Monday, June 21, 2010

Schools, Real Estate and Aging.

Schools, Real Estate and Aging.

I went to visit my family this past weekend. My parents still live in the
home I grew up in the close in Detroit suburb of Oak Park, an area much like
Columbia Heights. In walking and driving around the market appears to be
stabilizing. Very few "for sale" signs.

My sister and brother-in-law live in the next community to the north,
Huntington Woods, which is a beautiful little suburb. Housing stock is
similar to southwest Minneapolis near 50th and France, but there is no
commercial development so property taxes are high. My sister pays $3,600 a
year on a little bungalow on a 40' lot.

It was a beautiful evening as I walked the 1.25 miles from my parents to my
sister's house. Past the sometimes crumbling homes of my childhood friends
that are filled with my memories. Coming from the Twin Cities, I'm still
shocked by the racial divide as those I see enjoying the evening outside in
Oak Park all have black skin. Then I cross 10 Mile road and Highway 696, one
of the most beautiful engineering jobs I've ever seen on an Interstate, as
its built below grade and is very quiet to the surrounding homes.

Now I'm in Huntington Woods and the faces of the children riding their bikes
are all white.

School Districts matter. Oak Park High School, where I graduated from, is
now 96% African American, 3% white and 1% other. It has received a "D Alert"
from the Michigan Department of Education. Test scores at 34% reading
proficiency and 13% math. The district spends $10,000 per student versus the
state average of $9,200 and 48% are eligible for free and reduced lunch.

Compare this to the neighboring Berkley High School, which serves Huntington
Woods where my niece and nephew attended. Its among the few public high
schools in Michigan to receive a distinguished Great Schools Rating of 8 out
of 10 and has a "B" grade. The school is 80% white, 18% African American and
2% other. 16% are eligible for free and reduced lunch. Spending per pupil is
LOWER than Oak Park at $9,089 . Reading had a 69% proficiency and math had
63%. Demographics matter more than school funding when it comes to student

While Oak Park High School students took AP Exams in 4 subjects, Berkley
students took the AP exams in 20 different topics. And that is a shift that
started when I attended Oak Park High School. I would take an advanced class
that my sister had taken 8 before, and it would be the last time that class
was ever offered as the demographic shift was already occurring. While there
was always a significant black population that were bused in from a
neighboring township, Oak Park High was getting an influx of Russian Jews
and Chaldeans (Iraqi Catholics) students that didn't speak English. Those
populations have moved on as the demographics in my home town churn faster
and more dramatically than any other community I've ever encountered.

How do the schools impact real estate values? Recent sales in Huntington
Woods range from $211,000, a block away from my sister's bungalow, to
$325,000. Prices in Oak Park range from $25,000 to $77,000 in Oak Park
Schools and $118,000 to $158,000 in the Berkley Schools. So nearly THREE
times the value for a similar size home and lot just by crossing the road
and school district boundary.

Recent home sales for the City of Detroit where the schools are even worse
than Oak Park? There were 2 outliers, one at $99,000 and one at $255,000.
The others ranged from $11,000 to $43,000, with most clustering around
$22,000. That's a single family HOUSE. I wouldn't even speculate what the
lots would be worth.

Statistics are fun to study but what does this mean at a personal level? A
couple years ago SUVs were hot and the Detroit economy was stronger than I
ever recall it in my lifetime. My parents little house was worth $130,000.
Today they would be lucky to get $70,000 and I haven't studied the data
enough to even guess how long it would take to sell at that price.

Mom is 79, and other than a hearing loss she refuses to admit to ("my
hearing is fine, its the doorbell that is broken") is doing well. Dad is 83
and it was hard this trip to see how frail he has become. How his amazing
sense of direction is fading as well as his wonderful math skills. And the
driving is getting a little scary. He has trouble getting around the house
and somehow my folks think this will be fixed by just finding the right
chair that is easier for daddy to get up from. I am so grateful my sister
and brother in law live so close to help Mom and Dad, but there is only so
much they can do.

I visit my Aunt Lucille, who I love and enjoy more than I can express. My
Aunt moved to a senior high rise 8 years ago when "little things added up to
big things" in the single family home that Lucille and her live in boyfriend
Harry, (now deceased) lived in. My Aunt loves this lifestyle and is active
in all the wonderful programming that is available.

Aunt Lucille suggests I talk to my parents about them selling the house and
moving into her beautiful building. I tell my aunt about the big argument I
had with mom that morning. I thought the cut cantaloupe had gone bad and
should be tossed and mom yelled and screamed at me, insisting the melon was
perfectly fine. How can we talk about real estate when we can't even talk
about fruit? Let alone money which is something we just don't talk about in
my family.

And there is "The Stuff"--49 years worth of it. Its not just the stuff, its
the memories. A few years ago when my niece was getting married we were
talking about what to wear to the wedding. I spotted my prom picture hanging
on the wall. "What happened to my prom dress?" "Its in the basement," my mom
said. Sure enough, it was perfectly preserved and I wore it to the wedding.
When I got compliments on it I'd truthfully say, "The dress is as old as the

I get my independent nature from my daddy. Selling their single family home
would be so very difficult. My aging parents remind me that real estate
isn't about statistics -- its about people.

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