Tuesday, January 29, 2008

Sacramento Settlement Patterns and the Desirability Debate

A while back I gave a commenter a hard time when they made the following statement: "homes in the hills generally are more desirable and valuable than those in the 'flat lands.'"

I asked for something to back up this claim, because based on my knowledge of historical settlement patterns, the opposite seemed true. (Granted I am making some sweeping generalizations here with no research to back it up….so feel free to take a shot at me.)

Let me explain. In my field (aviation), supply tends to be a reflection of demand. For example, airline schedules tend to reflect passengers ‘desirability” (frequent flights between desired destinations and lots of flights in the morning and late afternoon to accommodate business schedules).

Now let’s apply this same logic to settlement patterns in the Sacramento Metro area. Initially I believe settlement patterns, and hence desirability, was based on 2 major factors. The first was access to a source of water, which our rivers provide. The second was transportation networks; originally the rivers, and later rail and major highways. These two factors appear to be fairly universal; hence most of the world’s major cities are located on major rivers, and coastal areas. Historically hill settlements tended to be the exception, only when no flat lands were available, or because of defense needs (easy to see the enemy coming).

Fast forward a hundred years or so, and many of the most desirable flat lands have been settled. Thus building began in less desirable suburban locations. However, the less desirable locations were often balanced out by the fact that the suburbs were newer, and the infrastructure in parts of city centers was starting to decay.

In Sacramento this phenomena seems a bit more dynamic because flood risk added additional criteria to the desirability. However, contrary to the belief of some, the entire Sac Metro area is not in danger of flooding. There are many respectable neighborhoods, not in the hills, that have a minimal risk of flooding. Of course, the high grounds nearest the city center were settled first. Eventually that was all filled in leaving, high grounds with a long commute (Rocklin/Roseville/Folsom etc), or areas in a flood plain with a shorter commute (say Natomas).

As for the desirability of the foothills themselves, it isn’t easy to build large swaths of affordable housing in hills. So by definition they tended to have custom homes initially. Thus the foothills appealed to those who could afford a custom home and were willing to live far from the city, and thereby bringing an air of exclusivity to the foothills.

In the last 7 years or so, what has made the foothills more accessible to the masses is better technology. Technology has enabled people like me to “work” without commuting into Sacramento. It has also made it relatively easier to build homes on a larger scale on hillsides. Of course the original “exclusivity” has been seized upon and nurtured by builders for marketing purposes. The newer infrastructure (schools, roads etc) is also very attractive when compared to many of the older parts of Sacramento.

So there you have it. I can’t really come up with any inherent arguments in favor of “hills” versus “valleys”, except perhaps a nice view. Based on observed behavior, valleys seem to win almost every time (until recently). Of course, I prefer the hills to the valley, but if I had to commute to work, a short commute would vastly outweigh any desirability the hills had to offer.


Paul said...

And some of us like a view!

Sippn said...

You could have just said "uncle".

I think even if you drive around the "flat earth society" of east sac, mid town and south land park you will notice that when there is high ground (30' above sea level instead of 23') the homes usually get pricier.

smf said...

Up till recent history, EDH was cheaper than Sacramento for the same type of home.

Only lately has there been similar pricing between both areas. But there is still significant distance between EDH and downtown, and this should be reflected in the price.

As to views...well...I have been surprised to see the number of homes that don't take advantage of it.

And no, golf courses don't count as 'views' to me...

Observant One said...

Well, basing your argument on historical patterns from 100 years ago is not compelling. We're in the 21st century, and transportation of people, water, goods and data has progressed light years from the circumstance back then. Although you may deem such developments recent,' the reality is that it doesn't matter; it's here and it's here to stay.

People are attracted to the foothills for a variety of reasons, ranging from a desire to enjoy the geography to an appreciation of a lifestyle that has some insultation from the issues associated with a city/urban core to which peoples once, of necessity, were tethered.

And views of golf courses certainly 'count' as views; beautiful greenery and trees do not lose anything because a flagstick is out there every once in awhile. The homes along the Serrano golf course have some terrific views, for example.

Husmanen said...

For me the foothills have a 'feature' which can be a view, golf course, walking/biking pathway, open spaces, trees, a basic feeling of openness.

Features in Sacto include being close to the river, and no I am not thinking about flood issues here, recreational 'features'.

Laguna did this this with its water 'feature'.

BMac said...

settlement patterns of society on a historical basis vs. current individual property values. If there were a bunch of random, big ass hills where oak park is right now, do you think that those homes would be more or less expensive than the same homes in East Sac? no brainer. Of course proximity to job centers, cultural hubs, retail, etc must be factored into price also.
However, the cost of a home in Bel Air is always going to be more expensive than Watts.

smf said...

"Well, basing your argument on historical patterns from 100 years ago is not compelling"

Use price history is Zillow, works wonders.

"We're in the 21st century, and transportation of people, water, goods and data has progressed light years from the circumstance back then."

Sure it has, but TIME hasn't changed. Neither has availability of other things, like hospitals and other shopping selections. This has to be reflected in the price.

"People are attracted to the foothills for a variety of reasons..."

With the proliferation of housing up in the foothills, every day there is less difference between these places and the city. There is nothing that vast parts of Serrano offer that I couldn't get in the city, except for commuting distances.

"The homes along the Serrano golf course have some terrific views, for example."

Sure they do. But between a view of the city, lake or golf course, I tell you which one comes last.

"For me the foothills have a 'feature' which can be a view, golf course, walking/biking pathway, open spaces, trees, a basic feeling of openness."

Openness is relative when large homes are in small lots.

"However, the cost of a home in Bel Air is always going to be more expensive than Watts."

Of course it is. But when the tide makes all boats rise, when it goes down it will bring ALL with it. There are homes and areas that will always be more expensive than others. These areas also rely on move-up buyers. If I sell my house now for $100K less than I could before, it means that I have $100K less to spend on my move-up home.

And the historical prices I am referring to are those from the 90s.

Cmyst said...

Of course, we live in the now. And for the near future, I believe that the exclusivity, views, superior schools, and lower crime rate of foothills suburbs will make them very attractive.
However, coal was once the primary energy source for the world and the steam locomotive was once the main transportation, and in their day and time people could not conceive of anything different.
I believe that with the environmental challenges as well as the inevitability of the limitations of peak oil, our whole paradigm will change. This won't necessarily make living in the foothills less desirable, but it might change the lifestyle of those who choose to do so.

Mystere said...

If you're relying on Zillow, you've undermined your credibility. Nice try, though.

Anonymous said...

Until about two weeks ago, I had no idea Sacramento's elevation was so low. But a co-worker and I started discussing this and I was actually shocked to find Sacramento at such a low elevation, even Carmichael nearly doubles the elevation of the city proper, and helps explain why, historically, property values are higher there than for similarly sized properties in the city.

I am not in a mandatory flood insurance zone, but really, this gave me pause. A lot of pause. I had never considered this aspect of homeownership until two weeks ago. Sure, I knew Natomas was a bad bet and I also knew that downtown Sacramento had raised the street level by one story in older areas, but it had never struck me in this way.

I lived in East Sac. in the 80's and remember the flooding. It was really something to drive up over the levees on the American River by CSUS on J/Fair Oaks Blvd. and see the water near topping them and know that you lived, at least, 15 feet lower than the levee tops, but I guess I forgot about that when I purchased a home.

Maybe it's time to re-up my voluntary flood insurance. Or maybe I'm just jittery because of the last three weeks of rain. Sacramento isn't N'awlins but maybe we're not as far away from it as we think we are.

There are a lot of neighborhoods that could be in danger if the levees fail, and I'm not just talking about Natomas.


Buying Time said...

I became much more cognizant of all disaster related scenarios (natural and manmade) after living in D.C. when the Pentagon was hit on 9/11. Things haven't been the same for me since.

smf said...

"If you're relying on Zillow, you've undermined your credibility."

Are you saying Zillow does not reflect correct past sale prices?

kmm said...

Public policy over the past century has always allowed the "hills" across our country to be an exclusive community.
The correct urban planning term for communities like EDH is "Exurbs." They are not exclusive to cities with "hills" but simply represent the areas where wealthy individuals can afford to break away from the urban center. Home prices locally were cheaper because of the lack of infrastructure in these neighborhoods, but once enough of a knowledge base (schools need smart parents to build a base of smart kids) and retail base has been established, then the value realign.
The added perks of additional land, newer construction and infrastructure adds to the growing appeal, but very few of these communities have an isolated city center to provide for their citizens and relies instead on neighboring cities. They are almost exclusively homes, schools & retail establishments with business reliant upon office parks. Sound familiar to anyone?
Here's a nice NYT quote about the situation: "They begin as embryonic subdivisions of a few hundred homes at the far edge of beyond, surrounded by scrub. Then, they grow - first gradually, but soon with explosive force - attracting stores, creating jobs and struggling to keep pace with the need for more schools, more roads, more everything. And eventually, when no more land is available and home prices have skyrocketed, the whole cycle starts again, another 15 minutes down the turnpike."
And of course a price decline leads to an influx of lower middle class moving up, bringing the schools down minus the relocation of a strong intellectual corporation in the community. (Hello West Roseville... it's not the teachers or the schools that get the high scores, it's the fact that Intel brought in smart people who have...ready for it...smart kids!)

So while part of it might be "higher ground" ... it's not really. It's just part of a larger phenomenon that exploded in the 1990s.