Online real estate shift during COVID-19 reinforces the private nature of American homes

The ways in which COVID-19 has pushed more real estate activity online – virtual tours, making offers without physically seeing a home – doubles down on the private dimensions of residences in the United States. Here is my argument:

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Already, Americans tend to see their homes as castles, refuges from the outside world, spaces where they can do what they want, settings in which they tend to their immediate family and consume a lot of media, financial investments for their future. Add this to suburbs devoted to homeownership and driving and the home is truly a private place.

The downside is this: there is often limited community and civic engagement. Neighbors get along by pleasantly or passively leaving each other alone. Private spaces are very distinct from public spaces and public spaces where a true diversity of people might actually mix, whether a shopping mall or a library, are relatively rare. Trust in institutions is low and participation in community groups has declined.

Putting homes for sale on the Internet just further reduces the community or neighborhood element of a residence. If you look at enough real estate pictures, you see some patterns: lots of interior shots but limited images of how the residence interacts with surrounding spaces or what may be just down the street. For example, you may get a shot of a backyard but it is often facing the rear of the house, not out into the neighborhood. Or, you might get a pleasant image of the downtown of a community or a local park or a common room within an apartment building without much sense of how those spaces are used.

This is similar to how HGTV often shows homes. There may be sweeping shots of a neighborhood or location but the focus is always on the single housing unit. The interior and its features are the focus. The neighborhood or surroundings do not matter unless it has to do with proximity to work or family or to note the character of surrounding buildings (which is often connected to property values and the perceived niceness of the location).

There are some tools that could help potential homebuyers check out the neighborhood and community. A virtual house tour could be followed by a Google Street View drive through the nearby blocks. Instead of just relying on walkability and school scores on real estate websites, a potential buyer could go to local websites or message boards to try to get a sense of community life. Yet, any of these Internet attempts pale to talking to people in the community and experiencing the surrounding area. People should make some efforts to get to know their community before they consider moving there.

Seeing homes and residences as commodities that can be evaluated solely through the Internet downplays civic life or at least pushes it into the background. Divorcing a home from its surroundings can be done but it is impoverishing in the long run for property owners and communities. When we emerge from a COVID-19 pandemic, I hope the online aspect of real estate does not hamper efforts to rebuild community and social life when such work is sorely needed.

Flipping houses stats – up then Great Recession then up then down again – and questions

How many houses have been flipped in the United States in the last fifteen years? Here are some of the stats:

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In the first three months of 2020, 7.5% of homes sold in the United States were flipped, according to a June report from real estate research firm ATTOM Data Solutions. That’s the highest rate since 2006 and a jump from 6.3% at the end of 2019.

Home flipping rates had dropped drastically in 2007 and began to gradually recover in 2010. The number of flipped homes sold in a quarter peaked around 100,000 in 2005, and while it was on the rise in recent years, a decline began in the second quarter of 2019. In the first quarter of 2020, 53,705 single-family homes and condos were flipped, according to the report.

Profit margins have also dropped since 2019, hitting the lowest return-on-investment since 2011. After plummeting with the national economy between 2006 and 2008, profit margins on flipped homes grew at a steady rate until 2017. But since then, return-on-investment has been on a decline.

Still, it’s too soon to fully grasp how the coronavirus pandemic will impact the house flipping market through 2020 and beyond, ATTOM chief product officer Todd Teta said in a statement.

Flipping homes is by now a well-known process due to TV shows and personalities plus its spread throughout the United States. Yet, alongside other phenomena featured on HGTV and among certain groups (such as tiny houses), it can be hard to know how widespread a phenomena is.

Not surprisingly, these stats suggest flipping homes is connected to broader economic conditions: flipping increases when property values are high and repairs to a home can pay off in a sale. When times are tough and property values stagnate or even drop, there is less money to be made in flipping homes.

In the data above, it would be helpful to see how the national trends compare to patterns in particular places. Does flipping work in the hottest markets where prices are already high (limiting who can flip)? What about Rust Belt communities in good and bad times? Suburbs? Urban neighborhoods? I would guess there is a lot of variation across communities.

It is also worth considering what happens to the housing stock in places where flipping does or does not take place. If flipping happens, older housing stock gains new life. If it does not, do these homes simply keep sliding into disrepair?

Finally, this article starts with an example of a family involved in a flipping business but says very little about the role of small flipping businesses or more corporate operations. Even if flipping activity declines during tougher economic times, does it present opportunities for some to buy up properties to flip later? How do the profit margins differ across different kinds of flippers? Are smaller firms or family-owned flippers viewed more favorably by communities than corporate entities?

Providing a fully designed and furnished home

The CEO of Restoration Hardware recently discussed providing customers with homes that are completely designed and furnished:

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I would ask everybody in this call, if you get a second tonight, go on Zillow, go on Redfin, go on, pick your website for real estate. Go look at 100 homes tonight in a price range that you think we might play at. And tell me how many have great architecture, tell me how many have great interior design and how many have great landscape architecture. If it’s 1% — if it’s more than 1%, like you must live in a really great area. But even in the great areas, it’s so low. How many friends’ houses do you go to that you say, “Wow, this is beautiful architecture. This is great interior design. This is great landscape architecture”? Almost never. Almost never. It’s like a completed — completely uncharted world.

When you really look at the big homebuilders, they’re kind of stamping out some — it’s not a McMansion anymore. Call it whatever you want. But it’s a stamp out, right? And it’s a nice organized development, but there’s no one providing completely turnkey homes. Like Eri says to me a lot, like they don’t sell you a car without an interior. You don’t go buy a beautiful Mercedes or whatever brand you like, and it comes without an interior and you got to figure it out yourself.

I don’t know how many people on this phone have tried to do their own interior design or furnished their house. It’s a nightmare. It’s a nightmare for me, and I do it for a living. I have a house in the Napa Valley that I finished remodeling like 3.5 years ago. It’s not furnished yet. It’s that hard. It’s a pain in the ass. And so we know how hard it is. We know we’re good at it….

And I sit here and I go, well, why can’t we — we’re really good at architecture, really good at interior design, really good at landscape architecture. I know we can design and build things and furnishing that people will like. And I think there’s — if you think about people with money, okay, and you think about just what’s the most valuable asset, time, right? By far, the most valuable asset. Everybody on this phone can figure out — if you lose your money, you can figure out how to make more money. If you lose your time, you just can’t get it back, right? So we think a lot about businesses that deliver time value will become more valuable.

Four things stand out to me here:

  1. It is interesting to consider this in light of the increasing emphasis on staging properties. With staging, the design is more temporary but it gives potential buyers a vision for what the property could be. The option discussed above is more long-term.
  2. Generally, Americans act as though homes should be empty boxes filled in by owners to fit their tastes. When people buy homes, they customize them (within the confines of what is possible with the home) to what they desire and what they can afford. What if it could also work the other way around: a fully designed home shapes the owner as they come to grow into it?
  3. This highlights the mass produced nature of many American homes, whether they are McMansions are not. Particularly after World War Two, larger homebuilders started constructing more homes and buyers purchased them more like factory items. Straddling this gap from mass produced home to more customized home is not easy.
  4. I think he is right that there is a market for such homes. Yet, I imagine the market is fairly small given the price that would be involved. It is one thing to stage a home and then take those items back out; it is another to have a fully immersive design process and keep everything. For a business, I wonder what is the lower price point of homes that this makes sense for businesses (particularly if this is meant of more of a luxury product that is supposed to remain exclusive).

 

Watching TV to see people use Zillow

In watching a recent episode of House Hunters on HGTV, I was treated to brief scenes of the couple using Zillow:

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Caveats:

-I know this is how people shop for houses today. I have done it myself.

-I would guess this means HGTV and Zillow are working together on the show in some capacity. (See a similar clip on ispotTV.)

-House Hunters tries (!) to show what looking at houses might look like.

Commentary:

Even though the scene was brief, I found it odd. It either seemed like obvious product placement (use Zillow rather than Redfin or MLS or other options!), uninteresting storytelling (watch people look at a screen!), or signaled some major change. As the couple then moved to driving around by themselves and looking at houses, I thought for a short moment that they would not even need a realtor: they had found listings online, arranged their own details, and would tour on their own. (Alas, the realtor just met them at the first house tour.)

While there is a lot of potential for HGTV and other similar programming to incorporate devices and screens (mainly smartphones and tablets) into their portrayals of finding property, there is a bigger issue at play for television and film: how can you interestingly portray handheld screens that so many of us are buried in on a daily basis within a story that has to move at a rapid pace? This is not easy.

What I want to know: do TV shows push viewers to buy certain kinds of houses?

After publishing two papers in the last few years on TV depictions of suburbs and their houses (see here and here), it leaves me with one big question: do shows like these directly influence what homes people purchase?

Americans watch a lot of television – still an average of about four hours a day for adults – and they see a lot of dwellings. While there is a mix of housing units shown, scholars point out that television since the 1950s does place a lot of emphasis on single-family homes. This includes fictional shows set in single-family homes in the suburbs (think Bewitched or Desperate Housewives), rural areas (think Lassie), and cities (think Happy Days and King of Queens). More recently, viewers can see homes on HGTV and other networks that emphasize home life (plus the shows on other networks that specifically target homeowners, from This Old House to Trading Spaces). This makes some sense in a country that holds up owning a single-family home, particularly in the suburbs, as an ideal.

But, we know little how about all of this watching about homes translates into choosing homes. My study “From I Love Lucy to Desperate Housewives” did not find much evidence that more popular suburban television shows led to more people living in suburbs (or vice versa). Similarly, outside of some interest from Sopranos’ fans in having a home like Tony, there is little to no evidence that Americans flocked to imitate the home or neighborhood of the Sopranos. While the viewers of HGTV might be relatively wealthy, do they take what they see and directly purchase something like that?

It is relatively easy to make claims about how media products affect thoughts and behavior. However, it is harder to make direct, causal connections. I would guess advertisers around such shows hope such a connection is present. If we could examine this relationship between shows and homes more closely in research studies, it could help us better understand how Americans form, maintain, and change their approaches to homes and communities.

Showing a McMansion while saying, “I love all the brick. I love all the character.”

In a recent HGTV episode intro, the host is driving through a Chicago suburb. He says, “I love all the brick. I love all the character.” And this is the home we see as he says this:

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This is a McMansion due to at least four features:

1. The two story entryway.

2. The multi-dimensional roofline.

3. The three car garage and large driveway.

4. The lighter brick and other style choices that date the home as roughly a 1990s build.

(For aesthetic purposes, the dangling power lines in the front do not help.)

This home may have plenty of brick but critics of McMansions might argue the brick is deployed poorly. This home may have character – but of the negative kind rather than the charming variety.

Looking for the HGTV show that prioritizes fit and well-being, not budget and square footage

Reflecting on yesterday’s post on the dissonance of watching Marie Kondo in a McMansion, I wondered: where are the television shows that prioritize finding a home based on the social and psychological needs of the owners and their long-term health rather than emphasizing running up against the budget and maximizing the size of the home?

The easy answer is that these are not the homes or stories that Americans want to see. People want to get as much as they can within their budget. The overall price of the home and the size makes for interesting viewing across different locales.

Yet, I imagine there is some sort of viewership market for those who would rather emphasize how a home would fit their lifestyle. This occasionally comes through on HGTV but tends to be subsumed under concerns about budget and the size. Where are the people buying smaller homes and or cheaper homes because they appreciate the aesthetics of a particular home or because a smaller home is easier to clean and maintain or that cheaper and smaller home is near friends and family which are more important than their private home? Or, perhaps there could be a show about how relatively normal people purchase homes and then tweak them to fit their particular needs or interests.

If more homeowners are truly interested in long-term well-being, evidenced by interest in decluttering or options like the Not So Big House, it may be a while before they see this reflected on TV. Too many current shows are limited by budget and square feet to truly consider the well-being of the owners.

Can you tidy up with Marie Kondo in a McMansion?

A review of the new show Tidying Up with Marie Kondo contrasts organizing with purchasing a McMansion:

Stylistically, Tidying Up is gentle. Marie Kondo is a soothing presence—never soporific, somehow, but always engaging. She is twee, almost unbearably so, which is an affect not really seen in American television personalities. About 15 minutes into every episode, Kondo takes a moment to commune with the house, selecting a spot in the residence and kneeling in silent reverence. This goes on for longer than feels comfortable; sometimes the subjects join her, and sometimes they seem like they’re enjoying it. Conflict, when it happens, feels softer than it would on House Hunters, where couples routinely argue with increasing venom over the necessity of a mudroom in the home of their dreams.

The beauty of Marie Kondo’s world is that tidying is not punishment. She subverts the chore of cleaning by imbuing it with a radical sense of self-improvement. Unlike the underlying economic status anxiety that colors all of HGTV’s offerings, Tidying Up is more self-help than self-defeat. The home improvements, and by extension, life improvements, come not from buying a McMansion in Indiana, but from clearing life’s detritus out of your home to make way for something else.

The end of the review posits a dichotomous choice: either buying a McMansion to assuage status anxiety or tidying up to feel better.

But, I imagine many Americans would want to try to do both: purchase the McMansion or a large home and find a way to organize and declutter that home so that they feel better. Yet, this path seems to go against the path Kondo and others would prefer where Americans can’t have it all and have to make choices about their lives to prioritize well-being. Having a large home helps people feel like they can purchase and acquire more stuff. Having a bigger home is part of a consumer culture where buying bigger and more is a good thing.

One important step to the Kondo life would then be to not purchase the biggest home possible. How many Americans would be willing to do that or is it simply easier to buy into a tidying strategy that could be utilized in any home?

Popular HGTV show leads to local tourism boost – but what are the lasting effects?

Many HGTV shows are tenuously connected to actual communities – the focus is on the homes and personalities, not the neighborhoods and community. Fixer Upper and the efforts of the Gaines family in Waco, Texas may then be quite unique:

In 2015, they opened Magnolia Market, a home goods store that sells Mrs. Gaines’s mass-produced collections of bohemian farmhouse décor, and quickly followed with a bakery, garden shop and a turf-lawn park built near two old silos that had been constructed in 1950 by the Brazos Valley Cotton Oil Company. They also opened a nearby restaurant, Magnolia Table, in the former Elite Café, a longtime favorite that closed in 2016 after several different owners and renovations. When the Gaineses took it over, they installed subway tile along the walls, exposed the wood beams in the ceiling and stuck an ever-changing marquee sign out front. Naturally, the renovation was featured on their show.

No one’s complaining. The number of tourists to Waco has tripled in the four years since “Fixer Upper” first aired, with some 1.7 million people visiting in the first seven months of 2018 alone, and other local businesses have flourished with the influx. Carla Pendergraft, director of marketing for the Waco Convention and Visitors Bureau, said the appeal of the “Fixer Upper” brand has had a profound impact on the city.

Several quick thoughts::

1. The article touts increased tourism and a few local businesses that have benefited from the popularity of the show. Lacking are numbers about increased jobs and increased tax revenues.

2. The biggest bonus to Waco seems to be less about economics and more about status: the Gaines have helped make the city cool.

3. How long will this effect last? When Fixer Upper is done, will the family still exert the same pull on people? And if this trend dies down, how will the community of Waco respond? My guess would be that this uptick in tourism and interest will fade away if the Gaines are not as visible.

4. The concept of TV driven tourism is an intriguing one. People want to visit popular TV sites, like the Brady Bunch house for the Soprano’s home. Should more cities take advantage of shows that have strong connections to certain locations? Imagine Chicago building a full campaign around the Chicago Fire, Chicago P.D., and Chicago Med galaxy.

HGTV cashes in on the popularity of the suburban Brady Bunch home

The iconic home of the Brady family on The Brady Bunch may have a number of confusing features but it is still popular: HGTV is working on a show about the renovation of the home.

The Studio City, Calif., residence was pictured in each episode before the camera took viewers inside the family’s abode. Those scenes, which featured, for example, the kitchen where housekeeper Alice (the late Ann B. Davis) dished out jokes or the girls’ bedroom, where Marcia Brady brushed her hair, were shot on a soundstage.

The house changed hands over the summer, when the network snapped up the property for an unknown price. (Former ‘N Sync member and Brady Bunch die-hard fan Lance Bass narrowly missed out on the place in a bidding war.)

HGTV revealed in August that it had placed the winning bid and would restore the home “to its 1970s glory” as part of a new show.

On Thursday, the network announced that A Very Brady Renovation is set to premiere in September 2019. Home renovation pros from HGTV will “reimagine the popular show’s interior set design, working to ensure that the final renovation results stay true to the spirit of the Brady Bunch family home that everyone loves and remembers,” according to a press release. In other words, the iconic staircase and the retro hues used in the home will remain.

Perhaps this is what nostalgia about postwar suburban life looks like: it is filtered through television. Instead of having a show about updating postwar suburban homes (imagine an HGTV show solely devoted to the iconic Levittown and other mass produced suburbs), a network banks on a fictional suburban home. If this Brady Bunch renovation show works, I imagine more shows featuring famous TV homes could occur.

This whole concept makes some sense. Television emerged at the same time as the suburbs. Certain shows, including the Brady Bunch, became associated with suburban America. Some have argued the depictions of suburbs on television helped encourage suburban development – I’m not sure there is much evidence for that. Still, the suburban TV show following the exploits of a nuclear family and kids developed in this time and is still a genre today.

But, I could also imagine some alternative ways that a home like that of the Brady Bunch could enter the realm of nostalgia:

  1. Becoming a museum. Imagine either someone purchasing the property and turning it into a museum or a local government acquiring the property. Put a little money into the home to set up some displays, charge a manageable entrance fee, and the facility is up and running.
  2. Since the first option might cause some zoning issues, move the whole home to a place – museum, theme park, TV studio – better suited to host visitors to the home. What if there was a theme park built around TV buildings or even just around depicted suburban homes?