The nuance in rising property values, retired residents, & choices for aldermen.

I have a constituent I know very well. When I was first elected, he was fairly skeptical of me, but over the years we worked together on a number of neighborhood related issues together and got to know one another. Today I’d call him my friend. He is 69 years old and has been retired since he was about 63 when he was laid off from his last job. He was mostly a carpenter by trade. He bought his house when he was 21 years old around 1970. He and his wife raised three kids in the home. His wife became ill and over the last 20 years he slowly became her primary caregiver as her health declined. A few months ago she unexpectedly passed away. He told me he gave her CPR until an ambulance arrived. He was with her as she died.

He and his wife had been primarily living on Social Security since his retirement. With their two Social Security checks they were getting by, but not much more. Their house had been paid off, but he’d taken out a home equity loan for part of the value to help pay for her expenses while she was ill.

After she passed away, he told me he looked at his finances and realized it wasn’t going to work with only one Social Security income. When his wife passed away, the household income was essentially cut in half. He wouldn’t have enough to pay the home equity loan and take care of himself. We were talking about how he had to pack up all his wife’s clothes to donate them. He is a stoic person but he was obviously affected by it. The idea of cleaning out a spouse’s clothes and leaving the neighborhood he’d lived in most of his life was obviously an emotional challenge.

He happens to live in an area that’s had a pretty steady clip of new home infill construction in recent years. Vacant lots have been built on, and the economics even work when a builder can get an inexpensive tear down home or buy something out of foreclosure. New homes are selling for up to $350,000, which is above the average for the neighborhood and certainly more than I could afford. Some have had some level of tax abatement and some have not.

He had realized his lot was just shy of enough square footage to divide into two lots. Essentially he had a double lot, and if he could sell it to a builder as two lots he though it was worth more than selling it as a house to renovate. It looked like it would be enough to pay off the home equity loan and walk away with some cash. The home itself, while not beyond saving, had so much deferred maintenance that it would be a gut rehab. The land itself was probably worth more as two lots.

There is a lot of rhetoric about how rising property and housing values can hurt retired residents. And you get no argument about that from me in cities that have seen meteoric rises in property values on the coasts. But this is the flip side. Without the fairly-steady rise of values in this neighborhood, this retired life long resident of the neighborhood would be up a creek without a paddle. The equity he had in his home helped him take care of his wife, and the demand for new housing will probably allow him to sell his property, pay off his loan, and find a new place to live. Are these pleasant choices? No. But they are the type of choices many retired people face.

The equity my friend had accumulated in his home was an asset. It was a little bit financial capacity to see him through a difficult period. And it’s what many St. Louis residents have missed out on as hundreds of thousands of people have left St. Louis. Depopulation undermines demand and lowers values. The result has been a slow-motion financial disaster for many homeowners, particularly black homeowners in St. Louis. The equity my friend was able to accumulate is something residents of many neighborhoods with declining value have missed out on. Not having a financial asset in the form of home value is one of the reasons for the huge wealth gap between white and black residents in the U.S. that has finally gotten more attention.

During this election I’ve heard candidates say some version of, “We shouldn’t allow $350,000 homes in this neighborhood. We shouldn’t allow zoning variances for home builders.” This conversation happens to some extent across the city. It seems like there is always a lot of skepticism and even fear of new housing. But without investment values property values decline, equity never accumulates, and ultimately current residents are hurt if and when they need to sell a home or get a loan.

Where does the alderman come in? Will the next alderman allow the subdivision of this resident’s property into two lots, which he might sell for $100,000 total? Or will the next alderman not allow it, and essentially take $50,000 in value away from the current owner?

Skyrocketing property values have rightly gotten a lot of attention in certain coastal cities that tend to dominate the conversation on urbanism. But the dynamic in many Midwestern cities is far different. Declining values here have sadly left homeowners in some neighborhoods with nothing. I hope the next alderman recognizes the difference, and as a city we continue to engage with the nuance involved when property values rise, and the real strife that results when they decline.