Third World Patterns in the Bay Area

As students of cultural geography know, in the Third World, property values in the cities tend to be highest, where the wealthy live, while shantytowns tend to surround the cities in the steeper terrain. In the First World, this pattern is often reversed, due to the wealthy fleeing the city centers and being able to afford the expensive engineering required to build in steeper terrain. Naturally these are generalizations, but it is always interesting to note when they don't apply.

San Francisco (left) and Mt. Tamalpais, the highest
point in hilly and forested Marin County.

In the San Francisco Bay Area of Northern California, the First World pattern tends to hold. Steep and hilly Marin County, a short walk across the Golden Gate Bridge north of the densest city in the state, is the richest county in the state and tends to have some of the highest property values.

As you move outward, property values tend to fall again, which is why commuters spend so much time in their cars and buy houses in hot, inland locations. Recent events in the housing market and higher fuel costs have tended to make house prices in these areas even lower.



Why do people call them "home" prices when a significant part of the buying activity driving house prices up out of the reach of home buyers is from speculators and investors? I digress... so recent trends are for people to see the less desirable areas for what they are, and devalue them. This is what happened to Las Vegas. People have finally decided they want to live in nice places with short  travel times.

The town of Woodacre, in Marin County, just over the hill from Fairfax, is the first inhabited place you reach in West Marin as you bicycle west on Sir Francis Drake Blvd toward Point Reyes. There are two areas of Woodacre: "the flats", which have some serious septic issues, and the surrounding valley slopes, which have their own issues (mildew, shade, fire, mudslide, tree hazard -think falling redwood branches the size of normal trees, collisions with out of control mountain bikes, etc.).

So now maybe you see where I'm going with this.

In the Third World pattern, the Woodacre Flats would be the expensive desirable real estate, and in the surrounding hills would be the cheap shantytowns. But here in the Bay Area, we would expect the opposite: expensive houses in the hills, with the cheap real estate in the flats. This tends to hold true because of the expensive engineering involved in building on a steep lot compared to a flat lot. The house in the steeps will just cost more to build.

In recent experience, this is not necessarily the case.

House #1
A house in the Woodacre Flats earlier this year sold for almost $400,000. It wasn't worth that due to water damage (new carpet and wall paint hid the damage but there was a tarp on the roof and a stain on the ceiling). All the windows were single pane and painted shut. The outbuilding was built without permits and not in the county's records. The big potential cost was probable septic replacement costs.

The septic situation in the Woodacre Flats can be read about here. To summarize, many lots have failing septic systems due to illegal units, a shallow winter water table, and a long list of other factors. A community sewer system, if built, would replace the septic systems, but could cost each lot owner $50,000 to build and $1,200 per year to operate. And to top it all off, the State Water Resources Control Board's new septic system rules take effect in May 2013.

So house prices in the Woodacre Flats should plummet by at least $50,000 after May (full disclosure: I'm hoping prices come back down to a reasonable range for first-time Bay Area home buyers). If you replace a failing septic system before May 2013, you only have to comply with the old rules, and that new system will probably comply with the new rules for existing systems. If you replace a failing septic system after the new rules take effect in May, you have to comply with the new rules for new systems, and that could be more costly, or even impossible in some circumstances. Which is why prices for houses with questionable septic systems should fall in May.

House #2
A house in the Woodacre hills earlier this year went on the market at $340,000. It has recently been reduced in price a bit. It wasn't worth $100,000 less than that for many reasons. A large tree (large means LARGE--Doug Firs on this property are 5 feet in diameter) had fallen on an outbuilding with a finished interior, buckling the roof and walls, breaking the ceiling, and dumping the contents of the attic onto the floor. The wood from the tree that fell was neatly stacked in the yard, but selling that wood wouldn't nearly pay for reconstruction of the outbuilding. Another huge tree on the other side of the property had a limb the size of a small tree suspended in its branches over the main house... just waiting to fall.

We haven't even gotten inside the main house yet. Which is really easy to do, especially if you are a mouse, rat, deer, skunk, cat, dog, or whatever. This is because the shattered sliding glass door has cardboard taped over it, preventing it from closing. That's right, the broken glass door is stuck in the open position.

So for buyers that haven't turned around and walked away already, you go "inside", and the place is abandoned and unlivable. But it just needs work, and assuming it isn't going to get any worse, lopping $100 grand off the price leaves that amount for all the needed work. The house next door is inhabited and for sale, but you wonder how bad things are over there, since the price is only $40,000 more than the rat-infested mildew cave you just walked through.

There goes the neighborhood
The funny thing is, House #1 was put on the Market at the price House #2 will probably sell for, and House #2 was put on the market at a price closer to what House #1 sold for. An asking price tells so much more about what is going on in the owner's head than anything going on in the real world. And the sale price is mostly about what is going on in the buyer's head. Where does the real world fit in?

One of the best classes I ever took at Cal Poly was a land use planning class in the Soil Science Department. I loved all my soil science classes, and this class was no exception, since I was interested in land use planning more than just about anything else at the time. The great thing about this class was that it taught you to make land use planning decisions based on the capacity of the soil to support various land uses. Using soil maps, you looked up the soil on the site in the soil survey, and pretty quickly, maybe after a few calculations, you would be able to tell if the soil was suitable for the land use you were considering.

The nice thing about this method of land use planning is that it bases land use choices on reality--not in what is in someone's head, but in the presence of a high water table, or steep unstable soils, or a floodplain, or low available water capacity. The big disappointment for me in the decades since then (one of many, as I set out into in this world of wounds with my ecological education) has been to realize we already made most of our land use planning decisions, and are often continuing to make new ones, based on political and economic decisions made by developers and politicians. This is not good--especially when you throw in continued development at and below sea level, when predictions for sea level rise would seem to be a wake up call to not do that anymore.

Fundamentally, the constraints of soil (and other natural hazards) on land use are simply a cost issue. You can engineer an above-ground septic system in a soil that is unsuitable for septics. You can drill huge beams and supports deep into unstable hillsides so that when the surface of a hill finally slides during the next El Nino, your house will remain suspended in mid-air. Unfortunately many costs aren't paid by the owner, and as a result we have the societal costs of failing septic systems in Woodacre Flats polluting the local creeks, and the costs of fighting wildfires on the ridges (and maintaining an expensive and eroding "fire road" system that is rarely used to fight fire) to protect the houses built in the forest.

But as the world flattens due to rapid transportation and communication, and world trade equalizes the standard of living everywhere, the First and Third World patterns begin to blur. Cost becomes a bigger issue in the U.S., as the availability of money to engineer expensive solutions evaporates. Avoiding hazards is much cheaper than engineering your way through them.

But what do we do with things built in the wrong place? Unfortunately, houses in the Santa Venetia area of San Rafael will always be threatened by storm surges as sea level continues to rise. They will probably continue to be some of the cheapest houses in Marin County. The houses in the hills might be headed for the same situation as the public stops subsidizing the costs that make these places habitable. But it isn't good public policy to put our poorest residents (often the elderly and families with children) in the most dangerous places. We shouldn't put any (inadequately built and protected) houses in dangerous places. The alternative to these First World shantytowns is to remove the houses from the hazard areas, much like agriculture was removed from the poorest soils of the Great Plains after the Dustbowl.

The same is true for any unsustainable land use, especially anything subsidized by the government, such as irrigated agriculture in certain areas. Systematically removing these poorly-sited land uses reduces costs and future disruptions and damage. And after we remove the inappropriate land uses, we can restore the lost grasslands and the bay marshes and the floodplains that we so desperately need.

The other day a couple sitting in a car with its engine running stopped us to ask a question. They wondered how high Sylvestris Creek gets next to a flat lot that has been for sale for years (at least since the building moratorium three years ago). I told them that the bigger problem with the lot that they should look into was the setbacks in Marin County's new Stream Conservation Ordinance that is about to be adopted (and long overdue, minus some outrageous permit fees that will result in everyone doing work illegally without permits). But their question was a good one, and my opinion (without having walked through the property to investigate) was that the creek rarely would get high enough for floodwaters to encroach on much of the lot. What I didn't tell them is that the flat lot at the bottom of the steep canyon is in a geomorphological position known as an alluvial fan, and could be in a prime spot for debris flows and rare channel changing flood events. This is one of many reasons why it is important to understand geology, geomorphology, hydrology, and the other Earth sciences.

But in their lifetimes, it would probably be more likely for the culvert under their idling car to plug and flood half the property, or one of the gigantic redwood trees nearby to fall on the house they would build. This long time horizon is why better land use planning decisions need to be made by County or State planning professionals--a First World approach--and not by people buying and selling lots and houses--the Third World approach.