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Why McMansions are Good for Dallas

Before you go cursing developers, consider the big picture—and your own property’s value.
By D Magazine |

In December, as the bulldozers demolished the Highland Park home designed and formerly owned by famed architect George Dahl, it was hard to imagine how someone could say this was a good thing for Dallas. How could you? When a lovely, significant home is destroyed to make way for a modern replacement in the name of walk-in closets and granite countertops, it seems an affront to our notions of community and good taste. It’s why neighbors, as they watched the razing of Dahl’s art deco landmark on Bordeaux Avenue, called it not only a shame but also a sin.

If the characterizations seem exaggerated—new homes replace old homes all the time, right?—you haven’t kept up with the teardown controversy. The National Trust for Historic Preservation calls the estimated 75,000 yearly teardowns in the United States “a growing disaster” and says they “wreck neighborhoods” and “spread through a community like a cancer.” In the Park Cities alone, more than 1,000 homes have been demolished to make way for “starter castles” or “McMansions,” as detractors call them, leading neighbors in older homes to pine for the ’90s, when 5,000 square feet was quite enough for a family of four, thank you very much. In East Dallas, which along with the Park Cities and Preston Hollow has seen entire streets razed and remade, blocks of homeowners take sides in feuds framed in the simplest terms: evil developers versus sensible homeowners.

Again, when you watch the cottage next door torn down, it’s hard not to sympathize. The problem with this concern is that, in the larger sense, it’s misplaced. Because teardowns are not only a natural phenomenon, they’re also good for Dallas.

“It’s unpopular to say it, but we usually improve neighborhoods,” says Jeff Dworkin, a former division president of KB Home in North Texas who began building semi-custom homes in the White Rock Lake area a few years ago. He is standing beside a new prairie-style, two-story home in Little Forest Hills, on a street largely populated by small 1940s homes in various states of disrepair. His is one of several dozen homes being built in the area. “I mean, take this block. ‘Keep it funky’ is fine, but why go after developers who increase your home value and the overall value of the neighborhood? Why not go after the slumlords who rent out homes here with the AC unit on blocks and the roof is falling apart? I just don’t get it.”

Dworkin, like all developers interviewed for this story, can sound defensive. You would, too, if when your real estate agent holds an open house for potential visitors, the neighbors show up to berate her for destroying the neighborhood. But Dworkin has a point. And a less hysterical look at housing migration patterns reveals several benefits of new homes replacing old ones in urban areas:

INCREASING THE TAX BASE. This one is obvious, but its import is often discounted by anti-McMansion activists. If Dallas, for example, is going to overcome many of the impediments suburbanites say make them wary about moving back to the urban core, then the city needs to increase spending on police, fire, roads, and schools. Dallas County figures released last summer showed an 8 percent increase in total valuation (to $146 billion). Much was driven by South Dallas commercial construction, but single-family homes and new townhomes played an important part. In Highland Park, new homes increased overall valuation by almost 14 percent.

ATTRACTING FAMILIES. The conventional wisdom is that families move where the good schools are. While that’s true to an extent, increasingly, the long commutes in the ’burbs and other lifestyle concerns are bringing families back into Dallas’ core. “Families want homes that work, first and foremost,” says Kevin Sayre, a partner with Team Whiteside, a Coldwell Banker group. “Big kitchens, room for the kids, lots of closets. Then they figure out the school situation.” Media rooms don’t necessarily equate to urban revival, but they do help.

PRESSURING SCHOOLS TO IMPROVE. Once here, those former suburbanite families take one look at their tax bill and say, “Look, DISD is going to give me some options, whether it wants to or not.” They demand accountability and, if not excellence, at least improvement in the schools to which they’re suddenly sending big bucks.

MAKING IT EASIER TO GET A MORE ACCURATE TAX ASSESSMENT. Many think this is a bad thing, as evidenced by the more than 100,000 appraisal-value protests in 2006. But, again, on the macro-economic level, it’s better if the city knows that your house is worth the $700,000 you just paid for it rather than not knowing that you’ve put $200,000 worth of updates into your kitchen. The city needs your money, and getting taxed on the true market value of your house is a good thing, so long as I’m not the one paying it.

HELPING PEOPLE WHO WANT TO SELL THEIR HOMES. In my White Rock neighborhood, several long-time residents are decrying the teardown trend and huge renovations under construction. But not my neighbor who is nearing retirement and whose home is now worth nearly 50 percent more than it was five years ago. He stood and watched the huge house going up between ours and told me, “My real estate agent says this is putting another $50,000 in my pocket.”

No one is arguing that every McMansion should be seen as a sign of progress. But the fact that newer, larger houses are replacing smaller, older ones is a good sign. Syracuse University real estate economist Stuart Rosenthal published a study last year showing that most urban neighborhoods are in a constant state of transition. Over a 100-year period, he argues, a neighborhood goes through a phase in which the homes appreciate for a time, then for 20 to 40 years they will depreciate, then appreciate again until they’re torn down. Thus, East Dallas becomes highly valued for its Tudors and bungalows, while areas with many homes built in the ’70s and ’80s (think Lewisville) are suffering. That Dallas is at a point of high development suggests, according to Rosenthal’s work, that the city is headed for a decades-long urban renewal.

The process isn’t immutable. In the Stonewall Jackson neighborhood, for example, homeowners fought bitterly over the teardown trend. In November, the City Plan Commission granted the neighborhood stabilization overlay designation to the area. If the overlay is approved by the City Council, it will force builders to adhere to size restrictions on new homes. How these restrictions might affect property values in the neighborhood remains to be seen. But it’s not hard to imagine how “stabilization” could wind up creating “stagnation.” Because the sort of people who buy new homes in the urban core are the sort who researchers (and common sense) say help a city the most on a macro level: middle-aged, well-educated homeowners. They provide the most income, and they do the best job of holding a city accountable.

What about people who can’t afford big homes and higher taxes on their current homes? Don’t worry. Following Rosenthal’s cycle, the poor will start moving into your McMansion when its value plummets in 50 years.

The Rising Cost of Dirt
That McMansion next door might offend your aesthetic sensibilities, but take a look at what it does to your property’s value. Which is exactly what we did in these Dallas neighborhoods. We found three blocks with significant new construction and found how the average assessed value of the older homes has been affected.
BLOCK2000200120022003200420052006
Hanover Street, near Lovers Lane and Central. 20 homes, 10 of which are new. Average value of 10 older homes:$275,900$313,595$318,434$346,576$376,011$443,726$474,115
Vanderbilt Avenue, east of Abrams. 25 homes, 19 of which are new or under construction. Average of 6 older homes:$65,252$97,542$124,578$124,578$124,578$197,410 $197,410

Cherokee Trail, in Bluffview. 20 homes, 7 of which are new or under construction. Average of 13 older homes:$625,800$734,594$819,331$903,569$873,028$948,747 $1,013,759

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