A pop-up on V Street NW in Washington.

Photographer: Sarah L. Voisin/The Washington Post

When Real Estate Goes Up, Literally

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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My city is trying to get rid of pop-ups. As a libertarian, I'm against it. As an avid follower of the stage and screen, I can't help but enjoy the theater of the absurd.

What is a pop-up, you ask? Well, in a city where lots are small and expensive, the idea is that you take a 100-year-old row house, rip off the roof and put another level on the house. Usually, this is followed by the developer dividing the place into condos, because putting on a pop-up costs well over $100,000, and developers are the folks with the ready cash to do it. Having done so, they want to make as much money as possible, so they split the house into two units that will each fetch more than a single large place.

Pop-ups are much despised in many sectors of Washington. Indeed, I hate a lot of the pop-ups on my block, because they are often horrible. This is probably the most notorious example in my city, and I admit it's extreme. Far more common, however, is the sight of some aesthetically challenged developer topping an ornate Victorian row house with a badly proportioned aluminum-sided cube that doesn't even match the color of the original building it squats atop. It spoils the look of the block, lowers your neighbors' property values and generally offends the eye whenever you have to walk past it.

Now, I understand that D.C. has a critical shortage of affordable housing, and developers need a cost-efficient way to expand the space. What is truly galling about this is that it would cost very little extra money to slap some brick veneer on the face instead of aluminum or stucco, get a polyurethane window cornice that looks approximately like the ones on the floors below, and slap another cornice on the top. Developers one block over from me did just that, and their pop-ups are lovely, a true asset to a neighborhood that needs more housing -- and not noticeably more expensive than the condos across the street where they went with aluminum siding. The problem is not the costs; it's that they just don't bother.

This is the sort of thing that could be fixed with a small change in the rules regarding street-fronting additions to older homes. Legitimate concerns about structural damage to neighboring homes (shared walls occasionally collapse, and more often spring cracks or leaks, when structural work is done to dig out basements or enable another story) could be fixed by ensuring better oversight of potentially disastrous construction.

Naturally, the Zoning Commission is instead planning to take five feet off the maximum height of homes in the old row house neighborhoods. Why? Because that gives them the power to make war on condo conversions.

Over here in Northeast Washington, no one seems to oppose condo conversions, except for the aforementioned habit of building the ugliest possible addition atop a formerly attractive house. But in the tonier parts of town, the fear of multi-unit dwellings seems to approach a sort of madness. Proponents are very clear about what they do not want -- eek! A four-unit condo right down the street from me!!!!! But no explanation is ever given as to why this poses a threat to the quiet enjoyment of their own property; it is taken as axiomatic, as ineffably true as the proposition that two parallel lines can never touch.

Those residents are well organized and well connected, and the zoning board has heard their pleas. Condo conversions delenda est.

As someone who might like to someday build another story atop her cozy row house, this fills me with dismay. And of course, it will make housing in the District of Columbia even more expensive. 

The richest irony is the people claiming that this will actually make row homes cheaper. There's a tiny bit of logic to this, which is that condo conversions increase the overall supply of housing while reducing the supply of single-family row homes. Affluent families, of course, want to live in single-family row homes, with a little yard for the children and no one complaining about the pitter-patter of little feet on the ceiling above them. These are also people who are further along in their careers, more rooted in the district, better connected to powerful people in the city's government ... and you see where I am going with this.

You could probably build an economic model where this would actually make single-family homes less pricey, but I doubt it will work out that way in practice. The proponents of this idea are imagining they'd be better off if those two condos were one row home and the two childless couples living in the units were forced to live somewhere else. They're forgetting about the folks who could have afforded a row home but decided they didn't need the space ... and then start bidding on row homes when there are fewer condos available. Ultimately, constricting the supply of condos in the District of Columbia is likely to push prices up on all sorts of housing, not just two-flats.

Of course, if you already own a row home ... well, shucks, darn it, I guess our property values are going to go up. What a shame. It's perfectly understandable that homeowners would feel this way. It's less understandable why the Zoning Commission would decide it's good public policy to push folks with more modest incomes out of the city while further enriching existing property owners who have already done pretty well in D.C.'s overheated housing market.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor on this story:
Brooke Sample at bsample1@bloomberg.net