Occam’s Razor

Trapped in exurbia

As a part time prognosticator, I sometimes get it wrong. Sometimes I get it right. When I get it right, it is not necessarily a reason for feeling smug. Today, I reread this post that I wrote back in 2005. I wrote it when the oil squeeze was just beginning. I remarked how uncomfortable I felt seeing new exurbias sprouting up in nearby Loudoun County, Virginia because virtually all of them are inaccessible to public transportation. I wondered what would happen to these communities with continued increases in price of oil or its unavailability.

Now we are finding out, and the answer is scary, as this NPR story reports. Ashburn, Virginia is in Loudon County, Virginia and part of the greater Washington D.C. metropolitan area. It is one of those newly built exurbias. What is happening in Ashburn is that home prices are tumbling much faster than the national average.

Realtor Danilo Bogdanovic surveyed two rows of neat, new, brick townhouses on Falkner’s Lane. “These were selling for about $550,000 at the peak, which was about August ‘05, and they’re selling right now for about $350,000,” Bogdanovic said. “Fifty percent of this community has been ether foreclosed on or is facing foreclosure.”

Coincidentally, my hair stylist lives in Ashburn. Today while she was cutting my hair, we were chatting about high gas prices. If she and her husband had to do it over again, she said, they would have never moved to Ashburn. Their gas prices are driving a big dent in their budget. Yet, I learned, moving in closer was not an option. They would lose too much money, because their house was worth less than they paid for it. If her house is on Falkner’s Lane, I can understand why she would feel blue, since she might now own a house worth $200,000 less than what she paid for it.

What might turn things around? As I implied back in 2005, some public transportation might help. That is not to say that it doesn’t exist in Loudoun County, but it is very limited and assumes you commute to work in Washington, D.C. A resident of Ashburn could drive or bike to the Dulles North Transportation Center and from there take an express bus into Washington D.C. This bus is not cheap. It costs $6.00 each way with a smart card, or $7.00 if you pay cash.

What would someone in Ashburn do if they needed to commute to some other job center like Tyson’s Corner? Perhaps they could catch another bus at the West Falls Church Metro Station, where the bus stops on its way into Washington. What if they need to take public transportation to go to a doctor’s office in Reston, Virginia? It might be technically possible at certain times of the day, if they can make it work with the commuter bus schedule and make their bus transfers on time. What if they need to take public transportation to go to the grocery store? As best I can tell, there are no such routes. Even if routes were put into place, given that Ashburn is such a sprawled out community they might have to walk a mile or more just to get to a bus stop.

For all practical purposes, residents of Ashburn are stuck. Owning a car is required to live there. Their lifestyle is held hostage by the price of oil. Oil prices may seem astronomical, but they are fortunate that gas is available at any price. Without it, Ashburn would become a gigantic modern ghost town. Combine rising oil prices with a falling dollar and the negative net worth of so many residents of Ashburn and you end up with houses that are worth $200,000 less than they were just three years ago. You have whole communities of people with negative equities in their houses, unable to move and who are one job loss away from financial catastrophe.

My own house is about three miles away from Reston. Reston is a major source of employment and has thousands of great jobs for knowledge workers. In the unlikely event that you lose your job at one company in Reston, you can probably pick another one like it somewhere else in Reston. A Fairfax Connector bus serves my neighborhood, but it operates during rush hours only. However, my house is just three to five miles away from thousands of jobs, not ten or fifteen miles away like in Ashburn. Where I live, you can probably get to your job without a car if needed. I bicycle to work, which is three miles away, three or four days a week. Consequently, gas prices affect me much less than most commuters. Yet even if I worked downtown, I still would not be too badly inconvenienced. I could bike to the Herndon Monroe Park and Ride, which is also three miles away, or grab the 929 bus, which runs by a road a few hundred feet from my door. Once at the Herndon Monroe Park and Ride there are plentiful express buses that will take me to the West Falls Church Metro station. From there I can get to any place on the Metro system. If I needed to take a bus to nearby Reston, Herndon, or even some of the local malls, I can transfer at the Herndon Monroe Park and Ride. Obviously, I could get to these places more quickly by car, but it is possible. The same cannot necessarily be said about communities like Ashburn.

My neighborhood is not immune to the real estate slowdown either. Our house has lost about $75,000 in value since its 2005 peak. However, that is $75,000 though, not $200,000. There are plenty of houses for sale on my street, virtually all in excellent condition. We live in a terrific family neighborhood where owners take pride in their houses. I suggested to my stylist that they should move to a house on my street. She would be two miles from work so the cost of gasoline would be insignificant. However, with the negative equity in her house, moving is out of the question. Where would she and her husband find the money to pay off their loan on closing?

I do not think these underlying dynamics are likely to change. We are at the beginning of a fundamental transformation of America. This means our love affair with the automobile is likely to change dramatically. At best, I expect oil prices will stay about where they are now. Therefore, for many homeowners out in exurbia the financial squeeze, already bad, is likely to get much more painful. The long-term trends though are clear. Unless you can work from your home or can find employment close by that pays your bills, do not buy in the exurbia. If you are in the exurbia and can move in close, this is the time to do it.

Housing prices are down substantially in good neighborhoods like mine that are close to jobs and public transportation. Because prices are down and mortgages are very affordable, now is an excellent time to buy in these neighborhoods. It may not be easy to sell your current house, but as I learned in 1993 if you lower the price enough you can sell any house. You can buy a better and closer house at a substantial discount and be primed for appreciation during this seismic realignment of society. In addition, selection is plentiful.

To the many residents of Ashburn and similar far-flung communities who are feeling the squeeze, you have my sympathy. If I lived in Ashburn, I would still move closer in if I could find a way. The long-term housing dynamics for Ashburn and places like it look dismal. You may find yourself inhabiting a modern ghost town.

April 25th, 2008 at 09:25pm Posted by Mark | Politics 2008 | no comments

An American in Paris: Part Two

Take a close look at the photo below. I shot this picture from the balcony of our hotel room. It shows Rue Sophie Germain, an alleyway next to our hotel, which itself is off Avenue Du General Leclerc in the Montparnasse section of Paris. My family and I recently spent eight nights here. You may have seen pictures of Parisian streets like this one before. It was rather typical of the Paris that we saw, at least inside the city itself.

This is the Parisian way of living. The street level contains businesses that serve the neighborhood. People live above the street level in apartments. Each building almost looks like a townhouse, except they tend to be seven stories tall. The houses on this block look old. I do not know exactly how old they are, but I would guess they are one hundred years old. While they certainly look weathered, they are not flimsy. These solid buildings were clearly built to last.

Now, courtesy of Google Earth, here is the same view from the air.

Do you notice something different? Notice that the backs of these buildings do not push up against another row on an adjacent block. Inside the outer ring of buildings, there is often (as in this case) a large courtyard full of trees. Here there is both a lovely courtyard and even some houses inside the courtyard. Depending on how apartments are arranged, one apartment may face the street or alleyway, another may face the courtyard. If your apartment faces the street, you would expect it to be noisier. If it faces the courtyard, it is a relatively quiet oasis in the midst of an otherwise busy and bustling city.

This may be old fashioned, but this way of living strikes me as very smart. Moreover, it is an excellent way to comfortably fit a large number of people into a relatively small area. Doing so provides both the convenience of being in a major city, yet also provides the ability to escape into a setting that is quieter and more bucolic. You may escape to the courtyard to read a book in the shade of a tree, or to catch some rays on the grass in the sun. Your children might use it to play with other children living in these flats, yet doing so in relative safety and under the watchful eye of many neighbors.

If you need to go shopping, there is no need to get into your car and drive for miles to a Safeway or Costco. There is likely a grocer or two within a few hundred feet of your apartment. Yet this is just the start of it. Just wandering down this particular alley we found a number of restaurants, a Pizza Hut carryout, another small hotel and a dry cleaner. Around the corner was an apothecary. Just a block and a half away was a Monoprix, France’s equivalent of a supermarket with a wide selection of foods at reasonable prices. The Monoprix also had a bakery facing the street selling baguettes and wonderful pastries. There were two banks in the same block. To quickly leave the neighborhood you simply had to walk across the street and descend into a convenient subway stop.

There is no grass to mow, but you can, like most residents, attend a geranium or other potted plant in your window or on your balcony, or decorate your apartment with other living things. You can spend your time at home at leisure, rather than consumed by the incessant chores of maintaining a house.

No wonder I had such a hard time finding a stressed out Frenchman. Here in America we like to think we have mastered the art of good living. From my perspective, the French have mastered it. Almost all of life’s needs are readily available for a short walk. There is no need to get into your car to go out to dinner either. On any block there are bound to be at least several cafes, most of which serve excellent food at reasonable prices. An automobile is truly superfluous. With the limited street parking, almost all of it metered, owning an automobile affords no particular advantage. It is doubtful that even if you had an automobile you could make better time than by taking the subway or bus.

I am sure it is not perfect living. Perhaps you hear noisy neighbors above or below you. In eight days in our hotel room though, which was clearly just another converted blockhouse, we never heard our neighbors. We heard plenty of noises from the street, so an apartment facing the street is likely trying to those sensitive to noise. And while the buildings look very solid, they are also old. Although it is generally not needed in these northern latitudes, they probably do not come with central air conditioning.

I do not know how Parisian urban living compares with the rest of Europe. I suspect their means of living is fairly unique and offers many significant advantages. It is a form of urban living that we Americans could and probably should emulate. Rather than tear down more forests and put in yet more suburban housing in hard to reach areas far from our jobs, why not put in denser housing designed to last for generations in our more blighted inner city neighborhoods, and build in the conveniences like ready food, restaurants and shopping within a short walk that Parisians take for granted?

“Community” is a word that has almost lost its meaning here in America. In my suburban neighborhood, I know a handful of my neighbors by name. Some others I know by site, but not by name. The vast majority of them though will remain complete strangers. We share a neighborhood so we are technically neighbors, but we do not have a real neighborhood. In Paris, your neighbors are likely a lot more in your face. It would be difficult not to get to know your neighbors, and become well acquainted with their quirks and personalities. Each block is a community in the best sense of the word. It is hard for me to believe that such an environment would not foster the community values we say we want to have, but to which we mostly give lip service.

As I noted, my father’s retirement community is also a real community. Just as in Paris, he lives in a community where it is impossible not to know your neighbors. You meet with them every night at community dinners and bump into them repeatedly in the hallways. You sing songs with them in front of the piano in the town center. You play bridge or chess with them in the evenings. Perhaps that is why, nearing age 80, he seems so amazingly happy and content. Perhaps Paris’ engineered neighborliness explains why the crime rate in Paris is so low compared to most American cities. You would think that living in such close proximity to each other would breed ill will. Instead, it appears to draw people closer together. These communities are the real deal.

Sign me up.

July 17th, 2006 at 09:22pm Posted by Mark | Travel | one comment