On the front page of WaPo for 17 May there is an important story on Housing. Read it from end to end and one finds the headline “Healthy signs in the area’s housing market” is VERY misleading.

The story, when one takes into account the sources of the ‘he said / she said’ quotes, is ‘correct’ AND it disproves the headline.

For a more complete picture see CNN Money’s 13 May story “Foreclosures plateau – finally. Repossessions soar” and their 17 May story “Housing market diagnosis: Bipolar.” Also see the 15 May story in the New York Times “Building Is Booming in a City (sic) of Empty Houses.” As the colleague who called this article to our attention said: “… for ridiculous, unsustainable, wishful thinking that is oblivious to too many realities to count… this is actually scary.”

Back to the 17 May WaPo story:

As EMR’s beautiful wife said: “We did not learn a thing for that story.” True, but most citizens do not even know that much about what is happening in the shelter industry and the prospects for ending the Affordable and Accessible Housing Crisis.

If you have been distracted by the oily slime you might find the story useful. If you read the story or do not bother, here is a short list of the problems:


What territory are they taking about? They refer to:

“the Washington area”
“the region”
“the area” (several times)
“the Washington metropolitan area” (no capital ‘M’ or ‘A.’)

From the context, it is clear that most of the references are to DIFFERENT geographies.


Almost every sources of data has a different reference geography and most of the specifics are about county “A” or county “B” without regard to the relative location of that municipality vis a vis the Centroid of the SubRegion.

The most significant omission and source of confusion in the WaPo story is the complete lack of attention to the variation of Housing market conditions by Radius Band.

If one understands that Prince William County is a major part of the R=20 to R=30 Radius Band in Virginia (the rest of the R=20 to R=30 Radius Band is the eastern part of Loudoun County) one starts to get some sense of what is happening.

Read the story with this in mind and new insights come to the surface.

NB: Arlington, Alexandria the Federal District are inside R=10. Note what Gregory Leisch of Delta Associates says is the reason that there has not been a big drop in house prices in those jurisdictions. He and John McClain of GMU’s Center for Regional Analysis both make good points in response to the questions they were asked.

The most important fact that is obscured by the WaPo story is that the biggest problems are in the R=30 Plus territory of the National Capital Subregion. The story does not even mention a municipality in this geography except for Frederick County, MD and Frederick has a separate set of parameters.

The territory outside R=30 from the Centroid of the National Capital Regions is where the house values have fallen the most. It is also where the most concentrated pockets of foreclosures and underwater mortgages are located.

This is where the lower half of the economic Ziggurat has been pushed to find Affordable (but not Accessible) housing.

This is also where many of the Wrong Size House / Wrong Location dwellings are located. These dwellings were sold to those who should have known better and could have qualified for house that met their shelter needs – as opposed to their real estate speculation fantasies – closer to their Jobs and Services.

One can get a glimpse of what is going on because Fauquier County makes up part a substantial part of the R=30 to R=50 Radius band in Virginia. (Most of the rest of this Radius Band is the western part of Loudoun County as well as parts of the Greater Fredericksburg SubRegion which has its own set to circumstances due to the Jobs and Services in the I-95 Corridor and inside the Clear Edge around the Core of that SubRegion. As noted above, the same is true for Greater Frederick, MD.)

In Fauquier County the newspaper of record publishes real estate closings each week. Over the past month, the listings of foreclosures have continued to be at near record levels with the listed sales are primarily short sales and bank sales. Essentially nothing has sold for more than 70 percent of its 2007 value for reasons outlined in the stories quoted above.

In the meantime, the same paper ran a story on 12 May titled “Housing shows signs of strength” which can be characterized as “builders and real estate agents whistling past the grave yard” if one understands what the WaPo story and other coverage documents. It fact it is almost as bad as the New York Times story about Los Vegas, but not nearly as funny.

The bottom line is that builders nation-wide will try to build ‘cheap’ houses in scattered locations. That will continue to sour the market for resales as suggested in the New York Times story. Dysfunctional settlement patterns will continue to propagate.

The result will be an overbuild of Too Big Houses AND an overbuild of Too Cheap Houses – ALL in the Wrong Locations. For those who came in late, that means Housing that is NOT near Jobs / Services / Recreation / Amenity.

This will be due to the fact that citizens do not have the information they need to make intelligent decisions in the market – or intelligent decisions in the voting booth. Check out the primary results tomorrow night.

EMR’s next Current Perspective item will address those attempting to create SubRegional ‘economic growth’ by finding ways to expand the Urbanized area of the National Capital SubRegion.

Geographic Illiteracy is a terrible thing.


Share this article


(comments below)


(comments below)


28 responses to “A SHELTER MUST READ”

  1. Anonymous Avatar

    I like your shift from 'MainStream Media' to 'Enterprise Media.'

    Makes a lot of sense from an ESTATES MATRIX perspective.


  2. Larry G Avatar
    Larry G

    We have a residential development proposal locally and the developer is characterizing his proposal as "needed"….."affordable housing" for deputies and teachers and similar and they are townhouses in the 300K range.

    The obvious issue is, can a deputy afford a 300k mortgage and second, is it possible to build a 200K townhouse?

    I would submit this is the same problem that NoVa has and at the core of EMR's premise about settlement patterns.

    Much of NoVa turns into empty shells of buildings at night and few, if any people live within walking distance of those buildings, right?

    I can tell you where the deputies down in our area live and it's not where the 300K townhouses are but instead 10-20 miles out in the rural areas where they can find a truly affordable place to live in the sub 200K range.

    Whose job is it to insure that affordable housing stock is available for the folks who don't earn the big bucks?

    The developers will tell you that it's not their job. They build to serve the most lucrative markets.

    Ray will tell us that it's wrong for govt to tell developers what they can or cannot build.



  3. Anonymous Avatar

    Larry – well stated. There is a huge need for affordable housing. Land and construction costs are the key drivers. Land costs are lower outside the clear edge (EMR, do I have that right?) and construction costs skyrocket as building heights increase. Thus, we see the Tysons landowners back-peddling like crazy from their earlier promises to build lots of affordable housing at Tysons. So much for their arguments that giving them density in exchange for affordable housing. (Bonus question: Were they just lying from the get-go?)

    There is no stomach among most elected officials to increase taxes to build lots of affordable housing.

    So shouldn't we expect to see more building of townhouses and garden apartments outside the clear edge? If not, why not and how does affordable housing get built inside the clear edge?


  4. Anonymous Avatar

    I would be happy to put up a modest Home for some teacher or deputy, complete with barn & riding privileges. It would be a bargain for them and it would earn enough money to keep the rest fo the farm afloat for another 50 years.

    If allowed, I could do it for well under $200k.

    I only say that if you are going to charge extra for more developmentrights, thenthey should be paid for when taken away.

    Otherwise, I'd agree with Groveton, public officials are probably not most wellequipped to decide what a developer can build sustaianably – meaning with enough profit to keep him in business.

    If developers are able to make the argument that ti is better for them to build more expensive homes, it is only an indication that not enough homes have been built – otherwise they would not be able to sell them.



  5. Groveton Avatar

    Moral hazards …

    The FHA insures the loan on the home in Las Vegas. So, the bank has a moral hazard in making the loan. How dilligent will they be when they process the loan if Uncle Sam is backing it. The borrower can put down a smaller deposit because it's FHA insured. Another moral hazard. How much will he sweat the details of making the payments? I guess Freddie Mac or Fannie Mae will buy the loan once it's made. And we all know they are too big to fail. How much analysis will go into the decision as to which loans to buy? The municipalities are authorizing new construction while already built houses sit empty. Presumably, they want to see the construction jobs and real estate taxes. Who will buy and demoilsh the derelict homes which don't sell? How many condo / neighborhood associations will go bankrupt and force the homeowners remaining in "3 years ago's" development to flee?

    "I can tell you where the deputies down in our area live and it's not where the 300K townhouses are but instead 10-20 miles out in the rural areas where they can find a truly affordable place to live in the sub 200K range.".

    Hmmm… I guess there's no affordable housing in Fredricksburg either. Man, those greedy Tyson's landowners have long reach.

    You want to see affordable housing? Watch an All In The Family rerun. The Bunkers lived in affordable housing.

    Want to see more affordable housing. Watch a Honeymooners rerun.

    There's plenty of affordable housing inside the clear edge – so long as The Bunkers, The Cramdens and the Nortons are the prototypes.

    Single family place with a nice lawn? Doesn't count.

    Fancy new 4 bedroom townhouse with a Viking range? Doesn't count.

    Go to Annandale. Go to Springfield. Go to the Rt 1 corridor. There are plenty of 1 and 2 bedroom condos / apartments. Even some affordable older townhomes. Places where a longshoreman might live, or a bus driver or a sanitation worker.

    Here's a link for LarryG …

    28 properties currently for sale between $150,000 and $250,000. Annandale is inside the clear edge – no?


  6. Anonymous Avatar

    Groveton speaks truth from the Far East.


  7. Anonymous Avatar

    Groveton – I agree with your points on Annandale, Springfield, etc. Indeed, one need look no further than Pimmit Hills to find close-in affordable housing.

    But if we need massive amounts of affordable housing, more will need to be constructed. Despite all of the hollow promises from the Tysons landowners and the Fairfax County Chamber of Commerce that an urban Tysons would provide much of that needed housing stock, they are now fighting any actual commitments/requirements tooth and nail. It's the old classic bait and switch. If you tried this with a customer, you'd quickly lose the customer and might even find your company on the wrong end of a lawsuit for fraud in the inducement.

    IMO, we need to separate the fly s**t from the pepper as we figure out how to address the affordable housing issues. How much do we need? Stephen Fuller's newest projections for employment greatly exceed historical trends and he's been hired by some big developers who want taxpayers to fund more infrastructure. How much do we have? How can we make the best use of the existing housing stock? How much affordable housing does Fairfax County want? How much affordable housing can we push on other jurisdictions? How do we get more affordable housing in a way that is affordable?


  8. Anonymous Avatar

    "In Clackamas, Multnomah and Washington Counties, 32% of all families do not have affordable housing2, and for
    low-income families the problem is far greater. The American Housing Survey Data estimated that 82% of all households
    in the region earning less than 30% of Median Family Income (MFI)3 are in need of affordable housing.

    ◘ Metro Regional Government’s Regional Affordable Housing Strategy found a need for more than 90,000 units of new
    housing affordable to households earning less than 50% of MFI
    in Clackamas, Multnomah and Washington Counties. These
    estimates were made prior to the recent downturn in the economy."

    You want more affordable houses, build more houses. Issue more building permits.


  9. Anonymous Avatar

    A few notes concerning shelter from a recent lecture on functional settlement patterns by Prof. Risse:

    Shelter – specifically Affordable and Accessible Housing – is a heath, safety and public welfare issue. Period.

    A fair allocation of all location-variable costs will make small, efficient, dwellings close to Jobs and Services more attractive because the price of ‘Too Big,’ ‘Too Far,’ ‘ More House For The Money’ dwellings will reflect their true cost.

    Land outside the Clear Edge IS less expensive now (TMT is right) and that attracts those who want to sell and buy More House For Less Money.

    Land outside the Clear Edge is less expensive now because it is worth less for Urban land uses.

    Land outside the Clear Edge is still far overpriced because the cost of providing Services / Recreation / Amenity and access to Jobs is not yet being charged to those who convert this land to Urban land uses.

    Because builders and developers also do not pay the full cost of their activities inside Clear Edge AND because the goal of every Enterprise is create to maximize its return on investment, every plan (e.g. every play by a Tysons Corner land owner per TMT) includes as much of as many land uses that have the highest returns as possible. This has NOTHING to do with Balance.

    A Balance of J / H / S / R / A is the only way to achieve Affordable and Accessible Housing and developers make the most money from J and from S.

    Let “someone else” provide the lower immediate-return-on-investment land uses – R and A and especially H for those in the bottom half of the Ziggurat. That is just ‘good business.’

    Because municipal jurisdictions get more property tax revenue from J / S uses, let some other jurisdiction provide allow shelter for those at the bottom of the Ziggurat.

    Groveton does speak the truth. Affordable and Accessible housing looks more like lofts, live-work units, studios, condos and 18 foot wide townhouses than what one sees in builders weekend ads.

    Autonomobiles Enterprises and Housing Enterprises make more profit from bigger and fancier cars and dwellings.

    There are already too many Too Big houses. There have been far more four bedroom dwellings built since 1989 than there have been three child Households created. In addition the Big Houses are in the Wrong Locations – far from the places that parents can earn enough to raise three children.

    Shelter – specifically Affordable and Accessible Housing – is a heath, safety and public welfare issue. Period.

    Fundamental Transformation of governance structure can result in a more fair and more equitable way to evolve functional and sustainable settlement patterns that provide among other things Affordable and Accessible housing for all the Households in the Ziggurat.

    LEED – ND (Neighborhood Development) standards are a step in the right direction.

    Keep going on the same trajectory and both democracy and free markets will be lost because demagogues will promises those in the bottom 51 percent of the Ziggurat, Agency supported housing.


  10. Anonymous Avatar

    For once RH is right.

    Build more dwellings.

    He forgot to mention:

    Build them in the right location and

    Build them the right size.

    Where and what size?

    Fairly allocate the costs and let the market decide.


  11. Anonymous Avatar

    "Fairly allocate the costs and let the market decide."

    It would be better that way. but even if the costs are not allocated exactly as EMR would like, the market will still decide.

    People are willing to pay less for a houseif they have to live in jepip, and support the cots of driving long distance.

    People who sell in Jepip have to accept less.

    EMR's argument is that houses in Jepip OUGHT to cost even more because hey OUGHT to have to support more road to get to them, more power lines to get to them, and so on.

    By his reasoning that would mean that fewer people would want to buy in the areas he would like to see downzoned anyway.

    But all that does is raise the price of the [currently] cheapest houses. It does nothing to increase the supply of houses such that prices are lowered.

    It does nothing to lower the [even higher] costs of builing in what he thinks are the right places. These costs are even higher because now you have to supply and operate mass transit to support the density that is needed to support mass transit. And, such places need more security,
    more infrrastructure, more complex infrastructure, and higher taxes to support it all.

    And, under the doctrine tha costs are fairly allocated those places have to absorb those costs themselves.

    Plus, they have to pay the full and fair allocated costs for the support area that provides them with things they don't have, like space to put their garbage.

    The cost per square foot for such places is already high, and they have already high taxes to go with it, not to mention all the other costs of urban living like parking tickets, expensive groceries, noise and so on.

    Therefore, we can already see much of what the market would look like if full costs were fairly allocated, and it does not change our present settlement pattern much.

    All it does is raise the price and lower the avaialability of affordable housing.

    What EMR doesn't get is that costs are not "ALLOCATED", unless you think you control the market.

    For the most part, costs happen. you don't get a choice in them, except for luxury items. There is a cost for clothing, and a different cost for tuxedos and gowns. But Tuxedos and Gowns are OPTIONAL. They are free choice. If the market WANTS to spend on those things, well, that's a free market.

    There is something obtuse about claiming you need to allocate costs in order to get a free market.

    Surely there are market failures, in which the market simply does not produces needed goods and services. That is because there is no profit in them: they cannot be done sustainably, no matter how much they might be desired.

    And there are market externalities, in which a good or service is provided at a price that does not reflect all of its true cost. That doesn't always matter because sometimes the extra cost doesn't really affect anyone [it might even be a negative cost, a benefit].

    EMR argues that developeng rural spaces cause huge externalities that should be paid for. And if they must be paid for, then people will choose not to live in rural spaces.

    But that is not going to make housing any more affordable.

    What happens though, if you do that and the market decides to pay anyway? Right now, every thing we gt is paid for. [Or borrowed for, in which case we decide tht our children should pay for what THEY get, someday. We get to get it, and have it on the cheap, in the meantime.]

    If the costs are fairly allocated and the market decides to go ahead anyway, what would be our argument against building in rural spaces then?


  12. Groveton Avatar

    "A fair allocation of all location-variable costs will make small, efficient, dwellings close to Jobs and Services more attractive because the price of ‘Too Big,’ ‘Too Far,’ ‘ More House For The Money’ dwellings will reflect their true cost.".

    I feel like Fox Mulder on the X-Files.

    I want to believe.

    But I don't – at least not yet.

    I've heard about these endless externalities for quite some time. Once, in a long lost thread, I saw a list of various things that EMR would consider externalities which were rarely paid for by the homeowner.

    But I've never seen numbers.

    I've never seen a list with the estimated uncovered costs of the externalities.

    Let's pick a house outside the clear edge. How about between Dulles Airport and Leesburg. Say, 5,000 sq ft on 1 acre. Today's cost = $500,000.

    Where do I start looking for uncovered externalities.

    Oh yeah … the house is in Loudoun County, required a $40,000 proffer to build and generates 1% real estate tax on its assessed value. The working couple who live in the house have a combined income of $250,000 and are raising 2 children (ages 10 and 12) who attend public school. Their average state income tax is 5.4% and their average federal income tax is 34%. They spend @75,000 per year on various things paying an average sales tax of 5%. The husband commutes to Tyson's – which is 17 miles away. The wife commutes just 8 miles. Hubby uses a combination of the Greenway and Dulles Toll Road. Wifey uses surface streets (i.e. no tolls).

    What else do we need to know in order to estimate how much these "scoff societies" are stealing from us?

  13. Anonymous Avatar

    More to the point, if you find out what they are and add them to the price, how does that make for more affordable housing?

    The only way it works is if you take those new higher prices and redistribute the other costs so that they are lower for some other style of living.

    But that other style is still less desirable: the American Dream isn't a three bedroom condo.

    So you swap some costs around and you haven't made anything cheaper, plus you have a whole bunch of new transaction accounting to do.

    We can either have government regulation that averages the price of electricity regardless of location, or we can have governement regulation that knows how much power you use to dry your undies, and at what time of day.

    There are a lot more two bedroom apartments than eight bedroom mansions, so even if you charge those guys according to the 10X rule, the savings to the apartment dwellers are small.

    There is no net social benefit that can be used to pay off the losers in this transaction.

    And, those guys you downsized from the mansions are going to be politically PO'd.


  14. Anonymous Avatar

    A fair allocation of all location-variable costs will make small, efficient, dwellings close to Jobs and Services more attractive

    Making the alternative more expensive is not the same as making small dwellings close to jobs "attractive".


  15. Anonymous Avatar

    Land outside the Clear Edge is less expensive now because it is worth less for Urban land uses.

    Yeah, and it is worth even less than that for non urban uses.

    If you make $50 an acre – net – from your non urban use, and if you can do that reliably for 20 years, then you could afford to pay $50,000 up front for a 100 acre lot, and earn 5% on you money and labor for 20 years.

    (See VA Tech Ag Budgets)

    Then someone comes along and offers you $40,000 for one acre. even though it is not worth much as urban land use, it is still worth a lot more than as Non urban land use.

    Of course to get that 100 acres you would have to pay more like $400,000, assuming it was ONLY ag acreage.


  16. Anonymous Avatar


    Sorry, I don't see that a sentence like this add much to eliminate the confusion.

    -This and other (un-named stories)

    are important for

    -What they say and what they don't say

    -What they say in confusing ways.

    – Which we can't trust because we know that Enterprise Media are self serving profit makers.


    It is so much clearer to me now.


  17. Anonymous Avatar

    If that guy is actually paying 34% tax, then he needs a new accountant.


  18. Anonymous Avatar

    RISMEDIA, May 14, 2010 —

    "Residential developers and homebuilders who survived the housing bust now are feasting on the remains of those who didn’t. They’ve been on a buying spree, using cash savings to acquire finished, but unbuilt lots and subdivisions that have been stalled or lost to foreclosure or bankruptcy. They’re paying up to 75 percent off peak land prices during the housing boom, and planning to succeed where others have struggled or failed.

    All say discounted land prices attracted them, but it was the local housing market’s long-term potential that made them buy."

    Yep, the residential sky is falling.

  19. Anonymous Avatar

    Oil production in North Dakota is growing exponentially and has now doubled over the last two years from fewer than 138,000 barrels per day in February 2008, and tripled over the last five years from 92,500 barrels per day in February 2005.

  20. Anonymous Avatar

    U.S. Rail Traffic Sets New Record in April: All 19 Commodity Groups Increased vs. Last Year

    Yep, the economy is going in the dumps.

  21. Anonymous Avatar

    Between 2000 and the bubble's peak, inflation- adjusted housing prices in California and Florida more than doubled, and since the peak they have fallen by 20 to 30 percent. In contrast, housing prices in Georgia and Texas grew by only about 20 to 25 percent, and they haven't significantly declined.

    The most important factor that distinguishes states like California and Florida from states like Georgia and Texas is the amount of regulation imposed on landowners and developers, and in particular a regulatory system known as growth management.

    Randal O'Toole is a senior fellow with the Cato Institute


  22. Larry G Avatar
    Larry G

    re: allocating the externalities

    yes.. it's sort of like you have to have to a secret decoder ring to find out….

    heck, I'd be satisfied with a rank list of places that allocate more fairly and what the worth of it is (or not).

    the one major discrete externality that I can see is distance from work and the fuel and infrastructure that is required to provided to those who choose to live further from work.

    But I do not believe that even if you made gasoline cost 5 or even $10 a gallon that it would convince people to live within walking distance of their jobs.

    We'd see big changes – no question about that but I simply do not believe that such a thing would cause a contraction to optimal functional settlement patterns.

    I agree with the part about large private vehicles – and the future but what about SMALLk private vehicles or LARGE multi-passenger vehicles?

  23. Anonymous Avatar

    the one major discrete externality that I can see is distance from work and the fuel and infrastructure that is required to provided to those who choose to live further from work.

    If the price of the infrastructure is built in to the price of fuel then infrastructure will be paid for proportionately by everyone who drives.

    Where is the externality?

    In economics, an externality is a cost or benefit, not transmitted through prices, and incurred by a party who did not agree to the action causing the cost or benefit.

    You don't agree to living far from work and you believe it costs you money.

    I don't see the externality here. They drive, they work, they pay, they cause congestion – to each other-. If you don't drive, you stay home, you walk to work, you don't pay fuel tax : what is the problem?\

  24. Anonymous Avatar

    "But I do not believe that even if you made gasoline cost 5 or even $10 a gallon that it would convince people to live within walking distance of their jobs."

    This is a core fact that EMR refuses to recognize. Evenn with gas at $7 a gallon Europeans still drive cars.

    We are not going to disnvent these things and they do have some value.

    Rather than vent about large private autonomobiles, and postulate on the spposed superiority of shared vehicle systems and dream about the mis-named personal rapid transit (neither personal nor rapid), asEMR does we shou drop back to first principles and figure out what the optimum transportation system wluld look like and how it would be paid for.

    Instead, what we have is transportation mode partisanship, with each party spewing false statistics to bolster their point or damage the other guys point.

    This is not the route to an optimum solution.

  25. Anonymous Avatar

    RH has perfected the art of circular argument.

    And when someone quotes Randal O’Toole, they have gone over the edge.

    There is no better proof than his last post:

    “we shou[ld] drop back to first principles and figure out what the optimum transportation system wluld [would] look like and how it would be paid for.”

    No first one figures out what settlement pattern is best THEN one figures out what mix of transportation facilities will serve the activities generated by the settlement pattern.


  26. Larry G Avatar
    Larry G

    Our MPO is beginning an exercise called Regional Land Use Scenario Planning in which they are going to model the transportation infrastructure needs according to various land-use scenarios including the base case of existing land-use as currently designated.

    Various other land-use scenarios will be modeled to include more density, more compact development to included the recently enacted Urban Development Areas by the State of Virginia.

    Virginia itself says that it plan to incentivize the transportation infrastructure for compact development but as of yet the only incentives seem to be making potential funding available at higher priorities for the more more preferred densities.

    Of course, this would be for a MSA of about 300K population that is currently a significant commuting bedroom community of Nova but it could be interesting to see how it turns out.

  27. E M Risse Avatar
    E M Risse


    The key will be how the location-variable costs are identified and quantified.


  28. Anonymous Avatar

    EMR – should postalized rates, as as used by the US Postal Service, most telecom companies, and electric companies be abolished? Aren't distance/density-sensitive charges important to fixing the problem, as you define it? Again, this is not a hostile or in-your-face question. I'm just probing to understand your paradigm.


Leave a Reply