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Stories below are reprinted from the April 23, 2014, issue of U.S. 1 Newspaper.

Wednesday, April 16, 2014

Cover Story: Land Values Rise, Small Houses Fall

by Michele Alperin

Looking at the issues raised by Edmund Keeley’s novel from a broader perspective, Jim Constantine, principal at Nassau Street-based Looney Ricks Kiss, professional planner, and Princeton resident, notes that a number of different dynamics are at play. “One is that existing property owners sometimes have lived in the community, reared a family, are members of civic organizations and houses of worship, and have done their banking in a community all their lives, and now have a chance to sell their greatest financial asset, their homes,” he says.


The market pressure is huge, he explains, because of the limited supply of lots in desirable neighborhoods to build new homes. “If people are trying to get lots in established neighborhoods where trees are mature and there is a little greater sense of character than living in some former cornfield, there aren’t many vacant sellable lots available,” says Constantine.

“This drives the price up to where the only thing that really makes economic sense is to rebuild at a much larger size,” he says. The replacement house must be substantially larger and more costly to cover the cost of the teardown; otherwise, the land value will be too high relative to that of the house. Historically, he explains, the value of the land was about 25 percent of house value, whereas today it is typically a third or higher.
“If the choice is to sell to a person who wants to live in the old house or to another who wants to live in a bigger house and will pay more, people will sell for a higher price,” says Constantine.

Whereas some people deliberately choose to live in a historical or previously owned house, others want to live in new construction. “Every vibrant, dynamic community needs to provide some supply of that,” he says.
A subset of buyers certainly find McMansions appealing. “I refer to them as king or queen of the block,” he says. “They exist in older neighborhoods, where they want the biggest house and are willing to pay a premium. If you apply the same homebuyer profile to new construction, you have the perfect match. They want it to be the obvious and perceptibly biggest home in the neighborhood.”

In some neighborhoods houses and lot patterns are visually diverse, and in those something new and larger might blend in more. Other neighborhoods, built primarily after World War II and after the advent of zoning, are incredibly uniform, subdivisions with a limited number of housing plans. “There any change that adds diversity is going to be that much more noticeable than in a neighborhood marked by diversity,” he says.

Constantine also addresses the issue of size and a changing esthetic. Before World War II, homes tended to sit on the property with a particular relationship to the street: facade and front door were visible, and a narrow driveway led to the back of the house. “They were often telescoped, with substantial mass placed behind the main facade,” says Keeley.

After the war, as automobiles became more important, often a two-car garage would be placed to the side, making homes wider. Today “sometimes there is a three-car garage up front, with less architectural attention paid, in some cases, to the facade,” he explains. “Parking becomes in some cases very prominent to the streetscape.”

At the same time, these contemporary design realities aren’t the only way to go, suggests Constantine.

“There are ways that larger mass can be constructed where it may be more visually compatible within established neighborhoods,” he says. They can bring back the telescoping that pushed the mass backward rather than paralleling the mass to the street and can do a better job of keeping parking discreet.

But some developers are paying more attention to the inside of a house, not the outside. “There is a shift in how see community, with more focus on interior space and how a house lives on the inside, and the relationship to the neighborhood is secondary,” he says.

Although the hands of local government may be somewhat tied by the economic forces at work, Constantine suggests some potential actions. One is to enact ordinances limiting how much of a lot’s width the main face of a new house can occupy and then create zoning rules to telescope mass back — “not necessarily limit size but shift its configuration so that it may be more compatible to view from the street,” says Constantine.

Another possibility is to control driveway exposure, for example, by limiting the number of bays of a garage that can face forward. Yet another is to limit the floor area ratio (FAR), the ratio of the building size to the property size, an approach that Princeton has tried.

To reduce local disapproval, developers might “step” a house’s facade, that is, put on one or both sides flanking wings that sit back about eight feet from the front, following a traditional Western architectural tradition. Gravel for driveways and a richness of landscape materials in the front of the house may also be helpful.

Noting that finding the right balance is a challenge, Constantine adds, “Even in a healthy community, some degree of regeneration occurs, where older, deteriorated housing stock comes down and is replaced by something modern and more livable.”

The bottom line, says Constantine, is that “you have blame that is misplaced to some degree on the new homeowner in the big house or on the builder, who are perceived as ruining the neighborhood when in reality you have a lifelong homeowner doing what he should do in terms of his fiduciary responsibility to his family.”

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