Our Self-Inflicted Hell We Hate to Love and Love to Hate.

Have you ever noticed that in the idealized world of movies and television (and even in our vacation lives) that no one works in, lives in, or visits the suburban hell we so overwhelmingly build and actually live and work in? Unless it seems,  the movie is about some psychotic killer, deranged neighbors or what hell suburban life is? Why is this? Why in God's good name do we persist in building this stuff when it's pretty apparent we hate it? 

In the movies and on our vacations, we wish for and visit idyllic small towns where we can wake up in the morning, walk to the store to grab a cup of coffee and say hello to our neighbors along the way. Look, I know this isn't really news but I don't ever recall reading about someone else pointing out (except to myself many times over the years) that we have a classic case of our actions and desires being completely out of sync with each other. Do you know anyone that makes plans to vacation in the suburbs of, say, Kansas City...or Atlanta...or anywhere? And visits to friends and relatives for the holidays DO NOT count. I'm talking a plan-a-trip, get-away-for-vacation vacation. We chose quaint seaside villages, hamlets nestled in the mountains, gorgeous historic towns or awe-inspiring cities (OK...there are those who for some reason actually go to Mall of America for vacation but that's an anomaly). 

 

I've lived in a quaint village, in a big city and yes, the suburbs. Actually, for the most part, I'm a product of suburban life...often wish I wasn't but am. It's hard to deny the good schools often found there, but why does it seem so hard to build something a little more....human? Of course there are myriad reasons, a large one being the Euclidean zoning mostly put in place after WWII. Lord only know how many acres of land have been paved for parking at strip malls and shopping centers that goes totally unused because it's too damn far away from the stores. During one or two weeks a year before the holidays some of those spots might actually see a car, but what happened to the old expression "You don't build the church for Easter Sunday"?

The TND movement (Traditional Neighborhood Development) is great, but I have two problems with it that are distinct from each other. The first is that most actual, quaint villages happened organically over a long period of time hence the mish-mash of architecture, big trees and charming-but-often-dangerous spider web of streets (most of which happened by accident to accommodate horse and cart traffic, not cars). TND's are planned in total all-at-once and the result is a sometimes unsettling, close-but-not-quite approximation. The second challenge with TNDs is that, much like anything, they tend to suffer from "design drift". Not necessarily in any one TND, but over time as a genre of development. The more well-known TNDs like The Kentlands (below) in Gaithersburg, MD or Seaside in FL work pretty well because a lot of attention was paid to detail and they had close involvement of many of the originators of the TND movement like Andres Duany. 

 

I've got one TND development near me here in Central NJ that I give the developer an A for effort but that's about it. It simply missed the mark. Too few home sizes. Too little design variation. It feels like tract housing shoe-horned into a TND skin (pics below). Granted, I don't know what challenges the developer faced from local authorities but still...

To wrap things up, here's a great article from yesterday in Scientific American about just this type of thing.

This article about banks bulldozing homes didn't surprise me one bit. You see, in a Twitter post a couple of years ago I predicted it would come to this (actually there have been a few news stories about banks taking to the 'dozer over the last few years, but now it's starting to happen more frequently and in greater numbers).

If you build a house out of real stone, brick and plaster, don't take short cuts while doing so and generally build to last, it can stand for quite a few years without much or any upkeep. But a new home? Sheesh. What Mother Nature doesn't destroy vandals will. On the other hand, while those prone to destroying things for fun can do surface damage to a well-built house, they have a much harder time damaging the structure. Granted, a CMU house will take a lot of punishment but why do homes built before WWII generally still look pretty solid while a lot of homes built since then look rather tired just a few years down the road? The answer? Ding, ding! Poor quality materials and construction all in the name of quick profits during the boom. Aannndd...mass production housing in general which started after WWII.

Right now primarily very low-value houses are the ones being leveled. But just wait. Take a read at my previous post about quantity over quality in the US and it won't be too long before recently built (< 10 years old) homes are flattened due to a combination of lack of care and poor quality. Banks already have hired companies to care for many of the properties but with more-and-more homes either becoming REOs (or not...because the banks don't have ability to deal with them) they will fall into disrepair beyond repair by the time the banks get around to them. Then what?

Well, the banks will take a look at the holding costs and period and what they can get for a house that needs a complete renovation vs leveling it and selling off the land (or donating it as many are doing and taking the tax write-off).

Honestly, if I was one of the few people living in a neighborhood with mostly empty, vandalized (or prone to being vandalized) homes I'd much rather see them torn down than sit there empty for an extended period of time. And if you think this only happens in older blighted urban areas like Detroit, take a trip to Florida, Arizona, Nevada and California to see relatively new, nearly empty suburban neighborhoods.

But in the end, this matter (along with the unemployment rate, screwy values, etc) are all just symptoms of a larger structural problem. I don't think it's news to anyone that things are out of whack. Dylan Ratigan hit the nail on the head the other day with his on-air rant. Take a look.

See ya.

Quantity over Quality - America's Problem. Part 2

Last time around I began a discussion of America's seeming obsession with quantity over quality and its impact on real estate development. I'll wrap up those thoughts this time.

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This is not to say all homes and buildings need to be exquisitely handcrafted by master craftsmen using only the finest materials. That's great if you're a billionaire but the average person is certainly not that..

I believe much of the source of the problem lies in the current business school / MBA philosophy that the manager/executive is ultimately beholden solely to the shareholder to maximize returns. I get it. I went to business school and got my MBA but have never been comfortable with that position. Just as a real, live person is a member of his/her community and should act as a good citizen, a corporation, legally a person, should do so as well. 

This is not to say that profits are not important - they are. But I don't believe they are the be-all/end-all, especially "immediate quarterly profits" (and this belief is one reason I am a signer of the MBA Oath). The primary purpose of the oath is to encourage MBAs and businesses to "create value responsibly and ethically". A business needs to look to the long term health of the company, not just upcoming quarterly profits. And of course the compensation structure of C-level execs has long been a subject of debate and continues to be.

I worked for a company that was private when I started and went public during my tenure there. There was a major shift in corporate culture (and not for the better) and the company slowly went downhill as it chased quarterly profits, eventually going bankrupt (of course a major factor in its downfall was the Great Recession, but still...).

You might say "So what? A company is there to make money. Who cares if the employees are happy? The company is not there to serve them." I'd have to strongly disagree. Happy employees (but not so fat and happy they aren't striving to be better) make for happy customers and happy customers make for a successful, profitable company. 

So how do we tie this back into real estate development? Builders and developers need to once again take pride in their work. Almost more than any other product, ours is visible to the general public. We have chosen to create the built space the human race lives its lives in. Think about that. It's a fairly awesome responsibility. 

I won't berate the point. Long story short is that those of us in real estate development and construction need to stand up for providing profits AND value AND quality.