Feb 21 2009
Regrowing Small Towns
In the last decade or so, some small towns have seen a recent influx of families move into them, primarily because of affordable housing. One local family, struggling to find an affordable house in Minneapolis, discovered a forty thousand dollar house in Henning, a small town in mid central Minnesota. Soon they bought and now the family has their own home. The children attend the local school and participate in wrestling and other sports. The downside? Most residents of small towns need to drive some distances to get to their work. One local school counselor drives forty-five minutes southeast to her job, and her husband drives forty-five minutes north to his job. They basically chose to live in between.
This issue of affordable housing is truly making or breaking communities across the United States. And it is affecting mid-cities in interesting ways. In Perham, Minnesota, the school district, back in the early 1990s, put together a projection of student enrollment. In response to these projections, they built a middle school. The student population didn’t increase the way it was projected and now the district residents are saddled with heating and maintaining two school buildings to educate the same size classes that it did back in the 1970’s with one building and fewer staff members.
At a principal’s meeting in 2008, the discussion came up as to why the student population was falling. The answer: rents were to expensive for families, and nice houses were too costly for an average family to purchase. It was true that the town was filled with jobs, but most paid no more than $11 an hour, and that didn’t go far when paying a $1500 a month mortgage. The result: people bought homes in nearby towns with homes that were half the price, then sent their children to those schools.
Smaller districts have had to become more pragmatic to survive. Many older buildings closed as families fled to midsized cities looking for work, and the remaining children in those towns are bussed to other nearby schools. The results are a poignant show of hometown pride. Last night at a wrestling match at the tiny town of Bertha-Hewitt, little boys wearing many different colored uniforms wrestled their hearts out. The tiny town of Verndale, which could have combined its team with the larger city of Wadena, chose instead to combine with Bertha. The same was true as the Otter Tail Bull Dogs were a combined team of several smaller schools. Many of the boys wore their own uniforms with great pride, and the hometown identity remained.
Those pragmatic schools that have combined to stay open have usually already worked out the “bugs” compared to Perham. While Perham tries to think into the next century, the affordable housing issue has burdened the community with more taxes, exacerbating the problem. Fortunately the town has attracted a fair number of working professionals who can afford the newer homes in the subdivisions that have popped up north of town.
Understanding the dynamics of the school districts are critical to the real estate investors that sift through the millions of for sale and foreclosure signs. Buying a small house in a dying town will bring in some revenue, but in the town with the school, the real estate may actually increase in value as the market rebounds. The best example was in Hewitt, the town without the school. In Bertha, a convenience store made it possible to stop and get a cup of coffee, some small groceries and fuel up after 8 p.m.. In Hewitt, the only commercial places open at night were two bars. It is not a moral statement; just reality of what kind of places will make money in the town that has or doesn’t have the school building.
Money invested in these small towns with carefully chosen properties can yield renters for years to come. In the future, when the real estate market stabalizes, these properties should increase in value. No matter what, it will be interesting to see how mid sized cities and smaller ones will change in the next two decades.
