wanted to live there for a decade or more.
posted by Afroblanco at 5:12 PM on February 15, 2009


I guess that's one of the advantages of living in an area that's been in slow decline for decades - nothing much has changed here. There are more foreclosures, but, since home prices didn't rise all that dramatically during the "boom" they haven't fallen dramatically during the "bust". And seeing as the city's manufacturing sector has been declining since the '80s additional layoffs and plant closing hardly seem to raise an eyebrow anymore. I believe that tomorrow a number of Harley-Davidson employees (including my mother-in-law) will learn their fate but even those hundreds of jobs are a drop in the bucket compared to the many thousands that were lost when companies like Briggs & Stratton and Master Lock moved on to warmer, and cheaper, climes. Steady as she goes Milwaukee, steady as she goes.
posted by MikeMc at 5:20 PM on February 15, 2009


His response? "You'll come around eventually."

Home ownership can certainly be a pain in the ass and should only be entered into if you really want to own, but, I will never go back to renting if I can help it. I didn't buy my home as an investment (but equity is always welcome) I bought because: I don't like having to answer to a landlord, I don't like having to listen to the couple downstairs f*ck (she was a screamer), I don't like having "quiet sex" because my wife doesn't want the people downstairs listening to us f*ck, I don't like having to listen to other people's arguments, parties etc... And so on. I don't consider a home an investment, I consider a place of my own to live in that, hopefully, we'll make some money on if and when we move.
posted by MikeMc at 5:33 PM on February 15, 2009 [1 favorite]


I think another reason to buy is as a hedge against rents rising above your ability to pay when you retire. This of course, assumes that you can actually retire one day. And that you can pay off your house before retirement. Both of those assumptions today, are in doubt.
posted by wuwei at 5:54 PM on February 15, 2009


Interesting article, but this made me LOL:

Bank of America, Charlotte’s other large bank (and the biggest bank in the U.S.) bought Merrill Lynch for pennies on the dollar.

lol what. Bank of America paid $50 billion for Merrill! The combined company is worth only $35 billion now. It was one of the most drastic over-valuations in M&A history. One could almost say that Merill shareholders robbed BAC blind.
posted by mullacc at 6:39 PM on February 15, 2009 [1 favorite]


You're allowed to rent homes, MikeMc. That should resolve the sex and party problems.
posted by five fresh fish at 7:57 PM on February 15, 2009


This article only reiterates what pretty much most people already predicted. The mid west is gonna be in essentially third world status in 50 years, all that. Nothing new.
posted by tkchrist at 8:11 PM on February 15, 2009


You're allowed to rent homes, MikeMc. That should resolve the sex and party problems.

But you still have to deal with a landlord. I'm not saying I'll never rent again -- it can make a lot of sense, and if you need to be more mobile, or want to be able to put your equity elsewhere, it's definitely the best option. But the actual experience of renting has been pretty uniformly unpleasant in my experience, and I don't miss it at all. I'd be willing to pay a pretty steep surcharge for owning, simply to never have to deal with an asshole landlord.
posted by Forktine at 8:21 PM on February 15, 2009


MIkeMC, that stuff doesn't have much to do with renting vs owning - that's how close you live to people etc. But you can buy apartments, or rent houses in the middle of nowhere.

I always feel as if it's got to make more sense to buy just because rent goes on endlessly and you can never get it back, while at least if you buy you are paying into something. But clearly if you don't get the right mortgage, or if you have too high a maintenance on a co-op, you could be paying endless money that you never get back just for interest or building costs or whatever. So in that case you have to just be smart and do your math, i guess. I know people who have bought who I don't think got all that much advantage out of it. But that's not to say they'd have done better renting, just that it might have been less of a hassle, and the outcome not much worse.
posted by mdn at 8:42 PM on February 15, 2009


lupus_yonderboy: Well, yes, you do [have to grow every year forever]... because the population increases, because technology advances, there is natural growth in all economic system. [...]

Taking endless population growth on premise and claiming it as a justification for endless economic growth sort of begs the question.

Endless population growth seems like, in the long run anyway, an even more serious problem than endless economic or resource-extraction growth. Ironically, it was one that I think many people — at least in the free-market/uber-capitalist camp — saw as a nearly solved problem, because high-technology societies had or have downward population trends on the horizon, and it was assumed that as technology and living conditions spread, these demographic shifts would as well. However, if the economics underlying Western civilization are as unsound as they have recently started to appear to be, it throws the whole idea of growing one's way (economically) into negative population growth (and thus eventual sustainability) into question.
posted by Kadin2048 at 9:21 PM on February 15, 2009


To be fair, mdn, when you own a house you're spending endlessly on maintenance and improvements and taxes. It's a way bigger money sink than renting.

But it is yours and you can do what you want with it without having to deal with a landlord. I gotta agree, that's pretty nice. Worth it, in my case.
posted by five fresh fish at 10:06 PM on February 15, 2009


There is no possible way we can have endless population growth on the planet Earth. We shall have to take to space if we intend to breed recklessly.
posted by five fresh fish at 10:08 PM on February 15, 2009


MIkeMC, tell it to all the people who bought condos.
They get the worst of both worlds.
posted by Iax at 12:37 AM on February 16, 2009


I read an interview with Rupert Murdoch last week where he was quoted as saying "Nobody could have foreseen how bad this economic crisis has turned out to be." I wanted to scream at him, "You gigantic piece of shit" because he is either dumb as as a toadstool or lying through his teeth. The last 4 or 5 years while the Bush Administration and the MSM were trumpeting "how great the economy is" like a bunch of gaseous elephants, those of us in the middle class kept looking about us and wondering what they were talking about. A consumer based society must have consumers-- how hard is that to figure out? You want prosperity, you want glowing economic health, make sure you have a strong middle class that can afford to buy consumer goods. You cannot base an entire economic structure around a few multi-billionaires who buy $5,000 shower curtains.
posted by Secret Life of Gravy at 7:48 AM on February 16, 2009 [2 favorites]


To be fair, mdn, when you own a house you're spending endlessly on maintenance and improvements and taxes.

You pay for those if you're renting too, but it's built into your rent check instead of being a different line-item.
posted by ROU_Xenophobe at 9:16 AM on February 16, 2009


Rupert Murdoch... is ... lying through his teeth.

It's all he does. It got him rich.
posted by a robot made out of meat at 9:16 AM on February 16, 2009


the ability to simply move to another city and reinvent yourself.

The moving part is cool, I guess, but my inability to reinvent myself as a rock star with superpowers has really shaken my confidence in the promise of the American Dream.
posted by thivaia at 9:25 AM on February 16, 2009


Re home ownership - we don't really have a strong "renting" infrastructure in N. America, except maybe in the bigger urban cores, and even then the number of decent rentable places has been decimated as the better rental buildings all went "condo". The combination of the real-estate bubble, and the hassles of being a landlord (maintenance, deadbeat or problem tenants) has made it very unappealing for investors to just buy and hold a rental building.

I agree that there has been too much emphasis on home ownership, particularly through unfair perks like mortgage interest deductibility, and the recent slew of insane mortgage products (see NINJA, interest-only ARMs, "payment-option" loans, teaser rates, balloon payments) that drew in unqualified buyers.

That being said, home ownership IS great for alot of us. It's reasonable and attainable on a middle-class salary, it has tended to appreciate over time at least as well as inflation (but I don't have a crystal ball), and if you're handy with your hands and halfway smart about selecting and renewing mortgages, you can save on maintenance and financing.

Our secret to home ownership has been:
- know whether you're a "house" person or not. We are.
- buy a small, upgradable house that fits your budget in an area you like, with reasonable prospects for continued employment, obviously
- intend to stay put for at least 10 years
- whenever possible, pay down the mortgate. If you have $10,000 to invest, your RRSP/401K pays 3%, and your mortgage interest is 6%, you're 3% ahead by reducing the mortgage by $10k.
- work slowly and carefully at SENSIBLY upgrading the house
- ENJOY your house. if you get to a point where you don't mind hanging out at home for some vacations, you've succeeded

In the linked article, the author states that home ownership has led to a less-mobile work-force. I say... so? Geez, in the middle-ages, even serfs could reasonably count on staying put. Through careful regulation and a variety of incentives, we have some control over where businesses set up. Turning workers into rootless nomads is not a reasonable step in the search for economic growth.
posted by Artful Codger at 9:33 AM on February 16, 2009


Interesting article. Just sad to see rust belt towns getting another kick in the groin. I was in Buffalo recently, it's hard to believe that was ever a thriving city nowadays.
posted by lazlo_80 at 5:11 PM on February 16, 2009


You pay for those if you're renting too, but it's built into your rent check instead of being a different line-item.

Not necessarily. Los Angeles has rent control. The landlord can only up the rent 3% per year no matter what he's paying for repairs and taxes. Doesn't affect me at all.

At least in Southern California, it's been stupid to own real estate for some time now. I remember using one of these on-line calculators during the bubble, and real estate values would have had to go up something like 25% a year for the next decade for me to break even for buying vs. renting. Renting is MUCH CHEAPER.
posted by MythMaker at 5:48 PM on February 16, 2009


"You pay for those if you're renting too, but it's built into your rent check instead of being a different line-item."

That wasn't the case in Michigan—if you rent, you get a deduction for the property taxes. I mean, you still pay them to the landlord, but then you essentially get that same money back from the government.
posted by klangklangston at 12:49 PM on February 17, 2009


That wasn't the case in Michigan—if you rent, you get a deduction for the property taxes.

But the other costs of the physical structure are built into your rent. Furnace repair, painting, and a new oven are costs that are included in your rent, even if you never see the itemized bill for them. Of course, most of the landlords I rented from didn't bother to do even the most minimal of maintenance and repairs, so their costs were really low, and as a consequence their properties were slowly deteriorating.

Owning or renting, buildings absorb a surprisingly large amount of money and time every year in upkeep and maintenance. Slacking off on that usually becomes visible really quickly, which is why a street with a bunch of foreclosures creates such a crisis for the remaining residents.
posted by Forktine at 1:13 PM on February 17, 2009


I've come to see that the one tremendously valuable privilege and freedom Americans have, that others don't in the same way, is the ability to simply move to another city and reinvent yourself.

How do you mean, StickyCarpet? Why is it easier for Americans?


Take Canada for instance. Most commercial niches will be dominated by a particular family name, if you move to another city and look for work in a particular field you will most likely be asked if you know the relevant family from where you came, what your family does, and about neighborhoods and schools, until some kind of connection to your past has been uncovered.

In the US, they would be much more likely to go on the strength of your portfolio, or knowledge you can demonstrate.
posted by StickyCarpet at 1:14 PM on February 20, 2009


?!!? The hell you talkin' 'bout, SC?
posted by five fresh fish at 5:01 PM on February 20, 2009


Quebec?
posted by StickyCarpet at 5:03 PM on February 20, 2009


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