Thursday, June 5, 2014

Apartments and McMansions

The world is increasingly binodal whether we're discussing pay disparities, the digital divide, abilities of students in a single class or even Dunwoody real estate--the mean truly is mythical.

Dunwoody was formed to purge the area of existing apartments and where ever possible to forestall or prevent the construction of new apartments--a chore previously handled by the DHA thru their cadre of lawyers. The logic was that apartments suffer from shoddy construction, poor maintenance (and one might observe: poor enforcement of local codes) and high crime thus harming overall property values in the vicinity but the underlying issue was the fact that apartment dwellers ARE the lower lobe of our socio-economic binodal distribution. This was pretty clearly exposed along with the plans for spending the proposed tax bonds on eradicating the PIB apartments. The noise about this being a  "high crime area" has become muted as the real high crime area is the Perimeter Mall where the apartments are tony and newer. It cannot go without saying that they pay more in property tax for which they receive the lion's share of Dunwoody's police protection. We won't detail the "harm to our schools" argument as that was pretty much blown out of the water with Austin's recent CCRPI scores in spite of hosting kids from apartments.

Given our revulsion to apartments it may seem befuddling that there is a growing resistance to McMansions whether on previously undeveloped land or lot-by-lot tear down rebuilds. It seems that in Dunwoody the only good McMansions are those replacing existing apartments or preventing the construction of new apartments. But while McMansions may be bad, they're not that bad.

But are McMansions really bad at all?

A surprising number of single family detached houses in Dunwoody were built in the late sixties to mid eighties after which scarcity drove up prices and drove many buyers further out. As our Mayor has pointed out (in his support of tear-down McMansions) these houses were built with construction techniques and integrity such that they have about a thirty year life (funny how that is a bad thing for an apartment complex but a good thing for a house) and it is really about time they were replaced. Our own little Ulysses, bless his heart.

So why is someone in a mature neighborhood upset that the neighboring 2600 sq. ft. Four Four and a Door has been replaced by a 6500 sq. ft. Tudor style two story with a three car garage and blessed with a daylight basement?

This isn't just envy. You. Lose. Money.

Your property taxes just went up and the Total Addressable Market of buyers and  ironically the price they're willing to pay just went down.

But there is also a strong pride of ownership. Long time homeowners have often put much of themselves into their home--more than sweat equity--homes become a personal statement. It is a family jewel. The homestead. Where the kids were raised. Remember the year the cat chewed thru the Christmas light cord and had to be put down? Ah...yes, dear Beelzebub...she was really just like a dog.

Where real estate agents see a house (and a private school payment for their child) some folks see a home. Their home. Just like the one in Father of the Bride, Part 2--to be preserved and cherished for all eternity and not an eyesore to be demolished so some rich asshole has a better place to park his A7.

OK. Maybe there is some envy.

Then there are those built on previously un- or under-developed land. Bill Grant has been building McMansions right off Ashford Duwnoody (and even scored a new curb cut for a single driveway) for what seems like an eternity.  And now another developer has plans to build a few dozen homes off Vermack. This would be on approximately 35 acres already zoned for exactly this purpose so at this point it is in the hands of the developers and their investors. Resistance will be relegated to "additional traffic" and "impact on schools". Not very compelling.

Prices at the new development start at $700,000 and run right up thru $1 million. The Bill Grant homes are no cheaper. Unless your plan in life is to drain a trust fund these hardly fall in the category of Starter Home. And that affects the traditional Dunwoody Demographic pushing some folks who currently enjoy the view from the top just a wee bit further down.

When you consider a wide range of factors (down payment, interest, other debt, DTI, etc.) you should not be surprised if the folks buying these homes have anything less than $150K in annual household income. Probably more. Perhaps a lot more. This is not only at least two times the 2011 Dunwoody average household income, it is no more a starter salary than these are starter homes. So don't expect a starter family either.

It is hard to get really good drill downs on census data for these demographics but researchers have long reported that these levels of income strongly correlate with high levels of education, particularly amongst women as they tend to seek out equally well educated mates resulting in high earning households. These folks also tend towards the middle to latter part of the high-wage portion of the lifecycle (generally 35-55 years of age) and combined with a high probability of well educated women will likely result in fewer and older children. Their kids are as likely to be in (or out of) college as they are to be taking seats in K-12. Given these income levels, strong emphasis on education and the sorry state of our DeKalb County schools any of their children eligible for DCSD will probably be in private schools.

These McMansions will attract smart, well educated families with high household incomes and below average burden on school and city services. With all this how could anyone oppose the gentrification of Dunwoody?