Wednesday, October 14, 2015

Risk Analysis Example -- Housing

The mayor of the city I currently call home has just announced a housing emergency. Both house prices and rents have been increasing at one of the fastest rates in the country. Sellers in hot neighborhoods are seeing bidding wars and prices end up $100,000 over asking. Rents have been jumping and people are getting 30-day notice evictions when they can't afford the increases. We have an extremely low vacancy rate across the city. Naturally, in this environment the homeless population is also increasing, as the city's most vulnerable are forced out of housing entirely. There are new rental units being built, but they are frequently at the high end -- upscale downtown high rises and the like that many can't afford.

This is a huge risk for any city and it serves as an interesting example of risk calculation for one of the most important areas in everyone's life... where they will lay their heads. We're going to look at it from the perspective of several hypothetical residents. Remember, my goal isn't to argue for or against any one path (renting, home ownership) but simply to look at how different people would analyse their risk. In addition, examining the calculations that go into dealing with this situation does not mean I support or approve of it. Politically, I'm very left-leaning, and am generally for rent controls, affordable housing options, and a living wage for all people.
With four of these, you can trade up to a hotel.

Bob and his husband Bill rent. Bob does grant writing and marketing for a local non-profit and Bill's a transgender artist who shows and teaches around the city and has a devoted following up some of the city's affluent liberals. That means moderate incomes but with some instability. They've already decided to move once when their rent went up a shocking $500 dollars. The choices were to move further outside of town and buy a second car or get a smaller not-as-nice place in town. They chose the latter, but after another year their rent is going up again. Of course every time you move it costs money too.

Sue and Bill and their two kids own their house. They live just outside the city in a suburb and both Sue and Bill have professional jobs with longer commutes: Bill downtown and Sue out to the outlying burbs. The kids are doing ok at their elementary, but the local middle and high schools are large and not that great and they're worried about their kids' education. Like most dual income families, their mortgage is a huge chunk of their monthly outlay, but they are doing well. They wouldn't mind a house on a quieter street, but their neighborhood is safe. They enjoy doing things in the city occasionally, but are mostly focused on volunteering at school, keeping their house up, visiting their elderly parents, and having other families over for BBQs. One of their friends is a realtor and has been telling them how much more they could get for their house in this hot market.

Sam and his cat are barely hanging in there. An injury left him unable to work for over a year and he didn't have insurance at the time. It was a huge setback. He's in construction, but can't work full hours and is trying to find some training in a new field where he won't have to be so hard on his body. He's currently got an efficiency, but he's not fooling himself. He's one disaster away from couch surfing or being on the street. Fortunately, the city subsidizes his rent and he's in a program to pay for tech school, but his neighbor just told him that when they went to resign the lease the rent increased by another $50.

So what might each family's personal risk analysis look like?

Bob and Bill are rapidly getting priced out of their own city. Without family nearby they might move, but their analysis is colored by the fact that they have nontraditional lifestyles. They aren't going to just be able to uproot to small-town USA. They are well aware that certain areas of the country are outright dangerous for them. Here are some possibilities:

  • They could look at the income side of the equation. Bob might switch to the private sector to generate more income in the near term. Bill might start teaching more. This sounds depressing but the goal would be to aggressively save up enough for a down payment on a small house outside of the city center. The location isn't optimal, but it would stabilize their situation and keep them in the area. Associated magic would be for increased income and opportunities.
  • A second option is to decide to embrace the uncertainty. After all, they have no kids and both can work remotely. Maybe they sell everything and travel through Europe for a year. Give up privacy and join an intentional community. Use Bill's connections to get a series of house sitting gigs in some of the city's best neighborhoods. Maybe they buy a van and go on a road trip to visit a series of small towns that are also noted artist communities to find a new place to settle. They use the experience to pitch a book called Trans-continental: Tolerance and Creativity in Small Town America. Associated magic could be map magic, identifying where to go or where to look for house sitting opportunities. Not to mention the standard moving and traveling spells for safety and protection.

Because it's fabulous, that's why!
Which option they choose depends on a number of factors: their ages and general health, Bob's fondness for and loyalty to his nonprofit gig, and their general risk tolerance. I recommend they start with some joint divination and some honest discussion.

Sue and Bill have three years until their oldest will get thrown into the maelstrom that is the local middle school. They are leery. But private school tuition would break them. And what about the brass ring? That their house is suddenly so much more valuable than they ever expected? They have deep ties to Portland. They grew up here, have elderly relatives, and are generally entrenched in their local community. Moving isn't just a zip code change. It would uproot them at a time when what they most crave is stability. Here are their options:

  • Shelter in place. Making a cool $150,000 profit on your house sounds great... until you realize that you still need a place to live and all the other houses are also now $150,000 more. Moving will make one adult's commute untenable. Renting introduces some instability that they don't want if it impacts their kids. So one option is to do nothing: acknowledge that the value of their house is primarily in memories and security and just be glad they are in a position to avoid the chaos of moving or increases in their monthly payment. They could focus instead on school options. Maybe they look at alternate schools like charter schools. Maybe the local middle school will work if their kids get into their honors program. Maybe they mitigate the school environment with outside activities that are more nurturing. I'd be thinking about spells to help unearth the correct educational opportunities and spells to get their kids into the school of their choice.
  • Adjust slightly. Moving is always a change, but how big of a change depends on where you move. Maybe this family does a little research on schools in the outlying suburb-cities of Portland. They discover several places where the schools are better and the housing is the same or less than where they are at now. Of course that makes for a really long commute for Bill, though a slightly better on for Sue. One benefit to living here is that the general economy for professionals is going well. So maybe Bill looks for a new job in the outlying suburbs on the same side of town as his wife. When he finds it, they put the house up and plow their equity into a new place further outside the city, but still within driving distance to their extended families. The kids end up with better school options through high school. There's a big body of spells for getting the best offer on a house, but I'd be more focused on spells to find an affordable new one. Not to mention spells to find a new job in a specific location.

Funny, it looked bigger in the listing...
Having an appreciated and stable asset to live in gives our couple more options. But it also limits their options in certain specific ways. They aren't going to sell their house and retire to a small town while they have kids and parents to take care of. They're not going to sell everything and hit the road. Whatever they do, they know that they are here for the long run, which means they also have to consider how much worse the situation could get. Again, divination can help them make choices, but they also have to decide as a family (even an extended family) what to do.

Sam is between a rock and a hard place isn't he? Let's be honest, its easier to do risk mitigation when you have more options and resources. That's why so much financial advice is geared to people who could be considered middle class. But it would be unfair to discuss a housing risk situation without discussing those most at risk. Right now, Sam is in a race and the stakes are high. Will he finish his training and be able to get a new job before his rent goes up and drives him into the street? Sam needs to do some hard thinking and planning. Most of all, he needs to be proactive.

I know from personal experience that when things are really dire, there's a strong urge not to think about it. Not because you're a slacker (which is the perception that some people might have) but because the situation is so stressful and chronic stress is so harmful, that every fiber of your being wants to avoid dealing with it. However, not dealing with things tends to make them worse and sets up a loop of reactive functioning. He's had warning that he could be facing increased rent, so he should everything he can now to mitigate that risk. That also means lots of divination and spell work, but in addition he must take concrete action now.

Here are some ideas he can try:

  • Of all our examples, Sam is the best candidate to move someplace else. Why live somewhere expensive when you could live somewhere cheaper? The question is how and when. It makes sense to finish his technical training, which will make him more employable. That gives him a timeline to work with. But his lease is also on a timeline. Before he gets too stressed, he needs to do some digging and figure out what his options are. For example, since he's involved in some city-based programs he can start there. Maybe the city will negotiate on his behalf to keep his rent stable until his training is done. If his landlord is local, he can also charm the heck out of him or her to keep the rent the same.
  • Are there additional resources he can access to meet his rent if it goes up? He needs to examine this carefully and he needs to start now, before the rent goes up. Perhaps his subsidy could be increased. Programs that are supposed to help people are notoriously complex and bureaucratic. He may not know that there's a option to help him unless he asks persistently and enchants to cut through the red tape. Alternately, maybe he can find a way of increasing his income in the short term. Despite his injury, his constructions skills are valuable. I'd never recommend anyone break the law (look, I said that in writing) but under the table work is perfect for his situation. He can help folks with their small repair tasks for cash and use sigils to draw work opportunities to him.
  • Sam also needs to evaluate his technical training. First, he needs to be sure that this training will lead to work. He's not doing this as a hobby after all. And there are plenty of courses, certifications, etc. that are unlikely to pan out in terms of increased chances for employment. Of course, Sam is not paying, but there is an opportunity cost and that cost is especially high for someone who's dealing with an injury that may limit his energy. Unfortunately, there are plenty of unscrupulous organizations who are happy to fleece the government and offer false hope to struggling people. Sam needs to do his homework if he hasn't already. This can mean divination, but also hard objective research.

    If the program is legitimate, Sam still needs to understand how his training will get him a job. Does he need better clothing? The best way to do that on the cheap is to scope out consignment shops and Goodwill... but that takes time, so he should start now. Will it help him to have contacts in the field? (Answer: yes, always yes.) If so, he should also start making those now. That will help him get a position faster when the time comes. Networking magic is useful for just about anyone in any field.
  • Sam also needs to mitigate his housing risk extremely carefully. If the worst happens and he can't afford his rent what then? Can he leverage his network to get into some kind of room rent or sharing situation? Keeping in mind that this is short term and the critical goal is to keep him out of a shelter or off the street (and his cat out of the pound). It's better to approach someone and say "if worst comes to worst, do you think I could rent your spare room (garage, shed, couch) for a few months while I finish my course?" than "hi, I just lost my apartment, can I crash here." I don't recommend enchanting your friends to let them stay with you, but if they agree to let you stay, you can enchant for invisibility, so you don't get under their skin. Also, he needs to figure out how much stuff he has and what he wants to store.

    In the past, we've had friends stay with us for various lengths of time as well as storing stuff in our garage while they were moving or between housing. 
Not an Olympic sport... yet.

Note that I can't talk about the risk analysis that goes into dealing with homelessness, because I don't have enough experience to speak on the subject. While my personal situation has been like Sam's, it's never been worse. And while my spouse has experience with being homeless, it's been too long for the information to be useful (similar to when your grandfather says useless stuff like "when I graduated from high school I got a job at the mill and worked there until I retired with my pension... why don't you do that?"). I will say that according to wilderness survivalists, in bad weather conditions shelter is your number one priority -- more important than water or food. The US is currently having some bad economic weather conditions and so I say the same thing. Having a place to live, however rough, is critical.



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