The Economics of Everyday Things - 42. Cemeteries

Episode Date: April 1, 2024

The verdant lawns promise everlasting rest — but what does it mean to sign a lease for all eternity? Zachary Crockett finds out where the bodies are buried. SOURCES:Terry Arellano, co-founder and president of Cemetery Property Resales, Inc.Jeff Lindeman, C.E.O. and General Manager of Mountain View Cemetery.Tanya Marsh, professor of law at Wake Forest University.Maureen Walton, founder and president of The Cemetery Exchange. RESOURCES:"Los Angeles Burial Crypt Near Marilyn Monroe, Hugh Hefner on Sale for $2 Million," by Stephanie Nolasco (Fox 10 Phoenix, 2023)."Why the Brooklyn-Queens Border Is Full of Dead People," by Keith Williams (The New York Times, 2017)."Death in the City: What Happens When All Our Cemeteries Are Full?" by Ana Naomi de Sousa (The Guardian, 2015)."Our First Public Parks: The Forgotten History of Cemeteries," by Rebecca Greenfield (The Atlantic, 2011)."Selling a Burial Plot is a Grave Decision," by Erin Peterson (Kiplinger, 2010). EXTRAS:"How to Be Better at Death," by Freakonomics Radio (2021).

In the city of Oakland, California, you'll find one of America's most scenic cemeteries. Perched in the hills, it has unobstructed views of the Golden Gate Bridge and the San Francisco Bay. These 226 acres of prime real estate are occupied by the remains of titans of industry, like the founders of Folgers Coffee and Ghirardelli Chocolate. And if you want to join them, six feet under, it'll cost you dearly. You might pay as much as $50,000 for a premium plot.

Jeff Lindeman is the CEO of Mountain View Cemetery. You might not think of cemeteries as having CEOs, but they're a $3 billion industry in the US. And there's a lot riding on them making money because they've made an eternal promise to the people buried there. When we sell a plot crypto niche, the idea is that you put enough money away in the trust fund so that over time, you can care for the cemetery forever. S1C1 When you're selling a finite resource, though, the word forever can be a bit tricky. It's really kind of greedy, you know, from a land use perspective to say a person who died is going to occupy this couple square feet of real estate forever,

forever, and we're never ever, ever going to change it. For the Freakonomics Radio Network, this is the economics of everyday things. I'm Zachary Crockett. Today, cemeteries. For most of human history, we didn't bury our deceased in the ground. When our oldest ancestors died, they were often left in caves, burned, or pushed out to sea. The modern practice of burying people in dedicated graveyards

began with organized religion. And when the first Europeans settled in America, they brought that practice with them. For the first couple hundred years of European settlement in America, we really had church cemeteries and family-owned cemeteries, like a little corner of a farm. That's Tanya Marsh. She's a professor of law at Wake Forest University. And she holds a bit of a unique distinction. As far as I know, I teach the only course in funeral and cemetery law at a US law school.

Marsh says that America started to rethink its cemetery system during the Industrial Revolution. Church graveyards tended to be right in the middle of town. As urban populations grew, those burial grounds became overcrowded and unsanitary. – They were burying people on top of each other for, you know, way more than 100 years. And it was smelly, and it was not awesome to have in the middle of these downtowns. And so they started to build these so-called rural cemeteries outside major metropolitan areas in the United States.

Today, thousands of these cemeteries dot the American landscape. Some of them look like giant parks with trees, benches, and winding paths. Others look kind of like golf courses with green lawns and flat headstones. Many of these cemeteries are run by religious organizations, local municipalities, or the federal government. In those cases, the funds for running them come from the church or from taxpayers. But a sizable portion of cemeteries

are owned by private companies or nonprofits. And those are a big business. Nicole Soule-Splendor Cemetery Cemetery is just another real estate use, right? So, if you're thinking about what's the use for a particular piece of land, and how can I make money from it? Well, cemeteries might be an option. Tom Noonan We are there to serve consumers who are there to serve consumers who have a little bit of money, and we are there to serve consumers who want something more extravagant. Again, that's Jeff Lindeman, the CEO of Mountain View Cemetery in Oakland, California. The

cemetery was built as a nonprofit in the 1860s. And today, 205,000 people and counting are interred there. Like most cemeteries, Mountain View has a pretty simple business model. It owns a piece of land, and customers pay to be buried there. But those customers aren't actually buying real estate. Tom Mollinsons consumers often mistakenly think that when they purchase a grave, they're purchasing the land, and they're not. What they're really purchasing is an easement on the land for burial rights. Jared Sussman In other words, those bodies in the cemetery are renters with a very long-term lease. Nationwide, the average cost for a traditional cemetery plot is around $3,600.

In a small-town municipal cemetery, you might be able to find one for as little as $1,000. And in a more desirable private cemetery, burial spaces go from many multiples more. The Pierce Brothers Westwood Village Memorial Park and Mortuary is filled with celebrities. There, a crypt near Marilyn Monroe recently went on the market for $2 million. And the plot itself is only one small part of the cost a cemetery charges you for a burial. When the time comes, you will typically incur charges

for opening and closing the plot. Most cemeteries will require what we call an outer burial container. And typically, there might be a recording fee. In addition, if you want to purchase a headstone, and most people do, there would be a range of prices applicable to that as well. If you tally up all the extra costs, a traditional burial at a cemetery can easily exceed $20,000.

What you get in return is a guarantee that your remains will be cared for in perpetuity. The law promises us forever when we're talking about cemeteries. In many states, for-profit and non-profit cemeteries like Mountain View have to put a portion of what you pay into something called a perpetual trust or an endowment fund. That money is invested, and the income is used to keep the cemetery operational for as long as possible. So that money might be used to mow the lawn. For example, if we have a landslide in the cemetery, it would be used to shore up that

landslide. It would be used, for example, to hire an arborist to come out periodically and care for the trees. Upkeep at a cemetery can be expensive. At Mountain View, the landscaping and gardening bill is around $900,000 a year. Utilities run half a million, and repairs are just shy of $275,000. Lindemann says his cemetery has more than $100 million in its endowment fund to cover these costs long term. But not every cemetery is so lucky.

Unfortunately, there have been instances where organizations have not put enough money in their trust. And when those organizations close, we've all seen the cemeteries that have fallen into disarray. Yeah, there's gonna be a lot of cemeteries going out of business in the next 20 years, I think. When a cemetery goes bankrupt, a few things can happen. In many states, the local government is permitted to step in. But Marsh says there's not much of an incentive to do so. Most municipalities and counties don't want to take on the tax burden if there's no money

in a perpetual care fund. So as a result, we have a fairly significant number of abandoned cemeteries in the United States. If a judge approves it, the owner of a bankrupt cemetery can sometimes sell its land for development. All of the buried bodies have to be exhumed at the expense of the buyer. In 2012, the city of Chicago spent $17 million to relocate 15,000 graves so it could build a new runway at O'Hare International Airport. And in Northern California, a church had to exhume and relocate dozens of unmarked graves from the 1800s before selling an adjacent plot of land to a developer.

I mean, this is one of the funny things about this whole promise of perpetual care. Forever means forever until the living decide they want to do something else with that piece of property. When these cemeteries go away, they're often not replaced. Because opening a new cemetery is its own unique challenge. Cemeteries are generally exempt from paying property taxes, and they don't create a lot of jobs. So, municipalities aren't too keen about using scarce land to house dead people. Potential neighbors usually object to.

Generally, people don't want the cemetery in their backyard. They know that they need to have some form of disposition some day, but not in their backyard. More than 3 million Americans die each year. And for existing cemeteries, the concern is finding enough space to accommodate everyone. The land that's easy to develop at the cemetery is pretty much fully developed.

This fixed supply has given birth to an unusual resale market for cemetery plots. That's coming up. If you want to be buried in a cemetery, you have two options. You can wait until you die and leave it to your family to figure out. Or you can buy a plot in advance. Let's say you snatch up a burial plot 20 years before your time comes. And then you decide that plot isn't where you want to spend eternity.

What do you do with the plot? In a lot of cases, the cemetery won't buy it back. You can list it on eBay or Craigslist and try to find someone who's looking for a grave site just like yours, but your best bet is to head to a certified cemetery plot broker. Terry Ariano and I am president of Cemetery Property Resales, Inc. Terry Ariano is kind of like a real estate broker for final rusting places. She helps people sell plots they've already purchased, or buy them at a discounted rate. In return, she charges a flat fee of around

$100. Most of our sellers are actually referred to us by the cemetery, and most of our buyers are referred to us by the funeral home or a caseworker, a hospice caretaker. Over nearly 30 years, Arellano has facilitated the transfer of 15,000 burial plots at more than 50 cemeteries all over the San Francisco Bay Area. She can get you a space for 20 to 80 percent below what the cemetery charges. Rather than going straight to the cemetery and buying a space that's 8,000 or 10,000 for a single space, we have those for 3,000, 4,000. Most commonly, people sell their plots because they've moved away and want to be buried

somewhere else. But there are other reasons, too. Oh, this is a good one. The wife purchased two spaces when her first husband died. And so the first husband, he's in one space and the one right next to it is reserved for the wife when her time comes. Well, now she's gotten remarried. And who's calling us? Husband number two. He wants to make sure that space is sold because she's not going to go into that space next to husband number one.

Ariano says more and more people end up selling their plots for financial reasons. Many times someone will buy a plot decades in advance without realizing there are additional burial costs down the line. So you can imagine maybe somebody bought a grave 40 years ago and they paid $200 for it. And so they feel like, oh, thank goodness, we've got our final resting place. Well, then somebody dies and they go to the cemetery and they go, okay, we're ready.

And here's some paperwork. And all of a sudden they have to pay the cemetery $10,000. In recent decades, some cemetery plots have appreciated in value more than the housing market. Some cemetery plots have appreciated in value more than the housing market. Spaces priced at $3,000 to $4,000 30 years ago are now often going for $25,000. The only thing you can always be assured of is that cemetery prices will go up every year regardless of what the market is doing. That's Maureen Walton. She's the founder of the online listing service,

The Cemetery Exchange. It's kind of like Zillow, but for cemetery spaces. On the site, you can browse through nearly 10,000 cemetery properties for sale across the country. We might have somebody that's selling a single grave space in Indianapolis for, let's say, $1,000 up to a private crypt in Hollywood Forever Cemetery for $250,000. But Walton says that traditional burial plots are getting a little harder to sell.

Six out of 10 Americans are now opting for cremation, which is double what the rate was 20 years ago. This is partly because it's a much cheaper alternative than a casket burial. You could get cremated for under $2,000 and walk out with a really nice urn, and then you can decide to be on somebody's mantle for eternity or scattered somewhere. For the cemeteries themselves, this is actually a welcome trend, because running out of land is a serious concern. Once the grave plots are all used up, there's no more revenue.

Cemeteries have experimented with all kinds of ways to maximize capacity. They've buried caskets upright rather than horizontally. They've used double-decker plots to accommodate multiple bodies. But Tanya Marsh, the law professor, says it's a lot easier to find space for an urn than a casket. One of my favorite cemeteries is Greenwood Cemetery in Brooklyn. And for the past 40 years, they've been saying about every 10 years, we've got about 10 years left in Greenwood. But they keep figuring out ways to kind of squeeze in more space. And one

way cemeteries in urban areas have figured out to do it is to build spreading gardens for cremated remains. You can create a spreading garden and let people spread ashes even in a full cemetery, right? John McAllister Jeff Lindeman says Mountain View Cemetery has gotten a bit more liberal about its cremation policies. Jeff Lindeman So, often, somebody will purchase a grave for a full casket burial, but we will allow families to later on add cremated remains to that grave. So, in a sense, it enables us to expand the resource without necessarily having to expand the perimeter or the borders of the cemetery.

John McAllister Mountain View charges around $1,500 for each additional urn buried with an existing plot, plus the cost to open and close the ground. If you get enough family members on board, that plot with the view of the Golden Gate Bridge might become a bit more feasible. So, for example, let's say you like that plot with the great view, it's $30,000, and you purchase it for a single casket burial, you can also purchase future burial rights for cremations at a much lesser cost. So, conceivably, you may eventually enter five or six family members in that single grave after the additional cremation burial rite cost. Let's say we come to $36,000

for that grave. Now you've got a cost per individual of $6,000 as compared to $30,000 for a single person. Mountain View has around $25 million worth of grave space left. Lindemann spends most of his time thinking about how he can stretch that out as long as possible. Cemeteries in many other countries don't share this concern. There are countries where permanent burial is either luxury or it's simply not allowed. You actually lease a grave for a couple of decades or more, and then you can pay more if you want to extend it.

But then if there's bones still left, they're going to take them and put them into a communal spot, something like that. It's much more efficient use of land. Tanya Marsh wouldn't mind seeing this model applied to American soil because in the end, all we are is dust in the wind. Human remains do not last forever. Even if you embalm them and put them in a steel casket inside a concrete vault, they're not going to last forever. We are all organic material.

Eventually, everything is going to go away and turn into something else. For the economics of everyday things, I'm Zachary Crockett. This episode was produced by me and Sarah Lilly and mixed by Jeremy Johnston. We had help from Daniel Moritz-Rapson. Have you decided what you're going to do someday? Oh honey, I'm going high and dry. I want to be in a mausoleum. I want to be in a mausoleum.