I'm going to ask you for a very big favor. A really big one. I know I'm asking a lot, but I'm asking you to think all by yourself. No influence from your beer drinking buddies, or your friends from Yoga class. I want you to abandon "group think." I want you to forget about Chicken Little and her falling sky. I want you to forget about Crying Wolf too many times. I want you to forget about mass hysteria. I want you to think for yourself. That is hard, because human beings find comfort in herd instinct. Before humans learned to pick up clubs and band together, we were prey animals. I understand all that, but I'm going to ask you to think for yourself. That's a very big request. It's rarely seen around these parts.
I want to talk about apartments. Now, that should set off rockets and bombs. Of course, everybody knows that apartments will cause the downfall of western civilization, right? Well, they won't. In fact, they are a much needed human invention.
But, now that you've decided to think for yourself, and are no longer influenced by senseless blather, lets review some facts.......not hysterical coffee clatch BS, but facts.
August 13, 2013
80 Percent of Americans Prefer Single-Family Homeownership By Charlotte O'Malley: "Detached, single-family homes are the end goal for the majority of Americans. While 80 percent of the population would prefer to live in a single-family home, seven in ten Americans (70 percent) actually do. Apartment and condo living is only preferred by 8 percent of the population, yet two in 10 Americans (17 percent) live in an apartment or condo."
Let's use 20% as a standard percentage of persons living in multi-family units.
Let's play some more.
Large Cities: Population, Housing, an
Please note the percentages in Dallas and Houston. Up until a couple of years ago, Rowlett's percentage was nearly zero. There were not many apartments anywhere. Dallas and Houston are major metropolitan areas. It is to be expected that the population will be younger and more mobile. The rental population should be higher. Rowlett is a suburb. It is reasonable to assume that Rowlett's rental population should be lower, but still tied to, and influenced by, a major metropolitan area. Wills Point is rural and probably has very little, if any apartments. The national average includes all these rural towns.
Now here is an interesting set of facts:
Though millennials often get a bad rap for clinging to rental housing and stubbornly refusing to jump into homeownership, a study released Wednesday by Harvard University's Joint Center for Housing Studies suggests more than half of renters are actually in their 40s or older.
The study – which extensively details the rental and homeownership trends that have played out in America over more than a decade – challenges the notion that young people are mostly to blame for staggeringly high rental occupancy and historically low homeownership rates across the country. It also casts doubt on whether the housing market has truly recovered from its collapse in the mid-2000s, with so many atypical renters staying away from traditional homeownership.
"In mid-2015, 43 million families and individuals lived in rental housing, up nearly 9 million from 2005 – the largest gain in any 10-year period on record," the report said. "While households in their 20s make up the single largest share [of renters], households aged 40 and over now account for a majority of all renters."
Those younger than 30 account for nearly 26 percent of America's rental market, according to the study. That's far larger than any other age demographic's share. But the number of households rented to people younger than 30 has only expanded by about 1 million units over the last 10 years.
For comparison's sake, the number of units rented to people in their 50s ballooned by more than 2.3 million over the same window, while those occupied by people in their 60s climbed by more than 2 million. Those older than 50 years old accounted for 55 percent of the growth in America's rental population between 2005 and 2015, compared with those under 30, who accounted for just 11 percent of the gains.
I would say it was reasonable to assume that senior citizens are increasingly seeking and finding apartment living perfectly acceptable. You wanna know what their rub is? You don't even have to be too bright to figure it out. Many, if not most, seniors are having their older years less comfortable than advertised by increasing home ownership costs that far exceed their wildest expectations. Even if their house is paid off, the wildly escalating taxes, utilities, insurance, and maintenance costs are possibly keeping food off their tables and visits to grandkids are less often than desired. They are prisoners in their own house.
You think the young families have it better? Think again. A fresh family just out of college trying to put a life together can't afford home ownership, either. Their combined income allows a pretty good lifestyle, but not good enough to qualify for a loan for an average house in Rowlett. The median income for a Rowlett family is a pretty good at $83K plus a year. An average house in Rowlett costs about $250K, if not more. Our average family can not qualify for a loan to buy our average house. They're about $40K a year short on income.
As recently as today, Steve Brown, of DMN, reports that pre-owned home prices have escalated 50% over the past five years. Has your salary increased anywhere close to that amount? What about Social Security payments? Today's DMN reports that the average pre-owned house price is now $255K in the Dallas area. The average new home price is now $315K. The household income would have to be around $160K a year to buy a new house.
Now, of course, we all know that the children of Seniors and young families below 30 (there are so many of them) create havoc in the neighborhoods. They skin deer in the parking lots. They throw trash everywhere. They burglarize nearby homes. They paint graffiti on everything that doesn't move. Of course, all this depresses home values in the neighborhood, right? Of course, that's all unmitigated crap.
I have been in the real estate finance business for 50 years. I have read hundreds of appraisals. I have yet to read that first appraisal whereby a nearby apartment project has depressed the value of a house. However, I have read appraisals whereby the neighborhood in which the apartment project is located was so bad that it created "economic depreciation." That's appraisal PC speak for a crappy neighborhood. Folks, "junky apartments" are located in "junky neighborhoods." Local authorities will not tolerate mismanagement of sites in well maintained residential areas. There are many ways the local authorities can create huge problems for an ill managed apartment project.........enough that the bad tenants are evicted, or the project is shut down. "Shut down" means foreclosure and new owners and management. Developers know this. Rowlett is a good town. We have authorities that will not tolerate such behavior.
Just to compound problems to your thinking, a couple of weeks ago, Steve Brown, Real Estate Editor for the Dallas Morning News wrote an interesting article. It appears there are a whole bunch of people making a whole bunch of money that doesn't give a flip about owning a house. Many of them want to live in nice apartments, and they make far more money than the people living in houses all around them. They look down at me, and my paid off house, and my housing costs, and my housing pains in the butt. Boy, are they stupid.
Now, let's talk about Rowlett. Twenty years ago, or so, some apartments were built on Lakeshore Pky. Since then, not much has happened. However, starting about five years ago, the North Texas economy took off like a rocket. Everywhere, including Rowlett, was trying to house the newcomers coming to town with their new jobs. Coming off the recession, when nothing was built anyway, was the added problem of no inventory. Texas had done a good job of scaling back. Contrary to cities like L.A., Phoenix, Las Vegas, and various Florida cities, Texas had no inventory. Prices of land, labor, material, and houses started going up. Taxes were going up. Utilities were going up. Insurance was going up. Seniors and young families were watching their good housing opportunities slip away.
The new apartments that are proposed for Rowlett are satisfying the needs of upper wage earners, but the needs seniors and young workforce families are not.
The lowest cost two bedroom two bath apartment in the new apartment units being built on Scenic Drive, rent for $1750 per month. Try doing that on a young fireman's salary. That rent is higher than the monthly payments on most of the houses within a three block radius of the apartments. Other new one bedroom, one bath, apartment units in Rowlett are going $1200-$1300 per month. That market exists in Rowlett. Do you think apartment developers build these new projects because no one exists that can afford them? There are 30,000-40,000 new high paying jobs being created just 15-20 minutes up the turnpike from Rowlett. If you are against these high cost apartments, you are against bringing these highly paid people, and their disposable incomes, to Rowlett. That ain't too bright. Some fit into Steve Brown's group of very highly paid people. Some people just don't want to paint a picket fence every year.
As I've written and said before, "One size doesn't fit all." Building apartments for upper income tenants with good jobs doesn't do a whit for seniors and workforce populations. Unless you're deaf, dumb, and blind, you should be able to see that the seniors and workforce people can't afford the apartments being built in Rowlett. However, the hue and cry goes out: "The sky is falling!" "The wolf is coming!" "Real estate values are falling!" "Criminals are moving to town!"
Then, a quiet voice asks, "What about the Seniors?" And the responses are, "wha?...where?....when?....I don't know anything about that." Absolutely brilliant.
There are all kinds of apartments, each catering to a particular market. However, more than apartments are needed. Affordable homes are needed. How do you make land cheaper? How do you pay less for 2x4's and bricks? Do you want to cut the electrician's pay? Only innovative financing can help this problem. We're only beginning to explore this.
In about 2009, a prominent consulting firm by the name of Robert Charles Lessor Company conducted some Research for the City of Rowlett. I know this company because I used to use them when I was a loan officer for GE. I trust them. I learned of the existence of this study by accident in 2013. It was in one of our previous city manager's files. I practically had to wrestle the CM to the ground and pin her shoulders to make her let me see the file. She finally relented. After cutting thru all the rhetoric, the report finally said that Rowlett was really bad at taking care of their seniors and young people. Rowlett 2020 said the same thing. Here we are in 2017 and we still aren't.
Now we're in a position to help seniors and workforce, but the naysayers, "group think" experts, and proponents of mass hysteria, have been let out of the gate. They're roaming free. If you refuse to think, they will harm Rowlett by preventing very valuable residents a place to live. To deny these future residents is the logic of egotistical, self centered, pompous, dumb asses.
Hain't we got all the fools in town on our side? And ain't that a big enough majority in any town?
- The Adventures of Huckleberry Finn
I think Rowlett is in the neighborhood of, say, 3500 units that will make it........still far short of typical. However, it is time to make room for seniors and workforce populations. We need them to make Rowlett a whole village. I want to see seniors and young people on the streets.
I know I asked a lot of you. It's hard to think.......at least for me. I work at it. If you don't trust me, look to good ole Mark Twain for advice.