Apr 29, 2011

The $25,000 House

A local blogger recently did a series of posts on the improving rental market in the Valley, and what the cities should do to prosper most from the trend. He combined a number of utopian concepts, which seem somewhat incompatible in the real world of eastern Pennsylvania. He wants affordable housing and upperly mobile housing, if not side by side, close by. The starry eyed call this mixed income neighborhoods. I think what they fail to understand is that this is Allentown, not Manhattan. We are a horizontal community, not constricted in area. Although he cites rising rents, he doesn't understand the specifics. Rents are rising in the suburbs, away from the mixed income neighborhood. Higher rents in center city are only the formula for higher vacancy and turnover rates, part of the learning curve for newer landlords. The tale of the tape is the real estate listings, and more indicative, the deed transfers. In Allentown there are currently 62 houses for sale under $50,000. This past fall and winter, the deed transfers have been dominated by dozens of homes, purchased for rental, by investors for $25,000. This low cost of entry has saturated the rental market with $700 a month homes. The house pictured above is near 12th and Linden Streets, and can be purchased for $16,000.
UPDATE: There has been a juxtaposition of failed real estate strategies which created our current situation. The city orange tagged many apartment buildings in the last couple of years. Government policy wanted to make everyone and their pet a homeowner, putting hundreds of marginally financed people in houses. The crash has now reverted them back to tenants, but angry, resentful tenants. Overall, as William Bendex would say at the end of the Life of Riley, "What a revolting development this turned out to be." A fellow blogger cut and pasted several articles on our wonderful new rental environment. I thought I'd give an actual report from the front lines. If you want optimism or false solutions, go to his blog or City Hall.

27 comments:

Patrick McHenry said...

MM -

Speaking of FUTURE low-rent housing, I heard that Zawarski will be asking the Planning Commission for a few waivers to be able to pack 12 more units into the area around S. 8th Street.

michael molovinsky said...

he has a row on s. 8th that he poured the foundations, but never finished.

Local said...

Why would anybody be building new homes in the city?
Why do pre sale inspections exist?
Why constant rental unit inspections?
Why does the Allentown Parking Authority continuosly rape citizens?
How about the sweep program?
Why do all these Allentown government agencies even exist?
These agencies have all swelled with employees the past few years. WHY?
None of this improves any conditions for inhabitants living here.
Add to that the fact that most residents here can not even procure a mortgage for $16,000.
Only leaves non-resident owners (a problem) and the poor who will pay much more than the cost of a mortgage + taxes.
The powers that be will keep on taking the money until this city is one big slum.

gary ledebur said...

....and so how should Allentown improve it housing? Let's see some solid proposals not just criticism, opprobrium and blame.

Local said...

You don't like blame?
That's the life blood of this administration.
I thought It was clear.
Stop bleeding the residents.
ESPECIALLY those of us paying taxes, living in center city and trying to make a go of being here.
Take care of crime.
Solid proposals have been constantly voiced to deaf, arrogant, corrupt ears.

Anonymous said...

Mike, be kind to Jon. He's young, naive, blinded by a childlike infatuation with the greatness of Government, and his only real world experiences are starting a blog and attending policy seminars.

He has no idea what the real world is like.

michael molovinsky said...

gary, i assume you're referring to "local"s" comment at 7:03, as my post only realistically describes the marketplace. local's comments are valid as stand alone. why are taxpayers footing the bill for programs which haven't proved effective? it's a bureaucratic mindset which says any programs are better than none, even if they don't work.

i think allentown could improve itself with less section 8 housing, and by redirecting it's community block grants to infrastructure, rather than agencies which fuel the poverty magnet. affordable housing should not be a city policy, when financing that affordability falls on the middle class homeowners. city government should concentrate on police and street cleaning, until which time we can attract a citizenry which requires less such maintenance. (see first two suggestions to start that process). very simple, requires no consultants, conventions, seminars or power point presentations.

Local said...

I had to look up opprobrium.
Thanks for a great word that perfectly describes the behavior exhibited by our administration. That is one part of what I was writing about.
Definition: something that brings disgrace
: public disgrace or ill fame that follows from conduct considered grossly wrong or vicious.

Anonymous said...

It's not very appealling to consider moving into center city knowing that your monthly tax escrow payment would be more than a mortgage payment on these bargain properties.

gary ledebur said...

So, the best recommendations are upgrading infrastructure, street cleaning and law enforcement?

This sounds like a platform that could get a group of citizens to support. Start a movement. It may take years but call some meetings. You may be surprised how easy it may be to begin the campaign.

My only caution would be to avoid boldly proclaiming the group is opposed to affordable housing and helping the poor and unemployed.

ironpigpen said...

When is the first ice hockey game at the Pawlowski Palace of Sport?

Ich bin aufgeregt!

I need my Bread and Circus, you understand...

Anonymous said...

Always close out with a little CLASS WARFARE...

Well played, then, Comrade Ledebur!

Yours,
V. LENIN

Allentown taxpayer said...

Let's see: I bought a center city Allentown house this year for - yes! - $16,000, spent about that much in renovation/repair/improvements, and now I rent that to a young couple for - yes! - $750.00 a month, and make money doing it. I could get $800 or more, like other rentals on the block, but I foolishly believe having first-rate tenants is more important than an extra $50 a month. The property is no longer vacant (had been for a year). The house is no longer an eyesore and is up to code. Taxpaying (working) tenants are living there. To me that seems like a win-win-win, for me, the city and for the renters. But to some people on this blog, it makes for an opportunity to lament all the ills of Allentown, or claim my investment even encourages poor people to flock here. And that makes me, a "non-resident owner", "a problem" instead of part of a solution.
PS: Dear "Local": this young couple are renting to save up to buy a house.
PPS: I know you do not give free real estate lessons, MM, but as to Local's remark about residents being unable to afford $16,000 mortgages, may I ask, who sells mortgages for $16,000? Seriously, I would love to get a few of those. Whenever I look for mortgages, even the subsidized ones have a minimum $50,000 requirement.

michael molovinsky said...

taxpayer, although i agree with the positives you have attributed to the investor, there are some complications with the $16,000 house. first, every one should realize that these are the asking prices. I have seen recent transfers for as low as $13,000. unfortunately, both the quantity and low rent of these houses are attracting tenants who require the on going maintenance more associated with an apartment, than a house. houses generally require additional responsibility, such as maintaining the grass and snow. time will tell how this level of house rental works out for all concerned; tenant, landlord and city. at any rate, i see a far different prospect than my fellow blogger

Anonymous said...

Permission to Post:
Mr. Molovinsky,
Moving the visitor center to American on Wheels museum may be an awful mistake. For months to come, Hanover Avenue will be a nightmare to travel. Single lane lines and aggressive drivers make the route from Airport Road into downtown Allentown an exhausting one. Now visitors are expected to emerge from Hanover Avenue and within two seconds read and recognize they are now at the city's visitor center and quickly turn left.

gary ledebur said...

Anon 9:56 Concern for the poor was not Marx and Lenin. They were concerned with the proletariate. It is the God of Abraham, through his prophet Amos (3rd chapter), that commands us to care for indigent among us. If you are a Christian then add the Sermon of the Mount (Matthew 5 - 7). If you are an atheist, well so were Marx and Lenin!

Allentown taxpayer said...

So, someone who can afford a $750 a month rent for a house is of the same socioeconic class as an apartment dweller. And they are unlikely to mow the lawn or shovel the walk.
This is as weak a position as saying the renovation and subsequent occupation of a house only benefits the investor.
So, what should be done? Leave the $16,000 house an empty eyesore?Let's see some solid proposals not just criticism, opprobrium and blame.

michael molovinsky said...

taxpayer, there has been a juxtaposition of failed real estate strategies which created our current situation. the city orange tagged many apartment buildings in the last couple of years. government policy wanted to make everyone and their pet a homeowner, putting hundreds of marginally financed people in houses. the crash has now reverted them back to tenants, but angry, resentful tenants. overall, as william bendex would say at the end of the life of riley, what a revolting development this turned out to be a fellow blogger cut and pasted several articles on our wonderful new rental environment. i thought i'd give an actual report from the front lines. if you want optimism or false solutions, go to his blog or city hall.

Anonymous said...

No MM, we will stick to admiring the problem.

Local said...

Allentown taxpayer said...
I hope you are right - but I don't believe it.
50.00 a month will not change a neighborhood.
I have several apartments that I don't rent.
Unfortunately, once you find those wonderful tennents, they only need to see a mugging or two, hear some gunshots, and they (especially folks with children) will generally run for the hills.
Take a walk around your place at night - I dare you.
AND I said why would any body build new houses? There is plenty of available housing in the city.
I repeat: Take care of crime.
ALSO, please don't knitpick.
Many people can not afford to buy a home for 16,000 or 50,000 but surely pay a rent that is much greater than a loan, mortgage or whatever you want to call it would be.
You or I may use a credit card or a check for 16,000 but that is an impossible sum for many others.
More: I do wish that more of my neighbors would maintain their properties in the way you and I do. Living here at my property makes it possible to encourage and help neighbors to keep up and to participate in watching to keep a safe neighborhood.

Anonymous said...

What about an extremely reputable and well-qualified (to speak nothing of connected) high-price, out-of-town Christian Consulting Firm that cares about the poor and underprivileged?

Surely, then, they will know what to do.

The local Government should waive the normal unwritten Pay-to-Pay stipulation and award a most lucrative contract immediately.

Your thoughts on this potential solution, Mr. Ledebur?

V.L.

Allentown taxpayer said...

Mr. Lenin,
Check out "Promise Neighborhood". This non-profit organization works with local chuches and social service agencies to promote wellness and education to families with school-age children. Look them up on the web. Some good people are trying to address many of the concerns/problems that are lamented upon on this blog.
Their "neighborhood" is center city allentown. The Allentown group is part of a regional or, perhaps I believe, national effort.

Guy Williams said...

A look back at city history holds many of the answers but we are not willing to accept them.After ww2 there was a housing shortage,the result was the built up of the south side,east side and west end with affordable housing in neiborhoods like the one mike grew up in also midway manor,westbrook park,hamilton park etc etc. These by the way were developed privatly and targeted to middle class working families.1946 to 1960 was the heyday for these neiborhoods.Then as now few were attracted to the common row home. For many reasons, typical small baths,yards,no closets,three floors,and the lack of privacy due to the density.Once the west,south and east sides filled up apartment complexes sprang up all over in the 60s.Those which were once desireable are now some of the worst.Leroy Bogart a family friend from the south side was way ahead of his time on the housing front having been a builder .At the time his views were scourned and he was labeled a racist because of his opposition to public housing projects being proposed on lehigh and lawrence and cumberland gardens.His view was to have private developers create homes again for working poor as they did 20 years before.All buildings do not warrent preservation some need to be torn down and relaced with desireable housing.Their comes a time when tough choices have to be made for the future.If housing is substandard or too small tear it down and rebuild.

Anonymous said...

I love non-profits!

Particularly those funded with Government grants.

The kind that pass out free rakes are my most favorite of all.

Where would this country be without good citizens who care?

V.L.

Local said...

Then as now few were attracted to the common row home.April 30, 2011 10:00 PM

Generally a good write, but many people are attracted to row homes and for some of the very reasons you cite as negatives.
The city is for people that like small yards , convenient (close) quarters etc.
Allentown is full of lovely architecture and solid buildings.
It is a shame that many large row homes were chopped up into apartments.
Was it a good or bad program that payed owners to down convert these less than spacious apartments back into larger quarters?

Allentown taxpayer said...

In regard to Mr. Williams' observations about no closets in city row homes, is it true what I heard, that closets back then were taxed as additional rooms, so as a result they were avoided?

Anonymous said...

Sounds like a character flaw to me VL,unyielding support of a cause. Ive been there too,handing out rakes to the South Vietnamese in Binh Thuy RVN. No Regrets,For better or worse,richer or poorer,right or wrong,Blah,blah, blah.