Housing
October 5, 2008

Small is beautiful

Witold Rybczynski makes the case for smaller homes:

Smaller houses on smaller lots are the logical solution to the problem of affordability, yet density— and less affluent neighbors— are precisely what most communities fear most. In the name of fighting sprawl, local zoning boards enact regulations that either require larger lots or restrict development, or both.

These strategies decrease the supply— hence, increase the cost— of developable land. Since builders pass the cost of lots on to buyers, they justify the higher land prices by building larger and more expensive houses—McMansions. This produces more community resistance, and calls for yet more restrictive regulations. In the process, housing affordability becomes an even more distant chimera.

[From Andrew Sullivan.]

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August 21, 2008

“Last year, 59 percent of new home sales were condos.”

According to the New York Times, in which city is that statement true?

Would you believe Los Angeles?

Los Angeles is becoming a more vertical area at all income levels as land for development becomes less plentiful and traffic congestion, and now high gas prices, steer more people to cluster around mass transit stations and more community-like sections, like downtown and West Los Angeles, said Delores A. Conway, director of the Casden Real Estate Economics Forecast at the University of Southern California. For 2006 and 2007 in Los Angeles County, condos sold better than single family homes, even as the market was dipping …

That’s pretty much what I was anticipating in Price Tags 89.

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My column in the current Business in Vancouver:

No quick or easy fix for affordable housing policy

When it comes to the cost of housing in Vancouver, there are so many perspectives, it’s easy to lose your own.

Some mayoral candidates have put “housing affordability” at the top of their to-do lists.

Gregor Robertson says he will foster an “affordable housing boom.” Al DeGenova will lever “appropriate development densities” into hundreds of millions of dollars. Raymond Louie will do it by “better using the city’s assets.” Peter Ladner and Sam Sullivan speak about homelessness and social housing on their websites, but they don’t tackle affordability head on.

So, if I may, some cautionary notes for the candidates:

“Affordability” is like “density” – everyone thinks it’s a good or bad idea depending on how it affects him or her. It’s good if it gives you an option to get what you want – say, a condo downtown. But if you’ve already got one, there’s no personal benefit when more is proposed for somebody else. And if additional density for more affordable housing means an actual lowering of housing prices, well, that’s a problem.

Because that would mean assessed values would fall – and a policy-maker who set out to achieve such a thing would be committing political suicide.

No one thinks a politician would – or could – deliberately make housing prices fall in Vancouver. But if they’re not prepared to do so, that has a pretty significant implication. It means “affordable housing” in Vancouver can’t be seen to affect the value of the housing around it. Infill housing mustn’t lower current property values. Therefore, infill housing must be seen to be expensive if it’s to be accepted in expensive neighbourhoods.

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Does the meltdown in U.S. housing prices have anything to tell us yet about the impact of peak oil? 

According to the current real-estate column in the Georgia Straight: yup.  Carilto Pablo quotes Oregon economist Joe Cortwright:

Properties located in cities and neighbourhoods that require residents to go on lengthy commutes and don’t provide many transportation alternatives have fallen in value more deeply than those in “more central, compact and accessible places”, Cortright wrote in Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs.

My comment in the column:

“It’s part of the larger question about how the future is going to play out in the world of more expensive gas, carbon taxes, where you’re going to put the investment, and whether if, as promised, increasing density actually delivers a reduction in transportation costs,” Price explained to the Straight.

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I’ve been wondering for awhile whether, in the current housing meltdown in the U.S., location would make any difference on house prices and foreclosures.  In particular, would the length of a commute now constitute a disadvantage great enough to overcome the “drive ’til you qualify” mortgage advantage of distant development?

Yup, apparently it would.

According to this piece on National Public Radio:

Recent studies suggest that buyers underestimated the costs of their long commutes. Those expenses can add up to more than the buyers saved on the home. Developers also miscalculated, lured by cheap land and rising home prices. They overreached, “partly because the bubble collapsed, but partly because these developments were just bad ideas to begin with,” Stiff said.

Many of the projects were simply too far away from places that people need to go.

On the other hand:

It’s a different story for properties that are closer to the city’s center — in areas of Montgomery County that are on the edge of Washington.

“When I have a listing in this neighborhood, there are often 40 to 60 people coming through the open houses,” said Pam Ryan-Brye, an agent with Long and Foster Real Estate.

You can even see the difference from space.  Here’s the area pictured in the NPR story above – Clarendon, VA – which I also explore in Price Tags 97. The orange line is the Washington Metro rapid-transit route.

Whereas here’s the part of Florida that has the highest foreclosure rate in the nation:

NPR talks about Lee County here.

As prices have fallen back to earth, owners have increasingly found themselves owing more than their properties are worth, and are walking away from them, helping to create a backlog of more than 19,000 unsold homes — about six times as many as two years ago.

 

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We need the equivalent of this map for Vancouver:

You can find the full explanation here in the Slog Blog – but basically the blue areas are those where housing and transportation together cost more than 48 percent of median household income ($50,733 for a family of 2.5); taupe areas are places where they cost less.

The Center for Neighborhood Technology  wants to (inject) a dose of badly needed sanity into the debate over housing costs.  CNT has put together an “affordability index” that considers both housing prices and transportation costs in about 50 metropolitan areas. According to CNT’s analysis of the Seattle region, the most affordable parts of our region are actually inside city limits—once transportation costs are factored in.

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January 4, 2008

I was researching “Paris height limits” the other day. (I’m heading for the City of Light in February – actually, to “La Defense,” the corporate centre just outside the ring road. Like most places these days, it wants to be more ‘sustainable.’ If you have observations or references about La Defense, send ’em along.)
Anyway … the first item up was, curiously, about Washington, D.C. (another low-lying city influenced in its origins by Paris) – a post by a blogger, KWest, who writes A Portable Snack.  Says KWest, unabashedly:

Yeah, I’m pro-development. 
But not just any development.
I’m pro-dense, urban, well-designed, well built development.

He was writing about his neighbourhood, Columbia Heights, in the U and 14th area, which I covered extensively in Price Tags 95:

I sent KWest a link, and, since he’s particularly interested in the nature of urban retail, he picked up on the question of how the big-box format can fit into an urban environment.  On 14th Street, a major experiment is underway:

Columbia Heights is pushing the boundaries of high-density urbanism by incorporating the big box into village-oriented retail – a Target superstore will be joining other chains in a complex opposite the Metro station. 

 

KWest responded:

There been a lot of negative things said about the big box retailers coming to Columbia Heights, but as it stands now, everyone in the neighborhood who can, drives to Virginia or Maryland to go to Target and TJ Max, so the local retailers are already competing with them.  Why not keep the tax revenue in DC and create more employment locally?

And if that echoes the debate over the Canada Tire and Wal-Mart controversy in Vancouver, then here’s his take on gentrification, with an American slant:
 

And I always find the “condos for the rich” debate silly: the rich don’t set foot in the city unless they have to; middle class two income government worker couples like my wife and I live in the condos.
In DC, there are a lot of politicians (like Marion Barry), the entrenched old-guard (who I consider the actual “conservatives” in our political atmosphere) who don’t want anything to change because it erodes their power base, who make a lot of political hay by pitting the poor against the “yuppies”, the poor against development, the poor against everything.
Which is ashame, since the tax revenue, jobs, and economic opportunity that development brings will benefit the working poor more in the long run than trying to keep it out. But I’m sure it’s the same everywhere.

Food for thought – though I’m sure people will digest it differently.  In any event, I’m adding “A Portlable Snack” to my Favourites menu. 

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Another piece on the explosive growth in the South Lake Union neighbourhood.

“What happened is pretty much what everybody expected, but it’s occurred in five years instead of 50,” said Mike Foley, who was a neighborhood activist and sometime Vulcan critic until the company bought his property for $21 million in 2003….
Even with all the condos — and Vulcan is building 426 more of them — the mix of housing remains diverse, said Ada Healey, Vulcan’s vice president of real estate.
Developers have recently built or are building 170 apartments for low-income and moderate-income residents. An additional 133 apartments are planned for low-income seniors and mentally ill homeless adults. A 12-story, 377-unit senior-housing complex is also under construction.
One-third of South Lake Union housing is considered affordable to low- and moderate-income, according to the city. But that’s down 15 percent from a year ago.

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If you’re a reader of James Kunstler’s books and blog, you’re familiar with his argument that “the suburbs have no future.” Indeed, he predicts that even if the current subprime mess is resolved, the suburbs aren’t coming back.
Kunstler has never been very good with the timing of his predictions, but his casandra-like pronouncements seem to be matching up with reality if you go by some of the worst examples coming out of the States.  The foreclosures resulting in vacant housing are severely impacting the viability of some neighbourhoods.
Here’s an article from The Charlotte Observer – New Suburbs in Fast Decay – sent along by Portland Metro Councilor Robert Liberty.

In Peachtree Hills, police are summoned nearly 300 times a year, mostly for property crimes in the 147 homes. But the 4-year-old neighborhood, near Sunset Road, has also seen robberies, shootings and gang displays more commonly associated with violent urban areas — not new subdivisions.
   [Click map for details.]
Fourteen-year-old Devon Smith was shot dead there in July. Graffiti memorializes his name on the sidewalks and benches. Spray paint also proclaims “Bloods 4 Life” and “PT Blood.”
“All I wanted was a safe place with some backyard space for my son to run around, but that’s not what we got,” says Stacy Hall, 36, a medical claims processor and single mom, whose Peachtree home was burglarized last year. They got away with $110 in day care money. And in November, she arrived home to find a police helicopter hovering and officers chasing men through her yard.
“I was like, `Where am I? L.A. or something?’ ”
A Chicago study found that when the foreclosure rate increases 1 percentage point in a neighborhood, its violent crime rate jumps 2.3 percent.

Cleveland seems to be very hard hit as well – particularly the inner-ring suburb of Slavic Village.  Stories here and here.

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The other day The Tyee asked me for an idea that I think has traction: something that will shape our city in the coming year.
Well, okay.  How about some new housing that effectively addresses  affordability and sustainability without changing the character of low-density neighbourhoods? – in other words, an EcoDensity wet dream.
How about if it were simply built, appropriately west-coast, with a touch of elegance?  What if it gave options for the elderly – or for students – but didn’t require carving a house up into secondary suites?
What if gave first-time homebuyers a real option that doesn’t require (a) living in a highrise, or (b) mortgaging their first-borne?
What if it didn’t even cost the city a lot in the way of new infrastructure, taxes or traumatic rezonings?
You know I wouldn’t even ask unless I had an answer. 
And so ….

Ta da!  A suite of cottages by Smallworks, a company turning out solutions from their Southlands studio, willing to truck their little cottages to you, pre-fab, easily assembled and ready to fit nicely into your backyard.  If you have a 33-foot-wide site with lane access at the rear, it will take up the room of an existing garage.

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