Archive for the 'Other States' Category
Steve Jobs, Apple CEO and technology visionary, has a gift for designing things. People have been going bananas over Apple’s various portable devices for the past decade, and he is credited with many of their important design principles.
Although gadgets are fun, we’re more about the real estate on this site. And this news piece definitely caught our attention – Steve Jobs is going to be building a new home! And the site plans are available on the internet!
The story of this property is too long and complicated for us to fully understand the details, but there seems to be two interesting themes – historic preservation and design.
Jobs bought the estate in 1984, lived in it for a while, rented it for a while, and let it sit vacant for a while. The existing structure is a 30 room Spanish Colonial Revival mansion with 14 bedrooms and 13.5 baths over multiple structures on 6 acres. Although Jobs has wanted to demolish the home for years, local preservationists have successfully intervened on the property’s behalf, working to either save the structure or move the home to a different site. In 2006 someone made their way onto the vacant property and took these pictures, which show significant neglect. There seems to have been rulings in favor of each side, with the most recent victory being for Jobs when the preservationists dropped their lawsuit seeking to prevent demolition. At this point, the demolition is on.
The other interesting subplot is about what the new home will look like. Jobs has the resources to build anything he wants, so what will it be? Conceptual plans for the new home were submitted to the Woodside Town Council, and they have reached the interwebs. I haven’t found images that I can zoom in on (please post a link in the comments if you find some), but these small images and the accompanying commentary give a good flavor for the space. The basic conclusions of those who have studied the plans in detail are that Jobs is sticking with the clean, simplified aesthetic popularized by Apple products. Also, that he won’t be throwing large parties at his house, it’s designed more as a peaceful retreat than a showpiece property.
Jobs has won the most recent battle with the preservationists, but will it be the end of the war? And if he actually follows through with his plan, will the final product truly be as restrained as the current plans? Only time will tell.
Pricing a house is all about using “comparable sales.” We always try to compare similar properties and the more similar the better. There is rarely a perfect match, but we can usually get pretty close.
It seems to me that in evaluating a city we should be using a similar approach. When comparing our area to others around the country, we need to be comparing like to like. The current dust-up about Hartford being a “dead city” is the most recent, but far from only, example of how inappropriate comparisons skew reality in one way or another.
A wonderfully positive example is Kiplinger Personal Finance Magazine recognizing West Hartford as a town for the coming decade next to Austin and Seattle. The point isn’t that West Hartford is unworthy, or to minimize all the hard work of the town’s leadership, rather that comparing West Hartford and Washington DC (#3 on the list) as equals is not apples-to-apples.
We unfortunately can’t control how other people do their analysis, but we can draw our own conclusions so that we can decide on our own what truly matters and what doesn’t. Amy and I have lived in a few different parts of the country, but we’re going to need help from our readers to find appropriate cities to use as comps for Hartford.
But before we get to that, our first order of business is to define what we mean by “Hartford.”
The word “Hartford” can be used in a lot of different ways, and means different things to different people. In some of the most common uses the speaker means…
- The Downtown neighborhood where all the tall buildings are.
- Everything within the Hartford City limits.
- The general geographic area that is centered on the City of Hartford.
- The seat of the County and State governments.
Normally defining the city wouldn’t be a challenge, but boundary lines are drawn differently in Connecticut than in many other parts of the country. Is it appropriate to compare Hartford to Detroit? Hartford (as defined in the article) is strictly the City of Hartford, which is 17.3 square miles of land. Detroit, on the other hand is 138.8 square miles. In order to make a geographic area of comparable size, we would need to include Hartford, West Hartford, Wethersfield, Newington, Rocky Hill, Bloomfield, Windsor, and half of Windsor Locks. Would the conclusions be the same if the analysis included all of those towns?
I propose that we think of “Hartford” as the region – the general area centered on the City of Hartford, but including all the surrounding towns. There is no right answer, of course, but I think that taking a regional view is most appropriate because we have a regional economy with people frequently traveling between towns for work, to shop, and to have fun. Additionally, taking this view is the only practical way to compare Hartford to other cities since they are usually geographically much larger. The negative of looking regionally is that it will be very difficult to gather data on the Hartford region.
Going back to the article praising West Hartford, I think that Hartford (as a region) would still be worthy of inclusion as a best city for the coming decade. I’m no expert on Washington DC, but if Kiplinger is able to look past their challenges to see the potential, then they should be able to see past our challenges too.
I’d love to have folks weigh in with their take on how we should define “Hartford.” And if we can agree, then we can begin to look for other similar cities to which we can compare our current situation and future ambitions.
Economists are divided as to the direction of the national housing market. Some believe that the environment is stabilizing and that prices will increase from here. Others see further price decreases once the government support fades away.
Barry Ritholz is one economist we follow regularly, through his posts on The Big Picture blog. Right now, he has a strong negative view on the future of the US housing markets. One of yesterday’s posts broke down his views in more detail.
Looking back at how we got to where we are today, Mr. Ritholz notes that that low interest rates throughout the 2000s caused a credit bubble, which in turn caused a housing boom. Lots of people bought houses they couldn’t afford because poor lending standards and very low mortgage rates allowed them to jump into the real estate markets. Five million homeowners have been foreclosed upon, and he expects five million more foreclosures to come.
His forward-looking thesis is that even after a 33% fall from the peak, prices are still too high when looking at traditional valuation metrics like prices vs income and the cost of owning vs renting. Supply is high, with more waiting in the wings. Demand is well below the inflated peak levels, caused by tighter credit and high unemployment. And when markets correct from severe imbalances, they usually move well below the mean.
How does his thesis translate to Greater Hartford?
Our markets did not appreciate nearly as much as markets in some other parts of the country, which has also meant that we have not seen as severe a correction. However, housing in the northeast is generally more expensive than it is/was in the boom areas, so there is more room to fall. And there is no guarantee it will always be more expensive up here.
Inventory: Real estate inventories in Hartford County checked in at just over 6 months of sales activity at the end of the first quarter. That’s right on the boundary between a neutral market and one that favors buyers, so we’re not seeing any major warning signs here. The number at the end of the second quarter should be comparable, or even better, since the tax credit created a huge spike in deals that will close by the end of June.
Foreclosures: The number of foreclosures has increased dramatically in the past few years. A recent Hartford Courant article focusing on the amount of money marshals earn indicates that “five or six years ago there were 3,000 or 4,000 foreclosures” per year in the state. Compare that to a statistic later in the article stating that 20,000 foreclosures were filed in 2009, which was 40% more than 2008.
Employment: The employment situation in Greater Hartford has improved over the past year. People we talk with say that companies are adding employees, though many positions remain unfilled and may never be filled. We are also seeing more relocation buyers coming from out of town, which of course means that they have jobs waiting for them. That’s the short-term view. The long-term view is more negative. One of our major employers has gone on the record saying that they want to move jobs anywhere outside of Connecticut. The comment made headlines, but nobody seemed especially surprised by the news. The housing market depends on buyers with steady income, which depends on employment.
Credit and Mortgage Rates: Buyers with good credit are able to get mortgages, and are currently seeing very low rates. However, buyers with poor credit are having trouble financing a purchase and often have to sit out of the market for a year or two to repair their credit. We know of numerous buyers in this situation – all of whom are gainfully employed.
Overall, the environment in Greater Hartford is trending in the same direction as the national picture for three out of four areas that Mr. Ritholz identifies as concerns. It’s difficult to know how severe our readings are relative to the national average, but it seems like we may be at risk for falling prices if his analysis turns out to be correct.
The National Association of Realtors (NAR) has been leading a push to get part of the Federal Home Buyer Tax Credit extended. But don’t get too excited – their proposal won’t give allow anyone new to claim the credit.
Before diving into the details, here is a quick review of the current rules of the game:
1. First time buyer or existing owner (extra criteria).
2. Binding purchase contract by April 30, 2010.
3. Closing by June 30, 2010.
In a June 11th press release, NAR argues that 180,000 buyers met the first two rules but are at risk of missing out on the credit because their lenders will not be able to underwrite the mortgage in time. In fact, they state that “as many as one-third of qualified applicants have been notified by their lender that their mortgages will not close before June 30th.” NAR would like to protect these buyers by extending the deadline for closing to September 30th.
NAR’s main concern is that the surge in purchases at the end of April is overwhelming lenders. Others seem to believe that the tighter lending standards and the new appraisal rules that fall under the Home Valuation Code of Conduct (HVCC) are a big part of the delay. A number of articles, including Senator Reid’s press release on the issue, state that there is “growing concern” that short sales will be impacted.
We have heard about mortgage delays with some of the larger national lenders and with special programs (like CHFA) that require additional steps or approvals. However, buyers using standard mortgages with local and regional lenders are seeing their loans go through without much trouble. Appraisals can be an adventure when someone is assigned from outside of the area (like from Rhode Island!), but they have occurred in an expeditious manner. Short sales are a whole different animal, and the concerns identified seem to lead to a discussion about when the purchase contracts becomes binding – not a debate for today.
Buyers in Greater Hartford are seeing some of the same challenges that have been reported in the country overall, especially when they use national lenders. Hopefully we won’t see too many closing delays as the month of June comes to an end. And if the “closing by June 30th” rule is relaxed, that will help ensure everyone gets the incentive they were expecting.
Friday’s Wall Street Journal article about the demolition of historic homes in Detroit came at an interesting time. The previous evening we had attended the Hartford Preservation Alliance awards event, a gathering to celebrate the architectural history of our city and the efforts of community members to restore and reuse buildings rather than knock them down.
Detroit has a rich architectural history, as can be seen on sites like Forgotten Detroit and Detroit1701.org. Some of the historical homes are currently in use, and in good condition, while others appear to be abandoned. The city has lost a substantial number of residents over the past 50 years and there are apparently blocks with few inhabited houses. A piece on the Land+Living site from 2006 shows some images of Detroit’s residential landscape.
The WSJ article raises an important question that we face here in Hartford too … how much should we preserve? Is preserving the exterior sufficient? Is bulldozing ever the right thing to do?
Houses are large, and theyâ€™re expensive to maintain. This makes preserving them much more difficult than paintings, sculptures, or other works of art. However, like a work of art, each house is often unique since it reflects the site on which it was built and may have been customized for the owner. Therefore homes are different from cars, stamps, or guns, where having one example of each “model” could be considered sufficient.
I like to think of myself as a practical, if not pragmatic, person. Houses need to be functional; otherwise theyâ€™re not going to survive. I think that older homes should evolve over time to meet the needs of modern society. They need regular maintenance, and the best way to achieve that is by continuing to serve their primary role as a shelter and an oasis from the outside world. However, in making the updates property owners have a responsibility to make changes within the spirit and character of their home. They should make historically appropriate choices as often as possible.
The larger challenge is when neighborhoods and regions evolve. This is the primary issue that Detroit faces, and is also a relevant topic in the City of Hartford. What happens when it no longer makes economic sense for homeowners to maintain and restore their property? Or a block of properties? Or an entire neighborhood?
Detroit has chosen to sacrifice some of their history in an effort to move their city forward. Without living in the area and experiencing their problems first-hand, it’s difficult to fully understand that decision. I can only imagine the intense debate that led up to the final demolition orders. Mayor Bingâ€™s State of the City address on March 23, 2010 outlines Detroitâ€™s major challenges and initiatives, of which the demolition program is just a small piece.
It’s always sad to see grand old homes in disrepair â€“ you can still see their beauty shining through the years of neglect. At some point taking them down may be the only option. Hopefully here in Hartford we can continue working to protect our historic properties as we confront many of the same challenges as Detroit, just on a smaller scale.