Tag Archives: housing

HUD investigating DuPage County Housing Authority who is also naming a new director

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In an update to a story I noted last year, HUD is conducting an investigation of the DuPage County Housing Authority.

Investigators with the U.S. Department of Housing and Urban Development’s Office of Inspector General are examining the housing authority’s development of Myers Commons, a 91-unit senior housing project in Darien, the sources said.

The investigation comes after the Tribune reported last year that the housing authority’s board and executive director violated federal regulations by allowing a former board member to develop the project. The housing authority also failed to follow federal regulations by not allowing competition to develop the project, the Tribune reported.

The irony here is that this is a black mark for the county and it involves an agency that many conservatives in the county may not even want (or want it to do much).

Additionally, the agency is naming a new director:

In the latest step to improve its standing with HUD, the DuPage Housing Authority will name David Hoicka as its new executive director Thursday, Board Chairman Thomas Good said.

Hoicka has served as chief operating officer for the housing authority in El Paso, Texas, worked as an adviser to the housing ministry in Bahrain, managed the New Orleans housing authority, and worked as branch chief for Hawaii’s Housing and Community Development Corp. He has written three manuals on HUD regulations.

It would be interesting to hear more about why someone who has presided over housing authorities in decent sized cities such as El Paso and New Orleans would want to work in DuPage County. Clearly, there is this issue to clean up but DuPage County could provide some interesting challenges: it is a wealthy county with a growing population of poorer residents and a need for affordable housing. Additionally, the DuPage Housing Authority has a mixed legacy and it is trying to operate within a conservative county that at least in the past has tried to resist such efforts.

Americans want smaller homes but are still looking online at big ones

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There have been several indicators in recent months that Americans are interested in smaller homes. But what if they say they would purchase smaller homes but are still looking at bigger homes? An economist for Trulia.com discusses this:

We asked people to tell us their ideal home size. They’re shunning super-sized homes, the McMansions. Only 6 percent of Americans say their ideal home size is more than 3,200 square feet. Thirty-two percent said they see the ideal home at 1,401 to 2,000 square feet. About 27 percent said 2,001 to 2,600 square feet.

This is partly due to the economic troubles of the recession and recovery. But this could be part of a permanent shift toward smaller homes. And it could reflect baby boomers wanting to downsize and increasing environmental awareness, with some people wanting a smaller environmental footprint.

On the other hand, when we look at the homes that people view on our site — even though only 6 percent of the people in our survey said the McMansion size range was ideal — 27 percent of the property views people are looking at are of that size. So even though people aren’t saying those large homes are their ideal size, they want to see what these homes look like and want to dream big.

This disconnect could be explained in several different ways:

1. Americans look at bigger houses online because it is free. These days, one can look at hundreds of homes and get a good idea what is on the market. Perhaps we would need to ask realtors about what sized homes people actually ask to see.

2. Americans actually do want to buy bigger homes but they know the economic realities and perhaps even the cultural shift and so say they would want a smaller home. As the economist suggests, Americans simply like to dream big. This certainly wouldn’t be the first time that self-reported actions and aspirations don’t match up. If the economy picked up, we could then figure out whether the shift toward smaller homes is real or was a reaction to the economic crisis.

3. Americans want to look at bigger homes because they want the features of the bigger homes in a smaller home.

Time will help us figure out which of these interpretations is most accurate as would more data.

You can read Trulia.com’s press release concerning the survey here and a more  interpretation here. The web survey involved some weighting:

Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents’ propensity to be online. These online surveys are not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodologies, including weighting variables, click here.

“Not based on a probability sample” is usually a problem for surveys, even if proper weights are assigned to results. I would like to see some more thorough survey data on some of these issues.

A possible future of McMaisonettes

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At the end of a review of Harvard’s Joint Centre for Housing Studies 2011 “State of the Nation’s Housing,” a commentator speculates on the near future for American housing:

But if there is a rebound, the JCHS analysis of American demography suggests where things will be most bouncy. At one end of the age spectrum, there will be pent-up demand from younger adults who have deferred setting up on their own because of economic and financial constraints. At the other end, the ageing of the baby-boomer generation will mean an increase in sales of homes by older people looking to downsize into smaller residences. That, and the limitations on mortgage financing, indicates that a revival in housing construction will focus on smaller houses. Fewer McMansions, in other words, and more McMaisonettes.

And I’m left waiting for the next paragraph which will then provide an explanation of future McMaisonettes. Because there is a “Mc-” prefix attached to the term maisonette, defined as a “small house” (also “an apartment often on two floors”), I assume this refers to the mass produced nature of these small homes. This is typically not complementary as critics suggests McMansions either all look the same or they mix-and-match authentic architectural themes or motifs into an mishmash. So will smaller homes be regarded as better because are more within people’s economic reach and are less wasteful or will they be knocked for their mass-produced nature just like McMansions?

Barbie needs a “green dream home”

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The socialization process that children go through includes messages and ideas that they get from the toys that they play with. So if we want future adults to live in greener homes, then perhaps it will be Barbie who leads the way:

With an exciting new career in architecture, Barbie naturally needs stylish new digs which is why Mattel has teamed up with the American Institute of Architects (AIA) to launch the Architect Barbie Dream House Design Competition…

And here are Barbie’s guidelines, in her own words:

My Dream House should reflect the best sustainable design principles and also be a stylish space that I can live in comfortably. A sleek, smart home office is important for any doll…

I love to entertain so I need living and dining areas that are open and connected allowing for mingling and easy entertaining from one room to the other…

And the list of guidelines goes on.

This is an interesting list: it starts with “sustainable design principles” but then the rest of the list expands on the concept of “stylish space.” So Barbie might want a greener home but this home is still going to have to be pretty large to accommodate all of her stuff. The home may be designed a little better but it still sounds like it will be an ode to consumption since she is a “fashionista,” has at least three cars, and needs a big yard. Can Barbie live in a greener McMansion (not that architects could call it that)?

It would be interesting to see what type of architects would openly submit designs for this.

Great quotes in homeownership #1: Owning a home keeps Americans from Communism

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In a recent conversation with a college friend, we talked about how keeping up with a home takes a lot of time. This reminded me of a quote from William Levitt, a member of the famous family who built the Levittowns:

He [William Levitt] was a prime facilitator of the American Dream in its cold war formulation. “No man who owns his own house and lot can be a communist,” he once said. “He has too much to do.”

So the key to fighting the Cold War through homeownership was not about owning private property; it was about keeping men (and women?) busy taking care of their homes so they can’t get involved in causes like communism.

The trick is that people have to want to and be able to put the time, effort, and money into homes that they buy. Starting mainly in the 1960s, Americans were given new options for homeownership that didn’t require as much work: townhomes and condos. (Contrary to the typical interchanging of the two terms, these two types of units are actually different: in a townhome, the homeowners own the land while condo owners do not.) The associations in these developments take care of much of the outdoor work leaving the homeowners to tackle the interior.

In addition to Baby Boomers who are retiring and downsizing to homes that will require less work, I would guess that many in the younger generation want homeownership without all the work.

Homes still large in New Zealand

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While new American homes have gotten smaller and this trend might continue into the future (I wrote about a piece in Slate that has been getting a lot of attention on this front), homes in New Zealand had also increased in size in recent decades though this might change in the near future:

Latest research from Quotable Value puts the average size of a home built since 2010 at 205 square metres, against just 142.4 square metres in 1980.

Quotable Value research director Jonno Ingerson said much of the increase could be put down to a rise in the construction of four bedroom homes, particularly during the last 20 years…

However significant increases in the cost of building in recent years meant the rate of growth was now slowing, suggesting homes may not get much larger, he said.

“There is also a push by some of the larger city councils to encourage medium density housing in fringe city suburbs. This type of housing will have smaller floor areas than the traditional suburban family homes that have been built over the last 20 years.”

It sounds like similar trends are taking place in New Zealand.

Several years ago, I had read a number of books comparing housing in the United States to European countries. While there are often clear differences there, it would be interesting to see recent research or books comparing the US housing market to that of Australia and New Zealand where bigger houses had also become the norm in recent decades. Will all three countries end up following a similar path toward smaller homes?

Federal government looking into redlining practices

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During the economic crisis of recent years, mortgages have been more difficult to obtain for many compared to what was available in the mid 2000s. With these tighter lending practices, the US government is looking deeper into possible redlining practices by lenders:

At the Justice Dept., a new 20-person unit dedicated to fair lending issues received a record number of discrimination referrals from regulators in 2010 and has dozens of open cases, according to a recent agency report. Potential penalties can reach into the millions of dollars. “We are using every tool in our arsenal to combat lending discrimination,” Thomas E. Perez, the assistant attorney general for the Civil Rights Div., told a conference of community development advocates in Washington in April.

To some banks the crackdown has come as a surprise, say consultants and lawyers representing financial institutions in discussions with regulators. Like Midwest BankCentre, some lenders are being cited for failing to operate in minority and low-income census tracts near their branches, even when they have never done business there before. “If you put your branches only in upper-income areas, the regulators are not accepting that anymore,” says Warren W. Traiger, a lawyer at BuckleySandler in New York, which advises banks on fair lending issues.

Mortgage refinancing activity doubled in white neighborhoods but dropped sharply in minority neighborhoods in a sample of major U.S. cities in 2008 and 2009, according to Paying More for the American Dream, an April study by a group of seven community development nonprofits. “The pendulum has swung back too far the other way,” says Kevin Stein, associate director of the California Reinvestment Coalition in San Francisco, one of the report’s authors.

Several things strike me as interesting about this:

1. As the article notes, this oversight goes back to the 1977 Community Reinvestment Act (CRA). I wonder how the HMDA data, data lenders must report every time someone applies for a mortgage (including factors like race), has been a part of these government efforts. With this data, regulators (and others) can get an idea of who lenders approve for loans and who they do not.

2. The Drudge Report headline about this article,  “Obama admin pushing banks to offer subprimes again…,” seems somewhat misleading. There is little to indicate in this article that the government is telling lenders they should make subprime loans. Rather, it sounds like the government is suggesting that lenders need to make their products available to all people. One adaptation to this in order to account for worse credit scores or other factors might be for the lenders to offer subprime loans in order to protect some of their investment. But there is little indication the government is saying that lenders have to offer subprime loans.

3. Access to credit really is an important issue. If it is not widely available or limited to certain groups, the purchasing power of consumers for goods like houses or cars can be severely limited. And this can then have a large impact on the greater economy.

The importance of property values to NIMBYism

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NIMBYism is cited as a common American issue as homeowners often fight hard to protect their pristine homes and neighborhoods. I was reminded of this by an article looking at seven neighbors that damage property values:

Here, the seven suprising neighbors that can reduce your home’s value:

Power Plants. The data is fairly clear on the impact of power plants on nearby home values — it usually hurts them. A study from the University of California at Berkeley shows that home values within two miles of a power plant can decrease between 4% and 7%.

Landfills. A study from the Pima County (Arizona) Assessor’s office shows that a subdivision located near a landfill (and all other residential factors being equal, like house size, school quality and residential incomes) loses 6% to 10% in value compared to a subdivision that isn’t located near a dump.

Robert A. Simons, an urban planning professor at Cleveland State University, says that if you live within two miles of a Superfund site (a landfill that the government designates as a hazardous waste site), your home’s value could decline by up to 15%.

Sex Offenders. Living in close proximity to a registered sex offender is one of the biggest downward drivers of home values. Researchers at Longwood University’s College of Business & Economics conclude that the closer you live to a sex offender, the more your home will depreciate. In the paper, Estimating the Effect of Crime Risk on Property Values and Time on Market: Evidence from Megan’s Law in Virginia, Longwood researchers say, “the presence of a registered sex offender living within one-tenth of a mile reduces home values by about 9%, and these same homes take as much as 10% longer to sell than homes not located near registered sex offenders.”

Delinquent Bill Payers. One surprising way that neighbors can bring down the value of surrounding homes, especially in town home or condo communities, is by not paying their maintenance fees or their mortgages. “Bad neighbors bring values down by not paying their maintenance fees, in some cases their mortgage payments, and not maintaining the home’s appearance,” says Pordes. “These homeowners usually do not care about real estate values.”

Foreclosed Homes. Perhaps the biggest single factor that drives nearby home values down is a foreclosure. A recent study by the Massachusetts Institute of Technology concludes that a neighbor’s foreclosed home can slash the value of homes within 250 feet of the foreclosed properties by an average of 27%. Says Federal Reserve Governor Joseph Tracy recently in his economic outlook for 2011: “The growing inventory of defaulted mortgages continues to weigh down any recovery in the housing market… Problems in housing markets can impact economic growth.”

Lackluster Landscaping. Studies show that lawn care has a big impact on surrounding home values. Virginia Tech University released a report stating that pristine landscaping can jack up the value of a home by 5% to 10%. But if the lawn looks like it just hosted the world rugby tournament, it can be a green thumb to the eye of local home prices.

Closed Schools. Sometimes, neighborhood problems can stem from local government action. For example, if a cash-strapped city or town closes a neighborhood school, that can easily steer home values south. The National Association of Realtors says that 75% of home shoppers, the quality and availability of schools in the neighborhood is either “somewhat important” or “very important.”

As the article notes, what an individual homeowner can do about these situations might be limited. Perhaps the best way to avoid this is simply to do one’s homework before moving into a neighborhood to assess what has happened or might happen in the future. This could involve checking community websites, reading local news, and talking with current residents. But, there are always trade-offs involved in this process. If someone desires a cheaper home, perhaps they might move into an area that has one of these conditions.

At the same time, there are plenty of land uses or neighbors that are not cited in the article where homeowners band together to protect their community. Here are a few recent situations in the Chicago region: a battle over affordable housing in Winnetka (with an update here), Naperville residents opposed to Show-Me’s and Evanston residents opposed to a Tilted Kilt restaurant, and a debate over lighting in Barrington Hills. Compared to a power plant or landfill, these uses seem much less obvious and yet are important concerns for residents of wealthier communities.

On the whole, this article illustrates that one of the primary goals of a homeowner is to protect and/or grow their property values. In order to do this, a homeowner may have to be in opposition to larger neighborhood or community goals. After all, power plants and landfills and sex offenders have to be somewhere. But, if you have the economic means in the United States, you generally move to nicer and nicer neighborhoods where these NIMBY concerns are likely reduced. It would be interesting to track how people’s neighborhood or suburban moves over the years progressively place them further and further away from such property value lowering uses.

Bin Laden and his McMansion

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As the details of Osama bin Laden’s death have become public, some attention has been paid to the house in Pakistan in which he was staying. Here is an extended description from Politico:

The White House says the compound that housed Osama bin Laden in Pakistan was “extraordinarily unique” and had many signs that indicated he was hiding there.

The structure, which has been described as a mansion, was on a “large plot of land” in a “relatively secluded” area, a senior administration official told reporters on a conference call. The residence itself was “eight times larger” than other homes in the area, said the official, who refused to be identified.

“We were shocked by what we saw,” the official said after President Obama announced that bin Laden had been killed at the compound in Abbottabad.

The security measures at the compound were “extraordinary,” the official said, describing walls that were 12 to 18 feet high and topped with barbed wire, in addition to walls on the inside. Access to the mansion was restricted with two security gates, officials said.

Another sign was that the residents of the mansion burned their trash, unlike their neighbors, who simply put their garbage outside, they said.

The property, valued at $1 million, had no telephone or Internet access, the White House said. It was “custom built to hide someone of significance,” the official said.

When I first heard about this house in a Pakistani community, I wondered if anyone would tie this kind of unusual house to the idea of a McMansion. I found three examples. First, a columnist links bin Laden’s house to McMansion complaints in an Austin neighborhood:

And so much for the legend that bin Laden was a really big camper who survived in caves. Bin Laden was found in a huge house, in Abbottabad, Pakistan, eight times larger than any other house in the area. So if he had been hiding in the Bouldin Creek neighborhood, they would have found him years ago because people would have called the city to complain about his McMansion.

They must have a lot of complaints about McMansions in this neighborhood.

Second, a Brooklyn-based publication links bin Laden to McMansions and Martha Stewart:

As for the details, we’ll find out over time (we’re expecting a big spread in Martha Stewart Living about how you can make your house look like Osama’s Abottobad Dream McMansion).

I don’t think we’ll be seeing that particular spread soon.

Third, the blog SpyTalk has this headline for a blog post: “Mystery: Who Financed Bin Laden’s McMansion?”

Why exactly would people say bin Laden was living in a McMansion? Perhaps a few reasons: the house was quite large. The house was larger than anything nearby (the relative size argument). The home was quite private with its walls, gate, and barbed wire. But this seems kind of ridiculous: the typical suburban McMansion looks nothing like this nor are its typical residents dangerous terrorists (regardless of what the movie Arlington Road might lead you to believe). But if you don’t like McMansions and you don’t like bin Laden, perhaps this makes sense…

(A Time piece suggests the house was not even a mansion:

The compound doesn’t quite fit the descriptions of a mansion, as some have labeled it. The walls are 12 feet high walls and about 13 inches thick – enough to shield the tall terrorist leader from public view. The property itself is spread over an area slightly smaller than an acre. The house is a great deal smaller, rising over two-storeys. In other ways, it was unremarkable but sometimes noticed.

So there are some differing opinions on this.)

McMansions and the “inconspicuous consumption” of the 1990s

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One aspect of McMansions that is frequently discussed is the tie between such houses and larger patterns of excessive consumption. Here is a quote from a CEO of a Pennsylvania construction company that does just this:

“The new-home industry will have to respond to the market for smaller lot size and efficient home construction,” Wagman said. “We’re past the building of McMansions. That type of inconspicuous consumption is so ’90s.”

To be honest, I didn’t quite know what this term “inconspicuous term” meant. I know what conspicuous consumption as it is a common sociological term first introduced by Thorstein Veblen in his 1899 work The Theory of the Leisure Class. So I went digging around Google for the meaning of this term and how it relates to Veblen’s term. This piece from The Economist in 2005 argues that conspicuous consumption is now much more complex in wealthy, Western societies and so inconspicuous consumption still shows off wealth but in more subtle ways:

As well as traditional conspicuous consumption and “self-treating”, Ledbury Research identifies two other motives that are driving buying by the rich: connoisseurship and being an “early adopter”. Both are arguably consumption that is conspicuous only to those you really want to impress. Connoisseurs are people whom their friends respect for their deep knowledge of, say, fine wine or handmade Swiss watches. Early adopters are those who are first with a new technology. Silicon Valley millionaires currently impress their friends by buying an amphibian vehicle to avoid the commuter traffic on the Bay Bridge. Several millionaires have already paid $50,000 a go to clone their pet cat.

Who knew that spending lavishing to show off one’s wealth and status had become so difficult? In 2008, Virginia Postrel says something similar:

The shift away from conspicuous consumption—from goods to services and experiences—can also make luxury more exclusive. Anyone with $6,000 can buy a limited-edition Bottega Veneta bag, an elaborately beaded Roberto Cavalli minidress, or a Cartier watch. Or, for the same sum, you can register for the TED conference. That $6,000 ticket entitles you to spend four days in California hearing short talks by brainy innovators, famous (Frank Gehry, Amy Tan, Brian Greene) and not-so-known. You get to mingle with smart, curious people, all of whom have $6,000 to spare. But to go to TED, you need more than cash. The conference directors have to deem you interesting enough to merit one of the 1,450 spots. It’s the intellectual equivalent of a velvet rope.

As for goods, forget showing off. “If you want to live like a billionaire, buy a $12,000 bed,” says a financial-planner friend of mine. You can’t park a mattress in your driveway, but it will last for decades and you can enjoy it every night.

So we’ve moved away from garish displays of spending to more exclusive but somewhat more hidden ways to display wealth.

If we return then to the quote from the construction CEO, what exactly was he getting at? A few thoughts:

1. If he is adhering to a similar definition as The Economist piece or Virginia Postrel, then he is suggesting that McMansions were a more subtle display of wealth. But it seems that a lot of the criticism of McMansions comes from the idea that the owners are trying (desperately) to flaunt their wealth in the form of their large, garish house. So is McMansion buying a conspicuous or inconspicuous act? Might there be different opinions if we talk to the buyers/owners of such homes (after all, people need to live somewhere) versus McMansion critics (but people don’t have to live in mass-produced, poorly designed homes)?

2. He suggests that the inconspicuous consumption of McMansions took place during the 1990s. The late 1990s is where the term McMansion started to take off but the houses themselves seemed to receive the most attention from roughly 2000 to the start of the current economic/housing crisis. Perhaps the 1990s get singled out here because of a good economy in the latter half of the decade but much McMansion building and purchasing was still taking place until recent years.

(3. I wonder if he simply didn’t mean to say “conspicuous consumption” and said “inconspicuous consumption” instead.)

(Amazon also has a 1997 book that uses this term as a title: Inconspicuous Consumption: An Obsessive Look at the Stuff We Take for Granted, from the Everyday to the Obscure. Interestingly, it is written by Paul Lukas, the mind also behind Uni Watch, a blog with the tagline of “The Obsessive Study of Athletics Aesthetics.” It appears Lukas is still writing about the same topics for ESPN.com but I haven’t seen his material featured in years. When it was more prominently featured, I would read his thoughts quite often.)