kottke.org posts about real estate
Soon after Jake Mohan and his wife bought a house, something went wrong with the plumbing. And then something went right with the plumbing.
Rick called his friend Tom, a plumber. If I'd thought Rick was eccentric, I hadn't seen anything yet. Tom was the Kramer to his Seinfeld. Leather-skinned and gray-mustached, Tom swaggered into the house, took one look at me, and asked me if I was a model. I still hadn't had any coffee, so I wasn't sure if I was suffering auditory hallucinations. "A model?"
"Yeah, you look like you could be a model."
I told him I was a teacher, possibly the furthest thing from a model. "Well, you might have a second calling, brother."
Ordinarily I might have been flattered, but I was disoriented and increasingly angry that our perfect new house was anything but, its actual guts in a state of delinquent disarray. Rick and Tom set about looking at the shoddy plumbing work, shaking their heads and clucking their tongues (the phrases "crap work" and "lipstick on a pig" were uttered). Not only was the cleanout valve worthless, but the downstairs bathroom's waste line, which runs directly from the toilet, was routed directly into the cleanout valve.
Edmund Andrews, an economics reporter for the New York Times, confesses that he got caught up in "catastrophic binge on overpriced real estate" and signed a "reckless mortgage" for more money than he and his new wife could afford.
What about my alimony and child-support obligations? No need to mention them. What would happen when they saw the automatic withholdings in my paycheck? No need to show them. If I wanted to buy a house, Bob figured, it was my job to decide whether I could afford it. His job was to make it happen.
"I am here to enable dreams," he explained to me long afterward. Bob's view was that if I'd been unemployed for seven years and didn't have a dime to my name but I wanted a house, he wouldn't question my prudence. "Who am I to tell you that you shouldn't do what you want to do? I am here to sell money and to help you do what you want to do. At the end of the day, it's your signature on the mortgage - not mine."
Andrews and his family aren't all that bad off, but my mouth got all cottony while reading this as I extrapolated from his story to the millions of people who made similar deals under much more dire circumstances. A chilling first person tip-of-the-iceberg tale. (via the laboritorium, which calls the piece "an instant classic of economic crisis journalism")
Update: According to a nice bit of reporting by Megan McArdle, Andrews failed to mention that his second wife has declared bankruptcy twice, once while married to Andrews.
Moreover, pesky bad luck isn't really the picture painted by either filing. Rather, Ms. Barreiro seems to have spent most of the last two decades living right up to the edge of her income, and beyond, and then massively defaulting. If you structure your finances so that absolutely everything has to go right, it's hard to blame the mortgage company when you don't quite make it.
Andrews has been admirably open about many of the poor decisions and the wishful thinking that led him deep into debt. Nonetheless, he has laid much of the blame onto irresponsible bankers and mortgage brokers. The missing bankruptcies substantially undermine this basic narrative arc of Andrews' story. Particularly in his book, the bankers are the villains, America's current troubles are the inevitable denouement of their maniacal greed, and the Andrews household stands in for an American public led, by their own greed and longing and hopeful trust, into the money pit.
Seen through this lens, it's not so much that Andrews was done in by a overly large mortgage...it was that he married a financial anchor.
Update: Andrews responds to McArdle's claims:
These bankruptcies did occur, but they had nothing to do with our mortgage woes. They were both tied to old debts from before we were married or bought a house. They had nothing to do with my ability to get a mortgage; nor did they have anything to do with our subsequent financial problems.
And McArdle responds to his response. (This is getting complicated!)
Andrews seems to now be arguing that the Chapter 7 filings are not relevant because they didn't affect his ability to get a mortgage. But of course the article and the book is not just about him--rightly, because unless your marriage is pretty dysfunctional, it's a financial partnership. The two bankruptcies seem to reveal that one partner has demonstrated a historic inability to live within their means. So though the bankruptcies don't tell us anything about their ability to get a mortgage on their house, they may tell us quite a bit about their willingness to take on a mortgage. This decision is at least as important as the bank's. I'm sure banks would have given me all kinds of stupid mortgage loans in 2004, but I didn't avail myself of the opportunity.
Jim Griffioen took photos of every house on a block in Detroit where most of the houses are abandoned and stitched them into panoramas.
If you were to compare the current international housing crisis to a black hole sucking the equity out of our homes, this one-way street near the northern border of Detroit might just be the singularity: the point where the density of the problem defies anyone's ability to comprehend it. These homes started emptying in 2006.
Hong Kong architect Gary Chang has renovated his tiny apartment four times since he's owned it. The most recent renovation is called "The Domestic Transformer".
The wall units, which are suspended from steel tracks bolted into the ceiling, seem to float an inch above the reflective black granite floor. As they are shifted around, the apartment becomes all manner of spaces -- kitchen, library, laundry room, dressing room, a lounge with a hammock, an enclosed dining area and a wet bar.
Chang's Suitcase House uses many of the same principles as his apartment.
A lovely photo set of New York City from the 1930s. My favorites are the crowded beach scene at Coney Island, Margaret Bourke-White's shot of hats in the Garment District, and a shot of "the Lung Block" on the Lower East Side. In due time, that then-notorious but now-beautiful block was razed to make way for one of Manhattan's first large apartment complexes, Knickerbocker Village which at various times housed several members of the Bonnano crime family and Julius & Ethel Rosenberg. (thx, mark)
Michael Lewis rents a mansion in New Orleans and finds in the experience a parable about the thirst of Americans for better housing than they can afford, the subprime mortgage crisis, and the ensuing financial panic.
The real moral is that when a middle-class couple buys a house they can't afford, defaults on their mortgage, and then sits down to explain it to a reporter from the New York Times, they can be confident that he will overlook the reason for their financial distress: the peculiar willingness of Americans to risk it all for a house above their station. People who buy something they cannot afford usually hear a little voice warning them away or prodding them to feel guilty. But when the item in question is a house, all the signals in American life conspire to drown out the little voice. The tax code tells people like the Garcias that while their interest payments are now gargantuan relative to their income, they're deductible. Their friends tell them how impressed they are-and they mean it. Their family tells them that while theirs is indeed a big house, they have worked hard, and Americans who work hard deserve to own a dream house. Their kids love them for it.
Photographer Jay Maisel bought the building at 190 Bowery 42 years ago for $102,000. Covered by graffiti and assumed by many to have been abandoned for years, it's matured into a single family home with 6 stories, 72 rooms, 35,000 square feet, an estimated value of up to $70 million and three residents.
Photos of Mike Tyson's abandoned mansion. What an odd house. Half of it is bathrooms & an indoor pool and looks like it was designed by Homer Simpson.
A wonderful story about how an architect took it upon himself to build a scavenger hunt into one of his client's apartments, all without telling them.
Finally, one day last fall, more than a year after they moved in, Mr. Klinsky received a letter in the mail containing a poem that began:
We've taken liberties with Yeats
to lead you through a tale
that tells of most inspired fates
iin hopes to lift the veil.
The letter directed the family to a hidden panel in the front hall that contained a beautifully bound and printed book, Ms. Bensko's opus. The book led them on a scavenger hunt through their own apartment.
And it wasn't an easy hunt either.
In any case, the finale involved, in part, removing decorative door knockers from two hallway panels, which fit together to make a crank, which in turn opened hidden panels in a credenza in the dining room, which displayed multiple keys and keyholes, which, when the correct ones were used, yielded drawers containing acrylic letters and a table-size cloth imprinted with the beginnings of a crossword puzzle, the answers to which led to one of the rectangular panels lining the tiny den, which concealed a chamfered magnetic cube, which could be used to open the 24 remaining panels, revealing, in large type, the poem written by Mr. Klinsky.
The stunning Calatrava-designed Chicago Spire is due to be completed in 2011 and will, ahem, tower over the Sears Tower by more than 500 feet. Check out the view from the 140th floor.
Rent Vs. Buy Myths That Ruined the Housing Market.
Myth #1: Renting is Like Throwing Your Money Away
Buyers throw their money away for the first five years they own a home, because they simply give money to the bank for the privilege of borrowing money. Renters, on the other hand, pay for one thing every month: shelter. They don't pay interest to the bank, property taxes or maintenance fees. They pay rent.
Are the suburbs the next slums?
At Windy Ridge, a recently built starter-home development seven miles northwest of Charlotte, North Carolina, 81 of the community's 132 small, vinyl-sided houses were in foreclosure as of late last year. Vandals have kicked in doors and stripped the copper wire from vacant houses; drug users and homeless people have furtively moved in. In December, after a stray bullet blasted through her son's bedroom and into her own, Laurie Talbot, who'd moved to Windy Ridge from New York in 2005, told The Charlotte Observer, "I thought I'd bought a home in Pleasantville. I never imagined in my wildest dreams that stuff like this would happen."
James Kunstler has been saying this for ages.
Stamen teamed up with MySociety to produce some lovely travel-time maps of London. My favorite is the interactive travel + housing prices map:
Next, it is clearly no good to be told that a location is very convenient for your work if you can't afford to live there. So we have produced some interactive maps that allow users to set both the maximum time they're willing to commute, and the median house price they're willing or able to pay.
The commute time slider makes a lovely Mandelbrot-esque pattern as you pinch the times together. (via o'reilly radar)
Yay! Today is sub-prime mortgage day on kottke.org, I guess. The collapse of the sub-prime mortgage market took everyone on Wall Street by surprise...except Goldman Sachs, which earned $11.6 billion in 2007 when everyone else lost money. How'd they do it? Michael Lewis says that Goldman went against the flow in shorting sub-prime mortgages by assuming that the entire rest of the industry, including their own expert and extremely well-paid traders, were, as Lewis puts it, "a bunch of idiots".
Update: Here's the WSJ article mentioned by Lewis in the above piece. (thx, andy)
n+1 magazine has a fascinating Interview with a Hedge Fund Manager. Topics of conversation include the sub-prime mortgage crisis. I gotta admit that I didn't understand some of this, but most of it was pretty interesting. (via snarkmarket)
Letter to the editor, New York Times, June 23, 1993:
If landlords could double or triple the rent on vacant apartments, it would be a compelling incentive for them to try to drive current tenants out by any means necessary. (During the East Village's gentrification in the 1980's, my landlords neglected or cut off heat and hot water, called us late at night to tell us to leave, let crack addicts stay in warehoused apartments and rented storefronts to drug dealers.)
Under luxury decontrol, what would stop them from renting only to tenants who make more than $100,000 a year to get apartments permanently deregulated? Warehousing would burgeon as landlords kept apartments vacant for months waiting for a sucker to pay top market rent.
New York Times, September 29, 1991:
She began asking $132,000 for her studio in 1988 and has since lowered the asking price to $115,00, but has not had a bid.
Another owner in the Christadora House bought her 1,100-square-foot, two-bedroom apartment for $270,000 in 1986 has been trying to sell it for 14 months. She first asked $305,000 and has lowered her price to $260,000. Her only offer so far, which she rejected six months ago, was for $220,000.
Two blocks away, on 11th Street between Avenue A and Avenue B, the owner of a two-bedroom co-op on the top floor of a renovated five-story tenement has received a bigger blow. He paid $186,000 for it a year ago and has been trying to sell it for four months at $89,000. So far, no takers.
The story about how drummer and web designer Mark Robohm completely renovated his Chelsea studio for only $11,600 is both inspirational and hilarious.
Ms. Doucette found Mr. Robohm's office chair on Park Avenue. Before taking it, she called him up to describe it. "I asked her what the name was and she said, 'Herman Miller,'" Mr. Robohm said. "I was like, 'Grab that chair and run for your life.'"
The audio slideshow is worth a look as well.
Now you can buy a house modeled after one of Martha Stewart's three houses. People love these houses so much that sales are bucking the downturn in new home sales. Says a representative for the company building the homes: "It's our version of the iPhone. It illustrates the power of something different with a brand tied to it."
Stamen delivers another lovely project: Trulia Hindsight. It's an animated map of the US which shows new home construction over a period of years "with an eye towards exposing patterns of expansion and development". As you might expect, the growth of a city like Las Vegas is interesting to watch. More on the project from Stamen and on the Trulia Hindsight blog.
Undiscovered bedrooms, the typical dream of the New Yorker. I always thought the undiscovered room dream story was apocryphal until Meg, unaware of the story at the time, dreamt of finding another room in our apartment a few months ago.
Rollercoaster version of the graph of US home prices adjusted for inflation...you basically ride the curve of the graph. Brilliant...I want to ride all the graphs I come across! (via is it real or is it magnetbox)
The McMansion page on Wikipedia is surprisingly detailed. Other terms for a McMansion include Faux Chateau, Frankenhouse, Starter Castle, and Parachute Home. The Lawyer Foyer refers to "the two-story entry space typically found on many McMansions which is meant to be visually overwhelming but which contributes little to the useful space of the house".
LeBron James' new house: 35,440 sq ft, 2200 sq ft master suite (with 2-story walk-in closet), theater, casino, barber shop, bowling alley, and a limestone bust of LeBron wearing a headband.
Roommate Wanted: Share My West Village Pad. "Ideally, you do not have 'a lot' of friends (i.e., any). But if you do, they cannot visit the apartment at any time."
Story about a couple who moved out of their suburban house and into a condo in the city and how their lives have changed.
This has had a profound effect on how we interact with people. We realize now that the cocoons of our cars kept us well insulated from the people around us. Our genuine interactions were with family and coworkers, the only people who saw us stripped of the metal that clothed and protected us. Our neighbors, we discovered, were virtually strangers. Now, we stand face-to-face with people in our building's elevators, at our corner hangouts, and on the sidewalks. We chitchat and pet our neighbors' dogs. We exchange 'good mornings' with the people we pass everyday on our way to work. We've developed friendships with several proprietors and servers at our favorite restaurants.
Suroweicki explans why ever-rising housing prices may be deceiving. "If you control for inflation and quality...real home prices barely budged between the eighteen-nineties and the nineteen-nineties. The idea that housing prices have nowhere to go but up is, in other words, a statistical illusion."
Letters to George W. Bush from German citizens attempting to affirm their rights to moon land they have purchased for $19.99 an acre. "If you intend to use my area within the bounds of your intention, to build a moon base or something else on, over, or under the surface of this moon area, you have to contact me personally. This must be absolutely, to clear up under which special conditions I will leave the rights of use to you or the United States of America."
Graph of American house values from 1890 to the present. You can't miss the sheer cliff starting in 1997. Houses have also gotten bigger over time. It would be interesting to see the same graph in price/square feet. (via ben hyde)
A West Village family built a porch and garden on top of their six floor apartment building. The photos are surreal. "The depth [of the soil] was kept consistent because Mr. Puchkoff had the foresight to collect two dozen chopsticks from Sushi on Hudson, a Japanese restaurant in the neighborhood, and mark them at seven inches."
James Surowiecki fills us in on a new investment opportunity, housing futures. "If housing futures work the way they're supposed to, they will shift risk from those who are less able to bear it (individual homeowners with hefty mortgages) to those who are more willing to (speculators looking for a big upside on their investments). In the process, they will effectively provide a form of house-price insurance."
Modernist prefab houses are all the rage these days. "Designed by architects, constructed in factories and trucked to their sites, these houses had the look the couple wanted, at a lower price." The Dwell House had a lot to do with current interest is modern prefab housing.
1880s Brooklyn brownstone has swastika patterns as part of the wood flooring. "We turned to the landlord guy and said, 'You haven't fixed this?!?!' He suggested that we could just put furniture over them. All four, in every room. And then he told us that there had been a number of Jews who'd looked at the place and 'seemed really bothered by it.'"