St. Paul Housing: A Modern Historical Tragic Comedy

The “character” of a place means various things to different people. The Las Vegas strip clearly is of a different character than Boston’s North End. Highland, with it’s strip malls, peripheral stroads and a dendritic-street designed neighborhood by golf courses is of a different character than Mac-Grove, with its older buildings, grid structure, and more atomized zoning.

When I moved to the Twin Cities metro, in many ways a type of “character” drew us to look at houses in St. Paul. Despite nonsensical sidewalk gaps, and a bike infrastructure that just doesn’t compare to Minneapolis, a lot of the houses are, to put it one way, super cute. Interesting stonework, high peaked roofs, lovely details…not unlike some picture of a European village. Now, I live in a charming house built in the 1920s, the kind of unique home that I assume is meant to be preserved by a recently proposed historic survey in Merriam Park, one which was reversed, but is not unlike other housing moratoriums enacted by the City of St. Paul.

Sounds like a good idea, right? After all, it was this kind of charming building “character” (I’ve always loved old buildings), that led us to view a number of quaint St. Paul houses in our search for a new home. What followed was an eye-opening experience.

First, I should state for the record that my St. Paul home is the most expensive I have ever owned, and I’ve lived in a number of cities. In fact, every Twin Cities house I looked at would be the most expensive I have ever owned, and at this moment, a little over two years later, I believe I could yet make a tidy profit on my house, should I choose. So, to put it plainly; housing is expensive here. Nearly as expensive as portions of New York state.

Second, almost all of those very expensive houses were in laughable condition. I’m certain that people did, in time, purchase them, because they have almost no choice if they want to live in St. Paul, but that doesn’t mean they are good homes. It just means there are some dedicated, or naïve, homebuyers.

Or they were homebuyers without my means to search. Leaving out identifying details, what follows is a summation of my experience shopping these cute homes at prices near, or north of, $400,000.

At one house, my agent and I passed nearly an hour running from room to room and laughing hysterically, as we compared the various slanting floors, and made jokes about a kid learning to walk in that house, or what their concepts of gravity might develop to be. The sellers helpfully left a copy of an examination by a structural engineer, attesting to the fact that the badly listing structure was still, in fact, structurally sound and would not list further.

Another pair of sellers thought that it was entirely unreasonable for me, as a buyer, to insist that the plumbing in a $400K house should function.

A particularly adorable structure that resembled a tiny castle, one I was in love with, was suffering from nearly catastrophic water ingress issues being held temporarily at bay by what appeared to be the local hardware store’s entire inventory of caulking.

My ongoing home search, which ran a year, presented me with odd holes carved or smashed in walls, panels missing from floors, and any number of broken, broken things. Window frames that cracked and crumbled under the strain of opening, or were impossible to open. A main horizontal structural beam that was sagging in the middle because it had been notched to fit a refrigerator. A refrigerator! Highly dubious remodels and modifications to walls and structures. These were the houses that an initial walk-through with my agent, and my untrained eye, could eliminate immediately. There were others that I put contracts on, but cancelled the contract after a thorough home inspection revealed things that I insisted on being repaired, or brought to code, and the sellers simply refused, something they could do because another buyer would come along, one with, perhaps, greater need than myself and my family.

What I had to work with was the luxury of both time, and money. Time, in that we weren’t in a crunch to find a new house; we were shopping from a rental, having sold our previous house to do so. I have a flexible job, one that pays above average, and our savings account was healthy. The search for a home took a year of dedicated questing, and every time I walked from a contract, I walked away from both the earnest money, and the inspection fees. Most families shopping for homes do not have the ability to simply leave thousands of dollars like that in order to find a house that is suitable for them.

As the search wore on, I also looked at the inner and outer-ring suburbs, where the same amount of money would get me a house that wasn’t a horror show of problems. As dedicated as I was to living in the metro, to being a single-car family, to having access to walkable neighborhoods and bicycle infrastructure, that dedication was flagging in the demoralizing headwinds of house-hunting in St. Paul, even from my position of advantage. Ultimately, I found a house. One with issues, but issues that could be dealt with.

Yet even the inspector missed the critical problem that would compel me to spend $30K in repairs in the first year alone. That hit is still exerting a dire gravity over our finances. For many families, it would be crippling, a devastating blow from a house that, seemingly, had no really serious issues. Many of these old, and very expensive homes, have known problems up front that will likely require secondary loans to bring them up to the standard that a family would want to live in, and raise children in.

So. after asking forgiveness for how many concepts are going to be blithely glossed, let’s discuss housing Economics 101.

The first potential buyer for the dump pictured here is a young, working family, with 2.7 human children, and likely two careers. They are busy, they are on a budget, and they need a safe home for their children. They can buy this house, for $600,000, then put at least another $500,000 into making it a suitable home for their children. This is a rough estimate based solely on public inspection records, which seem to indicate structural, foundation problems, non-functioning windows, plumbing and electric that isn’t to code, and a host of other problems, large and small, that are not in public TISH statements, but are to be expected after what seems to be decades of benign neglect. One million dollars. That same family can spend $400,000 in the suburbs for a home with a builder warranty and no problems, and get on with worrying about school and work.

The second potential buyer for this dilapidated structure is a developer, who will buy it, bulldoze it, and use the lot to erect a quadplex, or a condominium, or even a large modern home worth more than a million dollars. Those options are the only way to achieve any ROI, and the last option is problematic. The best is to make multiple, modern units for sale or rent, units which four young families will occupy.

I suppose I have to admire the neighbors for their…passion…for old buildings, passion which has expressed itself in the form of tantrums at public hearings, and efforts to use the power of municipal government to dictate the nature of private property transactions in a capitalist society. But these neighbors don’t have to live in the houses, so why should they be able to exert pressure on the city to use the law to preserve their sidewalk, old building view? Perhaps these neighbors should become the third potential buyer; the enthusiast who purchases and restores the house simply out of the love of old buildings? That is how things are done in a world of private transactions.

It’s been endlessly fascinating to me, however, that there is not the same level of anxiety in St. Paul when old homes along Mississippi River Boulevard are torn down and replaced with new, million dollar, luxurious and modern single family homes. Only when old large homes are going to be replaced with condos or quads. Interesting.

Suffice it to say that our first buyer – the young family – simply doesn’t exist, while the second – our developer – absolutely does. The first buyer only exists if the sum of purchase, plus work to bring the structure to acceptable levels of safety, amenities, and building codes, can be brought quite a bit closer to the price of the suburban house. How does this happen?

Simply put, the “value” of the house must come down, which means that, paradoxically, the way to save some old homes is to allow more of them to be torn down. An influx of modern, denser, safer, less maintenance intensive, and more reasonably priced family housing will cause the prices on older dumps to plummet, because they won’t be able to compete on the market with their new neighbors at such grossly inflated prices. They will then be more likely to sell cheap to buyers willing to restore them.

I find myself in the curious position of endorsing capitalism and market forces as the instruments of social justice and housing reform.

But if St. Paul thinks that prohibiting development and passing various historic ordinances will preserve these properties, the city is sorely mistaken. Yes, artificially restricting supply and development will cause the “value” of these old homes to continue to rise, and will keep them in place, but it is an illusory and temporary form of civic vitality. The young families and working professionals the city needs will move elsewhere. Elderly neighbors will walk the streets by the old buildings, well satisfied with their efforts at preserving their carefully curated museum, while the houses go unsold, and the maintenance problems mount.

The sickness will spread, while the houses decay into stratospherically expensive decrepitude, the schools will decline as families take their children to suburban homes and schools. The decline of the schools will be another reason for young families to avoid St. Paul, and as they do so, the homes will crumble and the tax base recede.

But they’ll be historic.

In the meantime, St. Paul’s scarcity of homes, and restrictions on development, have apparently added 20%-25% to the value of my home in merely two years. As a rational person, I’m starting to ponder on the appropriate dollar amount to sell at, and take my young family elsewhere. There is a point at which logic and finances will dictate no other reasonable course. I bought here not just for the unique old house, but also because proposed developments like the Ford site indicated a community poised to thrive and grow. I’m wondering if that judgment was in error.