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Thursday, January 10th, 2013

My First Impressions of Rhode Island

My latest post is online over at GoLocalProv. It is called “My First Impressions of Rhode Island” and is a first take on the Providence region after six months of living there. Here’s an excerpt:

Thinking about it this way, the basic problem of Providence (and by extension the rest of Rhode Island) becomes obvious: it is a small city, without an above average talent pool or assets, but with high costs and business-unfriendly regulation. Thus Providence will neither be competitive with elite talent centers like Boston, nor with smaller city peers like Nashville that are low cost and nearly “anything goes” from a regulatory perspective. There’s little prospect of materially changing either the talent/asset mix or the cost structure in the near term even if there was consensus to do so, which there isn’t. So expect struggles to continue, even if there’s a bit of lift from a change in national macroeconomic conditions.
….
But as a place to live, there’s a lot to enjoy about being here. One thing that has really surprised me is the people of Rhode Island. I come from the Midwest and the land of “Hoosier Hospitality.” I was thinking honestly it would be hyper rude and abrasive, like some stereotype of Boston. Yet the people of Rhode Island have been fantastic to me. And while the total talent pool (college degree attainment) is about average compared to peer cities, I’ve met some truly top notch people who would thrive in any city. The people of Rhode Island are really first rate.

Click through to read the entire op-ed.

Here are some related articles you might enjoy:

New England vs. Midwest Culture
Providence and the Virtues of Scale
Is Providence the Rust Belt’s Most Northeasterly Point?
A Quiet Revival in Providence
Don’t Fly Too Close to the Sun

11 Comments
Topics: Economic Development, Globalization, Public Policy, Urban Culture
Cities: Providence

11 Responses to “My First Impressions of Rhode Island”

  1. Matthew Hall says:

    I have found that New Englanders can be hard to read, but respectful. The mid-Atlantic region of Philly, Baltimore, D.C. is the capital of rude in the U.S. in my experience. Good service is limited in Philly, unusual in Baltimore and non-existent in D.C. unless you are paying a fortune. New Yorkers and New Englanders are downright civil by comparison to their neighbors to the South.

  2. wkg_in_bham says:

    As usual, an informative and thought-provoking article. Thoughts provoked:
    1. I was stricken by the negativity of the comments.
    2. Most referred to how expensive it is to live in Providence. I would have thought it would be reasonably inexpensive place to live. Particularly when compared to NYC or Boston.
    3. Since I know virtually nothing about Providence, I read the Wikipedia entry for the city. The demographic and economic indicators are not very good. Some how or other, a lot of poor people are managing to afford Providence.
    4. You commented on the coast line, etc. I took a Googlemaps virtual fly over. There doesn’t seem to be much in the way of port facilities – particularly when you consider the history of the city. There also wasn’t much in the way of recreational marine facilities either. Seems like there is a tremendous opportunity in these areas.
    5. Closely related to #4 is the America’s Cup – which used to be held at Newport. Providence should start a new race – a world-class race.

    A question: what is a “party pizza”?

  3. @wkg_in_bham, this place is as self-loathing as any Rust Belt city ever. Yes, Providence is expensive. Out of 49 metro areas over a million people for which data is available, Providence ranks 48th in median income adjusted for cost of living. It’s pathetic.

    I’ve often wondered how, for example, housing could be so expensive here given the depressed conditions. Part of it is that very little building occurs due to the regulatory environment and culture. There isn’t a lot new here.

    I believe there’s a port in Quonset, but given the environmental attitudes of New England, I’d expect very little new port development here.

    Party pizza is basically like a rectangular deep dish pizza crust with tomato sauce but no other toppings. It’s cut into strips and served cold. Frankly it’s not very good at all.

  4. Quimbob says:

    You can actually get pizza strips at gas stations. They’re next to the Slim Jims. The “tomato sauce” is kinda like thick red latex paint.
    At 178k, I wouldn’t call Providence a small city.

  5. @Quimbob, Providence metro at 1.6 million is what I refer to as a small city. I’ve generally used the 1-2.5 metro figure to describe that. (My blog has tended to cover metros with a million or more people)

  6. Peter Brassard says:

    Quonset’s Port of Davisville is North America’s 5th largest auto importer. Like many things in Rhode Island and New England there can be a subtlety or obscurity to what would be obvious anywhere else.

    Looking only at current metropolitan statistics can give a distorted view. Until about twelve years ago Rhode Island and the Massachusetts south coast were virtually undiscovered. In spite of its pockets of poverty or low income, it was an extremely affordable region. The area was discovered by New Yorkers and Bostonians as a place to find cheap second home oceanfront or water-view properties at a small fraction of the costs of Fire Island, the Hamptons, South or North Shore of Boston, or Cape Cod. Also Downcity and the East Side of Providence became commuting destinations for Boston office workers because of the MBTA commuter train and relatively lower housing costs.

    Even with the real estate collapse and foreclosure crisis, second home properties distort the Providence MSA real estate market. In the higher end suburbs housing prices are only marginally lower than other parts of the northeast. At any time there’s easily 400 to 600 single-family properties on the market for a $1 million or more. Today you could snap up a house on Ocean Drive in Newport for $15.7 million or in Watch Hill in Westerly for $17.5 million.

    The escalation of Providence’s housing prices, from just before and during the boom, was one of the highest in the country. Providence is a place of extremes including poverty and wealth. There are a lot poor people that live here. They manage to find places to live, which may be in places like the west and south sides or north end of Providence or other inner core cities like Pawtucket, Central Falls, Woonsocket, Fall River, or New Bedford.

    If you rent, you can find a decent place in a decent neighborhood that doesn’t require a car for $700-900 per month for a 2- or 3-bedroom apartment that’s not in a gang infested crime riddled neighborhood. Today of the 4,000+ single-family houses (not including trailers) that are listed for sale on the RI Living website, roughly 500 are in the range between $65,000 and $130,000. These houses may be located in modest areas in the inner core cities or adjacent lackluster inner ring suburbs and have been built the1890s, 1920s, 50s or 60s, but decent places to live. Also, listed are over 600 two- and three-decker multi-family properties for those who want to subsidize their mortgages with rental income.

    I have no idea what housing prices are in rust-belt Midwestern cities, but for the Northeast, Providence’s housing can be dirt cheap.

    Strip pizza is one of those things, like eating insects that you’ve had to experience before the age of four to truly appreciate.

  7. Peter, out of the 49 metro areas with over one million in population for which data is available, Providence ranks 48ths in median household income adjusted for cost of living. The cost of living index for Rhode Island is something like 128 IIRC. I don’t think most people appreciate how poor on average this area is once you adjust for cost of living.

  8. Peter Brassard says:

    Aaron, There’s no question that the Providence area is poor as compared to other regions. Part of the reason why it’s poor is due to lower education results, de-industrialization, high taxes, and business regulations. But another part, which is often ignored or overlooked is the impact of high housing costs as they effect the overall cost of living, which is a result of second home buying by adjacent wealthier regions (New York, Connecticut, Boston).

    Newport despite its highbrow reputation and image historically has been a pretty poor community. After Providence it has the most public housing in Rhode Island. It still is poor but to a much lesser degree. Many have been forced out. Most of Newport’s high-density neighborhoods near downtown were gentrified since 2000-2001.

    Example
    Yachting Village house:
    1998 value $77,000; 2007 value $520,000; 2012 value $320,000
    Not including the 2007 peak between 1998 and 2012 = 415% increase

    Average Newport year-round rent 2-Bedroom apartment:
    2000 – $400/month; 2006 – $1,000/month; 2012 – $1,300/month
    Between 2000 and 2012 = 325% increase

    This kind of housing inflation occurred along the entire coastal region including much of the bay from Westerly to Fairhaven. There are now thousands of houses in coastal communities that were previously occupied by local year-round residents that have been renovated to the nines and remain vacant for all but a few months in the summer or possibly on weekends at other times. The effect was to shift or squeeze the population around the region, which in turn raised prices everywhere.

    Providence area salaries didn’t go up very much if at all during the last 12 to 15 years, where housing did. My point for raising this is to understand the full picture you need to go back and look at past statistics to understand why the region is so depressed today.

  9. Derek Rutherford says:

    These comments make me want to compare (A) the relationship of Providence with Boston/NY, with (B) the relationship of Milwaukee with Chicago, about which this blog has posted recently. Similar distances between the smaller metro and the larger metro(s), but different results.

    Superficially, Milwaukee seems to have handled this situation, but I am no expert here. Aaron, you would be a good person to make such a comparison. It sounds like a good future post for you!

  10. Peter Brassard says:

    Aaron, I keep thinking about the statistic you sighted, where Providence is next to the bottom of comparable cities, 48th out of 49, for median income adjusted for cost of living. I don’t doubt the number, but I can’t help but thinking that there’s more going on than what that particular measurement reveals. Alon Levy touched on this in his post “Providence: The Quiet Revival,” posted 3/7/12. http://pedestrianobservations.wordpress.com/2012/03/07/providence-the-quiet-revival/

    Despite obvious unemployment, poverty, high cost of living, and apparent lack of activity, the region is slowly becoming wealthier according to Alon’s findings. From my own observation of the real estate spike that was in part a result of large scale buying of local properties by people from adjacent wealthier regions, which artificially elevated housing prices, makes the region seem much poorer.

    You’ve expressed surprise that so many people who live in the region were also born in it, especially given the size of the state and metro area. This stable legacy population, as well as perhaps a large percentage of them as compared to the total population, might be a key to better understanding the actual dynamic of the economics of the area.

    How many Providence area residents purchased their houses or apartments prior to the real estate price escalation? Many of those people might have incomes that would be defined as lower or lower middleclass, which would drag down the current overall relationship of income vs. cost of living. But if they paid 200% to 400% less for housing 12 or 15 years ago, even if their present incomes are modest, their cost of living and quality of life might be somewhat unaffected by the current distortion between median income and cost of living statistics.

    Economic statistics usually don’t quantify quality of life. How would quality of life figure into the equation? If someone lives in a traditional walkable city, town, or village and has the option to use mass transit or use their cars less and being able to walk to shop or go to a restaurant or café, would that equate to any savings in the median income adjusted for cost of living?

    I suspect that these statistics miss the real costs or benefits of externalities, similar to driving a car or energy production and not counting the costs of pollution or health impacts. Or conversely living in a walkable community, where you have lower fuel, repair, and replacement costs due to using a car less or being in better health resulting from additional walking.

    Is there a savings, or an effective or real accumulation of wealth, when people stay in the location over a long period of time whether for it’s for a lifetime or generations? Also is there an intrinsic value to places that are traditionally walkable and less auto-centric or for regions where geographic distances are small as they are in Rhode Island and the Providence area?

  11. Chris Barnett says:

    Good point on affordability (median income to median home price comparison). That statistic is certainly relevant to three groups: in-migrants from other metros, existing residents establishing new households (kids moving out and breaking-up couples), and existing residents looking to move up or down to change their housing footprint to better meet their lifestyle (largely strivers and retirees).

    For all these groups, housing affordability is a proxy for some aspects of “quality of life”, as it’s not possible to enjoy amenities such as coffee, dining or drinking at the local walkable place if they don’t have enough disposable income after housing costs. And on the flip side, there’s not a need to increase the supply of such things because demand is limited.

    I agree that the overhang of long-time homeowners is not necessarily made poorer, except that they cannot move up…to get a better deal, they must move out…and the choices of urban amenities might not be the same as in other, more affordable places.

    Taken together, the affordability index problem would (qualitatively speaking) tend to discourage new in-migration and to encourage current residents to look elsewhere when they want to make a move to adjust their “residential bundle” to more closely meet their desires. Not good for the next-to-last city on the list…almost every other city looks better.

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