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View Diary: Dear New Orleans, Here is how to recover from destruction. Love, San Francsico (59 comments)

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  •  i would need to see you local assessments (0+ / 0-)

    to be sure but i would heavily suspect it is because because of poor and inefficient use of land in said city. Possibly tax abatements might be a cause as well... in New York certain types of housing gain X year tax abatements.

    •  The reason we have inner city McM's is this (0+ / 0-)

      your improvements wont raise your taxes because the tax is based on the location not the structure sitting upon it.

      Property tax here is largely based on the value of the structure, not the value of the land.

      1554 Sq Ft house, valued at 284K, taxes 7K
      Similar house across the street torn down and replaced by:
      3470 Sq Ft house, valued at 511K, taxes 15K

      Regardless, your observation that this is a "suburban" creature is in error. McMansions are impacting numerous inner/near inner neighborhoods all over the country.

      Practice absurdus interruptus - Support ePluribus Media.

      by Catte Nappe on Mon Jun 26, 2006 at 10:47:12 AM PDT

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      •  well you have described the problem (0+ / 0-)

        since the taxes sit largely on structure.

        see comments below regarding Sydney.

      •  McMansions... (0+ / 0-)

        require a lot of land to sit under them also, remember and around them. Do you see many of those without huge sprawling yards, cul-de-sacs and so on? Probably not.

        Two, sprawl happens because we subsidize sprawl through our building massive highways at the expense of the inner city. The wealth from the inner-city is drained to the outerlieing area without ever taxing the sudden windfall gain that the govenrment bestowed on those near the highway. See the Denny Hastert scandel for an example or go to my blog to read up on it if you haven't seen it.

        Three, speculators within the city buy up land and withhold it from use preventing any development. They are awaiting a similar windfall, like a large stadium to be built or something else.

        Fourth, I'm not sure I understand you example in the above, it seems as though you are contradicting yourself to me, but maybe I am not reading it as you intended.

        •  Yes, bunches (0+ / 0-)

          Do you see many of those without huge sprawling yards

          I hope to cover all four of your points here.

          Speculative developers have taken to buying up homes in older, but still well-maintained, neighborhoods. They then tear down the previous structure and build a McMansion on the property. Yes, it uses up much of the land under it, so there is no sprawling yard. Some have almost no "yard" at all; although there is often a bit of "front" left in order to pave a circle driveway. They loom over the yards of their neighbors, cause run-off onto neighbor property, and other unpleasant effects. My example above is of two properties immediately across the street from one another. Originally pretty much identical in lot size and original home structure. One remains the same single story dwelling around 1500 sq.ft. The new McMansion is two story and totals 3470 sq.ft. It has an "interesting" effect on the character of the neighborhood when you have a mix like this.

          Practice absurdus interruptus - Support ePluribus Media.

          by Catte Nappe on Mon Jun 26, 2006 at 11:30:31 AM PDT

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          •  question (0+ / 0-)

            because I don't know and don't want to presume anything...

            Do you consider:

            It has an "interesting" effect on the character of the neighborhood when you have a mix like this.

            a good thing or a bad thing for the neighborhood?

            You know the this place, not me after all ;)

            •  A matter of persepctive I suppose (0+ / 0-)

              "Interesting" was placed in quotes, because from my perspective (living in one of those smaller single story homes) I am not excited to see the McMansions going up in the area. Not a good thing for my neighborhood - ambience, character, home value, water run-oof effects, etc.

              On the other hand, I suppose if I had dreams of owning a 500-600K McMansion with no yard, near downtown, I would be watching the area with a different level of interest in hopes that many of more McMansions would come into being so I could have one of my very own.

              Practice absurdus interruptus - Support ePluribus Media.

              by Catte Nappe on Mon Jun 26, 2006 at 11:41:16 AM PDT

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              •  I think you just hit the nail... (1+ / 0-)
                Recommended by:
                stillman

                ... on the head.

                As time goes by, in your neighborhood for whatever reason. Maybe a new road went in, maybe your area has become "trendy", maybe it has become known as being a safe area to live, etc. more and more speculators will look with eyes of wolf on the hunt towards the property going for sale. Some of those homes will get knocked down and cookie cutter homes will go up in their place. The point that you can observe this right now is critical and frankly, most people don't actually see it happening until they can no longer afford their homes.

                Now, maybe this one home is just a fluke and, frankly, we are never going to stop they guy down the road from painting his house hotpink if he wants to (i actually had a neighbor who did that as revenge towards another neighbor. heh) Anyway.

                the way the system is set up now, it actually favors those who have a lot of money regardless who values the lot the most.

                here is an example, very easy to follow.

                Lets say there are two people, rich and Jamie. Jamie is poor, rich is rolling in it. Jamie really values this particular lot and needs a loan. Rich also values this lot, but not as much as jamie, and he also needs a loan.

                Rich believes he can get an income of 300 dollars from this lot. Jamie is poor but is really productive and believes he can get an income of 600 dollars because he has a great business idea. Who will the land go to? Let's see.

                Rich:

                Rent(R) = 300
                Interest (i) = .05

                Value (V) = 6000

                Jamie

                Rent(R) = 600
                Interest (i) = .20

                Value (V) = 3000

                jamie looses, the speculator gets the land. Too bad, so sad. No jobs created.

                But, lets see what happens when we tax land.

                If we tax the rental value of land, then the rental value is R- T and so V = R-T / i

                Lets start with a tax of 100 dollars on the rent.

                Rich

                Rent(R) = 300 -100 = 200
                Interest (i) = .05

                Value (V) = 4000

                jamie

                Rent(R) = 600 – 100 = 500
                Interest (i) = .20

                Value (V) = 2500

                Now with a 200 dollar tax

                rich

                Rent(R) = 300 -200 = 100
                Interest (i) = .05

                Value (V) = 2000

                jamie

                Rent(R) = 600 – 200 = 400
                Interest (i) = .20

                Value (V) = 2000

                So, any tax > then 200 in this scenario will cause the land to go to the most productive user of the land. Interesting, no? Now, in real life there are many bidders. Sometimes the most productive person is the wealthiest person. Sometimes, however, the most productive person is least well off and sometimes it's the family in the little neighborhood who doesn't like salt run off.

                •  Not a fluke (0+ / 0-)

                  It is not just one home. I just did a typical pairing for an example. Depending on the street or general neighborhood it is somewhere between 5%-40% of homes.

                  As to the most "productive", that has to be our version of Rich. Whether or not good ole Rich makes a profit on building and selling his McMansion (we presume he does, or he wouldn't keep buying/demolishing/building), the city and county are quite happy to have the taxes jump from 7K to 15K.

                  Practice absurdus interruptus - Support ePluribus Media.

                  by Catte Nappe on Mon Jun 26, 2006 at 12:21:26 PM PDT

                  [ Parent ]

                  •  Not rich (0+ / 0-)

                    As to the most "productive", that has to be our version of Rich.

                    Take a look at those houses again, and tell me, after adding up all those costs, do you think they are more "productive" then anyone else? By what you have told me, I sincerely doubt it. Frankly, they sound fairly waistful to me.

                    the city and county are quite happy to have the taxes jump from 7K to 15K.

                    ahh, and here you have found another truth.

                    if only land was taxed and not buildings, would the city and county have an incentive to propel this sort of sprawl? You can complain all you won't vote for them now, but they don't care, because others will move in who will vote for them.

                    The fact is, a land tax would keep out those speculators and would keep it in the hands of people who deserve it.

        •  McMansions don't necessarily require large lots (0+ / 0-)

          Where I live, an hour from NYC, I've seen older homes on 2-acre lots torn down and replaced with, in one case 4 large boxy colonials, facing each other in pairs, and, in the other case, 12 new homes tucked onto a cul de sac, the last of which is on the market for $1.2 million.  If I recall correctly, the old house on 2 or so acres sold for about $600, and the site required a lot of blasting.  The resulting houses are rather attractive, and most have sold quickly, though I couldn't imagine paying that much for them.  

      •  Value the land first (1+ / 0-)
        Recommended by:
        Catte Nappe

        Land is often a lot more valuable than assessments would suggest.  Investors would prefer that most of the value appear to be in the building, because they can depreciate the building, but they can't depreciate the land.  So assessors tend to oblige them, and value the land low and the building high.

        When there are teardowns in the neighborhood (not in New Orleans situation, but in a more normal state of affairs), it is an indication that the sites are very valuable and the older houses are becoming obsolete, at least in the minds of some buyers.  

        When builders can't find virgin land to build on, they start looking for other sites on which to build, and look for the best location with the least valuable structure on it.  While this is not precisely true, one way to look at a teardown is that the old house was valued at $0 and the entire purchase price was for the site.  In addition to that, the buyer pays for the demolition and removal, and it would be fair to say, after, say three or four of these in a neighborhood, that the value of a building site there is the average of the sum of those purchases plus some allowance for demolition and removal.  

        The value of the other houses in the neighborhood is the difference between what they would sell for and the value of the land itself.  Where I live, raised ranches and split levels seem to be the prime tear-down candidates.  I don't know whether they weren't well built in the first place, or have simply fallen out of fashion, or whether builders will just buy whatever sites they can get.

        •  Good overview (0+ / 0-)

          And as you will recognize, it is not pelasant to be in a neighborhood where your perfectly nice, but no longer "fashionable" house, is now de facto valued at $0.

          It is all the more distressing that this sort of neighborhood adjustment is happening at the same time as we get a report of serious reduction in middle class neighborhoods, global warming impacts, etc.

          Practice absurdus interruptus - Support ePluribus Media.

          by Catte Nappe on Mon Jun 26, 2006 at 11:35:55 AM PDT

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          •  Change can be upsetting (1+ / 0-)
            Recommended by:
            stillman

            I've lived in my present town for over 30 years, and have watched the changes that have taken place here.  Neighborhoods near downtown that contained older single family homes that still looked quite fine to me gradually became multi-family housing and/or office building neighborhoods.  I still miss some of the old houses.  

            A column in the local paper, written by an elderly gent who grew up here goes back many more years than I can describing what neighborhoods were like in his childhood.

            Where I live, there is one-acre zoning, and wells and septic systems, and the local property owners association is trying to get laws written that will prevent sewers and city water from ever being extended into this area.  I find that ridiculous.  If the residents of our area fifty years ago had tied the hands of the future the way these people want to, most of them wouldn't have a place to live here now.  And besides, most of them won't be here 50 years from now.  We're all just passing through. Neighborhoods change.  More people want to live close to the center of things, and farmland gives way to single-family residential, which may give way to smaller lots and then to multifamily residential and to commercial uses of various kinds.

            We should encourage those incentives which prevent checkerboarding and leapfrogging, and promote more density where infrastructure already exists.  Many neighborhoods that consisted of single-family homes when I came here now are dense with condos and townhouses, which house many more people than lived there formerly.  Is this tough on folks who come back to visit, in search of the place of their childhoods?  Yes, most likely.  But many more peoples' needs for an affordable place to live are being met, and many more people are avoiding long commutes, and those strike me as good things.   The land is being used more intensively to serve human needs.

            •  Density (0+ / 0-)

              Density is a goal our city is supposed to be pursuing. Of course, there is no increase in population density when you are replacing single family homes of 1550 sq ft with other single family homes of 3470 sq ft. And it is not expanding the housing options for more people to have affordable places to live when the single family homes of 284K are replaced by single family homes of 511K.

              I will admit to being and old fud who doesn't like this particular change. Not because I miss the haunts of my childhood, but because my single most valuable asset is at risk of losing substanital value. And a move to an equivalent home elsewhere would mean moving from near downtown and a 10 mile commute to work to some suburb with a 30+ mile commute to work. Except, there isn't an equivalent home elsewhere because of the custom improvments we have made over the years, and those would be lost as well.

              Practice absurdus interruptus - Support ePluribus Media.

              by Catte Nappe on Mon Jun 26, 2006 at 12:29:27 PM PDT

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