An article in today’s Portland Tribune talks about the effect on home values of various businesses – local movies, high end grocers, and bookstores raised values. Day spas and record/CD stores lowered them. What it reinforces here is that the close-in creative class neighborhoods that attract these stores then benefit from the store’s presence. I’d guess the same would hold true in other cities (and wonder what’s wrong with CD shops?)
This reminded me of an article in the latest Portland Spaces magazine about the difference in home value appreciation between close-in neighborhoods and further out suburbs. I had looked at their website and not found it – but the Trib article inspired me to call Portland Spaces editor, who referred me to a study Joe Cortright did for CEO’s for Cities last Spring. It showed that in Portland, housing prices had increased three percent in close-in neighborhoods, while declining five percent in distant suburbs. The same thing held true in other cities studied.
Cortright analyzed the effects on gas prices in this, but I think the more fundamental thing is the growing move back into cities is recreating small neighborhoods and supporting home values.
September 25th, 2008 at 9:40 pm
Intriguing. On CD stores: maybe big CD stores are not the cause of lower real estate prices but the effect — the margins on CDs are pretty small, so big CD retailers can only afford to be in places with cheaper real estate, which also tend to be places less desirable and therefore more vulnerable in a slow down.
I doubt the finding applies to a small, independent music store in 2000 s.f. of CRU space.
The SPA finding is puzzling.
September 25th, 2008 at 11:55 pm
I dunno about CD shops. Most of Portland’s aren’t in residential neighborhoods. Music Millennium, a long established store recently got priced out of a gentrifying area.
I wonder if day spas are code for prostitution, the way massage parlors became in the ’70’s?
September 26th, 2008 at 8:40 am
They may have lumped in high end day spas (which serve wine, provide mud baths, etc) with massage parlors of questionable repute. Since there is probably more low end, seedy massage parlors, the net effect was downward pressure on housing.
September 26th, 2008 at 9:35 am
I question whether the “in and up” and “out and down” house price affect has been caused by in-migration to the city center.
Isn’t it also possible that those who live in the outer suburbs are more sensitive to interest rate fluctuations? By this I mean, counldn’t it be the case that as interest rates go up, people living in the inner-suburbs are still able to afford housing yet people in the outer suburbs are not.. because they are not as wealthy or have less favorable credit histories?
September 26th, 2008 at 10:41 pm
Yeah, and we can see that unfurling umbrellas make it rain.
HELLO! Correlation does equal causation!
Sorry, studies like this drive me crazy.
Is there anything here that shows the addition of these amentities (and only these amenities) leads to higher home prices? The same influences which lead to a rise in prices are very likely responsible for establishment of amenities catering to a changing homeowner demographic.
I agree with Michael that smaller neighborhoods are being rejuvenated. They are becoming more desirable in part due to gas prices, but more so because people want an alternative to an increasingly-lengthy commute. Also, the smaller homes of the inner city are becoming more appealing to those who are leading the urban migration; singles, young couples, empty-nesters, and retirees.
Best, Bert
September 27th, 2008 at 8:34 am
Prices in the suburbs have gone down (mostly) because the supply of homes on the market had exceeded the demand for them. Too many builders trying to lower their unit costs by throwing up cookie-cutter homes/neighborhoods that had no character.
It will take a while to use up this inventory, but look for the suburbs to be populated with people who can’t afford to live in the big city, but would probably like to. Funny reversal of the 80’s & 90’s where the people with money moved out and commuted in, to the trend of higher income people moving into the city, and forcing the little guy out. San Francisco comes to mind….
September 27th, 2008 at 12:03 pm
My theory on the negative correlation with cd stores is that chain music stores are increasingly irrelevant to educated and especially creative consumers. We’ve all heard the music industry moguls bemoan the impacts of new technology, and increading accessability of production expertise, on traditional ablum sales.
The last dozen cds i have purchassed, I bought directly from the artist, usually during a performance. I feel a lot better about supporting an artist direcly by attending a show and putting the money for the cd right into their hands. Most of the artists i want to support are independant and not available in big chain CD stores in any case. (although i would agree with Bert that this is a correlation and not a causation factor)
I’d also note that many local businesses in my neighbourhood (a gift shop, bookstore, co-op, and pub) do sell albums by local artists. Who needs a record store?
I would be curious to know what impact spaces for live music and performance have on the property values. I checked the article, but they only mention pubs and movie theatres.
September 27th, 2008 at 3:24 pm
Erk…
In my post (#5), it should read -
“Correlation does NOT equal causation!”
b.
September 29th, 2008 at 3:08 am
Alanah,
Surely the record store provides jobs and work not only for the staff, but the letting agent, servicing staff, creates the need for the store to pay for utilities and the tax receipt on the procurement of all of these services.
Buying directly from the artist generates none of these overheads. I bet the price of the CD is still the same, and I doubt the artist is paying sales tax on the CDs.
If everyone bought products directly from the producer then those producers would a) go mad from all the extra work b) be unable to produce in significant quantities c) be poor d) probably live in Bangladesh and e) there’d be no shops, just factories and farms therefore where would teenagers hang out after school and why would you go all the way to the town centre just to drink a coffee or have lunch? There’d be no point. City centres would die.
So maybe it’s not such a good idea to buy directly from the artist after all. Haven’t you read The Wealth of Nations?
November 12th, 2008 at 2:32 pm
Sorry to hear you had a hard time finding Portland Spaces web site. The URL is http://www.portlandspaces.net