The Downtown Housing Problem
I have now talked with at least a dozen people frustrated over what they say is a lack of choice when it comes to buying a residence downtown. Half want housing between $100,000 and $200,000. But others are quite willing to pay a lot more. But that’s the catch: The higher-end housing is apparently more appealing to the younger demographic which can’t go that high, and the lower-end housing doesn’t appeal to the higher-end buyers. Not sure if any of this was contemplated when I wrote this in 2007:
Why downtown condos cost $250,000
By Steve Lackmeyer
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Tuesday, April 10, 2007
Edition: CITY, Section: BUSINESS, Page 4B——————————————————————————–
For the past two years, the question has lingered among those watching the emergence of housing in downtown Oklahoma City: “Why are so many of the new units priced at $250,000 and up?Such pricing left a lot of young urban professionals who rent downtown frustrated. They could afford to jump from a $750 a month rental payment to a $1,000 condominium payment. But $1,000 a month doesn’t get you past $200,000 without a hefty down payment.
It’s not as if downtown developers haven’t known all along about this pent-up demand. While they might make more money on a half-million-dollar condo, they would be assured a quick sale with units averaging $150,000. Yet in almost every major downtown development announced to date, the prices continue to hover at $350,000. The Oklahoma City Urban Renewal Authority, recently given a choice between a mixed-use development of lower-price condos and apartments versus high-price residential towers for MidTown, went with the upscale product.
Credit Brett Hamm, president of Downtown Oklahoma City Inc., for offering an explanation that sheds light on the question of high-price housing.
The slant toward higher-price housing isn’t by coincidence — it is a grand conspiracy. Well, that’s not exactly how Hamm worded it. But here’s his take: you have to start somewhere. You can start with expensive housing in an area and then eventually add lower-price choices to the mix. But you can’t start developing an area by building a lot of lower-price housing and then hope to add more expensive units later.
Downtown housing really was a blank slate as late as 2000. It was then that a study by Houston-based CDS Market Research reported 6,000 people desired to live in downtown Oklahoma City but their interests were thwarted by a lack of available housing. That was the match that lit the fuse.
Much of the development involves land controlled by the Urban Renewal Authority. The Hill, Block 42, The Centennial and now Overholser Greens all are Urban Renewal projects, all involving products generally priced north of $200,000. Also priced higher than $200,000, but developed privately, are the Brownstones at Maywood Park. On the other side of this equation are the Central Avenue Villas, the Harvey Lofts and the just announced Lofts at Maywood Park as developments offering at least half of their units below $200,000. But the number of higher-price units far out-number the ones that will be sought after by all those aspiring homeowners living in the Deep Deuce apartments.
And that’s just fine with Hamm. One of the often-told rules of buying a home is to avoid the highest-price house on the block. Take that wisdom downtown and you can see why it’s so important to get the high-end housing under way. You don’t want to buy a $400,000 house surrounded by $150,000 homes. But who doesn’t want to buy a $150,000 house surrounded by $400,000 homes?
Of course, the next question is whether all of this expensive housing downtown will sell. The results aren’t quite in yet, but with The Centennial a virtual sell-out and half the units sold at Block 42, the grand conspiracy is far from a failure.
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Comments
I understand what Brett was saying, but I think he was comparing apples to oranges. The residential dynamic of urban areas cannot be equated and managed in the mindset of the traditional suburban neighborhood.
I would LOVE to live downtown and give up my 32 mile RT suburban commute. However, I’m just not willing to pay
$150,000 for a 700 sq ft. closet.
It would be nice if they would build some housing that
young professionals who make a decent salary could afford.
When I told my Realtor that right now downtown was no longer an option for me because of the high prices offered I got the response of, “Sure, go outside downtown and you can get more bang for your buck.” I think I was misunderstood…I’m not looking for *more bang for my buck* I’m just looking for the physical chance to get in, and that can’t happen right now.
I do think “The Leslie” is slated to have six $99,000 units on the bottom floor with grand $250,000 condos on both floors above it. I don’t think they’ve issued a correct start time yet. Still don’t know what to think about it but it’s at least a start in the right direction.
I agree with Holley. In the mist of Bricktown and Downtown trying to emerge you will continue to see businesses leave the area. The demographic that is going to support this area and the entertainment that it provides can not afford to live there and it’s too risky to enjoy the night life when you live just 10-15 miles away. There is still no commuter system in place to help this situation and the realtors continue to think that their retail spaces are worth way more than any new business is willing to risk. It’s a road to nowhere and therefore the Bricktown and Downtown that every young professional would like to enjoy can’t happen. Businesses will continue to leave based on not affording rent and the community will continue to take the blame for not supporting a business that the main demographic has no incentive to support. The ones with influence need to figure out that we are not NY, not Dallas, and not Chicago…just yet (Casey Cornett has a great vision basedon his blog yesterday but we’re fighting ourselves to make it a reality). It’s achievable but let’s try and build to that instead of running every business out of town over night by jacking up rent everytime a lease expires (refer to Steve’s list of businesses that are no longer there), building expensive housing, and over priced entertainment that the targeted demographic can’t support. Go talk to any business owner in Bricktown (minus a few) and they will tell you that they are fighting to keep their head above water just waiting for the city to follow-through with it’s promise to bring the young professional to the area that will in turn make life easier for everyone.
I think your post illustrates a really valid point, Steve – the vision of a fully actualized downtown core is going to take a very, very long time. I would have considered buying downtown at one point had there been anything on the menu other than the Nichols Hills price points. As it stands now, I’m looking to shave a little time off my commute by placing my house in Norman up on the market and then renting something downtown for a while – after that, I’m not too sure.
Personally, I think the city is getting ahead of itself with the core to shore plans. The city needs more in migration from surrounding areas and other states, and I don’t think there are enough people firing up the U-Hauls to get the loftier development goals off the drawing board. For the next five to seven years, going smaller might pay bigger long term dividends by focusing resources on the areas already on the map like Deep Deuce, Bricktown, and tying it all in to Automobile Alley and mid town with some kind of sensible and reliable mass transit. Once the school of rock gets up and running, and the economy picks up a little more steam – then, and only then take the next bigger steps when the demographics are favorable.
Given more time, perhaps Oklahoma as a whole will also be more culturally ready for a truly urban OKC. There are many, many people who want a welcoming city for everyone, but there are also still those who scare away the younger urban crowd with their efforts to legislate morality and who wish to tell people how they should live. Those who are extending the welcome mat have an uphill battle against those who have a narrower vision – and, yes, those things do make a difference too when people are deciding what place they want to call home.
Park Harvey, Deep Deuce, and The Garage are the most affordable spaces downtown, but those are for rent. My hope is that downtown OKC evolves into a more ecclectic demographic mix beyond just yuppity, gentrified urbanites. The most pressing need for downtown is critical mass…which will not be achieved under the current umbrella of downtown housing options.
Agreed. I think Urban Renewal should put the Overholser Green and other vacant or delayed properties up for rebid and should focus more on the mixed-use proposals that have some lower priced housing mixed in. Having a $400,000 luxury condo next door to a $150 flat is not the same as having a $400,000 palace in suburbia, next to a $100,000 fixer upper.