Controlling private property, as viewed through Nextdoor

Based on Nextdoor, one writer sums up what bothers Americans about their local surroundings:

Steve Wymer, Nextdoor’s vice president of policy, told me that the same topics arise again and again, modulated by region and neighborhood type. Service requests and recommendations constitute 30 percent of chatter, and discussions of real estate make up another 20 percent. About 10 percent of Nextdoor conversations relate to crime and safety, Wymer said. (Suspicious persons come up a lot, often amounting to sightings of people of color in predominantly white areas. Nextdoor has attempted to discourage posts that use appearance as a proxy for criminality by prompting users to add more detail and blocking some posts that mention race.) Public agencies such as police and emergency-management departments also post updates to their constituencies. Noise complaints are another popular subject, according to Wymer—fireworks seem to raise particular ire—as are classifieds, missing pets, and gardening tips.

Judging by the conversations on Nextdoor, it would seem that Americans are concerned first about the safety and security of their property, family, and pets, and then with their property’s, family’s, and pets’ upkeep and improvement. Though the platform breeds its share of conflict, it is notable—in contrast to other social networks—for the commonality it reveals, even in these times of unprecedented political division. No one, Democrat or Republican, wants a neighborhood strewed with dog poop.

I wonder how much this online behavior is driven by two fundamental factors underlying American neighborhoods:

  1. Residents want to be able to control their own property.
  2. They also want to control some of their immediate surroundings, often in the name of property values or the character of the neighborhood.

These values can often come into conflict when one resident’s actions with their own property clashes with the desires of another property owner. Property rights are very important in the United States but property values often rely on neighbors and the surrounding community.

In the long run, it would be interesting to know whether Nextdoor provides a better platform for resolving neighborhood conflicts compared to face-to-face conversations or mediated conversations through other actors (such as calling the police or contacting local government about a concern). For example, many suburbanites are averse to open conflict and moving the conversation online might diffuse some of the tension. At the same time, an online platform could reinforce issues if things are said there that wouldn’t be said face-to-face or conversations take significantly more time.

 

The declining value of shopping mall real estate

The declining shopping mall has led to a drop in value for these properties:

“It’s a tough environment. I don’t think anybody really anticipated the decline of the department store to happen as quickly as it did,” said Joe Coradino, chief executive officer of Pennsylvania Real Estate Investment Trust, which owns 21 malls in the Mid-Atlantic region. “The sellers are clearly on their knees.”

The Philadelphia-based REIT has sold 17 bottom-tier malls since 2013. The last deal, completed in September, was a $33.2 million transaction for the Logan Valley Mall in Altoona, Pennsylvania, anchored by Macy’s, JCPenney and Sears stores. If those same properties were on the market today, prices would be substantially lower, Coradino said…

Not long ago, some of the biggest names in private equity, such as KKR & Co. and Barry Sternlicht’s Starwood Capital Group, were laying out substantial sums to snap up retail properties. In 2012 and 2013, Starwood purchased a combined $2.6 billion of malls from Westfield, followed less than a year later by a $1.4 billion deal to buy seven malls from Taubman Centers Inc. From 2012 to 2014, KKR bought four regional malls for about $502 million, Real Capital data show. That demand has all but evaporated as timing a wager on American malls becomes increasingly treacherous…

It’s easy to understand their reluctance to sell now. Prices for malls fell 14 percent in the past 12 months, even as values for other types of commercial properties, such as warehouses and office buildings, rose or held steady, according to Green Street Advisors LLC. At least four properties have been pulled from the market in recent months because the bids were too low, Dobrowski said.

Even with efforts to save some shopping malls, from adding restaurants and entertainment options, housing, and community spaces, a good number will simply not survive. They will not be desirable enough for retail activity nor prime spots for redevelopment. They may sit empty for much longer than communities desire or can bear. I suspect we will see a lot of potential creative solutions to these dead shopping malls as land owners, developers, and communities try to turn them into sites that again contribute to the surrounding area.

Perhaps the most interesting question here is how low prices will get before they interest someone who will buy them. Are we headed for the equivalent of $1 homes for shopping malls? Perhaps they will become subject to blight and renewal programs? Will the price be low enough for neighbors or communities to buy them simply to raze them? Perhaps they will be the dystopian spaces featured in films like Gone Girl?

The number of dandelions in the yard as an indicator of social class

It is the time of year around here when dandelions are sprouting now that we have some warmer weather and rain. If you walk, bike, or drive around, it is not hard to spot stark differences between yards with no dandelions and those with a lot of dandelions. Here are some quick connections between the number of dandelions and social class:

  1. There are certain expectations in the United States, particularly in suburbs, about lawns. Americans are obsessed with lawns: it must be green (even under drought conditions), of a certain height (lest you violate local ordinances), and free of weeds. It is big business to help Americans keep their lawn looking good. Residents experience pressure from neighbors to keep their lawn nice. Even senators can be attacked for not keeping their lawn in a way that pleases the neighbors.
  2. Those with more money can more easily (a) pay for lawn care and treatments as well as (b) pay for lawn care products that they apply themselves. It is not necessarily cheap to keep a pristine lawn. It is not just a matter of avoiding dandelions but having lush greenery all around, consistency in the kind of grass, and a regularly manicured height.
  3. A nicer and larger lawn is connected to wealth and social class. It is a signal of the homeowner’s ability to tame and maintain nature. It supposedly shows they care about their property. It suggests they want to present a tidy image, which is always connected to property values.
  4. As a test of numbers 1-3 above, imagine trying to sell a decent priced house in a major metropolitan area where the yard is just covered in dandelions. Even if the house is in good shape, wouldn’t all those dandelions harm the image of the home? How many realtors would want to present an image of a lawn filled with dandelions to prospective buyers?
  5. Homeowner’s associations for townhouses, condos, apartments, and houses tend to do a good job of keeping dandelions in check. I assume this has to do with keeping up a positive appearance for the community. Fewer dandelions means a better image, more exclusivity, and higher rents or prices.
  6. The landscaping on our campus tends to look really good around graduation time when plenty of families and visitors are in town. The dandelions are largely in check.

In sum, I would suggest that the dandelion-free yard is yet another American status symbol. Just as people passing by might infer the social class of residents based on the size of the dwelling and the exterior appearance and the cars in the driveway, the number of dandelions may be used as a marker of social class.

(There certainly could additional factors that influence the number of dandelions in the yard. In addition to resources as noted above, addressing the dandelions requires time and physical ability which could be in short supply for a variety of reasons.)

Earning more yearly from the growing value of your home than a minimum wage job?

Zillow suggests the growth in home values in about half of the United States’ largest cities is higher than working a full-time minimum wage job:

The typical U.S. home appreciated 7.6 percent over the past year, from a median value of $195,400 in February 2017 to $210,200 at the end of February 2018. That $14,800 bump in value translates to a gain in home equity of $7.09 for every hour the typical U.S. homeowner was at the office last year (assuming a standard 40-hour work week),[1] a shade less than the federal minimum wage of $7.25 per hour.

Overall, owners of the median-valued home in 24 of the nation’s 50 largest cities earned more in equity per hour over the past year than their local minimum wage.[2] But homeowners in a handful of U.S. cities made out a lot better than that – in some cases much, much better.

The median U.S. household earned roughly $60,000 in 2017 ($58,978 to be exact),[3] or a little more than $28 per hour. But in six U.S. cities – New York, San Diego, San Jose, San Francisco, Seattle and Oakland – owners of the median-valued local home gained more than that in home equity alone. And if earning a six-figure annual salary represents a certain amount of privilege, homeowners in San Francisco, San Jose and Seattle all made comfortably more than that simply by virtue of owning a local home…

A home is often a person’s biggest financial investment, and according to the 2017 Zillow Group Consumer Housing Trends Report, the typical American homeowner has 40 percent of their wealth tied up in their home. A recent Zillow survey found that 70 percent of Americans[4] view their home as a positive long-term investment.

This is both an interesting and weird comparison. For the interesting part: most people understand the abstract idea of working a minimum wage job. They should know that a full year of work at that rate does not generate much money. The reader is supposed to be surprised that simply owning a home could be a more profitable activity than working.

But, there are a number of weird features of this comparison. Here are four:

First, not all that many Americans work full-time minimum wage jobs. People understand the idea but tend to overestimate how many people work just for minimum wage.

Second, roughly half the cities on this list did not experience such an increase in housing values. Without comparisons over time, it is hard to know whether this information about 24 out of 50 cities is noteworthy or not.

Third, the comparison hints that a homeowner could choose to not work and instead reap the benefits of their home’s value. This question is posed in the first paragraph: “Why work a 9-5 slog, when you can sit back and collect substantial hourly home equity “earnings” instead?” Oddly, after the data is presented, there is a disclaimer section at the end where the difference between working a job and earning money through selling a home is explained.

Fourth, to purchase a home, particularly in the hottest markets cited, someone has to start with a good amount of capital. In other words, the people who would be working full-time minimum wage jobs for a full year are not likely to be the ones who would benefit from the growth in their home’s equity. It takes a certain amount of wealth to even own a home and then even more if someone wanted to profit from just owning homes.

Overall, I would give Zillow some credit for trying to compare the growth in home values to a known entity (a minimum wage job) but the comparison falls apart pretty quickly when one gets past the headline.

Three major challenges facing tiny homes and their owners

Given that tiny houses have not exactly taken off, here are three possible reasons why:

The concept is appealing, but in truth, people have found it challenging to locate places where they can permanently park their home on wheels. It has become an issue in many communities, as homeowners worry that the character of the mobile homes will diminish their property value. Locating the perfect site can be easier in rural areas.

Another dose of reality has come in the form of human behavior. It turns out that for some of the people appearing on the various HGTV programs devoted to tiny-house living, the strain of living in such tiny quarters has surfaced. As we see with follow-ups, some couples cannot manage to live in 300 square feet together, and one moves out.

Additionally, when compared with the lifestyle of an urban micro-unit, rural or suburban settings are more restrictive. In the city, for example, people can get to a pub, cafe or coffee house in minutes simply by walking out the building’s front entrance and down the block.

These are three important challenges. The first and third discussed above seem related to me: it may take a significant amount of time before communities develop zoning and planning that allows for tiny houses. Current residents might view them as threats not only because are they mobile but also because the homes are also significantly cheaper than many other kinds of housing units. In the best case for tiny homes, communities would allow them to fill in spaces between existing buildings and units. This would increase density and possibly provide more tax revenue. In the worst case, tiny houses will be excluded from many desirable locations, contributing to the third issue above where the advantages of a tiny home and budget may be combined with needing to drive everywhere.

As for the second issue above, Americans like their (1) personal space and (2) space for lots of stuff. Tiny houses do not have much square footage for either. In a perfect world, the tiny house might be located in a vibrant urban or suburban area where the owner(s) could spend a lot of time outside the unit (taking advantage of third and public spaces like coffee shops, parks, and libraries). Without those nearby amenities, a tiny house might simply not offer enough separation from others. Additionally, a tiny house likely requires an owner to do without many things. This could be overcome through a variety of methods – living near family and friends with whom one could share, storage units, or a barter or sharing economy – but this requires more work and resources.

All of these problems might be solved eventually but it will take time.

The nuisance of Apple’s new HQ vs. it can help double your property values

This article details the complaints of neighbors of the new Apple headquarters facility in Sunnyvale yet ends with this tidbit about property values:

Some worry that the neighborhood of mostly single-story homes built in the 1950s and ’60s is living on borrowed time as long-time residents sell their homes to newcomers.

Housing values in the neighborhood have doubled since 2011, according to Art Maryon of Intero Real Estate Services. And in the first six months of 2017, 24 houses in Birdland sold on average at $1,690,350, according to Maryon.

The increase in property values mirrors what has happened in the rest of Sunnyvale, and across the Bay Area, but Birdland’s proximity to Apple Park makes it even more desirable.

“Many say we should just be happy that Apple is raising our property values,” said Birdland resident Debby MacDonald. “This doesn’t do me much good unless I plan to sell. And I am not sure what we have had to put up with and will continue to put up with is worth the money.”

This presents suburban residents with quite the dilemma: will NIMBYism or raised property values win out? Both are goals for the average suburbanite. They resist significant changes to the character of their community as this can disturb their quality of life through altered scenery, increased traffic, and a change in neighborhood activities. Ultimately, the changes may lower property values. Yet, this massive headquarters may change their neighborhood and significantly raise property values since it houses many employees and is home to one of the most desirable brands in the world.

Someone needs to make sure to follow up on this in a few years or ten years and find out how many residents are left. And even if they cash out – some because they want to and others because they have to (increased housing values can also lead to other increased costs) – those who leave might feel a real sense of loss.

Claim: “Local politics is always…about housing”

In a detailed overview of the policy debates over housing between YIMBY and the Democratic Socialist of America groups in San Francisco, Henry Grabar leads with an interesting argument:

Local politics is always, in one way or another, about housing. In San Francisco, a deep blue city whose fault lines long ago ceased to resemble America’s, that politics is a vitriolic civic scrimmage, where people who agree about almost every national issue make sworn enemies over zoning, demolition, and development. It’s like a circular firing squad at a co-op meeting.

This seems similar to Sonia Hirt’s contention that zoning in America is all about protecting the single-family home.

Ultimately, do local politics always come down to housing? In many ways, housing is the bedrock of a community: it is where residents experience home, it provides numerous signals about the status of the residents and the community (through property values, architecture, the quality of life associated with the dwellings), and it generates property tax revenue (more important in some places than others). If the housing is bad shape or there are major issues, it is a major concern for residents and, by extension, their elected (and unelected) officials.

Perhaps we could even get more specific about which aspects of housing drives local politics. Which issue is most important may differ based on the (1) class status of the community and (2) its stage of development. How about property values? Or decisions about large-scale developments (particularly if they present some differences from already-existing housing)?