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Homeowner Guides The 5 Most Significant Challenges Facing American Neighborhoods

In the next few decades, the U.S. will see major demographic changes – and challenges. As the population changes, neighborhoods will experience new and challenging situations. In addition, as the pace of life speeds up and technology evolves, people are connecting with each other less, resulting in communities that may seem frayed or fragmented. As we consider these factors, a troubling picture of the state of American neighborhoods emerges. At Associated Asset Management (AAM), we wanted to explore those trends – because we know there is light at the end of the tunnel, and that working together we can create a better America, one neighborhood at a time. Our goal was to identify challenges so that we could begin to think about creative ways to address the situations American communities face. To do that, we completed a comprehensive research study to investigate trends in American neighborhoods, particularly in the communities we serve. Our study revealed five significant challenges facing American neighborhoods today: 1. 2. 3. 4. 5.

The American dream seems out of reach Our communities are more diverse than ever before Americans are feeling instability People are distracted and disconnected Neighborhoods aren’t working in America...but we want them to

© Copyright 2012 by Associated Asset Management. All Rights Reserved. | www.associatedasset.com


Homeowner Guides About Our Survey Associated Asset Management commissioned a survey conducted by two third-party research firms with more than 40 years of experience between them. The survey had a two-part focus: 1) national trends and statistics; and 2) a survey of nearly 600 homeowners living in HOA communities, 80 percent of whom reside in Arizona. Of the 600 survey respondents, more than half had lived in the neighborhood for one to five years. Less than a quarter had lived in their neighborhood for less than a year, while fewer than 10 percent had lived in their neighborhood for more than 10 years.

Challenge #1: The American Dream Seems Out of Reach In 1931, historian and businessman James Truslow Adams coined the term, “the American dream,” which he defined as “that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.” 1 Truslow, however, didn’t invent the idea of the American dream; he merely gave name to a sentiment that has been with America since its founding, and that is still very much alive today. The American dream takes numerous forms, but for many, it involves home ownership. In the 1950s, achieving the American dream often meant a life of comfort, prosperity, and home ownership in one of our country’s many suburbs. Today, not much has changed. Home ownership and a life in the suburbs are still representative of the American dream for many people – just as they were in the mid-century boom years. As recently as 2011, a New York Times and CBS News poll found that nearly 90 percent of respondents said that home ownership is an important part of the American dream. While the American dream of owning a home in the suburbs is alive and well, for many that dream sometimes seems more out of reach than ever. For some, foreclosures and underwater mortgages have turned the American dream into a nightmare. Nearly 25 percent of respondents to the New York Times/CBS survey said their home was now worth less than what they owed on their mortgage. Today, the American dream can seem far away.

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“Life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.” – James Truslow Adams

What HOA Residents Think More than 70 percent of HOA residents surveyed believe that the American dream includes the ability to buy a home and provide a better life for themselves and their families.

Columbia University, James Truslow Adams papers, 1918-1949. Available at http://www.columbia.edu/cu/lweb/archival/collections/ldpd_4078384/

© Copyright 2012 by Associated Asset Management. All Rights Reserved. | www.associatedasset.com

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Homeowner Guides The American Dream Is In Jeopardy People still believe in the American dream, yet they’re finding it increasingly difficult to turn their dreams into reality. Arizona homeowners report that they chose their current neighborhood because it felt safe and met their financial requirements – in other words, they were looking for the safety and security of the American dream. But the current challenges that America faces make those goals harder and harder for people to achieve or maintain.

Challenge #2: Our Communities Are More Diverse Than Ever Before The suburbs have often gotten a bad rap, but the old stereotypes about the suburbs – such as that they’re nothing more than cookie-cutter bedroom communities for cities – simply aren’t accurate. In fact, in 2000, roughly half the U.S. population lived in the suburbs.2 Suburbs aren’t homogenous or sleepy; they’re a vital, diverse part of our nation’s fabric.

Percentage of People Who Say They Aren’t Living the American Dream • • • • •

53% of African-Americans 36% of Hispanics 32% of Caucasians 52% of single parents 27% of married parents

Source: National League of Cities (NLC), 2011

Here are some facts to keep in mind about the suburbs: • • • •

There are now more jobs in the suburbs than in cities Nationwide, a million more suburbanites are living below the poverty line than city dwellers The housing crisis is devastating suburban governments and suburban homeowners Suburbanites and urbanites are actually very similar

Today, suburbs and cities share many of the same opportunities – and face many of the same challenges.

The Demographics of the U.S. Are Changing The demographics of the U.S. are changing, and we are well on our way to becoming a majority minority country. By 2050, Caucasian Americans are forecast to make up less than 50 percent of the population.3 Most children under the age of one are now minorities, according to the U.S. Census Bureau.4 Several states, including Texas, California, Hawaii, and New Mexico, are now majority minority. Minorities make up an ever-greater portion of the U.S. population. But while their numbers are growing, minorities often face challenges when it comes to home ownership. During the recent economic boom and bust, minority home buyers were much more likely than Caucasians to use high-cost loans. And as housing credit has tightened, minority borrowing has disproportionately declined, with Hispanics and Latinos seeing the largest drop-off. Nonetheless, statistics suggest that Hispanics will make up half of home buyers between now and 2020. CNN, “U.S. population now 300 million and growing,” 17 Oct 2006. Available at http://articles.cnn.com/2006-10-17/us/300.million.over_1_total-population-households-census-bureau?_s=PM:US 3 Joel Kotkin, “The Changing Demographics of America,” Smithsonian Magazine, July-August 2010. Available at http://www.smithsonianmag.com/ specialsections/40th-anniversary/The-Changing-Demographics-of-America.html 4 U.S. Bureau of the Census, “Most Children Younger Than Age 1 are Minorities,” 17 May 2012. Available at http://www.census.gov/newsroom/releases/archives/population/cb12-90.html 2

© Copyright 2012 by Associated Asset Management. All Rights Reserved. | www.associatedasset.com

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White Paper

Even while minority populations are increasing, overall U.S. population growth is flattening. Even previously booming cities in the Sun Belt, like Phoenix and Dallas, showed declines in growth. Phoenix dropped from 34.3 percent growth one decade to 9.4 percent the next. The nation as a whole grew only 9.7 percent, down from 13.2 percent in the 1990s.

A New Portrait of the American Family As U.S. demographics shift, American families are also changing. The nuclear family is no longer the norm, and the marriage rate is at a record low. At the same time, an increasing number of people are living in one-person households. It’s hard to say what the “typical” American household looks like today. The new normal is that there is no “normal.” Call-out: American Demographic Changes and the “New Normal” • • • • • • • • •

Multicultural families Unwed parents Foster families Divorced families Diverse unions Adoption without marriage Wedding after baby Single parents Multi-generational homes

A changing America means that we can often find a great deal of diversity in a relatively small geographic area. In a large city, for example, the price of a home in one area can be dramatically different from the exact same home just a few miles away. And though two homes may look similar, the individuals living in those homes may be radically different. Often, there are major differences in income, age, ethnicities, and the number of persons occupying the home, as well as significant differences in their lifestyles and spending patterns.

HOA Communities Are Different There is one area of the U.S. where you’ll still find more traditional households: HOA communities. Most of the respondents to our survey were suburbanites; most (more than 60 percent) were between the ages of 35 and 64; and two-thirds lived with a spouse. HOA communities seem to represent an island of stability in a changing America.

© Copyright 2012 by Associated Asset Management. All Rights Reserved. | www.associatedasset.com

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Demographics of HOA Survey Respondents

Gender

Male: 60.50% Femaile: 39.5%

Age: Less than 24 25-34 35-44 45-54 55-64 65+ Rather Not Say

1.00% 12.30% 18.20% 18.40% 26.00% 19.80% 4.20%

Ethnicity: White / Caucasian Black / African American Hispanic / Latino / Spanish-American / Chicano Asian / Pacific Islander American Indian / Native American Other Rather Not Say

77.00% 3.20% 6.90% 4.20% 0.30% 1.00% 7.30%

Challenge #3: Americans Are Feeling Instability Americans are worried about the future. A persistent housing slump and lingering unemployment have contributed to a general feeling of instability. Across the country, Americans’ biggest concerns include jobs, unemployment, the economy, and debt. In Arizona, homeowners have concerns similar to those of people around the nation: the economy, family, and finances.

CNN, “U.S. population now 300 million and growing,” 17 Oct 2006. Available at http://articles.cnn.com/2006-10-17/us/300.million.over_1_total-population-households-census-bureau?_s=PM:US 3 Joel Kotkin, “The Changing Demographics of America,” Smithsonian Magazine, July-August 2010. Available at http://www.smithsonianmag.com/ specialsections/40th-anniversary/The-Changing-Demographics-of-America.html 2

© Copyright 2012 by Associated Asset Management. All Rights Reserved. | www.associatedasset.com

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Homeowner Guides

People Want Neighborhoods That Create Stability Arizona homeowners tend to choose their neighborhoods to address some of those concerns. Many selected their current neighborhood because it was safe and met their financial requirements. Yet current economic challenges put those neighborhoods at risk. Unemployment remains high: the overall unemployment rate in the U.S. in September 2012 was 7.8 percent.5 Arizona’s unemployment has been higher than the overall nation’s, and was at 8.2 percent in September 2012.6 Continuing rates of high unemployment puts stress on individuals, families, and neighborhoods.

Americans’ Biggest Concerns • • • •

Jobs Unemployment The economy Debt

Foreclosures also remain a problem – in August 2012, there were 57,000 foreclosures in the U.S.7 Vacant properties can become eyesores and drag down the value of surrounding properties. Even worse, high foreclosure rates can contribute to rising crime rates. And that crime doesn’t just affect the victims – entire neighborhoods can be damaged by ongoing high crime. That’s why people are, now more than ever, looking for safe, stable neighborhoods where they can live comfortable lives. But those neighborhoods are increasingly hard to find.

Challenge #4: People Are Distracted and Disconnected Recent technological innovations have changed our lives – in many cases for the better. But sometimes, it seems that near-constant technology use has further isolated people and contributed to a society that is more fragmented than ever. Long commutes, the mobile office (which means we never really leave work at work) and a transient lifestyle, with more Americans renting their homes rather than buying, have further contributed to a general sense of being distracted and disconnected.

Technology Can’t Replace Face-to-Face Contact The fact is, while people love technology, they don’t want it to replace real human contact. In many ways, people are craving a simpler lifestyle, with safe neighborhoods, friendly neighbors and reasonable commutes. In our survey, 67 percent of Arizona respondents reported that their neighbors affect their happiness somewhat or a lot. But in an on-the-go, always connected society, many people don’t ever get the chance to get to know their neighbors – even though they have such a big effect on their wellbeing. For many, community now exists online or in the office, but not in the place where they live.

67% people say that their neighbors affect their happiness somewhat or a lot.

United States Bureau of Labor Statistics. Available at http://www.bls.gov/home.htm United States Bureau of Labor Statistics, Local Area Unemployment Statistics. Available at http://www.bls.gov/lau/ 7 “CoreLogic Reports 57,000 Completed Foreclosures in August,” 4 Oct 2012. Available at http://www.corelogic.com/about-us/news/corelogic-reports-57,000-completed-foreclosures-in-august.aspx 5 6

© Copyright 2012 by Associated Asset Management. All Rights Reserved. | www.associatedasset.com

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Homeowner Guides Challenge #5: Neighborhoods Aren’t Working in America...But We Want Them To America’s diverse neighborhoods face challenges. In many cases, they’re not working the way their residents want them to. That’s true whether people live in urban, rural, or suburban areas. Everywhere, people want to live in safe, vibrant communities where residents know and support each other. Unfortunately, statistics show that there’s a disconnect between what Americans want from their neighborhoods and their current situations: • •

Nationally, 83 percent of Americans say they are willing to pitch in and help neighbors who are struggling financially However, only 25 percent of Americans know most or all of their neighbors’ names

Do you know your neighbors? Nearly two-thirds of Arizona homeowners surveyed know some of their neighbors by name, but just a quarter know most neighbors by name.

People also report that their neighbors have at least some affect on their happiness. But many people don’t have good relationships with the folks next door or down the block: • •

Nationally, 86 percent of Americans say that neighbors affect their happiness at least a little However, 66 percent of urban Americans and 54 percent of rural Americans have a complaint with a neighbor

Yet even as people report that their current relationships with their neighbors may not be the best, at the same time, they believe in the transformative power of neighborhoods. People want to help their neighbors when they are faced with life’s challenges – such as helping them find jobs, providing childcare, cooking meals when needed, or lending money. People Want More from Their Neighborhoods The bottom line, in other words, is that people want more from their neighborhoods: • • •

More than half of Arizona homeowners would like to get together socially and be able to depend on a neighbor to look out for each other’s homes More than 40 percent would like to be able to lend each other something More than 30 percent would like to eat together or watch each other’s pets

That dream – to live somewhere where people can turn to their neighbors for support and fun – isn’t asking a lot. And it’s not an impossible dream to achieve, despite all the challenges our communities face. These challenges are real, but there is a light at the end of the tunnel. HOAs have the power to address the problems of American communities. They can help create safe, stable, and supportive communities. In fact, that’s exactly what Associated Asset Management is dedicated to doing. HOA residents expect their HOA board to keep their neighborhood safe and financially solvent, as well as to help increase positive interactions between neighbors.

© Copyright 2012 by Associated Asset Management. All Rights Reserved. | www.associatedasset.com

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Homeowner Guides Homeowners report that they love to communicate face-to-face with their neighbors, but with hectic lives, many people find it difficult to make this happen. They want community and small group events, as well as technology-facilitated communication, through email, social networking, and text message. The American homeowner wants – and deserves – more from their neighborhoods. That’s what we offer at Associated Asset Management. AAM is committed to developing and cultivating long-term relationships with developers and HOAs so that we can continue to create a better America, one neighborhood at a time.

About AAM: Creating a Better America, One Neighborhood at a Time At Associated Asset Management, we’re proactively addressing the real challenges facing American communities today – including the five we’ve talked about here. We’re a vital part of our communities, and we’re in it for the long haul: 70 percent of our community managers have been with us for more than three years, and 76 percent of our communities have been with us for more than three years. We deliver real value for developers, HOAs, and homeowners by improving the quality of connections between of homeowners and boards, improving the financial health of the communities where we work, and raising the bar for the industry. AAM is one of America’s most-respected Homeowner Association (HOA) management companies. With more than 20 years of community management company experience to our credit and hundreds of associations under management, we are dedicated to creating a better America, one neighborhood at a time, starting with yours. Learn more about how we can help you create a better community. Visit www.associatedasset.com today.

© Copyright 2012 by Associated Asset Management. All Rights Reserved. | www.associatedasset.com

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