Floor Area Ratios – Bulk and Volume

I attended a meeting this week regarding proposed changes to the current FAR in my neighborhood in Kirkland.  I thought I’d report on Kirkland specifically on my blog, but raise the BIG question here.  Should neighbors and local governments be able to dictate, beyond height and setbacks, how “big” your home can be?[photopress:bigger_house.jpg,thumb,alignright]

Is the “argument” really about size?  Or is it about “style”.  It seems that people complain more about homes with a flat roof made of smooth stucco, than they do about homes with pitched roofs.  If everyone in town hates the house you want to build, should that matter?  Is this argument really about trying to dictate “taste”.  When an old house is torn down, the new one built in its place can’t be expected to look anything like the one that was there, can it?


The reason more houses are being built with a flat roof, rather than a pitched roof, is because of the height restrictions.  Here the height can’t exceed 25 feet.  If you have a point at the top, that point counts as your 25 feet, so you lose a lot of square footage at the top vs. building your second floor up to 25 feet with a flat roof. 

FAR is not so much about the size of the house, as it is the size of the house relative to the lot size.  If the building code has a restriction of 50% FAR, then the maximum size of a house on a 5,000 square foot lot is 2,500 square feet.  Unlike real estate agent and appraiser criteria, building code square footage can include the attached garage, but often does not include the “air space” of a two story room with no floor at the second level.  “Volume” related complaints suggest that this “air space” should be included in the square footage as if it had a floor.[photopress:small_house.jpg,thumb,alignright]

I will stick to the specifics of the actual Kirkland meeting on my blog, but here in RCG, I thought we could talk more about the issue generally.  Used to be as long as you adhered to the height restriction and setback rules, all was A-OK.  Now people want to dictate and prevent “monoliths” and homes that just don’t seem to “fit” into the type of town “we” want to be. 

The fur does tend to fly at these meetings.  Anyone have any opinions on this topic?  Some of the questions raised are “Why do so many new homes have such small yards?”  Should we really be able to tell people whether or not they MUST have a “yard”?  Whatever became of one story houses? and “What’s going to happen if my neighbors sell?” Should we let people do whatever they want with the land that they own, or should neighbors and local governments have some say in the matter?

Weigh in your opinion.  Inquiring minds want to know how people feel about this topic.

Futures and property values: you can bet on the bubble

Last November, Slate magazine posted a piece on the housing market futures. The gist: you can hedge a drop in your house’s property values by buying derivatives that pay if the region’s property values drop a specific amount over a specific time period or even if predicted growth doesn’t materialize:

Next spring, however, investors might finally have a better hedging product. Just in time for the apparent top of the housing market, the Chicago Mercantile Exchange is introducing futures and options on housing prices in 10 cities for the second quarter of 2006.

It’s pitched to big institutions, but it would probably benefit individual investors immensely. That is, if they used it. Unfortunately, the individual home owners it would benefit the most didn’t have enough cash on hand to put money down on their house and are currently just paying interest, so they probably don’t have extra money to invest in hedges.

Also, as Ardell eloquently pointed out a while back, different sectors of the market can “pop” at different times and at different rates. Unfortunately, this could only protect against region-wide shifts:

These options will cover large markets—it will be tough to hedge the value of your own house, which depends so much on your particular neighborhood.

I liken it to buying an index fund (or mutual fund) instead of a single stock, although maybe insurance against extreme price swings is a better analogy; the effect is to reduce the upside and the downside of your investment. It doesn’t seem very exciting in the least so I’m putting this one in the “popular after the crash” basket, as it’s hard to plan for hard times when the good times have lasted so long.

So who’s buying on opening day? And can the market correctly predict housing prices over the next few years, or are investors so oriented toward a bubble popping that they can’t see the inherent strength of the market (or vice versa)?