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HomeMy WebLinkAboutA047 - Reading material from Zimmerman/Volk Memo f Department of Planning & Housing Caring People Quality Programs Fxceplional Service TO: Mayor, City Council FROM: Brian P. O'Conn ctor DATE: January 23, 2001 SUBJECT: Reading Material from ZimmermanNolk on Housing Market Analysis In the numerous discussions that staff has had with officials from ZimmermanNolk regarding the pace of home sales in Somerset, they have advised that we provide background research materials to members of the City Council. Todd Zimmerman and Laurie Volk have written the articles attached to the memo, who are the principals of the firm that we have hired to assist with the home sales issue in Somerset. The article entitled Mass Markets, Housing, and the Illusion of Choice discusses the current trends in housing construction, the emergence of a high degree of sameness in construction of homes, and the false belief that buyers of homes today really have a choice. The article entitled Development Dynamics describes the actual developer premiums that can be obtained as a result of well-developed Traditional Neighborhood Development. The last article entitled Confronting the Question of Market Demand for Urban Residential Development discusses again the intricacies of conducting housing market analysis and the possibilities that new housing types generate in terms of added market potential. There is no action needed by Council regarding this material. This is being provided for your information and insight into the issue of housing sales in Somerset. BPO:clh Attachment s:\bpo\meml23 I1EC-29-00 03 :09 PM ZIMMERMAN.-VOLK ASSOC INC 908 735 4751 P. 15 Development of typical American suburban housing has been based almost entire- Massy upon a peculiar system of self reference.Guided only by the most recent market successes, debt and equity funding for new residential development is obtained kets only after sufficient"market comparables"have been documented(sec related artl• Marce p.8).The simple logic of this system of comparables has led housing producers —as well as many small to mid-sized lenders—to a heedless acceptance of the notion that current production and marketing,mechanisms are meeting the desires Housing (If not the needs) of housing consumers. The [a of this system seems to reward lack of Innovation and the continued expansionnsion of of developed land to satis- fy less than half of the potential market for new housing. In this regard, market research has succeeded too well.When builders tailor their products to the market• place as defined by past practices,they perpetuate a cycle of blandness.They cele- and the brate the same four-bedroom Texas Romantic unlbox—that four-bedroorn, two• and•a-half bath center-hall house designed to appeal to everyone and no one. u S O�1 of In addition, residential construction Is currently dominated by quite conservative forces, influencing both the demand and supply sides of the housing equation,A greater percentage of new dwellings are produced by publicly-traded entities; a Choice larger-Than-normal percentage of new home buyers are transferee households, those that are compelled to move. When the 1991 Tax Reform Act(FIRRFA)caused a three-year disruption in the flow of capital to smaller builders,larger builder/developers were able to increase slgnif- ICandy their share of market and land control.The act severely constrained lending by Laurie Volk a n d practices,including putting stringent limits on the size of outstanding loans to a sin- gle borrower. Nome building companies with access to capital —those that are publicly-traded and those that have special relationships with capital Institutions— Todd Zimmerman gained market share in most regions,having the capital to buy land at just the time when thousands of properties became available through the Resolution Trust New American housing suffers from the same affliction affecting nearly every aspect Corporation and Federal Deposit Insurance Corporation. of our economy.The genuine diversity of goods previously available to most citizens has been replaced by homogeneity;variety has been wrung out by the'efficiency" Publicly-traded home builders are the most conservative,six C'-oriented of of serving global mass markets.The impact has spread beyond the marketplace as suppliers,One public builder commissioned no fewer than six focus groups to look at the potential for detached garages and got uniformly positive responses, The the finance-driven economy rewards those entitles that are best at pushing off risk company has yet to offer detached garages because the approach is so different and cost onto society at large;from seed crops to songbirds to suburbs,the Yemen- dous variety of life is being winnowed down to only a few`successful"versions. that who[Is currently "succeeding" the marketplace. During the same period that tax Code and banking changes gave ve dominance to the most tonservadve of The Baby Boom generation--those born between 1946 and 1964—formed the producers,the national recession gave dominance to the most conservative of hous- most significant rationale for mass marketing in the history of the planet. They ing consumers—transferees.With house prices stagnant or even deflating in many have Influence age-related institutions at every lifr stage,from maternity wards in regions during the late'80s and early'90s, households that were not compelled to the'S0s to the anticipated cremation boom;n the mid-21st century.Likewise,the move did not.Thus the transferees gained a greater than typical share of the mar- post-war history of housing construction follows the Baby Boomers by Ilfestage— ket. Transferee households typically do not buy houses to live in; they buy houses from their childhood In the GI Sill-supported housing tracts of the'40s through to fell later.A real estate broker axiom is that a house will sell faster if it does not the apartment boom in the'70s,when Baby Boomers first left the nest,to the cur- have anything too personal,too individualized.Buyers expecting to be transferred rent emphasis on detached, familyorltnWcl houses, with Baby Boomers at "full- again in the next couple of years buy houses that do not offend anyone, nest"stage. So baseline data defines only those houses that have sold in the relent past. However, It Is precisely this b3wllne mentality that nearly brought the domestic Housing ructed in America prior to World War exhibited extraordinary local auto Industry to its knees—building for what people have'always bought, > and regionnalal diversity,ranging from simple frame houses In New England to stucco haciendas and craftsman bungalows In California.Today,how- ever,regional diversity is limited to two basic houses,the"colo- nlal," which dominales most markets, and its one-and-a•half• story counterpart in Florida and the Southwest.These two basic houses are being built across the country in nearly every new t. subdivision under construction; the "unibox" Is ascendant, \ "rambler"or a million-dollar man whether a modest Ion,is this fr ; + �' a` y J� lack of homing i hnit r an end nrSult of"consumer demand,"aIr �'y�+� f � � f t `ZP► Is4i�c�� 1't 1�rti f clear Inulk ition OwL tilt'population,overwhelmed by the com- i *' ''1 ,•t� 7 �•{rt f , ;`' �' plexities of modern life, wants to live In houses that took as much like their neighbors as possible?We think not. •s art,✓✓ "* There is a widespread misunderstanding that new housing In i I letter to most markets is a response to consumer desires, n a this publication(-el. 1 no.2),the otherwise very astute Witold Rybczynskl perpetuates this confusion, contending that �� �'•+ T, `���1 tit 7 -because most developers are relatively small, [commercial housing] is chiefly a demand-driven market.' Professor Rybczynski argues that"developers are in fact very responsive apanment oridge over Ian. tali � to buyers,and will build whatever it is that people want..." r;t 's� ,y e I 1l In most cases land developers plat lots along the line of least resistance,which is largely defined by zoning.in contrast to theti agile,market-adaptive entities Professor Rybczynski sees,small In the Norfoik rednelogmeni area if new lane runs inraugh the center of thin"sae'clock.Nouses Id the lane corners . A..-..'a Mr k Innk•Ifka Raps, 12/29/00 FRI 13:59 [TI/R% NO 6319] 1015 TEC-29-00 03 : 10 PM ZIMMERMAN.-VOLK ASSOC INC 908 735 4751 P. 16 wllllutn regard W auto consumers' emerging qualify and design concerns.The housing Industry,of course, t t has real ddranldge5 over the auto industry (or more �/ precisely these days, the light truck and minivan industry). The housing industry is greatly decentral• r7 l f .00 led and much less capital intensive. ftowever, it is the "rearview mirror" approach to research that is in large measure responsible for the dramatic boom/bust cycles to which wmerlcan real g }Rj i ■sta fa►� [r Dili n7iTq'1T'estate has been prone.When development programs s' +.? P � are based on what has succeeded in the past,they are _ �1 �f 11 susceptible to market shifts.This is akin to Steering a _-- car by very carefully aligning Vte road in the rearview ` —•-' — - „_ — - _ mirror,the first curve could prove fatal. �-,- The new town center for Ira Norfolk redevelopment area provides fen simple lots for mixed-use eaalopment.The mts arm meant for reran on the ground floor and multi•stary homes or flats above.The arrangement makes it possible for shookeepers To Ilia We believe Olat in the housing market today there is a upstairs.Design guidelines assure an eestneVe,legible public realm lancer OW,el.tsr-zreeta areaieeena Ten rl.nnv■. growing hunger for variety, that there is disdain for streets of •cookle•cutter"houses,that increasing num• must include both conventlonal supply-side and ers), these households characterize the demand for bers of family households are no longer responsive to demographic analysis as well as detailed analysis of dlfferet housing options.When placed within the price what Is being offered In the typical American subdlv6 consumer preferences, and rent context of the specific marketplace, these lion Housing producers ignore this demand at their housing options—which may notyet exist In the mar- peril, The best and most rigorous quaktative analysis In a classical supply/demand analysls of the potential ketp13Ce—become the optimum housing mix, yields consistent results from new home buyers even for a redevelopment area in Norfolk, Virginia, we in vrry cnnse votive markets: "We buy It(convention- found that, according to conventional analytic tech- The target-market analysis found that the potential al new housing) because It's the only thing being nlques, there was limited demand for new housing absorption of a welbrealized and appropriately-priced offered,not because we like it," units. Three different methodologies based on redevelopment of the Norfolk tract outstripped the employment/household ratios, household age4strib- conventional projections of demand for new housing. Determining the size of the demand for new housing ution, end household size projections ylelded the The neighborhood IS it Duany/Plater•Zyberk design is a deceptively simple task. In a given year, the same results; demand was derived from the redistrib- that essentially restores the area to its traditional dc-mand for new dwelling units equals the change of utlon of existing households rather than from the neighborhood pattern and provides housing options the number of households plus the number of existing anticipation of any Increase in the number of house- for Norfolk households that simply do not currently Ind occupied dwellings removed from service. In a holds. This conventional analysis could not measure exist. (See Figures 1 and 2.) Households that might closOd system—say,a university with guaranteed on- demand for a housing option that did not currently otherwise move out to surrounding sprawling subur- carripus housing_. new housing dernand Is quite easy exist in the marketplace, ban communities will have the option to stay in to lorecast Almost all American housing markets, Norfolk; likewise, households moving Into the area however,are fluld and borderiess.so even defining the Our fourth way of looking at demand, called forger- that might otherwise have settled for a suburban loca- rnarket area can often be challenging, market analysis, puts human faces on the numbers, tion will have a new neighborhood option in Norfolk, The technique has enabled us to look at the potential Barring a significant natural disaster, the easy part is for untested housing types In markets as different as Our recommended housing programs, although very proiccting how many dwelling units will be lost to fire an old city In New England and a new town in Hawaii. specific in mix and proportion of housing types,gen- rsr <,ihor<ri,,t,Trr, to abartdonmenl, to conversion to The analysis includes a detailed examination of the erally include the proviso that new community or Will another use, or to the urban renewal bulldozer. The lilcstyle characteristics and housing preferences of neighborhood design should recognize the Inevitabil- ledt-ral government keeps statistics for loss of dwelling households who would be likely to move to the study Ity of change as household Characteristics and neigh- unils Thal r,ut itr•projected with rcdsonable accuracy, site. We have classified 39 unique household types borhood dynamics evolve over times Housing's initial (see Table below), according to life-stage: empty. Success requires detailed knowledge of probable first Determining the character of the demand for new nesters and retirees,famliles,and younger singles and occupants;long-term Community health requires flex- hnusiml, Itowrvrr, i, another matter. Demographers couples:and according to geographic locadon, met- ibility of design at both the dwelling and the neigh- are coast-only sulpniscd by cite failure of their new rupuliian cities, metropolium suburbs, smalf borhood level. This recognition is a contrast to Ole household formation, projections for the nation. cities/edge cities; town and country/exurbla, and typical rellance an niche markets to create highly- tar-Household projections are often dramatically wrong rural/agrarian. geted housing types that lack the flexibility to respond when made an the Ittad level, Projections, by definl- to Changing social and economic conditions, tiorl,depend upon baseline data.However,when sig- Each of these groups has Its own specific eConomlc nihcant shifts occur in a local or reglonat economy, and demographic characteristics, consumption pat- There are many Interlocking questions aDout the exist- baseline data become irrelevant.valid, as well as its. terns,style Of living,and housing preferences,Taken In ing, inflexible enclaves of highly targeted housing, Ustically significant, housing demand determinatlons the aggregate, after filtering for a variety of factors What will happen when the Baby Boomers completE such as mobility, income and tenure(renters Ys.buy- the transition from the full-nest life stage to retire- ment?Who will live in all those Texas Romantic uril- HOUSEHOLD TYPES f UK fAlICIEf MARKET ANALYSIS boxes?Where will the Boomers retire?And what will happen to all the age-restricted communities where EMPTY-NESTERS AND RETIREES: FAMILIES! YOUNGER SINGLES&COUPLES the dwellings and the communities are gearad to ear. The Social Register FuP-Nesf Suburbonites The VIPs lier generatlons7 We predict troubled times ahead for Nouveau Money Kids'r'Us Fast-Track Professionals the mass market oriented housing producers,■ Affluent Empry Nesters Full-Nest Urbanites Suburban 5trivers Posi-Wor Suburbon Pioneers Ethnic Families Generation X hurls Yolk end Todd Zimmerman are managing directors of Blue-Collor Burton-Dons Cosmopolitan Families Urban Elite ZimmermanNalk Aeaoclnaa, a siren that eonduals urauplc Comfortoblo Retirees Unibox Transferees Yuppies 8 Eggheads analysis lot the red Ii Industry including analyses for reel- Urban Establiahmeni Traditionalists New lelachann et, spmmmunitorclil and rnd Anond ism inn in muter Bohemians planned comtnunkles and nixed-arcs rsd■velopment Rowhouse Empty-Nesters landed Gentry Urban Shivers limmermah has been active In multifamily and senior housing Active Retirees Full-Nest Exurbanites Twentywmefhings rlevefapmenr IQ,IN-last twenty years.Volk speeialixea Is anely- a Middle-Class Move-Downs Pillars of the Community Collegians slaef demographic.rnatkat and liM1Hyie pattersasrlth rsapsola Z filue-Collor Retirees Small-Tort.rn Fomilies PC Pioneers real rune envelopment, 7 Mainstream Retirees Young Homesteaders 0 Mainstream Families t: Heartland Families Farmhovsg Familie 12/29/00 FRI 13:59 [TX/RX NO 63191 U 016 JON-22-01 04 :35 PM ZIMMERMAN,-YOLK ASSOC INC 908 735 4751 P. 02 VOLUME 11 THE COMING DISPOSAL OF CORPORATE REAL ESTATE Peter Linneman NUMBER 2 REGIONALISM: THE FEASIBLE OPTIONS FALL 1998 Joseph Gyourko • - THE URBAN ECONOMIC DILEMMA Anita A. Summers THE SEATTLE COMMONS David Sucher INSIDE THE REVOLUTION Douglas Crocker II ESTATEWHARTON REAL R E V I E NEW COMMUNITIES, NEW URBANISM NOT DEVELOPERS, TOWN FOUNDERS Andres Duane• LESSONS FROM SEASIDE Robert S. Davis DEVELOPMENT DYNAMICS Laurie Volk Todd Zimmerman (SOME) PEOPLE LIKE NEW URBANISM Witold Rybczynski 01/22/01 MON 15:32 [TX/RX NO 64001 JAN-22-01 04 :36 PM ZIMMERMANiVOLK ASSOC INC 908 735 4751 P_ 03 t DEVELOPMENT DYNAMICS Den_1t1, D E N S I T Y A N D A „-ell-integrated mix of land uses are important integrated Prix of land principles of New Urbanism (NU), also known as traditional neighborhood uses in master-1)1anPied development, that can lead to significant development advantages in new planned cr;mmi4niries provide communities. Yet the potential advantages and disadvantages of NU remain largely derelr�pnr� rrt efficr� ni 1 misunderstood, not only by experienced builders, developers and lenders, but also .211d f1exibi1iri% by many advocates. The long-term value enhancement that is often at the core of the investment strategy of NU is antithet- ical to the trend toward standardization and securitization, in which the thinking on the debt side can be aggressively short L Au R t E vo t K term. Building the long-term residual TODD ZIMMERMAN value associated xv-ith NU requires, among other things, a long term. which is 01/22/01 MON 15:32 [T%/R% NO 6400'1 J,AN-22-01 04 :36 PM ZIMMERMAN.-VOLK ASSOC INC 908 735 4751 P_ 04 sources currently have no patience. DEVELOPMENT %,laster-planned communities have always ADVANTAGES been difficult to finance, as large devel- opments lack a clear, near-term exit A mixture of house types and market strategy at competitive rates of return. segments is one of the hallmarks of a «'ell- A greater understanding of NU executed NU property. The combination would help investors and lenders make of density and diversity- creates a number informed decisions. The advantages of of development advantages:. lower land NU can be simply summarized: Density + cost per unit; lower infrastructure cost Diversity - Efficiency + Flexibility. Density per unit; lower first-phase infrastructure carries negative connotations for many cost; greater development flexibility; and citizens and planning officials. Yet density lower costs for public services. can be a virtue, creating the sorts of places that the public appreciates. vlanv of our most cherished historic Lower 1 a n d tourist destinations were built at relatively cost per unit high densities: Annapolis, Savannah, Since no buffers are required between Charleston, New Orleans. However, to housing segments, the close proximity of be a virtue, density must be responsive different residential types leads to more not onlv to market fundamentals, but also efficient land yields. In NU plans there to location, climate, topography and cul- are no collector roads without de�el- rural heritage. Above all, density must be opable frontage; for that reason the street combined with a well-integrated mix of network also contributes to the lower uses, building types, housing types, and land cost per unit. lot sizes. One of the best examples of an artful blend of housing types is a 1.4-acre block Lower i n f r a s t r u c t�� r e of a new planned community, Kentlands cost per unit ng tree-planting strips, sidewalks in Gaithersburg, Nlarvland. The block includi includes 21 dwelling units: a few small and alleyways, a NU community can accessory aP artments at monthly rents have higher infrastructure cost per linear >r�etw•een S750 and $900, rowhouses that foot of street than the typical conven- tional subdivision. However, due to the sold for approximately $250,000, and l higher density, the cost per dwelling unit large detached houses that sold for up to is actually lower. In a study of costs con- S5()0,000. The block's net density of 15 units to the acre is offset by alley-loaded ducted for the Canada Mortgage and Housing Corporation, a portion of parking, and a location on one Kentland's g p 01/22/01 MON 15:32 [T%/R% NO 64001 JAN-22-01 04 :37 PM ZIMMERMAN- tiVOLK ASSOC INC 908 735 4751 P. 05 near Ottawa, was redesigned using NU Greater d e v e l o p yn e n t principles (Essiambre-Phillips-Desjardins flexibility Associates Ltd. et al:, Conventional and Optimally designed streets and blocks can Alternative Development Patterns; Phase accommodate a range of housing types l: Infrastructure Costs, Canada Mortgage with the same lot depth, from small apart- and Housing Corporation, 1997). The ment buildings and rowhouses to low- higher total infrastructure cost of the density, detached houses. If market new plan was more than offset by the sig- demand shifts, housing types on any given nificandy higher unit yield, and resulted street can shift in response without the in a 24 percent lower infrastructure cost need for elaborate changes. Conventional per dwelling unit. master-planned communities are based on separation of housing types in separate development "pods," with road layouts Lower first-phase specific to each type of pod. Changing just i n f ra s t r u c t u r e cost a portion of a pod is difficult. However, A common perception is that NU prop- when blocks are designed with common ernes require heavy up-front costs. lot depths, changes in market preferences Press accounts typically focus on the can be accommodated simply by adjusting amenities that contribute to a "sense of lot widths. For example, the lots sur- community," but ignore the fact that rounding Nursery Park at Harbor Town these amenities are common to most in Memphis underwent just such a transi- master-planned communities. In fact, tion. The relatively large lots surrounding first-phase infrastructure cost can be the park were reduced in size when the lower in an NU master-planned com- developer realized that smaller lots were munity. Conventional communities not only marketable but preferred by a usually require the creation of entire number of buyers; utility lines were ripped pods and collector roads. In the first out to accommodate the larger number of phase of an NU development, the only lots. The net gain justified the extra investment required is the completion expense. Even though the smaller lots of both sides of a single street. This individually had a lower value than the street serves a variety of housing types larger ones they replaced, their aggregate in close proximity, perhaps including a value was greater after the replarring. A small formal civic space such as a similar development flexibility extends to green or plaza. Not only are initial buildings. For example, the "mansion" infrastructure costs reduced, but the prototype—based on buildings that have virtue of density is demonstrated at the made up the commercial fabric of same time. Thus the street itself func- American small towns—is often used in 01/22/01 MON 15.32 [T%/R% NO 64001 JAN-22-01 04 :37 PM ZIMMERMAN-VOLK ASSOC INC 908 735 4751 P. 06 uses on a single for hype. One NU prototype THE REVENUE is three floors with a total of 7,500 square SIDE feet that can be a small office building, office or housing over retail, or a small bed- Although the cost impact of density, and-breakfast inn. The essential point is that diversity, efficiency and flexibility is sig- buildings are strictly regulated in form, but nificant, NU developments can have an eery flexible in use. They are an increment even greater impact on revenue. Analysis of development that the smallest develop- of several new communities that have ment entities can easily manage, yet each generated sufficient performance data prototype building supports the quality suggests three inter-related market and character of the downtown fabric. advantages of a well-executed NU devel- Of course, flexible zoning and land-use opment: a housing value premium. regulations are required. a higher, long-term value for income property; and a location premium. Lower costs for public services Housing The Canada Mortgage and Housing value premium Corporation study examined life-cycle A well-designed NU landplan can add costs over a 75-year period (Hemson value to residential development, either Consulting Ltd.. Conventional and through unit price premiums, increased Alternative Development Patterns; sales paces, or some combination of the Pba-e 11: Municipal Revenues. Canada two. A recent study of 1,850 sales in the Mortgage and Housing Corporation, Kentlands market area attributed a pre- 1997). The public sector costs relating to mium of approximately- 12-13 percent of nc�n-residential uses were 48 percent the purchase price of single-family hous- IoNver in the NU plan compared to the es in Kentlands directly to NU principles conventional plan, with costs for residen- (C. Tu & M. Eppli. Valuing the New tial uses 5 percent lower. The most Urbanism: The Case of Kentlands, significant savings related to roads, 1998). The analysis used a hedonic pric- stormwater management, and water ing model in which size, construction distribution. However, the study found quality- and other variables were held that the NU plan was not always more constant. It identified a 524,000 to efficient. For example, the cast of 530,000 price premium for Kentlands Snow clearing was projected to be nearly houses compared to the houses located fire times higher in the NU plan because in nearby conventionally designed com- of the snore numerous intersections munities. At Seaside—the NU resort vil- 01/22/01 ' MON 15:3i [TX/R% NO 64001-�� JAN-22-01 04 :38 PM ZIMMERMAN-YOLK ASSOC INC 908 735 4751 P. 07 annual price escalation of the various lot Higher long- term types ranges from 9 percent for water- value f o r i front lots to 87 percent for interior lots. income property The market value of the waterfront lots A well-designed environment enhances was widely recognized at the outset. the value of all income property. Once flovvever, the value of the interior lots established, retail and office uses increase i was created solely through the quality of in value, benefiting from the synergy of the built environment. A 1982-1997 uses. Institutional investors are beginning comparison of Seaside resales with an to target assets in locations that take adjacent conventionally-planned property, advantage of this synergy. Decades of i Seagrove Beach, found an average annu- investment experience has shown that I al appreciation rate of 40.4 percent for frequently- a stand-alone "A''-quality Seaside lots compared to 26.0 percent apartment or retail property slips to "B'' for Seagrove lots, and an average annual and then to "C," as the property ages appreciation rate of 20.5 percent for and new development moves away. Seaside houses compared to 17.9 percent However, according to Emerging Trends for Seagrove houses. Seaside buyers have in Real Estate 1998 (Equitable Real j reaped similar rewards, with same-house Estate Investment .'Management, Inc., & i resales showing a 20 percent annual Real Estate Research Corporation), real appreciation and same-lot resales appre- estate assets in mixed-use central bus'- dating at a 40 percent annual rate. ness districts of healthy 24-hour cities are The NU premium can add to land now considered to be less risky than sin- value. For example, the average 12,000- gle-use assets in their suburbs. Assets square-foot lots at Newpoint near within NU communities are similarly Beaufort, South Carolina are half the expected to retain value, size of typical lots in the area. Yet Newpoinr's waterfront lots have sold for an average of $1.0.10 per square foot, Location premium compared to $3.77 per square foot for The residents of existing NU communi- Nvaterfront lots at Cottage Farm, a com- ties reflect the long-standing American parable, adjacent property. Interior lots dynamic of selecting neighborhood first at Newpoint sold for an average of and house second. ERE Yarmouth (now i S3.36 per square foot, compared to Lend Lease Real Estate Investments), the 1 $1 .77 per square foot for interior lots at nation's largest manager of real estate for Cortagc Farm. Revenue per net acre is pension funds, has found that buyers are 84 percent higher at Newpoint, at willing to pay more for houses in NU $193,000 compared with $105,000 at communities, explaining that "It's the 01/22/01 MON 15:32 [TX/RX NO 64001:__ JAN-22-01 04 :38 PM ZIMMERMANiwOLK ASSOC INC 908 735 4751 P. 08 which suddenly has renewed attraction for an increasing number of American suburb dwellers." In conclusion, to be effective, NU development must be approached as pragmatically as any real estate venture. Once the advantages inherent in the form are better understood by developers and investors the New Urbanism will move more rapidly from the margins to the mainstream. i I I i 01/22/01 MON 15.32 [T%/R% NO 64001 Confronting the Question of Market Demand For Urban Residential Development Laurie Volk and Todd Zimmerman Zimmerman/Volk Associates, Inc. Abstract This article considers new methods for determining the market demand for urban residential development. Traditional supply/demand analysis often underestimates demand because it ignores the potentially significant impact of newly introduced housing supply in urban areas on settlement patterns, particularly when that supply is specifically targeted to match the housing preferences and economic capabilities of draw area households. By using methods such as target marketing, the demand for different types of residential development can be estimated for neighborhoods that currently feature no such housing. Although demand for urban housing cannot be quantified, the characteristics of the various types of households that represent the potential market for urban housing can be determined. An understanding of these household characteristics can guide the public and private sectors toward adopting strategies for developing and sustaining urban neighborhoods. The most difficult challenge is to marshal economic forces through proper positioning, timing, and phasing to exert a positive influence on urban settlement patterns. Keywords: Markets; Housing; Development/Revitalization Introduction "Demand" for housing is often an illusory concept, particularly when applied to urban neighborhoods. The depth and breadth of the potential market for urban housing, however, can be determined and is often substantial, even in cities that have seen little or no new housing produced in years. Historically, urban areas have experienced population loss, often severe, and conventional supply/demand analyses typically project that trend to continue, with the result that forecasts of demand are often minimal, if not negative. Conventional supply/demand introduced housing s supply in urbaes ignore the n potentially significant impact of newly (This paper is a work in progress and is not intended for attribution_ It may not be quoted, cited, or duplicated without the permission of the Fannie Mae Foundation. The opinions expressed are those of the authors and do not necessarily reflect the positions of the Fannie Mae Foundation or its officers.) ® Fannie Mae Foundation 2000. All Rights Reserved. iDEC-29-00 03 :02 PM ZIMMERMAN,-VOLK ASSOC INC 908 735 4751 P_ 03 Confronting the Question of Demand for Urban Residential Development settlement patterns, particularly when that supply is specifically targeted to match the housing preferences and economic capabilities of draw area households. Research Methodologies All too often, research methodology limits the scope of possible results. s c For example, if housing market analysis is focused only on the a pP ide— i.e., values and occupancies of existing dwelling units (typically, adjacent neighborhoods) and values and absorption locatio s)s thenof e the e"demand idential construction (typically, in greenfields forecast" will be limited to those housing types that are currently available. Even the most rigorously applied supply/demand methodology rarely reveals the actual scope of new housing potential. This is because most "market analysis for real estate uses general marketing ti concerns theory; however, os ever, out of necessity, it must consider the geographicalP concentrations of supply and diffused demand" (Grissom and Liu 1994, 79). Rarely is this mismatch adequately resolved. Because of this mismatch, demand for new housing in a specific location cannot be definitively determined through research, however rigorous. The multiple factors that enter into the housing decision cannot be statistically isolated even through the most complex empirical analysis. Thoughtful observers of residential settlement patterns know that, when it comes to housing analysis, rigorous empirical inquiry only leads to additional questions. Although demand for urban housing cannot be quantified, the characteristics of the various types of households that represent the potential market for urban housing can be determined. An understanding of these household characteristics can guide the public and private sectors toward adopting strategies for developing and sustaining urban neighborhoods. The most difficult challenge is to marshal economic forces through proper positioning, timing, and phasing to exert a positive influence on urban settlement patterns. The challenge is an important one. The creation, re-establishment, restoration, or enhancement of neighborhoods is the foundation of any rational initiative for sustainable regional development. Without the connections between residents and shopping, employment, and recreation, infrastructure and resource efficiencies will continue at the current low levels. Supporters of the status quo maintain that e if eofwere a genuine i is market b for urban housing, there would already plenty targeted, single-use current leap-frogging pattern of lr the ow-density, narrowly ply g continuin "the development still argue that the current pattern is simply Fannie Mae Foundation 2000 Annual Housing Conference 2 Tl,a Market Power of Emerging Communities Confronting the Question of Demand for Urban Residential Development relentless outward expansion of cities into suburbs and beyond" (Gordon and Richardson 1997, 75-76), This thinking suggests that we are ultimately headed toward some sort of housing entropy, in which every household is equidistant from every other household, and all community and commerce is experienced in cyberspace out of necessity. Those same supporters also cite as "empirical evidence" decades of American household movement to environments characterized by steadily decreasing densities. However, this "evidence" is largely meaningless. In most metropolitan areas, American households buy into the current settlement patterns because they lack genuine choice. Housing production generally follows the path of least resistance: easy-to- finance and easy-to-build units on land that is environmentally "clean," in a "good" location in a metropolitan area that is experiencing reasonable job growth, for which it is deemed appropriate zoning and approvals can be readily obtained. The builders and developers follow the well-defined and efficient delivery system of housing as "product" that is the end result of a long conspiracy of good intentions, from the Euclid zoning decision to the Americans with Disabilities Act. This usually translates into the efficient "unibox" detached houses on former agricultural land. There is more residential development in fringe locations, then, simply because it is significantly easier to accomplish than development on urban sites: Exurban tracts are larger; entitlements are less complicated; and a majority of acquisition, development, and construction lenders have a high comfort level with single-use greenfields development. It is the higher degree of difficulty that has made urban residential development a "niche product." This does not mean that urban housing can find only a "niche market." Compact urban development is beginning to be embraced by too many builders, developers, financial institutions, and government agencies—from local to federal—to remain marginalized as a "niche." Supply-Side Research in Urban Locations Conventional housing market analysis generally does not attempt to address the specific needs or desires of the increasingly diverse pool of housing consumers. Supply/demand analysis is generally the analytical tool of choice. But the type of supply/demand analysis that often passes for new housing research is nothing more than an analysis of the market performance of currently marketed subdivisions and master-planned communities, combined with simple, often marginally related demographic data, If forecasts of household change are included, they are usually straight baseline projections, which assume that the recent pattern of change in the numbers of households will continue into the future_ Analysis of supply-side data can range from rudimentary to quite sophisticated. Nevertheless, most new housing research is predicated on Fannie Mae Foundation 2000 Annual Housing Conference 3 The Market Power of Emerging Communities Confronting the Question of Demand for Urban Residential Development two very questionable premises: 1) that the change in the number of households will continue the trend of the recent past, and 2) that the only housing types that will meet with market acceptance are those that have demonstrated sales success in comparable locations. Reliance on supply-side analysis often leads to local myopia. Builders, real estate brokers, and other real estate observers are often subject to an antiurban bias, justifying their opinions with supply-side data. The distortion of supply-side analysis is often aggravated in urban areas by the mismatch of existing urban housing units and the households that have the potential to move to urban neighborhoods. In some cities—for example, St. Louis—the market feasibility of new housing construction has been dismissed because large houses already existing in the city do not sell despite prices that are quite low. In these instances, the issue is not the prices, but rather the sizes of the existing houses. A significant number of the grand older urban houses have hundreds, even thousands of square feet more than the market really requires; this is particularly true when the market consists of young singles and childless couples who are seeking convenience and location rather than space. An understanding of the characteristics of the potential market for urban housing, then, can reveal these mismatches. The heavy reliance on competitive sales data has led the housing industry into a peculiar self-referential inward spiral, in which the houses of many builders are converging into amazingly similar units. Continued ad absurdum, this convergence means that in the future there will be just one house type built in America. A benefit of this scenario of monotony, one would assume, is that production would be very efficient. Academicians generally dismiss these limited housing research studies: ".An recent years the quality of market studies in real estate has been widely criticized" (Myers and Beck 1994, 259). However, despite many decades of scholarly analysis of empirical real estate-related data, few of the scholarly research techniques have been adopted by housing developers. Only real estate portfolio analysts and acquisition managers have empirical tools on which they can rely. Just as supply/demand analysis often works quite well in describing the market for packaged goods, if carefully applied, it can also provide useful insights into performance projections of investment-grade income-producing real estate assets. In contrast, those seeking practical tools with which to gauge the potential for new residential initiatives--public and private sectors alike—have, as often as not, been led astray by supply/demand analysis. The emphasis often placed on unquantifiable "demand" can be misguided. Forecasting the demand for new housing is so challenging because housing dynamics are fundamentally different than those of other consumer durable items. Unlike other purchase transactions of consumer Fannie Mae Foundation 2000 Annual Housing Conference 4 The Market Power of Emerging Communities Confronting the Question of Demand for Urban Residential Development goods (from impulse items to big-ticket items), housing is a product that is fixed in place requiring that the purchaser must move to acquire it. As Dowell Myers has pointed out (Myers 1990), this creates the unique causal relationship between population and housing in which the arrow of causation changes direction depending upon geographic scale. The relationship between the demand for housing and the number of new households may vary significantly depending on scale. At the broadest geographic scale (metropolitan statistical area and above), housing demand—and its corollary, the number of new housing units that is required to respond to that demand—is derived primarily from projected increases in the number of households; barring wholesale demolition, fire loss, and abandonment of existing housing stock, new housing is not likely to be absorbed without a corresponding increase in households. At the local level, however, and assuming a neighborhood's housing units are at "stabilized full occupancy," there can be no increase in households if there are no new housing units built in which they can be housed. Housing, therefore, is unique among consumer items; because it is fixed in place, supply can create its own "demand," the results of which are seen in the low-density settlement pattern of the past several decades. However, this peculiar dynamic of "build it and they will come" can only occur when those new housing units are well-matched to the characteristics of the households that comprise the potential market. The success of dispersed, relatively low cost per square foot detached housing has been its match with the demographic bulge of family households that is now beginning to wane as the Baby Boom generation—those born between 1946 and 1964—begin to move from "full nest" to "empty nest" life stage. (The recent remarkable increase of high-priced detached houses is simply matching the expectations of the Baby Boom households in the peak earning years—the first generation in American history in which it is common to have two incomes contributing to those peak earnings.) Survey Research in Urban Locations The critical question for urban housing, then, becomes not so much the quantities of market demand but rather the qualities of the market potential. Because of the lack of meaningful "comparables" in urban locations, the methodology most often employed to determine both quantity and characteristics of the market for urban housing has been some kind of survey research. Survey research can be effective if its objectives are set with the recognition that what can be quantified is not market "demand" but rather market "potential." The two pitfalls of survey research regarding urban housing (or any housing, or any survey for that matter) have to do with the sample—i.e., who one asks—and questions—i.e., what one asks. Fannie Mae Foundation 2000 Annual Housing Conference 5 The Market Power of Emerging Communities Confronting the Question of Demand for Urban Residential Development A sample can be biased despite the most rigorous efforts. Projecting survey results based solely on sample demographics can be perilous. Households with virtually identical demographics can have very different attitudes. If a sample does not have the same cultural values as the population as a whole, survey results could over- or underestimate the potential market for urban housing. Some cultural values have correlated positively with a preference for compact and urban neighborhoods. For example, households that place greater value on experience than on material goods are more likely to value the diversity and cultural opportunities associated with urban living (Rey 1996). A more serious flaw with survey research is the difficulty of conveying an appropriate image of an urban neighborhood. Questions are often vaguely worded, asking the respondent's attitude toward living "downtown" or "in the city." Often the vagueness is purposeful, to allow the most open interpretation and least bias from a population that has little familiarity with urban living. There is no single urban residential archetype; the neighborhoods of American cities vary greatly in both density and character, from the detached houses of Charleston to the apartment buildings of Manhattan. The fundamental problem is that many, if not most, Americans, lacking an urban frame of reference, are unable to conceive of an urban neighborhood as a habitable place. Many suburbanites have simply no idea what a stable urban neighborhood would look like or be like; for them, the word "urban" still conjures images of crime, congestion, and blight. If these limitations and difficulties are recognized, well-designed survey research is probably the least complicated conventional methodology that is capable of providing approximations of both the quantity and characteristics of households that make up the potential market for urban housing. Professionally facilitated qualitative research, including focus groups and interviews, can help distinguish the characteristics of potential urban residents and can determine individual unit and neighborhood preferences at a relatively detailed level. Even the best qualitative researchers, however, require guidance in assembling panels or prospective interviewees; they must, in effect, know who the market is in order to learn about it in detail. No qualitative research is capable of determining the depth and breadth of the market. Target Market Methodology It is from analysis of migration trends and mobility rates that the depth and breadth of the pothouseholds move into amarket Migration area, an from here quantifies how manyany determined. Fannie Mae Foundation 2000 Annual Housing Conference 6 The Market Power of Emerging Communities Confronting the Question of Demand for Urban Residential Development they are moving. Mobility rates quantify those households that move within a market area. The number of households that could potentially move to a given location in a given year describes the practical upper limit on market potential. Migration analysis need focus only on in-migration, rather than out- migration or net migration. Net migration is of little consequence even when a local market has been stigmatized by precipitous household loss. For example, the cities of St. Louis and Detroit have both experienced dramatic out-migration; nevertheless, there is still market potential for the downtown areas of both cities. Thousands t numbes have households8ply beenmove o both lower cities every year; until recently, hose than the numbers of households that have moved out. While migration and mobility analysis provide a means for determining the quantity of those households that could potentially move to an urban location, the more difficult task is determining their qualities and characteristics, and how those qualities and characteristics influence housing preferences. Some household characteristics can be obtained through conventional research techniques, as noted above. Triggered by our work, geodemographic analysis, a methodology not previously applied to housing, has been proposed as a means of identifying which middle-inc ome suburbanites have the potential to relocate to central cities (Lang, Hughes, and Danielsen 1997). Even without the refinements of migration and mobility analysis, target marketing ciwas tes with a dund to e per understanding conventional data, and to have the potential to pride of their market advantages. Over the past decade, we have used our proprietary target market methodology, which combines geodemographic data with migration ot and mobility analysis, to determine the depth and breadth of the p tial market, and the optimum market position n fornewmarket. development or redevelopment based on the e s It is important to emphasize that the supply-side context cannot be ignored; the supply-side context provides benchmarks of housing value. Although proposed new housing units need not be hostage to the supply-side context, neither can new construction be positioned in ignorance of supply. Fannie Mae Foundation 2000 Annual Housing Conference 7 The Market Power of Emerging Communities Confronting the Question of Demand for Urban Residential Development Case Study:Norfolk,Virginia Until the groundbreaking of Heritage at Freemason Harbor in 1998, very little new housing construction had occurred in or adjacent to downtown Norfolk since the 1970s. The city's household population had dropped by more than 10,000 households over the same period, convincing most market analysts that there was little demand for new housing units anywhere in the city, much less the downtown. However, the Norfolk Redevelopment and Housing Authority had acquired three city blocks adjacent to downtown and sought a private developer to produce a mix of rental and for-sale housing on the site. Connecticut-based Collins Enterprises, the developer, asked Zimmerman/Volk Associates to undertake a target market analysis of the site in part because local experts were highly skeptical that there was any market for housing on the site, in part because that very small market was thought to be for very large units at relatively low rents and prices, and in part because the only "comparables" were new resort-oriented condominiums in Virginia Beach, a much more suburban residential environment, The housing program proposed by Zimmerman/Volk Associates for Heritage at Freemason Harbor was derived from our proprietary target market analysis, which determines not only the depth and breadth of the potential market, but also who those households are, where they are moving from, what their housing and lifestyle preferences are, and how much they can afford to pay. The foundation of our methodology is the fact that, on average, between 16 and 20 percent of American households move each year, primarily because of changes in lifestyle, economics, or family status. Although household mobility rates vary depending on location (westerners move at much higher rates than Easterners), by tenure (renters move more than owners), and by age (the young move more than the old), those moving households represent the broad potential market for housing, both existing units and new construction. The target market methodology is actually quite straightforward. After an evaluation of the site, Zimmerman/Volk Associates determines where the potential buyers and renters will move from (draw areas), who currently lives in those draw areas (target household groups), how many of those households are likely to move to the site (market potential), hat their their housing preferences (tenure and housing type) ga nd alternatives (other housing properties) are. Field investigation and taxpayer migration data, obtained from the Internal Revenue Service, provide the framework for the delineation of the draw areas. U.S. Bureau of the obtained fromnsus daa,Claritast Incc�s used t I ZM geodemographic data o determine the Fannie Mae Foundation 2000 Annual Housing Conference 8 The Market Power of Emerging Communities Confronting the Question of Demand for Urban Residential Development number of households in each target market group that will move from one residence to another within a specific jurisdiction in a given year. In this case, migration analysis showed that, in addition to households already living in the city of Norfolk, households moving from outside the city comprised a significant segment of the potential market for new housing units in downtown Norfolk. Households moving from Virginia Beach represented approximately 20 percent of all households moving into Norfolk each year, and households moving from Chesapeake approximately 5 percent. The remainder of the households were moving from cities or counties that, individually, comprised well below 4 percent of Norfolk's annual total in-migration. The result was that more than 5,100 households represented the potential market for new and existing housing units in the city of Norfolk in the year of the analysis. The specific analysis of those households is based on geodemographic segmentation; in this instance, Claritas' PRIZM analysis, where clusters of households are grouped according to a variety of significant factors, ranging from basic demographic characteristics, such as income qualification and age, to less frequently considered attributes such as mobility rates, lifestyle patterns, and compatibility issues. We have refined the analysis of these househo relatedeto housing tpreferenceso and of more than 500 survey data points consumer and lifestyle characteristics. From that target market analysis, it was determined that not all of those 5,100 households represented the potential market for housing in downtown Norfolk; some target groups—particularly traditional families, incomes— currently living in very o more suburban,elessand those with expensive areas of Norfolk but were likely to move t not to the city's downtown core. However, more than 1,100 target households were determined to comprise the depth and breadth of the potential market for new housing units on the downtown Norfolk site, a number considerably higher than local estimates. As might be expected, the potential market was dominated by younger singles and couples: the career- and convenience-oriented VIPs, Fast- Track Professionals, and Yuppies & Eggheads, and the "indicator species" of emerging hip neighborhoods, the New Bohemians. The potential market also included affluent older households, from the sophisticated Urban Establishment to the Post-War Suburbani Pioneers, 10 children have home. moving from suburbia to downtown after the youngest Perhaps surprisingly, the potential market also includedFull-Nest a percenrbanit agand of compact family households: both the city sa vy Fannie Mae Foundation 2000 Annual Housing Conference 9 The Market Power of Emerging Communities Confronting the Question of Demand for Urban Residential Development Cosmopolitan Families, as well as Unibox Transferees, who typically rent a quality apartment while waiting to take occupancy of their new house.' Our determination of the composition of the potential market—more than 53 percent younger singles and couples, approximately 28 percent empty nesters and retirees, and 19 percent compact families—was also at odds with the local experts, who perceived the market to be considerably smaller and almost entirely composed of older couples. The market performance of Heritage at Freemason Harbor has borne out the analysis. Tenant and buyer profiles quite closely reflect the distribution of the market analysis. Although the property has achieved cieein ts and sales theNorfolk prices dramatically higher than other new construction area, there is a waiting list for the existing rental apartments, the third and final rental building was almost entirely pre-leased months hsbefore construction, and nearly all of the for-sale units were pre-sold several months before groundbreaking. Perhaps the most dramatic application of the detailed market knowledge provided by the target market analysis was the success of the "maisonette" units—direct-entry apartments facing Boush Street, a high-traffic arterial. These apartments have become a desirable "address" for urban residents and have transformed the public perception of Boush Street from an inhospitable highway to a comfortable urban boulevard. Other Significant Urban Market Issues A thorough understanding of urban 1aI Buesdynamics rangehas fromimplications physical far beyond typical supply/demand concerns form to phasing: There is no single housing formula. Seeing urban markets as a function of market potential specific to an area means that one must accept that there is no formulaic housing mix to attract new households to urban neighborhoods. Good neighborhood revitalization must be responsive to local market dynamics—i.e., the preferences of the different household groups that make up the market for new urban housing. Household mix—the proportions of empty nesters, younger singles and couples, and families that make up the new housing market—can be very different from city to city and from neighborhood to The nomenclature in this paragraph was developed by zimmermanNolk Associates, which renamed the Claritas PRIZM household groups to emphasize housing propensities and integrate survey data into the target groups, descriptions. Fannie Mae Foundation 2000 Annual Housing Conference 10 The Market Power of Emerging Communities Confronting the Question of Demand for Urban Residential Development neighborhood. Two cities that are commonly considered to have very similar dynamics—St. Louis and Detroit—in fact, have very different markets: Detroit's new housing market is predominantly family households, albeit nontraditional ones, whereas St. Louis has much higher proportions of empty nester/retirees and younger singles and couples and comparatively few families. The market potential for urban housing need not be a "zero-sum game." A corollary to the concept that housing supply can create its own demand is that, citywide, the creation of new housing in any one neighborhood need not be a "zero-sum game." This is an important issue when many city neighborhoods perceive themselves to be in competition for a limited number of households. New housing can be introduced into an urban neighborhood without cannibalizing other emerging neighborhoods. The key is neighborhood positioning. Careful positioning is second nature to the best developers of master-planned communities, but is usually ignored by municipalities and sponsors of neighborhood revitalization. Emerging neighborhoods that target the proper potential market can change housing dynamics in the entire city. When new housing options are created within a city, these new units can capture households that otherwise might have settled elsewhere. They may also retain households that, because of a lifestage or economic change, might otherwise have moved out of the city. New construction has the power to attract the potential market. A powerful rationale for an increasing number of households to leave familiar urban neighborhoods is the desire for newly constructed housing. In the same regard, introducing newly constructed housing into an existing neighborhood usually presents an attractive alternative to former residents of the area who have previously moved out of the city. The expense and aggravation of continued repairs to oh nehousing oasi 1 gnCe9 in kitchens can helm and many households; new construction—wit PP baths, floorplans that match modern lifestyles, and ample closet space in the bedrooms—becomes increasingly attractive. Phasing can influence the market. To attract the potential market, new urban housing ic nstrucwhatorm housing tion must be seen not only in spatial terms—i.e., wherewhen each housing type should be built—but also in temporal terms—i.e., suburban should be introduced thefirstphase the can make ort, Just as with any break the development. What is at development, the first Fannie Mae Foundation 2000 Annual Housing Conference 11 The Market Power of Emerging Communities Confronting the Question of Demand for Urban Residential Development stake is more than the obvious efficiency of infrastructure and a careful matching of expenses with revenues. The first phase can have an impact on the potential market as well. The first phase must consider the image that is presented to the community at large. The type of housing built at the property's most visible edge must be very carefully targeted; it will convey most powerfully the character of the neighborhood to the potential market. Finally, the tenure mix of early phases can be critical. Despite the widespread objective of bringing homeownership into the city, rental housing can be an excellent first phase for neighborhood revitalization. Rentals can quickly transform neighborhoods, particularly those that have nonresidential elements. Rental units are leased at a much faster pace than for-sale units are sold. Renters typically spend more time in the public realm because they are generally younger and their units are generally smaller than those of homeowners. The public realm should be matched to the market. Just as it is important to provide a range of housing matched to the potential market, it is equally important to provide a public realm that meets the cultural and leisure interests of that market. The commerce and culture of urban locations usually attracts young singles and childless couples, both young and older. Family households may also appreciate these attributes, but schools and security issues frequently deter households from remaining once children appear. Cities can retain families if they provide the three significant community elements that are required to establish or sustain urban residential neighborhoods—safe and secure streets, sufficient green space, and good schools. The urge to suburbanize should be avoided. Knowledge of the characteristics of households that have the potential to populate urban neighborhoods provides arfi t l important porta urban reinterpretation insight- ns erpreta on will be attracted to appropriate urban design, places as much emphasis of low-density suburban forms. Good urban designp la a on creating quality on creating quality streets and public places buildings. Fannie Mae Foundation 2000 Annual Housing Conference 12 The Market Power of Emerging Communities L Confronting the Question of Demand for Urban Residential Development Design should not signal socioeconomics. For urban neighborhoods to attract and sustain a diverse mix of households, a neutral socioeconomic design is required. The affluent will live in mixed-income neighborhoods if the occupants' income level or tenure is not discernible from the street. This can be achieved through consistent construction quality and the mixing of rental and for-sale buildings and units throughout the community. Authors Laurie Volk and Todd Zimmerman are partners in the research and analysis firm Zimmerman/Volk Associates in Clinton, NJ. References Gordon, Peter, and Harry W. Richardson. 1997. The Destiny of Downtowns: Doom or Dazzle? Lccsk Review for Real Estate Development and Urban Transformation 3(2):63-76. Grissom, Terry V., and Crocker H. Liu. 1994. The Search for a Discipline. The Philosophy and the Paradigms. In Appraisal, Market Analysis, and Public Policy in Real Estate, ed. James R. DeLisle and J. Sa-Aadu, 65-106. Boston: The American Real Estate Society. Lang, Robert, James W. Hughes, and Karen A. Danielsen, 1997. Targeting the Suburban Urbanites: Marketing Central-City Housing. Housing Policy Debate 8(2):437-70. Myers, Dowell, ed. 1990. Housing Demography. Linking Demographic Structure and Housing Markets. Madison: The University of Wisconsin Press. Myers, Dowell, and Kenneth Beck. 1994. A Four-Square Design for Relating the Two Essential Dimensions of Real Estate Market Studies. In Appraisal, Market Analysis, and Public Policy in Real Estate, ed. James R. DeLisle and J. Sa-Aadu, 259-88. Boston: The American Real Estate Society. Rey, Paul H. 1996. The Integral Culture Survey:A Study of the Emergence of Transformational Values in America. Sausalito: Institute of Noetic Science. Fannie Mae Foundation 2000 Annual Housing Conference 13 The Market Power of Emerging Communities