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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I realized that American hustle + grind culture is inescapable. 
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I wouldn't call it inescapable.  However, I did have an epiphany while selling my house recently.  I actually have a large house in neighborhood full of small houses and a nominally above average school.  The realtors seem to hate my house they want to sell it for the same price for all the other houses in the neighborhood.  For a frame of reference in another neighborhood it would be maybe a 1.3 million dollar home.  So basically an owner in these other neighborhoods, paid too much for their home so they can be next to a bunch of other people who also paid too much for their homes.  Realtors seem to really like this idea.  However, I got to thinking about it.  Many of these "good neighborhoods", they lack decent amenities.  Like no sidewalks, nothing to do really except drive a car.  Well, I jumped on chatGPT and it explained it to me.  The problem with large houses in neighborhoods of small houses or houses near amenities... entertainment like bowling alleys, is the Financial institutions can't model them.  Their model's don't know how to value them, they can roll them into package that conforms to some criteria then put them in a mortgage portfolio.

So there it is.  These financial movers that build these subdivisions, explicitly exclude many amenities, anything that might interfere with your paying your mortgage off why? So they can predictably model profits.  Everything else follows from that.  Long commutes etc. They're basically financial engines.  The only way out is to get someone else to buy in.[/quote]

I don’t understand this post.  I want to, but I don’t.  How does excluding amenities make profits more predictable? [/quote]

Local amenities — like shops, restaurants, parks, bars, or entertainment — make life better for residents, but they also introduce variability in local housing markets and incomes. Lenders (banks, investors, insurers like Fannie Mae) care about predictability because mortgages are long-term contracts priced on risk. Here’s how amenities complicate that:

🧭 1. Amenities make local housing prices volatile

When a neighborhood gets new amenities (say, a trendy café strip), home values can rise rapidly — but if those amenities fail or trends change, they can fall just as fast.

That means the collateral (the house) is harder to value reliably over 15–30 years.

Mortgage models prefer stable, homogeneous areas where price movements track the broader region rather than idiosyncratic local economies.

Example:
A suburban tract of identical houses near a business park has predictable resale values.
A mixed-use block with boutiques, bars, and new condos might swing 20–30% up or down with small economic shifts.

🧱 2. Amenities signal mixed land use — which increases income and tenant variability

Lenders prefer neighborhoods where everyone has similar, steady incomes.
When local amenities attract transient populations (students, gig workers, tourists), you get:

More rental churn

More seasonal employment

Less predictable household stability

That makes defaults less statistically predictable, even if average incomes are higher.

🏪 3. Amenities rely on discretionary spending

Areas built around leisure — restaurants, casinos, entertainment — depend on residents having spare income.
If the economy slows, those sectors contract quickly, hitting both local employment and property values.
For lenders, that’s a correlated risk: many borrowers in one place might lose income simultaneously.

📉 4. Amenities distort standard risk models

Most U.S. mortgage risk models are based on tract-level historical data — like census data on income, employment, and housing turnover.
Mixed-use areas or amenity-driven “creative” neighborhoods don’t fit the historical mold, so their default probability and prepayment patterns are less predictable.

🧩 5. Amenities can change neighborhood composition too fast

When new amenities appear, they often accelerate gentrification. That makes long-term forecasting (and thus pricing) harder:

Today’s borrower profile may not match tomorrow’s neighborhood.

If low-income residents are displaced, lenders can’t rely on historical payment performance in that ZIP code.

In short:

Mortgage finance likes monotony.
The more a neighborhood looks like a controlled experiment — similar homes, incomes, jobs — the more confidently a lender can price risk.
Local amenities make a place livable, but also less predictable to model.[/quote]

Yes but no one is opening a business for the sake of the bank. The long term driver for small businesses /amenities is always demand. [/quote]

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