Since this is the “Yes” blog, I guess I have tipped my hand on my position regarding the NSO. However, I want to say at the outset that I understand why others might vote differently, and I am not particularly comfortable with the yes/no choice that we have to make. I am somewhat saddened by the divisiveness that it has generated.
At another time, I will go into my opinions on at least some of the issues that have been raised and commented on previously on this blog. First, though, I want to say something about how I feel about our neighborhood.
We moved here in 1970 into a two-bedroom house with 1150 square feet on the diagram. While it looked pretty big when it was empty, it was pretty easy to fill up. Nevertheless, we did not see how we could ever afford the mortgage payment, which in the next 30 years became dwarfed by the insurance and taxes.
When we moved in, there were only a few children on our street. We were pleased to have three living right next door for a while in a rented house, but they moved after a few years and left us hunting hard for playmates for our two kids. Now, I am pleased to see how many young families with small children have moved in. I expect that at least some of these parents are wondering how they will ever afford to pay the mortgage and other costs of a home.
One of our newest neighbors is our son, daughter-in-law, and one-year old granddaughter. They live three doors down in a house my wife and I are financing, which included remodeling the house from the studs to the brick. I know what their mortgage payment is, and I know they are wondering how they will be able to keep up with that mortgage.
I can’t tell you what a joy it is to live so close to these kids and our granddaughter. And I believe in my heart that we could never have swung such a deal in a neighborhood with larger homes. If my faith were stronger, I would say that Someone wanted us to stay here for so long just so we could do this. Faith or not, I feel that we have been truly blessed.
My larger point is that I think the University Terrace neighborhood has been and can be that kind of blessing for a lot of people. Its high quality has continued for the 30 years I have been here, and it is still affordable, making it a hallmark of value. The current residents are obviously taking advantage of that value, and I think we should consider maintaining the blessing we have enjoyed for future residents. This neighborhood is something special, and we should recognize that and act accordingly.
If/when I write again, I’ll try to go a little less “Touched By An Angel.” I promise.
Pete Dickson
Tuesday, April 21, 2009
Sunday, April 12, 2009
Fact #4
There is provable, negligible difference in the tax value of the original homes in a teardown neighborhood and in one protected by an NSO. The values remain virtually the same, with the difference being that the lot value improves while the structure value diminishes.
You can look at the previous posts, where I've provided links to property records of homes in teardown neighborhoods. You've seen that as the lot values increase, the structure values rapidly and dramatically decrease, yielding a near flat value when normal citywide appreciation of property is taken into account.
Further, I took a sampling of the first 10 original houses on Santa Barbara, starting at 4007, and contrasted them with the first 10 houses on my street, Haverford, here in University Terrace, and the first 10 homes on Westbrook in Dalewood, an area protected by an NSO. The result was as follows:
You can look at the previous posts, where I've provided links to property records of homes in teardown neighborhoods. You've seen that as the lot values increase, the structure values rapidly and dramatically decrease, yielding a near flat value when normal citywide appreciation of property is taken into account.
Further, I took a sampling of the first 10 original houses on Santa Barbara, starting at 4007, and contrasted them with the first 10 houses on my street, Haverford, here in University Terrace, and the first 10 homes on Westbrook in Dalewood, an area protected by an NSO. The result was as follows:
The homes on Santa Barbara, with an average age of 36 years, mostly built in 1971, have a value of $163.19 per sq. ft.
The homes on Haverford, with an average age of 50 years, mostly built in 1957, have a value of $144.37 per sq. ft.
The homes on Westbrook, with an average age of 58 years, mostly built in 1954, have a value of $156.75 per sq. ft.
Considering the 14 to 22 additional years of normal depreciation for the homes on Haverford and Westbrook, that's a provable, negligible difference in the tax record market value for these homes. You may take other sampling groups and find slight variations, but I think these are generally accurate numbers.
But what you see in every case, in every home that you look at, is that once the builders move in, the value shifts from the structure to the lot. Your home doesn't appreciate any faster. You're not going to get a fat check from the builder. You're going to get market value for your home.
What will affect your home the most is it's Condition, and if you live in a teardown nieghborhood, and you've lost your incentive to improve your structure because your only value is in the lot, then your home will slide from Good to Average to Fair to Poor, and along with it, so goes your total value.
Look at the Dallas Central Appraisal District records and pick homes listed Fair and Poor condition and contrast them with homes in Good condition. The price per square foot is startlingly different.
Fact #3
The best way to ensure that older homes in a neighborhood aren’t updated or improved is to vote NO. Once builders target a neighborhood for teardowns, the value of the structures, of the homes, plummets as much as 80%. The result is that people are less likely to invest in upgrades and even routine maintenance, because the only value is in the dirt under the structure.
You don't have to dig too deeply into the Dallas Central Appraisal District records to find examples of this occurring. Here are some examples:
4020 Santa Barbara: Structure Value in 2006; $124,800 / Structure Value in 2008; $21,470
83% decrease in Structure Value.
4212 Santa Barbara: Structure Value in 2006; $140,270 / Structure Value in 2008; $15,050
89% decrease in Structure Value.
4402 Santa Barbara: Structure Value in 2006; $94,830 / Structure Value in 2008; $15,440
84% decrease in Structure Value.
Some will say I'm cherry picking. So let's compare Apples and Apples.
Here's a home at 4007 Santa Barbara Dr. It is 2,162 sq. ft. and according to DCAD, has a market value of 320,020, or $148.00 per sq. ft. It is listed in Good condition.
Here's a home at 7006 Haverford Rd. It is 1,798 sq. ft. and according to DCAD, has a market value of 293,430, or $163.00 per sq. ft. It is also listed in Good condition.
The difference is that the home on Santa Barbara has a lot value of $200,000 and a structure value of $120,020, while the home on Haverford has a lot value of only $80,000 and a structure value of 213,430.
Oddly, the Structure on the lot at 4007 Santa Barbara Dr. was worth $295,920 as recently as 2006. But it has lost 60% of it's value in three years. Many will say that this was done to protect the homeowner from higher and higher taxes. But this home has a homestead, capping the taxable value at $316,963. So, if the structure depreciation rates applicable to University Terrace (which are all over the board, ranging from a few percent year depreciation to as much a 5% a year appreciation), were applied to this property, given the new value of their lot ($200,000) the home on Santa Barbara ought to be worth as much as $495,000.
But it's not.
None of the older homes on Santa Barbara, or Vanderbilt or Sondra or Lake Circle have been able to enjoy anything close to a dollar for dollar increase in their homes as the value of their lots increased.
For whatever reason this is done, it sure makes it easy for the builders to point to why they're offering so much less than you dreamed you would get once the destruction of your neighborhood began.
Fact #2
There are single storey homes in our neighborhood that fit within the guidance of the proposed NSO that are as large as 2,000 square feet. Clearly, a 4,000 square foot, two storey home could be built in the exact same footprint without being at all creative with home placement on the lot. Truth is, the houses being built on teardown lots in other neighborhoods on our side of town are all two storey and seldom exceed 4,500 square feet, with many at 3,500 square feet. That’s plenty of room for a house and a back yard under the proposed NSO.
7010 Haverford Rd. 2,040 sq. ft.
7115 Haverford Rd. 2,264 sq. ft.
7125 Haverford Rd. 2,100 sq. ft.
7129 Haverford Rd. 2,016 sq. ft.
7205 Haverford Rd. 2,031 sq. ft.
7319 Haverford Rd. 2,175 sq. ft.
These are just the examples on my street. I'm sure if you go to dallascad.org and search the property records for the homes on your street, you can find just as many like examples. In fact, there were a lot more than this between 1,750 and 2,000 sq. ft. that would yield a structure at least 3,500 sq. ft. at two storeys, and if you look at the property records for the new homes on Santa Barbara, many of them are in that range; 3,500 to 4,000 sq. ft.
Fact #1
It’s not too early to tell and it is provable, through Dallas Central Appraisal District Records, that the best way to protect the value of your structure, of your home, is to enact an NSO.
Our opposition has stated that "all experts agree" it's too early to tell the impact an NSO has on a neighborhood. They quote Ms. Tama Cole of Briggs-Freeman, a local real estate agency where Ms. Cole works as a commission sales agent: ‘When you buy property, much like a car, the house immediately begins to depreciate because of age. The only appreciation is in the land. If the land is restricted, making it hard for builders to construct new houses and make a profit, then your land will not appreciate..."
They are cherry picking information to make it appear that they have “facts” and “experts” on their side of the argument. They state a simple fact; all structures begin to depreciate the moment after they’re built, but it’s not too soon, as their “experts” claim, to draw conclusions about structure depreciation in a pre-teardown and post-teardown neighborhood.
We have a perfect example in Santa Barbara, less than 0.5 miles from the border of our neighborhood. Look at the Market Value graph for 4020 Santa Barbara:
Notice how as recently as 2006, their structure was worth $124,000 and their lot was worth $30,000. Today, that structure is worth $21,470. This structure is listed as in Fair condition, as it was in 2006 when it was worth $124,000. The only thing that’s changed is that the builders moved in, started buying up houses, scraping them and building 4,500 sq. ft. houses (on average).
Now look at the house of one of the folks who sent you the latest AGAINST flyer, It's Jack Ormberget's house at 7309 Bennington:
In 2006 the structure was worth $127,840 and the lot was worth $50,000. Today, as Ms. Tama Cole predicted, the structure is worth less; $120,760. But that is far more than any of the older structures on Santa Barbara. Yet Jack's house is nearly the same as 4020 Santa Barbara, slightly larger, but listed in the same Fair condition.
What has protected the value of his structure? Our neighborhood is not yet the target of teardown speculators. You can look at any street or neighborhood that’s gone through what Santa Barbara has – a little farther away, look at Vanderbilt, or Sondra, or Lake Circle – and see the same phenomenon. As soon as the builders move in and the land becomes worth more, the structures are rapidly depreciated, discouraging any investment in that structure, and turning the entire neighborhood into nothing more than deteriorating Scrapers. I learned that term when I called Dallas Central Appraisal District and asked an appraiser why I was seeing such rapid depreciations in the Market Value histories. Scrapers was his term for what those homes have become.
When you’re over on Lake Circle, go down to the 6500 block and look at the Violation citations posted on the now overgrown scraped lots directly across the street from 3,500 & 4,500 sq. ft. homes. Some of these lots are still owned by builders who apparently can’t afford to keep them mowed. Some are now owned by banks. You can look that up at dallascad.org, too.
When the builders move in, the spirit of neighborhood goes out the window. The streets becomes nothing more than a money trench to be mined for profit. Regardless of the best intentions of the people speculating on teardowns, the bottom line is always money, and if the economy goes south, it is the residents, not the builders, who are left looking at the overgrown, vacant lots, all scraped with the best intentions.
What happens in a teardown neighborhood is that the neighbors who have spent time and effort to make their homes attractive and modern and well maintained are the first to be penalized, because their homes cost too much to attract the builders who specialize in teardowns. Those builders are business people, and they pay as little as possible for their lots. So, the neighbors who have improved their homes are the ones left to deal with the dirt and dust and trucks and racket and lunch trucks blaring their horns and everything that comes along with living in a teardown neighborhood. And as an added bonus, they get to watch the value of their structures plummet over a two or three year period, until no matter the condition of their structure – which I like to call My Home – all it’s worth is the dirt that it sits on.
They are cherry picking information to make it appear that they have “facts” and “experts” on their side of the argument. They state a simple fact; all structures begin to depreciate the moment after they’re built, but it’s not too soon, as their “experts” claim, to draw conclusions about structure depreciation in a pre-teardown and post-teardown neighborhood.
We have a perfect example in Santa Barbara, less than 0.5 miles from the border of our neighborhood. Look at the Market Value graph for 4020 Santa Barbara:
Notice how as recently as 2006, their structure was worth $124,000 and their lot was worth $30,000. Today, that structure is worth $21,470. This structure is listed as in Fair condition, as it was in 2006 when it was worth $124,000. The only thing that’s changed is that the builders moved in, started buying up houses, scraping them and building 4,500 sq. ft. houses (on average).
Now look at the house of one of the folks who sent you the latest AGAINST flyer, It's Jack Ormberget's house at 7309 Bennington:
In 2006 the structure was worth $127,840 and the lot was worth $50,000. Today, as Ms. Tama Cole predicted, the structure is worth less; $120,760. But that is far more than any of the older structures on Santa Barbara. Yet Jack's house is nearly the same as 4020 Santa Barbara, slightly larger, but listed in the same Fair condition.
What has protected the value of his structure? Our neighborhood is not yet the target of teardown speculators. You can look at any street or neighborhood that’s gone through what Santa Barbara has – a little farther away, look at Vanderbilt, or Sondra, or Lake Circle – and see the same phenomenon. As soon as the builders move in and the land becomes worth more, the structures are rapidly depreciated, discouraging any investment in that structure, and turning the entire neighborhood into nothing more than deteriorating Scrapers. I learned that term when I called Dallas Central Appraisal District and asked an appraiser why I was seeing such rapid depreciations in the Market Value histories. Scrapers was his term for what those homes have become.
When you’re over on Lake Circle, go down to the 6500 block and look at the Violation citations posted on the now overgrown scraped lots directly across the street from 3,500 & 4,500 sq. ft. homes. Some of these lots are still owned by builders who apparently can’t afford to keep them mowed. Some are now owned by banks. You can look that up at dallascad.org, too.
When the builders move in, the spirit of neighborhood goes out the window. The streets becomes nothing more than a money trench to be mined for profit. Regardless of the best intentions of the people speculating on teardowns, the bottom line is always money, and if the economy goes south, it is the residents, not the builders, who are left looking at the overgrown, vacant lots, all scraped with the best intentions.
What happens in a teardown neighborhood is that the neighbors who have spent time and effort to make their homes attractive and modern and well maintained are the first to be penalized, because their homes cost too much to attract the builders who specialize in teardowns. Those builders are business people, and they pay as little as possible for their lots. So, the neighbors who have improved their homes are the ones left to deal with the dirt and dust and trucks and racket and lunch trucks blaring their horns and everything that comes along with living in a teardown neighborhood. And as an added bonus, they get to watch the value of their structures plummet over a two or three year period, until no matter the condition of their structure – which I like to call My Home – all it’s worth is the dirt that it sits on.
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