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The incredible shrinking city

Youngstown, Ohio has long been on the decline and now is being hit by the foreclosure crisis.

Its answer: Razing abandoned buildings and tearing up streets.

April 14, 2008: 4:44 AM EDT

 

The last holdout:

youngstown3.03.jpg

Two minutes from Youngstown's downtown sit empty lots and abandoned houses where families of mill workers once thrived.

 

Recycling Youngstown: Empty houses, once magnets for drugs and prostitution, have been reclaimed as playgrounds.

 

 

YOUNGSTOWN, Ohio (CNNMoney.com) -- Youngstown, Ohio, has seen its population shrink by more than half over the past 40 years, leaving behind huge swaths of empty homes, streets and neighborhoods.

 

Now, in a radical move, the city - which has suffered since the steel industry left town and jobs dried up - is bulldozing abandoned buildings and tearing up blighted streets, converting entire blocks into open green spaces. More than 1,000 structures have been demolished so far.

 

Under the initiative, dubbed Plan 2010, city officials are also monitoring thinly-populated blocks. When only one or two occupied homes remain, the city offers incentives - up to $50,000 in grants - for those home owners to move, so that the entire area can be razed. The city will save by cutting back on services like garbage pick-ups and street lighting in deserted areas.

 

"When I grew up in the 1950s, the city was at its peak," said Father Ed Noga, who heads St. Patrick's on Youngstown's South Side. "There were kids everywhere and everyone converged on downtown. You went to eat, to shop and to go to the movies."

 

Today downtown is positively sleepy and even somewhat derelict. Residents have to drive out of town to shop for clothes or housewares. And while foreclosures have long been a scourge in this city, they have recently skyrocketed along with the rest of the country, up 178% in February from a year ago.

 

"Abandoned houses here are like rainfall in the spring," said Mayor Jay Williams, "That has gone on for decades."

##

There were some harebrained schemes.

 

"A blimp factory was going to put the city back on the map," Williams said. "That represents a whole lot of the promises made and broken. They sound ridiculous now. President Clinton promised a defense facility employing 5,000. We were waiting for a savior."

 

They never got one. But now, Youngstown's infrastructure-paring strategy may yet become a model for other Rust-Belt cities that must recreate themselves after years of decline.

 

Already, delegations from smaller, post-industrial cities like Flint, Mich.; Wheeling, W.Va.; and Dayton, Ohio, have come to Youngstown to study the plan.

 

"We're one of the first cities of significant size in the United States to embrace shrinkage," said Williams.

##

A fresh start

"I'm very nervous to have all that space," said Higby, the founder of Grow Youngstown, which promote produce gardening and farmers markets. "I'm used to living in 460 square feet."

 

Ideally, all this energy surrounding 2010 will help turn the city around. It does have a lot going for it, including Youngstown State University, which attracts creative-class types like artists and writers and other intellectuals, as well as museums and and excellent public library.

 

The cheap residential and commercial real estate can be a draw. Start-up companies thrive on low overhead, and employees can easily find housing just minutes from work.

 

At the very least, the 2010 plan has changed residents perspective, said Hunter Morrison. "It's getting us to think about where we're going into the future, rather than where we've been in the past."

 

 

 

# continues # http://money.cnn.com/2008/04/08/real_estat...oney_topstories

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I will be going back to Downtown Cleveland this weekend to check-out some property. If anyone has any specific questions about areas I may be able to check them out.

 

...Maybe contact Svetlana, and see if she has anything worth seeing- that fits your criteria?

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...Maybe contact Svetlana, and see if she has anything worth seeing- that fits your criteria?

 

Hi,

 

I will be very glad to help with Cleveland's properties except if Pluto works exclusively with another Real estate agent.

 

Very interesting information about Youngstown. It' s different from Cleveland. Sometimes I think that for Cleveland it also may be the best solution just to buldoze all these abandoned, ruined houses.

 

Market is very active now. Keeps us busy.

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Very interesting information about Youngstown. It' s different from Cleveland. Sometimes I think that for Cleveland it also may be the best solution just to buldoze all these abandoned, ruined houses.

 

youngstownyj3.png : streetmap : hiking

 

What I like about Youngstown:

+ It is cheap

+ It has a railway going through it, with an Amtrak station in the middle

+ Given Youngstown's history, it has good transport links with major cities

+ The city is desperate enough to consider radical solutions (like bulldosing houses),

... and they may eventually come up with something that works.

= = =

 

What i dont like about Youngstown:

+ it may stay cheap

 

Svetlana,

What do you think of my idea that a bottom may come in US real estate market, in Q1.2009

at the absolute earliest?

 

If you agreed with this assessment, what would you be doing now, if not just waiting?

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First I have to congratulate DrBubb for getting me to join and post on any forum after years of lurking. It was a combination of the thoughtfulness on some of the threads and this topic in particular which is near and dear to my heart, since I am from Detroit. After 25 years in Michigan, a decade in LA, and 6 years in Islington, London, I am happy to now finally call Italy my home.

 

If it weren't for this thread I would never even have imagined seriously thinking about the merits of Cleveland as an investment (but can I focus on Detroit, it's in the ambit of this discussion and I know it well?). Kudos.

 

I have a great deal to say about the US industrial belt, but one key thing that I am not sure everyone can appreciate is the effect of local government. They tend to be very liberal and taxes can be quite burdensome (by US standards). Note local taxes that exist in many US cities like Detroit. You'd never see such taxes like this in "newer" places like Las Vegas, Salt Lake, Phoenix, etc. I don't think. In fact the states compete with each other for the big prizes and so you see a state like, what, Alabama?, building a highway as a gift for BMW just to get them to open a plant. I haven't seen that in Michigan at a casual glance. That's always been a criticism of mine of the industrial midwest, they continue to think even now that raising taxes is the answer.

 

For a starting perspective I forwarded this thread to two good friends in Detroit with the subject "Time to go Bullish on Detroit?". It must have knocked them out of their chair as I am Michigan's biggest critic! One of these friends is a partner in a prominent Detroit law firm and his fiancee, as you will see below, is quite involved in Detroit goverment. We all met at the University of Michigan (Ann Arbor) as students. Despite my tax comment above, However, note all the tax incentives my friend refers to to get the economy going again in Detroit, both state, federal and local.

 

I only wrote to my friends about the proposition of buying a house in Michigan, but my friend also discussed the labor climate touched on earlier in this thread. I hope you find it interesting. I have redacted some specific names obviously:

 

Hey [Knavel]:

 

***

 

I'm not sure that the U.S. is cheap for labor, but the UAW has

effectively conceded on wages for auto manufacturers in a huge way.

Same thing with Delphi - I suspect that the labor market is going to

ratchet downward. One thing that is definitely certain is that the

depressed dollar/euro/yen exchange rate is making companies look at

making some complex, high-tariff goods stateside (primarily cars and

appliances). ***

 

Housing is very affordable in Michigan, and Grosse Pointe has never

looked better for huge lakefront houses at virtually no cost. I don't

have any idea where the market is going, though, although I think that

anything with water access anywhere in the world is a relatively safe

bet.

 

Downtown is the same. We have some political upheaval here, but the

business community has by and large been ignoring it. The taxes are

always there, but it's my perception that everyone coming in gets some

kind of a tax abatement. We are on the tail end of some federal

empowerment zones (no fed taxes) and have multiple Renaissance Zones

(no state or local taxes). There are also discretionary tax abatements.

 

[My fiancee] has a lot more info on what the city does for incoming businesss;

she was just promoted to the Vice-President for Business Attraction of

the Detroit Economic Growth Corporation. DEGC is a nonprofit

(basically run by former DTE Energy people) that does the city's

business attraction and staffs the relevant city agencies.

 

Someone else you may want to talk to is [ ], who is at the

Michigan Economic Development Corporation. He is a friend of mine

from way back and in charge of a fund that invests in new ventures

starting up in Michigan. They do a lot of stuff in Ann Arbor and a

little in Detroit. If I recall, his fund is how Michigan decided to

dispose of its massive tobacco settlement.

 

I'm not sure if Detroit would be more fun than say LA or Islington, but it's interesting...

 

_______________________

 

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First I have to congratulate DrBubb for getting me to join and post on any forum after years of lurking. It was a combination of the thoughtfulness on some of the threads and this topic in particular which is near and dear to my heart, since I am from Detroit. After 25 years in Michigan, a decade in LA, and 6 years in Islington, London, I am happy to now finally call Italy my home.

 

If it weren't for this thread I would never even have imagined seriously thinking about the merits of Cleveland as an investment (but can I focus on Detroit, it's in the ambit of this discussion and I know it well?). Kudos.

 

What an interesting post, which I will lift and repost on the Michigan Thread.

 

It was particularly interesting to me, since I was born in the Henry Ford hospital in Detroit,

and grew up in Farmington and Birmingham, Michigan, and nearly joined a number of my classmates

in going to MSU or UofM (Ann Arbor), before choising Harvard after a visit to Boston.

 

I have a number of the responses to your post, and will post them on the Michogan thread.

 

Thanks, again. And it would be great to continue a discussion about Detroit there.

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Svetlana,

What do you think of my idea that a bottom may come in US real estate market, in Q1.2009

at the absolute earliest?

 

If you agreed with this assessment, what would you be doing now, if not just waiting?

 

Michael,

 

I have the same vision of the situation. It may adjust a little place-by-place. It's a very interesting situation on Greater Cleveland Real Estate market now. We have much more qualified buyers now than last year. Delayed demand needs to be satisfied. That's why we will experience a stability in pricing during spring-summer selling season. Some neighborhoods in suburbs are steadily growing, like Bainbridge, Chagrin Falls, etc.

 

Looks like bank owned homes' segment of the market hit the bottom in South Euclid. South Euclid became very popular in comparison with adjacent Cleveland Heights or Shaker Heights because of more or less reasonable tax rate, decent schools system and no Point of Sale inspection. Rental properties are in a big demand over there. 4 bedrooms home sells for about 50K (real multiple offers, highest bid wins), requires about $5K for minor repairs and rents out for $1,100-$1,200/month. Just a year ago similar houses sold for about $80K, and that was good.

 

Here is the answer: I would buy the cheap rental properties in decent neighborhoods now as the prices will go up soon. I would wait till Q1.2009 when the greatest deals in the best newer developments will pop up. We will have more houses built in 2001-2005 for $600-$700K which will sell for half that price next winter. I would definitely look at residential Downtown Cleveland by the end of 2008. Though the price of new construction is still too high, tax abatements are very attractive. There are still few great commercial offers in Downtown, too.

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... Rental properties are in a big demand over there. 4 bedrooms home sells for about 50K (real multiple offers, highest bid wins), requires about $5K for minor repairs and rents out for $1,100-$1,200/month. Just a year ago similar houses sold for about $80K, and that was good.

...

Svetlana, many thanks for your very useful and specific comments.

 

Slightly off-topic, I just want to tell the following. I have recently visited friends who have moved into the Quartermile development in Edinburgh, Scotland. They pay £1,300 per month in rent for a two-bedroom flat. The flat sold as far as I know for almost £500,000. Everyone, just do the maths. I couldn't believe it myself. Seems to me that the guy/landlord who allegedly bought 6(!) of these flats made a bad deal when compared to rental yields in the Cleveland area. UK property will crash & burn.

 

See also: http://www.youtube.com/watch?v=2t8YTvdYXws&hl=en

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I will be going back to Downtown Cleveland this weekend to check-out some property. If anyone has any specific questions about areas I may be able to check them out.

 

Hi Pluto.

Here are my questions:

1. Can you get by easily without a car in the parts of Cleveland that you saw?

2. Is there a "rich and varied street life" for pedestrians?

3. Do you feel safe while walking on the streets?

4. Are there jobs nearby?

 

GROSS YIELD Calculations:

 

Edinburgh.. : 1,300 x 12 / 500,000 ............ : 3.12%

Cleveland.. : 1,100 a 12 / (50,000 + 5,000) : 24.0%

 

It only goes to show what

you have in the UK.

Although a more accurate calculation, including all expenses, and computing a net yield should

be done. I have no doubt which investment will look better.

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Rental properties are in a big demand over there. 4 bedrooms home sells for about 50K (real multiple offers, highest bid wins), requires about $5K for minor repairs and rents out for $1,100-$1,200/month.

 

Certainly beguiling but sounds pretty unbelievable. Svetlana what kind of tenants have $1150 to pay each month but not $55K to buy and how is it that there are seemingly so many waiting with (rent) deposit in hand (but not house deposit)?

 

Nice juxtaposition with Edinburgh comparison Goldfinger. Thanks

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Certainly beguiling but sounds pretty unbelievable. Svetlana what kind of tenants have $1150 to pay each month but not $55K to buy and how is it that there are seemingly so many waiting with (rent) deposit in hand (but not house deposit)?

 

Nice juxtaposition with Edinburgh comparison Goldfinger. Thanks

 

This is how mortgage crisis affects our market. Lenders tightened underwriting standards and many people lost an ability to borrow money. They have a good job and income though. It's not only about "ex-sub-prime" borrowers. Many people with credit score under 680 get troubles in obtaining a good mortgage financing. At the same time many of potential investors experience troubles in getting investors' loans, especially small amount loans. Before the crisis of 2007-2008 a lot of honest, respectable investors used so called "liars'" mortgages - stated income programs - to obtain financing for rental properties because of complexity of unserwriting standards for rental income. This opportunity is very limited now.

 

This situation created this unique opportunity - very cheap properties in nice neighborhoods with big rental capacity. It will not last too long. My prediction is that banks will finally enter Real Estate market maximum in 2009 and will recive right to manage their REO. At this point they will stop giving away houses for nothing.

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This situation created this unique opportunity - very cheap properties in nice neighborhoods with big rental capacity. It will not last too long. My prediction is that banks will finally enter Real Estate market maximum in 2009 and will recive right to manage their REO. At this point they will stop giving away houses for nothing.

 

Interesting point.

But how will they manage those properties?

Indeed, what is the best way for a foreign based investor to manage a portfolio of properties in Cleveland?

 

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Interesting point.

But how will they manage those properties?

Indeed, what is the best way for a foreign based investor to manage a portfolio of properties in Cleveland?

Just hire the reliable RE company with property management experience. Local-n-Global is a good choice :rolleyes:

 

As for banks, they already have their asset management firms. It will be not so hard to turn them into property management..

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Bubb

 

If you bought a property in the US, would you buy it cash or try to find a mortgage?

 

If you buy cash, the only thing that matters is that the price is low.

 

If you buy leveraged i.e. with a mortgage, you have to play low price against low rates. If it's still possible to get 25y mortgages at comparatively low fixed rates, higher inflation could help you paying most of the principal i.e. price would matter much less.

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Bubb

 

If you bought a property in the US, would you buy it cash or try to find a mortgage?

 

If you buy cash, the only thing that matters is that the price is low.

 

If you buy leveraged i.e. with a mortgage, you have to play low price against low rates. If it's still possible to get 25y mortgages at comparatively low fixed rates, higher inflation could help you paying most of the principal i.e. price would matter much less.

 

Its a good point.

And to be honest, I havent decided yet.

 

Two sides:

+ If it is cheap enough, why bother with the hassel of getting a loan?

+ If you get a loan, you have some protection against future dollar weakness.

 

I suppose if I bought now, I would try to get a loan, since I can foresee much further downside in the dollar

 

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Just hire the reliable RE company with property management experience. Local-n-Global is a good choice :rolleyes:

 

As for banks, they already have their asset management firms. It will be not so hard to turn them into property management..

 

Thanks for the tip.

Local-n-Global is your firm, or the firm you are affiliated with- as I understand it.

 

Can you take a "typical example" such as a house costing US100,000, and give us an idea of the

services that an offshore client might buy to manage a property, and what it would cost.

(I am looking for some detail here, if possible.)

 

Also, what could go wrong, and cause ownership costs to grow?

 

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Just hire the reliable RE company with property management experience. Local-n-Global is a good choice :rolleyes:

 

As for banks, they already have their asset management firms. It will be not so hard to turn them into property management..

 

Thanks for the tip.

Local-n-Global is your firm, or the firm you are affiliated with- as I understand it.

 

Can you take a "typical example" such as a house costing US100,000, and give us an idea of the

services that an offshore client might buy to manage a property, and what it would cost.

(I am looking for some detail here, if possible.)

 

Also, what could go wrong, and cause ownership costs to grow?

 

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GREAT LAKES WATER - contained in food- for Middle East Oil -- An essential trade for both maybe??

 

Although seemingly abundant, fresh water is relatively limited in quantity. The Great Lakes are an attractive and impressive resource, representing 21 percent of the world's fresh surface water and 95 percent of the United States' fresh surface water.

 

...they have moved to protect that precious resource....

 

Great Lakes Compact vital: Ohio must protect its precious fresh water resource

 

By: SEN. SUE MORANO, 13th District, Ohio Senate ... 02/03/2008

 

THIS week, the Ohio House expects to ratify the Great Lakes-St. Lawrence River Basin Water Resources Compact, or The Compact, on account of the House Economic Development and Environment Committee hearing no opposition to this critical interstate agreement.

. . .

Opponents believe that ratifying The Compact will hurt economic development by robbing private property owners of their right to draw surface and ground water from their land; that somehow Ohio's long-standing common law water rights will be immediately abolished and that private property owners will be forced to hand over water drawn off their land to the public. This is just not true. Drafters of The Compact included an explicit statement within the agreement to ensure that private property rights were not superseded by The Compact.

 

To belay fears further, Rep. Matthew Dolan reiterates this assertion in his ratification bill, H.B. 416.

 

Many of Ohio's cities, including Cleveland and Toledo, have put their support behind The Compact, as has Gov. Ted Strickland. Other Great Lakes states, like Minnesota, Illinois, and our western neighbor, Indiana, have been eager to ratify The Compact for two reasons:

 

* The real legislative work begins in the next phase of implementing The Compact, which is passing enforceable water conservation programs.

 

* Taking a pass on ratifying the agreement means serious consequences for any Great Lakes state. By not ratifying The Compact, we leave the door open for the federal government to interfere in our affairs, and we would be driving away business opportunities for our state.

. . .

Opponents believe that ratifying The Compact will hurt economic development by robbing private property owners of their right to draw surface and ground water from their land; that somehow Ohio's long-standing common law water rights will be immediately abolished and that private property owners will be forced to hand over water drawn off their land to the public. This is just not true. Drafters of The Compact included an explicit statement within the agreement to ensure that private property rights were not superseded by The Compact.

 

To belay fears further, Rep. Matthew Dolan reiterates this assertion in his ratification bill, H.B. 416.

 

Many of Ohio's cities, including Cleveland and Toledo, have put their support behind The Compact, as has Gov. Ted Strickland. Other Great Lakes states, like Minnesota, Illinois, and our western neighbor, Indiana, have been eager to ratify The Compact for two reasons:

 

* The real legislative work begins in the next phase of implementing The Compact, which is passing enforceable water conservation programs.

 

* Taking a pass on ratifying the agreement means serious consequences for any Great Lakes state. By not ratifying The Compact, we leave the door open for the federal government to interfere in our affairs, and we would be driving away business opportunities for our state.

 

/see: http://www.zwire.com/site/news.cfm?newsid=...46368&rfi=6

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I will be going back to Downtown Cleveland this weekend to check-out some property. If anyone has any specific questions about areas I may be able to check them out.

 

Anything NEW to report, Pluto?

 

Are you actively seeking to BUY in Cleveland after your visit?

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  • 1 month later...

CLEVELAND VS> DETROIT -

 

Devil's Night

Wed, 06/04/2008 - 17:15 — Marquis Dee (not verified)

As a third-generation Detroiter (now living happily in Cleveland after 15 years in Boston...Cleveland has problems, but it's a nice fusion of the intimacy of Boston and the unpretentious Midwesternness of Detroit,, is affordable, and truly a good place to live) I read this article and all comments with great interest.

First, "The Riots" (which were in 1967, a year before most other cities) did not start so-called "white flight"; they did greatly accelerate a process of depopulation that was underway since the mid-1950's. My parents married and left their Redlined (remember that?) neighborhoods for Dearborn Heights in 1958, and they were one couple among many who got new brick homes with FHA-insured loans who could use Federally-funded "Defense Hightways".

Second, the book referred to is Devil's Night: And Other True Stories of Detroit by the Israeli author Ze'ev Chafets (1991). I was in college at the University of Detroit during the heyday of Devil's Night, when it was a 3-day "Festival of Arson" - in 1983, if I recall, about 700 fires! From a ten-story dorm, they were like fireflies in the night.

Another good read for Detroit Obsessors is Poletown: Community Betrayed by Jeanie Wylie, 1990. It tells of how, in 1981, the City, State, GM, and the Archdiocese colluded to destroy the last integrated, poor neighborhood close to Downtown. 4200 residents, 1300 homes, 140 businesses, 6 churches, and a hospital all removed, mostly for surface parking for a Cadillac plant that never delivered on the promised number of jobs. It's all robots!

Third, though government tends toward corruption in places undergoing negative change, Detroit has been in a league of its' own for a long time. I believe that this is because the REAL centers of power were the Corporations and the Unions; government was always Tertiary at best.

 

Now those Cororations and Unions are on the ropes, and the era of a Middle-Class lifestyle with a working-class job is GONE. FOREVER. Happened here too, but there are a LOT of people here in Cleveland working hard to re-invent our region, building on our strengths and more diversified economy, and knowing that eventually our central location and our water will be like oil. Frankly, the Detroit of my Parents' generation was well-designed, with good transit and nice neighborhods. But with one million people gone to the suburbs, and the Metro area sprawling farther while stagnating - ROMEO is a suburb! - Detroit is just too spread out to survive the end of cheap oil.

 

As someone once wrote about Detroit, "The City of Consumption Ultimately Consumes Itself". And as Im say, "Detroit is the necessary precondition for the invention of California". We made the cars; they drove them along the ocean with the top down and a blonde in the passenger seat.

 

Well, enough for now. DOS (Detroit Obsession Syndrome) has no cure. But it can go into remission. All Best,

 

MARQUIS DEE

 

/DET-2nd.Depression: http://www.depression2.tv/d2/node/118?page=1

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  • 4 weeks later...
Cleveland Home Prices Rise!

 

Home prices in the Cleveland area increased in April for the first time in almost a year, with improvement across all price levels, according to data released Tuesday. The Standard & Poor's/Case-Shiller home-price index looks at existing single-family homes sold in 20 major markets, including the Cleveland-Elyria-Mentor area. Nationally, the index dropped 1.4 percent from March to April. But the Cleveland-area index rose 2.9 percent, marking the first month-to-month home price increase here since May of last year -- and the biggest one-month gain in the 20 metro areas.

 

The index for lower-priced homes in Greater Cleveland rose the most -- 5.9 percent for homes under $114,448.

http://clevelandcityliving.blogspot.com/20...rices-rise.html

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"the Cleveland-area index rose 2.9 percent,

marking the first month-to-month home price increase here since May of last year."

 

GEI readers have started buying, it would seem

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  • 2 weeks later...

I am spending time in Indiana at the moment. My thoughts:

 

Yes, the landscape is incredibly "zersiedelt" (built upon in an uncoordinated way). Yes, everything is car-/gas-based. BUT: it's an incredibly fertile landscape. It's mid-summer, but everything is green. Everything I eat could have been grown here: corn cobbs, beef, salad, fruit of all sorts, bread/soy. IMO, a family could easily make a living off a piece of land the average person here could in fact easily afford. The average distance to a grocery store of some sort is also less than one might think. To sum it up, whatever will happen, people will be able to live here in a not too bad kind of way. In contrast to possibly MANY other places in the world, like the Arab Peninsula or even Australia.

 

I will wait a few more years, and then buy a piece of land with some sort of house on it. I don't think one can go too wrong with it once the bottom has dropped out of this market.

 

And the bottom is dropping out of it. I see an awful lot of McMansions here that already seem to be in a neglected state. I have relatives who have been trying for months to sell decent houses, to no avail.

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