Tag Archives: wealthy

Three thoughts on the finding that 7.5% of housing in Naperville is affordable

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Naperville is a large – over 140,000 residents – and wealth – a median household income of just over $114,000 – suburb. It also does not have much affordable housing:

A state agency recently faulted Naperville as the only Illinois community of 50,000 or more lacking affordable housing, which, according to the federal government, means housing costs make up no more than 30% of a household’s income. In a report last year, the Illinois Housing Development Authority found just 7.5% of Naperville homes are considered affordable based on the regional median income, among the lowest percentages in the state.

Some elected officials fear Naperville’s high housing costs could drive out seniors and push away recent college graduates and middle-class professionals. As those city leaders consider a slew of new developments, they and housing advocates are debating how and whether to include affordable units that could bring in new residents and help people such as Melekhova stay…

Efforts to include affordable housing in Naperville developments have been met with some resistance. Residents have questioned the effects affordable units would have on their neighborhood and whether the look of buildings with affordable units would fit the character of the area.

One question submitted on a note card during a panel on affordable housing in May was more pointed: “What steps can landlords utilize to minimize the potential negative impacts of the associated tenants utilizing affordable housing?”

Based on my research on suburbs and Naperville, three quick thoughts:

  1. Naperville enjoys being a wealthy suburb. It has a really low poverty rate for a city its size. It has lots of white-collar jobs. While this tends to be put in terms of having a high quality of life, nice amenities, and good schools, there is clearly wealth.
  2. There is not a lot of affordable housing because that is not the kind of housing Naperville prioritized for the last fifty years. As the suburb really started to grow in land area and population in the 1960s, there were public discussions about building apartments. This is not what won out in the long run and the community approved subdivision after subdivision of nicer single-family homes. (See my 2013 article that details some of this.)
  3. More recent discussions and the comments highlighted in the article are common ones in suburban debates over affordable housing. When suburbs discuss affordable housing, they often are thinking of people that would desire in the community such as younger adults and retirees. They are not explicitly seeking out poorer residents. Such concerns can be put in different terms – privileging “quality” development or protecting the “character” of neighborhoods – but they often do not address housing for the many Americans working in lower-paying jobs. And there may be some support for affordable housing units but it is harder to find the suburban homeowners who want to live near those units.

All that said, truly addressing the issue of affordable housing requires more effort than adding a few units spread throughout the large suburb. A larger discussion about what kind of housing the community desires and what kind of residents it wants would have to take place before the number of affordable housing units would truly jump.

Considering the Wall Street Journal’s “mansion porn”

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The Wall Street Journal sends a special supplement each week to readers looking at the houses of the wealthy:

Mansion, The Wall Street Journal’s real-estate supplement, arrives each Friday slipped into the middle of my newsprint edition, the way pornography (so I’m told!) used to come in unmarked envelopes back before the internet placed it at everyone’s fingertips. I’m satisfied with my weekly print version, but you may prefer reading Mansion on the web, where the photographs are more numerous, detailed, lurid, and explicit…

The comparison to porn is apt. It’s also unoriginal and incomplete. A little more than a decade ago, when the century was young and right before their real-estate holdings drove millions of people into bankruptcy, New York magazine ran a regular feature about how fabulous it was to own real estate. And not just to own it, but to fantasize about it, drool over it, caress the photos and the sales price as though they were objects of sensual desire. The feature was called “Real Estate Porn,” in keeping with the salacious content.

Mansion invokes the same feelings of naughtiness: You’re watching people do something that, in a fairer and more just world, you’d be doing yourself. I think of Vivian Dixon and John Chapple, a married couple that Mansion introduced us to not long ago, as the exemplars of the Mansion character. They are voluptuaries of real estate. They grab houses the way the rest of us scoop mints from the little bowl as we leave a restaurant. At the time of the article’s publication, in May, they owned six residences, though by the time the piece ends you suspect their trigger finger is getting itchy again…

This willingness to take the wealthy on their own terms is a rarity in American business journalism. Reporters are usually more leery in their treatment of such subjects, when not nakedly hostile. Few people in the world despise the winners of the capitalist lotto more than the sorry drudges who are called to write about them. You’ll find a higher percentage of committed socialists in the newsroom of the Financial Times than at a lakefront party at Bernie Sanders’s dacha.

I have not seen this section but I wonder if tackles several darker essentials of American culture from the beginning:

  1. The presence of really wealthy people in the midst of an egalitarian/middle-class public discourse.
  2. The importance of real estate in American life. Sure, citizens can vote and a few people can move from the bottom to the top in unique ways but the real answer to getting ahead is real estate (from moving the frontier for 150+ years to gobbling up expensive properties in  global cities).
  3. The work that goes into homeownership in both maintaining and improving properties.
  4. The interest in seeing what the rich are up to and uncertainty about whether to critique their excess or celebrate their success.

It would be interesting to know how many Americans exist at this elite level of real estate. This is not the typical homeowner hoping to make money on their single-family home or the small market house flipper or the “dream hoarders” in the top quintile of earners; these are people buying and selling with large amounts of capital (perhaps some even thinking like the current president).

Could giga-mansions relieve the negative attention directed toward McMansions?

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The term McMansion is likely to stick around (even if is used poorly at times) but more interest may be shifting to the giga-mansion.  A Motley Fools podcast provides some information:

First we had mansions. Then we had mega-mansions. And McMansions. Now we have giga-mansions. Yes, it’s a growing trend of massive houses usually built in the LA area on spec. They are massive, expensive, and outrageously ostentatious. Let’s see if you two can answer some trivia around some of the most expensive pieces of residential real estate on the market…

The One will be America’s largest house on the market at 100,000 square feet. It will be the most expensive private residence when it comes to market. It boasts four swimming pools, a nightclub, a room where the walls and ceiling are filled with jellyfish. It will have a 30-car gallery. Because of this price you don’t call it a garage. Of the 20 bedrooms, how many are in a separate building just for your staff?…

Let’s move on and talk about the house called Billionaire. It’s 38,000 square feet. It was America’s most-expensive house on the market when it was listed for $250 million in 2017. The property is in the exclusive Los Angeles suburb of Bel Air. It has 12 bedrooms, 21 bathrooms, three kitchens, a 40-feet James Bond-themed cinema, six bars, two fully stocked champagne cellars, and the helicopter from what 1980s television series? Rick knows this. He can’t wait to say it…

Southwick: A $1 billion lot. Now we’re going to go to The Manor. The largest home in LA was actually built in 1988 by the TV show producer Aaron Spelling and his wife Candy. The 56,000 square foot, 14-bedroom, 27-bath home originally was built for $12 million. They sold it all in a cash deal for $85 million in 2011 to the 23-year-old daughter of someone wealthy. Don’t worry about it. She renovated much of the house, since it had some very quirky spaces, including a flower-cutting room, a humidity-controlled silver storage room, a barber shop, and three rooms for doing what common birthday and Christmas activity?

One of the major critiques of McMansions involves their symbolic nature: they are associated with sprawl, wealth, and conspicuous consumption. All of these appear to be in play with the examples from the Los Angeles area cited above: a region known for cars and highways, entertainment celebrities and executives along with other wealthy people, and a constant need to stand out from the rest of the area.

But, McMansions have key differences from this supersized homes. They are generally smaller – roughly 3,000-10,000 square feet – and more often found in “typical” neighborhoods. They are often mass-produced. They are often criticized for their architecture while megahomes take more flak for their size. Perhaps most importantly, McMansions are within the reach of more Americans. Depending on the housing market, an upper-middle class household can acquire a McMansion but these giga-mansions are only for the wealthiest.

If the ultimate concern behind critiques of McMansions is their unnecessary size and flaunting of wealth, then the spread of giga-mansion might relieve some of the pressure. Granted, there will always be more McMansions but it is easy to focus on these outsized homes and their owners. Why criticize the top 10-20% of American homeowners for their McMansion choices when the giga-mansions of tomorrow constructed and owned by the top 0.1% of homeowners are so ridiculous and unnecessary?

Promote smaller, cheaper housing by calling it “missing middle housing”

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Even if the median size of new American homes is smaller in recent years, this does not mean it is easy to construct smaller new homes in communities:

To propel the movement, he recommends using the term “missing middle housing,” rather than terms such as “upzoning,” “density” and “multifamily,” which he says have a negative connotation.

“I can’t imagine a single neighborhood in the country where people will get excited about the term ‘density,’ ” Parolek said. “Even things like ‘multifamily’ can be a scary term that’s past its life span.”

His larger recommendation is for cities to change their zoning ordinances. Parolek advocates for form-based zoning, which allows more flexibility for what can be built on a property…

“Zoning in and of itself is a system that encourages single-family home construction in cities,” Parolek said. “Most cities don’t have effective zoning for missing middle housing, so the easy thing to do is to build a single-family house. There’s no neighborhood pushback and less risk. There’s a reason it’s being done, but it’s not responding to what the market wants.”

Very few neighbors or communities would be excited to live next to or approve cheaper housing. The assumption is that more expensive housing is good: it will bring in more tax dollars, typically has fewer residents (so lower local costs), and connotes a higher status. In contrast, it is thought cheaper housing brings down surrounding property values and the kind of people who live in cheaper housing are not as desirable as higher income residents.

Would communities react better to “missing middle housing”? Perhaps. Many places talk about the need to have housing where hard working professionals with a stake in the community, like teachers and firefighters, can reside in the place where they work. Or, it is desirable to provide denser housing for young professionals and retirees to keep them in the community. Yet, as Parolek notes, the goal is still to move people toward a single-family home (with some flexibility for townhouses and condos) in the long run. Changing zoning is not easy because many people purchase a home and then work hard for years to protect the value of that home. Cheaper housing may be more acceptable if located away from existing larger and more expensive housing, if it is allowed in the community at all.

Missing from even this suggestion about “missing middle housing” is an acknowledgement of the necessity of housing for lower-class and poorer residents. True affordable housing needs to go beyond the middle-class and provide housing for those working in the retail and service industries. But, I don’t think most communities and America as a whole wants to talk about this kind of housing.

New Bel Air homes of over 17,500 square feet cannot be called McMansions

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In recent years, a number of extra large houses have been constructed in Bel Air. But, these are not just regular McMansions:

Rosen rallied his neighbors in a mini-revolt against City Hall. The result was 2017’s Bel Air mansion ordinance, a more rigid version of the ordinance imposed on the rest of Los Angeles. While many of the hauling trucks are now gone, the wealthy enclave is still grappling with the legacy of its McMansion years. Between 2014 and early 2017, the city issued 28 permits for mansions in Bel Air of 17,500 square feet or larger, most of which are still under construction, according to an analysis by The Real Deal. The projects are exacerbating a spec-home building spree that rattled longtime Bel Air residents and is dramatically altering the landscape of the area, not to mention its real-estate market.

As of Wednesday there were 12 homes in Bel Air of 15,000 square feet or larger currently sitting empty and unsold in, according to MLS data cited by Steve Lewis, President of CORE Real Estate Group in Beverly Hills.

These are not regular McMansions in suburban neighborhoods: these are megahomes going for megaprices and constructed by and for the ultra-wealthy.

Meanwhile, on Chalon Road, Thomas Barrack Jr., the Colony Capital CEO and pal of President Donald Trump, is nearly done building out an eight-acre compound with a 77,000-square-foot mansion being designed by Peter Marino. Barrack is building it on behalf of the royal family of Qatar. Other competing giant offerings, including the Mountain, a 157-acre plot in Beverly Hills Post Office now listed for $650 million, and a 120-acre site owned by an entity linked to the late Paul Allen asking $150 million, don’t have plans or permits in place for mega-mansions, Blankenship said.

Massive spec mansions on the market right now include Bruce Makowsky’s 38,000-square-foot estate at 924 Bel Air Road, asking a much-reduced $150 million, and the Mohamed Hadid-developed mansion at 901 Strada Vecchia, which is the subject of an FBI probe and a lawsuit from neighbors who want to see it torn down.

Granted, it sounds like some of the activity in Bel Air may be consistent with several features of McMansions: big homes, teardowns, and status symbols for the wealthy. For those who live in Bel Air, it could be disconcerting to see the scale of new construction. But, this article focuses primarily on the really big homes, the ones that are not just someone upgrading from a 2,000 square foot ranch to a 5,000 square foot home with a mishmash of architectural features. The last example in the piece illustrates this difference between a McMansion and mansion: a billionaire/actress couple want to tear down a home under 8,000 and more than double the square footage in a new home. Again, that is a scale far beyond the average upper middle-class American (and that does not even include the price it takes to buy into this particular neighborhood). Perhaps the real goal of using the term McMansion here is to denigrate the new homes and not grant them the status of mansion.

I would argue McMansions are roughly 3,000 square feet to 10,000 square feet. The bottom end may seem rather small but this size home could be quite large if constructed in a home of small homes. The upper end is a rough cutoff when a home goes from regular big home to extra large/wealthy big home. Size is a critical factor in defining a McMansion and these Bel Air homes are way beyond McMansion limits.

Former Cabrini-Green site home to the fastest growing American neighborhood of residents making over $200k

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A new analysis of Census data suggests the former home to Cabrini-Green housing project high-rises is increasingly the home of wealthy residents:

Cook County, which includes the county seat of Chicago, is home to the No. 1 and No. 7 fastest-growing concentrations of $200,000-plus households. No. 1 is, ironically, the area around where the Cabrini-Green public housing projects once stood. Cabrini-Green was notorious for violent crime, poverty and de facto racial segregation until its demolition beginning in the 1990s at the behest of the Chicago Housing Authority.

Even back then, authorities fretted that redevelopment plans might displace low-income families. They were right to be worried. Two decades later, the area’s concentration of $200,000-plus households has skyrocketed from zero to 39 percent. For some of the longtime residents who remain, the neighborhood’s transformation has been isolating.

Latanya Palmer, 53, grew up in the Cabrini Rowhouses. While she moved into a nearby mixed-income development in 2005, the hypergentrification has occasionally made her feel like a stranger in her own home. That sentiment echoes across the country, as poor and working-class Americans are increasingly pushed aside by frenzied development and prohibitive living expenses…

The census tract in question includes the still-standing, albeit largely vacant row houses where Palmer grew up. But now there are luxury condominiums and apartments, too. They sport rooftop terraces and sparkling views of the city’s affluent Gold Coast and Lake Michigan beyond. A three-bedroom penthouse can cost around $2 million.

This should be no surprise: the proximity of the land to both downtown and Lincoln Park meant that it is was highly desirable for developers and residents. Compare the clamor for the Cabrini-Green land to land where the Robert Taylor Homes once stood.

I would suggest there is a bit of revisionist history above. The claim that “authorities fretted” about the possible displacement of public housing residents is overstated. If anything, the city and Chicago Housing Authority probably could not wait to remove the high-rises (and other ones in the city, including the Robert Taylor Homes). Progress on replacing the units has been slow and with limited effects. The Chicago Housing Authority continues to have long waiting lists for housing. And many of the neighborhoods where public housing high-rises once stood are still relatively poor, even as a construction boom is taking place in the Loop and desirable nearby neighborhoods. In other words, some foresaw the potential for the Cabrini-Green site to be a wealthy neighborhood – and this what the city desired.

For more on why some Cabrini-Green residents fought hard to not be pushed out of their high-rises, see my earlier paper: “The Struggle Over Redevelopment at Cabrini-Green, 1989-2004.”

Mapping how wealthier suburban voters helped deliver the House to Democrats

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The Washington Post has a story with great maps that illustrate how suburbanites helped swing the 2018 House elections toward Democrats:

In Tuesday’s election, House districts on the outskirts of major American cities were the site of electoral shifts that propelled Democrats to power.

Wealthy and middle class voters delivered the suburban votes for enough Democratic pickups to secure a majority. In several cases, the battleground districts were wealthy and highly educated places that Hillary Clinton won in 2016, exposing the vulnerability of those Republican lawmakers.

The addition of quality mapping data in recent years to stories about election results is great. It helps highlight the clear patterns from recent elections regarding where the two parties have stronger bases, Democrats in cities and close suburbs and Republicans in rural areas and further suburbs.

US now has 201 communities with median home values over $1 million

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Rising housing values in the United States means more communities have a median home value of over $1 million:

Meanwhile, 29 cities and towns joined those with a median home value of $1 million or more this year, bringing the total to 201. Nineteen municipalities joined the million-dollar club last year.

They include San Jose, California, whose median value rose from $930,900 to $1.09 million; Fremont, California ($966,000 to $1.13 million); Burbank, California ($845,700 to $1.01 million); Newton, Massachusetts ($977,200 to $1.07 million); and Shelter Island, N.Y. ($903,500 to $1.15 million)…

Of the roughly 15,100 larger neighborhoods around the country analyzed by Trulia, 838 have median home values of $1 million or more and about two thirds of those are in California. Nearly 30 percent of California’s neighborhoods have a median home price of at least $1 million, the most by far of any state. New York, Florida and Washington followed.

It is not surprising that California leads the way given the housing issues in the state (recent example of lawsuits for housing in suburbs).

If I had to guess about the rest of the communities, they are (1) clustered around coastal cities in the West and Northeast (with exceptions being small, extremely high-end suburbs in the Midwest and South) and (2) most of the communities are suburbs. The first guess has to do with limited land, demand, and certain policies. I base the second conjecture on the facts that suburbs prize single-family homes, exclusion, and local control.

Only McMansion owners want expensive deliveries of stone crabs

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One Miami business owner describes his business and customers:

The process is simple. State law declares that stone crabs have to be cooked with six hours of being caught. For Abramowitz, there are about fifty fisherman and fifty boats who rake in thousands of pounds of stone crabs every morning. The crabs are then dunked for three minutes in boiling water, and placed in ice, where they will stay fresh for over three weeks. Then Abramowitz places them in boxes and ships them nationwide, using FedEx…
The average Fresh Stone Crabs order is over $400. His customers are mostly doctors, lawyers and CEOs with McMansions, all looking for someone to cater a party with fresh crabs. “It’s like a caviar business,” Abramowitz says.

The national shipping ability seems like a recent move for this business. Thus, it may be possible that the owner knows whether Miami area customers actually lived in McMansions.

At the same time, this description seems a little too convenient because of the two pieces of information provided about potential customers. First, we hear that the orders are typically pricey. A $400 price is a little different than ordering McDonald’s or ice cream delivered to your door. Second, we are told about the occupations of those doing the ordering: professionals who tend to have larger salaries. Who fits this bill (and could also desire caviar)? McMansion owners!

It sounds like the use of McMansion here is part of a description for people with money. Since McMansions are also often criticized for their architecture, this is not a positive term. Would a business owner want to say to people spending $400 on crabs, “Nice McMansion you have here?” Or, is it more likely that he is saying that the kinds of people who can afford and like to order stone crabs are people who live in larger houses in ritzier areas? And one way to say that quickly is to call their homes McMansions.

Asking for advice: my parents keep renovating their McMansion, my sister and I have debts

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Would those who spend money renovating their McMansions be better served by helping their adult children with that money? From the one seeking advice:

My parents (mom and stepdad) are in their 70s, retired, healthy, and doing well financially. They spend their money on traveling the globe and constantly remodeling their new Florida McMansion. That’s fine. They can spend their money on whatever makes them happy…

My sister had joint-replacement surgery and has high medical bills. I am going through a legal fight with a previous employer, am unemployed for the first time in my life (I’ve had a job since I was 14), and legal bills are eating my 401(k). Our parents know the details. We’re not asking for any help.

But I don’t want to get on the phone with my mom and have to hear all the issues of remodeling rooms that looked perfectly fine when I visited a year ago. Plus they don’t even ask how things are going with their children and grandchildren. It’s all talk about superficial things and how awesome they are doing.

Advice columnist responds:

But let’s back up for a second. You’ve presented this as a two-item menu: either endure your mom’s affluenza, or stop calling your parents.

There’s a middle choice, though: truth. “Mom, [sister] and I are buried in legal and medical bills. I can’t sympathize over expensive renovations.”

It does not sound as though the McMansion is the actual problem. Yes, the letter writer is upset because the mom both spends money on their McMansion (which, in the letter writer’s opinion, does not need more work) and then spends a lot of time talking about it. But, it seems as though the McMansion could be replaced by a number of objects or hobbies associated with people with resources. It could be golf, fixing up old cars, buying collectible items, playing bridge, or any number of things that, according to the letter-writer, keep the mom from paying sufficient attention to her kids.

At the same time, the McMansion is a potent symbol here. Since it is such a pejorative and loaded term, it leads readers toward a particular kind of person: one with poor taste in architecture, lots of money, and an interest in flaunting their status through their home. Additionally, who would prioritize their expensive home over the real needs of their children? These are not just parents who happen to live in a McMansion; these are unlikable McMansion owners.

Are McMansion owners on the whole more generous with their family? Do they have money to spare and give it away? Others have argued McMansions are bad for children; it is not clear from this letter whether the advice seeker grew up in this home. Could a whole generation of Americans reveal hurts produced by or in McMansions? Even with the attention they receive, widespread tales of childhood McMansion woes are unlikely given the actual number of McMansions in the United States.