Tuesday, September 25, 2012

Housing after the Collapse: Country vs. Urban

Thanks so much for your wonderful blog.  I've seen a lot written about the pros / cons of debt going into an economic collapse.  You're recent blog post about contracting brought up this topic.
We're in the opposite position however,  I'd like your thoughts on the dangers of being debt free during/after a collapse because I see risks with this decision as well.  We own two houses with no debt or mortgage.  One is a large nice home near downtown Houston in a walled gated community, not in the suburbs; we use this house part-time.  The other is a small place with 15 acres just outside the city which is our full time home.
We think the US is headed for a dollar collapse.  We are considering selling the house in the city because much of our savings is in this home.  If we sold now, we could invest this money in precious metals.  However, we'd take a significant loss on the home.  So do we hold or sell?
Reasons to sell:
 If we hold the home, we're concerned about being able to pay property tax and insurance during a collapse
 We're concerned about rioting and crime in the city during/after a collapse, further driving down the value of this property
 Finding buyers may become very difficult after the collapse
Reasons to keep the property
 We could use it as a rental property for income.  (However, I'm concerned about the downward pressure on rents during a collapse b/c people will be so focused on having enough money to pay for food.)
 If people migrate from the suburbs to the city b/c transportation costs skyrocket, it might be a good investment
 We really like this house and enjoy the property
 Your thoughts on this would be much appreciated.  If you post on your blog, please keep me anonymous.

Hi K, I think that right now isn’t the best time to sell given the overall low prices. I also believe you can profit nicely when renting it because of the reasons I’ll explain.

Regarding your two properties, they represent opposing views in terms of what works or not in a post-collapse society. Fiction survival literature would have you believe that a house in a rural setting is the best option. Stay as far from rioting cities as you can, avoid criminals by living far away. This is repeated over and over until people take it for a fact, but ironically the truth is that living in such conditions is possible only in very safe, functioning societies. The further away and more isolated you are, the more vulnerable you are. With higher gas prices commuting back and forth or driving into town puts a dent into your finances. As the system and infrastructure starts failing, roads, reliable power and proper medical care becomes unreliable the further away you are. 

After a decade of studying different crisis and disaster scenarios in different countries all over the world I believe that the idea of retreating to rural areas as a way of rationally preparing for hard times has no foundation on empirical facts but is instead rooted on American survival fantasy concepts. In what seems to be a vicious circle, people keep regurgitating what others have said and take it for a fact rather than checking how things actually turn out when serious social crisis have occurred. You only have to study South Africa’s recent history, most third world countries or the post communism western union nations to understand that what is taken as a fact in the American survival culture isn’t quite so. Keeping it short, if you live well today in an isolated homestead without 24hs security, its precisely because society has not collapsed. You wont be able to do so afterwards. 

Because of this, a house in a walled gated community is highly desirable and it will be even more so after a serious crisis or collapse. In most Latin American countries, gated communities such as those are the only way in which you can live with a degree of peace of mind while you sleep. Your two properties are basically giving you those two options.
As crime gets worse in USA, demand for such properties will go up. With a gated community you have options such as all neighbors paying more so as to have added security. 

I wouldn’t sell it. If you like the other place more then I´d just rent it so as to make some money, always good to have another source of income, and at the same time you keep it as a plan B in case things go South Africa or Latinamerica way and you have to move into the gated community yourself. 



Greek Caste System said...

Experience from Greece:

1)During the Greek civil war (1944-1949) most of the Greek Army was engaged in fights against Nazi Germans in Europe. Few troops remained in the free parts of Greece. Then communist rebels tried to seize the power. The few troops were allocated in the two major cities of Greece, where the government buildings were. Countryside was at the mercy of rebels, looters etc. So "urban" gets a point here and Ferfal is right.

2)During the 2008 riots in Athens, (anarchists with illegal immigrants started to loot and destroy everything, police just watched) the centre of Athens was burnt. Looters asked for ransom from shop owners in order not to throw molotov bombs in their shops. Despite Greece generally still remains a very safe place concerning hard crime, the centre of Athens is a very dangerous place even in daylight, due to many illegal immigrants residing there. So "countryside" or "suburban" get this point now.

3) If you live in a country like Greece where tourism is a major source of income, the government even in cases of ecomonic collapse will try to maintain a minimun level of safety, neatness etc. in tourist areas. When I first visited the Greek island of Santorini in 2010 (one of the world top tourist destinations) it was almost as visiting another country! Very clean, extermely safe, buses running on-time etc. Good place to go in case SHTF.

3) Greece cannot inflate its currency like Argentina, because we have the Euro. They also not start needed reforms. To compensate (because they want to keep intact the bloated public sector), Greek corrupt government raised greatly taxes in real estate. May your govermnent like to follow this path instead of the inflatory one. So build/buy the smallest house that fits your needs.

Anonymous said...

To give "American survival culture" the benefit of the doubt, I would suggest that the initial strategies developed by the "fathers" of the movement were conceived at a time when the Cold War/nuclear confrontation played a significant role in their thinking. Hence, getting out of the cities, that is nuclear target areas, made sense.

This points out how survival strategies have to be developed relative to specific threats/scenarios. It's not a "one size fits all" problem.

Sidvic said...

I would also add that you should consider the tax situation carefully on rental/property tax. I am not intimately familiar with Texas, but i can speak to US federal tax law. If you only have one rental, you are probably safe to rent it on cash basis. If you go through a management company they report rental income to IRS directly, so I would manage it myself. This can be a big hit come April and make the difference between a property generating a smallish income and not. As the feds begin to tighten belt and lower subsidies for states expect large property tax increases (already here to some extent). I am not as skeptical of rural living as Ferfal, he makes highly valid pts, but it is highly dependent upon situation.
If you have good neighbors out in the boondocks it can mean all the difference. South Africa and Rhodesia were special circumstances, with white farmers isolated in a sea of black. They often got slaughtered. In Romania when things got bad- country living was much preferred. At least you could grow some food and heat with wood. If you really believe we are headed for collapse, and i mean interruption of food-production -shit -your-pants apocalyptic collapse, then sell your big house and take the hit, buy ½ gold as below-board as you can and ½ large cap stock and enjoy the fresh air.

eternalgreenknight said...

After reading this blog for years, and reading the book, I've still decided that I'm better in a more rural setting, only because of my location in a southern state near a moderate sized city. After I got back from Iraq, my ex picked out a house in an unsafe neighborhood and ditched me (she had partied the whole time I was deployed). We had a really nice house in a small town in NC we've been trying to sell or rent for over 3 years now (it's not moving and the payments are killing me). The little suburban house I've been in the last few years in a different state is in a rough neighborhood. It was ok for just me, but I've remarried, and it's no place to have a family- break-ins, shootings, drugs, prostitution, etc... Renting it might be possible, but the place would need constant upkeep (not making me anything), so I'll try to sell. Crime is bad in the city/suburbs and getting worse the longer Obama is in power, and the few "gated" communities here are not affordable, a joke for what you get, and filled with clueless people and strict gun laws which prevent practice (and poorly made for the half-mil price tag- I have a friend who lives in one such community and a neighbor's house burned down because of wiring issues). I found a nice cheap rural brick home built in the 80s on the side of a mountain with a long approach where we can shoot, raise chickens for eggs (as my wife has done her whole life), with decent neighbors in shouting range- not too far from emergency responder services, etc. I think Ferfal's guidance is good in almost all situations, but if you can't find an affordable quality gated community, and the other option is a crime infested slum area, I'd suggest looking for a small affordable town with low crime not too far from work. My commute will be 45 minutes (a bit far, but I just got an old cheap car with twice the gas mileage of my newer gas guzzler- and it's not a big flashy target if things get much worse).

Don Williams said...

1) American survivalists' bias in favor of rural retreats is not all fantasy --some of it arose because of our history. During the Eisenhower Administration of the 1950s it became clear that the Soviets had the ability to nuke every major US city into a pile of ashes. Urban dwellers had the crap scared out of them when we
came close to nuclear war during the Cuban Missile Crisis of 1962.

The US government's response -- encouraging corporations to decentralize production and
creation of the Interstate highway system -- encouraged outward emigration to the suburbs and even rural exurbs. The US government's chosen pattern for
US industry and US transportation was the same as the Internet pattern chosen for our national communication system.

The government would open an access ramp to an Interstate about 15 miles out from civilization, a defense contractor planted a new factory/office on the surrounding
farmland, people flocked out for the new jobs/cheap land/houses and merchants/real estate developers happily worked to provide goods and services to the employees of the defense contractor. On the USA East Coast, those suburbs' expanded toward the northwest -- because prevailing winds are from that direction and government planners
wanted you to be upwind of the urban core so that the fallout would blow away from you.
(Although they didn't get around to explaining that to you, heh heh.)

Don Williams said...

2) However, US Cold War emigration from the central cities reduced the incomes and resources of the urban core and the resulting poverty/crime resulted in massive
riots and arson in the 1960s-- which amplified the emigration. See
http://en.wikipedia.org/wiki/Watts_Riots and

3) As I noted in my review of Ferfal's books several years ago, the modern day survivalist movement in the USA was greatly influenced by the writings of Mel Tappan circa 1979. Mel was strongly influenced by the urban riots and thought US urban cores would be nonviable in a collapse he saw coming from his work as a banker. (He had been an English Lit major at Stanford and was also influenced by Yeats' poem "The Second Coming".)

But Mel was even more harshly critical of rural isolated retreats than Ferfal -- he recounts how a hippie couple he knew in northern California had been killed by a motorcycle gang. He noted that
a sniper could pick you off anytime you went outside your house to work and argued that you wanted to move into a small TOWN of 5000 people with surrounding farmland.

Said town having the specialists (doctors, mechanics,etc) needed to survive and capable of fielding a militia that could exterminate bandit gangs.

Don Williams said...

4) However, the "motorcycle gang" paradigm is also a very old pattern in US history.
Our pioneer settlers moved into hostile Indian territory with a pattern of individual farms around a fort --instead of the walled town used in the European Middle Ages.
That was because mounted scouts constantly patrolled the surrounding countryside
and warned settlers to flee to the fort --the horseman being much faster than the invading Indian war party travelling on foot. A band of mounted men could then assemble and chase down the hostile force. Entire Indian tribes were exterminated by raiding their villages in the late fall and burning their grain warehouses so that the tribe --including women, elderly and children -- would starve to death over the winter.

In the American South, slaves rarely fled because they would be chased down by similar mounted bands using tracking dogs -- a macabre version of a fox hunt.
During the American Revolution mounted guerrilla bands kept the British from forming a puppet government in the South after the southern Continental Army
was destroyed at Charleston, SC. The US Army's military history notes that Great Britain was winning the Revolutionary War until a large band of horseman suddenly surrounded Cornwallis' left wing at King's Mountain and destroyed it.

Regardless of where you chose to live, don't become the fox in a foxhunt.

Raymond Chow said...

We learn what to expect post economic collapse from stories relayed to us from those who have experienced it and in most situation they're same in this modern times.

For ferfal in modern day Argentina he 's experience says you'd be better off in the city because it's more secure post collapse. The same is true for the gentleman above in WWII era Greece.

But for us Americans...our experience is the depression era when 70% of the US working class were farmers and the 30% in the city starved. What I 'm saying is our experience is different from other countries. Don't criticize the American thinking on survival saying we wrong because your experience says different.

You have to understand that our thinking is to produce your own food during collapse and to create neighborhood alliances for security. We are also the most armed nation in the world and believe we are capable of depending ourselves against hordes of zombies if we have to.

Maldek said...

Hi K,

you are in a very specific and interesting position.

Fiction meets reality - who will win?

Sell the farm, live in the city, get a job that pays real money as long as they still exist. Buy gold and silver each month.

If you can NOT find a job, rent the gated house, sell the farm, live in the city and try whatever you can to make money. Buy gold and silver each month.

If you expect trouble, the bad guys will find you. The worst think that can happen to you is that they will find you alone, in the middle of nowhere, on your farm as a sitting duck. Worst thing you can do.

Dont buy the bullshit those TEOTWAWKI or SHTF maniacs want to sell you - there is no "day X" it is a slow but steady decline and it has been going on for years and will not go better any time soon. Look at argentina or greece or spain - thats your future. What works there today will work for you tomorrow.

Anonymous said...

Thanks for the feedback.

The farm is just outside the city. It is a 15 acre tract surrounded by homes on 5 acre tracts in an acreage subdivision. So it is not out in the middle of nowhere, but does not have the benefit of the gated community in the city. It is a working farm and produces enough food to provide for our family. The families in this neighborhood are well armed. Can we defend this neighborhood? I don't know.

We are going to hold onto the city house. The house is large, so we've decided to take on a tenant for 2 of the bedrooms. That will help with the monthly expenses, but we'll still have access to the home on a shared basis versus all out rental arrangement.

During the Argentina collapse, did people with large homes rent out rooms? This is a new concept to us, but the more we consider the more appealing it is... provided we find the right tenant.


Don Williams said...

1) It can be instructive to look at Fort Hood -- the huge US Army reservation north of Austin near Killeen -- from overhead with Google Maps (Satellite view). You will see hundreds of army tanks and armored vehicles parked there. Given the importance of Houston's
oil refineries, I suspect that any social unrest would be extremely shortlived.

Especially since Houston is away from the US East Coast high density areas and has low density areas several hundred miles to the west.

2) However, there are several things to examine in an urban area: a) Do you have several excape routes (that will allow you to carry whatever you need to reach your rural home)?
In an extreme case, A canoe on a river or a mountain bike on a power line route or railroad may let you get out of the city if the government imposes a quarantine (e.g, for avian flu.)
b) Are you near any poor areas that could explode in high crime if people got desperate?
c) How vulnerable is your neighborhood to arson --including fires starting several blocks
d) In the worse case --if something disrupts the city's water supply -- do you have access to a stream or river whose water would be good enough if filtered/bleached?
If not You can buy 50 gallon poly barrels cheaply, fill them up and have two or three months supply in the basement.
e) Are there any medical facilities (hospitals,etc.) ,police stations, and fire stations
f) Wealthy areas tend to get more protection in a city than poor neighborhoods -- do you have wealthy, influential neighbors that the city government will protect?

3) Growing food is a highly risky business even if you are an expert farmer with modern machinery, fuel, and fertilizer. With only hand labor, you tend to burn up more calories than you grow and slowly starve to death. Suggest you buy a few hundred pounds of grain , 10 jugs of olive oil and a hundred pounds of salt /sugar to store at your rural ranch and urban home.

Extremely cheap insurance. although wheat and corn have almost doubled from years ago. Rural feed stores often have 50 lb bags ($8?) -- make sure you tell them you want the edible kind and buy a grain mill.

However, you need fuel to cook/make bread and woodsmoke is a dinner gong-- propane tanks with burner attachment and blackout curtains would help you keep a low profile for a month or so --hopefully time enough for things to settle out.

4) Houston is a coastal city which is a big advantage. Take sailing lessons -- a small sailboat
can carry tons of food /water and would let you reach the US East Coast, Puerto Rico, or Mexico
without the danger of land travel. This would obviously be an extreme case backup plan.

Sailing is highly dangerous if you don't know what you are doing -- look at the American Sailing
Association's 7 levels and progression of instruction/experience. You would need money (gold) to establish yourself in a new location if you did bail out at some point.

Since Houston gets hit with hurricanes, you probably don't want to buy a boat to keep permanently moored in a harbor but a smaller one that can be carried on a trailer could be stored on land (or maybe at your ranch farther inland if a hurricane threatened.) Plus there's always piracy.

5) It is best to not expend a lot of resources on low-probability catastrophe scenarios but
to have confidence that you know how to handle them if they arise. That way you can forget them and focus on more immediate problems. Americans today are far more
likely to die from inadequate medical care because they haven't built up enough retirement savings -- or in a car crash because they don't use their seat belts -- than
they are from being shot by bandits.

Anonymous said...

Hi K!

When SHTF i wouldnt trust anyone outside my family enough to live in my house.

The few bugs you will get for one room or another aint worth the risk of loosing your inventory, stock or a home invasion with friendly support of your tenant.
In my humble opinion.


Tod said...

Don Williams had a good thought there. Most of those $300K+ houses inside of 610 are in a flood zone. How did your house fair during Allison?

Anonymous said...

Tod, our house was built after Allison. Our lot was not flooded. But you never know with Houston. There's always new areas that are flooding.


Tod said...


This might help a little: