Tag Archives: property values

Would you rather have $10 land in rural Canada or houses for under $100 in Detroit?

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I saw a story about a small rural town in Canada trying to lure in new residents by offering land for $10:

In an effort to jump on the oil boom in that part of the country, officials are once again selling undeveloped land for a mere $10, an initiative they first started in 2010. Back then they had 14 lots for sale, 11 of which have houses built on them today, economic development officer Tanis Chalmers told ABC News .

That plan was so successful that in September the Rural Municipality of Pipestone, of which Reston is the biggest town (population: 550), decided to put up an additional 10 lots for sale, along with the three left from 2010. Nine remain, “But I’ve had offers on them already from both Canada and the U.S,” said Chalmers, adding that the initiative has been so effective that the local school finally “has a standalone kindergarten class.”…

The plan is pretty straightforward: To purchase a property, wannabe homeowners have to sign an agreement and put down a $1,000 deposit. Once a lot is purchased, owners have 90 days to begin construction, and 12 months to complete it. As soon as the town receives your occupancy permit, they will refund $990 of the original down payment…

As further incentive, the town is offering a $6,000 grant to people who’ve built a new house or purchased an existing home in the rural municipality. The grant, mind you, can be used for anything from home upgrades to a new car. Chalmers says taxes hover around $1,500 to $2,500 per year.

This reminded me of stories in recent years about cheap houses in Detroit. Here is one example:

“I was living in Chicago and a friend told me that houses in Detroit could be had for $500,” said Brumit, a financially strapped artist who thought he had little prospect of owning his own property. “I said if you hear of anything just a little cheaper let me know. Within a week he emails me a photo of a house for $100. I thought that’s just crazy. Why not? It’s a way to cut our expenses way down and kind of open up a lot of time for creative projects because we’re not working to pay the rent.”…A third of the population are unemployed. Property prices have fallen 80% or more in large parts of Detroit over the last three years. The average price of a home sold in the city last year has been put at $7,500 (£4,900)…

Banks are selling off properties in the worst neighbourhoods, which are usually surrounded by empty and wrecked housing, for a few dollars each. But even better houses can be had at a fraction of their former value.

Technically, Brumit paid $95 for the land and $5 for the house on Lawley Street – which fitted what estate agents euphemistically call an opportunity.

I suspect more people would jump at the rural opportunity. While there might be more amenities nearby in Detroit (you mean those winning Tigers can’t boost home prices like winning NFLteams  supposedly can?), the idea of living in Detroit itself would scare a lot of people. What might happen in the neighborhood? Can the city provide basic services? On the other hand, the rural property might be a long way from anything worthwhile but it could offer some access to nature, there probably aren’t as many worries about neighbors, and there is some appeal to starting from scratch. If we wanted to stretch this explanation out even further, this could be a sign of the urban/rural divide in the United States; economically similar opportunities in the big city and the country don’t attract the same level of cultural and residential interest.

Property values, city finances, and downtown development: controversy over approved senior housing in downtown Wheaton

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New development projects in already-developed suburban areas can attract controversy. Here is an example from downtown Wheaton, Illinois: the city council just approved a senior housing project but some of the neighbors are not happy with the change to the site and there are some questions about funding and whether the city will be left with a bill.

The council voted 4-3 this week to allow construction of a 167-unit facility on a site once slated for luxury condominiums as part of the Courthouse Square complex at the corner of Naperville Road and Willow Avenue…

The approval came after nine planning and zoning board meetings totaling more than 24 hours with testimony from experts, opponents and supporters. In a nearly unanimous vote in August, that board recommended the council deny the zoning plans.

The original proposal for the complex, supported by the council in 2004, called for a mix of townhouses and condos. But developers cited the housing market crash when they pulled the plug on what were supposed to be the second and third midrise buildings. Northfield-based Focus Development Inc. and West Chicago-based Airhart Construction Corp. partnered on the project.

The saga continued when developers asked to amend the plan to allow senior housing, angering some Courthouse Square residents who argued they were promised a strictly residential community when they bought their units.

I’m not sure how this will all play out in court and whether the current residents have a case against the developers. However, here are a few thoughts about this:

1. Senior citizen housing would be helpful in Wheaton. As a more mature community that is relatively wealthy, there are relatively less places in the community for seniors to live in affordable housing. Indeed, when communities like Wheaton do talk about affordable, they tend to be talking about seniors and young people who would like to be in the community but don’t have the resources due to their stage in life to remain.

2. Wheaton has been on a longer program of introducing more housing into the downtown, starting with the condominiums built in the early 1990s across the street from the downtown train station. While higher-end housing might bring in more revenue and people who have more spending power to spread around the downtown, having some development in this space rather than none might be preferable.

3. Like in many suburban debates about development, it sounds like this is partly (mainly?) about property values. The existing residents don’t want their higher-end units to suffer because senior-citizen housing is built nearby instead of other high end units. This could be one of those situations where it would help to take a bigger view: Wheaton would like to offer more affordable housing for seniors and this land is available so perhaps property values can’t or shouldn’t be the overriding concern here.

4. More than ever because of the economic crisis, revenues matter in these situations. Some are concerned that the city, and therefore, taxpayers, might be on the hook if the development doesn’t work out in a certain way. This would be a strike against downtown redevelopment plans; the goal is to generate new revenues, property and sales taxes, not saddle the municipality with new costs.

Are McMansions about maximizing exchange value?

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A commentator takes a look at a new, oversized condominium building and discusses use value versus exchange value:

The house on this lot was rebuilt into two large condominiums.  Each is about 3,000 s.f. and priced at $849,000.  It’s a way to maximize the return for the property owner.  I can’t say the building is very attractive, but it is one block from the forthcoming Monroe and Market Street development adjacent to the Brookland Metro Station, and is two blocks from the Metro.

It’s too bad buildings such as this are oversized for the lot in a manner that degrades the visual qualities of the rest of the block.  Use values, including aesthetics, are subsidiary to the exchange value of place (maximizing financial return) in this instance.

To complete the circle about use value, one could also look at the experience of the homebuyers. Are these large housing units worth the money? Even if these big homes don’t quite fit in the neighborhood, they could be nice places to live. As noted above, they are spacious, located near desirable mass transit stops, and are probably have some nice interior features (surely granite countertops, stainless steel appliances, and hardwood floors!). Even the New Urbanists that wrote Suburban Nation admit that Americans have superior private realms in our homes. (Of course, there are others, like Sarah Susanka and Winifred Gallagher who suggest these spacious, comfortable homes may not be good fits after all.)

Lurking behind this analysis is Marx’s discussion of use value, exchange value, and capitalism. In a capitalistic system, much can be commodified: Twitter followers, positive online reviews, and houses. Particularly during the 20th century, American homes became more than just shelters: they were expected to increase in value and become investment vehicles. (One could look at some data to see if these oversized housing units are flipped more quickly than other kinds of housing as owners look to make money.) Builders and developers can make even bigger money on houses. One very influential idea in urban sociology in the last few decades is the growth machine model, the idea that boosters, business leaders, politicians, and developers work together to make profits by transforming open land into valuable land. From the early days of the American suburbs when streetcar operators built their lines into the countryside and then offered free rides to the end of the line to show people lots and potential to McMansions today, much development, aesthetically pleasing or not (actually, aesthetics may indeed just help increase the value!), is about making money. Commodifying the home can move the discussion away from other important aspects f purchasing and owning a home like community life, environmental responsibility, and providing affordable housing.

Suburban tree ordinance helps fight off McMansions, preserve “suburban quality of life”

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Many suburban residents may not pay much attention to tree ordinances in their community. However, a recent debate about the ordinance in Oyster Bay, New York reveals some interesting motivations for such ordinances:

Amendments to the code of the Town of Oyster Bay were discussed at the Tuesday, Aug. 14, town board meeting. They included regulations pertaining to the growing of bamboo on both residential and commercial property (see article on page 10), storm water management and erosion and sediment control, and the removal of trees on private property…

Oyster Bay Town Supervisor John Venditto opened the hearing by explaining the town’s decision that the law as stated was burdensome and needed balance. He said, “Trees are probably the most visible symbols of our suburban quality of life.” The supervisor explained the law was intended to protect the tree population but that when it was instituted they didn’t hear the other side of the story. Now the board members are hearing from residents who are saying, “Who are you to come into my backyard and say I can’t remove a tree.” He said homeowners viewed it as a loss of their individual rights and called it “government intrusion.” After listening to many speakers who seemed to understand his views, he said, “It’s a question of balance.” Mr. Venditto said it was the homeowner dealing with trees on their private property that were the ones the repeal of the ordinance would benefit.

Still the possibility of repealing a tree ordinance reminds people of why they wanted one in the first place. Nassau County Legislator Judy Jacobs (D-Woodbury) was the first to speak. She reminded the audience that, “The initial tree ordinance was passed in 1973 following the total destruction of a 15-acre parcel of land in Woodbury which was bull dozed by a developer, Sidney Kalvar, who was denied an application for zoning on the property.  Hundreds of trees were just leveled and a barren piece of land replaced the natural growth which was there.”

In 2007, an amendment to the town’s 1973 tree ordinance was adopted as a result of the work of Save the Jewel By the Bay which was working to protect the hamlet of Oyster Bay from an onslaught of “McMansions.” The town added to the tree ordinance as well as adopting several zoning ordinances to prevent McMansions; both ordinances were adopted townwide.

Trees clearly have environmental benefits. Yet, they also serve as status symbols. Two things struck me here:

  1. Regulations about trees are tied to fighting McMansions. A common image of the construction of McMansions includes a developer/builder coming in with teams of bulldozers, flattening the landscape, and then mass producing unnecessarily large and ugly houses. Of course, this is not that different of a process from other suburban construction going back to the early days of mass produced housing in places like Levittown. My question: can McMansions be made more acceptable if the developer/builder work more with the existing landscape and retain many of the trees? Put another way, can’t communities simply tell McMansion builders that they must retain or plant a certain number of trees? It doesn’t seem to me that McMansions and trees necessarily have to be antithetical to each other.
  2. Trees denote a “suburban quality of life.” Suburban streets are often depicted with broad, leafy trees spanning over the roadway. I recall reading how the creators of The Wonder Years wanted this sort of suburban image and found it in Culver City, California. Yet, one can find this is many urban neighborhoods. So perhaps it is more about the number of trees. Urban streetscapes are often limited to having trees in the space between the sidewalk and street and sidewalk and building. Or, perhaps it is about trees plus a little green space around the trees which is also tougher to find in cities. I wonder how much having older and/or more trees on a property increases the property value of suburban homes. Neighborhoods with few or shorter trees tends to indicate that the neighborhood is newer but is there a price reduction because of this? How much of the character of an older neighborhood is tied to the trees? Is having plenty of older trees an indication of the community being older and monied?

A final note: the article mentions that two residents say that in order to be known as a “Tree City USA” community, a municipality must have a tree ordinance on the books. I was not aware of this and have wondered what it took to get such a designation and sign along the roadway.

How mowing your lawn might be soon affect your ability to get a mortgage

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A new proposed FICO score algorithm will include things like whether you have been cited for not mowing your lawn:

Just when you thought you knew all the ins and outs of how your credit score is calculated, it all changes. Last month FICO announced a new partnership with CoreLogic to create a new FICO score for use in the mortgage industry. While there are many credit bureaus that provide scoring on Americans, your FICO score is the report most widely used for mortgages. That’s because FHA and other government-backed mortgages use FICO as part of their means testing for approval. If FICO standards change, it could have a widespread effect on families looking for mortgage approval…

The addition of the CoreScore to your FICO will greatly increase a bank’s access to your personal finance information. The more doors that are open, the more doors that you will need to guard—even doors you didn’t know existed.

It’s not common knowledge, but seemingly unrelated aspects of your finances can get exposed through public information. Town ordinances and zoning are becoming increasingly restrictive in communities. There are plenty of local governments that can cite you for not mowing your lawn, leaving your garbage out on the curb overnight or owning one too many dogs. These types of local penalties may seem ridiculous and unfair, but they do have teeth. Many localities have the ability to place a lien on your property if citations remain outstanding. That means that it could get noticed by the new FICO score.

Failure to mow your lawn really could lead to a rejection on your mortgage application. The addition of the CoreScore opens the floods gates on financial information that was once unavailable to lenders.

From a lender’s point of view, having extra information is helpful. Yet, I wonder at the statistical connection between maintaining a lawn (and avoiding local fines) and paying a mortgage: are they always linked? Having too many pets/animals indicates less of a likelihood of paying a mortgage?

I wonder if there isn’t something else at work here. Given the increase in foreclosures, mortgage holders behind in their payments, and underwater mortgages, perhaps lenders are more interested in how well the home will be maintained so that if the lender does end up reclaiming the property in a few years, they don’t have to drastically reduce the price or spend money to fix up the home.

A last comment: the article suggests such local ordinances “may seem ridiculous and unfair” but there are at least two big rationales behind him. First, it is all about property values. You may want the right to keep garbage and junk on your property or return your yard to a more natural state but your neighbors could be negatively affected. Second, the uptick in foreclosures in recent years has pushed many communities to adopt stricter regulations as homeowners and banks don’t keep up some properties, affecting nearby property values as well as contributing to the appearance of social disorder.

Walmart increases nearby home values

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The Atlantic reports on a University of Chicago working paper (subscription req.) that having a Walmart nearby noticeably affects housing prices:

Home values within a half mile of a new store got a 2 and 3 percent boost. Within a mile, the store pushed up values 1 to 2 percent. That translated to a $7,000 average bump for nearby homes and $4,000 for houses a little further away.

Unfortunately, I don’t have a subscription and thus cannot look at the paper directly, but I have a few questions:

1.  Do other big-box retailers (e.g., Target) similarly boost nearby housing prices?
1a.  Is Walmart’s boost larger?

2.  Is there a corresponding drop in housing prices if/when a particular Walmart closes (often only to reopen at a new location a few miles away)?
2a.  If yes, is the drop greater than the boost?

There goes the neighborhood, vacant suburban lot full of dandelions edition

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As I was walking near campus, I spotted a yard that may just be in many suburbanites’ nightmares: a vacant corner lot full of dandelions.

DandelionLawn

Granted, these dandelions might be temporarily in bloom but this is a potential disaster for many neighboring yards. Even worse, this yard sits at a corner on full display. Interestingly, the lot also contains a “for sale” sign. Does the sight of dandelions discourage anyone from purchasing it? Would it better to have a barren yard than this spectacle?

It can be hard and laborious to fight off the dandelion scourge if others around you don’t keep up. The picture isn’t quite wide enough to show it but there is a very clear line where the yard to the right begins because of the absence of dandelions. How long can that pristine yard to the right hold out? My neighborhood has some similar issues; when dandelions are in full bloom, on windy days the air can be full of white seeds blowing around. I’ve had to act as a dandelion vigilante, digging out the root at first sight of the yellow bloom. Until this point, I’ve been able to keep things under control without herbicide but that would be much more difficult if I lived next to this lot. Is there a proper etiquette or protocol to follow in order to get a nearby homeowner to tackle the dandelions in their own lawn?

And thus continues the battle between suburbanite and nature, man versus weed. When homeowners are not vigilant, all lawns can suffer.

(I think this issue is related to one I raised a few weeks ago: it may not be a pretty sight if everyone lets their dog use the common areas in a neighborhood for a restroom.)

Argument: class concerns behind zoning laws

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One commentator suggests that activities commonly banned by zoning laws are banned because they don’t meet middle-class or upper-class standards:

1. Clotheslines instead of dryers. Reason: Looks poor. Might suggest you can’t afford a dryer. Plus, you might see underwear that isn’t your own. This is a major cause of sin.

2. No livestock, but large pets are acceptable. Reason: Ostensible reasons are health based, a few even broadly grounded in fact, They ignore, however, that carnivore manures are almost certainly more dangerous than any other livestock manure, and health issues are at least as prevalent from pets. The same is true of considerations of size, noise, etc… – barking dogs the size of ponies are permitted while three quiet hens are not. The real reason is that pets are broadly a sign of affluence, since they cost us money, while livestock are a sign of poverty, because they provide economic benefits.

3. No front yard gardens. Reason: The lawn is a sign of affluence – you have money, leisure and water enough to have a chunk of land, however tiny, that doesn’t produce anything.. It creates in many neighborhoods a seemingly contiguous but basically sterile, often chemically toxic and seeming “public” greenspace that is actually privatized and not very green. Gardens, on the other hand, have dirty wildlife and bugs in them, and might grow food, which is bad because it implies you can’t afford it – even if you can’t.

4. No rainwater collection. Reason: This is mostly in dry places in the Southwest, for fear that the tiny amount of available rainwater might not reach people who can’t afford to pay for it, or strangely believe that water that lands on their roof might belong to them, and who would like to have gardens anyway. A few other municipalities do it for fear of west nile disease because they seem never to have heard of screens or mosquito dunks. Oh, and barrels look like you can’t afford to water your lawn with sprinklers, even when it is raining. While western riparian water rights are an issue, research has shown over and over again that rainbarrels increase net water access and that lost water in storm surge that could have been collected in rainbarrels is a net gain. Fortunately, many cities are finally getting over this one.

5. No commerce that isn’t white collar. Reason – Class. Telecommuters who can make money out of their homes all they want, or upscale white collar professionals with home offices are generally permitted in residential zoning.. This means people who want to sell food, do hair, fix things, cannot hang a discrete sign selling their biscuits or offering their services. This is deemed ugly and bad – and it is a visible reminder that people might not have enough money to keep warm burning it, and might need to earn some.

This seems to get at one of the basic principles of suburban life in recent decades, particularly in places with homeowners associations: legislate against certain behaviors in order to protect your own property values. Voluntarily give up some of your property rights in order to protect yourself from neighbors who don’t care about their property as much as you do. Theoretically, everyone then wins because the neighborhood is protected.

This reminds me of accounts of some early suburbs in the United States where people built their own homes and frequently kept animals. Building your house yourself these days would likely run into all sorts of code concerns (unless you were a proficient plumber, electrician, etc.). Additionally, I imagine the home might look less “perfect” than mass produced housing and these accounts told about how people frequently were adding on to their homes or leaving certain parts in various states of repair.

Many suburbs and communities have faced the question in recent years about residents keeping animals. Some have allowed it, some have not. I assume this is not as much of a concern in wealthier suburbs but it would be interesting to see if there are patterns in which communities allowed animals and which did not.

Overall, zoning is often black and white in its approach and residential zones are meant to be only for residences.

How small is too small for a new house? Debating minimum sizes (along with race and class)

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There are plenty of people who would like to see Americans live in smaller homes but some communities have minimum square footage requirements for new homes, leading to this question: how small is too small for a new house?

Chris Jaussi, owner of Zip Kit Homes in Mount Pleasant, manufactures homes as small as 400 square feet and would like to sell the micro dwellings in the county. But dwellings that small are prohibited by a 1980s ordinance that mandates the minimum size [800 square feet] of a residence…

He believes the current ordinance is “discriminatory” against lower-income people who can’t afford a conventional “stick-built home” in the county…

County officials said the existing policy was adopted to limit mobile and double-wide manufactured homes to specified zoned areas and keep them from springing up randomly in the county…

“I have a lot of sympathy for those who can’t afford their own homes — the poor of Sanpete County. But I don’t want to make housing so cheap we import the poor from other cities,” said Stewart [vice chair of the county’s Planning and Zoning Commission], according to the newspaper. “We get someone who can’t afford to build a bigger home, so they buy this one and fill up the rest of the [5-acre county lot] with junk cars …we don’t want people to come to Sanpete County for that reason.”

This is fascinating for a couple of reasons:

1. Many residents may not think about minimum or maximum home sizes – can’t you build what you want on your own property? However, zoning laws are often quite clear about this.

2. I don’t think minimum home sizes are that unusual. It sounds like this was enacted in this particular county to limit manufactured homes but I also have read about a similar battle in Naperville. Levitt and Sons, the same builders who built the famous Levittowns in the Northeast, proposed building smaller homes of about 1,000 square feet in the early 1980s. However, residents of nearby newer subdivisions complained that the much lower prices of these “downsized” homes would reduce their own property values. Naperville thought about enacting a minimum size ordinance but decided not to after finding that similar regulations in other Chicago suburbs had been struck down in court.

3. Let’s be honest here: this is all about property values and of course, property values also coincide with issues of race and class. More expensive homes, which on average are more likely to attract middle- to upper-class residents who are more likely to be white, are seen by many communities as a boon while smaller homes which attract the lower classes and minorities are seen as less worthwhile. Look at the associations cited here in this story: allowing smaller homes will automatically attract lower-income residents who will live in mobile homes and/or keep junked cars in their yards. The suburbs have a long history of formal and informal ways of restricting access to the poor and a minimum house size or lot size (usually associated with exclusionary zoning) can accomplish this. I do wonder though if these smaller homes will necessarily attract low-income residents – if these smaller homes are about being green (and perhaps also about quality rather than quantity), might they also be marketed to more educated, higher-class residents?

“Mandatory energy star ratings” for Australian houses

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I’ve asked before whether McMansions can ever be green. Australia is proposing energy star ratings for homes and such regulations would especially affect McMansions:

The Federal Government aims to introduce, by as soon as next year, mandatory energy star ratings for homes being sold or rented out…

Housing experts said most McMansions would score very poorly on the ratings system, which would be similar to the methodology used to identify the energy efficiency of whitegoods…

There are significant financial implications for owners of these homes – and most older dwellings which are also likely to rate lowly.

Owners would need to either spend up on going green or face the prospect of a lower sale price.

This is one way to push homeowners to improve the efficiency of their homes. This isn’t terribly surprising considering that many consumer goods or appliances these days are rated along these grounds (from electricity cost to miles per gallon). But at the same time, I can’t imagine these sorts of regulations being instituted in the United States anytime soon unless it was solely limited to new construction.