Friday, February 22, 2013

Own or Rent Redux — Controlling the Chaos

The American Dream?
I posted this blog two and one half years ago, during the height of what has been called the Great Recession, and has as much validity today as then. Maybe more so. A housing equilibrium has begun, foreclosures are significantly down, home prices are rising, and apartments are booming (Remember: All things are cyclical). 

We have owned a home for over thirty years; it is both a source of pride and value. None-the-less, from a meager down payment in the late 1970s we have significantly leveraged that payment into a comfortable home and not an unreasonable sum of equity – I said equity not cash – ah, there is the rub.

The Wall Street Journal notes this week (Sept. 2010) that Fannie Mae (now there is a reliable source) says that the percentage of people who consider a house a safe investment has declined from 83% in 2003 to 67% this past July. My guess it corresponds to number of foreclosures, unemployed, and speculated homes – but that is just my guess. 

To own or rent is a debate that will never end. In the mid-1940s, articles were written in Harper’s Magazine and other publications, saying that home ownership would be a disaster to your personal finances and implied that the buyer didn’t know what they were getting into. Other types of housing were offered as the solution: rentals, apartments, mutual associations, and the like. At the time there seemed to be a fear of homeownership – fifteen years of almost no ‘ownership’ construction will do that (see Great Depression). This obviously passed as all irrational fears do. Americans have built and bought millions of homes since then.

The current debate is more economic than challenging the fulfillment of a dream. In America there has been a cultural, economic, and social desire to plant your flag on a chunk of ground and call it your own. It is a visceral desire – in fact many of the current sad stories are a direct result of this yearning. In other times and different economies, this longing would not have caused the chaos of today. Many competing and opposing forces came to bear to create this disaster.

But markets try to and eventually will, balance themselves. When inexperienced or even experienced homeowners are sadly forced out, other opportunities appear. The foreclosed house now becomes a rental, and large suburban tracts are changed to horizontal rental complexes, street after street, meeting the needs of the marketplace. Is this good or bad? I’m not sure, only time will tell. But what is critical is the residential market structure is preserved and adjusts to reflect later market forces, from owner to rental and back to owner.

Rental and ownership are perceived differently across the country. New York City, where almost everyone rents (or more culturally/financially appropriatly, leases) a residential unit; extreme allowances are made and tolerance giving to rent control, obituary diving, and under-the-table rentals. But there is no stigma to the renter – all are in the same boat. This is an entirely different housing market than the suburban foreclosed homeowner who is forced into a rental property. Iowans would not understand New York City housing.

The Census Bureau notes, in an August (2010) release, that renters pay a higher percentage of their income for housing than do owners – go figure. In most cases the age and the structure of the family has something to do with it. As these families mature, incomes and stability increase, homeownership follows – it is the longer term that is often thought of by the homebuyer. The renter tends to be transient, mobile, socially and culturally looser – age and family growth changes these actions. Rents reflect the current marketplace (for good or ill), ownership costs do not – as personal incomes increase, the ratio changes. Today’s foreclosures do tell a different story for some, but the trend will always go back to the mean – consider your own home and situation if you bought prior to 2000.

To rent or own will always have its champions. Rationalizations will be made that prove, without a doubt, their position is correct. As I noted above the desire to own is visceral – the reason for renting may be cerebral. Rationalize away . . . .

Stay tuned . . . . .

Friday, February 15, 2013

Fascists, Rome, and Chicago

Monument to Italo Balbo in Chicago (wikipedia)
While doing research for my new book Wars Amongst Lovers (which I write in a parallel life and will be out this summer), I came across an interesting and strange bit of factual history about Chicago, Fascists, and World War Two. It has to do with the naming of Balbo Avenue on Chicago’s near south side. The street runs east to west and begins near the Buckingham Fountain and South Lake Shore Drive. The street is named for one of Benito Mussolini’s most important political allies and Fascists, Italo Balbo (1896-1940). A devoted Fascist since World War I, Balbo was one of the most powerful men in Italy and helped bring Mussolini to power in 1922.

Even though new to flying, Balbo was tasked with building the Italian Royal Air Force and he led Italy into the twentieth century skies. Aviation was the “New” thing in 1925, not unlike some of the strange things we recently see like electric cars, high speed rail, and even smartphones. All started slow and built momentum until they became the rage. In air travel that meant a lot of amateurs lost their status by burrowing their airplanes into cornfields. For nations, air was prestige and glamor. And Italy was one of the leaders of the times; Italian aviators accomplished amazing feats in aircraft built by Italians. Italo Balbo led two transatlantic flights in seaplanes, twelve Savoia-Marchetti S.55s to Rio de Janeiro in December 1930 and twenty-four seaplanes to Chicago in July, 1933, that landed on Lake Michigan.

Chicago was in the midst of its glorious Worlds’ Fair, The Century of Progress. All manner of new and exciting post WWI exhibitions and events continued to add to Chicago’s reputation as a new and upcoming leader in American and world commerce. This squadron of Italian seaplanes added to this image. Chicago, by the mid-1930s, had a large and expanding Italian population. On the south side, Little Italy spread along Taylor Street and Italians were making their way, like the Irish, into important political jobs. Balbo only added to their pride and prestige.

In Chicago. he was treated to a huge parade, dinners, and other public presentations. His pilots and crews were welcomed as conquering heroes and with great pride shown off across the city. And, in an even greater example of international friendship, Mussolini “borrowed” a marble column from the historic city, on Italy’s coast, Ostia, and presented it to the city of Chicago to be displayed at Italy’s exhibit at the fair. It now sits a few hundred yards southeast of Soldier Field. And the city renamed Seventh Street to Balbo Drive (now Avenue). Later, during the war, there was much controversy over the name – but it still remains today.

Balbo was treated to lunch with President Roosevelt (who gave him the Distinguished Flying Cross), the Sioux adopted him as a brother with the title “Chief Flying Eagle”. He stopped in New York on his way back to Italy and in Madison Square Garden told the huge crowd, “Be proud you are Italians. Mussolini has ended the era of humiliations.”

Balbo was one of the few who was against the rise of Italian anti-Semitism and laws the specifically targeted Jews in Italy, sadly he was a minority voice in Mussolini’s need to curry favor with Hitler. He was later Governor-General of conquered Libya and was involved with Mussolini’s grand designs on much of North Africa. In the late 1930s collaborations between Hitler’s air force and the Italian military began to expand, much of it do to their assistance to Franco in Spain’s civil war. But Balbo leaned toward Britain. Few followed his lead, and when he was informed of Italy’s formal alliance with the Nazi’s, he exclaimed, “You will all wind up shinning the shoes of the Germans.” Sadly Italy did far more than that before their surrender in September of 1943.

On June 28, 1940, while trying to land at an Italian airfield in Tobruk, his plane was shot down by his own Italian gunners and he was killed. Some have claimed it as an assassination by his own government, but it was really one of those tragic accidents of war. How his voice might have changed the outcome, we will never know. Later when Muammar Gaddafi threatened to disinter the Italian cemetery in Tripoli, Balbo’s remains were brought back to Italy.

Balbo Avenue still remains, the Balbo monument, with its 2nd century marble column, still remains, and Chicago’s connections to Italy remain as strong as ever.

More Later . . . . . . .

Friday, February 8, 2013

Let Me Gang Up on You For A Minute

Northerly Park Expansion - Chicago
I am very curious about Jeanne Gang and her Studio Gang Architects. She has created some very exciting buildings and concepts; one of the most notable is the design for a new and dramatic lakefront park (with SmithgroupJJR) where an airport used to be in Chicago (I really admire the park concept). She has challenged conventional architecture and made significant impacts on architectural-ecological mixtures of how we should live and where we should live. But, like the slave who rode in the chariot behind the conquering hero, continually reminding him to be wary of hubris and his conquests going to his head. All success must be tempered. Even Howard Roark wasn’t infallible.

What I am referring to is in an article in    about Ms. Gang, her firm, and its designs and brilliant work. As both a Chicagoan and Californian, I understand the broad sweep of architecture and time. The high rise was born in Chicago, the great linear parks were born there under the pen of F.L. Olmsted, and greats like F.L. Wright, Sullivan, Skidmore, Owens, Perkins, Will and others called it home. Architecture can be organic or concrete, lush and brutal, fad or fashion. But in all cases it must be humane. And I also have to add, meet the demands of the consumer and the marketplace. If not, architecture is only expensive sculpture and art, and at its worse, a dalliance and a visual blight for decades.

But when Jeanne Gang makes the statement:
 “I want to turn Wright’s legacy upside down,” Gang says with no hint of doubt. “The way to be ecological is not by spreading out. It’s by clustering together. It’s by having a better relationship with nature in the city than you can have in a far-out suburb.”
Aqua Tower - Studio Gang Architects
That is hubris. It is joining the unending war against the suburbs that is now into its second century. Give it up, the maligned suburb is not worse or better than an 80 story high rise powered by compost in the basement and a windmill on the roof, but the suburb is a more practical and economic model than anything I’ve seen with multiple floors and “views to die for.”

And when she also says:
“Urbanization is the huge issue of our time,” she (Gang) says. “We can’t survive if we can’t solve the problems of population growth, loss of clean air and water and loss of biodiversity.”

That is folding the perceived ills of the world into a nice self-serving quote for the front of your brochure. Hyperbole and hubris, shame on you Ms. Gang.

In William H. Whyte’s book the Organization Man, published in 1956, he succinctly put it thus when he challenged architects and planners interested in sociology:
“…but a little sociology (applied to planning) can be a dangerous weapon, for it seems so objective that it is easy to forget the questions of value involved.”

And more to the point, Mr. Whyte, one of America’s greatest writers and critics on American architecture and planning, said (in his seminal book The Last Landscape, on ecological planning, open space, and human habitats), be careful:

“Listening to some new town discussions, one gets the feeling that the end object is not a workable community so much as the untrammeled exercise of expertise in planning it.”

I have seen this before with the New Urbanist Movement with it acolytes and finger wagging, the Transit Oriented Development (TOD) movement (your tax money at work), Paolo Soleri and his mega cities (which were really very cool, in a Blade Runner sort of way), Frank Lloyd Wright and ‘American’ utopian architecture, and we give Le Corbusier a pass for creating architecture that foretold the American prison system. As I said, fads and fantasies. We have had brutalism, pre and post modern, and now rampant ecological design (actually the list is endless, as if a parking garage covered with ivy is an award winner). And each is as different as Robert Stern is to Philip Johnson.

So, be careful Ms. Gang, listen to the voice over your shoulder, there are traps being laid, both professional and journalistically. And please remember the market, while the client is important, the buyer is even more powerful. They will determine your success. They will determine whether you are an architect or a dilettante.

Stay Tuned . . . . . . . .

Friday, February 1, 2013

Noodling January 2013

I know it’s the first of February and not the last Friday of January when I usually post my Noodling, but last Friday was crazy and besides I wasn’t interested in posting it. So here are a few interesting things that have passed through my door, they are all wide ranging and far afield.

San Francisco Bay Area Housing:
Housing values for resale homes are up over 25% for all the counties in the region. Here is the report form KCBS on the increase in values, multiple offers over asking, and buyer’s remorse when there is nothing on the market to buy after selling. GO HERE  

And homes that have sold for more than a million buckeroos are also up. For the curious thrill seekers GO HERE.

All of this points to an increasing problem I have noted in previous posts, there is NO forward planning going on in the housing market, especially California. New homes are being built, that’s true, the public builders are building and selling at rates not seen in years – but this is all out of existing mapped lots and finished house pads (some five years old). The problem will become acute in nine to twelve months when these run out. Prices will escalate significantly, and if interest rates are kept artificially low (see Feds), then they will explode. Be warned.

Electric Cars
I have supported the idea of electric cars, especially in the urban market. But I don’t support the Fed’s and their Robin Hood dreams of using tax incentives, grants, and loans to “make” us want a product. Sales are lack luster to say the most GO HERE, and even after throwing together all the hybrids, plug-ins, and all-electric into one stat, they only amount to 3.3% of total automobile sales. Someone get a clue. Every major industry has their hands out for federal money (incipient socialism), recipients of grants and loans are failing and declaring bankruptcy (guess who pays?), airports are canceling free parking for electrics, and gas prices are (temporarily) falling. The market is a tough place to understand – but it always speaks the truth, whether you like it or not. If the Feds were to get out of the way and let the market actually react to the product, it might have a chance.

And lastly:
A cool urban video, enjoy.
Toronto: City Rising

And an interesting one on high speed trains in Europe with a very good narrative – Barcelona to Paris, my guess is that it was sponsored by the California High Speed Rail Authority!

Stay Tuned . . . . . . .