Amenities, ROI on housing, and social class

A recent piece linking amenities to higher return on investment for housing left unnamed a key factor: social class.

It turns out that if Trader Joe’s is nearby, your house might be worth more than if it were close to other grocery chains. The average return on investment, or ROI, for Trader Joe’s-adjacent homes is 51 percent, 10 percentage points more than the runner-up, Whole Foods (41 percent), and almost 20 percentage points more than Aldi (34 percent)…

“When we overlay points of interest (like transit, shopping, and amenities) on top of prices, we see trends in the distance to these features,” Marshall says. “In urban areas, ClearAVM has found that access to public transit has a large correlation with higher property prices. We have found the same with access to restaurants, coffee shops and groceries in urban and suburban areas.”…

Some of the positive location amenities that can impact home values and equity include high-ranking schools, hospitals, shopping centers, green spaces and being near the waterfront (think oceans and lakes), as well as access to highways and main thoroughfares.

Negative location markers include things like high-traffic and high-noise areas, crowded commercial properties, high-tension power lines or other utility easements, a poorly maintained home or neighborhood, and not being near the appealing attractions mentioned earlier, Hunt says.

While I don’t doubt these factors do influence housing values, there is a common factor that helps join them all together: the social class of residents. Grocery stores, like many other businesses, figure out where to locate at least in part on looking at the residents who live nearby. Whole Food’s is generally not going to move to a community where residents do not have the resources to pay their prices. Aldi, in contrast, appeals to a different market. Going further, think of the differences in locations between Walmart and Target, McDonald’s and Chipotle, Dollar Stores versus chain drug stores, and more.

A number of the items on the list of “positive location amenities” are also closely connected to social class. High-ranking schools tend to be in wealthier communities. The same is true of shopping centers and higher property values mean only certain kinds of residents can afford homes on the waterfront.

This does not mean that there is not more affordable housing in these areas with positive amenities. There may be. But, I would guess the zip codes connected to the higher-class grocery stores tend to be wealthier and more educated zip codes overall. The habitus of social class extends even to what grocery stores people prefer, the desired appearance of nearby homes, and close amenities that help reinforce their social class, practices, and tastes.

Trying to revive buses in American cities

A new book looks at how buses could become more viable transportation options. From the author of the book:

One of the statistics that is telling in the book is that when you look at bus ridership in a place like Germany, the people who ride the bus have the same median income as the average German. In the U.S., they’re much poorer. At the same time, it’s not a service that actually serves low-income people well at all. So is it really for them? It’s really a system for people who don’t have alternatives…

One of the biggest omissions from federal policy is that federal transportation programs are almost always about building things. But the biggest problem [with public transit] in most cities is that we don’t run enough service. You could use federal transportation funding to buy a bus, or stripe a bus lane, but you can’t use it to hire a bus operator, or dispatchers, or people who are planning bus priority projects. In the book, I write about this really bizarre set of affairs in the [2008] stimulus package, where cities all over the country were using federal stimulus dollars to buy buses. At the same time, they had to lay off all of their bus operators. That’s not really doing anything to further equity for people on the ground…

There’s a cycle between culture and reality. We design bus systems that are really inconvenient, and that only people without great alternatives will use, and that colors how decision makers think about who bus riders are. And that’s really important to disrupt.

One of the promising things you see in places that are improving bus service is how quickly it can turn around. You just provide more service in a route, and upgrade the shelters, and you see ridership increasing. We have this terrible conception of the so-called captive rider in transportation planning, when all the actual data shows that basically everyone has choices, and sometimes those choices can be pretty inconvenient, like having to get a ride with your friends, or having to walk four miles to work. Transit service can always deteriorate to the point that people are going to choose something else. But as you make bus service better, more and more people start gravitating towards it. It’s a very natural thing.

There a lot of issues to overcome in addition to the ones cited above. In my mind, buses have one major advantage over other forms of mass transit: they utilize existing roads and highways to provide mass transit. It would take a lot to reverse the American preference for driving and all that comes with it. Of course, as the article notes, buses that crawl along in traffic like cars and trucks may not be very attractive to riders and may require dedicated lanes. Similarly, buses in sprawling areas may not work as well if people are not willing to start at a common location and give up some freedom of mobility. (The discussion in the article revolves around cities but there are denser suburbs – and suburban like areas of some cities – where buses might work.)

The discussion hints at a related issue: there has to be enough bus service to be attractive but getting people to ride the bus in the first place is difficult when driving a car is a culturally preferred option as well as the option that best suits the existing infrastructure. How many local governments are willing to stick with busing even when it might not be successful at first? Furthermore, would increases in service be accompanied by changes in development policy that would seek to create housing and jobs along bus transit corridors?

Reading the full discussion, it does seem it might not be too difficult to revive bus transit in big cities. On the other hand, bus transit is a hard sell in many American communities and a long-term commitment from all levels might be needed before significant change occurs.

 

 

Maybe modernist houses will appeal to millennials – in certain circumstances

Architects and cultural critics often like modernist homes even as Americans largely do not prefer them. But, perhaps millennials will select modernist homes:

“For a while people were just tearing them down, but people are seeking them out now — they’re the anti-McMansion,” says Ellen Hilburg, co-founder of the real estate resource Mid Century Modern Hudson Valley. “For some people, it’s a nostalgia factor. But Millennials are discovering them, too. It’s an aesthetic that appeals to people who are aware and environmentally conscious.”

There are a number of pieces of this story that suggest preferences for modernist homes are tied to particular traits of the homeowner or observer:

1. A higher social class.

2. Higher levels of education.

3. Rejection of consumerism and the implied materialism and conformity that goes with it.

4. An interest in the “cool” factor of a home.

5. Living in a community – such as a wealthy, middle to upper-class suburb – where modernist homes are present and accepted.

Putting these categories together, there may indeed be a slice of Americans who prefer modernist homes. But, this also sounds like a taste connected to cultural capital, to invoke Bourdieu. In other words, expressing a preference for modernist design is connected to social class and education that not all Americans have access to.

Responding to “white suburbanites are exposed to more racial diversity than ever before”

One researcher explores the increasing racial and ethnic diversity of suburbia:

The scale of these national changes is too great to leave suburbs unaffected. As a consequence, white suburbanites are exposed to more racial diversity than ever before, a process that compounds annually. In 1980, a majority of white suburban residents lived in areas greater than 95 percent white, according to my analysis of the Census data. Only about one in six lived in a neighborhood where people of color made up at least 20 percent of the population. Fast-forward to today, and the numbers flip: Fewer than one in 10 white suburban residents lives in a neighborhood greater than 95 percent white, while more than half can be found somewhere that’s more than 20 percent nonwhite. Suburbs are now home to most black Americans and Hispanic Americans.

Nonwhite residents skew younger, which means diversity is increasing in schools even faster than in cities and neighborhoods. As that happens, the racial isolation of white children has been broken in spectacular fashion. In 1988, the earliest year with digitized federal data, more than half of white children nationwide attended a school that was more than 90 percent white. In 2016–2017, the most recent school year with data, that share dropped to less than one-fifth. In public districts today, more than three-fifths of white children attend a diverse school where at least 20 percent of the student population was not white; in major metros, nine-tenths of white children do.

Lest the point get lost in a swarm of statistics, these figures represent an inversion of America’s historic racial geography. As recently as a few decades ago, almost all white people in America lived their lives in places where racial diversity was minimal or nonexistent. This is simply no longer true. In neighborhoods and, especially, schools, moderate diversity is now the norm for most white Americans. The America where busing failed was a place where islands of urban diversity drifted in an ocean of suburban whiteness. Today, the metaphor must be reversed: An archipelago of white enclaves is embedded in a sea of growing racial diversity.

And since this discussion is in the context of debates about schools and busing, the author suggests this change in diversity has implications:

By every available demographic metric, those white suburbs are losing ground in 21st-century America. The problem of segregated schools, as urgent and familiar as ever, is embedded in a deeply unfamiliar context. School integration in 2019 means moving children across racial boundaries that are already looking ragged. The communities it risks outraging have ever-shrinking political clout. People should consider whether they have overlearned the lessons of history—whether the antibusing consensus is more robust than the conditions that created it. Integrated schools are more achievable than the political system believes. The missing ingredient for desegregation may just be elected officials with the courage to stop fearing America as it was, and start leading America as it is.

The article takes a pretty optimistic view of racial change in communities. Indeed, residential segregation has decreased in recent years with more minorities living in suburbs and increased immigration.

I wonder if the same data could be interpreted differently:

1. The cutoffs for diversity cited above are low bars. More than 20% non-white is not that much diversity.

2. The article does not discuss social class and its interaction with race and class. What kind of diversity are white suburbanites interacting with in terms of class and race together?

3. The emphasis here is on the public school system as well as communities though there are plenty of white students (as well as other students) in different schooling environments and social ties and networks can operate through many institutions. Diversity by community or neighborhood may not translate into diversity in a school setting or in local government or houses of worship or friendship networks.

4. What is the end goal of such efforts? Is “moderate diversity is now the norm for most white Americans” enough or even be used a way to limit further diversity? Is representation in public schools enough or is the goal similar academic achievement or access to political power or homeownership rates or wealth (all areas with disparity)?

Suggestion that tiny houses face snobbish responses because of links to lower classes

An overview of tiny houses in the United States (though no mention of how many there actually are) includes an interesting bit about social class:

But the main obstacle is a legal one: most municipalities and towns ban residents from living year-round in anything on wheels, and often have statutes requiring homes to be at least 900 square feet…

Historically in American culture, bungalows, caravans and mobile homes have a bad reputation — they are seen as badly made and decidedly lower-class.

But the Berriers’ home is impeccably decorated with a bathtub, a sunroom and a movie screen — no “trailer trash” here.

“There are preconceived notions. They haven’t seen it enough. It’s just something new. I think that’s the problem,” Berrier said.

This leads to a conundrum: if Americans love driving and homeownership, why do they dislike mobile or smaller housing so much?

The less positive reactions to tiny houses suggests it is not solely about owning a vehicle or home; the kind of vehicle or home matters. Driving is good but driving a nicer car is better. Owning a home is good but owning a bigger, more permanent home is clearly superior. Cars and homes are functional items and status symbols, important social markers of who a person is and desires to be.

A more functional approach to housing might be more open to tiny houses. People need a place to live at a reasonable cost? Affordable housing is scarce? Homeless people need residences? Let’s make it happen. Change zoning guidelines. Make it cool to downsize.

On the other hand, there are plenty of tiny house buyers who prefer getaways or luxury touches, not long-term housing in such a small size. It would be easy for the tiny house movement to be co-opted by those with resources and social status. Those people might be able to get tiny houses into certain places where they might otherwise not be allowed, but their motives would run against others who want tiny houses because of their reduced footprint and simpler lifestyle.

Many Americans can’t afford a McMansion (even if they might aspire to one)

A recent study suggested Americans aspire to own the larger homes in their neighborhood. By using the term “McMansion,” the study might be read as some as suggesting that this belief is widespread among many Americans. Americans like big houses and they like to look to external reference groups to help guide their own behavior. Isn’t everyone after a McMansion?

Just three little problems:

  1. Many Americans do not live in neighborhoods with McMansions.
  2. Many Americans cannot afford a McMansion.
  3. Not all larger houses are McMansions.

McMansions are particular kinds of houses that require a certain social class and set of resources to acquire. Even in cheaper housing markets, McMansions are not within reach of many residents. Academic articles and media articles journals can use the term broadly but how many Americans truly live in McMansions – 10%? 20%?

At the same time, it is worth looking at the aspirations of Americans. Homeownership, particularly in a suburban setting, is an ingrained goal in American society. And Americans do seem to like bigger homes. But, do they really want a McMansion, a home that can be made fun of by others and with a descriptor rarely used in real estate listings? There is clearly a market for such homes but the buffoonish McMansion may not exactly be the goal of homebuyers.

 

Linking nicer cars to a suburb on the rise

From the Australian suburbs: one insider suggests seeing nicer cars in driveways signals good prospects for the suburban community.

The gentrification of the driveway happens before the gentrification of a suburb, says the boss of a data analytics company.

Upmarket vehicles beginning to appear in the carports and garages of houses is often a forerunner of a suburb on the rise, as renovators move in...

When more models such as a BMW X5 or an Audi SUV begin appearing in the driveway of houses and apartments in particular suburban streets, it is a reliable predictor of a suburb undergoing gentrification and becoming much more popular with renovators. Extra investment in community infrastructure often followed, and there was a broad flow on to higher property prices…

He said households who were taking out a loan for $500,000 to buy a rundown home in an up-and-coming area were often also purchasing a $30,000 to $40,000 car to fit the aspirational lifestyle.

The article chalks this up to a big data insight as bringing together multiple pieces of information helped reveal this relationship. I can see how this new information might help investors but it is less clear how this would help residents or local governments.

More broadly, this gets at something my dad always said: look at the cars in driveways, on the street, or in parking spots and it gives you a sense of the people who live there. In societies that prize cars, such as in the United States and Australia and particularly their suburbs, a vehicle becomes an important social marker. The one-to-one relationship might not always work as some people buy more expensive cars than their housing might indicate and vice versa (recall the stories of millionaires driving old reliable cars). Yet, on the whole, people of different social classes drive different vehicles in varying states of repair. Hence, various brands aim at different segments of the market. Famously, General Motors did this early in the 20th century with five different car lines to appeal to different kinds of buyers.

UPDATE: I probably did not contribute to this upward trend with long-term ownership of a Toyota Echo. But, it looked good for its age.