Sustainability through Massive abundance.

Episode 24: Defying the Housing Crash

What happened when I bought a home at the peak of the housing bubble, and sold three years later in the depths of the housing crash? This episode tells my story, and how it provided the first clue that sustainable living is ready for its own "Apple Computer" moment.

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Transcript

Can you recession-proof a home?

Is it possible to recession-proof a home without doing anything in particular to the house itself? I wouldn't have thought so. But Green Acres, which I spoke about in the previous episode, really put this concept to the test.

Just to bring you up to date on that story, I moved into the neighborhood in 2006, and ended up buying a house in the neighborhood in 2007. And unfortunately, I had to sell in 2010.

Now, that was amazingly bad timing!

Because we basically bought at the peak of the housing bubble, and sold just about at the bottom of the housing crash. And so we should have lost a lot of money. And it was a really terrible experience for millions of people. And my heart just goes out to anybody who was affected by that. I know there's a whole generation of Americans are very hesitant to buy us family home as a result of that experience, and I myself saw the aftermath of this driving through towns in Ohio, where you had mile after mile of boarded up houses. It was really a terrible economic tragedy.

So I was very surprised when we put the house up for sale, that we didn't end up going underwater like so many millions of other people.

Did we just get lucky? Did we do something amazing to the house? NO and NO. What we did instead was participate in making the neighborhood itself a much better place to live. And in so doing, we accidentally positioned ourselves to be nudged by ... history itself!

Intro [music]

Cities designed like modern Edens, for economic and ecological abundance. I'm Kev Polk, your guide to Edenicity.

Welcome to Episode 24, where I'll discuss some surprising trends in real estate, including how to recession and disaster proof your neighborhood and your home.

Buying high, selling low?

So let me establish some basic parameters about my personal experience. I'm certainly not a real estate professional. So I can't say how universal my experience is. I do know that the house that we bought had sat on the market for something like 11 months before we bought it. It was a 50 year old house in a very nondescript development very close to the university, and we paid about $155,000 for it.

Now I went to Zillow and tracked the housing market as a whole and looked at what we should have ended up getting for it three years later, and that amount works out to about $125,000. So we should have lost about $30,000. But instead what happened was, we put it up for sale, it was on the market for three days. And we ended up closing at $165,000. So we actually ended up making a profit of $10,000 and performing about $40,000 above the market.

How did we do that? Now granted, it was a university neighborhood, and I figured, probably naively, that a university neighborhood would be somewhat inoculated against the general trend in housing. But that doesn't explain why it sold so fast and did so at a profit.

Repairs and upgrades

Did we fix it up? Well, a little bit. There were no major upgrades, just routine maintenance. We had to install a radon blower. We had to replace four leaky skylights. I got up on a ladder and re-glazed all 22 windows; that was a real pane ;^). And we ended up painting three rooms and, wouldn't you know it, one of the toilets just flat out broke and started leaking in the bathroom. And this led to an amateur bathroom upgrade. One could argue that the lack of quality of work that we put into it could actually reduce the value, not raise it.

In any case, selling in three days rather than 11 months is a really big step up. And again, there weren't that many realtors in that town, it was all pretty much the same crowd. I didn't write especially convincing sales copy, it was just pretty obvious stuff saying what a great wonderful green neighborhood Green Acres has become, and we've done some upgrades to the house, have a look. So it wasn't that big a step up, in terms of the house.

The $14 million bump

The only remaining factor that I can think of is that in those three years the neighborhood had gained enormously in reputation as we established it as an environmentally sustainable place to live.

Now if our experience also applied to all of the other houses in that neighborhood (and I think it would), then what we did as a neighborhood, redefining ourselves as a sustainable place to live, took what would have been a $10 million slump when you add up all of the values of all of the properties, and turned it into a $4 million bump. So our activities as a neighborhood, becoming more of a village and a better community for each other, added $14 million of value.

Now, again, I'm interpreting from very limited data here, but it's really intriguing and really encouraging. And so I decided to dig into it a little bit further. Here's what I found.

My first stop was the book, Designing Sustainable Communities: Learning from Village Homes by that development's instigators and designers, Judy Corbett and Michael Corbett. And on page 79, as I mentioned in a previous episode, they pointed out that over a 20 year period the community's reputation had changed from "that hippy subdivision" to "the most costly place per square foot to live in Davis, California."

Housing prices in green neighborhoods

So that encouraged me then to get online back in 2017 and look up other green neighborhoods. I used Mother Earth News to come up with a list of neighborhoods in Texas, Tennessee, Oregon, Illinois, Virginia, and Arizona. So we're talking all sorts of different climates. And then I got on Zillow, and looked up the values of homes in those neighborhoods compared to surrounding neighborhoods. And guess what I found? In just about every case, houses in the green neighborhoods fetched a much higher price than the surrounding neighborhoods.

So for example, houses in Miller Texas went for $500,000, while in surrounding Austin, Texas, they went for $300,000. Houses in the Madison Street Development in Tennessee fetched $250,000 while in surrounding Chattanooga, they went for $210,000. In Oregon, the Northwest Crossing development unit sold for $600,000, on average, while in Bend, Oregon, the surrounding area, they went for $380,000. In Prairie Crossing Illinois, houses went for $360,000, while in Grayslake, Illinois, they went for $210,000. Garden Atriums in Virginia went for $700,000, while in Poquossan, they fetched a measly $300,000. In Arizona, units in Silvano fetched $220,000, while in the greater Tucson area, they went for just $150,000.

So the developments that were blatantly green, actually fetched a premium. Now, does this prove my case? No, it's not a very large number of houses to survey. And I don't know much about the surrounding areas. I just know that green development doesn't hurt your property values.

Feedback from young renters

Another somewhat unscientific investigation that I undertook was to look at university and other institutional housing, and read the comments of residents, as well as the advertising materials. And one thing that I noticed is that green upgrades consistently won the approval of residents. So here's a quote from a residence review from one of the housing developments serving the University of Virginia: "I just renewed for my fourth year here at UV! I love all of the improvements being done to make the community more Eco-friendly and updated. Great place to live!"

So one of the trends that the land development community really has to get a grip on is that the upcoming generation of buyers and renters really put green living at a premium. I just presented a hint of evidence that green development is profitable. That said, this is just the first hint of what's possible.

Our Apple Computer moment

I think in real estate, we must be in an Apple Computer moment right now.

I mean, back in 1976, when Steve Jobs founded Apple Computer, there were really big mainframes. And then there were basically hobby kits that people played with and experimented with. And not a whole lot in between. And the genius of Apple Computer was to take some of the really cool features that people had in their hobby computers, things like spreadsheets and word processors, and make those available to the masses. And there was kind of a follow on revolution with the launch of the Macintosh in the 80s, which made computers much, much easier to use. And so you didn't have to be a specialist to get the value out of the thing.

Similarly, green lifestyles have basically been hobbies. This has been true for at least 50 years.

And the big question is, has it worked? Has it actually reversed climate change? Has it actually slowed the vast increase in mass extinctions?

All it has done (and this is an important thing) is to raise consciousness. But that's it. All it has done is create a market for Edenicity.

Right now we have people trying to live green in neighborhoods, all on their own and telling each other this is how we're going to change the world: by each of us having our compost piles and gardens and sharing stuff with our neighbors. And all of that is good because it builds the culture that's receptive to what's to come--just like the computer hobby clubs built some awareness and understanding of what computers were good for in the public's mind.

But just as we can't all be specialized computer hobbyists, very few people can make a personal career out of making environmentally friendly choices for the planet. We've got to live our lives. What people need but don't know they need is a turn-key way to live far greener than is even possible for anyone to do as a hobbyist. That's what's been missing for 50 years!

Episodes 8 and 9 showed why developers brave enough to go all the way with Edenicity will enjoy higher profit margins and vastly larger markets, while offering buyers a higher quality of life at a much lower price. And so it is incumbent upon developers to bring this revolution to the people by packaging it in a comprehensive way, just as Apple Computer did with the Apple and the Apple II and the Macintosh, all the way up through the modern day iPad and iPhone.

Cities as consumer products

Do you get the depth of what I'm talking about here? I'm saying that cities need to be designed like consumer products!

Decades ago, this would have been a ridiculous thing to say. Cities were so complex. There's so much emergent behavior, so much chaos to them, so much unpredictability in how they grew and changed and evolved that such a notion would seem laughable. But now we have self driving cars. We have very complex, highly integrated computer systems. We've gotten very good in just the last few decades in managing tremendous complexity. And so I think the time has come to design cities that heal the earth, with the kind of design flair and humanistic focus that Apple Computer did with the Macintosh, the iPod and the iPhone.

And if we do that, you'll get something very much like Edenicity:

Cities with really advanced transportation systems that take you wherever you need to go far faster, far cleaner and safer than anything ever has, without the half-broken hodgepodge of potholes, parking, repairs, noise and pollution that we have to endure with cars.

A city that generates and stores all of its own power and which is built so efficiently that it's easy to do so because it doesn't take that much power to run.

A city where you have free universal basic health care, because, again, it's been built to deliver clean air and clean water and clean food and no exposure to cars and the tremendous pollution and destruction they visit upon individuals and communities. So healthcare is much more affordable and therefore much easier to make universal.

It's a place that chunks, the spaces that people live in, and that they share, by degrees of desired intimacy, with great care. So it's easy to retreat, heal and restore yourself every day. And it's very easy to go out and make friends, make deals, make art and make breakthroughs many times quicker than in any city that's ever been in-- that's ever been built (I almost said "invented" because this is the first city in history that will be invented, just like a computer was invented).

Because Edenicity is invented to do 20 times better what cities do best --bring people together with the resources they and their ideas need to thrive-- it will be an economic juggernaut, as I discussed in Episode 3.

Edenicity is a city with such ecologically sound efficiency, that it's easy to grow economically. And it's easy to return many of the benefits of that growth to the commons via mechanisms that I'll get into in the next episode. And it's a city that heals the planet up to four times faster than we're currently harming it, as I explained in Episode 2.

The unbelievable market

In the 40s, 50s, 60s and 70s, the CEOs of the major computer companies didn't think that the market for computers could get that much bigger.

In 1943, Thomas Watson, president of IBM said, "I think there is a world market for maybe five computers."

In 1977, the same year that Apple released the revolutionary Apple II computer, Ken Olson, founder of one of my least favorite computer companies, Digital Equipment Corporation, said, "There is no reason anyone would want a computer in their home."

Similarly, there's people who are now skeptical that we can really design ways of living that are dozens or even hundreds of times more efficient, that can heal the planet so much faster than we're currently harming it. But we can, and we will. And my first hints of this happened when I tried to sell the house in a down market, and miraculously didn't take a financial beating.

I have a feeling that I've just scratched the surface here. I don't really aspire to be thorough. I just want to show what's possible, and what's already happening.

How many more clues is it going to take for the business world to catch on to the raw scale of what I'm talking about here? Edenicity will restructure housing, food, energy, transportation, even medicine to a far more profound extent than the smartphone has restructured and redefined communication worldwide. If the past 50 years belonged to the computer, the next 50 will belong to applied ecologists. That is to say, permaculturists who think big.

Close [music]

If you've enjoyed Episode 24, please be sure to subscribe so you don't miss a show. If you haven't already done so, please visit edenicity.com to download a copy of the Edenicity reference design. And be sure to join me next time when I'll discuss how to roll out the Universal Basic Income in Edenicity.

I'm Kev Polk, and this has been Edenicity.

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Edenicity 24: Defying the Housing Crash

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