I have more essays in progress, but for now, a quick update.
Much of my support for the Occupy Movement comes from our personal difficulties in May -- the tornado and my layoff. The layoff was cruel and hurt more, at the time, but the tornado has proven to be much more persistent in its tragedy. We were lucky, because our house was insured. The insurance company, while sluggish to come evaluate our situation, finally paid out more-or-less fair. Sadly, the story does not end there. Recently we've experienced the following revelations.
- Property values have been cut in half. That's a 50% drop in one afternoon.
- Our Homeowners insurance rate has trebled, and is now equal to a little more than 50% of our mortgage.
- Empty homes where families fled or were evicted are valued so low that banks have begun knocking them down rather than repair them. This isn't flood or fire damage; we're not talking irreperable damage. We're talking new shingles and window panes and the cost of clean-up. $15-20k, less than your average bathroom remodel. But the bank won't do it, so now there's a hole where a house used to be.
In short, we're paying twice what our home is worth, three times more for the same insurance, in a neighborhood that is dying all around us. So don't tell me how the invisible hand of the market will make everything right. This how the private sector treats people who have suffered a tragedy.
19 comments:
It's unfortunate that you have had these experiences, and having had witnessed a lot of it first hand, I can imagine how hard it is to watch a neighborhood die. This being said, I believe you are taking things a little far in personalizing the situation, and I truly wonder what your expectations are. Should the bank invest thousands of dollars (and you and I both know each of those homes are going to cost literally thousands of dollars to clean up, don't fool yourself) in renovating a property that won't turn over due to a market that is, at the best, difficult for home sales? Are they to maintain those properties through the next several years and nurse the property values back up themselves? Your post has such venom to it, I really do wonder what your expectations are. The truth of the matter is, you and your community suffered a tragedy. Tragedies disrupt lives, destroy property, and create grief. To expect an invisible hand, of any variety, to undo the damage, is perhaps not realistic.
My claim is not that they should be expected to behave differently. My claim is that the system does not produce justice. Of all, it's the insurance increase that angers me most. I do not expect a magic hand of any sort to show up and make everything better, but I also find it difficult to tolerate vulturism.
I don't know why you think "don't fool yourself" applies here. $15-20k is thousands. That's what it cost to make my house livable.
As for "taking things a little far." When I write an essay there are some standards of intellectual rigor I should be held to, but that is not what this is. This is my story, I'll tell it the way I choose. If you don't like it, then go away.
To me the biggest evidence that the market doesn't work is that none of the cheap houses on the block have sold yet. Even in a depressed market a damaged $30,000 house should sell, and quickly. I mean who isn't looking for cheap housing these days? And you'd get in at the bottom of the market. That's a textbook move my high school economics teacher would have advised people to jump at. But the problem is that people don't. The market has no way of compensating for people's foibles, except punishing them monetarily for not being able to overcome them, which doesn't get the house sold, it just means all the people who don't buy it are worse off for not buying it. Why don't they buy it? First, they don't know about it, because the realtor has every incentive to try to sell more expensive properties first because they'll turn a bigger profit, so there's no advertising. Second, even if they do, no one wants to be the first to move into an empty neighborhood. What if no one else does? Also, no one wants to move into a poor neighborhood, even if it will make them richer to do so. They're afraid the 'poor' will rub off on them. It's all highly illogical, but it's all too human and all the market can do is keep dropping the price of that house. Meanwhile, without roof repairs, the damage gets worse with every rainy day, and one of these days it will be condemned and torn down. And even though it would make market sense for any number of people to buy it, they won't and the market can't do anything about it.
I'm not quit sure you are grasping the concept of how housing insurance works. And maybe you do and choose not to realize the truth about it. Its not just your house that is evaluated. When you buy a home the cost of the home is reliant on how much other houses in the area cost. Making your house worth less due to other houses in the neighborhood being torn down instead of fixed up. Your neighborhood is at high risk because of the abandoned homes. This MAY have an effect on your insurance. Kind of like car insurance. If your a high risk driver and have had a lot of accidents your insurance rises. People tend to sometimes shy away from buying a home in a neighborhood that has a good amount of abandoned houses. The cost and the energy to fix up those houses far exceeds than just tearing them down. And maybe no one is buying those houses because it will take more than 15-20k to even make the homes livable.
And maybe by tearing them down people will build new homes. Making the neighborhood a better place and then maybe boosting the cost of your home upwards. And I believe everyones insurance has rose. You are just throwing a pity party for yourself.
Well, Anonymous, if you choose to believe I am reacting out of self-pity I am unlikely to convince you otherwise. I believe I am reacting out of a sense of injustice, which is a very different thing.
You keep explaining how the system works, as if this is something I don't already know. To make an over-the-top analogy, it's as if you're explaining to me the economic role that slavery played in pre-industrial Europe, when I'm interested in ethics of slavery. I'm not stupid, or blind, and neither are you. We're just not having the same conversation. If you want to defend free market capitalism in this situation, tell me why it is good, not how it works.
When you say I am "just having a pity party" you dismiss me, my arguments, my story. That's ad hominem and tells me that you have nothing interesting to say.
Spoon - this statement you posted...If you want to defend free market capitalism in this situation, tell me why it is good, not how it works.
I believe anonymous did make a statement of why it would be good...And maybe by tearing them down people will build new homes. Making the neighborhood a better place and then maybe boosting the cost of your home upwards.
Please tell me if that isn't a good thing.
Saying that you are reacting out of a sense of injustice implies that you believe that "anonymous" believes what has happened is just. That is not the case. In my opinion, "anonymous" was simply explaining why things are the way they are.
Free market capitalism is a laissez-faire approach where the only ones that regulate entities are those within said entities. This would mean that the government doesn't swoop in to clean up every mess that occurs within the country that it governs.
No system is perfect. What would you do to change the current system? Nobody can doubt that having a tornado hit your house is terrible. You seem unhappy with how your neighborhood has been since this natural disaster. How would you like things to be different?
A free market approach to your situation would be to pick yourself up by your bootstraps and make things better yourself without government interference.
It's getting hard to sort all the Anonymouses around here. I wish there way a way to get folks to identify themselves without forcing a sign-in.
That's true, I did ignore the point about tearing down old homes making space for new homes. That was unintentional, thanks for calling it out. I think that stands - if the result of those homes being torn down is a new home being built and inhabited, that has the potential to be a good thing. Something akin to the benefits of forest fires.
Unfortunately, I don't think that's likely to happen. If a person has the money to build a new home, why would they build it in such a depressed neighborhood? They'd probably have to spend more to build it than it will be worth when it's complete. And if a bank wanted to build the house, and make its money back, they'd have to price it so high that it's unlikely to sell (given the neighborhood). The old house at least had the advantage of being cheap. Even if it does sell, we run into the problem of gentrification, which is morally ambiguous.
Thanks for engaging with me, I appreciate it.
Thanks 12:48 PM. I'm gonna go by timestamps I guess.
Your question "How would you like things to be different?" is a very good one. When I say I'm working on essays, this is what I mean.
On a side note: Picking yourself up by your own bootstraps is physically impossible.
You mention vulatilism and injustice. How is your insurance a violation of your right to live in a so-called "bad" neighborhood? Don't we in America choose to live where we wish. I think you are lucky to have insurance. I'm sure a large number of individuals don't have insurance.
I understand you are upset with the recent situations in your life. I believe the best thing to do is pick yourself up dust off the dirt make the best of the situation. Learn from the curves in the road of life whether they are tragic or happy and move on.
Pull yourself up by the bootstraps meaning:
(not physically impossible to do)
http://www.phrases.org.uk/meanings/290800.html
Hi 6:15 AM,
"How is your insurance a violation of your right to live in a so-called "bad" neighborhood?"
I don't understand what you're trying to say here. I don't have a "Right" to live anywhere.
Here's what my insurance company knows: they know that if they raise my rates, there's not a damn thing I can do about it. I can't sell the house, and I can't change insurance companies because finishing up the claim takes 2 years. They've got us pinned, so they're milking us for cash. They have a legal right to do that, but I maintain that it is unethical.
I agree that we were lucky to be insured, and I have said so repeatedly, in multiple forums. A lot of our neighbors did not, and they are in much, much worse shape than we are.
"Don't we in America choose to live where we wish."
No, I don't think we do. We live where we are able. There are some government constraints on where we can live, but more importantly there are many, many economic constraints on where we can live. There is plenty of freedom, for those who can afford it.
Moreover, moving out of a bad neighborhood does not solve the social injustice that allows that neighborhood to be as bad as it is.
People keep saying "I understand you're upset, but..." What does that mean exactly? My anger does not nullify my stance. While it's fair to say that whining doesn't solve anything, neither does silence. Believe me, I'm learning from this. I'm learning just how little freedom there is left for those of us at the bottom.
We do live where we are able in the sense you work to live the life you want. And people choose to work as hard or as little as they want to live a life they want.
The military has fought for our freedom, making America free.
I see. So I'm in the position I am in because I am lazy.
We're done here.
A thought about the knocking down of the empty houses - I'm assuming that they are the empty ones, the bank-owned properties.
It is true that for not that much money any single home could be repaired of the damage from the tornado. However the banks are probably already looking at major losses on those properties given the nature of the market (and banks are notorious for doing little maintenance and no repairs on the properties they own) so from a financial standpoint, given current market conditions and regulations in place, knocking down the buildings and selling the land is probably their best bet for getting that property sold. It means they're looking for developers, not homeowners, and that's not necessarily a bad thing.
Particularly when we start talking about the true condition of those houses. Sure, the damage from the storm may be windows and shingles, but how long have those houses sat empty even before the storm? And now after the storm how long have they been exposed to the elements? Having bought a house that sat vacant for a year I know too well the expenses that are needed to bring a house back up to good condition. Those houses were probably getting close to needing to be condemned anyway. Chances are they have been vandalized (I saw it in so many of the houses we looked at in 2008 and it's only gotten worse - not just people breaking in and doing random surface damage, but things like stealing the copper pipes, doing major damage to the houses utility). The types of loans that people are able to get nowadays require either a sizable downpayment or that the house be in good as-is condition. A lot of those houses wouldn't be eligible for FHA loans and a lot of people who would be able to afford that kind of downpayment probably don't have that downpayment plus the money it would require to repair the house.
Yeah. I'm pretty sure the house on the corner which is now empty was occupied last winter, but I don't know whether they were still there when the tornado hit. Even if they were, that was just short of 6 months ago now.
Again, I'm not saying that we should expect the banks to behave against their own best interest. Self-interest is not a vice, but neither is it a virtue. What I am saying is that the system is failing in North. Watching it happen feels like being kicked when you're down.
Now, as a point of contrast, the empty house to our south is being fixed up by a guy and his son. They have a business where they make a deal with the bank to, essentially, try to flip a distressed property. I really hope they can sell it when they're done. But that's just one house.
Oops. I mean "is now gone" not "is now empty." The house on the corner is the one they tore down.
The system is failing all over, it was already extra concentrated in North and then had a major bitch slap in the form of a tornado. And of course it's worse given the history of the area and how the city screwed it over time and again.
And of course I'm speaking on a general level, not a house by house level, but just because it was occupied a year ago doesn't mean it was a. really in good condition then and b. not in even worse condition now. People being foreclosed on will often do a lot of damage to houses before they are evicted, and it doesn't take but one person working diligently overnight to remove all the plumbing from a house.
I'm not saying banks shouldn't be responsible for taking care of their property, or that they don't owe something to the neighborhood or that they shouldn't try to be virtous. I'm saying that sometimes the virtous thing is starting fresh. That many vacant houses can invite a criminal element into neighborhoods - please note that I am not saying that the people of North Minneapolis are criminals but rather that having that many empty houses is attractive to criminals.
Would I rather see those homes repaired and sold to good caretakers? Of course. But I'd also rather see an empty lot than an empty house being used as a meth lab.
If they aren't filling in the holes on those lots, complain to the city. I'm almost certain they are required to fill them in.
I should also say that this isn't me trying to say that the system will magically fix the neighborhood over time. But it isn't just the financial system that is responsible for the state of north Minneapolis. It is certainly making it worse, and I don't think it's an isolated incident or anything, but bank-owned properties and scummy insurance companies really are the vultures, not the predators, if I can try to stretch that metaphor a bit. I think the real tragedy is that not only is the current system so broken as to allow the vultures into your neighborhood, but because of the ways that they have bankrupted the economy a lot of public initiatives to rehabilitate neighborhoods in Minneapolis were defunded, which let things slide even further down.
It's great that it leads you to want to be part of the Occupy movement, but really the current financial regulations and institutions are only the last in a long line of entities that have fucked over North Minneapolis.
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