Title: Understanding the Considerations in Purchasing a House in a Declining Area
Introduction:
Buying a house is one of the most significant investments an individual can make. However, the decision to purchase a property is often influenced by multiple factors, including the potential for appreciation, neighborhood amenities, and overall livability. In some cases, individuals may be considering buying a house in an area that is experiencing economic decline or depopulation. While this decision may seem risky, it is essential to thoroughly assess the pros and cons before making a final decision. This article aims to explore the factors one should consider when contemplating buying a house in a declining area, providing a deeper understanding of the implications involved in such a decision.
Understanding the Decline:
Before delving into the consideration of purchasing a home in a declining area, it is crucial to define what constitutes a declining area. Economic decline can be a result of various factors, such as outsourcing, industry decline, population decreases, or unfavorable policies. These elements can contribute to a reduction in job opportunities, decreased property values, and overall deterioration of the area.
Factors to Consider:
1. Property Prices:
One of the most apparent advantages of buying a house in an area that is experiencing decline is the potential for lower property prices. Depreciation in value may make real estate more affordable in these areas, enabling buyers to secure a larger or better-equipped property for their budget.
2. Investment Opportunities:
While a declining area may present immediate challenges, it may also offer investment opportunities. Often, local governments and organizations focus on revitalizing such areas through infrastructure development, tax incentives, or other initiatives aimed at attracting new businesses and residents. This can create an opportunity for property owners to benefit from future appreciation in the value of their real estate.
3. Lifestyle Considerations:
While economic decline affects an area as a whole, it is essential to research the specific amenities and lifestyle offerings of the neighborhood you are considering. Some areas continue to thrive despite larger economic issues, offering unique characteristics such as historical charm, cultural heritage, or natural surroundings that might attract homeowners.
4. Rental Potential:
Consider the rental demand and potential rental income in the area. In declining areas, there may be an opportunity to purchase properties at a lower cost and capitalize on the demand for affordable rental housing. Conduct thorough market research to evaluate the long-term rental prospects, potential returns, and ensure that this aligns with your investment goals.
5. Redevelopment Plans and Infrastructure:
As mentioned earlier, the declining areas often attract the attention of local governments and organizations focused on revitalization. Researching the existence of any redevelopment plans, infrastructure improvements, and public investments in the area may provide insight into the potential for future growth and appreciation.
6. Personal Financial Stability:
Assessing your personal financial stability is crucial when considering investing in a declining area. Ensure that you have stable employment, sufficient savings, and appropriate risk tolerance to withstand potential challenges that may arise from living in an area experiencing economic decline.
7. Exit Strategy:
Before purchasing a house in a declining area, it is essential to develop a well-thought-out exit strategy. Consider the possibility of a future relocation, selling the property, or converting it to a rental. This will ensure that you have an alternative plan in case the local economy does not stabilize or improve as anticipated.
Conclusion:
Deciding to purchase a house in a declining area is a complex decision that requires careful consideration of various factors. While there may be financial advantages, such as lower property prices and potential for future appreciation, it is crucial to weigh these benefits against the risks associated with living in an area experiencing economic decline. It is recommended to conduct thorough research, analyze market trends, and seek advice from professionals such as real estate agents or financial advisors to make an informed decision that aligns with your long-term goals and financial stability.
Do you have stable *long term* employment around the Saginaw, Michigan area?
Buy if you are going to stay in the area longer term (ie 5+ years).
If you don’t yet have employment, consider renting or gaining employment in the area before jumping into locking yourself into a house.
The book Strong Towns talks a lot about this. It depends on what your local government is going to do when the city shrinks. It will depend on how they handle it, and the exact location of the house.
If you’re doing this, don’t buy on the outskirts. Buy as central to downtown as you can. In this kind of situation suburbs get abandoned and their infrastructure doesn’t get replaced. Bet on one that is worth investing in, for the local government.
Does the Saginaw area have things you enjoy (outdoor sports, entertainment venues, etc?)
Or are you a homebody who just enjoys their own space and hobbies indoors?
Does the house have features you love (lake views, large lot, garage for project cars/hobbies)?
Owning a home outright gives you tons of flexibility. You could buy it now, but continue to live with your parents until you get a job in the area. Without a mortgage or rent to worry about, your cost of living could be quite low, allowing you to work a simple job and have more time for your own pursuits.
I moved from a high CoL west coast city, into a low CoL Midwest town. Still have a mortgage, but it’s very reasonable. I love my life 🙂 If owning your own home for the long haul is your main goal, then the exact location is less important. Cities boom and bust all the time. It doesn’t matter much if the house allows you to pursue a fulfilling life.
You’re “priced out” of your area but you can buy a $50k+ house in cash? Maybe you should try renting a small apartment (or a house in Saginaw, for that matter) if you want to get out of your parents’ house. Your idea sounds unnecessarily desperate to me.
Do you want to live there?
It doesn’t really sound like the smartest idea to move across the state to a dying area just because you can afford to buy a house. Move, rent for awhile and buy a house after seeing how the situation really is first hand. If you can’t find meaningful employment, it won’t matter how cheap the real estate is.
Gotta keep in mind businesses shutting down. What do you when only a dollar general is in town so you can’t get fresh produce and meat?
I wouldn’t buy a mansion in Chernobyl for $10,000 as my primary residence…
I would consider renting. Rents should be very cheap, gives you time to see if you like the area and you can buy later, and if things go downhill, you can leave.
Remember that if an area goes downhill far enough, it can become very hard to live there- crime, crumbling infrastructure, no place to buy the things you need, and possibly high taxes for the few people who remain. If you rent, and those things start to happen, you can leave, but if you buy, you could get trapped.
If you’re like me and you work from home as a software dev and that house can get good internet, Id do It. Assuming you’re either never having kids or the schools are ok.
Also, I’d make sure w/e I buy is in range of an amazon warehouse and or walmart grocery delivery. I wouldn’t want to rely on local businesses staying in business.
I know the Saginaw area.
WHY move to Saginaw? If it’s to buy a house, that seems like a bad idea. Do you perhaps WFH and can live anywhere? Or how does this change your work/income?
I’m no expert but I don’t think Saginaw with ever “die” I lived in the area for a few years(Carlton specifically) and while it’s not the best city ever, it was alive and well. It doesn’t have the nicest houses or businesses or schools but it does have them. Yes the mall is dying but what mall isn’t dying ? I still have friends in the area and there are plenty of jobs to be had. Even if not right in Saginaw, many will live there just for the central location and cheap housing. You’re a half hour from midland, bay city is 20 mins away, flint is 30 mins away, birch run is 20 mins away, hell freeland isn’t a small town and that’s only 10 mins away and when I was living there I was working in Detroit which is only an hour away. Watching the Saginaw spirit play is relatively cheap at the DOW and normally musicians, comedians, acts at the DOW sell tickets pretty cheap. Not the safest city to enjoy the nightlife but it does have a night life scene. There’s multiple different grocery stores that can fit any budget, from Whole Foods to save a lot. Gyms on every other corner. There’s a couple movie theatres. There are tons and tons of different businesses. Lots of different locals are based out of Saginaw. Saginaw gets lots of visitors/shoppers from the thumb area as it’s the nearest “big” city. Not to mention The university there or the community college. I’m not expecting this to change your mind but in my opinion Saginaw will never die. I don’t think it will ever be “the” city to be in but it’s in such a damn good location it will not die.
Have you been there? I lived there and it’s *very* small town. We did not last long.
Do you know the area?
Do you know why it’s dying or “nobody wants to live there”?
Do you want to live there?
I otherwise agree that it’s time to move out of your parent’s house.
I could buy a home cash even in a HCOL area, but I prefer to rent cheap condos because it gives me the ability to relocate as needed.
In fact, I just got laid off this week. If my job search takes me to a new state, it is very easy for me to move.
Mobility is a very good benefit.
If you have a wife, family, and kids then my advice above may not be for you
I mean Saginaw won’t necessarily have great jobs either. It’s not dumb to buy a house in that area, but you could easily become socially isolated if you don’t have community there.
Why did you specifically choose Saginaw? There are so many wonderful places to live in MI. Do you have a job lined up there?
Meh I did this. I moved from LA to Oklahoma city without a job lined up and bought a house for cash and worked a low level manager job part time at a hardware chain store and still saved half my income. But I eventually missed my home state and dumped the house but I made like 50k profit on it so I guess it was worth it. Might move again in 5 years but for now I’m staying here
There’s exactly one thing you can’t change about a property: its location.
As a 33 yr old from west Michigan who drove through Saginaw today I just don’t know that I would want to up and move just for a random cheap house.
Other comments saying to rent for a bit and try to find stable work are the direction I would go.
There’s a huge middle ground between living with your parents and owning a house outright. Why don’t you try renting and see how you like living alone?
I live in the area and I’m in Saginaw a few times a week.
I would buy in the city part of Midland and commute to Saginaw. Midland is a much safer community, and the small city lot houses can still be bought for $100,000. There’s so much to do there outdoors and through their Rec facilities and the trip to Saginaw is under 30 minutes.
If you don’t like Midland or their higher taxes, check out Bay City. Prices are similar to Saginaw and there’s a lot of money being invested there from new business. Bay City has a lot of up and coming areas.
Saginaw is so hit or miss depending on the neighborhood. Rural saginaw is better, and the Tittabawassee Rd shopping area is fine, but there are some neighborhoods that you should stay away from unless you’re more familiar with the area.
If you’re concerned about resale value why not look a little farther out Bay City, Midland, Freeland, Hemlock not that far of a drive at all to Saginaw
I’m from Oakland county but I would think bay city just north is a really nice, very very affordable town. Very cheap housing. I’d look there.
Dow Chemical and Nexteer Automotive are usually hiring. Worked for Nexteer for a few years and it was pretty decent. The Saginaw midland area isn’t all bad. Good luck!
You can buy houses for 12k in 48601 in Saginaw. Does that mean you should buy it? No sir.
If you want to buy a home in this part of Michigan I would suggest an area in between. Somewhere like Freeland. If you are willing to go a little closer to lansing you can still find homes around this price in Owosso which has a lot of young people buying homes and settling down there. Just my opinion
Why do you think those houses are going cheap?
OP you sound like you’re making an emotionally driven decision. Pause for a second, take a breath, and ask yourself how those usually work out. A house shouldn’t be an impulse buy. It’s likely the largest purchase you’ll ever make. At least go rent an Airbnb in the area for a week or two and get the lay of the land. Even if you’ve been there before, go with a relocation mindset. You’ll start to notice things you never thought of before. Look at some properties while you’re out there. Maybe talk to some realtors. Give yourself a minute to just think it through. If the market is generally pretty slow there, it’s not like you’re going to be competing with multiple buyers for every property you like. You have time.
In the nicest and most wanting to help way possible I would use that money on some talk counseling/therapy. Sounds like you’ve worked really hard and made lots of sacrifices already and a good therapist will help you see how awesome you are and lead you to a new perspective. I did this a few years back and nothing about my job, relationships, or $ changed but I saw and experienced life completely differently and with much more joy. Hope this helps, you got this.
Saginaw is done declining. The downtown actually has a little going on. It’s getting better.
Still be very selective about the neighborhood.
In 2008-10, I snapped up some homes in Bay City and did well w them. I wouldn’t touch Sagnasty then, but I would now, if I was still in the area.
The auto and medical jobs have stabilized and the cannabis cash has helped too.
If you decide it isn’t for you, you can always rent it out.
I wouldn’t buy without having a stable job that I can count on for 5 years minimum. Preferably 10.
If your looking to move somewhere with better opportunities why not look an hour south. Metro Detroit still has affordable housing around and the job opportunities are plenty.