2.28.13 | Setting aside the irony of discussing resilience on the eve of what will be the biggest self-inflicted national wound since the designated hitter, we turn our attention to futures financial and regional.
The Pew Research Center recently released a study showing that young adults (24-35) are emerging from the Great Recession with much less debt than other 35-plus adult age groups “mainly by virtue of owning fewer houses and cars” despite having accumulated record debt-to-income ratios during the “Aughts” (2000s).
Among its findings, the study shows that from 2007 to 2010 among younger households:
- Home ownership fell from 40 percent to 34 percent;
- car ownership fell from 73 percent to 66 percent, and owing money on a car fell from 44 percent to 32 percent;
- carrying a credit card balance fell from 48 percent to 39 percent.
The only increase was in outstanding student debt; 34 percent of younger households had some in 2007, and 40 percent did by 2010.
NBC News’s John W. Schoen took note of the Pew study, suggesting that the housing bubble’s burst has left younger adults rather leery about home ownership as the safe investment that was once taken as a given. If that’s the case, he wrote, “that’s not good news for lenders, who have traditionally sought to build relationships with customers early in their adult life.”
And what happens when those younger adults reach the point when they’re ready to buy? Their broad preference for walkable urban settings may put older suburbs—especially those with strong transit connections to central cities—in play, as New York Times reporter Alex Williams discovered, charting the movement of Brooklynites to smaller Hudson Valley towns in Creating Hipsturbia.
Acknowledging the “dark side” of gentrification—the squeezing out of longtime residents who suddenly cannot cope with rising property values and hence, taxes—that sort of migration could be a fiscal salve for towns struggling to keep their proverbial heads above water.
David W. Meyers examined the rising incidences of municipal bankruptcy in a Feb. 19 post, Cities Gone Broke, at the Urban Land Institute’s Urbanland blog. While tracing the causes and reasons for municipal bankruptcies, a precipitous drop in property tax revenue since 2007 stood out.
“This ‘lag time’ usually gives cities a bit of a [financial] cushion to avoid making big budget cuts immediately, because they assume that values will start rising again in a few years and tax revenue will pick up,” says Michael A. Pagano, a researcher for the nonprofit NLC and dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago. “The problem now is that no one foresaw how long and how deep this housing recession would be,” Pagano says. “Traditional revenue models have gone out the window, and cities are suffering.”
For the first time in decades, the researcher adds, nationwide property tax revenue in 2010 fell by an inflation-adjusted 2 percent from the year before. It dropped a steeper 3.9 percent in 2011, about 2.1 percent in 2012, and Pagano says he expects it to essentially remain flat this year and next before slowly rising again in 2015. The same lag in reassessing properties at their new values on the way down also halts the rebound in tax revenues when values start to recover.
I was drawn to this part of the post, which reinforces much of what Williams found afoot outside New York City, and what New Urbanists have been saying for decades: those areas that will thrive are those areas that are pedestrian-scaled, and whose buildings can be adaptively reused.
In San Bernadino, CA, “Many real estate investors are particularly attracted to the older buildings that some financially ailing cities are offering for sale in promising downtown areas—often at fire-sale prices.”
In Central Falls, RI, “real estate developers are showing new interest in a city-run economic development program that gives tax breaks to companies that renovate older buildings, some of which are already being converted into residential or mixed-use projects that will further boost the community’s property tax base.”
Fiscal flexibility, adaptive reuse of existing infrastructure and the flip-side of that—ensuring that your laws and zoning codes allow not only that adaptive reuse, but the construction of new, multiuse buildings—and knowing your audience. That’s resilience that can outlast even the grand, national idiocy known as “Sequester.”
Photo/ Barbara Ray