Arbor Update

Ann Arbor Area Community News

Cooling housing market: population growth estimates in doubt?

10. October 2005 • Murph
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David Cahill suggests that Sunday’s News article on the leveling off of the local housing market provides cause to doubt the assumptions of County-wide growth and in-migration used in the City’s Calthorpe process (and, frequently, around here). He writes:

Much of the impetus behind the Calthorpe Downtown Development Strategies Project comes from projections from the Southeast Michigan Council of Governments (SEMCOG) showing a likely large increase in the population of Washtenaw County and the City of Ann Arbor over the next decades.

An article in the Sunday, October 9 issue of the Ann Arbor News, entitled “So many houses, so few buyers”, may provide a reality check on these projections.

An oversupply in housing that has been troubling other southeast Michigan communities has hit Washteaw County in full force. The result has been stagnant home values for the past two years.
. . .
Experts say the poor Michigan economy, coupled with a flood of new houses, has created the strong buyer’s market.
. . .
There has been a construction boom in the area in the past decade, but that has not been followed by a commensurate population boom. The result has been an excess supply of homes.
. . .
Lorne Zaleskin, CEO of Bruce Building Co., an Oakland County builder who has done work in Washtenaw County, says he thinks the Ann Arbor area is overbuilt and will experience a major correction.
. . .
Indeed, permits for new construction in the county are down 36.5 percent through August compared to 2004.

Bearing these statements in mind, how are we to determine the validity of the SEMCOG projections? Can we look at the validity of past SEMCOG projections for Washtenaw County and Ann Arbor? When did SEMCOG start making its projections? How close were they to the ultimate reality?

What are the objective criteria for an area being “overbuilt” in housing? Does Washtenaw/Ann Arbor meet those criteria? Should the Calthorpe study include a “really low growth” scenario in addition to those drawn from the SEMCOG projections?

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I have to question some of the evidence they’re using –
He said the retiring baby boomers looking to downsize out of their large homes will find that there aren’t enough younger people waiting to move in, and prices will fall.

He recently told a classroom full of University of Michigan business school students and local business people that he expected to see a 15 to 25 percent decline in values for homes in the $500,000 range.

People with 30-40 years of a career under their belt are surprised that recent college grads and new parents can’t afford the extravagant houses they want to sell? Shocker! I know that, as someone who is hoping to be a buyer within the next year, that a $500k house may as well be on Mars for anybody in our position. Cara and I certainly won’t be helping prop up the market for $500k homes.

Anyways, setting personal interests aside, it’s time for some exploratory maths…

I note that the lack of “a commensurate population boom” in the article is defined as “only 20,000 people moving into the County in the past 5 years.”

That’s…about a 1.25% annual growth rate on a base of 322,895 (Y2K census). Kept up until 2020, that’s…91,068 new Washtenaw residents, or…a 28% growth in County population.

SEMCOG’s predictions, as appearing in Washtenaw County’s Comprehensive Plan , are for a 15% increase from 2000, or 50,000 new residents by 2020.

Eek…If my math’s right, that means that, across 2000-2005, Washtenaw has grown almost twice as fast as the SEMCOG forecasts that everybody who’s paying attention has been using for their long-range planning. I had kind of started that fishing trip expecting that I’d come up with a growth rate lower than what had originally been predicted, but it looks like SEMCOG has so far been proven to be a conservative estimate?

With that number in hand, I’m inclined to say that the issue isn’t “nobody’s moving in”, but, “homebuilders were a little optimistic”, and front-loaded production a little too much.
—Murph. Oct. 10 '05 - 12:27PM #
And, as for the planning impacts of this,

1. If population growth continues apace (double SEMCOG estimates!), then the short-term oversupply of houses might buy us some time to figure out how we’re going to deal with the next 70k people. Our approaches might include a “do nothing” strategy, in which, if 70k more people move in in the next 15 years, we just let the homebuilders throw up tens of thousands more homes in the Townships. Or, they might include a strategy of more managed growth, where we try to guide new development into forms where it will have the most benefit / least detriment to the existing residents of the County.

2. Even if the 2000-2005 growth trend falters, or the more conservative SEMCOG estimates for 2000-2020 don’t turn up, there’s no harm in taking potential growth into consideration. Better to have plans in hand and have the growth not show up than to be caught unprepared if it does. The whole point of planning is that you do it beforehand, so that you can deal with things as they happen, or, better yet, set things up beforehand to deal with changes. If you wait until after things happen to plan for them, well, good luck coming up with anything good.
—Murph. Oct. 10 '05 - 12:36PM #
Thanks for posting this, Murph!

Let’s look at the City of Ann Arbor (only) for a minute, since that is what the Calthorpe study is about.

I’m on the Ann Arbor District Library Board. The Library recently retained Karen Popek Hart, the former AA Planning Director, to look at projected growth patterns for our district. She made a presentation at our retreat on September 6. She used the 2000 census data and the 2003 SEMCOG projections. Here are her figures for AA City only:

2000 115,012
2010 117,048
2020 116,933

In her prose summary to us, she says: The City of Ann Arbor “is projected to grow by only about 2,000 people by 2010 and may actually lose a small amount by 2020, stabilizing just above the 2000 population level.”

Disclaimer: I had nothing to do with retaining Karen and did not help in the preparation of her materials.

Acclaimer: I’ll send anyone who posts their snail mail address here a hard copy of her presentation.
—Dave Cahill Oct. 10 '05 - 02:40PM #
Dave—
As murph has demonstrated, there has always (over the last 5+ yrs) been an imbalance projected between city growth and county growth, ie township growth high, city growth low. WE DON’T WANT THAT. That is a major part of what the Calthorpe process is about—correcting that imbalance.

I might direct you to the DRTF presentation wherein Doug Kelbaugh said, “We have a moral obligation to take our share of growth” and “We should be offering residential choices” to residents of the city and the county. Remember that—this whole 2 YEAR process with substantial public input and step by step presentations and recommendations? I do.

Let me return to my broken record comment on any future that Ann Arbor hopes to have: AFFORDABILITY.

Without it, Ann Arbor is sunk.
—Dale Oct. 10 '05 - 02:55PM #
Dale, we have a different take on what Calthorpe has been saying. As I remember his presentations, they were supposed to have been based on projections of present trends, not on what anyone wants or doesn’t want.

Or did I miss some underlying Calthorpe assumption?

As to affordable housing, if the air continues to go out of Ann Arbor’s housing bubble, there will be plenty of affordable housing.
—Dave Cahill Oct. 10 '05 - 03:07PM #
Houses dropping from $600,000 to $500,000 does not make affordable housing! talk about housing in the $150-$200K range, and then we’ll make real progress.
—KGS Oct. 10 '05 - 04:07PM #
“I might direct you to the DRTF presentation wherein Doug Kelbaugh said, “We have a moral obligation to take our share of growth” and “We should be offering residential choices” to residents of the city and the county.”

Amen to that. How Dave and others can sit through the lectures from retail, tranportation, and zoning experts and come to the conclusions that they do…..frustrating.

If you believe Hart’s numbers, and I for one am hoping for 10 times this amount of growth for Ann Arbor, this is the zero growth path to nowhere.

If you believe these numbers, then you have to assume that UMich will not build any new dorms, and the total new housing units will total just 1,500 over the next 14 years. 500 new residents are moving into the new North Quad (used to be Frieze) when it is completed.

If this is all that we’re looking to do for Ann Arbor, then all we need to do is pick three sites in the downtown area, and build three mixed use buildings the same size as Frieze, and we’re finished installing the “massive density and construction” that some residents are fighting against so hard.

That’s a total of 4 buildings for the whole damn city for a period of 14 years.

If this is all the growth that residents in Ann Arbor can “handle”, then man, I am so out of here…....
—todd Oct. 10 '05 - 04:12PM #
I’m willing to believe Karen’s numbers, in part because of who she is. During her tenure as Ann Arbor’s planning director, she was a proponent of a lot more development, especially infill. Some have said that she never saw a project she didn’t like. 8-)

People don’t automatically shed their presumptions when they take on new roles. Ergo, it is my guess that Karen’s projections for Ann Arbor City are a bit on the high side.
—David Cahill Oct. 10 '05 - 04:57PM #
Dave, I am not talking about what Calthorpe/Scanga have been saying. I am talking about what ANN ARBOR has been saying. A main reason we HIRED Calthorpe Associates is because we REALIZED there were SERIOUS PROBLEMS with how growth was occuring (and projected to continue) in Ann Arbor and Washtenaw.

AFFORDABILITY, Dave. The median sale price is 3 times the median household income for Ann Arbor. Do you know what that means? It means that you have to be wealthier than the median person of an already wealthy community to afford a median house. If you’re not wealthy, then tough luck.

AFFORDABILITY.
—Dale Oct. 10 '05 - 05:12PM #
“I’m willing to believe Karen’s numbers, in part because of who she is.”

No one has questioned them.

We’re arguing that it’s important to build up instead of out, in part because that allows more efficient, non-polluting transportation, and uses less land.

The numbers you quote show that we’re currently building out instead of up—population within the city is staying the same while it’s increasing in the surrounding county.
—J. Bruce Fields Oct. 10 '05 - 05:37PM #
Dale, Ann Arbor as a whole hasn’t been saying anything about growth inside the City at all. City Council hired Calthorpe, so I don’t know who the “we” is supposed to be in your statement about “we” hiring Calthorpe, since you’re not on Council.

Oh – one other piece of the demographic puzzle. Apparently the City’s population has dropped slightly from 2000 to the present. I read this in the AA News recently. Sorry I can’t be more specific.

As I asked in my original article above, can anyone validate the projections SEMCOG has made in the past?
—David Cahill Oct. 10 '05 - 06:12PM #
“Oh– one other piece of the demographic puzzle. Apparently the City’s population has dropped slightly from 2000 to the present.”

Yeah. We know. We have accepted no growth.

Gee, I wonder why the cost of living keeps going up, and why all these new strip malls and new homes keep popping up around Ann Arbor??!!

Hmmmmm.
—todd Oct. 10 '05 - 07:02PM #
Dave—
I had no specific voice in the DRTF (or even a general one) and I had no specific voice in the hiring of Calthorpe. I didn’t need one and neither did you. There was pretty broad participation in this effort (check the links), which of course you should already know. It is the same “we” who is behind MOST efforts in Ann Arbor—City Council, advised by citizens. And you have NO REASON to complain about representation. Not a SINGLE student was on the task force; I doubt one was invited, though several NIMBYs and no-growthers participated in the process.

Re: population, the latest update from the census bureau is based on sampling. City population is basically flat, either slightly up in reality or slightly down. (Covered in a handful of other, BETTER newspapers at the same time.) Neither possibility changes the fact that there is too little growth in the city vis a vis the county.
—Dale Oct. 10 '05 - 07:28PM #
Another article in the News’ series, in today’s (Monday’s) paper, points out that the bloom is off the rose in Saline as well as in AA. Tomorrow’s article will be about a drop-off in construction.
—David Cahill Oct. 10 '05 - 08:12PM #
I think planning for growth is extremely important. However, I also think that, given current signs in Michigan, planning for low or no growth (hopefully not negative) is also important. If Visteon, Delphi, and the Big 3 either go under, contract significantly, or move many of their jobs out of the US, Michigan will be in for an even rougher go of it. I don’t see the University expanding much, if at all, in the next few years (even the much-vaunted Life Sciences Institute is only projected to employ 350 people and many of those have duel roles on campus). Pfizer isn’t exactly having a hiring boom either and their current big money drugs will be going to generic before too long.

That said, I’m not sure that the planning goals aren’t similar given either a high-growth, slow-growth, or no-growth scenario. We need more affordable housing, close to services, with as little drain on city resources as possible. This pretty much rules out suburban growth, but there is still the question of where it is best to build inside the city and/or how to utilize existing empty housing to best advantage. Downtown seems to be the worst place to attempt to build affordable housing because of land costs, but downtown housing affordable to a newly-graduated student seems to be the underlying goal of many here. I just don’t see that we can accomplish this by building more high-end units downtown. I know many people argue that building more housing units will price the whole market lower but I need to see proof that is actually what happens. There are many more housing units within the city of Ann Arbor now than there were ten or fifteen years ago, but prices have still climbed steadily. We are beginning to see downward trends now, but it will take a while and I’m not sure it will adjust down to the median income.

In addition, how do we deal with the greatly inflated prices paid for “student” houses downtown? In my neighborhood a house marketed as “student, commercial, or income” property sells for close to double what it would sell for as an “owner-occupied” house. The owners can get far more rent for a small house cut up into six or seven bedrooms than they could for the same size two or three-bedroom house. The advantage for the renters is that they pay far less per person if they can put a lot of people into one house. The new student-marketed housing that is going up is in the $600-900/bedroom range with stricter limits on numbers of residents so I think that has a limited market and don’t see people moving out of the houses soon. Unfortunately, these are exactly the small, low-end houses that used to be available to new graduates or people working downtown. We aren’t building affordable housing downtown and we are losing the affordable housing that is here to rental speculation. This market is also beginning to soften but I don’t see prices dropping the $200,000 that they need to drop to actually mean something to a median income buyer.
—Juliew Oct. 10 '05 - 09:04PM #
“though several NIMBYs and no-growthers participated in the process.”

You know Dale, there are a lot of people who are working to include students in city issues, talking about the contributions students make to Ann Arbor, and trying to see Ann Arbor from a student point of view. Statements like this make me wonder why anyone bothers since few students seem to have the same interest in looking at the point of few of the other side.
—Juliew Oct. 10 '05 - 09:05PM #
Was there anything inaccurate about that statement? No.

I regularly advocate for positions that will improve life for people regardless of class or position in life. The first one is affordability. (Has that not been clear?) Sufficient affordable housing available for people in every income bracket will benefit students, young professionals, the working poor, large employers, small business owners, the university and middle class homeowners. It will even benefit people who don’t want to live near downtown.

I speak stridently and unapologetically on behalf of students and renters because, despite the best efforts you allude to, our representation and consideration of our issues are almost absent from city government. Thinking about this from the other position, as you do, I would predict screams of bloody murder if middle class homeowners were excluded from city governance to the extent that students are. People addressing city issues shouldn’t have to think about how students might react to particular initiatives they impose; they should turn to students who are proportionally represented in every part of city government, and speak to them as equals and find out. Until this happens, you get people like me.
—Dale Oct. 10 '05 - 09:47PM #
“Was there anything inaccurate about that statement? No.”

Let’s just say I think the term NIMBY is offensive and derogatory. If that is what you intended, then my comment stands.
—Juliew Oct. 10 '05 - 10:53PM #
Dave, you’re bringing two different sets of numbers into things. As Todd and Dale have said, the difference between the City’s growth trend (very low) and the County’s (very high) is the problem, and not a reason to do nothing.

The City’s population growth rate is so low because the City has blocked natural growth. Development has been made difficult, preventing housing units from being added and declines in household sizes have reduced the population per housing unit – leading to exactly what you point out, a fairly level population. (We haven’t even made up for the drop in household size by enabling efficient use of homes, say, by allowing ADUs…)

The City’s low growth rate is not for lack of demand, though! Just look at prices to see that – look at the appreciation rate throughout the ‘90s. And people have not stopped moving “to Ann Arbor” just because the City’s population level is flat – they just move to the part of Ann Arbor that’s not part of the legally incorporated city – the parts that are taking advantage of Ann Arbor’s services, contributing to Ann Arbor’s congestion, enjoying Ann Arbor’s amenities…and not paying Ann Arbor’s taxes, leaving that to us suckers. SEMCOG’s numbers are showing demand to live “in Ann Arbor”, even if that means somewhere out around Dexter.

I’m betting that Karen’s numbers for A2 were taken straight from SEMCOG. Note that SEMCOG’s September ‘05 population estimates show A2’s population dropping by 1000 people in the last five years, while Washtenaw’s population has grown by 21,000. SEMCOG’s numbers are largely based on trends – such as “how much housing growth has happened, or is expected to happen?” Given Ann Arbor’s animosity towards any and all development, it’s not surprising that little population growth is forecast! Where would they live?
—Murph Oct. 10 '05 - 11:49PM #
(And, to strengthen the trend, we’re looking at houses in Ypsi in case my job search keeps me in Washtenaw – not so much because Ypsi’s our first choice location, but because that’s what comes up when we look for houses in our price range. The reason folks like Dale and I get so fired up about this stuff is because we’re the folks being asked to either live in tenement-style crowding or leave town.)

((No insult meant to Ypsi – it’s quite a nice place. It’s just not what I’m attached to, emotionally-like. Yet.))
—Murph. Oct. 10 '05 - 11:55PM #
I know many people argue that building more housing units will price the whole market lower but I need to see proof that is actually what happens.

Juliew – See proof how? As in watch it happen in your own town (not very likely)? Or read a respected publication attesting to the fact it has happened? I think there is a book or three on the subject…

My personal experience in a far away land witnessed dozens upon dozens of shiny condos being built. It eventually brought affordable housing… Older condos could be bought for a song, while detached homes continued to gain value like mad. Still, the new condos sold for asking price even if previous generations of buildings ended up losing value – because hey, they were half the price of a house. The moral of my slightly on/off track story is I half agree with you – multiple high-end units downtown will not result in affordable housing, but multiple mid-range units could.

Let’s just say I think the term NIMBY is offensive and derogatory.

How is NIMBY offensive? If the statement “NIMBYs and no-growthers” is anything, it’s redundant.
—FAA Oct. 11 '05 - 02:14AM #
Well, I can agree that “NIMBY” is offensive – it’s almost always a value statement, and usually said with a little bit of a sneer.

Calling somebody a NIMBY is almost the last acceptable form of upward-pointed class war, shorthand for, “I understand your position as wanting to prevent people less well-off than yourself from having acceptable homes, and that you hold this position for your own gain, and I think that’s a less-than-noble position.”
—Murph Oct. 11 '05 - 02:09PM #
The advantage for the renters is that they pay far less per person if they can put a lot of people into one house . . . Unfortunately, these are exactly the small, low-end houses that used to be available to new graduates or people working downtown.

Yes, and those Irish immigrants have an amazing advantage, the way they can reduce costs by putting whole families into each room in the tenements, and save money on heating because they don’t have any windows for heat to escape from!

Hyperbole aside, I can’t understand the position that students don’t need affordable housing. During undergrad, I don’t think I ever had a high enough income that I couldn’t qualify for the SROs at the old Y, and, yes, I was paying for myself, everything but tuition – I didn’t have my parents buy me a condo, nor does the typical student. Students might generally have better safety nets than non-students, but, in my experience, it’s the rare student who doesn’t worry about housing costs. Yes, new graduates and people working downtown, especially in lower-paying jobs, need reasonably-priced housing. But so do students. And if students drive up rental prices because they’re willing to live on top of each other in order to keep individual costs down, doesn’t that demonstrate that students do need affordable housing, and not that they don’t?
—Murph Oct. 11 '05 - 02:21PM #
I emphasize again that the city has 6 million dollars a year to spend on affordable housing and in the next 5 years, THEY WILL NOT DEVELOP A SINGLE UNIT FOR HOUSEHOLDS OF UNRELATED RENTERS. This is according to their own report filed with HUD last fall and is unconscionable when students and renters are a large part of why the city gets HUD-HOME funds and Community Development Block Grant money.

Follow the link.
—Dale Oct. 11 '05 - 02:45PM #
Off-topic but sure to generate comments:

http://blognyc.typepad.com/news/2005/10/quiet_suicide_o.html
—John Q Oct. 11 '05 - 02:46PM #
I want to go back to the beginning of this thread and talk a bit more about the article in Sunday’s News. The numbers and discussion that are presented in the article do not separate single-family detached homes from condo/townhomes. My guess is that there are a lot more condos on the market (and on the market for a lot longer) than there are single-family homes. Almost all the projects coming forward in the city are for condos – land is scarce, we want to protect natural features on the site, and they are more affordable to build and to buy. (Unfortunately, most of the projects are not in the form of mixed-use developments, but stand alone condo neighborhoods). Most condos don’t appreciate as much as a house will. And they stay on the market longer (presumably because there are so many more for sale?)

It frightens me that we draw conclusions on these gross statistics. To argue that we shouldn’t put more development downtown because there are too many houses for sale in the county doesn’t make any sense to me. I would think that the downtown housing market differs greatly from the housing market in other neighborhoods in Ann Arbor and in other parts of the county. And that those neighborhood markets differ from each other, as well.

Too many houses for sale sends up another signal for me. Is there something that we’re doing that is detracting people from moving here. As discussed above, affordability is one reason. What about people who can afford these homes, but choose to live elsewhere. Why? Whatever the answer is … the response can not be to do nothing.
—Jennifer Hall Oct. 11 '05 - 02:51PM #
Jennifer – I think you’ve identified a problem almost as popular to complain about as “the City won’t let anything get built”...”what the City does let get built are generic condos around the edges of town that don’t provide any particular benefit for being ‘in Ann Arbor’”. (Or six-BR warehouses. Juliew, have you seen the 6BR apartments going up on S. Forest, next door to the lot that used to be a burnt-down co-op? They actually have some actual design to them…)

Funny how so much energy is poured into “defending the unique character” of Ann Arbor…by channeling people and businesses into places that are far from unique. David – where were you and your zeal for Ann Arbor’s unique character when the Draft NEAP was written to encourage Plymouth Road to continue as strip mall heaven?

And the anecdotes the News presents in this series are (I hope!) atypical – consider the family in today’s article who moved from a 2500sf house to a 3400sf house in the same subdivision…According to the City’s tax database, they bought a $500,394 house on a 1/3 acre lot, and are having trouble selling their old, $300k+ house on 1/3 acre lot. Man. That’s rough. It really is terrible, the deprivations that the News has been showing us this week…

It would be interesting to see a slightly less aggregated account of home sales, though it’d probably be a semester-long project to do it right.
—Murph. Oct. 11 '05 - 03:25PM #
I’m definitely an advocate of higher density housing. But I would caution y’all not to expect construction of upscale condos to trickle down directly into affordable units.

The compilation “Critical Perspectives on Housing” (you planners probably all have a copy someplace) includes a study of what happens when a high-end unit is added to the housing stock. Someone moves into it, freeing up their old place; someone else moves into that, freeing up another one, and so on. That’s a “chain of moves”, with each person moving into a slightly more expensive unit and vacating a cheaper one.

The trouble is that the “chain of moves” would only go for about five links until it got to an upper-middle-class household formation. In other words, adding the upscale unit didn’t open up any units for people below the median income.

Since building high-end units doesn’t directly open up affordable ones, the pro-development argument has to be that over a number of years, having more housing units (greater supply, more choices) will eventually cause some of them to drift downward into the affordable range.

If we as a community or nation want affordable housing to appear more quickly, that requires directly sponsoring or creating it.
—Larry Kestenbaum Oct. 11 '05 - 03:50PM #
“But I would caution y’all not to expect construction of upscale condos to trickle down directly into affordable units.”

Well, I’ve heard this argument now from Julie, and now you, Larry.

I understand what you guys are saying, but we now have clear cut, can’t-argue-with-it evidence as to what happens when you do nothing. In Ann Arbor, we’ve had a net zero growth for the last five years, which means next to no new housing has been built in that time. What has been the result?

OK. So now we know what happens when you build next to nothing. Prices go up. Way up. Supply and demand. The most fundamental economic concept that some still think doesn’t work in Ann Arbor.

Given this indisputable evidence, and the following actions:

*installation of a multi-million dollar park and “greenway” system downtown
*enact a greenbelt millage that raises taxes and buys up buildable parcels of land
*Prop A effect
*residents who only want 2,000 new people in the ENTIRE CITY of Ann Arbor in 15 years
*500 of these people are moving into a non-taxable dorm
*refusal to make any of these buildings tall

What do you guys think that the cost of living and housing will be in Ann Arbor if we follow this path?
—todd Oct. 11 '05 - 04:23PM #
“In Ann Arbor, we’ve had a net zero growth for the last five years, which means next to no new housing has been built in that time.”

According to SEMCOG, Ann Arbor’s added a net of 1600 units since 2000.

http://semcog.org/Data/BuildingPermits/index.htm

Averaging over 300 new units a year is a decent amount of growth. The population decline is more likely an issue of demographics and its a trend happening in communities with affordable housing and less going for them than Ann Arbor. Compare A2 to more traditional suburbs that are equivalent in size and build out:

Rochester Hills – 1657
Troy – 1466
West Bloomfield – 1067
Livonia – 918
Farmington Hills – 573
—John Q Oct. 11 '05 - 04:34PM #
“According to SEMCOG, Ann Arbor’s added a net of 1600 units since 2000.”

This may be an underestimation. UMich doesn’t pull permits in the traditional fashion. I’m wondering if these are counted.

In any event, the rest of Wash County is at 13,567 units. We accepted ~11% of the new units, but the population stayed the same. What does that tell you?

John Q, given my last post, what do you suppose the average new unit/home cost will be in Ann Arbor in 15 years?
—todd Oct. 11 '05 - 04:50PM #
“Compare A2 to more traditional suburbs that are equivalent in size and build out:”

Well John Q., that’s true, I suppose, but you’re leaving out some imporant points

1. We’re home to one of the largest public universities in the world. The suburbs you mentioned aren’t. UMich enrollment increases alone far surpass the new units installed in Ann Arbor. These people are being pushed outside the city limits.

2. Developers aren’t begging to build in, say, downtown Livonia, and being turned away.

3. Ann Arbor is supposed to be a progressive town. If West Bloomfield or Farmington Hills is where the bar is set for us, then by all means, disallow any construction at all, and let’s stop pretending that we believe in things like workforce housing, “unique character”, local businesses or economic diversity.

I’ve said it before, but I’ll say it again. If Ann Arbor wants to be a place with lots of parks and expensive chain stores that only the wealthy can enjoy, then all this planning and Calthorpe crap is a complete waste of time. Let’s stop pretending that we are a progressive “city”, and accept that fact that we are becoming just another suburb just like the ones that you listed.

Lame.
—todd Oct. 11 '05 - 05:06PM #
You guys think things are fucked now… Think about what happens when gas hits $4 a gallon and the hospital clerks can’t afford to drive in from the townships anymore. There’ll be insane demand for housing in town, near jobs, and an absolute inability to provide it. That’ll likely mean huge job loss and a regional depression (especially once the car companies shutter their factories…)
—js Oct. 11 '05 - 05:12PM #
Todd, you’re reading too fast. I think you missed my opening sentence and my conclusion.
—Larry Kestenbaum Oct. 11 '05 - 05:20PM #
You’re right Larry. I missed them.

My apologies. I’m letting my emotions get the best of me again.
—todd Oct. 11 '05 - 05:27PM #
“And if students drive up rental prices because they’re willing to live on top of each other in order to keep individual costs down, doesn’t that demonstrate that students do need affordable housing, and not that they don’t?”

I agree totally. I think students do need less expensive (but decent and safe) places to live. But right now, much of the new building close to downtown is being built “for students” at what I think are entirely non-student prices. The 828 Greene syndrome where the builder wants to build six-bedroom units because six-bedroom units have the lowest vacancy rates and they can make the most money, but they don’t take into account the reason many people live in six-bedroom units is to save money. So the new buildings are 6-bedrooms at $650/bedroom. This doesn’t work well for the students because it is expensive, and it is not housing that works well for others (I have asked around and I have yet to find any non-students who are interested in a $3600/month six-bedroom apartment). I think the low-end houses are good because they are flexible housing: if students want/need to live in them now, they can accommodate that, but if the market changes, they can also accommodate other uses (owner-occupied residential, business, etc.). It just seems odd and wrong to me that the prices are highest on the housing for the lowest income tenants. This month’s Observer has a small feature on the house downtown that had the highest sale price/square foot. I don’t remember exactly where it is, but it is a rental house somewhere near Elbel Field. I don’t know if there is anything that can really be done about rental home speculation/flipping or building high-end “student” housing, but both of these trends drive up the price for the renters and the buyers in the exact locations where there should be more affordable housing.
—Juliew Oct. 11 '05 - 05:42PM #
todd, the point I’m trying to make is that your conclusions don’t seem to be backed up by the facts. Ann Arbor has added 1600 new units in the last 5 years. It’s not on pace with Canton but it also has not been a period of no growth. Even with those 1600 new units, population has been stagnant. There are very reasons why but much of it has to do with demographics. Pointing out that this is happening in other communities isn’t to use them as a benchmark but to show that it’s not just Ann Arbor that’s seeing this trend.
—John Q Oct. 11 '05 - 05:45PM #
Well, the whole planning process certainly can’t just be about housing. It needs to include ideas for growing a prosperous job base as well.

Ann Arbor city growth is certainly slow, and there are probably many causes, but the dearth of affordable housing is surely one of them. County growth (and metro growth—remember, we are our own MSA now, including Livingston and Lenawee counties) has certainly outpaced city growth, and I see no reason why it won’t continue without a change in city policy.

As for the housing glut, I wouldn’t be surprised if there were one. I don’t see this debate as one solely about the economy of the next five years. It’s certainly about more than the real estate market. Instead, I think it’s about the overall health of the area over the next few decades. Hopefully that will have some positive short-term effects on where and how housing is built, but those aren’t the only effects we should hope for. (And if there is a housing glut, we should be asking ourselves: how and why did this happen? Why did we let it?)

Someone else here said we should be thinking about development, rather than growth, and that’s a good attitude here—so let me restate something I might have said earlier: the question isn’t necessarily, how are we going to handle growth? The question is, what kind of development do we want, and how are we going to get it in the current environment?

BTW, Larry, what do you mean by “upper-middle-class household formation”? Do you mean the price decreases reduce to zero at some point? Even if so, how does the market stabilize? Is it just a chain of families swapping equally-priced housing? Is the problem migration in and out of the market? (If so, that would make sense.)
—Young Urban Amateur Oct. 11 '05 - 06:13PM #
Larry, I’ll agree that there’s only a limited amount – and only in the long-term – that new top-end units can do for affordability. I don’t think that rubber-stamping every $350,000 condo that comes along is the answer.

But that’s far from synonymous with “new development is not the answer.” It’s not the whole answer, but it’s definitely a part.

At the last CAC meeting, Newcomb Clark was talking about walking through a loft conversion project in Detroit – featuring 500sqft units.

If you hold construction costs constant for downtown residential units, but shrink the units from 1000+ sqft to 500sqft – still 1BR – you create $175k units, downtown. (For simplicity, we’ll trade off the land amortization of extra units for the extra effort involved in hallways and in making sure all the units have windows.) Look – you’ve magically not only cut the price in half, but also created twice as many units at that lower price point, meaning the “chain of moves” starts lower, and has twice as involves twice as many people!

(I have lived in a sub-500sqft apartment. I’ve had guests spend the weekend in such a place. We cooked Thanksgiving dinner for visiting family. It was probably the best place I’ve ever lived, despite also being the smallest. I’m not proposing anything ludicrous here…)

With some dedication, it’s possible to live in central A2 without a car. Don’t make people buy a parking space. Those $350k condos come with at least a car worth of parking each – at $30k in construction cost. Remove that, and you’re halving $320k, which means you can offer a $160k unit. Plus, if you’re not devoting the space to cars, you can devote more of your ground floor to business uses that incrementally increase residents’ access to goods and services. (And maybe they choose to still own a car, but keep it at a friend/relative’s house out in the neighborhoods, or buy a permit from the DDA, but the point is that you’re offering the choice – allowing the opportunity to opt out of the cost.)

Of course, zoning discourages these things. I believe downtown zoning still calls for one parking space per res. unit, and places minimum lot size to unit number ratios, which discourages small units. More units in a PUD means 15% is more units – consider easing the hard-line affordability requirements if the base cost is low enough.

Sigh. The housemate reading over my shoulder says, “Affordable housing again? Why don’t you try talking about UFOs, instead? I hear those have actually been sighted…” A sign for me to go do something else…
—Murph. Oct. 11 '05 - 06:13PM #
“Pointing out that this is happening in other communities isn’t to use them as a benchmark but to show that it’s not just Ann Arbor that’s seeing this trend”.

Seeing what trend? Are you talking about the rate of new permits pulled? I’m not sure that I understand what you are asking me.

If what you mean is that the demand for housing in each of those suburbs is the same as it is in the Ann Arbor area, then explain how it is that Ypsi Township managed to pull permits for a net result of 2,514 new units over the last five years? This is a township that, in 2000, had a population of just over 40K.

Logic and common sense tells me that this is where the Ann Arbor housing demand is settling. You know the ads “Ann Arbor without the Ann Arbor prices”.
—todd Oct. 11 '05 - 06:53PM #
Having spent WAY too much time looking at WAY too many apartments in NYC (don’t try to find a dog friendly apt in NYC unless you must—it’s trying!)—500 sq ft is huge and more than enough space for a single person or young couple. There are entirely too many 250 sq ft closets in this city going for entirely too much money. And don’t get me started on Tokyo.
—Scott Trudeau Oct. 11 '05 - 07:26PM #
todd – the trend is that household sizes are decreasing, especially in more urban areas. Cities like Livonia, Royal Oak, Southfield and Ann Arbor are seeing their population continue to decrease, even as they continue to add new housing because the number of people in each household is declining. It’s affecting high-end communities like Birmingham and the Grosse Pointes and lower-end communities like Hazel Park and Lincoln Park. As I noted above, it’s affecting traditional “downtown” communities and suburbs built from sprawl.

The places where this trend is being masked is in places like Ypsi. Township where there’s more open land and you can see large numbers of housing units built. The housing units are predominently being purchased by families, with larger numbers of people per household. But as you see in places like Livonia and Farmington Hills, when these communities reach build out, the household trend will take over as the predominate demographic trend.

All this means is that we can’t start handwringing over the population numbers. Ann Arbor has added a lot of new housing in the last 5 years. The stagnant population growth is part of a larger trend and nothing specific to Ann Arbor.
—John Q Oct. 11 '05 - 08:23PM #
YUA: a “household formation” is where someone leaves an existing household to start their own, perhaps because of growing up (leaving parents’ hom) or divorce.

Moreover, for Washtenaw County purposes, I suppose affluent folks moving in from elsewhere and buying houses or condos are equivalent to household formations—they’re new households which weren’t here before, and are part of the barrier (or perhaps the absorbent sponge?) between upscale new construction and downscale housing needs.

I’m not arguing against new construction—far from it. There are many good reasons to increase density, and increasing density requires building more stuff.

All I’m saying here is that bringing a new luxury penthouse or McMansion into the market does not directly free up a modest little cottage or apartment for you or me, and we shouldn’t be writing as if it did.

More than that, we shouldn’t shape our policies as if it did. Affordability is worth attending to directly.
—Larry Kestenbaum Oct. 11 '05 - 08:38PM #
Thanks to Murph (way up there) for providing the link to the September 1, 2005 SEMCOG estimates. They are not what Karen Hart used; she used the SEMCOG 2003 estimates.

As John Q has said, the size of the average household is dropping in a variety of places. Hence, the estimated drop in AA City population from 114,024 in 4/2000 to 112,765 in 9/05 is due to this factor, rather than to a bunch of housing units being abandoned.

There has been a very real drop in demand for housing in AA City over the last few years. I know from personal experience. Several years ago, there was a “bidding war” for a house next door to ours on Broadway. This year, a neighbors’ house has remained unsold for several months. They had to lower the price in order to get an offer.
—Dave Cahill Oct. 11 '05 - 08:52PM #
I missed this in the News until now:

“Scanga said he doesn’t think he will be able to make a recommendation on the viability of a greenway along the Ann Arbor Railroad from Stadium Boulevard to the Huron River. He also said he won’t make a recommendation about specific properties, such as the surface lot at First and William streets that has been the focus of a communitywide debate. Some want a parking structure on that lot. Others want a full-sized park that is part of a greenway.

“That’s partly what is dysfunctional about the town,’’ Scanga said. “They are arguing parcel-by-parcel.’’

“He said the city could implement a comprehensive zoning plan that takes the guesswork out of what is appropriate for specific sites.”

That’s weird. I feel like I’ve heard this somewhere before.
—Dale Oct. 12 '05 - 12:30AM #
John,

I understand your numbers here. Fewer people in slightly more units. I get it.

The thing that you are missing is that in the last 5 years, UMich’s enrollment has grown by 1,600 people. None of the other suburbs you’ve mentioned had this kind of built in demand for housing.

Where did these students go? The population is the same.

You’re starting to get closer to what is happening in Ann Arbor. I’ll give you a hint: the exact same phenomenon happened in Boulder about 20 years ago.
—todd Oct. 12 '05 - 03:52PM #
Sorry, in thinking about my comment #44 above after I entered it, I realized that housing units have been abandoned in AA City, at least temporarily. The vacancy rate for rental housing is higher than it used to be. In our neighborhood, which has a mix of owner-occupied and rental units, there are rentals which are vacant even now. This has not been true in earlier years.
—Dave Cahill Oct. 12 '05 - 06:37PM #
“The thing that you are missing is that in the last 5 years, UMich’s enrollment has grown by 1,600 people. None of the other suburbs you’ve mentioned had this kind of built in demand for housing.

Where did these students go? The population in Ann Arbor is the same, but we’ve had 1,600 more students in the past five years.”

There’s a question on the floor. Larry, JulieW, Dave C., (heck, anyone) please take a minute and tell me what happened here. This is at the heart of my rants for the past few years.

Where did these 1,600 students go, and what does that tell you?
—todd Oct. 12 '05 - 06:37PM #
Todd, I don’t know where those extra 1600 students have gone to live. Are they undergraduates, graduates, etc.? Perhaps they are indeed living in AA City, and an equal number of non-students moved out.

In non-college towns, the older housing in the central city is often the source of what we call “affordable housing”. In college towns like AA, though, this housing is taken up by students, instead of non-students with moderate or low incomes, because most students must live close to campus and pay a premium for doing so.

I’m not one of those who whine about the impact of the U-M on Ann Arbor. After all, without the U-M Ann Arbor would be like Dexter.
—Dave Cahill Oct. 12 '05 - 06:44PM #
“In non-college towns, the older housing in the central city is often the source of what we call ‘affordable housing’.”

Actually, in cities with healthy and vibrant economies, the central city is usually the most expensive housing. Only in dying, rust-belt, dysfunctional cities and metropolitan regions is the most affordable housing in aging city centers. It’s a key symptom of an unhealthy (socio-economic) city region.
—Scott Trudeau Oct. 12 '05 - 09:54PM #
Students are kind of volatile, in terms of actual population. A lot of it depends on how many students are leaving the area, how many are actually around during the summer, or for head-counts, how many vote, or are permanently employed, or have in-state drivers’ licenses, or pay taxes…estimates are only that: estimates. 1600 seems to me like a good margin of error.

Larry: very interesting about the households. I wonder if this type of situation should be treated as multiple markets. Surely, if there are middle- or low-income households who need housing, then there is a demand for lower-income housing. The question is, who’s willing to build the units (and accept the lower profits)? This might be an example of a market inefficiency, which doesn’t necessarily need to be dealt with by government-mandated affordable housing, but which merits government attention, maybe by way of encouragement via tax credits and the like (and/or actual price controls, but only if absolutely necessary).
—Young Urban Amateur Oct. 13 '05 - 05:39AM #

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