Chuck Mahron of Strongtowns thinks we should invest in poor neighborhoods, not rich ones. “What is obvious here” he says, “is that poor neighborhoods are profitable while affluent neighborhoods are not.” While this might be surprising to most of us, Mahron believes that this is a consistent condition across the United States, in city after city. “Poor neighborhoods subsidize the affluent; it is a ubiquitous condition of the American development pattern.”
Why is this true?
More affordable amenities.
Wealthy neighborhoods, with their large blocks of land and wide streets, are more expensive to maintain than poorer neighborhoods which are far denser. Narrower streets require less maintenance and historically the houses in poorer neighborhoods were built on higher ground giving them the advantage of free natural drainage. Today this makes service costs considerably less.
Consistent returns for less.
Compare the costs of flipping a house in a wealthy neighborhood and a poorer neighborhood. Spending $5,000 on a home in a wealthy neighborhood won’t get you very far but the same amount in a poorer neighborhood might give you a 5-10% gain in value. It’s simple math.
Low risk.
Poorer neighborhoods could do with improvement. Planting trees, maintaining street and signs, fixing sidewalks and changing zoning to encourage neighborhood businesses don’t cost very much but could bring consistent returns to investments in the area. And if they don’t, you haven’t lost a lot. Nothing ventured, nothing gained.
Investing in poor neighborhoods provides a way to make low-risk, high-return investments at the same time as improving the lives of residents, avoiding displacement and making the communities you invest in more vibrant.
Read the full story here.
Riverside Terrace, DC – image courtesy of Small Change
