Archive for October 24, 2008

Think ahead: 3 bedroom condos needed

October 24, 2008 / Wendy Waters / 10 comments

During the last real estate cycle, condominium living became popular in many cities.  Most buyers were singles or either young couples without kids or empty-nesters.  With perhaps Manhattan and Vancouver being notable exceptions, families with young children have generally not been among the new inner urban residents.

In part, this is because few new condominiums offer more than two bedrooms.  A two bedroom works fine with one child, but can be challenging with two or more kids.

This week in the Globe and Mail, Terrence Belford laments the lack of three bedroom units in Toronto’s new condos, seeing this as very short sighted.  He quotes urbanization specialist Jane Renwick who astutely notes: “Concrete lasts 200 years, so how will this situation change the face of the city 50 or 100 years down the road?”

Looking ahead in the future of North American civilization, more families will want to live in condominiums in order to be close to work as well as urban amenities.  Fuel prices will be high again, making commuting not only a time waster but also expensive.   Additionally, real estate prices will dictate that a condominium will be the starter home for many families, while others will prefer to spend their money on vacations, educations and other experiences rather than an expensive home with white picket fence.

Belford correctly notes that developers rarely build three bedroom units because at present there is not much demand for them, and profits are higher building 1 and 2 bedroom units.

What he doesn’t mention, is a solution that has been proposed in Vancouver (although not really implemented yet).  Vancouver condo marketer Bob Rennie as well as former chief city planner Larry Beasley, have both suggested that perhaps condominiums need “secondary suites” or “mortgage helpers.”

What if a building offered two bedroom suites with an attached small studio apartment of say 350 square feet.  The studio would have its own entrance, like a back door, as well as a door connecting it to the main unit that could be locked.  A couple or small family could live in the two bedroom unit and rent out the studio for a few years until enough mortgage is paid down or household income increases.   Then, they could take back the suite and use it as a master bedroom.

These studio suites would also serve to help alliviate the rental housing shortage in many cities.

Alternatively, with the separate entrance someone could use the studio suite as a home office or home business space.

Perhaps the slowing of the real estate markets in most cities will allow urban planners and developers to rethink what they’ve been  approving and building in order to think long term.  On the 100 year horizon, cities may need more 3 bedroom+ units.  If they fail, then Belford believes:

By mid-century, the lack of family-sized condominiums in the Toronto area may prove as effective a birth control measure as China’s one-child policy.

Category: "back to the center", planning policy, real estate, residential development, urban history /

Are City Halls Too Isolated?

October 20, 2008 / Wendy Waters / 4 comments

In most cities I’m familiar with, City Hall is a distinct, self-contained building separated from most of the key residential, business and entertainment areas of the city.  The staff that work in the City Hall building typically don’t visit the neighbourhoods and the employees who work on the streets and in the communities rarely visit city hall.

Perhaps this is not the most efficient nor innovative way to run a city.   If a city were like a private corporation, better connecting all employees to “their product” would bring productivity as well as morale gains.

For my regular, Monday posting on workplace trends at CreativeClass.com, this week I detail the new Boeing 737 facility in Renton, WA (a Seattle suburb).  By combining the engineers, sales and administrative staff with the factory floor manufacturing workers, productivity increased 40%.  Suddenly engineers were not isolated from the product they designed — nor were sales staff removed from appreciating the details of the aircraft they sell.  This also allowed for innovative, spontaneous problem solving.

Cities have numerous challenges on the ground that would benefit from similar thinking. Perhaps city hall workers need to have a variety of locales from which they can work.  Sitting in an office overlooking a poor neighborhood filled with the homeless, mentally ill and/or drug addicted might help inspire more creativity in solving this issue.  Reporting to work in a struggling business district similarly might allow city workers to better understand the needs of businesses in that area.  Just being in close proximity would encourage spontaneous dialog, which can’t but help.

With today’s flexible workplace designs supported by mobile technologies this is easily possible, especially as technology costs continually decline.  City employees themselves might enjoy the flexibility of getting out more and the sense of accomplishment from seeing their initiatives and efforts pay dividends for everyday citizens.

Anyone know of a decentralized City Hall?

Category: city hall /

Blog action day: Dynamic cities and poverty

October 15, 2008 / Wendy Waters / 7 comments

Dynamic cities with great employers, fantastic restaurants, great streets and pleasant parks also often have both significant numbers of impoverished people as well as wealthy individuals.  In some ways, this makes sense — great cities attract everyone.

In Who’s Your City, Richard Florida found that the most innovative centers in the United States — Silicon Valley, Boston and the Research Triangle — also contain the USA’s “highest levels of inequality.”  Florida notes that situations like this are becoming more common.  Economic spikes and valleys are happening within cities as well as in countries and around the world.

Why cities have such poverty and wealth side by side is no doubt complex.  Certainly, one aspect is that people struggling economically will come to more dynamic places in the hopes of finding that great job or other opportunity — and sometimes they will struggle.

What this means for cities — and their governments and residents — is that with success comes responsibility to address poverty.

As Florida says:

Managing the disparities between peaks and valleys worldwide — raising the valleys without sacrificing the peaks — is surely the greatest political challenge of our time.

*****

This year’s blog action day theme is poverty.  To learn more, go to their home page.

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Category: poverty /

Which cities are more recession proof?

October 6, 2008 / Wendy Waters / 6 comments

Professionally and personally I’ve been devoting considerable time to understanding the current American economic crisis.

One interesting issue emerging from my readings — but that is being overlooked in the mainstream media and even in some of my favorite economic blogs — is that there is not really _one_ national economy.  The US economy is comprised of myriad regional economies.  Therefore, not every place may be suffering, even if the average or sum of all the local economies faces a crisis.

Cities have their own economic dynamics that can run in contrast to the national or global economy.  Although the credit crunch has become a global challenge, and commodity prices tend to emerge from global supply-demand dynamics, some cities will fare better than others just as during generally good times, there are places that still struggle as well as ones that flourish.

So, which US cities are less likely to see a prolonged economic downturn?

The housing-led recovery prediction:

Well, the economists’ concensus (no, that doesn’t seem to be an oxymoron these days) seems to be that subprime mortgages and defaults on them were a key source of the current crisis.  Sub-prime borrowing artificially increased demand for houses, supporting land development and construction.  The current result is a large oversupply of housing.

Most economists believe that the US national economy will not fully recover until the excess inventory is absorbed, which will allow home values to stop falling and start rising.  Excess supply will continue to push down prices until then.  But once prices are rising because there is no longer an inventory, then construction can happen, generating economic activity.

But, not all cities and regions had a significant amount of subprime mortgages.  Therefore, according to this logic we should expect those metro areas with fewer subprime mortgages to be places where the economy will begin growing sooner.

I found a list (several actually, some by county, some by city).

From the Federal Reserve Board, the cities with the fewest sub-prime mortgages as a percent of loans in 2005:

rank city percent of loans subprime
99 Raleigh, NC 12
100 Ann Arbor, MI 11
101 San Francisco, CA 11
102 York, PA 11
103 San Jose, CA 10
104 Santa Rosa, CA 10
105 Lancaster, PA 10
106 Durham, NC 10
107 Madison, WI 09

I haven’t found a list of total subprime loans from 2002 through 2007 divided by total loans or total stock, which might provide a more accurate assessment of the exposure.

The Case-Schiller index does offer some additional or perhaps alternative evidence of which cities might be more recession proof this time.   The cities that have seen prices fall less than 5% since June 2007  are:

  • Charlotte
  • Dallas
  • Denver
  • Boston

None of these are on the list of lowest percentages of subprime mortgages, but other than Dallas (which had 23% of mortgages subprime) were in the bottom third (between 13% and 17% subprime).

So, based on the “housing will lead recovery” theory, Charlotte, Boston and Denver are probably places to watch.  I’ll also add Raleigh Durham to the list.  This area wasn’t on the Case-Schiller index that I downloaded.  However, I found a website, Home Price Trends, apparently tracks listings and prices.  According to the website, Raleigh-Durham median sale price is the same as it was in June 2007.

Admittedly, this is a crude forecasting model.  If I had time (which I do not), I would examine additional measures including but not limited to: percentage of jobs in manufacturing and finance/banking; job growth or losses during previous recent economic challenges (2001, 1991), and the reliance on oil / gasoline.

What other indicators might we look for in determining a region that will weather the current economic storm well (or poorly)?

addendum:  The New York Times just released a map showing which US cities have growing economies and which are in or heading for recession. (Pointer: Ryan Avent, The Bellows)  Raleigh-Durham, Charlotte, Dallas, Denver and Boston are all on the growth side.

Category: economic development, real estate, residential development, urban history /