“Home” Economics

For most of us, our biggest expense is the roof over our head. One of the best tickets to gaining financial freedom and minimizing one’s eco-footprint is to reduce that expense.

The following story of a house for sale in my Daytona Beachside neighborhood is an example of a phenomenon I see as harmful, that is playing out city-wide (and across the whole country).

Last year at this time, the house — a 2-bedroom, 1-bath, 800-square-foot bungalow typical of our charming though somewhat blighted historic neighborhood — went up for sale for 70K.

What would have been great is if some local who works at one of the nearby restaurants, stores, hotels, or other nearby businesses could have bought it. Someone currently renting, paying $900 or $1200 in rent — if they were to buy this house, their monthly payment (total of mortgage + taxes and insurance etc) would be below $900. If two people went in together, that’d be 450 per person! Wow! They could buy it and fix it up themselves and have a stable place to live.

The problem is, of course, that the working people in this neighborhood don’t tend to have the credit rating to get a loan, or the cash for a down payment, etc.
So the house got snapped up last year by an “investor.” Sometimes these investors do little more than slap on a coat of paint and put in new (supposedly attractive) counters and cabinets before putting the house on the market at a jacked-up price. In this case they did a pretty extensive rehab. Then soon after, a tenant moved in.

But now, a year later, the house is up for sale … for 178 K. Of course no local will be able to buy it now, if they couldn’t buy it last year for 70K. And I assume the tenant will be looking for a new place to live (unless the new buyer wants to be a landlord, which would be OK, except too bad the person living in the house paying 1,200 a month could not have afforded to buy it for 70K last year and would now be the owner-occupant).

So the cycle starts again. The ad starts out with the inevitable words, “INVESTOR ALERT”!

I don’t have any easy answers for this, but it keeps me awake at night and it is part of what motivates me to want to set up a grassroots local housing fund, which anyone could invest in, with the intent of helping locals buy homes and live in them.
Have you noticed this phenomenon in your neighborhood, of houses being bought mainly by investors rather than by people who just want to live in the house? I see signs all over town that are obviously targeting investors. I live in a tourist town so to some extent that’s inevitable. But I Zillow-snoop houses all over the country and see that it’s a pretty widespread phenomenon.

In small towns and historic urban cores, particularly, it’s pretty easy to find houses for sale for 50K, 40K, 30K, or even less. (Try Baltimore or Detroit if you want to be really startled at how low an old brick house/rowhouse can be priced.)
And yet the rental estimates are always hefty, like 900 or 1,200 a month or more, even in what are obviously blighted areas.

As I said, I don’t have any easy answers for this. However! From a reduce-your-overhead, low-footprint-living standpoint, there is a potential bright spot. In these times of rocky job prospects and high housing costs, houses for sale in old downtowns might just be the next frontier for many people.

My suggestion would be: If you don’t already have an occupation that is location-independent (writing, computer stuff, art, some sales and customer-service jobs, etc.) or universally in demand (carpentry, nursing, sewing, plumbing, midwife/doula, food-growing, landscaping), try to get yourself into such an occupation.

If you feel you need more education, look into trade school, community college courses, or even an informal apprenticeship. No college debt, and you will always be able to get work. Our communities can use many more skilled tradespeople right now.

Then, if you can manage, pool money with family or friends and find a low-priced fixer-upper house and buy it free and clear rather than take on a mortgage. Live there together and fix it up. I researched house prices in every state, and except in 3-4 states I found at least some houses under 50k, or even 30-40k, or less, in small towns or central urban areas.

If you have a useful trade or skill, you will have work wherever you go. So pick the place where you have friends, or where you like the climate (meteorological AND social), or where you can move together with a few friends/family members and be pioneers together. You might not even have to leave your own town to do this.

I have recently seen a number of houses for sale for 50-60k right here in my own adopted hometown, Daytona Beach. Rather than become investor-fodder, they could just as well be bought by people who just want a place to live, and create a resilient community together.

Same applies to commercial buildings. Buy one and contribute to the revitalization of a historic Main Street. Find meaning by building a life in a new place; adopt that place; really contribute.

If all of this sounds like too much work, or if you’re not willing to be a “pioneer” on the “next frontier” of old small towns or rundown urban core areas, well, I understand. For me, though, knowing about these low-priced houses represents a ray of hope. A ray of hope for myself, yes (in some hypothetical future, should sea-level rise or societal shifts force me at age 65 or 75 or older to leave my nice little $124K paid-for house near the ocean, I now have the reassurance I’d be able to find another place where I’d be able to live comfortably at my preferred income level of $1,000-1,300 a month before taxes).

But even more, the existence of $50K houses in almost every state of the union represents a ray of hope for the many people right now who are dealing with precarious employment and housing instability at the same time.

With the job market rocky, people might not be any worse off in a small town or a “run-down-but-livable-with-the-right-companions” industrial burg than in the more bustling, bigger, shinier cities where they’ve been living for job reasons, but where jobs are not such a sure thing anymore and costs remain high. Moving to some new place and starting over isn’t easy (between growing up in a military family and then, as an adult, needing to undertake a decades-long quest to “find myself and where I belonged,” I’ve done it many times), but it can be richly rewarding.

On that note, my favorite tip for surviving and thriving in a new place: Go there with the determination to give as much as you get, or more. A sense of mission, even. Be it protecting the environment, starting an urban agriculture movement, promoting literacy in an under-served neighborhood, or whatever your passion is. A lifelong dream of living in walking distance of the beach was what brought me to Daytona Beach. But what has kept me here, even when I went through some extremely lean times (as my “freelance eco educator” skills/knowledge that had earned me a livelihood back in Austin were not valued in the local economy here), was a sense of deep purpose. A deep-seated drive to contribute.

If you move to a new place with a heartfelt wish to serve, you’ll do fine and eventually find your niche even if you first end up going through some rough times like I did for a few years. That determination to serve will get you through hell and high water.

And that low-priced house will help you a lot with the financial part. By the way, my paid-for house was bought with money I inherited after my Mom passed. Had I not inherited that money, I would take the “find a 50K-or-less house and two friends to co-buy it” approach. There are lots of ways for three industrious people with good hearts to scrape together 50K, even if the goodness of their credit doesn’t quite match the goodness of their hearts.

Further Exploration:

• Ooh! Check this out!! On the tangent of the “grassroots local housing fund” which I suggested above … As opposed to a general fund, Small Change takes a project-by-project approach. Various in-town projects such as constructing 2 starter homes on a vacant lot; renovating an old motor court to be homeless housing, etc. Most of the projects appear to be in LA, Philly, Pittsburgh; I’m posting it here as an example of “grassroots investment oppty + socially beneficial building/rehab”. For each project, the amount being raised and the expected return on investment is listed.

House listing: Canadian Ark for Sale (house + thrift-store business in Hope, BC). They don’t list the price, and I’m pretty sure they would want quite a bit more than 50K. But I include this here because the lengthy write-up is an example of the pioneer mentality I was talking about. Moving somewhere with the idea of making yourself a pillar of a small local economy.

“A Bigger Picture,” by James Howard Kunstler. I read Kunstler’s blog regularly and I have had many of his same predictions about how things have gone and will go. Some might find him doom-y at first. But I feel he’s realistic, as well as offering pragmatic hope, as evidenced in this quote: “Many people will seek to escape the places they live now to find new homes and livelihoods elsewhere. These demographic movements are already underway. … Right now, start planning where you might go and what you can do. The turmoil will be filled with opportunity to find ways to be useful to other people, to devise work-arounds for ruptured systems and relationships, in getting food to people, making things they need, distributing them, fixing things that are broken where possible, and moving people and stuff from point A to point B. There will be plenty of work for people who are willing to do it. Keep in mind that it’s entirely up to you to make good choices. Don’t despair, and if you find yourself veering toward it, get over yourself. It’s just part of becoming stronger than you thought you could be, and the times will require it of you anyway.” By the way, this article was the source of the “Canadian Ark for Sale” link that I posted above.