Since yesterday’s thread about the Austin Street project has been hijacked into a discussion about anonymous comments, I’ve decided to start a new one here, linked to today’s TAB story.
Let’s see if we can stick to the topic at hand.
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I’m surprised the height has only decreased by 6 feet. Hard to see that as a “substantial reduction” as per the TAB. (Fun exercise: if the Mayor put out a press release on his decision, how different would that read compared to the TAB article, excepting the final quote?)
Interesting that the Mayor’s focus on affordable housing didn’t prevent him from presumably being OK with floating a trial balloon on Friday for slightly less affordable housing, allowing the developer to squeeze out a little more profit.
This whole process has been abominable.
PS Got your email Greg.
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It is absurd that the parking lot was declared “surplus”. It is full every weekend!
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And those same spaces can be full after construction. Free Saturday parking and all.
I haven’t studied the new plan in any detail, but the 6 foot reduction might address one concern I had. The original plan had what looked like excessively high floors that made the building feel (even more) out of scale with its surroundings (independent of its overall height) Perhaps the prefab modules are only available at certain heights?
Cutting those few units and bringing some of the mass of the building down will help, too, but is it enough? I still dislike the plain facade and general look of the GreenStaxx modules. They might look okay on Needham Street, but not so much with the historic structures in Newtonville. (instead more of a nod to the modern but unsightly bank and market) Weren’t some more distinct architectural elements discussed, like a turret or clock tower? Maybe something that’s not a box?
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Hmm… I retract what I just said. So the proposal went from 4-5 stories to 3-4 stories, but only lost 6 feet of height? That would suggest that each story got bigger, not smaller? Why?
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A post submitted this morning to this thread was deleted because the email address was invalid. I encourage the author(s) to resubmit with a valid address.
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The proposed building is three and four stories and 48′ tall consisting of a 15′ tall retail story and three 11′ tall residential stories with 45% less retail space and 15% fewer apartment homes (68 rather than 80 previously.)
Previously, the prior building design was four and five stories and 54′ tall with a 21′ tall retail story which included a residential mezzanine over parking at grade with three 11′ tall residential stories above.
Reducing the amount of ground floor retail space allowed for full replacement of the existing 127 at grade parking spaces and a 6′ lower ceiling height for smaller boutique retail spaces.
The proposed building is three stories and 37′ feet along Bram Way.
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@Austin Street Partners,
I would very much appreciate it if you could enlighten me regarding your calculations from http://www.newtonma.gov/civicax/filebank/documents/64817
where you claim it is more economical for seniors to sell and then rent.
You have a breakdown of costs (below)
Costs Homeownership
Home Cost $33,276
Real Estate Taxes $9,969
Heating $2,400
Electric $1,200
Insurance $1,200
Landscaping / snow $1,200
Repairs / maintenance $4,275
Total Annual Cost $53,520
Monthly Cost $4,460
Costs Rent
Rent 38,400 ($3200 per month)
Real Estate Taxes $0
Heating $300
Electric $600
Insurance $600
Landscaping / snow $0
Repairs / maintenance $0
Total Annual Cost $39,900
Monthly Cost $3,325
How is it the Home Ownership cost is $33,276 a year? You indicate the mortgage is fully paid off.
Also, I was looking for information regarding the Green Staxx system. I couldn’t see any information about fire resistance, and any comparables regarding energy efficiency claims.
Thanks
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Folks, let’s get real. This project is just a start, a drop in the bucket. I’ve lived in Newtonville for more than thirty years and I can walk down my street and around the corner and find a dozen people in 1/2 hour who want the kind of housing we’re talking about here. I’m tired of the bombastic idiots here who talk about density, and traffic, and all the rest. My kids went to Newton schools, graduated from NNHS in the mid 1990s and haven’t lived here since because they can’t afford to buy anything here, but I’ve been paying the bloody taxes ever since and glad to do it. Why? It’s called a community. Dumb, old fashioned idea, but that’s what makes this place work. All the naysayers, Paul, Simon, Mike Striar, Joshua Norman, Mr Bozo, Professor Wagstaff, whomever, are all totally entitled to their opinion. But get off my case, because I’ve paid my dues as much as anyone else, and I’ve had enough of this horsepuckey.
Let’s just take one small example. “Traffic and parking.” If I drive or walk (both of which I do often, although since the riverwalk was completed a few years ago I really enjoy going down one side of the Charles to Watertown dam and then back up the other side, stopping in at Russon’s for a couple of biscotti) down California St towards Watertown Sq at almost any time of day, but most painfully at morning or afternoon ruch hour (pick a time – 7:30 am, 5:30 pm whatever) the intersection at Bridge St and California and Chapel St is completely, horribly choked. Try Walnut St heading in to Newtonville, or Califonia St through Nonantum at similar times of the day. I do it several times a week, usually more. See, I’m an old retired guy and it seems like I’m picking up prescriptions at CVS almost every damn day. You know what? I have never had a problem finding a parking space within 100 ft of CVS in Newtonville, and I care about the distance because of arthritis. But the traffic is backed up on Walnut St something ridiculous.
This is called arterial congestion versus short trip or errand traffic. Think about it. There is not a ‘parking’ problem in Newtonville that will be impacted one way or the other by what happens at the Austin St site. It’s total bs.
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@HL,
I couldn’t help but notice you appear to have contradicted yourself. You like going for walks along the river, but when you are off to CVS parking distance is important due to arthritis?
I must admit I am coming around to Mike Striars concerns …
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Simon, how old are you? You seem to lack empathy for how older folks and people with mobility impairments have to live. The best thing for arthritis is to stay mobile and keep walking, and going to CVS for some pain relief makes perfect sense to me.
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Simon – We rented in an apartment for a year and expected it to be more expensive than owning a mortgage free home, but were amazed at how much cheaper it was to rent. It’s expensive to buy a home, but it’s also expensive to maintain one. Think of the major essential expenses that hit any home owner over the years and amortize them over time: a new roof, new heating system, replacing a water heater, painting the exterior of the house, replacing gutters, repairing a chimney, repairing unsafe steps, replacing broken appliances, repairing damage from ice dams, unclogging drains, dealing with water in the basement, broken windows and the list goes on.
We’ve done all of the above, some several times over. This list doesn’t include any upgrades – they are all basic maintenance items and need to be included on a list of expenses of home ownership.
As an aside, I have arthritis, and walking and movement in general are an excellent source of relief.
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@Ted,
If you read what HL said, you will notice he does indeed like going for walks. So I couldn’t see why it would be necessary to be able to park within 100 ft. of CVS. As for my age, I would say middle!
@Jane,
I agree with all you say. I would imagine for the vast majority of us buying a home is a huge investment, primarily financially but also time. But if you have lived in a house for 30 years (as per Austin St) some of those do not apply, but like you say maintenance is a big thing. The numbers Austin St have used however, appear to be incorrect. I am hoping they will clarify.
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@Simon – As someone with arthritis, among other things, let me assure you that I can go for walks a couple of times/week but when I’m going to the store for pain relief it’s important to be close if it’s a day my pain is bad. Arthritis and other chronic conditions tend to wax and wane. There are good days and bad days – heck, there are good hours and bad hours.
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All,
I mean no disrespect. I have no major ailments, but I do have kids. If they need medications or discover we’re out of milk! I hop in the car and park in the Walgreens packing lot.!
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Hi @Simon … thanks for your question and for taking the time to read our presentation.
Understanding the numbers requires a bit of explanation so please bear with us.
We had been asked if Newton empty nesters can afford to live in Austin Street apartment homes so we looked at the “average” empty nester.
Of course everyone is different but for our example we assumed a fictious empty nester couple bought a median priced home 30 years ago in 1985 and wanted to move into a new two-bedroom apartment home in 2015.
We checked and found that the median priced Newton home purchased in 1985 for $332,500 was worth $885,000 last year.
Since most mortgages are 30 years, we assumed that the empty nesters had paid off their mortgage and owned ther home free and clear after 30 years. The empty nesters now have an asset, the home, worth $885,000.
If the empty nesters sell their home, they have to pay a broker and pay capital gains taxes. We assumed the broker was paid a 6% commission. The IRS allows married taxpayers filing jointly to exclude any gain above $500,000. Conveniently, in our example, the taxable gain after paying the broker’s commission was just less than $500,000 so no tax is due.
After selling the empty nesters’ home, our “average” empty nesters have no place to live but $831,900 more in the bank.
What will they do? Invest their $831,900 nest egg and move to Austin Street.
How much can the empty nesters earn and spend annually from their $831,900 nest egg?
The answer comes from the oft-cited “Trinity Study” (http://en.wikipedia.org/wiki/Trinity_study) which concluded that one could, each year, safely spend 4% of a retirement portfolio containing a mix of stocks and bonds without fear of running out of money over 30 years.
Hence, our empty nesters, after investing their nest egg, would earn and could spend 4% of $831,900 or $33,276 per year.
Conversely, it “costs” the empty nesters $33,276 per year to live in their house because they must forgo the investment income. This cost is added to the real estate taxes, insurance, repairs and maintenance plus snow plowing and landscaping costs associated with owning a home.
When compared to renting an Austin Street apartment home, we found the empty nester would save over $13,000 per year or about $1100 per month renting over owning their home.
The New York Times has a calculator called “Is it Better to Rent or Buy?” (http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html) where you can change the assumptions to suit your personal situation though you have to know the answer to many questions to get an accurate answer
We hope that explains our example. Thanks for asking.
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There are certainly reasons why empty nesters would want to downsize or sell, but opportunity costs need to be taken into account both ways. Staying in the home, especially with Newton real estate, ought to yield well over 4%.
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@Austin St Partners
Your numbers are incorrect.
The Trinity Study concludes you can spend 4% per year, not that you would earn 4% per year. Their model assumes a lower investment return, plus some draw down on principal.
As the expected lower return is lower than the 4% that you have used, the “cost” to empty nesters by way of foregone investment income is lower as well.
I would suggest updating your numbers with the correct data, so that you are communicating accurately to the public.
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Adam’s point is excellent.
Real estate in Newton has appreciated at a higher rate than an appropriate mix of stocks and bonds, so there is actually no opportunity cost to stay in their home.
The whole argument is wrong.
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Paul, actually as someone who rented for years, I spend FAR more as a homeowner than I would as a renter. Perhaps it is older homes, but you need to take into account the maintentance and repairs of a house acquired over 30 years ago in their example. Many of my older neighbors can’t keep up with the annual and decade required repairs (roof, water heater, painting, landscaping, fencing, furnace, siding, insect repair, etc.) Insurance for a home is far more expensive than rental insurance, etc.
Renting can be a great alternative. And having the nest egg to invest can allow for a more diversified portfolio. I’m also not sure you are correct in terms of the overall appreciation of Newton real estate. Many of us who bought in the mid 2000’s have only now had any appreciation. And I’d also note that the recent run-up in prices might be due to some extent to the artificially low interest rate environment.
Check out the calculator it links to, you’ll see that while the post is incomplete to some small extent, the calculator takes into account a lot of detail.
Perhaps you should correct YOUR post… 😉
On a side note, I’m glad ASP is posting here. Great to get feedback from the horses mouth, even if I don’t always like the response.
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I’ll also note there is a reason why many senior citizens have homes in some degree of disrepair. Repairing a home on a fixed income/dealing with repairmen can be a source of stress in your later years. My neighbors certainly seem to think so. I know I do and I’m still relatively young. There are days I wish I still rented and could just call a landlord and have it be his/her problem. I also spend most of my weekends repairing/maintaining my house and yard in the spring/summer/fall, and shoveling in the winter.
I love owning my home, but I’m relatively new at it. But I can completely see how it would drag as I get older. Add in a bad hip or knee or some other health issue, and I’d be looking to move I think. And then I’d look for housing close to a supermarket/coffee shop/diner/post office/CVS/beer store/Chinese food takeout/bar/hair salon/hair salon/hair salon/nail place/nail place/ and a huge selections of banks to compete for my business. Also Subway. Plus commuter rail access as well as express bus access to Boston. Plus a short bus ride to the library. And hey, the senior center should be nearby. And boy I’d like a whole foods nearby too. And some ice cream shops.
It’s not perfect, but it is pretty darn good for senior living. Really. Also, once the state puts in those diesel cars along the commuter rail, and we finally get handicapped access to the commuter rail, it will be even better. I count that as a when, not an if. That’s just me. Can you imagine how great that would be…. Seriously, that would be totally terrific.
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Fig,
All good points, which further suggests that the considerations to move from a fully paid-off home in Newton to a rental unit are broad and complex. Austin St Partners has not considered many of them, and the ones they highlighted were inaccurate.
Altogether, it wasn’t a good analysis and should probably be removed. It was oversimplified and incorrect on what they did show. Not good work.
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@ASP,
Thank you for the response. Its great that we can engage here.
I know it gets a little more involved, but it would be interesting if you could possibly take a little feedback from comments above, and then work that into a 10-20 year plan.
Now that you have explained the numbers seem more reasonable, but inflation, raising rental costs etc need to be taken into consideration too.
I think it would be very valuable for our seniors to consider.
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Now that I’ve been called-out as a “naysayer” by a blogger who uses a fake name, I think it’s best that I clarify my position. I support development of the Austin Street lot. Conceptually it’s an excellent idea. My primary concern is that the city gets a good deal. Getting a good deal has two components. First, it means getting a building that meets expectations. Secondly, it means getting a good business deal. To date, the proposed building does not meet my expectations. And the business deal is farcical. But I’m very glad to see Austin Street Partners joining the conversation on V-14. And I remain open minded about the Austin Street project, which has great potential.
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@Paul … We stand by our numbers.
Over the past 30 years, the median price of the Newton home in our example grew from $332,500 to $885,000.
Hence, the appreciation was on average 3.3% annually.
By comparison, according to Vanguard’s website (https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations), the historical return of a balanced portfolio of 50% stocks and 50% bonds from 1926 to 2014 was 8.4%. But, as they are quick to say, past performance is not a guarantee of future returns.
Schwab’s website (http://www.schwab.com/public/schwab/nn/articles/Q-and-A-Estimating-Long-Term-Market-Returns) predicts a 4.8% long-term return from a portfolio of 50% large stocks and 50% bonds invested in 2015.
Hence, prospectively earning more than 4% a year on average seems to be a reasonable assumption so spending 4% a year would be a reasonable assumption as well. In contrast, as noted above, home price appreciation was 3.3% over the past 30 years.
Assuming a 4.8% return rather than the 4% in our example only makes renting an even more attractive option — about $550 a month or $6500 a year more attractive. Our empty nesters would save almost $20,000 a year by selling their home and renting on Austin Street.
Hope that is helpful!
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I find it amusing that Mike Striar and I were referred to as “naysayers” by a blogger who hides behind a fake name.
I’m not going to dignify his nareishkeit filled post with a response, though it is worth noting that the same arguments used to promote Austin Street were the same arguments used to promote Avalon Bay. Unfortunately, Avalon Bay has stuck Newton taxpayers with an $800,000 annual net cost to educate students, as the $800,000 in annual incremental tax revenue is more than offset by the $1.6 Million annual cost to educate the influx of students at Countryside who live at Avalon Bay.
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Austin St Partners-
You said that your numbers were based on the Trinity Study, and incorrectly cited a 4% earnings rate. Everyone can read that is what you wrote in the earlier post. After being challenged, rather than acknowledge the error, you CHANGE the rationale, now citing Vanguard, Fidelity and Schwab investment returns.
It’s hard to trust you as a community partner when you’re not telling a straight story.
It’s here for everyone to read.
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PS Did you really make a comparison of real estate returns and investment returns using different time periods for each (30 years versus 88 years)? You think that is a legitimate analysis?
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Your numbers also didn’t even factor in the continued home appreciation of 3.3% annually. So you are misleading when you say that empty nesters “forego” 4% returns by keeping their house instead of selling and investing, when in fact their home would continue appreciate 3.3% annually, so the difference is 0.7% annually- using your numbers.
This model is verifiably incorrect. Austin St. Partners stands behind this?
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You also have to pay taxes on investment returns, so you don’t get 4 or 4.8% to spend on rent, you get the amount AFTER you have paid taxes. Where have you factored in the tax impact of investing?
Should I keep going? Or start asking questions about other parts of the project?
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Thanks Paul. We continue to stand by our numbers.
You can use the New York Times buy or rent calculator to recreate our analysis:
http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0&abt=0002&abg=0
We’re sorry if we’ve not been able to clarify sufficiently. That may be a limitation of our blogging ability.
You or anyone on Village14 should feel free to contact us at [email protected] to set up a personal meeting to discuss this question or any other aspects of our proposal further.
Thanks again!
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