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June 2012 
In This Issue
Most valuable, most walkable.
Last lot at Woodmont
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Arcadia Video Corner

KCPT: Imagine KC - Transit Oriented Development
KCPT: Imagine KC - Transit Oriented Development
Arcadia partner, Christopher B. Leinberger, speaks in Kansas City about the benefits of a proposed street car line.
Arcadia partner, Robert S. Davis, discusses 25 years of success at Perspicasity, Seaside's open area market.

Seaside documentary trailer
Seaside trailer
A short telling of the story of Seaside.
Arcadia Reading Corner
The Option of Urbanism
 by Arcadia partner, Christopher B.

Americans are voting with their feet to abandon strip malls and suburban sprawl, embracing instead a new type of community where they can live, work, shop, and play within easy walking distance.
by Seaside Institute. 

A book about the iconic community of the New Urbanism-- Seaside-- developed by Arcadia partner, Robert Davis.

Last Harvest
by Witold Rybczynski.

A book about American development told through the lens of Arcadia's New Daleville community in Chester County.


One of the best books I've read in years is Daniel Kahneman's Thinking, Fast and Slow.  It is an extraordinary journey through the mental short-cuts and biases that skew human decision-making towards the irrational.  Two of these biases, I think, are very relevant to housing markets.


Loss aversion has long been identified as a factor in the downward "stickiness" of house prices.  Because losses are more painful than gains are rewarding, homeowners are often slow to accept lower prices for their properties, even when logic would suggest selling the property and moving on.  While many people simply cannot afford to move (see my past discussions of pervasive negative equity), many can but simply cannot stomach the loss.  The consequences of this behavior are both troubling and fascinating.  Households underwater are 1/3 less likely to move and married couples who owns homes in areas with major house price declines are less likely to divorce.


The narrative fallacy is the tendency of people to accept flawed accounts of the past to predict the present and future.  Our minds reflexively fit available facts into coherent stories (e.g., we tend to believe that the handsome athletic-looking baseball player is also likely to be the better pitcher) and to ignore unseen facts or the role of randomness.  Robert Shiller, Yale economist and co-founder of the Case-Shiller Index of house prices, has spoken about the power of "prevailing narratives" in housing markets and how cocktail party chatter about how "house prices don't go down" (circa-2005) or "now is a bad time to sell" (circa-2012) are sufficiently plausible to most people to fuel a cycle of irrational decision-making.


What might loss aversion and the narrative fallacy have to say about today's market?  Both have a tendency to impede liquidity: sellers don't sell to avoid losses and buyers don't buy for fear of further declines.  For me at least, both also point to the positive role inflation might have in housing markets by reducing negative equity and changing the prevailing narrative that housing is a risky investment.


Read below about Chris Leinberger's latest piece in the New York Times and the last lot at Woodmont. 

 JMD signature
Jason Duckworth
Most valuable, most walkable.
Walkable places are commanding higher values than auto-oriented places
Walkability is not only a virtue of great city planning, it also correlates with higher real estate values.  In a recent New York Time's OpEd piece, Arcadia partner Chris Leinberger describes his recent research where it was found that the more walkable the location the higher the rents.  

Leinberger's research was done with his Brookings Institution colleague Mariela Alfonzo and examined the Washington, DC market. As Chris writes: "There is a five-step "ladder" of walkability, from least to most walkable. On average, each step up the walkability ladder adds $9 per square foot to annual office rents, $7 per square foot to retail rents, more than $300 per month to apartment rents and nearly $82 per square foot to home values." 

To review the full research report from Brookings, please click here.

The last lot at Woodmont: end of a long road.

A rendering of the French Court at Woodmont where the final lot in the community is located.
It's been a long road, but we're finally down to our last lot at Woodmont in Huntingdon Valley, Pa.  Nearly 14 years after we made the original proposals for Woodmont, only lot 110 in the French Court remains.

The Woodmont corner store has been built and sold.  Houses in craftsman, colonial, and French cottage styles have become wonderful homes for their families.  The roads have been topped and dedicated. Even the street trees are beginning to show some maturity.  

Cornell Homes is building the last few homes at Woodmont including lot 110. If you're interested in building a home at Woodmont, please contact Brendan Reilly of Crescent Real Estate at (215) 510-2992.