If you don't live downtown, why not?

[flintysooner]

I can only speak for what I think are construction costs at the Maywood Brownstones, because I saw mine built from the studs. I suspect build-block construction is very expensive, with all that concrete and rebar. Then, there are slate roofs, solid brick and cast stone veneer, copper guttering, wood floors throughout, granite countertops even in the laundry room. The HVAC person who worked on a problem with my geothermal system told me the builders had installed the cadillac of systems, and the sound system certainly is as well. I actually think the prices there were quite "realistic" when I bought over 2 years ago. If the prices at the Hill are still comparable to the Brownstones, then I think they're overpriced, because they're stick-built and I don't think the interior finishes are that nice. The Maywood Lofts have underground parking, which I suspect was expensive to build, but again, I have no idea what costs for those types of developments would be. I've only been in one of the Block 42 townhouses, but it was very nice. Again, sometimes you get what you pay for, and I don't know if we've got any data suggesting developers downtown are inflating prices way above their costs. Several builders here have commented that it's more expensive to build in these locations. If you all hold out until the current developers have to sell at fire sale prices, it's going to do the opposite of encouraging new development, as all builders will stay the heck away from the area. Or, we'll get shoddy construction at prices people are willing to pay, and in 5 to 10 years it will all look like crap and where will your investment be? Again, it would take someone other than me to tell you for certain prices aren't inflated way above costs on all these developments, because I just don't know.

Excellent post with accurate information and astute conclusions.

In my opinion there are far too many in Oklahoma City, including some who post on this forum, who award first place to cheap prices in nearly everything including housing. When something is built to exceptional quality standards the complaints about price are the first and loudest.

This attitude of "cheap, cheap, cheap" above all else is one of my most significant, and thankfully few, complaints about my home state and city. It is just pervasive in everything across the spectrum including politics, education, work, shopping, travel, and entertainment. If someone buys a new car the first thing bragged about is what a deal he or she got. If someone buys a home it is a good deal if it was cheap. Even in groceries I hear people everyday comparing prices at stores on things that to me are just silly like the price of distilled water at Walmart compared to Homeland.

I would be much happier if we would strive for the best we can build instead of always looking for the cheapest. I'd like to see us building stuff now that will last a while and be of usable service to many future generations. Most of the stuff we are doing now will be lucky to make it 50 years and it will be junk even then.

I really don't know why it is this way here. I've speculated on it a great deal. Perhaps it is because we are such a young place or maybe it is the fact that our state was settled by those who were willing to live on the edge. Probably there are other reasons I've not even considered.

But there is not going to be quality development in general until there is some major shift in attitude to make quality the greater ethic.

Perhaps in my family it was different than in many but when I was a child we had few things but they were very good things. There was pride not in the quantity of things but in the quality. And it was apparent to me even then that the thing of greater quality was always at a greater cost. That didn't apply just to price but to time and effort as well.

Whoops. I realize I've fallen into rant mode. Excuse me while I exit.

[TaoMaas]

This attitude of "cheap, cheap, cheap" above all else is one of my most significant, and thankfully few, complaints about my home state and city. It is just pervasive in everything across the spectrum including politics, education, work, shopping, travel, and entertainment. If someone buys a new car the first thing bragged about is what a deal he or she got. If someone buys a home it is a good deal if it was cheap. Even in groceries I hear people everyday comparing prices at stores on things that to me are just silly like the price of distilled water at Walmart compared to Homeland.

Is it "cheap" that people are discussing or "value"? If the product is of equal quality, then the people are discussing value. That's the smartest way to shop, IMHO. Very few of us have the resources to always buy the top-of-the-line in everything. You'll go broke like that. If you don't compromise somewhere along the way, no amount of money will ever be enough.

[betts]

I hate to be repetitive, but if you look at larger cities, most of the people living downtown that aren't spending a fortune for housing are living in rentals, and small ones at that. My kids have to live 2 miles from downtown in Chicago, and even then they're paying twice what most people here have indicated they want to pay for rentals. In fact, if that story about the condo selling for under $200,000 in Chicago in Lincoln Park is true, and it doesn't need to be gutted and renovated, I may tell them it's time to buy. The cycle of housing that you see in older cities is: Initially a neighborhood has quality construction that is built to endure and costs a lot. Over time those buildings age and people move out. Over time the area decays and becomes less and less desirable. Then the area is "discovered", usually by kids and artists with less to spend and over time the area becomes a cool place to live, which gradually brings in people with more money who fix things up and the neighborhood starts becoming more expensive again. My kids in Chicago live in a neighborhood more like the Plaza District that anywhere else in OKC, and they're happy to be there. There, old row houses are being torn down or renovated, and some people are lucky enough to own the whole town house, but most live in one of a "three flat". Theirs is anything but luxurious, with formica countertops and home depot clearance fixtures. We've shopped in their neighborhood (Ukrainian Village) for fun, and I've yet to see anything in the price range of less than $400 a square foot that compares to the Maywood Lofts or Block 42, for instance. And that's two miles out from downtown.

[Rover]

People in OKC seem to demand suburban prices for urban living (price/sq. ft.). It doesn't work that way unless you want suburban type development downtown. People need to be realistic.

[BBatesokc]

People in OKC seem to demand suburban prices for urban living (price/sq. ft.). It doesn't work that way unless you want suburban type development downtown. People need to be realistic.

I don't necessarily buy that argument either - and apparently lots of other people aren't 'buying' too since so many new properties in the downtown area remain vacant. I can see where in a NYC, Chicago, San Fran and even congested places like Houston where there are huge advantages to being centrally located downtown - but not in OKC. Don't get me wrong, like I've said, we plan to move close to downtown in the next 1-2 years. IMO moving downtown is a luxury to support a specific lifestyle and at the current rates is not a good financial move. Though many people don't care that much about how much sense it makes financially.

A example would be this property.... http://realestate.yahoo.com/Oklahoma...47682520e420ba How can anyone justify that price for so little in return?

I used that example because we spent New Year's Eve in the unit that takes up space on the 3rd and forth floors directly above the entrance door featured in the photo.

[betts]

IMO moving downtown is a luxury to support a specific lifestyle and at the current rates is not a good financial move. Though many people don't care that much about how much sense it makes financially.

I'm not sure housing should be considered a financial move. Renting one's entire life may make the most financial sense. Considering how much we spend on cars over our lifetime, there's probably zero reason one should ever buy anything other than a Toyota Corolla either, but people like driving a Lexus, BMWs, Mercedes, etc. I think there's no guarantee of a big return on an investment downtown, but I don't think I've ever bought strictly as an investment. I've usually bought because I like a neighborhood and while I've tried to buy the best I can get for the money in that neighborhood, if money were the only consideration, people would never live in Nichols Hills, Crown Heights, Heritage Hills, etc. If price per square foot were ever the only consideration, those neighborhoods would be ghost towns. Sometimes we choose to make a purchase that can be considered a luxury. I've never bought a BMW or a Mercedes....I usually drive something more pedestrian. But, I like spending money on my home, and I doubt I've wasted anywhere near the money many people have on cars. The worst I've ever done on a house is break even, and a car is a dead loss the minute you drive it off the lot.

[BBatesokc]

I'm not sure housing should be considered a financial move.

WOW - that's really a shocking statement (whether renting or buying), and one that I think you'd be hard pressed to find a financial advisor that would back up. But, obviously many people feel the same way or we wouldn't have such a housing crisis. I really don't know how anyone could not consider what will probably be the biggest investment of their lives to not be a 'financial move.'

Comparing cars to homes is apples and oranges. In most cases a car is not considered an investment because virtually every car depreciates. And, obviously if you're buying new then you're buying a luxury item. That's why we never buy a car that is newer than 3 years. I simply try and keep my loses at their lowest when car buying.

if money were the only consideration, people would never live in Nichols Hills, Crown Heights, Heritage Hills, etc

That's not true at all in many cases. I've known several people who bought and sold in those neighborhoods and made quite a profit. At the very least they lived in those areas 'for free' for up to 12 years - can't do that in an apartment.

But, renting can be a smart financial move too. I know a guy who rents a studio for about $550/month. It suits him fine and his utilities are only about another $50. He puts $800 away in his 'house fund' every month and plans on buying in the next year or two and at that point he'll have over $67,000 to use as a down payment that he otherwise would not have and would have simply thrown away in rent if he'd lived in a larger place.

[betts]

I've bought in Nichols Hills and made a very nice profit. I also know plenty of people who've bought in Nichols Hills and not made a profit. But, housing is still a crap shoot, as I've also bought what I thought were sure investments and not made a penny. As I've said, I've never done worse than break even on a home though, and I've lost well over a hundred thousand on cars over my lifetime. Again, a home can be a luxury just like a car. You can buy the Toyota Corolla, get everywhere you can get in a Mercedes and save thousands upon thousands over your lifetime as compared to buying nothing but BMWs. So, why is buying the BMW not comparable to buying a home which you're not 100% positive you'll do better than break even on, simply because you want to live in a particular place or you like having granite countertops and top of the line woodwork and fixtures? There are other considerations too. I've mentioned on here before that I save $30,000 a year over my last house by living downtown, because of the dramatic decrease in utility costs due to concrete construction and geothermal heat, almost no cost yard and home maintenance, as well as savings on insurance due to type of construction, and a bit on taxes. Over 10 years, I'll save $300,000 in disposable income. That means that at my last house, having a yard was a luxury that I never got a return on, as was keeping my house at a reasonable temperature. There are so many intangibles that people don't factor in when they're computing their "profit" on their home.

[semisimple]

Then, there are slate roofs, solid brick and cast stone veneer, copper guttering, wood floors throughout, granite countertops even in the laundry room. The HVAC person who worked on a problem with my geothermal system told me the builders had installed the cadillac of systems, and the sound system certainly is as well.

This proves my point! These sorts of features, while nice, are unnecessary. Of course the price will be higher if only the best construction materials and appliances are used in your home.

There aren't simply two alternatives: high-end quality construction or low-end crap that's falling apart in 5 years. It is certainly conceivable that quality condos can be built in OKC for a substantially lower price than you paid if the features and amenities were dialed down a bit.

In any case I think cheap downtown apartments are more important than cheap condos. I posted before that the median rent for the OKC MSA is $650--so I think something not far from this number should be the price point for a basic studio or a small 1/1 near downtown.

So what if developers skimp on amenities or cut corners in the construction of a downtown apartment complex to keep prices reasonable (as has been done, for example, in uptown Dallas and downtown Austin). The important point is that moderately-priced downtown housing will get people to move downtown, which will in turn accelerate development of new restaurants, retail, and other amenities that will improve the downtown living experience and will create incentive for more people to move downtown.

[BBatesokc]

Well certainly there are people who lose their asses in the housing market, but many of them bought more house then they could afford at rates that continued to escalate. Or they were uniformed or emotional buyers (or maybe they just didn't consider a house purchase to be a financial move).

Again, taking each of our perspectives out of the equation, I don't think you can find a reputable financial advisor that would agree with you that a home purchase is not or should not be one largely based on finances/investment potential.

In normal markets with informed buyers a house is not a crap shoot. Its certainly not a 100% guarantee of big (or any) profits but it is always an investment.

Cars are known to the public not to be an investment. I don't know anyone that buys a car to be driven for any length of time that doesn't know the car will depreciate with 0 chance of not losing some money.

Certainly a home can be a 'luxury purchase' but that doesn't apply to most people without financial consequences. Like I've said, friends of mine have spent a million dollars on their Deep Deuce area condo. They have zero expectation of making any money off of it and don't care because their finances are such that it has virtually no noticeable effect. Myself and most people I know are not in that position.

[betts]

I agree. It's different for everyone. A perfect example of that is the home the people on 2nd street across from the Maywood Lofts are "remodeling". I've heard they're spending $3 million. It's hard to imagine them having an easy time selling it, but perhaps they don't care, either because they have enough money that they wouldn't miss it, or because they never plan on selling it. We all have to make decisions on luxuries, and for the sensible, those decisions are based on having the cash on hand to afford them, or a lot of surety that one will have the cash on hand as one pays for it. I suspect we will, at worst, end up breaking even on our purchase, as the area is going to improve and there will be more of an influx of people wanting to live downtown as the area fills in. But, if that doesn't happen, I feel confident that we will have saved enough money on the intangibles that it won't be financially bothersome. If you think about it, every penny any of us spend over very basic food, shelter and, unfortunately, insurance is luxury money. Some people spend it on travel, some on food, some on cars, etc. If I choose to spend mine on a house, it's really no different, and I certainly have a better chance of getting a return on my money than I would if I used it to to buy a luxury car, jewelry or expensive travel or dining. I enjoy my house and living downtown more than I desire any of those things.

[Joe Daddy]

There are so many intangibles that people don't factor in when they're computing their "profit" on their home.

Good point. Many people don't carefully add up the expense of owning a home. I built a home on a large acreage in another state for $212,000 and sold it 10 years later for $350,000. That's a "profit" of $138,000 in the minds of some. However, when I added up interest (construction and mortgage), taxes, insurance, maintenence et al over those 10 years, it actually cost me $525 per month to live there. That's $63,000 more than the $138,000 I made on the sale of the property. To break even after all expenses and broker sales fees, I would have to have sold the home for about $442,000. At the peak of the real estate bubble, I might could have achieved that feat, but that kind of timing rarely happens for the average home owner.

Granted, $525 per month to live on 40 acres within 10 miles of a mid sized city with decent schools is quite reasonable, you could not rent it for that. It was like living on a vacation estate for us for 10 years. But, homeownership is an expense more than an investment to me. It comes down to how much the actual expense of ownership turns out to be over the complete term of ownership. As a percentage, I'd imagine few home owners actually turn a true cash profit, or break even when the ledger is honestly balanced.

[flintysooner]

Is it "cheap" that people are discussing or "value"? If the product is of equal quality, then the people are discussing value. That's the smartest way to shop, IMHO. Very few of us have the resources to always buy the top-of-the-line in everything. You'll go broke like that. If you don't compromise somewhere along the way, no amount of money will ever be enough.

Depends upon what constitutes "value" in this situation. There are relatively few ICF homes being built in the metropolitan area and even fewer still with slate roofs and copper gutters and so on. We are so immersed in throw away culture that it seems reasonable to compare slate and comp roofing since they do perform the same function.

Of course there should be price points for different products. I am not arguing that at all and if I've given that impression I have failed miserable to communicate my concern.

If there is one place in our metropolitan area where quality and durability and aesthetics and timelessness should be showcased it seems to me it should be in our downtown area.

[onthestrip]

Betts, you say you save $30k/year living there A) surely you have a HOA fee right now that severly cuts into that number and B) how much did you spend on utilities and yard maintenance at your old house? Sounds like you were paying too much to begin with

[flintysooner]

I don't necessarily buy that argument either - and apparently lots of other people aren't 'buying' too since so many new properties in the downtown area remain vacant. I can see where in a NYC, Chicago, San Fran and even congested places like Houston where there are huge advantages to being centrally located downtown - but not in OKC. Don't get me wrong, like I've said, we plan to move close to downtown in the next 1-2 years. IMO moving downtown is a luxury to support a specific lifestyle and at the current rates is not a good financial move. Though many people don't care that much about how much sense it makes financially.

A example would be this property.... http://realestate.yahoo.com/Oklahoma...47682520e420ba How can anyone justify that price for so little in return?

I used that example because we spent New Year's Eve in the unit that takes up space on the 3rd and forth floors directly above the entrance door featured in the photo.

Just consider the parking garage alone and its cost and how that relates to the expense of the units. That's just one thing, too, and there are plenty of others.

[betts]

Betts, you say you save $30k/year living there A) surely you have a HOA fee right now that severly cuts into that number and B) how much did you spend on utilities and yard maintenance at your old house? Sounds like you were paying too much to begin with

The HOA fee here is so low it is negligible, the annual fee being about what I paid one month for utilties before. I had a pool. Lawn mowing, lawn maintenance with fertilizer,etc, water, pool maintenance and cleaning, tree trimming were regular expenses, and the pool had to be maintained year round. With a sprinkler system in NH you have two water mains and get charged double sewer fees. My utilities were outrageously high, though, which is probably because I had french doors all over the house and it was stick built, of course and my husband likes the house hot in the winter, cold in the summer. But here, for example, during that terrible storm last winter, my daughter asked me to turn the heat off on the fourth floor because she was roasting at night. I had to tell her that the heat wasn't on on the fourth floor and that if she wanted it cooler, we would have to turn on the airconditioner. During the summer, we only have to turn the air conditioning on on the fourth floor, because it can be as low as 65 degrees on the first two floors, with the air conditioner off. Because the house has concrete walls and an interior sprinkler system in case of fire, my insurance is about half as high as it was before too. I really am not exaggerating about the savings and I'm not factoring in any car expenses. The annual mileage on my car is less than half of what it was before.

[bluedogok]

This proves my point! These sorts of features, while nice, are unnecessary. Of course the price will be higher if only the best construction materials and appliances are used in your home.

There aren't simply two alternatives: high-end quality construction or low-end crap that's falling apart in 5 years. It is certainly conceivable that quality condos can be built in OKC for a substantially lower price than you paid if the features and amenities were dialed down a bit.

In any case I think cheap downtown apartments are more important than cheap condos. I posted before that the median rent for the OKC MSA is $650--so I think something not far from this number should be the price point for a basic studio or a small 1/1 near downtown.

So what if developers skimp on amenities or cut corners in the construction of a downtown apartment complex to keep prices reasonable (as has been done, for example, in uptown Dallas and downtown Austin). The important point is that moderately-priced downtown housing will get people to move downtown, which will in turn accelerate development of new restaurants, retail, and other amenities that will improve the downtown living experience and will create incentive for more people to move downtown.

I don't think "cheap" is the right approach, more like "reasonably priced" rentals are the answer. I do think the rental properties in Downtown Austin like The Monarch and The Gables were a big catalyst in the growth of downtown residential. As I have stated before, I know several who sold their homes in areas like Westlake or Lost Creek and moved into The Monarch to "try out" downtown living and all but one ended up buying a condo downtown, the other ended up in the Clarksville area much closer to downtown than their previous Westlake home.

I do think there needs to be developments built at different price points instead of just the high end purchase option. There needs to be rental built as well that isn't just a suburban style apartment complex plopped down in the downtown area. The main issue is finding the investors who are willing to look at a longer investment cycle than what they have been used to in recent years but then that is probably true in the investment world in general.

[flintysooner]

The main issue is finding the investors who are willing to look at a longer investment cycle than what they have been used to in recent years but then that is probably true in the investment world in general.

That's definitely part of the problem. When the first thing a prospective investor tells you is that he expects an exit strategy no more than 6 years from open and lenders have a hard time thinking beyond 20 years without government guarantees it is difficult to square with long life projects.

[Rover]

Yes there needs to be affordable rentals downtown, but for the same price as suburban rentals you will get less sq. ft. That's just the way it is in almost every city (except Detroit )

[flintysooner]

Financing multifamily right now is much more difficult - maybe more impossible actually - than financing units for sale. Maybe will change in a year or two but not very certain.

[Soho]

Some months ago I posted this in support of Betts in another thread...

Being Bett's neighbor, I feel qualified to respond. All of her points are on target and having lived in the Brownstones for a year and a half now, my wife and I couldn't be happier.

- No more commute from Oaktree every day, which saves us ~$10,000/ year.
- Association dues 80% less.
- No need to pay for parking.
- Due to quality of construction and foot thick walls our utility bills are 1/2 of previous
- More peace of mind during tornado season, again due to foot thick walls.
- Geothermal heat and air, with no noisy, expensive to maintain outside condenser.
- Cheaper homeowner's insurance.
- Outdoor living area overlooking downtown
- No trees to trim.
- No lawn to care for and waste precious water.
- Walking distance to our Doctors, pharmacy, cleaners, tag agency, museums, cafes, movies... etc.
- Bike trail access, in lieu of dodging rude and dangerous drivers.
- More social interaction due to a more walking friendly environment.
- Live concerts in BT on Thursday nights.
- Thunder games without the hassle of parking.
- Baseball games 2 blocks away
- Great neighbors.
- Various parades nearby.
- No maintenance to speak of, slate roof, concrete casement windows, All brick exterior, copper guttering, etc.
- Commercial grade fire sprinkler system.
- Elevator for our senior years, which in the meantime is used for elderly relatives and to carry groceries.

I could go on and on but a couple of important points - Quality is quality no matter where you buy. I travel extensively for business and pleasure and have compared what we have here with other cities. To replace our home with one of the same quality in Denver is $3M, Houston $2M, Manhattan $12-15M, San Francisco $8-10M, Dallas $2M. And before I get flamed about quality of life and amenities in these cities, let me say I have lived in Dallas and Denver and choose to live here and visit there. Without exaggeration, I have regained 2-3 hours of my life EVERYDAY since moving downtown!


For 7 years my offices were located on McKinney Ave. in the uptown area of Dallas. I saw it transform from what looked like Berlin after the war, to a bustling vibrant area with thousands of residents. I'm convinced the same will happen here. We have gone as much as 3 weeks without needing to start the car, I would recommend this lifestyle to anyone, except those with children needing a yard.



1/3/11 Update... We are still exceedingly pleased with living downtown and can't understand why more "empty nesters" haven't joined us.

[Midtowner]

People in OKC seem to demand suburban prices for urban living (price/sq. ft.). It doesn't work that way unless you want suburban type development downtown. People need to be realistic.

Not surburban prices, but urban prices tailored to the OKC market rather than someplace such as Dallas or Houston. Builders are entitled to make profits from their labors, but why should the margins be so much higher downtown as opposed to in the Deer Creek area?

And it isn't price, it's value. A home for most people is their largest investment. There are a lot of eggs in that basket, so most folks would be loathe to pay an amount of money so great that it's almost inevitable that their investment will be toast in a few years. And that's likely to happen. I can't imagine that as more inventory comes on line that these $250-$300 sq. ft. prices for existing structures will remain.

What's being said is that the prices should be market appropriate. And they're really not. Heck.. in Dallas, Q3, 2010, the average price/sq. ft. of downtown condos was only $180. How can we justify the prices here when that's the case in Dallas? True, they have a lot of existing inventory compared to us--which might be a cautionary tale if you plan to be an early adopter in OKC.

[onthestrip]

Soho and betts, Im glad you two enjoy living DT and im looking forward to the day when OKC has a true DT urban community. However I do have to point out that your savings are a little skewed. When you compare living somewhere with hardly any maintenance to a giant house and yard in Oaktree and Nichols Hills, of course there will be tremendous savings, along with a much shorter commute. You two were living in two of the most expensive neighborhoods in OKC, of course living in a new, effecient dwelling near your workplace is going to save you money. I imagine anyone that moves from Gailardia will experience the same. However, those that are looking to move from a more typical neighborhood wont find those savings. Thats why we need more quality housing options, but quality ones without slate roofs, copper gutters or a personal elevator.

[FritterGirl]

To me the biggest issue is there is not the right kind of housing to meet the specific market demand from the segment that wants it most. Young professionals who want to live -and purchase - downtown just can't shell out $250,000 for a condo, as badly as they may want to experience downtown life. They are almost forced into the suburbs by default.

Expand the current DT housing (and it's happening slowly) to include condos that fall well within the $130-$180 price, and then you're talking.

While I agree the empty nesters are also an important market, there is not yet enough demand from this particular demographic to warrant the amount of housing targeted to their price range.

Bring in more developments geared toward young professionals (even DINKs), with price points to match, and you'll see downtown housing fluorish.

[Soho]

Soho and betts, Im glad you two enjoy living DT and im looking forward to the day when OKC has a true DT urban community. However I do have to point out that your savings are a little skewed. When you compare living somewhere with hardly any maintenance to a giant house and yard in Oaktree and Nichols Hills, of course there will be tremendous savings, along with a much shorter commute. You two were living in two of the most expensive neighborhoods in OKC, of course living in a new, effecient dwelling near your workplace is going to save you money. I imagine anyone that moves from Gailardia will experience the same. However, those that are looking to move from a more typical neighborhood wont find those savings. Thats why we need more quality housing options, but quality ones without slate roofs, copper gutters or a personal elevator.

Those options exist in Block 42, The Hill, Central Ave. Villas and the Second Street Lofts. The proposed upscale apartments across the street would be a good way to "test drive" the area before buying.