Tag Archives: wealthy

Suburban car dealer limited to 75% of sales must be over $75k

Posted on by

The suburb of Burr Ridge has some price restrictions for a used car dealership:

The proposal would place the pre-owned luxury car dealer under a two-year probation period to see how a $10,000 minimum sales price would work. Under terms of a 2013 special use permit granted for the dealership, cars may not be sold for less than $30,000, and 75 percent of the vehicle sold must have an average sale price of $75,000 or higher, said Mayor Mickey Straub. The average price of a car in the show room needs to be $87,500, he said…

The dealership has maintained a $79,000 average sale price on its vehicles, but it is losing sales when it cannot trade in vehicles under $30,000, said Mutie Sughayar, Global Luxury Imports owner.

Residents expressed their concerns with traffic around the car dealership and the perceived image of the village if the minimum vehicle sales price is decreased…

“It was one of the stipulations that would ensure that the business remain a luxury used car dealer with minimal foot traffic,” said Mary Bradley, another resident.

Some suburbs want car dealers because they can generate a lot of tax revenue. Others think they are eye sores and project a certain kind of image. Burr Ridge is not alone in this; the city of Wheaton also worked to avoid the numerous car dealers along Roosevelt Road in Glen Ellyn. But, I’ve never seen price restrictions for car dealers like these enacted in Burr Ridge. Raising concerns about traffic are common in NIMBY situations even as this car dealer is close to an I-55 exit where there are plenty of other businesses and County Line Road has to have moderate traffic to make these businesses worthwhile. The negative image of the car dealer is likely the more important culprit in this community with a median household income of $115k.

Perhaps the only worthwhile car dealers in wealthy suburbs are ones that solely sell expensive vehicles to a limited number of people. Talk about exclusive…

Explaining why four Chicago neighborhoods haven’t had a murder in 3.5 years

Posted on by

Given Chicago’s reputation for violence, why have four Chicago neighborhoods – Mount Greenwood, Edison Park, Forest Glen, and North Park – not had a murder in recent years?

According to census data, 15,228 “law enforcement workers” live in Chicago, including about 12,100 police officers. Mount Greenwood, Edison Park and Forest Glen have some of the highest percentages of residents in the city working in law enforcement.

Crime in general is also low in these communities. For instance, between 2012 and 2014, not a single person was shot in Edison Park, which also reported only one criminal sexual assault. Forest Glen reported two sexual assaults. North Park had just 13 burglaries — which police Supt. Garry McCarthy calls a bellwether crime.

The city’s safest communities also have a high percentage of home ownership…

Another factor that stands out about some of the safest communities is wealth…

People in low-income neighborhoods tend to have a strong sense of community — with families living there for generations and looking out for one another, Papachristos says. But many young men have gravitated over the years toward gangs in those same neighborhoods, he says.

This article reads like a list of reasons for why crime happens in the first place (though at least broken windows theory is not invoked) and social scientists have found a range of reasons that might work in some situations and not others. However, we would suspect that areas that are wealthier have less crime as more people are living comfortably in the formal economy. This doesn’t mean these neighborhoods have no crime; there may be less violent crime but there are still some property crimes and likely crimes that are not caught including drug offenses and white collar crime (these might be even harder to uncover in wealthier areas).

If we follow the logic of this article, we would want to move high-crime areas toward the experiences of wealthier, higher quality of life neighborhoods that do exist in Chicago. Who is willing to take the steps to help this happen?

“McAnger” over new big homes in New York City suburbs

Posted on by

Some new large homes in Westchester County have drawn some “McAnger”:

“This is really stupid,” wrote Laura Kerns. “No one needs this much house.”…”It’s sad, really,” David Raguso wrote. “This county just doesn’t care about the average person.”

Said Dana Doyle, “Bye bye, middle-class! The rich folk are taking over!”…

Like others, Daphne Philipson questioned the need for so much square footage. “The Gilded Age is back – and we know how well that went for everyone.”…

“Wretched excess,” he wrote. “There is nothing wrong with being financially successful, but why then not be reserved about it? How much house does a man need? Find meaning in meaningful things.”…Some were not so much annoyed but still critical of the new homes, critiquing the exterior appearance specifically as a hodgepodge of conflicting architectural styles. “Looks like it was thrown together at different times by different moods,” wrote Erika Kislaki-Bauer.

Eileen Healy Rehill lamented the addition of “more overly priced McMansions” in Westchester rather than “nice yet affordable housing for the middle class.” She was far from the only one, with housing for seniors and the disabled also mentioned.

Some familiar comments when McMansions are involved. Three quick thoughts, with the first two mentioned briefly in this summary of feedback:

1. Westchester County already is a wealthy county. It was known as the home to many wealthy estates as New York City was growing. A number of high-profile companies moved there post-World War II, including IBM. It is home to “Hipsterurbia.” In other words, McMansions are just symptomatic of a wealthy county where many communities would not welcome affordable housing and builders see ongoing opportunities for wealthy buyers.

2. These new homes are indeed large and luxurious. But, the conversation about “who needs this” can get sticky. How much do Westchester County residents consume? How many suburbanites buy a home that is too small for them? How many people don’t seek through the exterior of their home or the things inside to provide some markers of their social status? On one hand, Americans have historically tended to frown upon opulent wealth (hence, everyone wants to be middle class) yet consumption is rampant and the American middle class is very well off by American standards (though there may be a big gap between them and many Westchester County residents).

3. The critique of the architecture might seem class neutral. After all, people could build both big and small houses that match the local styles or are done in good taste. Yet, architectural styles and design are likely class-based tastes, a la Bourdieu.

Shopping malls adapting with new purposes and targeted groups

Posted on by

Joel Kotkin argues shopping malls aren’t dead – they’re changing their purpose and targeting wealthier and ethnic consumers.

To be sure, there are hundreds of outmoded malls, long-in-the-tooth complexes most commonly found in working-class suburbs and inner-ring city neighborhoods. Some will never come back. By some estimates, something close to 10 to 15 percent of the country’s estimated 1,000 malls will go out of business over the next decade; many of them are located in areas where budgets have been very tight, with locals tending to shop at “power centers” built around low-end discounters such as Target or Walmart.

But the notion that Americans don’t like malls anymore is misleading. The roughly 400 malls that service more-affluent communities—like those typically anchored by a Bloomingdale’s or Nordstrom—recovered most quickly from the recession, and now appear to be doing quite well.

To suggest malls are dead based on failure in failed places would be like suggesting that the manifest shortcomings of Baltimore or Buffalo means urban centers are not doing well. Like cities, not all malls are alike.

Looking across the entire landscape, it’s clear the mall is transforming itself to meet the needs of a changing society but is hardly in its death throes. Last year, vacancy rates in malls flattened for the first time since the recession. The gains from e-commerce—6.5 percent of sales last year, up from 3.5 percent in 2010—has had an effect, but bricks and mortar still constitutes upwards of 90 percent of sales. There’s still little new construction, roughly one-seventh what it was in 2006, but that’s roughly twice that in 2010.

In other words, shopping malls today can’t afford to try to target everyone at once. Rather, the retail market has both exploded with opportunities and fragmented, meaning that malls and other retailers have to target particular groups. This is going to be easier in areas that have money or lack other retailers or have growing populations.

Of course, Kotkin isn’t particularly worried that shopping malls are taking over the Main Street function for suburbs and other communities. There are issues with this: this is privatized space that often requires a car to get to and its primary activity is consumerism. Indeed, if people focused on activities other than shopping (which remains a very popular activity), our version of  capitalism might ground to a halt:

9da4e7c0ca220132db3c005056a9545d

Still, many communities will be happy if shopping malls continue as they are economic boons through sales taxes and jobs.

How to get wealthier communities to accept affordable housing

Posted on by

This article discusses two tools to promote affordable housing in wealthier communities: regulations and lawsuits.

But Massachusetts has a work-around: A state statute, called 40B, allows developers to get around exclusionary zoning and build affordable housing in communities where only a small percentage of units are considered affordable. (A few other states have similar policies.) The statute, passed in 1969 and upheld by the state’s Supreme Judicial Court in 1973, has led to the construction of 1,300 developments throughout the state, containing a total of 34,000 units of affordable housing, according to Citizens’ Housing and Planning Association, or CHAPA.Projects built under 40B are almost always controversial: The statute was enacted in the first place because most communities outside of big cities didn’t permit multi-family housing, said Ann Verrilli, the director of research at CHAPA. Even with the statute, communities often spend millions of dollars in legal fees to try and stop the projects, Verrilli told me…

The experience of developers trying to build affordable housing in Massachusetts takes on added significance now, as housing advocates wait for a decision on a landmark case in front of the Supreme Court that concerns where low-income housing projects are placed. The case, Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, arose when a nonprofit housing group sued Texas, arguing that the state primarily distributed tax credits for low-income housing projects in minority-dominated areas. Inclusive Communities argued that doing so perpetuated segregation and violated the Fair Housing Act, which was passed in 1968 to prevent landlords, municipalities, banks and other housing providers from discriminating on the basis of race. The Supreme Court case centers on whether this discrimination has to be intentional in order to be illegal, or whether the Fair Housing Act also seeks to prevent policies that may not be intentionally discriminatory, but that have a “disparate impact” on minorities…

Many affordable housing units in the suburbs are a direct result of court cases, and even enforcement of those programs are lax. In 2009, Westchester County in New York signed a desegregation agreement and agreed to build and market hundreds of apartments for moderate-income minorities after a court found it had misled HUD by applying for funds that it said it would use to integrate housing, and then did the opposite. Four years later, the county had not complied with the provisions.

The shift from discriminatory race-based housing policies to economic ones in the 1960s and 1970s was an important one. I suggest reading David Freund’s Colored Property: State Policy and White Racial Politics in Suburban America. This is the logic still used today: better off residents argue that they worked hard to get to their higher quality of life and that others should have to do the same. But, since race/ethnicity and social class are inextricably linked, keeping out the lower classes through big lots, expensive properties, a lack of apartments, and other methods leads perpetuates residential segregation.

Two other relevant points from this article. First, affordable housing in the suburbs can be done well through good design and not high levels of concentration. Second, given the resistance to such projects as well as design guidelines that are helpful, still nowhere near enough affordable housing has been constructed. In one sense, the foot draggers of wealthy communities are winning because they have slowed down a process started by the courts in the late 1960s (the Gautreaux case) and 1970s (the Mount Laurel case). Plus, the wealthy can move easily if their properties are threatened.

Teardowns increase

Posted on by

Demonstrating again that people with means are doing fine in the housing market, the number of teardowns is on the rise:

Home teardowns are becoming common in U.S. suburbs such as Pimmit Hills, a 65-year-old neighborhood just beyond the borders of the growing Tysons Corner area near Washington. Builders, lured to locations where land is more valuable than the aging housing stock, are transforming communities outside of major employment hubs to take advantage of demand for real estate where schools are decent and commutes are short.

Knockdowns across the country are increasing, said Robert Dietz, an economist with the National Association of Home Builders. The trade group estimates that builders tore down and reconstructed about 32,000 homes last year, representing 5 percent of all single-family housing starts. Beyond the nation’s capital, the trend can be found in suburbs of cities from Boston to Minneapolis and Los Angeles.

“It’s all about traffic jams — people can have nice houses far out in outer suburbs but the commute time is impossible,” Lawrence Yun, chief economist of the National Association of Realtors, said in a telephone interview. “This is an ongoing process because older-built homes happen to be closer to job centers and may not meet the needs of modern homebuyers.”…

More builders are ripping down existing homes because well-located vacant lots are becoming difficult to find and structures in communities close to urban areas are among the oldest. In 2013, about 47 percent of owner-occupied homes in the U.S. were at least 40 years old, up from 27 percent in 1991, according to an analysis of Census Bureau data by the homebuilder group.

If you have the resources, you can get the bigger home with the shorter commute in a desirable suburb. The figure cited above about a dated housing stock is intriguing; many people today seem to want new and turnkey construction but many older suburbs – even ones founded right after World War II – could have primarily older homes.

I like the picture they chose to accompany this story as it highlights why many communities have fierce debates over large teardowns:

Northern Virginia’s Pimmit Hills

That is quite a difference in size and shape.

Record 5 homes over $100 million sold in the world last year. Is this really a trend?

Posted on by

The luxury housing market is booming and a new record was set last year for sales of $100 million+ homes:

Demand for mega-mansions and penthouses has accelerated as wealthy buyers seek havens for their cash and search for alternative investments such as art and collectible real estate, according to a report Thursday by Christie’s International Real Estate, owned by auction house Christie’s. Five homes sold for more than $100 million last year, with at least 20 more on the market with nine-figure asking prices, the brokerage said…

Just one home sale exceeded the $100 million mark in 2013, following four such transactions in 2012 and three in 2011, Christie’s reported.

While I have seen other corroborating evidence that this segment of the market is indeed doing well, how much of a trend or record is this went the number of transactions throughout the world increased to five? Here is the trend from the last four years: 3, 4, 1, 5. So if 2014 was a record year, was 2013 a big plunge in the market? The number of cases is so small and the timeline is so short that it is difficult to draw any substantial conclusions. Yet, suggesting a record occurred makes for a better headline or story…

Wealthier communities with no fire hydrants require different firefighting tactics

Posted on by

A recent house fire in a large Barrington Hills home illustrates the issues present in fighting fires in wealthier suburbs:

In all, 40 fire companies from departments as far away as Hebron, Des Plaines, Hanover Park and West Chicago converged on Barrington Hills April 18 to blast the fire with hundreds of thousands of gallons of water. But instead of hooking their hoses to nearby hydrants, all of that water had to be brought in from elsewhere in trucks, ratcheting up the degree of difficulty for firefighters.

“Having to bring water in on wheels is time-consuming,” said Deputy Chief Rich May of the Palatine Rural Fire Protection District. “The planning behind it is done quite well, but you can’t move it like tapping into a fire hydrant. There’s just no comparison.”…

“Years ago we had a lot of natural-based materials in houses,” he said. “Nowadays, with all of the synthetic products in the homes, such as plastics, they burn hotter and burn faster.”

That means houses burn hotter and collapse sooner, Giordano added…

Given the village’s lack of water system and regulations requiring minimum lot sizes of 5 acres, it’s not likely Barrington Hills residents will see hydrants near their homes anytime soon. However, fire officials said there are some steps homeowners can take to help make firefighters’ jobs easier.

In other words, the wealthier nature of the community led to a lack of fire hydrants. This is a bit odd because homeowners here could probably afford the costs of a full water system but would not have wanted to pay the costs for it which were exacerbated by the large lot sizes. Yet, when they need to put out a fire, doesn’t this lack of paying upfront for the water system lead to financial consequences down the road? One of the suggestions in this article – sprinklers within each home – would help keep homeowners more responsible for fighting fires in homes built in such settings.

See earlier posts about the unique challenges of fighting fires in large homes or McMansions.

Storing wealth in New York apartments, contemporary art

Posted on by

According to one asset manager, the wealthy are now storing their wealth in apartments and art:

“Historically gold was a great instrument for storing of wealth,” the chairman of BlackRock Inc. said at a conference in Singapore on Tuesday. “Gold has lost its luster and there’s other mechanisms in which you can store wealth that are inflation-adjusted.”…

“The two greatest stores of wealth internationally today is contemporary art….. and I don’t mean that as a joke, I mean that as a serious asset class,” said Fink. “And two, the other store of wealth today is apartments in Manhattan, apartments in Vancouver, in London.”…

The median sale price for existing condos in Manhattan jumped to a six-year high of $1.3 million in the first quarter, driven up by buyers seeking alternatives to out-of-reach new developments, according to Corcoran Group, a brokerage. In the U.K., asking prices for property climbed to a record in April as values in London rose 2.5 percent, Rightmove Plc said on Monday.

Three quick thoughts on this:

1. Good thing New York City has a boom in luxury building. Those underground expansions in wealthy London neighborhoods don’t hurt either.

2. What is the point where these apartments turn into a luxury housing bubble? There are only so many uber-desirable locations and only so many people who can afford these luxury places. If this part of the housing market collapses, what happens?

3. I recently read 33 Artists in 3 Acts by sociologist Sarah Thornton and this trend among the wealthy certainly has had an effect on the art world. There are some interesting discussions amongst artists involving money, commodities, and related topics.

Are Forest Preserves really about maintaining property values and quality of life, not protecting nature?

Posted on by

Each day on the way to and from work I drive past multiple Forest Preserve properties. They are generally green and open, providing a relaxing scene under the rising sun or after a long day. Yet, how much are they really about preserving or protecting nature as opposed to improving the quality of life of suburbanites? Are these two goals antithetical to each other?

The DuPage County Forest Preserve – alongside others in the Chicago metropolitan region – has been aggressive over the decades in purchasing land. The pace of acquisition picked up after World War II in the era of mass suburbanization where development eventually spread throughout all of Cook, DuPage, and Lake County. See an animation here of the land acquired by the DuPage County Forest Preserve since 1920.

The mission of the organization is stated here:

As mandated by the Illinois Downstate Forest Preserve Act, our mission is “to acquire and hold lands containing forests, prairies, wetlands, and associated plant communities or lands capable of being restored to such natural conditions for the purpose of protecting and preserving the flora, fauna and scenic beauty for the education, pleasure and recreation of its citizens.”

The mission mentions both nature and citizens. But, one way to look at the acquisitions is that they enhance the quality of life of wealthier residents by providing green and/or open space that will not be developed, offering recreational opportunities, and raising property values for nearby housing and not just for those that border the properties but for numerous developments who don’t have to contend with more nearby developments. Of course, forest preserves and parks can be used by residents of all class backgrounds. Yet, taking away all of the land from possible development means that affordable housing – already limited in wealthier places like DuPage County – may be even less possible. Property values are always lurking in the background of development decisions in the suburbs and I suspect it is relevant here.

Additionally, “protecting and preserving” nature is a tricky business. It is not exactly in a “natural state” as human beings have been in the area for at least hundreds of years going back to the first white settlers in the 1830s and Native American groups as least a few decades before that. These Forest Preserves present a particular kind of nature, one that this is never too far from busy roads, housing developments, tricky water run-off situations, and pollution. This is made more clear in the term sometimes used of “open space” where concerned suburbanites want empty land.

In the end, do suburbanites really desire Forest Preserves for the mediated nature they provide or the enhanced quality of life they bring? The answer might be both but we rarely discuss the implications of the second reason.