What Happened to the Old Neighborhood?

What Happened to the Old Neighborhood? An Honest Observation from the Trenches

How many times do you hear from a resident of a certain neighborhood such as East Mayfair or Juniata that the neighborhood has changed over the years or it is not like how it used to be?  Mothers and grandparents would say so much has changed over decades but now folks are saying so much has changed over just 5 to 7 years!   I am certain if you are in these areas often you will hear it frequently.   Or talk to any local and it will come up during your chat.

Philadelphia Magazine  posted a now famous local article "What The Hell Happened to Old City?".  You can almost take any Philadelphia neighborhood where the average sales price hovers less than $100,000 and ask the same question.   Or take a drive through and notice the litter, boarded up or overcrowded properties, drug activity, Section 8 properties and tension riddled streets.  It should not be like this as these are or used to be beautiful neighborhoods and great places to raise a family.   Many policeman and firemen have moved to the greater northeast such as Parkwood as they have to stay within Philadelphia county.

What is going on?

Simple.  The percentage of home-ownership has declined in these areas.  In the mini real estate boom, so many properties were sold to investors, who in turn rented out the properties.  And now if there are any blighted properties in these areas or foreclosed properties, those properties are typically sold to investors as well although HUD properties and Fannie Mae properties do have an owner occupant window.  However, an owner occupant will probably struggle with financing.   As this cycle continues, it is obvious what happens.  When you have less homeowners in a community, you have less unity and a decline of values, sense of caring and responsibility and in essence, the American Dream.

Please do not mistake this for saying that there is a negative connotation for renting a property.  There is not.  My "perfect goal" here would be for landlords to properly qualify and scrutinize their tenants, maintain their properties and participate in the community as well.  The better the property is cared for, the more responsible tenants typically will be for those properties.  Investors really need to step up and provide a better housing product if they want to be successful in real estate investing.   And have common sense.  Certain areas have very few Section 8 properties.  Thus, when there is a large population of qualified tenants, why convert a property to Section 8 that chances are will have a negative impact on the block and on the community?  Again, nothing negative with Section 8, but the odds are not in your favor that you are improving the community where there is a higher percentage of home-ownership.  If a landlord is interested in Section 8 investing, there are certain neighborhoods where the percentage of housing is much higher for that type of investing.  But that is another story.

Thus, as these neighborhoods go through a transition of lower prices, both from a decline in the housing market and the quality of life worsening as a result of the community not being as strong, what can be done?  First and foremost, it all starts with home-ownership.  I would offer a few suggestions, some of which have been talked about nationally:

• Allow creditworthy homeowners that are underwater on their mortgage to refinance at a lower rate.   Rates are so low but so few can take advantage of that.  This might prevent further foreclosures or simply allows a homeowner to stay in the home when every other expense around them has increased instead of selling out when things are tight.
• Loosen lending guidelines for qualified purchasers, especially for self employed buyers.
• Look into having sub-prime borrowing again.  It had its place in the past for decades.  If done properly, there is no reason why it should not be in existence with the right underwriting standards.
• Have Fannie Mae and bank loans available for those houses that are $50,000 and under.  It is almost impossible to find lending for a homeowner as the profit margins are so thin for a lender.

I will continue to sell the properties in these areas but my heart breaks when I sell a property for a single mother who has owned a home for just 5 years because she does not feel safe in her own home anymore.  Or the countless homes I have sold in some of these neighborhoods for the folks who have lived there for 20 years or more because they just have to "get out".

I remember in my previous profession, when I would get down on the business,  I would ask my manager for advice on what I should do.   His advice.  "Chris, take a drive through Camden.  Your perspective will change."  I did that and he was right.  That was over 12 years ago.   I never thought about taking a drive through Philly.  This past week, I recently thought about if would I feel safe walking in N. Philly at 2:00 am or sitting on the front step of a house I lived in like that Temple student who was shot by a teenager.  I would not.  Would you? I posted the same question on Facebook and it was a bunch of resounding "nos". The same sentiment was echoed for West Philly.   Our city should not be like this!

And for those long established Philadelphia neighborhoods like East Mayfair, West Mayfair, Port Richmond, Richmond, Harrowgate, Lawndale, Lawncrest, Olney, Germantown, West Philly, Overbrook, South Philly and the list goes on and on there is so much opportunity for improvement as the community ties are strong.  Well perhaps instead of these neighborhood declining at all,  they can all improve.  That would be my goal.

I believe it all starts with homeownership and community.  Home-ownership will lead the neighborhoods back into prosperity.  As home-ownership increases and families are raised, those children will learn a lot more about ownership, accountability, fiscal and personal responsibility and building financial wealth.

These same principles apply nationally as well.

What do you say?