The reasons behind and consequences of the possible extinction of the starter home

Posted on by

Why are fewer builders constructing smaller starter homes that first came to prominence after World War II?

It’s several things. Land is too expensive to put the more modest house on it. Municipalities’ fees are another reason. And then there’s this phenomenon: Entry-level buyers just don’t want a starter home — they want something fancier…

From the time that high-production builders gained traction in the ’40s and ’50s and into the last part of the last decade, they were able to access inexpensive land and get labor and materials in ways that allowed them to produce an accessible and affordable entry-level home. But the Great Recession didn’t cause land to decline in value the way that houses did, and the lots aren’t widely available. When they are available, there are multiple bidders for them, which pushes the price up. Builders also downsized during the recession, and they don’t have the same capacity to build in volume that they once had. Today, if you’re building a $300,000 or $400,000 house, you’re going to make more money than if you were building two or three $150,000 houses.

Some of the sticker shock for buyers of entry-level homes comes from the local entitlement and permit fees that effectively ward off entry-level neighborhoods from established communities. These fees get baked into the cost and may add 20 to 25 percent to the cost of the home, for schools, infrastructure and support services. Municipalities seem to be doing everything they can to prevent lower-cost housing from being developed. They want property values and, in turn, property taxes, to be higher…

The startup of household formations is lagging the generation earlier by a few years. They’re becoming couples later and having children later. In some seismic way, we’re seeing that age group that we call the millennials buying their first homes at age 35, 36, 37. Because that generation grew up in what are really the nicest homes that ever existed in any society, they’re not going to want to go back to a very modest first home that will set them back, in terms of what they’re used to. They have a whole different mindset about that than we did. Certainly, some percentage of this group is going to want (the simple starter), but most will want what they’ve become used to — even in student housing, it’s like major apartment amenities. “Modest” is not what they have in mind.

It sounds like there are issues on both the supply and demand sides:

1. Consumers now expect more from their first homes. With demographic shifts (later marriage and kids) plus higher standards of living over time, homebuyers want more. This is something that also works against downsizing arguments: once people have a standard (and in this case, it comes from their earlier years and not even from something they have owned yet), it is hard to step back from those features.

2. Builders just can’t make as much money off of starter homes. Land is more valuable – think of all those suburbs that have expanded in recent decades – and fees have gone up so they need to construct more expensive homes to make up the difference. How many established communities, particularly wealthier ones, want cheaper starter homes constructed which might lower their own housing values as well as contribute more children to the school system and possibly require more funding?

A few side effects that might emerge:

1. Those who do want starter homes will likely have to go to less wealthy and older communities with older housing stocks.

2. This might limit particular groups, such as lower-income workers, from buying a home as they will have a harder time making the leap to a more expensive new home.

3. This could keep rental prices higher if people have to save larger amounts for more expensive first homes.

4. Those same communities that want to protect their housing values may find they have precious few places for people they might want in the community – such as recent college graduates or downsizing older adults – to own homes.

The artificial constructs of the French Republican Calendar and the metric system

Posted on by

The first French Republic introduced two new ideas – a new calendar and the metric system – but only one of them stuck.

The Republican Calendar lasted a meager twelve years before Napoleon reinstated the Gregorian on January 1, 1805. It was, in a way, perhaps a victim of its own success, as Eviatar Zerubavel suggests. “One of the most remarkable accomplishments of the calendar reformers was exposing people to the naked truth, that their traditional calendar, whose absolute validity they had probably taken for granted, was a mere social artifact and by no means unalterable,” Zerubavel writes. However, this truth works both ways, and what the French reformers found was that “it was impossible to expose the conventionality and artificiality of the traditional calendar without exposing those of any other calendar, including the new one, at the same time.” While the Earth’s orbit is not a fiction, any attempt to organize that orbit’s movement into a rigid order is as arbitrary as any other.

It’s not entirely a fluke that the Republican Calendar failed while another of the Revolutionaries’ great projects — the Metric system — was a wild success. Unlike Metric-standard conversions, or, for that matter, Gregorian-Julian conversions, there was no way to translate the days of the Republican Calendar to the Gregorian calendar, which meant that France found itself isolated from other nations. But more importantly, the Metric system did not, in itself, threaten social order, and the natural diurnal rhythms of human lived experience that have evolved over millennia. By suddenly asserting a ten-day work week, with one day of rest for nine days’ work, the Republicans completely up-ended the ergonomics of the day, and this — more so than the religious function of the old calendar — was what was irreplaceable. The Metric system of weights and measurements marks a triumph of sense over tradition — it’s just plain easier to work with multiples of tens than the odd figures of the Standard measurement system. But in the case of calendars and time, convention wins out over sense.

Pretty fascinating to think how parts of social life that we often take for granted – the calendar and time, measurement – have complicated social histories. It didn’t necessarily have to turn out this way, as the rest of the discussion of the calendar demonstrates. Yet, once we are socialized into a particular system and may even passionately defend the way it is constructed without really knowing the reasons behind it, it can be very hard to conceive of a different way of doing things.

Play explores idea of a proposed mosque for downtown Naperville

Posted on by

Inspired by reactions to a proposed mosque in Naperville several years ago (and another proposed mosque received opposition), a playwright has put together a script that involves a proposed mosque in downtown Naperville:

Khoury said he’s seen the same response elsewhere, including in unincorporated land near Naperville. The Irshad Learning Center in 2010 took to court its attempt to win DuPage County’s approval of the needed conditional use permit for a worship center on property it owns on 75th Street east of Naper Boulevard, just across the city border.

Neighbors of the 3-acre parcel had ardently opposed the center, voicing concerns about traffic, lighting and noise, with support from the Naperville Tea Patriots and the anti-Islamic organization Act! for America. After a divided County Board in January 2010 denied the request, the matter wound up in federal court, with Irshad claiming its Constitutional guarantees of religious freedom and equal protection had been denied. Northern Illinois District Judge Rebecca Pallmeyer ruled in March 2013 that the county improperly withheld the permit, in part citing the outside groups’ role in the process. The Irshad board is preparing to open the center later this year…

The play centers on a proposal from a ficticious group called Al Ulama, which has prayer space in a Naperville neighborhood but wants to move to headquarters on the actual site of the downtown Naperville Nichols Library, property owned in the play by Truth Lutheran Church. The plan calls for razing the church annex and building a new 100,000-square-foot structure on the same footprint, an Islamic worship site that’s taller than the previous building. In the play a town hall meeting has been scheduled to present the plans…

“The fear really is of Muslims: What’s this going to do to our downtown? Is it going to scare people away?” he said.

While fictional, this does present an intriguing hypothetical. Would any religious group be allowed to utilize valuable downtown land for a religious building? Downtown Naperville is a business and civic center but communities can sometimes protect properties in order to keep them on the tax rolls. There are churches within several blocks of downtown Naperville but I can’t think of any immediately within the business and civic district.

The end of the article says there will be public readings of the play in Naperville in the next month or so. It will be interesting to hear about reactions…

Gentrification limited in Chicago; should worry more about neighborhoods in severe decline

Posted on by

Gentrification may get a lot of attention in big cities but one journalist suggests the more influential issue in Chicago is the number of neighborhoods that have undergone severe declines.

At WBEZ, a Chicago public radio station, our neighborhood bureau reporters produced a package of stories, “There Goes the Neighborhood” (found here) in December, about the changing conditions of neighborhoods in racially segregated Chicago. We partnered with the University of Illinois at Chicago, which created a gentrification index for understanding how to measure neighborhood change in the city, for better or worse. The index measures 13 indicators of neighborhood conditions, including race, income, house values, education, and even the percentage of kids attending private schools. The findings confirmed and challenged some of our own notions, but the main takeaway is that gentrification is not as pervasive throughout Chicago as conventional wisdom might suggest.

Scoring neighborhoods based on the index, Chicago’s 77 neighborhoods were grouped into nine categories ranging from “stable upper/middle class,” meaning index scores remained high since the 1970s, to “severe declines,” meaning those scores dropped significantly since the ’70s. The “gentrification” category captured neighborhoods that had low index scores in the 1970s, but grew significantly higher by 2010. There were only nine neighborhoods that fit that “gentrifying” classification, almost all of them in downtown Chicago (“The Loop”) or just north of it, areas that have been historically white. These places were basically immune to the housing crash, but meanwhile a glut of luxury high rises cast shadows over Lake Michigan.

The category you want to pay attention to, though is “severe decline” — 14 neighborhoods found mostly in South and West Chicago have populations that are, on average, two-thirds African American. Add those to the 12 neighborhoods that have remained in extreme poverty since the ’70s, of which 94.5 percent of residents are African American…

Policymakers, hence, must address the concerns of inequitable development across neighborhoods and income inequality, which are both also national issues. According to a City Observatory report examining urban poverty released last year, the problem over the past four decades is not wealthy whites infiltrating black and Latino neighborhoods with designer Pulaski hatchets and vegan cupcake shops. Governing magazine came to similar conclusions, showing low percentages of gentrified Census tracts in Chicago since 1990.

Gentrification might be the sexy topic but addressing the pressing issues in persistently disadvantaged neighborhoods would likely help more people in the long run. Of course, addressing the issues in poor neighborhoods is complex and not change may not come as quickly as it does through gentrification. Given Chicago’s long history of residential segregation, many of these poor neighborhoods – which are often heavily non-white – are not in any danger of gentrification anytime soon because they are far removed from the edges of wealthier white neighborhoods where good real estate deals or trendy spaces appealing to young, white, creative types might be found.

 

What should a sociology journal do if it found a 1 million pound surplus?

Posted on by

I don’t know how much money many sociology journals have on hand but one British journal recently discovered a sizable surplus:

A prominent journal accumulated a surplus of more than £1 million unbeknown to most of its board, a former board member has revealed.

The Sociological Review is one of the UK’s top sociology journals. The fees paid by Wiley-Blackwell for the rights to publish it led it to amass funds in excess of £1.2 million by 2013. However, according to Pnina Werbner, emeritus professor of anthropology at Keele University, she was unaware of this during her time on the board between 2008 and 2013…

Professor Savage said that the journal had “an ambitious plan” to use its surplus to “better support the discipline of sociology, as well as the journal itself”. But he warned that tax liabilities might reduce that surplus “significantly” if the journal’s application for charitable status were rejected.

For some reason, this reminds me of local governmental bodies that sometimes debate returning surpluses to their constituents. I don’t imagine reviewers or subscribers will be getting bonus checks anytime soon. But, it does appear to be an opportunity for an influential journal to do something unique.

American homes are bigger again but now more energy efficient

Posted on by

A new government report shows American homes are more energy efficient than in the past:

Efficiency gains are offsetting more than 70 percent of the growth in energy use that would result from the increasing size and number of U.S. households, reports the U.S. Energy Information Administration.

In fact, energy intensity—energy used per square foot—was 37 percent lower (or better) in 2009 than in 1980. It meant a reduced use of coal, natural gas and nuclear fuel.

Why this progress? The EIA cites factors that include energy prices, shifts in fuel sources and stricter building codes. It also notes the broader use of more efficient technologies—from appliances and lighting to heating/cooling units, some of which were promoted via energy labeling programs such as the voluntary Energy Star.

That’s the good news. The EIA also gives the bad: “The gains from energy intensity improvements would have been even larger if it were not for consumer preferences for larger homes and increased adoption of home appliances and electronics.”

Two competing interests: trying to reduce energy usage but Americans, when they have the money, tending to purchase larger homes. Progress is being made on the efficiency front but the real gains would come if Americans had smaller and more energy-efficient homes. There are two possible courses of action:

1. Continue to try to convince Americans they don’t need such big homes. This might be done with psychological arguments (smaller homes will fit you better, feel more cozy), shame arguments (that size of space is unnecessary), environmental arguments (you are wasting energy), cost arguments (smaller homes could be cheaper both in purchase price and upkeep), or peer pressure (a smaller home may grant higher status or you don’t want to be the one who sticks out with your extra-large home).

2. Continue to keep improving energy efficiency so that the bigger homes aren’t as problematic. More passive houses? More net zero energy homes? Offer tax credits to improve energy efficiency?

In the short term, I imagine #2 is the most likely path with a small group continuing to work on the arguments of#1.

2.

Comparing Greece’s debt problem with the McMansions of the 2007-2008 subprime crisis

Posted on by

One writer links the issues with McMansions in the last decade with the debt issue in Greece:

Sometimes the best way to summarize a complex situation is with an analogy. The Greek debt crisis, for example, is very much like the subprime mortgage crisis of 2007-08.

As you might recall, service workers earning $25,000 annually got $500,000 mortgages to buy McMansions in subprime’s go-go days. The applicant fudged a bit here and there on income and creditworthiness, and lenders reaping huge profits from originating and selling mortgages were delighted to ignore prudent underwriting standards and stamp “low-risk” on the mortgage because it was quickly sold to credulous investors…

The loan was fundamentally imprudent and risky because the borrower was not qualified for a loan of such magnitude. But since the risk was distributed to others, the banks ignored the 100% probability of eventual default and skimmed the profits upfront.

Greece was the subprime borrower, and its membership in the euro gave the banks permission to enter the credit rating of Germany on Greece’s loan application. Though anyone with the slightest knowledge of Greece’s economy knew it did not qualify for loans of such magnitude, lenders were happy to offer the loans at interest rates close to those of Greece’s northern neighbors, and then sell them as low-risk sovereign debt investments.

In effect, the banks were free-riding the magical-thinking belief that membership in the euro transformed risky borrowers into creditworthy borrowers.

Two quick thoughts:

1. Most analogies made about McMansions are not likely to reflect well on such homes. Here, McMansions are part of huge financial problems. Later in the piece we have more negative ideas about McMansions:

Meanwhile, the poorly constructed McMansion is falling apart…So the hapless subprime borrower with the crumbling McMansion and Greece both have the same choice: decades of zombie servitude to pay for the crumbling structure, or default and move on with their lives.

Not exactly attractive options. Yet, the assumption here is that all or most McMansions fall apart within ten years or so. Is this truly the case with McMansions – do they have more repair issues than other homes? Perhaps Consumer Reports could sort this out for us since they like collecting such data.

2. I don’t recall seeing strong evidence that the subprime crisis was primarily driven by people purchasing McMansions. Rather, mortgages were granted that were too risky. But, how many of these loans were actually made for McMansions as opposed to other kinds of housing? The whole housing market was doing crazy things, not just in the McMansion sector.

 

Designing homes in “Disaster Chic”

Posted on by

Looking for a home that will help you survive the coming apocalypse? Look no further than printable homes, prefabricated small homes, and shipping containers.

You peer warily out of the single window in your zombie-proof steel box. The street seems deserted—except for a lone figure who is staring at you from a distance. Is it 2079, in the years after the Great Drought Plague!? No, it’s 2015 in Royal Oaks, Michigan, and that zombie is a curious local Fox reporter.

Royal Oaks is just the latest American town to get a house made from shipping containers, which offer something unique to consumers with a taste for apocalyptic adventures. While designers are developing smarter ways to build temporary housing and disaster shelters, developers and real estate agents are using the same technology to sell trendy and high-end homes. What results is a bizarre kind of hybrid style that pairs our worst fears with our biggest hopes for the future—utopia and dystopia overlap. Call it disaster chic…

Of course, it’s not surprising to see interesting ideas cross-pollinate—3D printing, containerization, and pop-up dwellings are all really cool concepts, and there’s no reason they should be shrouded in break-in-case-of-emergency glass. What’s interesting is how similar our ideas about crisis engineering and future chic really are. In the city of the future, everything is instant, whether for a good reason or a bad one. The cities of our dreams have a lot in common with those of our nightmares.

These homes don’t seem all that well equipped to help keep you safe. If anything, their primary feature in relation to disasters is that they can be quickly produced and moved. Those are important features in recovering from disasters but I imagine some might want more solid homes to survive the disaster in the first place.

But, it is interesting that such homes that do well at addressing disaster recovery might become more popular with a broader audience. Do such designs simply offer something different in a housing market where the typical home or housing unit isn’t really that exciting or different? Is this a way to offer ironic commentary about one’s home – homes in the United States are often intended to imply permanence but these structures hint at catastrophic change and adaptability? Or is this primarily driven by younger adults looking for cheaper housing options in cities that seem pretty determined to not provide much in the way of affordable housing?

“Are Americans falling out of love with the shopping mall?”

Posted on by

The shopping mall era may be slowly ebbing away:

While high-end malls thrive, many others have been unable to keep up with changing shopping demands of American consumers, leading to obituaries in the US press with headlines such as “A dying breed – the American shopping mall” and “shopping malls in crisis”.

About 80 per cent of the country’s 1,200 malls are considered healthy, which means store vacancy rates of 10 per cent or less, according to CoStar Group data published in The New York Times.

That is down from 94 per cent in 2006, and there is even a website dedicated to documenting what some are calling the death of the shopping centre, deadmalls.com, keeping tabs on the latest closures across the country. Ms Dorsey remembers the old-style mall with nostalgia. “The first time my mum allowed me to go out by myself, it was in a mall,” says Ms Dorsey, a saleswoman at a natural products shop in Fairfax, outside the US capital. “I do have fond memories.”

Most of America’s malls were built in the 1950s and 1960s, as a growing network of highways connected suburban homes to futuristic urban shopping centres…

“It’s not that consumption is going down – consumption is going up, but we’re consuming differently in different places,” says the sociologist George Ritzer, the author of a book on consumption, Enchanting a Disenchanted World. “They are becoming more entertainment complexes.”

There are some competing trends contributing to this:

1. The rise of the suburbs helped lead to this as centralized locations for shopping became more important than communities where needs could be met within walking or mass transit distances (like in cities). But, that decentralization can now be moved increasingly online.

2. Suburbs didn’t have as many public places – and if they did, they were more difficult to access since they often required driving. Malls filled this void, particularly for teenagers who became a prominent social group right around this time (and their collective life was encouraged in the suburbs which was largely centered around child-rearing).

3. Americans still like consuming. See the fate of higher-end shopping experiences. However, shoppers now have more options including big box stores and online retailers. Additionally, the shift in malls toward experiences rather than consumer goods is still consumption. In fact, prioritizing experiences might even increase consumption because people can have a variety of experiences.

While malls won’t disappear anytime soon, perhaps they will be seen at some point as the result of a particular historical and social convergence.

Interpreting dreams about New York City real estate

Posted on by

At the center of the world, what do dreams about real estate mean? One dream specialist looks into real estate dreams of New Yorkers:

“I dreamt that I found a door in my apartment that lead to this massive extra room no one knew about and suddenly our 300ish-square-foot one bedroom was big! And we didn’t have to move to have kids! Just don’t tell the landlord! I woke up and searched for that door. It did not exist. Dammit, Narnia!”Anne Cutler: The dream image of finding a hidden door that opens into a room one didn’t know was there could be a metaphor for discovering a new aspect of oneself that you didn’t realize existed. In this dream, the expansion of the apartment with the new room could be both literal: room to start a family, and metaphorical: a psychological readiness to have children and expand the family…

“After our first meeting with our broker—which, by the way, was very positive—I had a dream that he was like, “Rebecca, I’m sorry, but we’re going to have to look on Staten Island.” (My parents are assisting with the buying; that’s why I said “we.”) I was very depressed when I woke up. I’m sure the dream interpreter will say I have financial anxiety about buying an apartment but who knows what else this means.”

AC: This dream was most likely triggered by something in her initial meeting with the broker. Possibly the dreamer was trying to manage her expectations about what they could afford. The dreamer is most likely engaged in an internal weighing of her own fantasies about her dream apartment/house versus her fears about how far her finances will go. The dream does have an anxiety component. Given her depressed mood when she woke up, I’ll assume the dreamer doesn’t want to live in Staten Island. But the specifics of why not can only be gleaned from further discussion with the dreamer. The specific images we choose in dreams all have significance. So, in this case, why Staten Island instead of Queens or the Bronx or Brooklyn?

The neuroses of New York City life – perhaps this should have been the focus of a Woody Allen film?

I can’t help but want more data on such a topic:

1. Do New Yorkers dream about real estate more than people in other cities, particularly those in cities with less expensive housing markets?

2. Compared to others, do New Yorkers always want to move up (bigger place, better location, etc.) in their dreams? Given the consumerist nature of American life and what we think real estate signifies about us, is this limited to New Yorkers?

3. Do people have positive dreams about where they live? The examples presented here are more about anxieties dealing with home. Yet, psychologists and others have argued that certain dwellings can be designed to provide a better fit with the resident’s personality.