Embedded Wealth And The New Suburb

The New York Times has another great article in its seemingly unplanned series on how wealth and the housing market in NYC are creating new types of suburbs.

“At 150 Edgars Ave, Changing The Idea Of Home”, tracks the ownership of a house in Hastings-On-Hudson, NY since its construction in 1925. The house was built for $10,000 by the original owner (about $111,000 in current inflation-adjusted dollars). It sold for $890,000 in 2002 to the current owner. The article describes how the astronomical increase in home prices has effected how families view their homes and the changes this imposes on towns.

The outrageous costs of NYC real estate has created more homogeneous communities. Even in suburbs like Hastings, where there was once a significant blue-collar and ethnic population, that feeling of diversity has become more “a feeling than a reality.” With average home prices topping $750,000, families will be restricted to the Wall Street types that have been the two most recent owners of this property, rather than the school teachers, small business owner and New York City municipal employee that had owned the home in prior years.

The article uses the term “embedded wealth” to describe what has become a huge investment, not just a place to roll out the futon, hang a couple of pictures and put on the tea kettle. The massive amount of money invested in these homes has led to a surge in home improvement work. Why? According to the article: “many home owners, the Hirschfelds among them, insist that quite apart from status and comfort, what was once mainly a dwelling in a compatible suburb now assumes even greater personal importance in an age when families increasingly focus on themselves.”

That is the concern that I have always had about suburbs, probably at the core of my back-and-forth blogging with NYCO and Balogh on neighborhoods last month: they are a place for rich folks to cocoon and forget about the rest of us. As Balogh pointed out as well, the trend of building all of your entertainment and socializing into your own home has a chilling effect on public services and the livability of communities.

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