When the economy crashes, it's not just individuals who suffer - it's whole communities. Just as individuals have to find ways to regroup and bounce back, so do neighborhoods and cities.
Individuals do it by minding personal budgets and sometimes even changing "personal infrastructure," such as where they live and what they buy. Communities, on the other hand, can't "move" or "find a new job." What they can do is find lots of "new jobs," once their own local economies are thriving again. Communities thrive through real estate investment -- reviving commercial districts and rehabbing housing stock. This, in turn, increases tax revenues for a healthier public sector, amplifying a healthier feedback loop between the public and private spheres.
Often times, the first domino to fall in reverse after a crash is real estate investment.
Two films hitting theaters in the hurly burly of award season are 99 Homes and The Big Short. The Big Short shows how institutional and regulatory missteps -- and worse -- helped create the financial crash of 2008, while 99 Homes shows some particularly unsavory aspects, and the personal costs, of the immediate aftermath. However, there are other stories about the aftermath of the Crash that haven't been told yet, that are still unfolding. These stories are about real estate investment making neighborhoods and economies healthy again, and sometimes, thriving in ways they never have before.
To be sure, these require new visions and ways of doing business. But that is precisely what we're seeing in terms of an "equal and opposite reaction" to many of the negative business practices that had gone on before.
There is a growing community of innovative, alternative real estate finance companies, cooperatives and institutions helping to bring real world changes to neighborhoods ranging from Boston to Newark to Sacramento, and many places beyond. These changes are tangible and positive.
An article from the Institute for Local Self-Reliance describes a now "bustling" neighborhood in Minneapolis, with "a bike shop, a cooperative brewery, and a bakery, in buildings with eye-catching exteriors of rough-hewn wood and silvery porcelain bricks. The neighborhood grocery co-op is one block up the street."
The same article notes that this area "didn't always look like this. In 2011, where these three businesses sit, there were two vacant buildings. The empty space was not uncommon along Central Avenue, a long corridor that was created to be the Main Street of the neighborhood, but that had suffered from decades of disinvestment. While a few businesses dotted the avenue, many other storefronts were neglected."
What started turning it around? A local investment cooperative "created a structure where any Minnesota resident could join the co-op for $1,000, and invest more through the purchase of different classes of nonvoting stock. The group began spreading the word to prospective members, and started looking for a building to buy."
In fact, they had enough to buy two. And then turned around to rehab the buildings and help new businesses that were originally having trouble finding space. Additional buildings were bought, more businesses came in, and suddenly, a moribund neighborhood found itself reviving.
Similarly, many peer-to-peer (P2P) real estate finance platforms were born in the aftermath of the crash, allowing both investors and local real estate entrepreneurs and developers to not only participate in, but jumpstart, neighborhood revitalization that same kind of recovery in the places they were living.
Even at the other end of the investment spectrum, the stories and practices are changing: Prudential Investment Management published a paper earlier this year saying urban expansion will provide "important new opportunities for institutional investors." Their report was cited as part of a larger article on the Institutional Investor website, providing an overview of Brooklyn, which is experiencing a particularly hot real estate revival into the foreseeable future. The same article also made note of an estimate from the McKinsey Global Institute saying, "Urban infrastructure... will need at least $50 trillion of investment over the next 15 years."
The emphasis is ours, but that investment will have to come from all over, and be equally available to developing neighborhoods, like the first ones that real estate crowdfunding companies, such as Patch of Land, helped revive in Chicago, the currently hot ones in Brooklyn, and all other neighborhoods in between.
Perhaps these revivals and rebirths can provide new stories to tell. We're not sure who the villains would be -- we're just looking for lots of heroes.