Matrix Blog

Development, Construction, Architecture & Land

Selling That House With Feng Shui Is No Yin Yang

December 13, 2005 | 12:01 am |

“Donald Trump is using it. Virgin Airlines, the Bank of England and the United Nations have embraced it. Even the hit TV series, Big Brother, employed ideas borrowed from this ancient art. But what, exactly, is Feng Shui?”

“Feng Shui is the art of placement and design and helps to create and organize our environments in such a way to bring about a more harmonious lifestyle by making minor adjustments that enhance the flow of ‘chi’ or energy.”

More and more, the brokerage community is embracing this [NY Mag] as another way to sell a home.

Here Are Some Feng Shui Real Estate Considerations

  • What makes one house or office better to live or work in than another?
  • What makes a property sell for the right price and terms?
  • How to determine if the entrance to your home or business will give you the maximum amount of good energy?
  • Knowing how environmental considerations, such as traffic direction, street location, nearby buildings and other influences can either aid or be detrimental to your location.
  • Knowing ways to determine if a new home or office under construction is right for you.
  • Knowing ways to arrange your environment to achieve your goals and heartfelt desires while maintaining environmental balance and harmony.

I would imagine that the use of this technique and others [Matrix] would gain in popularity during weaker real estate cycles.

The concept does not click with me – I must be too jaded – and I have problems with its adoptation for commercial gain. Given how much literature there is on the topic, it doesn’t seem to be a passing fad either.

Wait a second while I turn my desk to towards the sun…

UCLA Anderson Forecast: Boom Isn’t Over But Housing Industry Has Weaknesses

December 8, 2005 | 12:01 am | |

The UCLA Anderson Forecast was released today [USAToday]. “The widely respected forecasting center at UCLA said rising interest rates, slowing population growth, overbuilding and the fact that prices had reached bubble-like heights in some hot areas will drive the decline. Housing, which had been a big driver of growth, is contributing little to the economic expansion at present, the forecast said.”

“A year ago, UCLA’s respected Anderson Forecast declared the housing market a bubble and identified the prospect of a sharp housing-market downturn as the biggest risk to the U.S. economy….says the boom isn’t even over [WSJ].

The UCLA Anderson Forecast correctly predicted the 2001 recession.

The pushed back their original prediction that the US housing industry would experience a slow down beginning in mid-2005. They changed their estimate to early 2006.

The slowdown is likely to last several years, with as many as 500,000 construction jobs and 300,000 financial sector positions lost [AP].

The forecast said eight of the last 10 economic recessions were started by housing market slowdowns. Though the coming cooldown will cause a drag on the nation’s economy, it will fall short of triggering a recession, the forecast said.

“The report cited several signs that the decline could be under way:

  • New construction of housing in October was down 5.6 percent from the previous month, with new construction of single-family housing accounting for a 3.7 percent dip.

  • New home sales have declined.

  • Applications for home mortgages have trended downward since late September as rates increased.

  • In some regions, homes are remaining unsold longer and the pace of housing construction is outpacing population growth, which could spell a decline in demand.”

This is consistent with I think most people’s expectations. The volume of new development has been growing over the past several years and has finally hit a saturation point.

Alternative Housing: Barely Containing Ourselves

December 1, 2005 | 9:44 am |
Source: NYT

In our obsession with housing, an approach to design as discussed in the article Heavy Metal Jacket With a Luxe Lining [NYT] comes in the form of a shipping container with walls that unfold.

His is not a new idea, but he pushes it to the extreme.

“Adam Kalkin, an architect and artist who is unveiling his Push Button House, a shipping container with motorized walls that unfold like an elaborate Murphy bed to reveal an unexpectedly muted interior with the refined furnishings one might find in a Park Avenue apartment of patrician taste, complete with a couch from George Smith and a lacquer chandelier.

“It works like a flower – you push a button and the thing transforms itself,” Mr. Kalkin said last week as he puttered in the 8,000-square-foot factory he rents in Kenvil, N.J., while welders and electricians finished up the Push Button House before loading it onto a flatbed truck for the trip to Miami. “All the finishes inside are milky and human and delicate,” he added, “all trapped inside this heavy mechanical box.”

There is a whole cottage industry for this type of housing. Here are some other designs:

Jennifer Siegal [NPR]
Container City
Treehugger Blog

A tongue-in-cheek comment posted on Treehugger:

Fabulous idea but what happens when you wake up to find you and your bedroom in Singapore?

Heavy Metal Jacket With a Luxe Lining [NYT]

Front Yard Politics: Grass Losing Ground To Pavement

November 30, 2005 | 12:01 am | |
Source: NYT

In today’s article For Some, Grass Is Greener Where There Isn’t Any [NYT] the author covers the odd phenomenon of paving over front yards. This has taken on a political undertone in Kickin’ Asphalt: Pols Attack Front Yard Driveways [Queens Ledger]

“While there are no official city figures on pave-overs, it is clear that the fight is still being waged in the other boroughs and in some suburbs, where signs of creeping urbanism threaten the leafy suburban aesthetic…New York City has no rules prohibiting property owners from paving over their lawns, but Tony Avella, a city councilman from Queens, hopes to change that…Paving over has become so commonplace that it is spurring differences between neighbors and debates within households about whether to dispense with the lawn.”

Source: NYT

Apparently the same issue is a recent major concern in Dallas where a 50% coverage limit is being proposed: Council reviews ordinance to limit pavement in yards [Dallas News]

Some quick research yielded lots of pavement ordinances, but I lost interest after 2:

Garden Grove, CA

Garland Grove TX

Development Is Goin’ Down…town

November 29, 2005 | 12:01 am |

Eugene L. Birch of the Brookings Institution just completed an analysis of population, household and income trends in downtown areas from 1970 to 2000 called Who Lives Downtown

Download full the report [pdf]

The study was based on 44 different cities whose results vary widely but show these trends:

  • During the 1990s, downtown population grew by 10 percent, a marked resurgence following 20 years of overall decline.

  • From 1970 to 2000, the number of downtown households increased 8 percent—13 percent in the 1990s alone—and their composition shifted.

  • Downtown homeownership rates more than doubled during the thirty-year period, reaching 22 percent by 2000.

  • Downtowns are more racially and ethnically diverse than 20 years ago.

  • In general, downtowns boast a higher percentage of both young adults and college-educated residents than the nation’s cities and suburbs.

  • Downtowns are home to some of the most and least affluent households of their cities and regions.

The results, if based on the past five years would likely show a more pronounced shift toward urban revitalization.

Should We Stay Or Should We Go (To The Suburbs)? [Matrix]
Urban Beats Suburban [Matrix]

Like Its Name Implies, Cond-ops Have Two Meanings

November 28, 2005 | 12:03 am | |

There is an excellent article on How Condops Differ From Condops [NYT] that discusses the two uses of the word and why they are different. I don’t know if this form of ownership exists in other parts of the country outside of New York, but if it does, I suspect its rare.

The Legal Entity
In the 1980’s, the housing boom created a hybrid form of ownership called the “cond-op.” This form allowed the developer (sponsor) to retain control of the commercial or retail space, usually at grade and/or keep the building from violating its 80/20 if the commercial units were throwing off too much income. [80/20 law allows co-ops their tax deductions like real estate has] It works like this. The co-op entity would be enveloped within one of the condo units (legally). If there were two ground floor commercial units, each unit would be designated as a condo unit. This way a 200 unit apartment building with 2 retail units could be converted to a 3 unit condo development. The co-op board would have no power over the retail units. To the buyer of a residential apartment, the co-op acts and functions as a co-op, because, well, it is one. The main difference being that it doesn’t have control over the retail units. We generally find no disparity or penalty in this configuration.

Flash forward to the current market.

The Marketed Entity
The term condo-op has morphed into something else. The limited availability of sites have stimulated developments built or converted on land that is leased. This form of ownership can not be condo because the land is not owned in fee simple. These new developments are legally developed as co-ops but have rules that are more flexible than typical co-ops and are often called cond-ops. Easier board approval, more flexibility in renting are among the inferences the term implies. In fact, new developments like Astor Place (445 Lafayette), actually use the term condo-op on the cover of their offering plan, when they are, in fact co-op apartments.

UPDATE: Changed Lexington to Lafayette above – sorry about that. 😉

Banks Made A Bunch, More Construction Lending, Homequity Loans Weakened

November 28, 2005 | 12:02 am |

The FDIC reported that [bank and thrift earnings set a record this quarter [FDIC]]((, above the prior record set in the first quarter. Other items of interest are:

  • Residential mortgage loan growth increased 3.6% over last quarter. (I’d consider this a solid increase.)

  • Growth in real estate construction was 7.2% and is accelerating. (This is reflective of the potential for an over supply of housing.)

  • Home equity loan growth increased by 0.8%, the smallest quarterly increase in 4 years. (This could be a clue to a weakening economy as homeowners cooled off their use of home equity accounts, which is largely credited with keeping the economy going.


That 80’s Show: Rentals Going Condo

November 11, 2005 | 10:48 pm |

With relatively stagnant rent rolls, many landlords are considering converting their rental projects to condo [REJ]

The author says:
“I know what you’re thinking: Condo conversions are so 1980s. But the boom is back, fueled by the torrid residential housing market. Low mortgage rates and creative financing have turned thousands of would-be renters into homeowners, and a growing number of building owners have decided to cash in on the trend by converting apartment units to condos. The boom started heating up in 2003 as the broader real-estate market experienced a home-buying frenzy.”

Condo conversions are the last to arrive for the party. Often they are competing with new developments built as condo. Rents may not support investor purchases or entice existing tenants to buy, even with an “insider discount” because landlords are bullish on the market.

Converted projects may be inferior in construction when compared to as built condos because they are often configured for tenant occupancy characterized by a lower grade of construction.

Some cities are restricting conversions because the supply of rental housing is evaporating. “In the face of a dwindling supply of rental units, the city [Las Vegas] will consider Wednesday temporarily banning the conversion of apartments to condominiums.” In fact, the amount of available rental housing has been cut in half in the past year. The moratorium on condo conversions would last 6 months [Knowlegeplex].

Condo Prices Rose, Demographically Speaking [Matrix]

Recycled Jet Lag: Convert A 747 To A Home

November 11, 2005 | 4:48 pm |

In southern California, an innovative homeowner and architect have combined to recycle an old Boeing-747 into a mountainside house [REJ] that was environmentally friendly. “Unusual homes are nothing new along the coast of Southern California, long a magnet for eccentrics and free spirits.”

The homeowner says:

“It’s 100% post-consumer waste,” she says. “Isn’t that the coolest?”

Development Trend That Commutes the Commute

November 3, 2005 | 10:18 am |

As part of the polarizing residential housing trend of re-invigorated urban centers and expanded commutes for lower cost properties [Matrix], mixed-use developments are springing up around the country near transit hubs [NYT].

There is emphasis on the pedestrian environment in this new form of development, which is relatively new to the process.

Of course, another reason for this sort of development is the lower acquisition cost of properties that sit on primary transit hubs. Similar to the use of land for properties not suitable for single family housing, being developed with condos and mult-family rental buildings, this represents a logical highest and best use of these locations.

Also of interest

Sprawling On The Couch Of Urban Living [Matrix]

Existing Home Sales See Huricane Related Surge

October 25, 2005 | 10:13 pm |

The NAR reported that existing home sales were unchanged for September [Marketwatch] at the annual seasonally adjusted rate of 7.28 million homes, the second highest in history. The hurricanes prompted a sharp increase in purchases outside the damaged regions which offset weaker sales levels in other regions.

The median sales price of a US existing home was $212,000, up 13.4% over the prior year. Inventory increased 0.3% to 2.85 million or a 4.7% supply. The NAR interprets inventory as still “relatively lean.” I am a big fan of the charts churned out by Calculated Risk, and once again they have created an excellent graphic – this time covering inventory.

So existing homes sales, which is about 10x the number of new housing starts and therefore more telling of the overall housing market condition, was at a record level but did not see gains. At the same time, rising inventory appears to be gaining momentum. This should temper price appreciation in the coming months.

Other Related
Existing Homes: Sales Strong, Inventories Rise Seasonally [Calculated Risk]
Sept existing home sales flat [Reuters]


Housing’s Booming Lack Of Volatility

October 25, 2005 | 8:15 am |

The housing market seems to be out of the controlling grasp of the Fed these days. In a Floyd Norris column this weekend “Unending Housing Boom Tosses Aside Rate Increases and the Old Rules” [NYT] he makes the following observations:

  • The current housing boom has survived 11 rate increases by the Fed
  • The Fed said housing was now cooling yet 183,000 housing starts occured in September
  • The current housing boom has fewer starts than the peak in 1972
  • The volume of housing starts does not have the same volatility as it did 20 years ago

Whats different now?

  • S&L’s used to have to stop lending when Fed rates went above levels banks could pay on savings
  • The Fed is now having trouble slowing the boom as creative financing keep payments affordable
  • Builders hear the Fed’s concerns over excess supply but their customers keep buying
  • The market has changed, 44% of housing starts were multi-families in 1972 and its now 17%
  • Single family development dominates residential construction

Also see The Unending Housing Boom [Big Picture]

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