Tag Archives: property values

Growing real estate segment: commercial cannabis real estate

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A new startup wants to help buyers and sellers identify properties that are eligible to grow and/or sell marijuana:

Chicago’s real estate industry is in the midst of a few building booms, but if a new startup has its way, another one is about to bloom: commercial cannabis real estate. HerbFront, co-founded by CEO Alan O’Connell and Matt Chapdelaine, head of business development, want to create the Zillow of marijuana-based real estate. Their concept, which they’re developing at the ElmSpring accelerator at 1871 and plan to release in February, is a tool that lets investors see where they can legally locate dispensaries and grow operations, and helps property owners discover if buildings in their portfolio qualify for this potentially lucrative market. According to O’Connell, zoning rules and regulations can make locating a dispensary or grow operation complicated, but the huge upside means entrepreneurs are looking for someone to help point them in the right direction.

“There’s a lot of murky water in the industry, right now,” says Chapdelaine. “A lot of people are looking to access real estate, and real estate people are looking to access the industry.”

HerbFront will offer an array of services, from listing a property for $50 on its database to leasing the software to providing specialized business intelligence to investors and municipalities, in effect becoming a consultancy as well as a marketplace for these industry-specific property transactions. Chapdelaine, who has background as a broker, saw what happened during the last permit application process in Illinois, and believes his program can fill an important gap, as well as provide a form of insurance for those spending at least $250,000 to obtain a permit. With that kind of down payment to start a small business, obtaining a guarantee from HerbFront that potential sites are properly zoned becomes valuable (or so the founders hope).

I could see how this service might be valuable. But, it seems less difficult to map the available properties than it will be to predict and/or know what these properties might be worth. How profitable are such facilities? Are there other businesses or services that want to be or are needed near marijuana facilities? More broadly, could these be tools for economic development? From what I read about planning for such facilities in different Chicago suburbs, there is still hesitation based on what kind of people and activity such facilities could attract as well as how they might affect the reputation and image of the community. But, if they became a unique opportunity for economic development, perhaps communities would be falling over themselves to attract one.

A picket line against McMansions

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McMansions may be unpopular in Los Angeles but they rarely attract picket lines:

Residents in the Melrose District Sunday protested what they’re calling mega-mansions in Los Angeles.

A picket line was set-up outside of a new home in the 700 block of N. Vista Street which some claim towers over much smaller residences nearby and isn’t energy-efficient.

Demonstrators say they timed their protest to coincide with the realtor’s open-house of the residence…

The owner of the home being picketed was not available for comment.

I am guessing this doesn’t build goodwill among neighbors. Imagine you are trying to sell a home (or buy that same home) that attracts a picket line…I’m not sure there is a good outcome for that seller. I assume the people in the picket line hope this (1) draws attention to their cause and (2) tells other owners in the neighborhood that they will be unhappy with similar teardowns. Yet, I wonder if this truly acts as a deterrent and instead affects their own property values. Directly protesting the actions of one homeowner tends to violate neighborhood friendliness or at least the suburban moral minimalism (a term from The Moral Order of a Suburb by Baumgarner) of leaving each other alone that marks many sprawling communities.

Waze app ruins tranquil Los Angeles streets near major highways

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Drivers have flooded a number of residential streets near major LA highways thanks to apps that reroute drivers around congestion:

When the people whose houses hug the narrow warren of streets paralleling the busiest urban freeway in America began to see bumper-to-bumper traffic crawling by their homes a year or so ago, they were baffled.

When word spread that the explosively popular new smartphone app Waze was sending many of those cars through their neighborhood in a quest to shave five minutes off a daily rush-hour commute, they were angry and ready to fight back.

They would outsmart the app, some said, by using it to report phony car crashes and traffic jams on their streets that would keep the shortcut-seekers away…

There are some things that can be done to mitigate the situation, said Los Angeles Department of Transportation spokesman Bruce Gillman, like placing speed bumps and four-way stop signs on streets. Lanes could even be taken out to discourage shortcut seekers, but a neighborhood traffic study would have to be done first.

A fascinating confluence of driving culture and new technology. Now, no street near the major highways are safe from traffic!

It will be fascinating to see how the city responds to complaints from local residents. Having rush hour congestion on your residential road can make for quite a different experience. It is a quality of life issue – who wants to have bumper to bumper cars in front – and I suspect the residents are also worried about their property values. Yet, what about the concerns of drivers on highways like the 405 that handle over 375,000 cars a day? This is a classic stand-off between individual drivers and individual property owners – who should win between the prized American driver and property-owner?

The real solution here is to keep looking for ways to reduce the number of vehicles on the highways in the first place. However, such plans at this point in LA’s development require a long-term perspective and lots of money.

Decrease the number of new McMansions to increase local food security

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One farmer and activist suggests reaching local food security means stopping the construction of McMansions:

Salatin — a successful American farmer, former reporter and author of nine books on the food revolution — is able to produce far more food per acre than industrial-scale farms using techniques that make raising beef, chicken, eggs and even pigs palatable to the neighbours…

Putting fallow land around monster homes that are proliferating in the Agricultural Land Reserve back into production will be key to building local food security in B.C.“We call those McMansions,” he said. “It is a problem because that is agriculturally abandoned land. We can’t begin to feed ourselves with a local-centric system if we lock up land in royal manor models.”

Even urban dwellers need to consider how far their food has to travel and whether it will come at all if there are shortages, he suggested. The integrated approach he takes to food production on the farm can be applied at any scale, Salatin said.

There are a lot of things that people, even in well-established communities, can do themselves to become more food secure, said Salatin, giving examples such as keeping honeybees on rooftops, installing food-producing solariums in our homes, capturing rainwater for food production, container gardening and reclaiming some of the billions of potentially productive acres sequestered under lawns in North America.

It is rare to find a critique of McMansions that explicitly addresses food. Such homes are often criticized for being wasteful, using too much land and resources as well as providing more space than people need.

Yet, I suspect it is not quite as simple as suggesting new McMansions automatically mean less agricultural space. McMansions aren’t the only use of land. This argument seems to use McMansions as a shorthand for sprawl. The sprawl often associated with McMansion neighborhoods consumes green land and pushes farming and agriculture further and further away.

Would a middle ground be consistently using McMansion land for growing things and raising animals? I have yet to see a request from McMansion homeowners to allow chickens or livestock – though such lots could accommodate such activities. It probably comes down to property values…

 

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Advice for how to stop your neighbor from building a McMansion next door

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McMansions can be opposed in a variety of ways but one poster suggests the way to go is to be an undesirable neighbor:

Paint your house bright pink. Put several cars on cinderblocks in the front yard. Have 20 people move in with you. Stop cutting the grass. Park junk cars on the street in front of the vacant house. Blast loud music 24/7. Tie up a pit bull in your front yard. Get someone with a huge gut to hang out in your front yard without a shirt while drinking beer. All of these together may work, but you’ll probably make yourself miserable in the process.

These actions may or may not be possible given local laws and neighborhood regulations but they all have a similar goal: drive down property values so that possible McMansion no longer looks financially appealing. As numerous people will tell you, who wants to have the nicest house on the street, particularly compared to your immediate neighbors? If McMansions are about wealthier people upgrading their property regardless of their surroundings, then such actions could undercut their financial basis.

Good school districts give homes up to a $50 per square foot boost in value

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Redfin suggests a home located in a high-performing school district can command a higher price:

How much more do they have to pay for a home that feeds into a top-ranked elementary school as opposed to an average-ranked school? Nationally, try an extra $50 per square foot, on average, according to the data crunchers at Redfin.

In the Chicago area, the median price of a home near top-tier schools was $257,500, 58.5 percent higher than the median price of $162,500 for a home near an average-ranked school.

The findings are a jolt of reality for almost 1,000 consumers who plan to buy a home in the next two years and completed a Realtor.com survey in July. More than half of those potential buyers said they’d be willing to pay as much as 20 percent above their budget to buy a home within certain school boundaries. Apparently, that’s not enough to get into the best schools.

To do its calculations, Redfin compared median sale prices of similar homes in the same neighborhood but which fell within the boundaries of different elementary schools. The transactions studied were those that closed between May 1 and Aug. 31 — a time when home prices were showing recovery in most parts of the country — and were listed on local multiple listing services. Then Redfin boiled those numbers down into median sales prices per square foot.

An interesting experimental design – houses matched by neighborhood but in different school districts – and an interesting finding.

This reminds me of hearing Annette Lareau speak at the American Sociological Association meetings this past August in New York City. When she and her fellow researchers looked at how middle and upper-class families took schools into account when searching for where to live, they found that they were able to quickly eliminate most school districts as not being good enough. In contrast to the lengthy research these parents did regarding other areas of life, through word of mouth, they were able quickly learn what neighborhoods they would buy in.

Putting this all together, if there are only so many homes in the top school districts, buyers can ask for more and expect some competition among people who want to be part of the better school district.

How much Walter White may have lowered his neighbor’s property values

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Breaking Bad protagonist and meth kingpin Walter White might not have made his neighbors happy:

In his 2011 paper, “The Lasting Effects of Crime: The Relationship of Discovered Methamphetamine Laboratories and Home Values,” Holy Cross econ professor Joshua Congdon-Hohman calculates how much damage meth labs cause to surrounding home values after they’re discovered…Using housing sales data from Akron, Ohio — home to that state’s largest concentration of meth labs  — Congdon-Hohman finds the following:

  • For homes sold within an eighth of a mile after a lab is discovered, there is a 10.5% decline in sales prices.
  • Within the first year of the discovery the decline can be as much as 19%.
  • For homes sold within a quarter of a mile after a lab is discovered, there is a 4.5% decline.
  • The declines persist for at least two years.
  • It didn’t matter if an additional meth lab was discovered — just a single busted cook site can take down several blocks.

Summary: you don’t want meth makers on your street, particularly if you want more money when you sell your house. If reduced property values aren’t enough, I suspect the typical suburbanite also doesn’t want meth makers on their street because they don’t fit the image of a happy, stable, law-abiding neighborhood.

Should every home improvement increase the value of your home?

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HGTV host Sabrina Soto discusses five home improvements that might actually lower the value of your home:

Converting bedrooms into other spaces: If potential homebuyers “see it’s a four-bedroom house, they want to go to the open house and see four bedrooms. You have to take the guesswork out,” says Soto. If you do convert a room, there’s one feature you should absolutely never mess with. Watch the video to find out what that is.

Hot tubs: Soto thinks inheriting someone else’s hot tub is a turn-off — and she’s not alone. “You’d be surprised how many potential buyers find them to be a little gross.” And once a hot tub is installed, it’s not an easy feature to remove from a deck or backyard.

Colored trim and textured walls: It seems like any potential homebuyer would see these features and know they can easily paint over them, but not so fast, says Soto. “I would much rather paint walls than trim any day — it’s a beast of a job,” she says. And textured walls are “a mess to sand down and remove. The fad is over anyway, so just let it go.” If you feel your trim is outdated, see the video for Soto’s tips on what to do.

Children’s theme bedrooms: Spending hundreds of dollars on a mural for your child’s wall is throwing money away. Not only will they outgrow it in a matter of years, but “you’re never going to get that money back when you sell, so just keep it neutral,” posits Soto.

Too much landscaping: Conventional wisdom says you want your yard to look as nice as possible, but heed Soto’s warning: you want to “keep up with the Joneses — but don’t exceed them.” To a potential buyer, gorgeous, overdone landscaping screams high-maintenance.

My question after reading this list: what if you simply want these features for yourself and not because it might add to your resale value? Granted, if you are looking to sell your house, you might not want to pursue these options. But, if you are looking to live in your house for a while, you might decide that one or more of these features is what you want.

The bigger issue is this: doesn’t a list like this perpetuate the idea that a home is primarily an investment? That is one way to view things but there are other reasons for owning a home.

Claim that Bank of America takes better care of foreclosed properties in white neighborhoods than in minority neighborhoods

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A new report from the National Fair Housing Alliance argues Bank of America has taken better care of foreclosed properties in white neighborhoods:

A year ago, the alliance and several of its member organizations filed a complaint against the bank with the Department of Housing and Urban Development, arguing that the bank had violated the federal Fair Housing Act by neglecting foreclosed properties in minority communities in Denver, Atlanta, Miami, Dayton and Washington, D.C. Today, the groups amended their complaint with a stack of evidence – in maps, data, and photos – showing that the problem has persisted in each of those cities, while documenting it anew in Memphis, Denver, Las Vegas, Tucson and Philadelphia.

In total, housing advocates have now identified the problem in 18 metropolitan areas, across 621 Bank of America properties…

The sample size in each city varied, from about a dozen properties to more than 44 of them in Denver. But across all of the cities, homes in minority communities were two times more likely than those in predominantly white areas to have more than 10 maintenance or marketing problems. In Denver, homes in minority neighborhoods were 9.3 times more likely to have a broken door or lock. In Las Vegas, they were 4.5 times more likely to have damaged windows. In Philadelphia, they’re twice as likely to have accumulated substantial amounts of trash, relative to homes in white neighborhoods in the same market.

The pattern suggests yet another way that subtle housing discrimination may further handicap the ability of minority communities to recover from the housing crisis (or, put another way, this suggests why the effects of the recession will linger in minority communities for much longer). Federal fair housing law prohibits actions (or attempts at action) that “perpetuate, or tend to perpetuate, segregated housing patterns,” or that obstruct the choices in a community or neighborhood. It’s not hard to envision how these neglected homes could wind up doing just that.

Bank of America responded that the methodology of the study was flawed and that some of the homes in more disrepair were the responsibility of other entities.

More broadly, this suggests a potential new line of research questions about how banks and financial institutions respond after an economic crisis and whether this is stratified by race and class. How have banks made decisions regarding which foreclosed properties to improve or leave to others? Have they primarily worked with more valuable pieces of property, ones that might be found more often in middle to upper class neighborhoods? Is there also more political pressure (from local homeowners to municipalities) to address these more expensive homes or places with higher property values? It also seems like the analysis here would benefit by looking at the actions of multiple mortgage holders to see if there is a pattern across institutions.

A tiny house community in Washington, D.C.

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The Stronghold neighborhood of Washington, D.C. now features a small community of 200-square foot tiny houses:

The group behind Stronghold’s tiny-house community calls itself Boneyard Studios. “As property values and rents rise across the city, we want to showcase this potential option for affordable housing,” the group writes on its Web site. “We decided to live the questions: Can we build and showcase a few tiny homes on wheels in a DC urban alley lot? … Not in the woods, but in a true community, connected to a neighborhood? Yes, we think. Watch out left coast, the DC adventure begins.”

There’s one problem: The city’s zoning laws don’t allow residential dwellings on alley lots unless they are a minimum of 30 feet wide, or roughly the width of a city street. D.C. is currently discussing lifting the 30-foot restriction. So, as Boneyard Studios continues to advocate more progressive zoning laws, it is using the property to showcase what could be…

Although the diminutive homes are made of high-quality materials, they are priced for a flagging economy. They sell for $20,000 to $50,000, less than the down payment on a two-bedroom condo in a trendy D.C. neighborhood…

Despite the fact that tiny houses are, well, tiny, affordable-housing advocates are researching the possibility that attractive micro homes could one day complement or replace stigmatized trailer parks and low-income housing, especially in places such as the District, where they could be built in unused vacant spaces such as alleys.

This sounds like an interesting project. Still, these tiny houses could face a number of issues before being approved as affordable housing. Besides their size, how many people can fit in each tiny house, and how long each house might last, how many property owners would want to live next to these tiny houses? Even if these houses don’t have the stigma of trailer parks, residents and neighborhoods tend to worry about property values. Simply having smaller and cheaper houses nearby might lower other housing prices.

Additionally, how might these tiny houses be grouped or placed – would they be in rows, scattered in an open space or bigger lot, or on individual lots? Would a concentration of tiny houses fit under the same residential zoning categories as single-family homes or multi-family housing because of a greater density?

I imagine the neighbors will ask some of these questions and want good answers. Interestingly, the article does not cite any neighbors to the Stronghold colony of tiny houses.