As Chicago Alderman Howard B. Brookins sees it, Walmart isn’t perfect, but at a time when unemployment in the city still hovers around 10 percent, it makes sense to embrace the world’s largest — and perhaps most controversial — retailer. “People can no longer say that not having a job is better than working at Walmart,” says Brookins, whose support for the store has made him a political target of some of the city’s labor unions.
Walmart opened its first Chicago store less than six years ago. Today, it’s up to five stores, having just opened one in the city’s West Chatham neighborhood in Brookins’ ward. Construction is slated to begin this summer on a sixth store in the East Lakeview neighborhood, and another three Chicago stores are in the works. The company hopes to eventually have dozens of stores throughout the Windy City.
Walmart, one of the most recognizable symbols of modern suburbia, is going urban.
In addition to its push in Chicago, the store is expanding its footprint in Atlanta. It’s hoping to enter New York City and Boston for the first time. And in perhaps its most aggressive move, Walmart last year announced plans for six stores within Washington, D.C., a city that currently doesn’t have any. Walmart isn’t the only store that’s expanding into central cities. In recent years, Target, Best Buy and Home Depot, among others, have been turning their focus to urban markets, which for political reasons (like labor opposition) and more practical concerns (like tighter land-use regulations) have posed a challenge for the big-box market in the past.
But times have changed. The country’s largest retailers have oversaturated rural and suburban America, and companies view urban centers as huge, largely untapped markets. Meanwhile, cities are desperate for the property and sales tax revenue the stores can generate, not to mention the jobs they’ll create and the access to fresh food they can provide at a time when the issue of food deserts has become a national concern. To be sure, there’s no lack of opposition to the big-boxification of cities. Most recently, the federal investigation into alleged government bribes by Walmart’s Mexican subsidiary has threatened to slow the retailer’s urban growth campaign in the United States. And there are still plenty of very vocal opponents who say that big-box retailers will hurt urban livability by driving away smaller independent businesses. Nevertheless, city leaders from Atlanta to Chicago and New York to New Orleans are now actively courting Walmart and other mega-retailers. Is it time to learn to love the big box?
Over the last half-century, the volume of retail in the country has grown at an astonishing clip. In the 1960s, the nation had about 4 square feet of retail per American; by 2000, that figure had increased nearly 10 times over. Most of that growth occurred in suburbs, as central cities emptied out. When the recession hit in 2008, retail took a massive hit, leaving an estimated 1 billion square feet of space vacant, much of it in suburban areas. Meanwhile, cities have become increasingly attractive destinations for many of the same types of people who historically left for the suburbs.
Today, big-box retailers look at urban centers like Washington and New York as “oases in this recession” with relatively strong economies, says Winston Orzechowski, research director at commercial real estate investment brokerage firm Calkain Companies. These companies don’t just want to move to the city — they have to in order to survive. Cities, which for so long were one of the few places in America ignored by major retailers, have now become their final frontier. “It’s not like they have anywhere else to go,” says Ed McMahon, senior resident fellow with the Urban Land Institute. “They’ve already saturated every suburb and small town in America.”
Yet moving to the city hasn’t been easy. Building suburban stores is simple: A Walmart Supercenter in the suburbs of Houston, for example, is basically identical to one outside Orlando. Urban markets, however, force retailers to adapt to existing spaces or lots, and sometimes require other creative steps. In Chicago, a Target is slated for the landmark Carson, Pirie, Scott and Company Building, designed in 1899 by Louis Sullivan. In Washington, several of the proposed Walmart buildings include plans for apartment housing above the store.
Walmart has also created new formats that seem particularly well tailored to the urban environment, like the Walmart Express, with a typical footprint of less than 15,000 square feet, and the Walmart Neighborhood Market, measuring about 40,000 square feet. It’s not using those models exclusively in the city — all of the company’s planned Washington stores will measure 80,000 to 120,000 square feet — but that’s still smaller than the typical Supercenter, which can measure up to 180,000 square feet.
It’s hard to overstate how much these kinds of innovations represent a reversal from just a decade ago. When Walmart and other big-box stores tried to crack urban markets back then, they were largely unsuccessful. Experts say their inflexibility on design issues was too big a hurdle to overcome. “Trying to do something that seems appropriate for the outskirts of Las Vegas … in a big city like San Francisco or New York or Chicago is not going to work,” says John Norquist, a former mayor of Milwaukee and current head of the Congress for the New Urbanism. “I think they’ve finally figured that out.”
There are other questions they’re being forced to answer, mostly for the first time: where to put loading docks, how many underground parking spots to have and how to incorporate transit stops. If done right, urban big-box stores could actually help foster the goals of the smart growth crowd by creating retail opportunities that are easily accessible to pedestrians and transit users, instead of forcing them to drive to the suburbs to shop. Advocates for the trend also cite the “transformative effect of retail” and believe the stores could help improve transitional neighborhoods.
Casey Chroust, executive vice president for retail operations at the Retail Industry Leaders Association, a trade group that represents just about all of the country’s major big-box stores, points to the 40,000-square-foot Whole Foods Market that opened in Washington’s Logan Circle neighborhood in 2000. Less than 20 years ago, the area was a hub for prostitution and other crime; today, it’s one of the city’s most desirable locations, replete with high-end furniture stores, gourmet restaurants and expensive real estate. Many observers say the Whole Foods (which originally opened under the name Fresh Fields) was a catalyst for change in the area. “It’s like having an anchor in a shopping mall,” says McMahon of the Urban Land Institute. “It’s bringing people into the neighborhood.”
Each city is taking a different approach to the big-box movement. While Mayor Michael Bloomberg of New York City has welcomed the prospect of Walmart, many local leaders like New York City Public Advocate Bill de Blasio and some City Council members vigorously oppose the retailer. As it stands, Walmart doesn’t have firm plans for a single store in the city, even though it’s aggressively eyeing the market. In Washington, D.C., Mayor Vincent Gray has welcomed the retailer; some City Council members have questioned the merits of the stores, but their criticism has generally been muted. Walmart’s first store is expected to open in the district next year. In both New York and D.C., labor groups and activists have loudly criticized the entrance of big-box stores — and Walmart in particular — into urban markets.
Stacy Mitchell, a senior researcher with the Institute for Local Self-Reliance, a national group that advocates for local businesses, says Walmart’s strategy is to saturate urban markets. She believes the company’s announced plans for cities like Chicago and Washington are merely the earliest stages of a broader effort. Cities, she says, should start developing plans now for how they will address the rapid expansion of Walmart and others so they’ll be prepared. She and other advocates argue that the economic benefits to a city from stores like Walmart have been overstated.
Both Walmart and city leaders often cite “leakage” — money that a city’s residents spend in Walmarts outside their city limits — as one of the primary reasons cities should embrace the stores. Residents are shopping at Walmart anyway, the logic goes, so why shouldn’t their own city get a piece of the action through property tax and sales tax revenue? “People are shopping the brand,” says Walmart spokesman Steve Restivo. “Our goal is to make access more convenient.” According to Walmart, Chicagoans spend nearly $500 million each year at Walmart stores outside the city; New Yorkers spend $200 million; and Washingtonians spend $40 million.
But Mitchell and other big-box opponents argue that the money isn’t significant enough to compensate for the negative impact Walmart could have on a local economy. A given market only has a limited amount of dollars to spend, and if residents start spending those dollars at Walmart, they’ll necessarily spend less at smaller, local retailers, causing job losses at those businesses. That’s particularly bad news, critics say, because a dollar spent at a local store will be more widely circulated in the local economy than one spent at a national chain with headquarters elsewhere. Opponents of Walmart’s urban endeavor like to cite a 2009 study of the chain’s first store in Chicago, which identified 82 stores that closed in its wake. (That study, notably, did not look at any new businesses that may have been created as a result of Walmart moving in, ignoring the “transformative effect” cited by Chroust and others.)
“The problem with the big-box stores is they have such economic clout in the marketplace that they’re able to undercut local businesses,” says D.C. Councilman Phil Mendelson. He’s pushed for legislation — so far, unsuccessfully — that would require big-box stores in his city to pay a living wage and benefits. The intention, he says, is to prevent a race to the bottom in terms of wages. Theoretically, if a big-box store offering low wages had a large enough presence in a city, it could drive down wages across the entire retail sector. Mendelson’s legislation would only apply to big-box stores; other businesses could still pay the minimum wage. His argument? Big-box stores can afford it. Supporters of Walmart say that the very fact that its stores have employees proves the company pays the market rate wage.
Still, Mendelson says he isn’t entirely anti-Walmart, just very skeptical. “I would say, superficially, having the world’s largest retailer interested in locating in the city when we’ve lost almost every other department store over the last four decades — that’s a good thing,” Mendelson says. “Having an economic competitor who underprices the market and causes a descent to the bottom, in terms of wages — that’s not a good thing.”
There’s also a debate within cities about whether they should use their planning and zoning regulations to block the store. In many urban markets, Walmart isn’t seeking tax incentives, making it difficult for city leaders to make demands. That’s a stark departure from what big-box stores have historically done in the suburbs, where they often play jurisdictions off one another to see who will offer a lucrative package of tax abatements and incentives.
With that dynamic removed, cities may see that the best way to exercise leverage is through the zoning process. But even that’s a difficult situation. In Washington, Planning Director Harriet Tregoning says the only way the city could block Walmart — even if it wanted to — would be essentially to make the store illegal, since its plans generally comply with existing zoning regulations. In New York, the city has had a bit more flexibility with a Brooklyn site that Walmart is rumored to be considering, because part of the development’s land is titled to the government.
Big-box supporters say it’s a gross misuse of the planning and zoning process to try to block a store on political grounds. In a free market, they argue, a big-box store such as Walmart shouldn’t face roadblocks so long as it operates legally. Others see it differently. “We’re in a highly regulated system,” says Tom Angotti, an urban affairs professor at Hunter College in New York. “I’d love to see where this free market is. Show me a municipality that doesn’t have zoning regulations, that doesn’t have taxes, that doesn’t have a regulatory structure that limits what businesses can do all the time because of an overwhelming public interest.”
There’s a bigger, less quantifiable argument against big-box stores’ move to the city, and that’s the question of whether the widespread urban expansion of these major chains will have profound changes on the character of city life. Urbanist Jane Jacobs wrote that “the trust of a city street is formed over time from many, many little public sidewalk contacts” at places like the bakery, the newsstand, the grocery store and the drug store. “We’re in danger of obliterating those things if we greenlight these retailers,” says Mitchell of the Institute for Local Self-Reliance.
Could those places really disappear if Walmart and other big-box stores come to dominate city life? Maybe. But that might not necessarily be a bad thing. “Cities are evolutionary,” says Tregoning, the D.C. planner. “New uses replace old uses.” As Tregoning sees it, Walmart doesn’t offer any meaningful shopping experience. It competes solely on price and convenience. She doesn’t sugarcoat her message to small businesses afraid that they can’t compete. “If Walmart can beat you,” she says, “then you are in the wrong business to begin with.” Instead, she says businesses that offer something Walmart can’t — like bars, restaurants and stores selling specialty goods or offering personalized levels of service — will continue to thrive.
Washington has less than 9 square feet of retail per resident, while the national average is more than two dozen, according to Tregoning. Anything that gives residents more shopping options — especially affordable ones — is a good opportunity in her book. Other city leaders appear to be embracing that philosophy. In Chicago, Alderman Brookins sees Walmart filling a similar void. “It may not be right for everybody, but in our community, it works,” Brookins says. “In our community, the mom-and-pop stores have long since left.”
In many ways, the notion of major retailers opening huge stores in central cities is a return to the way things were half a century ago, says the Urban Land Institute’s McMahon. “It was 1960. We called it a department store.”

As Chicago Alderman Howard B. Brookins sees it, Walmart isn’t perfect, but at a time when unemployment in the city still hovers around 10 percent, it makes sense to embrace the world’s largest — and perhaps most controversial — retailer. “People can no longer say that not having a job is better than working at Walmart,” says Brookins, whose support for the store has made him a political target of some of the city’s labor unions.

Walmart opened its first Chicago store less than six years ago. Today, it’s up to five stores, having just opened one in the city’s West Chatham neighborhood in Brookins’ ward. Construction is slated to begin this summer on a sixth store in the East Lakeview neighborhood, and another three Chicago stores are in the works. The company hopes to eventually have dozens of stores throughout the Windy City.

Walmart, one of the most recognizable symbols of modern suburbia, is going urban.

In addition to its push in Chicago, the store is expanding its footprint in Atlanta. It’s hoping to enter New York City and Boston for the first time. And in perhaps its most aggressive move, Walmart last year announced plans for six stores within Washington, D.C., a city that currently doesn’t have any. Walmart isn’t the only store that’s expanding into central cities. In recent years, Target, Best Buy and Home Depot, among others, have been turning their focus to urban markets, which for political reasons (like labor opposition) and more practical concerns (like tighter land-use regulations) have posed a challenge for the big-box market in the past.

But times have changed. The country’s largest retailers have oversaturated rural and suburban America, and companies view urban centers as huge, largely untapped markets. Meanwhile, cities are desperate for the property and sales tax revenue the stores can generate, not to mention the jobs they’ll create and the access to fresh food they can provide at a time when the issue of food deserts has become a national concern. To be sure, there’s no lack of opposition to the big-boxification of cities. Most recently, the federal investigation into alleged government bribes by Walmart’s Mexican subsidiary has threatened to slow the retailer’s urban growth campaign in the United States. And there are still plenty of very vocal opponents who say that big-box retailers will hurt urban livability by driving away smaller independent businesses. Nevertheless, city leaders from Atlanta to Chicago and New York to New Orleans are now actively courting Walmart and other mega-retailers. Is it time to learn to love the big box?

Over the last half-century, the volume of retail in the country has grown at an astonishing clip. In the 1960s, the nation had about 4 square feet of retail per American; by 2000, that figure had increased nearly 10 times over. Most of that growth occurred in suburbs, as central cities emptied out. When the recession hit in 2008, retail took a massive hit, leaving an estimated 1 billion square feet of space vacant, much of it in suburban areas. Meanwhile, cities have become increasingly attractive destinations for many of the same types of people who historically left for the suburbs.

Today, big-box retailers look at urban centers like Washington and New York as “oases in this recession” with relatively strong economies, says Winston Orzechowski, research director at commercial real estate investment brokerage firm Calkain Companies. These companies don’t just want to move to the city — they have to in order to survive. Cities, which for so long were one of the few places in America ignored by major retailers, have now become their final frontier. “It’s not like they have anywhere else to go,” says Ed McMahon, senior resident fellow with the Urban Land Institute. “They’ve already saturated every suburb and small town in America.”

Yet moving to the city hasn’t been easy. Building suburban stores is simple: A Walmart Supercenter in the suburbs of Houston, for example, is basically identical to one outside Orlando. Urban markets, however, force retailers to adapt to existing spaces or lots, and sometimes require other creative steps. In Chicago, a Target is slated for the landmark Carson, Pirie, Scott and Company Building, designed in 1899 by Louis Sullivan. In Washington, several of the proposed Walmart buildings include plans for apartment housing above the store.

Walmart has also created new formats that seem particularly well tailored to the urban environment, like the Walmart Express, with a typical footprint of less than 15,000 square feet, and the Walmart Neighborhood Market, measuring about 40,000 square feet. It’s not using those models exclusively in the city — all of the company’s planned Washington stores will measure 80,000 to 120,000 square feet — but that’s still smaller than the typical Supercenter, which can measure up to 180,000 square feet.

It’s hard to overstate how much these kinds of innovations represent a reversal from just a decade ago. When Walmart and other big-box stores tried to crack urban markets back then, they were largely unsuccessful. Experts say their inflexibility on design issues was too big a hurdle to overcome. “Trying to do something that seems appropriate for the outskirts of Las Vegas … in a big city like San Francisco or New York or Chicago is not going to work,” says John Norquist, a former mayor of Milwaukee and current head of the Congress for the New Urbanism. “I think they’ve finally figured that out.”

There are other questions they’re being forced to answer, mostly for the first time: where to put loading docks, how many underground parking spots to have and how to incorporate transit stops. If done right, urban big-box stores could actually help foster the goals of the smart growth crowd by creating retail opportunities that are easily accessible to pedestrians and transit users, instead of forcing them to drive to the suburbs to shop. Advocates for the trend also cite the “transformative effect of retail” and believe the stores could help improve transitional neighborhoods.

Casey Chroust, executive vice president for retail operations at the Retail Industry Leaders Association, a trade group that represents just about all of the country’s major big-box stores, points to the 40,000-square-foot Whole Foods Market that opened in Washington’s Logan Circle neighborhood in 2000. Less than 20 years ago, the area was a hub for prostitution and other crime; today, it’s one of the city’s most desirable locations, replete with high-end furniture stores, gourmet restaurants and expensive real estate. Many observers say the Whole Foods (which originally opened under the name Fresh Fields) was a catalyst for change in the area. “It’s like having an anchor in a shopping mall,” says McMahon of the Urban Land Institute. “It’s bringing people into the neighborhood.”

Each city is taking a different approach to the big-box movement. While Mayor Michael Bloomberg of New York City has welcomed the prospect of Walmart, many local leaders like New York City Public Advocate Bill de Blasio and some City Council members vigorously oppose the retailer. As it stands, Walmart doesn’t have firm plans for a single store in the city, even though it’s aggressively eyeing the market. In Washington, D.C., Mayor Vincent Gray has welcomed the retailer; some City Council members have questioned the merits of the stores, but their criticism has generally been muted. Walmart’s first store is expected to open in the district next year. In both New York and D.C., labor groups and activists have loudly criticized the entrance of big-box stores — and Walmart in particular — into urban markets.

Stacy Mitchell, a senior researcher with the Institute for Local Self-Reliance, a national group that advocates for local businesses, says Walmart’s strategy is to saturate urban markets. She believes the company’s announced plans for cities like Chicago and Washington are merely the earliest stages of a broader effort. Cities, she says, should start developing plans now for how they will address the rapid expansion of Walmart and others so they’ll be prepared. She and other advocates argue that the economic benefits to a city from stores like Walmart have been overstated.

Both Walmart and city leaders often cite “leakage” — money that a city’s residents spend in Walmarts outside their city limits — as one of the primary reasons cities should embrace the stores. Residents are shopping at Walmart anyway, the logic goes, so why shouldn’t their own city get a piece of the action through property tax and sales tax revenue? “People are shopping the brand,” says Walmart spokesman Steve Restivo. “Our goal is to make access more convenient.” According to Walmart, Chicagoans spend nearly $500 million each year at Walmart stores outside the city; New Yorkers spend $200 million; and Washingtonians spend $40 million.

But Mitchell and other big-box opponents argue that the money isn’t significant enough to compensate for the negative impact Walmart could have on a local economy. A given market only has a limited amount of dollars to spend, and if residents start spending those dollars at Walmart, they’ll necessarily spend less at smaller, local retailers, causing job losses at those businesses. That’s particularly bad news, critics say, because a dollar spent at a local store will be more widely circulated in the local economy than one spent at a national chain with headquarters elsewhere. Opponents of Walmart’s urban endeavor like to cite a 2009 study of the chain’s first store in Chicago, which identified 82 stores that closed in its wake. (That study, notably, did not look at any new businesses that may have been created as a result of Walmart moving in, ignoring the “transformative effect” cited by Chroust and others.)

“The problem with the big-box stores is they have such economic clout in the marketplace that they’re able to undercut local businesses,” says D.C. Councilman Phil Mendelson. He’s pushed for legislation — so far, unsuccessfully — that would require big-box stores in his city to pay a living wage and benefits. The intention, he says, is to prevent a race to the bottom in terms of wages. Theoretically, if a big-box store offering low wages had a large enough presence in a city, it could drive down wages across the entire retail sector. Mendelson’s legislation would only apply to big-box stores; other businesses could still pay the minimum wage. His argument? Big-box stores can afford it. Supporters of Walmart say that the very fact that its stores have employees proves the company pays the market rate wage.

Still, Mendelson says he isn’t entirely anti-Walmart, just very skeptical. “I would say, superficially, having the world’s largest retailer interested in locating in the city when we’ve lost almost every other department store over the last four decades — that’s a good thing,” Mendelson says. “Having an economic competitor who underprices the market and causes a descent to the bottom, in terms of wages — that’s not a good thing.”

There’s also a debate within cities about whether they should use their planning and zoning regulations to block the store. In many urban markets, Walmart isn’t seeking tax incentives, making it difficult for city leaders to make demands. That’s a stark departure from what big-box stores have historically done in the suburbs, where they often play jurisdictions off one another to see who will offer a lucrative package of tax abatements and incentives.

With that dynamic removed, cities may see that the best way to exercise leverage is through the zoning process. But even that’s a difficult situation. In Washington, Planning Director Harriet Tregoning says the only way the city could block Walmart — even if it wanted to — would be essentially to make the store illegal, since its plans generally comply with existing zoning regulations. In New York, the city has had a bit more flexibility with a Brooklyn site that Walmart is rumored to be considering, because part of the development’s land is titled to the government.

Big-box supporters say it’s a gross misuse of the planning and zoning process to try to block a store on political grounds. In a free market, they argue, a big-box store such as Walmart shouldn’t face roadblocks so long as it operates legally. Others see it differently. “We’re in a highly regulated system,” says Tom Angotti, an urban affairs professor at Hunter College in New York. “I’d love to see where this free market is. Show me a municipality that doesn’t have zoning regulations, that doesn’t have taxes, that doesn’t have a regulatory structure that limits what businesses can do all the time because of an overwhelming public interest.”

There’s a bigger, less quantifiable argument against big-box stores’ move to the city, and that’s the question of whether the widespread urban expansion of these major chains will have profound changes on the character of city life. Urbanist Jane Jacobs wrote that “the trust of a city street is formed over time from many, many little public sidewalk contacts” at places like the bakery, the newsstand, the grocery store and the drug store. “We’re in danger of obliterating those things if we greenlight these retailers,” says Mitchell of the Institute for Local Self-Reliance.

Could those places really disappear if Walmart and other big-box stores come to dominate city life? Maybe. But that might not necessarily be a bad thing. “Cities are evolutionary,” says Tregoning, the D.C. planner. “New uses replace old uses.” As Tregoning sees it, Walmart doesn’t offer any meaningful shopping experience. It competes solely on price and convenience. She doesn’t sugarcoat her message to small businesses afraid that they can’t compete. “If Walmart can beat you,” she says, “then you are in the wrong business to begin with.” Instead, she says businesses that offer something Walmart can’t — like bars, restaurants and stores selling specialty goods or offering personalized levels of service — will continue to thrive.

Washington has less than 9 square feet of retail per resident, while the national average is more than two dozen, according to Tregoning. Anything that gives residents more shopping options — especially affordable ones — is a good opportunity in her book. Other city leaders appear to be embracing that philosophy. In Chicago, Alderman Brookins sees Walmart filling a similar void. “It may not be right for everybody, but in our community, it works,” Brookins says. “In our community, the mom-and-pop stores have long since left.”

In many ways, the notion of major retailers opening huge stores in central cities is a return to the way things were half a century ago, says the Urban Land Institute’s McMahon. “It was 1960. We called it a department store.”

Introducing Old Bacon Street CondominiumsAppointments starting June 20th, schedule here.
Priced from the mid 300’s to low 700’s
Rooftop decks with stunning city views
White oak hardwood floors
Fully restored exposed-brick walls
Solid surface countertops
Bosch kitchen appliances
Delivering August 2012

Introducing Old Bacon Street Condominiums
Appointments starting June 20th, schedule here.

  • Priced from the mid 300’s to low 700’s
  • Rooftop decks with stunning city views
  • White oak hardwood floors
  • Fully restored exposed-brick walls
  • Solid surface countertops
  • Bosch kitchen appliances

Delivering August 2012


Affordability could be an issue in the Washington area’s recovering housing market
By Lisa A. Sturtevant


The D.C. region has been called the leader of the nation’s housing market. Indeed, even as other markets across the country begin to recover, prices in the Washington area continue to rise and have been up for 26 out of the last 30 months, according to data from RBIntel. 
But, as everyone knows, all real estate is local, and the recovery has been markedly different around the region.  In the Washington metropolitan statistical area, or Washington MSA (which is defined as the District and 21 counties and cities in Maryland, Virginia and West Virginia), the median sales price is at 80 percent of the peak. However, there is wide variation across the region.  In general, price recovery is more likely to be in closer in locations.  The Virginia suburbs generally have fared better than the Maryland side of the river. (RBIntel, GMU Center for Regional Analysis, April 2012)
The uneven recovery across the region suggests that affordability is a minor issue in some places but an increasingly pressing issue in others.  For example, in Prince George’s County, where the median sales price in April is still just half of the county’s peak, housing remains relatively affordable.  In the District, and in Arlington County and the City of Alexandria, on the other hand, affordability is a pressing issue again.  The median home price in Arlington County was nearly $550,000 in April.  The median price of a single-family home (excluding condos, but including townhouses) in the county was $680,000. 
These are the same prices we saw five or six years ago when affordability was a front and center issue.  Interest rates are somewhat lower now than they were at the market peak — which makes the overall cost of housing lower — but incomes and families’ purchasing power have been flat. In jurisdictions where prices have returned close to peak, it is very difficult for anyone but the highest income families and individuals to buy a house.   
Amid the news of the continued recovery of our housing market, it is important to acknowledge that affordability is still an issue for many people.  In some jurisdictions, affordability is just as big a problem now as it was at the peak of the housing market.

Lisa A. Sturtevant is an assistant research professor at George Mason University’s Center for Regional Analysis.

Affordability could be an issue in the Washington area’s recovering housing market

The D.C. region has been called the leader of the nation’s housing market. Indeed, even as other markets across the country begin to recover, prices in the Washington area continue to rise and have been up for 26 out of the last 30 months, according to data from RBIntel

But, as everyone knows, all real estate is local, and the recovery has been markedly different around the region.  In the Washington metropolitan statistical area, or Washington MSA (which is defined as the District and 21 counties and cities in Maryland, Virginia and West Virginia), the median sales price is at 80 percent of the peak. However, there is wide variation across the region.  In general, price recovery is more likely to be in closer in locations.  The Virginia suburbs generally have fared better than the Maryland side of the river. 
(RBIntel, GMU Center for Regional Analysis, April 2012)

The uneven recovery across the region suggests that affordability is a minor issue in some places but an increasingly pressing issue in others.  For example, in Prince George’s County, where the median sales price in April is still just half of the county’s peak, housing remains relatively affordable.  In the District, and in Arlington County and the City of Alexandria, on the other hand, affordability is a pressing issue again.  The median home price in Arlington County was nearly $550,000 in April.  The median price of a single-family home (excluding condos, but including townhouses) in the county was $680,000. 

These are the same prices we saw five or six years ago when affordability was a front and center issue.  Interest rates are somewhat lower now than they were at the market peak — which makes the overall cost of housing lower — but incomes and families’ purchasing power have been flat. In jurisdictions where prices have returned close to peak, it is very difficult for anyone but the highest income families and individuals to buy a house.   

Amid the news of the continued recovery of our housing market, it is important to acknowledge that affordability is still an issue for many people.  In some jurisdictions, affordability is just as big a problem now as it was at the peak of the housing market.

Lisa A. Sturtevant is an assistant research professor at George Mason University’s Center for Regional Analysis.




WALKING isn’t just good for you. It has become an indicator of your socioeconomic status. 




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Josh Cochran





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Graphic
A Life of Walking Vs. Driving






Until the 1990s, exclusive suburban homes that were accessible only by car cost more, per square foot, than other kinds of American housing. Now, however, these suburbs have become overbuilt, and housing values have fallen. Today, the most valuable real estate lies in walkable urban locations. Many of these now pricey places were slums just 30 years ago. 
Mariela Alfonzo and I just released a Brookings Institution study that measures values of commercial and residential real estate in the Washington, D.C., metropolitan area, which includes the surrounding suburbs in Virginia and Maryland. Our research shows that real estate values increase as neighborhoods became more walkable, where everyday needs, including working, can be met by walking, transit or biking. There is a five-step “ladder” of walkability, from least to most walkable. On average, each step up the walkability ladder adds $9 per square foot to annual office rents, $7 per square foot to retail rents, more than $300 per month to apartment rents and nearly $82 per square foot to home values. 
As a neighborhood moves up each step of the five-step walkability ladder, the average household income of those who live there increases some $10,000. People who live in more walkable places tend to earn more, but they also tend to pay a higher percentage of their income for housing.
Although we have not studied all urban areas to the same degree, these findings appear to apply to much of the rest of the country. In metropolitan Seattle in 1996, the suburban Redmond area, home to Microsoft, had the same price per square foot as Capitol Hill, a walkable area adjacent to downtown, based on data from Zillow. Today, Capitol Hill is valued nearly 50 percent above Redmond. 
In Columbus, Ohio, the highest housing values recorded by Zillow in 1996 were in the suburb of Worthington, where prices were 135 percent higher than in the struggling neighborhood of Short North, adjacent to the city’s center.  Today, Short North housing values are 30 percent higher than those of Worthington, and downtown Columbus has the highest housing values in that metropolitan area. 
In the Denver area, Highlands Ranch, an upscale, master-planned community 20 miles south of downtown, had housing in 1996 that cost on average 21 percent more than housing in Highlands, a troubled neighborhood adjacent to downtown Denver. Today, Highlands has a 67 percent price premium over Highlands Ranch. 
People are clearly willing to pay more for homes that allow them to walk rather than drive. Biking is part of the picture, too. Biking and walking are part of a “complete streets” strategy that public rights of way should be for all of society — not just cars.
The rise in bike-sharing systems in Minneapolis, metropolitan Washington, and soon New York City makes it possible to imagine a future in which a third of a city’s population gets around primarily by bicycle. The popular Web site Walk Score has just added Bike Scoreto let people know which neighborhoods are most bikable.
Demand for walkable urban space extends beyond city centers to suburbs; in metropolitan Washington, more than half of the walkable places are in the suburbs, like Reston Town Center, 22 miles from downtown Washington; Ballston, in Arlington County; and Silver Spring, in suburban Maryland. Residents can easily get to grocery stores, cafes, libraries and work by rail transit, biking and walking. 
Why is there an urbanization of the suburbs? Some baby boomers want to sell their large suburban houses and move to a walkable urban place but stay close to friends and family. Young families want the advantages of walkable urban life but also high-quality suburban schools. This trend is about both the revitalization of center cities and the urbanization of the suburbs. 
To address the affordability challenge, a sensible strategy would include changes like zoning that allows homes with units in the back or over the garage. But the long-term solution is encouraging the building of more walkable places, which will reduce the price premiums by creating more supply.
(Disclosure: I am the president of Locus, a coalition of real estate developers and investors, and a project of Smart Growth America, which supports walkable neighborhoods and transit-oriented development.)
Different infrastructure needs to be built, including rail transit and paths for walking and biking. Some research has shown that walkable urban infrastructure is substantially cheaper on a usable square foot basis than spread-out drivable suburban infrastructure; the infrastructure is used much more extensively in a small area, resulting in much lower costs per usable square foot.
It’s important that developers and their investors learn how to build places that integrate many different uses within walking distance. Building walkable urban places is more complex and riskier than following decades-long patterns of suburban construction. But the market gets what it wants, and the market signals are flashing pretty brightly: build more walkable, and bikable, places. 

A professor at the George Washington University School of Business and a senior fellow at the Brookings Institution.

WALKING isn’t just good for you. It has become an indicator of your socioeconomic status. 

Josh Cochran
Multimedia

Until the 1990s, exclusive suburban homes that were accessible only by car cost more, per square foot, than other kinds of American housing. Now, however, these suburbs have become overbuilt, and housing values have fallen. Today, the most valuable real estate lies in walkable urban locations. Many of these now pricey places were slums just 30 years ago. 

Mariela Alfonzo and I just released a Brookings Institution study that measures values of commercial and residential real estate in the Washington, D.C., metropolitan area, which includes the surrounding suburbs in Virginia and Maryland. Our research shows that real estate values increase as neighborhoods became more walkable, where everyday needs, including working, can be met by walking, transit or biking. There is a five-step “ladder” of walkability, from least to most walkable. On average, each step up the walkability ladder adds $9 per square foot to annual office rents, $7 per square foot to retail rents, more than $300 per month to apartment rents and nearly $82 per square foot to home values. 

As a neighborhood moves up each step of the five-step walkability ladder, the average household income of those who live there increases some $10,000. People who live in more walkable places tend to earn more, but they also tend to pay a higher percentage of their income for housing.

Although we have not studied all urban areas to the same degree, these findings appear to apply to much of the rest of the country. In metropolitan Seattle in 1996, the suburban Redmond area, home to Microsoft, had the same price per square foot as Capitol Hill, a walkable area adjacent to downtown, based on data from Zillow. Today, Capitol Hill is valued nearly 50 percent above Redmond. 

In Columbus, Ohio, the highest housing values recorded by Zillow in 1996 were in the suburb of Worthington, where prices were 135 percent higher than in the struggling neighborhood of Short North, adjacent to the city’s center.  Today, Short North housing values are 30 percent higher than those of Worthington, and downtown Columbus has the highest housing values in that metropolitan area. 

In the Denver area, Highlands Ranch, an upscale, master-planned community 20 miles south of downtown, had housing in 1996 that cost on average 21 percent more than housing in Highlands, a troubled neighborhood adjacent to downtown Denver. Today, Highlands has a 67 percent price premium over Highlands Ranch. 

People are clearly willing to pay more for homes that allow them to walk rather than drive. Biking is part of the picture, too. Biking and walking are part of a “complete streets” strategy that public rights of way should be for all of society — not just cars.

The rise in bike-sharing systems in Minneapolis, metropolitan Washington, and soon New York City makes it possible to imagine a future in which a third of a city’s population gets around primarily by bicycle. The popular Web site Walk Score has just added Bike Scoreto let people know which neighborhoods are most bikable.

Demand for walkable urban space extends beyond city centers to suburbs; in metropolitan Washington, more than half of the walkable places are in the suburbs, like Reston Town Center, 22 miles from downtown Washington; Ballston, in Arlington County; and Silver Spring, in suburban Maryland. Residents can easily get to grocery stores, cafes, libraries and work by rail transit, biking and walking. 

Why is there an urbanization of the suburbs? Some baby boomers want to sell their large suburban houses and move to a walkable urban place but stay close to friends and family. Young families want the advantages of walkable urban life but also high-quality suburban schools. This trend is about both the revitalization of center cities and the urbanization of the suburbs. 

To address the affordability challenge, a sensible strategy would include changes like zoning that allows homes with units in the back or over the garage. But the long-term solution is encouraging the building of more walkable places, which will reduce the price premiums by creating more supply.

(Disclosure: I am the president of Locus, a coalition of real estate developers and investors, and a project of Smart Growth America, which supports walkable neighborhoods and transit-oriented development.)

Different infrastructure needs to be built, including rail transit and paths for walking and biking. Some research has shown that walkable urban infrastructure is substantially cheaper on a usable square foot basis than spread-out drivable suburban infrastructure; the infrastructure is used much more extensively in a small area, resulting in much lower costs per usable square foot.

It’s important that developers and their investors learn how to build places that integrate many different uses within walking distance. Building walkable urban places is more complex and riskier than following decades-long patterns of suburban construction. But the market gets what it wants, and the market signals are flashing pretty brightly: build more walkable, and bikable, places. 

professor at the George Washington University School of Business and a senior fellow at the Brookings Institution.

Only one week left to choose your finishes at The Standard Eleven. Don’t wait, contact us now to schedule your appointment at 202-580-6008.

Only one week left to choose your finishes at The Standard Eleven. Don’t wait, contact us now to schedule your appointment at 202-580-6008.

Housing Prices Find Stability!


Good news for real-estate agents: In a recent Gallup poll of trustworthiness, they ranked higher than lawyers, a turnaround from a 2008 survey. And they continue to leave telemarketers, members of Congress and stockbrokers in the dust.


Some gauges on housing appear to be turning the corner, as Spencer Jakab reports on Markets Hub. Photo: AP.


The public even may start to believe the message from the National Association of Realtors, advertised throughout the housing debacle, that this is “one of the best times to buy a home.



With the Case-Shiller index down 35% over six years and mortgage rates hitting record lows, affordability has improved.



Sinking prices have made a mockery of their exhortations, but the S&P/Case-Shiller index of home prices in 20 major cities is showing signs of stabilizing. And, if it stops falling when the March reading is released Tuesday, it would mark the first time since last August that the index hasn’t shown a month-over-month decline.
Meanwhile, other housing gauges using different methodologies already appear to be turning the corner. CoreLogic’s national home-price index perked up in late winter and has risen in recent months at the fastest pace since the bubbly spring of 2006. And the Federal Housing Agency’s purchase-only house-price index rose 1.8% in March from the prior month.





With the Case-Shiller index down 35% over six years and mortgage rates hitting record lows, affordability has improved. The National Association of Realtors’ Housing Affordability Index for the first quarter was at its highest level ever.
Supply and demand are playing a role, too. In early 2006, housing starts peaked near 2.3 million on an annualized basis. They crashed below 500,000 by the spring of 2009 and have climbed back to just over 700,000 in April. That is still below the pace of household formation, which is close to one million.
Any recovery will be a far cry from the good old days, though. Home-price tracker Zillow Inc. reports that 31% of borrowers remain “underwater” on their mortgages and so are unable to sell even while there is a backlog of homes yet to enter foreclosure. And household income will have to rise when mortgage rates increase from today’s artificially low levels to keep affordability constant.
So it is premature to predict a boom. But if prices really are turning the corner, that has positive implications for banks’ and consumers’ balance sheets.
Don’t take a real-estate agent’s word for it, but prices don’t lie.
Write to Spencer Jakab at spencer.jakab@wsj.com
A version of this article appeared May 29, 2012, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: Housing Prices Show Signs of Stability.

Housing Prices Find Stability!

Good news for real-estate agents: In a recent Gallup poll of trustworthiness, they ranked higher than lawyers, a turnaround from a 2008 survey. And they continue to leave telemarketers, members of Congress and stockbrokers in the dust.

Some gauges on housing appear to be turning the corner, as Spencer Jakab reports on Markets Hub. Photo: AP.

The public even may start to believe the message from the National Association of Realtors, advertised throughout the housing debacle, that this is “one of the best times to buy a home.

With the Case-Shiller index down 35% over six years and mortgage rates hitting record lows, affordability has improved.

Sinking prices have made a mockery of their exhortations, but the S&P/Case-Shiller index of home prices in 20 major cities is showing signs of stabilizing. And, if it stops falling when the March reading is released Tuesday, it would mark the first time since last August that the index hasn’t shown a month-over-month decline.

Meanwhile, other housing gauges using different methodologies already appear to be turning the corner. CoreLogic’s national home-price index perked up in late winter and has risen in recent months at the fastest pace since the bubbly spring of 2006. And the Federal Housing Agency’s purchase-only house-price index rose 1.8% in March from the prior month.

[AOT]

With the Case-Shiller index down 35% over six years and mortgage rates hitting record lows, affordability has improved. The National Association of Realtors’ Housing Affordability Index for the first quarter was at its highest level ever.

Supply and demand are playing a role, too. In early 2006, housing starts peaked near 2.3 million on an annualized basis. They crashed below 500,000 by the spring of 2009 and have climbed back to just over 700,000 in April. That is still below the pace of household formation, which is close to one million.

Any recovery will be a far cry from the good old days, though. Home-price tracker Zillow Inc. reports that 31% of borrowers remain “underwater” on their mortgages and so are unable to sell even while there is a backlog of homes yet to enter foreclosure. And household income will have to rise when mortgage rates increase from today’s artificially low levels to keep affordability constant.

So it is premature to predict a boom. But if prices really are turning the corner, that has positive implications for banks’ and consumers’ balance sheets.

Don’t take a real-estate agent’s word for it, but prices don’t lie.

Write to Spencer Jakab at spencer.jakab@wsj.com

A version of this article appeared May 29, 2012, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: Housing Prices Show Signs of Stability.

Freddie Mac Releases New Trends Report

PR Newswire

MCLEAN, Va.May 25, 2012 /PRNewswire/ — Freddie Mac (OTC: FMCC) today issued the company’s Monthly Volume Summary for April 2012.

The summary, available on the company’s Web site at www.FreddieMac.com/investors/volsum, provides information on Freddie Mac’s mortgage-related portfolios, securities issuance, risk management and delinquencies.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today, Freddie Mac makes home possible for one in four homebuyers and is one of the largest sources of financing for multifamily housing. 

SOURCE Freddie Mac

This week, interest rates took a major dive, if you’re in the market for a new home, read here to find out why you may want to buy right now!

This week, interest rates took a major dive, if you’re in the market for a new home, read here to find out why you may want to buy right now!

The Standard Eleven is Logan Circle’s newest condominium gem. If you’re a current home shopper, don’t miss this opportunity. This amazing Edwardian townhome has been lovingly restored with inspiration from The ACE Hotel in Manhattan. For the next ten days only, buyers will have the rare opportunity to choose interior features including flooring, tile, kitchen cabinets, custom audio/video options and much more. No other project in the Washington metro area is giving homebuyers this much flexibility. For more information, visit www.thestandardeleven.com.

The Standard Eleven is Logan Circle’s newest condominium gem. If you’re a current home shopper, don’t miss this opportunity. This amazing Edwardian townhome has been lovingly restored with inspiration from The ACE Hotel in Manhattan. For the next ten days only, buyers will have the rare opportunity to choose interior features including flooring, tile, kitchen cabinets, custom audio/video options and much more. No other project in the Washington metro area is giving homebuyers this much flexibility. For more information, visit www.thestandardeleven.com.

As any real estate professional and many frustrated buyers know, FHA has “tightened up the purse strings” over the last few years. Now, it seems that’s starting to change. With increased property values and consumer confidence fueling the market, FHA might once again be a great financing option. Read the full story here.

As any real estate professional and many frustrated buyers know, FHA has “tightened up the purse strings” over the last few years. Now, it seems that’s starting to change. With increased property values and consumer confidence fueling the market, FHA might once again be a great financing option. Read the full story here.