Sean Roche posted a thought provoking piece about a house selling for more than a $1,000,000 on his street. I’m going to steal his title and get even more personal.
My family moved to Newton almost 10 years ago and I absolutely love it here. I have settled in and got involved in this community in a way that I never had at any previous address. I love our house, our neighborhood, my neighbors and the whole city of Newton. In fact I love just about everything about this place except for one thing, and it is a big one.
We bought our house in Upper Falls in 2009 for $325,000. It was pretty much the cheapest single family house in Newton at the time.
That house we bought less than 10 years ago is listed today at $632,000 with an estimate that it will be at $666,000 a year from now. During those same 10 years the median income in the US has barely budged ($57,393 – $59,039) yet the price of this house has nearly doubled ($325,000 – $632,000).
So good for us! What’s not to like? We found a wonderful way to significantly increase our personal wealth while our income stayed about the same. That is definitely a great thing for us and I’m immensely grateful.
So where’s the down side for anyone? And what is the one thing I don’t like about living in Newton?
Our most important job is to raise our daughter. When we moved to Newton she was entering the first grade and she’s a teenager now. I think one of the most important jobs as a parent is fostering empathy in your kids, teaching them that not everyone is as fortunate as they are – whether its health, or intelligence, or talent or wealth – people with less of any of those are just as important people as they are. Part of the way you do that is to make sure your kids connect with all kinds of kids.
Now when it comes to wealth that’s a problem. As a kid growing up in Newton your perspective of what is normal, what is average, what is wealthy, what is poor is completely skewed and its getting more skewed every year.
We’re rapidly approaching the situation where the “poorest” people living in Newton will be those that are in the top 10% of wealth in the country. Pretty much the only reason we’re not there already is because it takes a good long time (roughly a generation) to turn over all the housing stock to the next round of buyers that can pay those wildly appreciated prices.
What’s the answer to all that. Damned if I know. But what I do know is that it is a radical transformation of the city, its essence and its personality. What I do know is that as a parent it makes it much harder to instill a healthy perspective on the wider world in our children. What I do know is that its the one thing about living in Newton that I don’t like and that it will continue to get worse.
There’s a lot of folks here in my neighborhood in Upper Falls that pre-date all of this. They grew up in this neighborhood back when it was full of modestly priced houses for bus drivers, and teachers,and carpenters, and plumbers, and city workers, and nurses …. There are other neighborhoods around the city that are similar Those folks are all getting older and when they are all gone something terribly important will be lost in our city.
As my wife just said “Upper Falls was built as a mill village with a few mill owners living here and the rest mill workers. Soon it will all be ‘mill owners’ “
What’s to be done? I’m not sure but I think the first step is to clearly face what is happening and consider what it will mean to live in a city of only the wealthiest 10% or 5% of citizens. What are the implications of that? Is that what we are all striving for as we cheer our rising house prices? If not, we better begin planning today how to prevent Newton from becoming a homogeneous enclave of only the wealthiest.
Newton has done a fantastic job at investing in its children and their education, and making sure that they have every opportunity in the world.
And through residential zoning restrictions, it’s done an even better job at excluding the children of the poor and less-educated from those opportunities.
The homogenization of Newton and the continued downfall of poorer communities is exacerbated by the Commonwealth’s imbalanced educational funding system, fueled by the reprehensible unfairness of Proposition 2 1/2.
And although Newtonites will convince themselves that they’re progressive by espousing a few token, fasionable social causes, at the end of the day the politics of this city are driven by a perpetuation of the economic chasm between the Newtons, the Welleslys, and the Westons versus the Commonwealth’s less fortunate communities. There are only so many Ivy League admission spots, after all.
This problem is not unique to Newton. PICK ANY town within commutable distance to jobs (Boston, SF, NYC.. you name it) and its the same story.
The cause: artificial low interest rates and supply of homes.
-People searching for yield were given no choice but to invest in real estate since savings accounts were only giving 0.1% interest rates
-Liberal NIMBYs choking supply under the disguise of historic districts, environmental affects, loss of habitats etc
Will government built “project housing” be the new “middle class” housing developments akin to the “project housing” built in the 60s?
Frankly, you’ll have to wait for the next recession or 7% mortgage rates for homes to dip to affordable levels again…
1) You said it your post- median income hasn’t kept pace. And among the causes are the loss of good paying jobs that do not require advanced degrees, which brings up the cost of college…..goto 1)
Everything I know about economics I learned by playing Monopoly(tm). When one person has all the money, the game is over. Or your cousin gets mad and flips the board over (aka Revolution)
So, here we are, nearing the end of the game. If you want the game to continue, you’ve got to raise taxes on the 10%. Why? Because that’s where the money is.
Rick
Another view point, all the money went to because both political parties offshored all the jobs… leaving only jobs requiring advanced degrees.
Another solutions: try like hell to bring those jobs back
Sean should also worry that his daughter will be unlikely to afford to own a house anywhere near where she grew up if the current trends continue.
You guys ought to come up to Nonantum sometime.
It’s also interesting that the city struggles to balance the budget.
Just imagine where the city would if the housing market hadn’t gone nuts. Presumably it would be collecting a good 20% less tax?
Jerry,
As a 45 year resident of the city I became a founding member of the Newton Villages Alliance, for many of the reasons you have outlined above.
It seems to me there are a few reasons that have shaped these changes you have come to recognize.
One primary factor is the way too liberal zoning regulations we have had to deal with. The floor area ratios that govern the size of a home allow too large of house to be built,.. thus any smaller naturally affordable home on a larger piece of property is a prime target for tearing down. The fireman or school teacher that might have moved into that house is at a distinct disadvantage in that purchase when a developer can double his investment by tearing down and building new.
Sadly this cycle perpetuates the real estate tax program we are saddled with. We continue to build and tax residential properties to support our schools, police/firemen, streets, and infrastructure, at a rate 1/2 of what commercial properties might bring.
I think that we should be building office buildings in place of apartment buildings. Robert Korff should be putting up office buildings on Washington Street, Northland Development should do the same at the end of Needham Street ( instead of 850 units of residential ), and the developer at Riverside, where hundreds of apartments are being proposed should be “ encouraged to do the same as well.
The cities unfunded liabilities in the nature of $1 billion, should not be hung on existing residential taxpayers. It only encourages more of the same tear downs and mega tax raising housing and the depletion of membership in our diverse community.
Just curious, have those who favor density created an accessory apartment unit yet,
This ordinance could theoretically increase housing units by 50%…
What is the reality after this was passed?
Liberal zoning did not create the tear down problem. The zoning that still allows a large house to be built on a small lot is left over from the restrictive zoning from previous years. That zoning at one time required huge lots to build single family homes and over time the lot size was subdivided without redefining the homes that could be built. Different communities have been cited by the feds for requiring large lots but not for the size or composition of the homes built on them.
If the zoning changes had included not just a reduction in lot size but also changes to smaller single or multi family homes, the tear downs wouldn’t be able to increase the size of the single family home.
There are other hidden costs of expensive housing. Housing demands money, and money demands time.
One thing that’s changed since housing was more affordable: our free time, our family time, our community time. We might be “mill owners”, but many of us are working more like mill workers: often in families both spouses work, our cell phones and computers bring home work with us, our commutes keep us from our families and force us to rush from place to place, we accept as normal jobs with less vacation than almost any other developed country in the world.
Our work isn’t as brutal and dangerous as that of yesterday’s mill worker, but the impact is still profound. Less free time means less community time (talking with neighbors, volunteering). Less time means more social isolation for adults and kids. Less free time means more stress on the roads (road rage, impatience, inattention by multitasking). Less free time means less walking/biking to school with our kids (“love to, got to get to work”).
The US has great “worker productivity”, the envy of many countries in the world, and stocks rise and fall on whether we’ve squeezed more out. For companies, that’s great. What does it mean for our time, and as an extension our communities, though?
And many of us enlist a score of different “time saving” tricks and devices, but if they actually save time, they just help keep our heads above water, keep us from borrowing a little less time.
Time is why an expensive suburb today isn’t the same as an affluent suburb was forty years ago. And housing prices, one of the biggest chunks of our cost of living, is directly responsible.
What good does having my house’s value rise do me if all the other housing in this area also rises? The only advantage to me is that I have a higher % equity in my house while paying off my mortgage, but that actually hurt me when I was applying for financial aid for my son to go to college – it looked like I was a lot better off than I am.
A few quick comments.
1. Jerry’s piece is one of the finest and most heartfelt I’ve ever seen posted on Village 14.
2. Mike Halle’s comments about the interrelationship between high housing costs, the diminishing amount of free time people have because they are on a fast treadmill trying to pay the bills for it all, and the sad decline of community spirit and involvement sums up how the quality of life has deteriorated in recent years. We think we have more, but we really have far less. This deserves a separate post.
3. Someone in this comment section lumped local historic districts in with a potpourri of other local initiatives designed to keep working and middle class families from acquiring housing in Newton. Jerry lives within the Upper Falls local historic district. He’s stated on several occasions that he wouldn’t have been otherwise able to buy his house in the Falls because it would have been torn down and would likely have been replaced by some kind of huge dwelling he wouldn’t have been able to afford. I was involved in trying to move consideration of a local historic district in Newton Highlands. We got hit with the same charges by opponents and their logic was really quite contradictory. On the one hand, we were accused of trying to keep working folks and minorities out of the Highlands. On the other hand, they hit us for a measure that might lower the price a homeowner could get when they went to sell.
@Yuppie Scum – Nonantum is much like Upper Falls. It too was a mill village. It too has always been the home to more modestly priced homes and has always housed folks with more modest incomes. It too has the exact same run-away inflation in house prices as the rest of the city.
I just took a quick peek on Trulia. The first Nonatum house I came across was a modest looking 2500 sq ft, 3 bedroom house on .25 acres priced at $989,000
To owners who want more affordable housing and live in historic districts:
So you want more affordable units by increasing density in someone elses neighborhood, but not in their neighborhood because its historic. Nice!
The flipside to the sad story…
An eldery couple homeowners who have worked as teachers for whole lives can now finally enjoy the sunny weather in florida for retirement. The 1.5m dollar equity allows them to enjoy life, fund their grandchilds college..
Some people want to stay and some want to leave….
Let the market decide who gets to win and loose…
@Bugek
After all the debate on this subject, I have come to the same conclusion, we should stop trying to interfere and let the market decide.
Simon: no, the city would not be collecting any less tax if housing prices were lower. Every year, the city does the following:
1) Produces a budget that raises property taxes 2.5% plus new growth plus overrides, etc.
2) Values all property in the city
3) Sets the tax rate accordingly
If real estate values plunged to 1/10 their current values, for example, the tax rate would just increase 10x to compensate. The city never loses.
Simon and Bugek,
You do realize that really letting the market decide would mean reducing or eliminating restrictive zoning, right?
Restrictive zoning distorts the market.
Sean,
Actually, have no problem with relaxing the zoning as much as the market can bear. As long as they figure out school overcrowding and keeping property taxes low. What I would object to would be the city subsidizing hundreds of low-income units (effectively making a huge loss at tax payer expense)
What the neighbor wants to do with their residential lot is their business …
@Sean
By letting the market decide perhaps I should have added a little context. I feel we should stop trying the fix the issue by meddling with our Zoning Ordinances.
Zoning Ordinances are by default restrictive. They create a set of rules we should all play with. Right now our council is allowing developers to get circumvent the standard develop “by right” rules (that almost all our residents play by), and instead are allowing spot rezoning and special permits that are making developer very wealthy.
People move to this city for all kinds of reasons. I would suggest that a key part of that must have something to do with our “restrictive zoning”.
So when I mentioned let the market decide, I meant just that.
Here is a scenario I see.
We continue allow over densification, and thus we continue to see an influx of more school kids. In the mean while a lot more seniors retire. The city / schools will have to absorb more residents. The city will want more money, but the city wont have the dollars. The seniors will not be able to continue contributing to sky rocketing taxes. The schools will start performing badly, services etc start to erode. People will stop wanting to come here for the school system. And the market will adjust.
We need to stop talking about restrictive zoning. We need to start talking about how this city operates. It needs to find a revenue through the commercial sector.
@Jerry Reilly,
Watch that house on Watertown Street.
( Nonamtum ?), for sale at $989,900 sitting on .25 acres.
It’s a two family, zoned MR2.
It’s a tear down just like the condos next door!
Why, because the FAR of approx. .50 will allow a structure to be built in the neighborhood of 5500 sf which would generate two condo units of 2600sf each which would sell on today’s market for $1,300,000 each.
It would only take a smart builder +/- $1,000,000 to build two new units , which when you do the math would yield him a $600,000 profit. Not bad for a year and half effort.
Mark my words,.. it’s a gonner!
And why,.. because the FAR is too generous.
If smaller the profit margin becomes narrower and the builders risk greater and the likely hood of a tear down less!
Watch this listing. I’ll give it a week. Then watch what happens there!
@Simon – I think the problem with the current zoning is it basically encourages tear downs over everything else. The way it was explained at one of the zoning redesign drop in sessions:
-An existing non-conforming property can be made more non-conforming with a special permit. This does require approval from the council but it comes down to what you can justify.
-An existing conforming property generally cannot be made non-conforming with a special permit outside of specific scenarios.
-It’s generally harder to make a conforming property non-conforming than it is to make a non-conforming property more non-conforming.
Somewhere around 88% of the lots in Newton are non-conforming, so anything that has a house on it already is going to fall under the first scenario of just needing a special permit. Anything else falls under the more difficult path even if the lot fits in with surrounding properties. This is why we see all the tear downs, developer buys small house then submits a special permit to make it “more non-conforming” by tearing down and replacing with giant condos. Smaller and medium size lots like you see in villages like Nonantum/Newtonville/etc… aren’t allowed under the current ordinance, more than half the houses on my street in Auburndale would be undevelopable based on lot size today. I think this is why one of the focus areas on the zoning redesign project is to bring down the non-conforming percentage. If smaller lots are brought into compliance with appropriate requirements then you can’t just throw a special permit at it, and that would also allow for new small/medium housing stock instead of nothing but 4500+ sqft condos.
@Jerry Reilly,
Re the future tear down at Watertown Street.
That lot size is 11099 sf. The zoning of MR2 allows a very generous FAR of 0.53 which can generate a new structure of 5,882 sf or two condo units of 2,941 each which means an even larger and more expensive unit.
More like $1,400,000 each. A better profit margin than previously posted.
Watch it .
@Blueprintbill – yes, you’re probably right, but its a bit beside the point
Regardless of whether it sells as a single family home for $989,000 or two condos for $1.3 million, the larger issue that I was talking about remains the same.
Blueprintbill,
For the waterdown st condo, for that particular location (link: https://www.redfin.com/MA/Newton/282-Watertown-St-02458/home/11408993), there has not been ANY condo sale over 1M in the last year area in that vicinity.
Closest I see is
2717sqft condo. sold 2017 for 825k
https://www.redfin.com/MA/Newton/254-Watertown-St-02458/unit-254/home/109223141
If it was in Newton Centre, I could see 1.4 being possible. In this case, I suspect 800k-900k.
I suspect the builder can knock out 2 low-quality condos for 500k for a profit of about (1.9M(sale) – 1.5M(cost+build) ) = 400k profit
Most likely scenario is to spend 250k on quick and dirty renovation and sell for 800k each
1.6 – 1.25M = 350k profit in about 1 year.
For Risk/Reward I would not go for the tear down.. especially for this location
@jerry R,
This listing on Watertown St is for a two family house.
The tear down will result in two units each at $1,300,000 = $2,600,000.
These would be NEW condo units @ Bugek well able to bring this kind of price in this part,( or any part ) of Newton these days.
Watch the listing. If it goes fast it’s particularly vulnerable.
@Patrick
The planning department likes to throw these numbers to supports its goals, and are misleading to say the least.
I shall give 2 data points where I suspect they get these numbers.
Current ordinance for an MR1 lot requires 10,000 sq ft, and a 10 ft side setback.
Pre 1953 lots require 7000 sq Ft, and 10 ft side setback.
Developers right now, are allowed to tear down a property on a 7000 sq ft lot, and redevelop to 7.5 ft setbacks.
I suspect the planning department are using the 10ft side set back, and 10,000 sq ft requirement to make the lot non conforming.
At some point in the not too distant future I would like to see the planning departments methodology at how they arrived at these numbers.
It would also be very interesting to see the ratio of pre and post 1953 lots available in the city!
blueprintBill,
If a developer wants to take a risk and build 2 new units at 1.3M.. kudos to them. They would be trying to break the record for highest price condo north of the pike in 02458
Last 3 year townhome/condo sales. Highest is 1.1M in that vicinity (33 Green st)
https://www.redfin.com/zipcode/02458/filter/property-type=condo+townhouse,min-sqft=2k-sqft,include=sold-3yr,viewport=42.36831:42.34928:-71.17952:-71.2181
They should be handsomely rewarded if they want to take on that risk :)
– busy street
– not walkable to T, rail
– 1 mile walk to K, Middle schools
– not considered ‘prime’ Newton (Waban, Newton Centre)
– unit will have zero charm or character
– higher interest rates next year
@ Bugek,
All good points you make, but this real estate market is red hot with a starving inventory.
I especially agree with you about “zero charm or character “. This costs developers money ( talent and architects fees ), and they don’t have to spend same today. A developers motive is $, and in today’s world that investment is cut short and unnessary.
There is an abundance of tailgate design happening. Look around.
@Simon – They used the current requirements for the numbers, so you’re right that it would be the 10k sqft instead of pre-1953 7k number even though the 7k is grandfathered. Form the summary in the pattern book they did not account for parking, side and rear setbacks in the 87% number. They looked at lot size/coverage/area per unit and building area/height/setback/use.
The pre/post-1953 lots are indeed interesting, I did a quick check in the pattern book and they do have a breakdown based on structures. I don’t think it’s an exact match to lots but approx. 72% of the current housing stock was built before 1950. That jumps to 90% by 1974 with the additional structures mostly clustered in the southern area of the city. The cutoff for the numbers was 2016 so it’s not going to account for the recent uptick in the past two years but that’s still a minimal amount that’s been added since 1974.
Several years ago, I attended the aldermanic meeting to consider Amy Sangiolo’s modest proposal to halt tear-downs for a year to study their effect on neighborhoods and on the skyrocketing price of real estate in Newton. The room was packed with realtors, and several aldermen (now city councilors) were hugging them and fraternizing most affectionately. Not surprisingly, the moratorium had no chance.
Another significant meeting: to consider the 330-unit mega-project for 135 Wells Avenue. CF&G filled two rows in the gallery with suits carrying briefcases and lengthy studies to support this attempt to fill Newton with even more millionaires, with a handful of “modest” units thrown in for “diversity.” No matter the virtual absence of meaningful public transportation and the absence of the basic amenities in that isolated area. No matter the single-access road, already overcrowded.
Fortunately, CF&G was too greedy and offered too little by way of funding for the necessary infrastructure- this proposal sank without a trace.
Whatever we believe concerning Newton’s real estate tax laws and other restrictions and mandates, developers like Mr. Korff smell the profits and are ready to pounce. Be forewarned!