Tag Archives: consumption

Does “smart-sizing” sound a lot better than “down-sizing”?

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One writer suggests “down-sizing” is too negative and instead would prefer to use “smart-sizing” instead:

In the world of real estate, downsizing generally refers to reducing the size of the property you live in and the amount of stuff you have. Downsizing is something most homeowners will do at some point in their lives and it can be a very positive and necessary experience when property needs change. So why do many people have a negative reaction to the word?

When I hear someone say they are ‘downsizing,’ my writer’s imagination goes into high gear and I immediately picture this elderly couple, giving away most of their worldly possessions, leaving the home they have lived in for 50 years to move into an anonymous condo somewhere — maybe in Florida — far away from the familiar faces of friends and loved ones and the city they call home. And even though the move to a more manageable property may be a good thing for a variety of positive reasons — “downsizing” to me still feels like something is being lost…

Buying and selling property comes with some hefty emotional baggage, so why add to it by using words that can have negative associations when new, more positive selections are available?

After a quick Google search, I found precisely the right word to replace downsizing in my vocabulary: Smart-sizing. Don’t you feel a rush of positivity right now?

I’m guessing many people would prefer to affix “smart” to their own activities. But, what exactly does the term mean?

Smart-sizing means finding the right-sized property for your individual needs. It makes sense to purchase a home best suited for your lifestyle, needs and budget, at any stage in life. This applies equally to first-time home buyers who want ultra-energy efficient houses with a smaller building footprint, to property ladder climbers with expanding families, to baby boomers with shrinking families, and to seniors who would rather spend time with loved ones, or travelling, or any other form of recreation without the burden of maintaining (or paying for!) a large property.

Here is what might be happening. “Down-sizing” implies that people are getting out of the status seeking game, possibly because they can’t keep up or no longer want to. Americans tend to like bigger homes and more stuff – it is built into our individualistic, consumeristic DNA. If people are moving to a smaller home and getting rid of stuff, they are moving back down that status ladder. “Smart-sizing” gets at something else. It covers up the bigger is better consumption motives behind homes and stuff and replaces it with customization and what individual homeowners need. Some people might need a pool and hot tub, others might still want a McMansions, others might need a cheaper home that suits their income. All these people win with a “smart-sized” home that fits their needs. Others have made this pitch before; architect Sarah Susanka argues for the Not-So-Big House. However, given the lifestyles of the individual owners, such homes may not really be cheaper or all that less luxurious.

In the end, do people with “smart-sized” homes have smaller, greener homes with less stuff? Maybe…

Gas prices go down, SUVs and Hummers return. Could the same idea hold for McMansions?

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SUV sales have picked up in recent months as gas prices dropped across the United States:

Over the last month, auto analysts say, consumers have shown a fresh interest in the kind of SUVs — Hummers, Lincoln Navigators, Ford Explorers — that typified America’s bigger-is-better mindset of twenty years ago. The new mindset among some car buyers is one of the most unexpected consequences of a domestic oil boom that has helped cause global crude prices to plummet in recent months, with the cost of a gallon of gas now below $3.

As oil prices hit a three-year low, Americans are starting to see price changes that could ultimately influence everything from their grocery shopping to their heating bills to their travel. The lower prices — should they be sustained, as expected, for the next few months — have the potential to nudge the U.S. further away from its dreary post-recession mindset, leaving instead a nation with more affordable air and road transportation options, higher consumer confidence, and yes, a few more gas guzzlers driving around…

One measure is the share of “trucks” — including pick-ups, SUVs and crossovers — among total vehicles sold. Before the financial crisis, trucks almost always outsold cars, in some months grabbing as much as 59 percent of the market. Post-recession, the industry has flip-flopped; cars are more popular.

But not in recent months. In September, the truck market share was 53.5 percent. In October, it was 53.6. That is the best sustained two-month stretch since 2005.

As for those Hummers? Autotrader.com said interest in Hummer H1s on its site rose 11 percent last month, making it the fastest-growing older model among all vehicles.

As gas prices drop, Americans are returning to some of their consumption patterns from the late 1990s and early 2000s when the economy was doing better. Even though they have seen higher gas prices (which could return soon), gone through a great recession, and government regulations encourage more MPGs across all vehicles in the coming years, some Americans want bigger vehicles that require more gas.

This is interesting in itself but I wonder if the same general concept could apply to McMansions. One argument about reducing purchases of SUVs and McMansions, often paired symbols of excessive consumption, is that Americans needed to be shocked by high gas prices and hard economic times before they would change their behavior. Yet, the recent data about gas prices suggests Americans might just return to their spending patterns once things look better. (And, with the gas prices, it is not like they are likely returning to the $1.20-$2.00 range of not that long ago.) Might the same apply to McMansions? Even with all the fanfare about smaller homes, more reasonable debt loads (whether through mortgages or car loans), and critiques of the kind of sprawling communities in which communities are often built, will Americans return to McMansions once the economy picks up?

I, for one, wouldn’t be surprised. Even during the recession, people with money continued to purchase and build large homes. Homes do require a larger financial commitment than SUVs but they also are highly symbolic and linked to suburbs, all dealing with the American Dream. Perhaps the best hope for fighting these consumerist impulses is pervasive generational shifts, particularly kids, teenagers, and young adults who don’t want cars and suburban houses in the same way over time.

New York parking spots going for $1 million each

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A new development project in New York City includes the option to buy a parking spot priced at $1 million:

A new development, 42 Crosby Street, is pushing the limits of New York City real estate to new heights with 10 underground parking spots that will cost more per square foot than the apartments being sold upstairs.

The million-dollar parking spots will be offered on a first-come-first-served basis to buyers at the 10-unit luxury apartment building being developed by Atlas Capital Group at Broome and Crosby Streets, itself the former site of a parking lot. At $250,000 a tire, the parking spaces in the underground garage cost more than four times the national median sales price for a home, which is $217,800, according to Zillow…

The number of off-street parking spaces in the city was 102,000 in 2010, or about 20 percent less than in 1978, when there were 127,000 spots, according to the Department of City Planning. While scarcity is a factor in the price of parking, $1 million for a parking spot may still be a reach.

Last year, a private garage with space for two cars at 66 East 11th Street was listed for $1 million by the Manhattan real estate firm Delos. It is still available in conjunction with the sale of the building’s $50 million dollar penthouse. In April 2012, a parking space at 60 Collister Street, a loft condominium building in TriBeCa, sold for $345,459.

Over the past year, residential parking spots in Manhattan have been selling for an average of $136,052, according to Jonathan J. Miller, the president of the appraisal firm Miller Samuel.

Actually, that $1 million gets you a 99-year lease contingent on living in the building.

I understand some of the shock registered in the New York Times or at Slate, but at the same time, this is high-end real estate with the precious commodity of a parking spot. There are plenty of people who make the general argument that parking rates should rise in places like New York City to encourage more residents and visitors to use public transportation instead. Can one be in support of higher parking prices and then not like limited parking in this facility going for really high rates? Granted, there are lots of good things that could be done with $1 million – and even the Times article notes that this parking spot costs more than four times more than a median home in the US – but that could be said of a lot of consumer goods.

The house the Tanner family on Full House could really afford in the Bay Area

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With rumors of a possible Full House remake, Trulia took a look at what the Tanner family could realistically afford:

Like the concept of home itself, the Full House house is largely placeless: Shots of the exterior come from the Lower Pac Heights Victorian at 1709 Broderick, the Painted Ladies of Alamo Square encourage all kinds of assumptions in the credits, and the address the characters use (1882 Girard) is actually wedged up against the 101 in Visitacion Valley. Still, it’s fairly obvious that the Tanner family of today could not so easily swing a Painted Lady, or its stand-in, in this market. Trulia actually ran the numbers and came up with the budget that a morning-show host, a musician, and a rock-paper-scissors champion would need to house the pre-mogul-phase Olsen twins and those other sisters. That number is $1.23M. And you know what? We found them a house!

First, the math:

Trulia used 1709 Broderick as the baseline. They say that the property sold last year for $2.865M. (Which is weird. Per the MLS, the last sale was in 2006, for $1.85M. Property Shark estimates the property’s current value at just over $2.05M—perhaps they were looking at that?) Gah, so much of this is theoretical, anyway: The real 1709 Broderick is only a three-bedroom, and according to these plans, they need at least four.) Anyway, the point is that the Bob Saget hair helmet and its costarring ‘dos need a lower mortgage payment. Here is what Trulia figured, assuming 20 percent down and a 30-year, 4.1 percent fixed-rate mortgage:

Let’s do the math: if Danny (played by Bob Saget) made close to $160,000 a year as the host of the local TV show, Wake Up, San Francisco, Joey made $30,000 doing stand-up gigs around the country, and Uncle Jesse raked in $48,000 as a musician, together, they could only afford a home around $1.23 million or about a $6,000-a-month mortgage.Of the homes around the $1.23M mark on the market right now, this four-bedroom Victorian in the Inner Richmond, just a block and a half from the park, is the only candidate that makes any kind of sense. It just squeezes in under budget at $1.15M, comes with a backyard large enough for a picnic table and the doling of woodwind-scored life lessons, and even has mint-sherbet-shingle synchronicity with this actual Painted Lady. There’s no garage, though, so Uncle Joey would need to live in the storage space.

Two thoughts:

1. This gives some quick insight into the superheated Bay Area housing market. The Tanners are not buying a cheap house with this estimated income yet they are clearly not living in the implied homes from the exterior shots because they could not afford it.

2. This is a common trend among family sitcoms on television: the “normal” family depicted often lives in a home that is realistically way beyond their means. I’ve been looking at some research regarding depictions of homes on TV and this dates back to the nuclear family sitcoms of the 1950s where families tended to live in pretty big houses for their time. Sociologist Juliet Schor argues that this increased level of consumption on television – the middle-class family living in bigger houses and having more stuff, seemingly without having to worry about finances – influenced American consumer patterns as their expectations of “normal” changed.

Illinois gas tax receipts down $380 million between 2007 and 2014

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Going green for transportation is good but it does hurt gas tax receipts:

In 2007, Illinois collected $1.59 billion in gas tax receipts, according to a Chicago Metropolitan Agency for Planning analysis of Illinois Department of Transportation data adjusted to 2014 dollars. In 2013, that had ticked down 24 percent, to $1.21 billion, adjusted to 2014 dollars.

One reason: People are driving less. Vehicle miles driven per capita on Illinois roads has fallen 6.5 percent since its peak in 2004, according to Federal Highway Administration and Census Bureau data. The recession was a factor, but studies suggest that the change in driving habits is likely to stick, particularly among younger people who socialize via technology rather than driving.

Those who do drive also are using less gasoline. So far, government analysts say that’s not a huge factor in driving down gas tax revenue. But with new government standards expected to boost average fuel efficiency of new vehicles from 29.7 miles per gallon to 49.6 miles per gallon in 2025, such improvements in fuel efficiencies are expected to increasingly tamp down gas tax revenue.

At the same time, more people are turning to vehicles fueled by electricity or natural gas or are opting for other forms of transportation. Nationwide, bike commuting grew 61 percent from 2000 to 2012.

Chicago more than doubled its rate of bicycle commuting from 2000 to 2012, according to the Census Bureau. Half a percent biked in 2000 versus 1.3 percent in 2012…

The changes in how people are traveling is not good news for Illinois’ crumbling infrastructure. Illinois received a C- rating on the 2014 infrastructure report card from the American Society of Civil Engineers. For roads, the state got a D+, with the society claiming that 42 percent of Illinois’ major roads are in “poor or mediocre condition.”

Taxing gasoline is not a “sin tax” in the same way as taxing cigarettes but the concept is the same: to ensure a steady flow of revenue, consumption has to stay the same (and even then inflation eats away at this) or increase.

I haven’t heard much lately about taxes based on miles-driven rather than gas consumption. But, the article notes that it appears Congress isn’t going to address the issue so we may end up with a bunch of different regulations as states and municipalities look for ways to replenish these funds.

Micro-housing that is too expensive to solve the problems of affordable and sustainable housing

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Micro-housing may lead to some cool design opportunities but it may not solve important problems: providing more affordable and sustainable housing.

Which is, of course, the problem with zeroHouse: Nobody needs micro-housing in places where plots of prairie, mountain, and sea (!) are available in plenty.

Now, the zeroHouse might not be designed for the urban dweller at all. Several of the home’s signature features seem as though they’re meant for another type of buyer altogether. The design specs note that the house is entirely secure, with tempered “Sentry-Glass” windows, Kevlar-reinforced doors, and fully mortised locking systems. (Shocking that a house that looks like a Transformer could double as a bunker!)

Given the design features, land-parcel requirements, and other aspects of the building’s design—it can go into an energy-conserving “hibernation” mode for extended period of times—zeroHouse sounds like it might be better suited for Cliven Bundy country than for downtown infill construction. But then, that Manhattan Micro-Loft isn’t a much better model for addressing the lack of affordable housing in major U.S. cities.

I don’t mean to pick on Specht Harpman Architects, a New York- and Austin-based firm that’s mostly in the business of designing interiors and elegant single-family homes. Tiny-house offenders are everywhere, from the pages of any shelter magazine to the real-estate section of the New York Times, where per-square-foot costs and land allotments are out of sync with what (say) most New Yorkers need from micro-housing.

From what I’ve seen, much of the interest in tiny houses is driven by two market segments: (1) architects, designers, and other creative types who relish a new puzzle (how do you fit a lot of desirable features into a smaller amount of space) and (2) “downshifters” (to borrow a term from sociologist Juliet Schor), people deliberately trying to limit their consumption by limiting their living space as well as how much stuff they can accumulate.

Of course, there are some interested in micro-housing for its ability to address affordable housing and sustainability issues but several things still hold the micro-housing market back: zoning issues, a lack of large-scale building of these units thus far which would make them appear more normal and more practical to build with economies of scale, and price points that may not be cheap enough for the affordable market.

Buying or renting smaller spaces related to less consumer spending

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If Americans turn away from McMansions and toward smaller homes or renting, they may also spend less on other items:

The apartment/renting moves have two implication for consumer spending. First, less space means less stuff. Second, rental units typically aren’t fitted with high-end appliances and finishes.

Looking at real spending for certain home goods, the data show annual increases in spending on items like appliances, furniture and window treatments are averaging less than they did during the boom years. That means that, like home construction, demand for home goods isn’t supplying the boost to economic growth that it did before the recession.

The Demand Institute, a joint initiative of The Conference Board and Nielsen, looked into the shift’s impact on consumer spending in a 2012 study. The DI analysis expected demand for home goods to pick up as housing recovers, but “value-oriented brands are likely to see the greatest growth,” the report said, a short-run trend “driven by landlords and renters who want to spend less on fixtures and furnishings than homeowners [do].”

Renting households also tend to own fewer vehicles, said the DI report, in part because their finances are worse than homeowners but also because parkingspots are limited. That shift will limit future car sales

All together, this links spending in one large area – housing – to spending in other sectors. Take owning a large suburban house. Such a home tends to support a more robust housing industry including construction and real estate. Such homes are often built in more sprawling suburban neighborhoods, leading to more cars and more road construction. Bigger homes require more furnishings, landscaping, and opportunities for improvements and repairs, supporting more suburban big box stores and other retailers.

I do wonder how much this is a case of spurious correlation versus indicating broader shifts: is this all linked to people having less disposable income? If they feel they have less money, they might make different choices about housing as well as consumer goods. Or, due to the economic crisis and relatively stagnant income for many Americans, consumers might be shifting their preferences in a number of ways that could upset traditionally important economic sectors. It could be a move away from expensive and more durable goods (houses, cars) toward electronics (like smartphones) and entertainment (the creative class).

Another take on “Dead End: Suburban Sprawl”

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Here is an excerpt from a new book where the author suggests suburban sprawl has reached the end of the road:

Despite the struggles of the 1970s, or perhaps because of them, sprawl moved on. It spread over wider territories. It mutated into new forms. The eye was assaulted by landscapes never seen before. Fields of McMansions sprang up in the countryside, gated communities cowered behind stucco walls, office towers were sprinkled among parking lots…

These toll lanes were quickly dubbed Lexus lanes, and they deserve the name. A study showed that drivers with incomes above $100,000 were four times more likely than those who earn less than $40,000 to have used the toll lanes on their last trip. Tolls can reach levels that seem astronomical to drivers accustomed to free interstates, yet they rarely bring in enough money to pay back the cost of construction. Most Lexus lanes need heavy subsidies.

Highways are thus segregated by economic class, much like suburban neighborhoods. Lexus lanes, by design, serve a minority—if most of the cars were in the pay lanes, the free lanes would move at the speed limit and there would be no reason to pay. The tolls are primarily an allocation mechanism, and only incidentally a source of revenue. Their purpose is to deter those less able to pay from using the new lanes. Those wealthy enough to afford the tolls bypass the traffic jams, while everyone backed up on the free lanes gets to pay the bills…

Only the tightening of land use regulation in the nimby era can explain the falloff in construction of apartment houses. Their builders face stricter zoning, growth controls, and aroused neighbors.

It would be interesting to see the unique argument of this new book because this excerpt puts together a number of the complaints about suburban sprawl that have been around for decades: roads are expensive and wasteful as regulations and taxes encouraged driving, promoting bigger single-family homes leads to more private lives marked by NIMBYism and increased consumption, and all of this led to a housing bubble and economic crisis. Perhaps the new argument – hinted at in this excerpt – is that the pace of all of this really picked up from the 1970s through the early 2000s. Sure, American suburbs existed before then but even the post-World War II exemplars, the Levittowns, had much smaller housing and were denser compared to the far-flung new waves of suburban development of recent decades.

American poor can buy cheap consumer goods but have a harder time purchasing important items

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I argued a ways back that Americans in poverty who own electronic goods illustrate the ubiquity of these goods in American life. Here is some evidence: the relative cost of consumer goods has dropped in recent decades while goods associated with leaving poverty, like higher education, have increased.

This is the tension at the core of modern impoverishment, which Annie Lowrey takes on in the New York Times today. The wonders of globalization, modern manufacturing, and ruthless Walmart-style supply-chain management have made the stuff we buy to fill our homes and time much cheaper, and as a result the poor now enjoy a level of material well-being that would have seemed unimaginable decades ago. The safety net is also infinitely more generous compared with the early 1960s, before Lyndon Johnson launched his war on poverty. Yet, because the prices of key services are spiraling out of control, the poor’s lot is still rather hopeless. The NYT captures it in this very, very long graph…

nyt_cost_graph

New York Times

Here’s what makes this trend so treacherous: Prices are rising on the very things that are essential for climbing out of poverty.

Another way to think about it might be that most Americans have a baseline of consumer goods they own. But, to move up in status or to purchase goods and services that can help one achieve mobility, more resources are needed.

It is too bad Internet service is not indexed here.

If one were to approach this from a Marxist point of view, perhaps the purpose of cheap goods is to keep people distracted while social life and economic life declines or is more exploitative. What is there to complain about what the typical person has a smartphone or a large LCD or LED TV and lots of viewing options?

Dunphy’s home from Modern Family isn’t exactly a middle-class home

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The home used as the Phil and Claire Dunphy household on Modern Family is up for sale:

[G]et ready for a blast of memories from “Modern Family,” the Golden Globe & Emmy-winning ABC prime-time comedy that was filmed at 10336 Dunleer Dr., Los Angeles, CA 90064.

The price is $2.35 million, but listing agent Mitch Hagerman of Coldwell Banker Previews International said there’s decent income potential given the fact that TV producers have forked over generous fees for the right to film exterior shots of the property. He said it would be up to the new owners to negotiate with ABC Studios…

The home is a traditional, two-story style and has been impeccably remodeled, complete with crown molding, wood floors and upgraded appliances. It sits on a prime street in the coveted Cheviot Hills neighborhood. Hagerman says the home should sell pretty easily on its own merits.

“It’s a charming, gorgeous, cozy, family-oriented and classic-style home in a fantastic neighborhood where there’s very little inventory,” he said.

The home offers 4 bedrooms with en suite bathrooms, plus a powder room. The home last sold for $1.97 million in 2006.

A nice and expensive home. This is interesting because the Dunphy family is portrayed as being fairly middle-class. Phil is a realtor who is not the most successful or smart (these are running points throughout the shows). Claire recently returned to work, working for her father’s closet business, after not working. Where do they get all of their money? How do they afford such a nice house?

Sociologist Juliet Schor argued in The Overspent American that one problem of post-World War II television is that it showed an increasingly lavish middle-class lifestyle. The evolving image of the middle-class on television showed families with more money and possessions and not much discussion about how they could afford it all. The Dunphys are supposed to look like normal Americans yet their lifestyle is pretty wealthy with little concern about money and pretty nice possessions. Schor suggests portrayals like this pushed more Americans to consume more.

In other words, the show plays off the idea the extended family depicted is a “typical” American family yet its class status is far from what many American families experience.