ABC News waves wand, turns "low overhead" into "upscale".

Years ago there was a Bay Area car dealer who claimed he could sell his cars for less because he sold in "low-overhead Vallejo".  I always wondered what Vallejo's city fathers thought of his "low-overhead Vallejo".  I'll bet that car dealer never had a Vallejo city park named after him.

So imagine my surprise when during the November 29, 2007 edition of ABC Nightly News reporter Laura Marquez announced that the housing crisis had hit Vallejo's immediate neighbor and other half of the Vallejo-Fairfield Metropolitan Statistical Area (fanfare please) "the upscale community of Fairfield, California".  "Even upper middle class suburbs aren't safe from the housing crisis", I learned to my concern and chagrin.

And all along I'd thought that the people who bought homes in remote corners of the Bay Area like Fairfield and Brentwood were people who couldn't afford "upscale communities".  All the people—plumbers, teachers, firemen, cops—who should be able to live in the communities they serve but can't.  All the people the Harris Poll tells us we admire and respect no end, but apparently not enough to let them live where they work, at least if they work in the more affluent parts of the Bay Area.

But I guess I was wrong.  I guess plumbers, teachers, firemen and cops just like driving two hours to work.  Each way.

But if this ABC News story left me a trifle incredulous, it was tailor-made for a national audience.  The national median price of an existing home in November 2007 was $210,200, according to the National Association of Realtors®.  So when Fairfield homeowner Kelley Lowry tells the country that in 2005 he paid $580k for his four-bedroom home, and confesses that he "camped out overnight" for the privilege, you can almost hear the eyebrows raise all across America's heartland.  "Gol durn yuppie", you can almost hear millions of viewers mutter.  Especially when the nation learns that  "just six months later, his house was worth $750k—but now?"  Yes, but now?  Tell us, ABC News!  Oh yes TELL us the wages of profligacy!  "The value has plunged to just about $400k".  Whoosh!  You can almost hear a grateful nation exhale.  "Young fool got what was comin'", barks Pa to Ma.

Tension, release.  Tension, release.  It's the secret of good music, and probably of all good art.  And it's certainly the secret to all good light entertainments, such as your network nightly news.

Now that ABC News has brought us catharsis, the secret of good tragedy, let's inspect this object lesson a little more closely.  Which is apparently a lot more closely than ABC News did.

First, let's get down to brass tacks and define "upscale", not from the point of view of Ma and Pa in Iowa City, Iowa, where $750k, $580k or even $400k might buy you an entire city block, but from two more objective points of view.

The first is the Merriam-Webster Online Dictionary, which defines "upscale" as "relating to, being, or appealing to affluent consumers; also:  of a superior quality".  The word dates from 1966, when some inspired sociologist or marketing type probably coined it—there should be a monument somewhere (Fairfield?) to him or her.  And doesn't "Fairfield" just sound upscale, like some tony East Coast enclave or maybe one of the royal family's castles?

Next, let's put "the upscale community of Fairfield" in its proper context ("context", according to Merriam-Webster, is "the interrelated conditions in which something exists or occurs").  My more casual definition of "context" is "something you rarely get from the media, either because they don't know the subject well enough to know it has a context, or because context would just get in the way of a good story". 

So let's look for traces of "upscale" in Kelley Lowry's four-bedroom home, and in the "upscale community of Fairfield" and its environs.  We'll be keeping our eyes peeled for "affluent consumers" and "superior quality".

You may remember that I was surprised to hear Fairfield called upscale.  Especially when Lowry could get a new four-bedroom house there in 2005 for just $580k.  "Just"?  Yes, "just".  $580k was cheap for a new Bay Area home back then.  For example, the average price of a new home in Palo Alto, a Bay Area city many would call "upscale" and "upper-middle class", was $2,319,462 in 2005. 

According to DataQuick, a real estate information aggregator, the median sales price of a Bay Area home two years ago in November 2005 was $625k.  Lowry paid 7 percent below the regional median for his home.  "Below median" and "upscale" go together only if you're the ABC Nightly News. 

Then consider that Lowry's house was new while most of the Bay Area's housing stock is anything but, much of it built before 1970, and that much of the region's housing stock is smaller than Lowry's home, 2110 sq.ft. according to county records.  Yet Lowry's new and more spacious home cost less than the regional average.

"Less than average"?  "Upscale"?

Another clue that Lowry's home in "upscale" Fairfield might not be so upscale is the meager 3135 sq.ft. lot it sits on.  A standard lot is 5000 sq.ft.; a 3135 sq.ft. lot would be called "substandard" by any Planning Department I've ever talked to. 

"Substandard"?  "Upscale"?

Now let's step back from Lowry's home and seek "upscale" indictors within the fair burg of Fairfield itself. 

Let's start our search with home prices, which should be a telling indicator.  And let's use 2006 prices, since they predate the Fairfield market's sharp drop.

According to DataQuick, the average sales price of a Fairfield home in 2006 was $495,500.  Where does this sales price fit within Fairfield's context, the nine counties of the Bay Area?  Of the 137 Bay Area communities DataQuick tracks, only 18 had an average sales price lower than Fairfield's.  5 of those 18 were in Solano County, where Fairfield is located, suggesting not only that Fairfield is affordable by the standards of its context, the Bay Area, but that Fairfield is in an affordable sub-region of the Bay Area.  In fact, Solano and neighboring Sonoma County together account for 13 of those 18 communities I just mentioned, some of the most affordable in the Bay Area.

"Affordable"?  "Upscale"?

Next let's look at key demographics:  per capita income in dollars; individuals in poverty; graduate or professional degree; and employment, management professional and related.  To make these categories meaningful, let's compare them to Fairfield's obvious contexts—Solano County, the Bay Area, California—but also to that upscale upper-middle class city I mentioned above, Palo Alto.  We'll also compare Fairfield's demographics to those of another Bay Area county, Santa Clara, which will be our stand-in for upscale upper-middle class Silicon Valley.

I'll use American Community Survey estimates for 2005 (the latest available) done by the US Census Bureau except for Palo Alto, where I'll have to use 1999 data.  The ACS hasn't come to Palo Alto yet, since its population is under 65,000.

First, per capita income:

You can see that Fairfield per capita income is not only below the state average, it's even below the Solano County average.  And it's well below Bay Area per capita income.  How does it compare with Palo Alto?  Not even in the same ball park.

"Below average"?  "Well below average"?  "Upscale"?

(Just for the heck of it, I looked up the per capita personal income for Indianapolis, which I'd recently read is the most affordable metro in the country.  It's $36,391, according to the Bureau of Economic Analysis.  In "upscale" Fairfield, it's $24,494.  Then I looked up per capita income in Iowa City, Iowa, for the sound scientific reason that Iowa City must be the heart of America's heartland and the navel of America's midsection:  $33,925.  Ma and Pa, don't be too jealous of Fairfield.)

Next let's look at individuals in poverty:

Fairfield comes in an unenviable second in this category.  Far be it from me to castigate a city because one in ten of its residents lives below the poverty line—I started out making $7200 a year, not much even back in 1976, and in those years could afford only an $102-a-month apartment in the Fruitvale district of East Oakland—but, again, this isn't the demographic of an "upscale community".  Palo Alto's is.

Now let's look at the percentage of residents with a graduate or professional degree:

Again, Fairfield badly trails not just the Bay Area but even California in this indicator of affluence.  Palo Alto?  Forget about it.

"Trails badly"?  "Upscale"?

Finally, let's examine the percentage of residents in management, professional and related fields:

Once again, Fairfield is far behind the Bay Area and California, and way behind the two genuinely upscale areas, Palo Alto and Santa Clara County.

"Far behind"?  "Way behind"?  "Upscale"?

By the way, aren't you dying to know how "low-overhead Vallejo" stacks up against "upscale Fairfield"?  I know I am.  Here's how the two contestants square off in percentage of residents in these three categories:  professionals, in poverty, and with advanced degrees:

It's pretty much a dead heat except in residents with advanced degrees, where Fairfield has a decided edge.  Income, which I don't show, is also close:  $24,494 for Fairfield, $23,315 for Vallejo.  If Vallejo is "low overhead", Fairfield looks like another good place to sell cars.

Well, by now you probably get the idea.  Fairfield may be a fine community—ABC's millisecond shot of its downtown suggests it is—but "upscale" Fairfield ain't.  Unless you're ABC News.  Unless you're looking for a nice quick morality play that'll rattle a few cages and make a whole bunch of people feel morally superior.  Which, when you're the mainstream media, is a job well done.

Indeed, the six viewer responses posted on ABC News' Web site are as telling as the report, and just as predictable.  There's:

Let's tally these responses:  17 percent fairly rational; 17 percent game playing; 66 percent hot air and moralizing.  Pretty typical of real estate discussion on the Internet.

In ABC News' defense, there is, of course, the faint possibility that "Housing Crisis Hits Upscale Suburbs" was just an honest mistake:  like the rest of the country, they saw $580k and $750k and "Fairfield" and thought, "golly, that's upscale".  Well, I hear that real estate in New York City, where ABC is headquartered, isn't exactly cheap either.  And what does it say about network news if the producers don't know any more about a subject than the audience they're "informing"?

But the real problem with exonerating ABC News is that the reporter, Laura Marquez, reports for a Bay Area TV station whose nightly news I watch.  She knows, or should know, where Fairfield fits within the firmament of upscale Bay Area cities.  And was it just me, or was that uncharacteristic grimace Laura gave at the end of her sign-off a conscious or unconscious commentary on her story?     

And maybe it's just me, but why have all the other reports I've seen on distressed new-home developments in crashing markets like east Contra Costa County invariably interviewed homeowners of color.  And now that the story focus goes "upscale", the interviewed homeowner just happens to be a white male about forty.  If I was a cynic, I'd say the producers tailored the homeowner to the report.

But after this performance, how could anyone be a cynic about the media?

So let's bid farewell to Fairfield, a city that just got fifteen minutes of the wrong kind of fame (apparently endemic to the area) and to Kelley Lowry, handy poster boy and whipping boy and boy skipper of a leaky vessel worth "about $400k".  Except that DataQuick shows Fairfield prices essentially flat from 2005 to 2006 and down 18 percent from 2006 to 2007, which would put the value of Kelley's house at just under $480k, which isn't the best news Kelley's ever had but also isn't the 30 percent shellacking ABC News says he's taken. 

So where did that "about $400k" come from?  An appraiser?  An agent?  A bubble blog?  ABC News doesn't say.  But I'm sure "about $400k" was as carefully researched as the rest of the report.  

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