New Geography

Author: Andrew Kirby

  • Could the Dallas Way be the Right Way?

    Dallas was George W. Bush’s first choice for a retirement destination but it gets low approval ratings elsewhere. A recent poll of readers of American Style magazine rated Dallas only 24th out of 25 large American cities as an arts destination. It came in immediately behind those well-known cultural magnets Milwaukee and Las Vegas, and ahead of only Jacksonville FL, even though it dwarfs all three places in terms of population, arts institutions and urban amenities. An apparently typical assessment residing in the blogosphere states flatly “God I hate Dallas. Everything about it. Especially the airport. Which is the only part of Dallas I’ve ever been in.”

    There has always been urban rivalry, going back at least to the days of the Greek city-states. When Phoenix overtook Philadelphia in the census rankings some years ago, the local newspapers delighted in printing unflattering pieces about the other and extolling their own virtues.

    Increasingly, this rivalry goes beyond traditional boosterism. Cities used to be places where one lived, but they have become metaphors about lifestyle and identity, and the personal has become increasingly highly political.

    In the last presidential election, the former mayor of Wasilla, Alaska seemed to argue that small towns were the keepers of the true American flame, which upset quite a few urbanites. But not all cities are created equal. The creative class thesis suggests that, like high school, there is cool and there is un-cool. This gets complicated when the nerds decide the cool places are. Cities that are designated as cool, like Portland, also tend to be among the least ethnically diverse.

    In short, we are now quarrelling about which cities are the coolest, based upon the extent to which they serve as extensions of our personalities and manifestations of our identities. This has always existed in terms of local rivalries—New York and New Jersey, Minneapolis and St. Paul—but now it is taking on the characteristics of cultural civil war.

    In this scheme of things, Dallas ranks among the totally uncool, which is probably one of the reasons George Bush chose it. But reputation is not necessarily its reality, as visitors to the city can find out for themselves. On a recent Friday afternoon downtown, I saw a line of school buses jostling to drop off and pick up their passengers ranging from young children to strapping adolescents. Every ethnicity seemed to be represented. They were not going to a sports event represented but regular traffic to the Dallas Arts District, a contiguous area amid the high rises that covers 68 acres and contains a broad array of theatres, museums and the city’s Arts Magnet school.

    Texas is hardly short of arts destinations: San Antonio ranked high in the American Style poll, as did Austin, which is known for its South by Southwest and Austin City Limits music festivals. Although Dallas does not automatically come to mind when thinking about highbrow culture, its Arts District is not just a vanity project, but is part of a restructuring of the city’s image taking shape for over three decades. The Arts District was anchored by the opening of the Dallas Museum of Art in 1984; this was followed by the Myerson Symphony Center [designed by I.M. Pei], the Crow Collection of Asian Art, the Nasher Sculpture Center, and the renovation of the Booker T. Washington High School for the Performing and Visual Arts [Norah Jones is an alumna]. Most recent to open is the AT&T Performing Arts Center, the fourth of the cultural buildings to be designed by a prize-winning architect.

    Most metro areas would delight in this kind of enhancement. Yet Harvey Graff, in his book “The Dallas Myth” suggests the city has grown by “brash boosterism”. He argues the ‘Dallas Way’ of getting things done involves an existential denial of the past [especially negative events, notably the Kennedy Assassination] and an equally strong denial of any limits to the future.

    Graff believes that the Dallas Way fails its residents. He argues little, if anything, has been done for poorer neighborhoods. There is substance to this of course: all American cities reflect the inequalities of our society

    Yet what Dallas is doing is still remarkable. In addition to the Arts District, it is pursuing costly projects such as the DART light rail network, which is connecting formerly neglected neighborhoods [now reviving to create a new Uptown] and reaching out to middle suburbia, where whole plazas are sprouting Asian stores and restaurants. No-one is going to be confusing it with New York any time soon, but it does seem that the Dallas Way also has things to recommend it. House prices have not cratered; the Metroplex is not in the fifth circuit of foreclosure hell like Phoenix or Las Vegas.

    Of course, this comes at a literal price, and a figurative one. Reviving some neighborhoods means gentrification. Spending on light rail tends to support young adults rather than children needing kindergartens. Stable house prices in some Dallas neighborhoods can mean modest homes costing more than a half million dollars, the antithesis of affordability.

    Yet the growth machine worked in the past and helped Dallas become a leading producer of higher end jobs and a high degree of home ownership. In many ways Dallas works better for its diverse residents than many urban aesthetes might suggest.

    This leaves unanswered the question of the aspirations of a city like Dallas to be taken seriously by the urban tastemakers. In the current climate, that seems unlikely. Cool is going to beat out the rest—except in the contexts of jobs and incomes, which is the world in which most people operate. Economic growth in Dallas and Houston gets little attention in the chat rooms where the defenders of Portland and its counterparts congregate. But as for me, I’m thinking that for the very first time, George Bush might actually be right.

    Andrew Kirby has been associated with the journal *Cities* for nearly thirty years. He is based in Arizona.

    Photo by purpletwinkie

  • Religious Freedom or A Tax-Free Ride?

    The furor over a mosque in Manhattan has swirled around issues of personal freedom and collective tolerance. But very little of the discussion has focused on the pros and cons of construction of places of worship in our cities and suburbs, or on their tax status. In a country that displays high rates of worship and has a growing population, it’s to be expected that religious spaces would be on the increase. Yet, like all things that are added to the built environment, churches, synagogues, temples and even meeting halls can have a negative impact on those who live in the area. Economists term this a ‘negative externality’.

    Parks are a simple analogy, in that it is nice to have somewhere to walk your dog if you live nearby, but it is not so pleasant if dogs are shipped in by their owners from other neighborhoods to use the space, especially if they have little incentive to clean up after themselves [that would be the owners, not the pets]. Places of worship are the same, insofar as it might be convenient to have a temple next door, but only if it is for a compatible religion. If not, it is just another source of traffic and noise for the neighborhood, and if it is a religion that is presently controversial, then there is even more likelihood of unhappiness.

    One of the reasons that so many congregations can afford to build new spaces for themselves is that religious enterprises are not taxed. A glance at the chat rooms across the Internet suggests that this is a warm-button topic — not of major importance, but ready to become so at a moment’s notice. Those who patrol these issues have developed a rather neat logic for this tax exemption, namely, that payment of income or property taxes by religious institutions would violate the separation of church and state. Indeed, the Supreme Court seems to have fostered this logic, arguing in 1970 in Walz vs. Tax Commission of the City of New York, that a tax exemption for churches “restricts the fiscal relationship between church and state, and tends to complement and reinforce the desired separation insulating each from the other”.

    Logically then, payment of taxes by religious groups should indeed be considered unconstitutional. But what if we were to separate the payment of taxes on income from the payment of property taxes? It’s reasonable enough to argue that the former should be exempt, especially if you are comfortable with the reality that plenty of corporations and many affluent individuals pay little or nothing in income tax.

    However, the non-payment of property taxes is quite different, as it has a large impact on the way in which cities operate. Religious enterprises can afford to outbid their competitors when purchasing land as they buy at a discount, namely, the dollars saved on non-payment of property taxes. Put another way, they can afford to purchase marginally larger properties, as they are able to fold the putative taxes into their bids for land.

    Congregations can often afford to buy prime locations at urban intersections; in the suburbs, they can afford to buy larger lots and build mega-churches with vast parking lots. The scale of these developments can be remarkable. A new LDS temple that is planned for Gilbert, Arizona will cater to tens of thousands of worshipers on a 21 acre site.

    Now, I would rather that the urban fabric be maintained than be left idle, especially at present, while the construction industry is in poor shape. It makes little sense, though, to encourage market distortions. Churches can break up the land-use in a city, inserting a structure that is used intermittently among, say, office spaces for which there can be high demand. Building any kind of religious structure in Manhattan, where land can fetch $100 million per acre, serves to drive up the costs of real estate yet further. In the suburbs and exurbs, where land is of course infinitely cheaper, the distortion is less, but the impacts are potentially higher. Vast mega-churches have all the impact of a Wal-Mart but none of the tax benefits, and of course none of the jobs.

    How much are we talking here in hard cash? My simplistic calculations and equally non-rigorous research suggest that there are approximately 350,000 religious spaces in the US. If we assume that each occupies 10,000 square feet [and many are five to ten times larger], then that would be approximately 80,000 acres of land on which taxes are not being paid. Clearly, few of those acres are as expensive as those in Manhattan, but even in suburban Phoenix, raw land reached $300,000 per acre before the 2008 correction. My arithmetic suggests that $20 billion of land is being used without tax payment, which would amount to tens of millions annually.

    Places of worship are in general highly inefficient uses of space if you simply take into account the number of hours per week they are used. This notwithstanding, they place a burden on the public purse in terms of water and sewerage links, road maintenance, and fire and police protection—the fact that they are unoccupied may actually increase the cost of surveillance. These services, plus the opportunity costs of lost taxes, come at a moment when nearly all municipalities and most States are looking for ways to replace contracting revenues. Law professor Evelyn Brody has done a fabulous job in documenting the ways in which non-payment is hurting the public sector, and the innovative ways in which some jurisdictions are using PILOTS (payments in lieu of taxes) to make up the losses.

    As we know, religion is a touchy subject. Asking congregations to pay their property taxes will be taken by many as an assault on religious freedom. But if we also look at the larger class of charitable and non-profit organizations, we find many small charities that could not and thus should not pay property taxes. Small churches, mosques and temples would be in this category. But there are also non-profit organizations that are wealthy; Harvard University should pay millions of dollars on its holdings in Boston, and the same is true of large, wealthy religious organizations with land holdings throughout the country’s urban areas.

    Why single out what many regard as ‘the good guys’? The answer is that welfare subsidies distort the market, wherever and whenever they occur. That’s true of mega-churches, and it’s equally true of new shopping malls that receive tax incentives to locate in one jurisdiction rather than another. Taxes are of course anathema to many in our society, but then so is welfare. So let’s be consistent and get rid of property tax subsidies for developers and large charities, regardless. If that includes large churches, then so be it. The new revenues will be a boon for municipalities, so that they can provide services for those who need them most. Some organizations will claim they cannot pay, but even there the news is not bad: There is evidence that when land-uses change, redevelopment can have a multiplier effect. This was true of plenty of military sites, and it has been documented for churches being re-purposed in inner city redevelopment areas.

    In its 1970 decision, the Supreme Court observed that “the power to tax involves the power to destroy.” Yet it is also the case that the power to provide exemptions is a powerful distortion of the ways that cities organize themselves as efficient providers of goods and services. To the extent that we can have a sensible discussion of religion or taxation, let’s explore just which interests are served by subsiding worship.

    Photo by rauchdickson of Solid Rock megachurch, Monroe, Ohio

    Andrew Kirby is an urbanist based in Phoenix. For several years he lived next door to the 12th century church in Cholsey in the UK, where Agatha Christie is buried.
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  • Time to Hate Those HOAs (again).

    The foreclosure crisis has been devastating for millions of Americans, but it has also impacted many still working as before and holding on to their homes. Even a couple of empty dwellings on a street can very quickly deteriorate and become a negative presence in the neighborhood, at the least driving down prices further, sometimes attracting crime. Untended pools can allow pests to breed. Many animals have been abandoned and shelters report overflowing traffic. The resulting impacts on local governments have been particularly visible, as property tax assessments have fallen and revenues have also gone south.

    Less obvious is the impacts on home owner associations [HOAs], whose revenues have also taken a hit, albeit for rather different reasons. For the most part, HOA dues are not a function of the value of the home but rather the need to cover the costs of maintaining the common interests of the association: landscaping, security and so forth. These tend to be fixed, even if the values of the homes collapse, and may even rise if dwellings are empty and untended.

    Many HOAs, especially in the newer metropolitan areas like Phoenix and Las Vegas where foreclosures have been most concentrated, have taken a beating because the number of households paying into the association has been depleted, quite badly in some instances. The problem seems, from press reports, to cover the economic spectrum. Low-income first-time buyers may stop paying their dues as an economy measure, while more affluent owners are more likely to have pulled cash from their home and are walking away from their debts. There are also thousands of empty homes that were purchased as investments at the height of the boom and may have never even been occupied.

    The foreclosure debacle is now old news, but the HOA situation is receiving attention because association boards are now aggressively trying to recoup their debts, even from those who have walked away from their mortgages. The debt, they argue, is attached to the individual, not to the dwelling, and is being turned over to collection agencies. Now, this is hardly a novelty. Municipalities have been turning household utility debts over to third parties for years, often with some success, and without a murmur of protest. So why is it different if HOAs do it?

    The answer is that HOAs are extremely unpopular with two vocal constituencies. The first is the academic community, and its hostility is part of the professional opprobrium that is heaped on gated communities, privatization and pretty much anything connected with suburban development. Interestingly, while the design aspects of gated communities have caught the attention of planners and urbanists, relatively few have focused on the dimension of governance. Those that have written on the topic have tended to be critical of private clubs that are seen to exist at the expense of the municipal collective. For what its worth, I don’t think I’ve ever known of an academic colleague who lived in an HOA, in contrast to the bulk of my students, who live in one or grew up there.

    The second constituency is more rowdy. Academics just disdain HOAs, but this group is committed to exposing them as a vast conspiracy to subvert the American way of life. This may sound like another version of contemporary “Teamania” but it is has been around for at least the past decade, during which time I’ve been monitoring Internet posts and the like. To this group, any restriction on personal freedom — from the color of one’s drapes or exterior paintwork through the display of the national flag — is clearly anathema.

    Early this year, my research on neighborliness in HOAs was covered in the local paper, and by the end of the day there were dozens of online posts. In response to the basic finding — that there is little fundamental difference between HOA and traditional neighborhoods — we received a torrent of angry responses. With a single exception, they all dismissed the findings out of hand, using an example of someone’s experience (rarely their own) to prove the point, at least to their satisfaction. One reader even tracked down my email address in order to demand an assurance that no public funds were used to promote this nonsense.

    Like much in contemporary American politics, this leaves me confused. I don’t understand why an exclusive residential association, freely entered into, with explicit rules that are presented at the outset, offering services-for-cash, is un-American. After all, this is in contrast to a municipality that levies taxes for services from which one cannot opt out (if one has no children in the schools, for instance) and which may not be available to all (such as public transport), and which could easily be seen as a redistributive institution, an example of that socialism we keep hearing so much about.

    For the record, I am happy to pay my property taxes for services I don’t receive — its just part of the social contract. Nor do I live in an HOA. But I can understand why our research indicates that most people who live in them do prefer them (and, for example, often move from one HOA to another). Rather than displaying the angst of those who seem to get nervous if anyone tries to step on their toes, these residents embrace belonging to a small polity in which they have a voice. And we should remember that rules, like fences, make good neighbors. As these neighborhoods become more diverse, traditional and non-traditional households alike can find reassurance in the behavioral conformity demanded of neighbors by an HOA.

    This brings us back to the recent stories about management boards ‘hounding’ those who have not paid their dues. Similar accounts have shown up for years, and the thrust is always the same: punitive, out-of-control boards attack those already in financial distress. There is clearly a lot of the latter to go round, but it’s hard to see why HOAs are much different than any other organization that is looking at a handful of bad debts. Are the HOAs the victims here? Absolutely not. Many embraced the housing bubble, and permitted speculators to buy in, even though they had no intention of living in the properties. At the height of the madness, up to one third of all housing transactions in Phoenix were initiated by out-of-state buyers who drove up home prices precipitately, and eventually caused the median house price to double. This has since corrected. All CC&Rs (the rules of the HOA) that I have seen dictate however that the purchaser must live in the property and that rental units are not permissible. So, like all the other players, the HOA boards liked the price increases so much that they ignored their own rules and looked the other way, a lapse for which they are now paying the price.

    Still, it would be a mistake compounding a mistake to climb on the anti-HOA bandwagon, now joined by the ACLU, which has recently joined the fray over a fight about a homeowner’s right to fly the Gadsden flag (motto: “Don’t step on me”). Libertarians should recognize that no-one has ever been forced to live in an association and that whipping up the wrath of state legislatures to control HOAs is a bad idea: it encourages even more government intervention, and it messes with the neighborhood, a form of governance that the vast majority rightly supports, even in HOAs.

    Andrew Kirby has written about HOAs on several occasions, including the 2003 edited volume “Spaces of Hate”. He most recently wrote about ‘The Suburban Question’ on this site in February.

    Photo by monkiemag

  • How Phoenix Will Come Back

    I have heard Paul Krugman say that ‘the end is nigh’ so many times that it seemed like the only sensible way to think about the housing market. It was identified as a bubble, and that could only mean that it would eventually burst. A steady diet of NYT editorials and Economist charts leave you with one conclusion — this is not going to end well.

    This certainly seems to be true in Phoenix. Even though I’ve lectured for years about ‘the growth machine’, how the economy in a city like Phoenix depends on building more homes, I did not expect the whole thing to collapse quite so precipitately, and with so many repercussions. The number of passengers going through the airport here is down 10% from last year; numerous restaurants, stores and other services have gone out of business, the State is trying to stare down a $3 billion deficit, the universities have fired hundreds of people—so the cycle keeps spreading like a slow motion disaster.

    Also predictable is the response. Local politicians are planning to slash the State budget and get government off people’s backs, once and for all. If we used foreign phrases such as ‘chutzpah’ around here, that would have to qualify. After all, it takes balls to watch the market behave like a bunch of drunks kicking Humpty Dumpty about, and then blame government for trying to put him back together again.

    Yet, at least here in Phoenix, it turns out that Professor Krugman hadn’t really got it figured out after all. As a rational man, he was distracted by the irrational exuberance of the market, the unsupportable ramping up of property prices, the NINJA loans, and the cynical exploitation of those arriving late to the party, those doomed to buy at the top of the market and be left holding fake mortgages on homes with phony values. The solutions seem simple. More oversight from Big Brother and everything can be fixed. Or, if you prefer to listen to the bizarro-world script over on AM radio, the black helicopters are about to start landing on Wall Street as the UN takes over to install European-style socialism.

    Yet much of this commentary is laughably wrong. The housing market debacle was not just predictable but actually utterly unavoidable. Some of this is simply a matter of money circulating around, which as Niall Ferguson’s book The Ascent of Money makes clear, this is as old as capitalism itself. The difference now is that digital technologies have made the speed of trading and transfer shift. The same rules apply, except that everyone must work harder to keep that cash flowing.

    What I now realize is that the entire economic system is based upon finding more risk. Without more risk in which to invest, the economy can’t keep moving. In other words, this wasn’t a series of calamities or errors or criminal mistakes — it is the market at work, no more, no less. And that is not going to change.

    What I thought I knew is not really so. I thought a bigger banking sector was not just more mysterious but was somehow more efficient and therefore safer; after all, health insurance works best if the risks are spread across larger and larger groups. Yet in reality finance is more like a vast Ponzi scheme. We should, in fact, let Mr. Madoff out of jail, as he was doing nothing particularly wrong — his only crime was that he wasn’t being clever enough in hiding his scheme in sufficiently obscure mathematics.

    What happens to the cities, towns and suburbs left devasted by the financial schemers? As James Surowiecki recently observed in the New Yorker, “banking grew bigger and more profitable but all we got in exchange was acres of empty houses in Phoenix.” So? Isn’t that a small price to pay? Given a choice, what would we rather have: a buoyant capital market and a few distant suburbs and downtown condos without any residents, or what we have today in some cities — double digit unemployment?

    There are real policy issues at work here. We were taught years ago, by the Marxists no less, that the purpose of a capitalist economy is to reproduce itself and the purpose of governments is to make sure that happens. So we make credit available to people; first to buy Model Ts, then to live in Levittown, then to play golf in Cancun, and so forth. And for this to work there has to be more risk in which to invest, an endless supply of new things. Housing has served us well in this regard; people live in condos and McMansions, people sell them, people build them, people manufacture the fixtures and fittings. This is how the growth machine, particularly in places like Phoenix, works.

    An economy like Phoenix is like a shark – it can’t stop, it can’t even run slow. We have to find more buyers — or perhaps we just build the homes now and fill them in the future when the population increases. Or, in line with a previous posting, we should have solved the immigration problem, and the need to sell more homes, by legalizing the Latino population and making them creditworthy.

    In this sense, maybe all this focus on the Valley’s 65,000 foreclosures is a mistake. As I argued last year, perhaps they should just be turned over to rentals and let the market sort it all out; predictably, rents are now coming down in apartment complexes as more families find affordable homes to rent.

    What we need is not to stop the market from repairing itself but we need to do it in a more creative way. Some of those suburbs are looking a bit down at heel, and the homes weren’t that sturdy to begin with — so let’s bulldoze them and do some serious brownfield redevelopment. Perhaps build them right, more sustainably, and less dependent on distant employment centers

    We can all get back to work, we can all feel virtuous as no new desert is being bladed, the infrastructure is already paid for, the journey to work costs will be less, the density perhaps a little higher with more jobs, offices and retail located closer to the houses.

    This approach will let us build more homes and get some more risk back into that market. Let’s repurpose the land. Then we can go back to business as usual, and if I was a betting man, that’s exactly what we are going to do.

    Andrew Kirby is the editor of the interdisciplinary Elsevier journal “Cities.”This is his 20th year as a resident of Arizona.

  • Rethinking Risk During a Financial Crisis: Learning from Mexico

    Last month I visited a small town in southern Mexico. It is a quiet and modestly prosperous place. Outside some of the homes are older Suburbans, Jeeps and Explorers; the license plates show that their owners have recently returned from the US, driven out by the collapsing economy and heightened nativist anxieties. Almost every family, it seems, has some member who has spent time up north; only a very few of them are still hanging on through the recession.

    For the most part, Mexicans are innocent by-standers in the current financial debacle. They didn’t allow themselves to be talked into strange mortgages or multiple credit cards; whether north or south of the border, this is for them still predominantly a cash economy. Even for those who went to the US, their key goal was to accumulate dollars and send them south, where, as pesos, they provide the basics and even a few luxuries for many families. Until recently, these remittances have been second only to oil income in importance for Mexico; now both are shrinking fast.

    There is something more than a little unfair in the manner in which the recession is hurting our southern neighbor. Mexicans, for the most part, have a personal risk calculus that is the complete reverse of ours. Like most people who have experienced hard times, they are not obsessed with the little things that might go awry; they don’t place little flags around puddles in the grocery store, and most dogs have never received a rabies shot. The sidewalks often look as though a tree is trying to push its way through the ground and electrical cables are frequently visible. It’s not unusual to see a local butcher frying up vast cauldrons of meats in front of his carnecineria, something that would drive American health inspectors to apoplexy.

    In contrast to their wealthier Northern neighbors, Mexicans seem quite happy to take responsibility for themselves and don’t expect to sue someone every time they stub their toe. But their collective view of risk is also the reverse of ours. Property is, for most people, something to live in and not something for speculation. Building one’s own home is common but it’s usually done in stages, whenever there is cash to spare. The results may be untidy, with streets perpetually possessing the appearance of construction zones, but there is no evidence of any foreclosure crisis—forests of ‘for sale’ signs are absent, in Veracruz, at least.

    Nor is that the only visual difference between nondescript Mexican and American cities. Antiseptic zoning is much less common in Mexico, with the result that families live above the store, or behind the workshop, or even on the roof of some buildings. Affluent homes may stand next to literal ruins. In most American cities, this would be evidence of a neighborhood slipping into decay, causing realtors to flee to more ordered areas. But for Mexicans, this juxtaposition simply adds to the sense of being in an organic place rather than on a Disney set. What it means for neighborliness is hard to judge, but it would certainly make an interesting comparative research project.

    Of course, there are some equivalents to the homogenous subdivisions that dominate the American housing market. I saw several large up-scale gated communities that were standing idle, waiting for better times. I was also shown several housing developments, where government agencies were building terraced homes for state workers. What is striking to the visitor is that these would never be offered in the US housing market, as they would be judged to be unacceptably small. At approximately one thousand square feet, they are half the size of the average American home, (approximately 2200 square feet) and significantly smaller than most new houses.

    Even though Mexican families are, on average, larger (with more children and more generations living together), the expectation is not that every member of the family gets a bathroom or even a bedroom. It is also common to buy small and build out, or up, as needs dictate and finances permit. Anyone who has traveled in Asia will also be familiar with this phenomenon, which manifests itself in ground floor apartments that encroach upon the street, balconies that become bedrooms and so forth. High density and modest means lead to invention, if not the kinds of appearance mandated by Home Owner Associations or preferred by the fusspot New Urbanist designers.

    In the past, the Mexican financial system has been criticized for maintaining a tight hold on credit. Even before the current crisis, high interest rates were unfriendly to the consumer, slowing the pace of both urban development and speculation. Given our current crisis, perhaps it’s worth asking whether this points to how the American market may develop in the future. Certainly, we can expect that credit will remain tight for a significant while. The rules for obtaining a mortgage will become more onerous; interest rates will be fixed, appraisals will be exact. McMansions will be of little interest except to large families of means; smaller and older homes will be at a premium. Definitions of overcrowding may change; design expectations will be downsized, and home maintenance will become more usual. As opportunities in the formal labor marketplace shrink, perhaps for an extended period, more Americans will work from their homes and garages, much as occurs in many developing countries.

    There may also be significantly less mobility, with little or no speculative purchasing. This is likely to have the greatest impact on the condominium market. Even affluent parents will be obligated to keep their college-age kids on campus rather than in condos that they hope to flip after graduation. And even when they have a degree, these young adults – with large student loans, minimal credit and no cash for a down payment – will become used to staying with their parents for longer periods, as is frequently the case in Mexico and other developing markets. This could extend into marriage and even family formation. The condos themselves will, for the foreseeable future, revert to rental properties, catering to those who can no longer maintain a foothold in the owner market.

    This does not imply that American cities are going to turn into Mexican ones any time soon. But there is much to be learned by studying the ways that Mexicans calculate risk. We might have fewer families borrowing beyond their means, and continually trying to beat the market. And with less aggregate risk in one part of our lives, we might then view other parts of our daily world with a little less obsession with control. We might be a little more relaxed about who lives next door; we might also be a little more tolerant about the age of their truck or the color of the drapes. After all, they might be Mexican, in which case we know that, if they are there, they can probably actually afford it.

    Andrew Kirby is the editor of the interdisciplinary Elsevier journal “Cities.”This is his 20th year as a resident of Arizona.

  • Bubble Opportunity: A New Life for Public Housing?

    The globalization of housing markets stood at the center of the vast, now unraveling, economic change of the past decade. The creation of new investment vehicles in the 90s diverted vast amounts of capital into housing markets around the world. The results were many and varied. Design features began to converge, with gated communities following shopping malls into cites in Latin America, China, Turkey and most other countries. Home prices began to rise, with The Economist even publishing a table of global house prices, indicating those with the most inflated costs (Spain and the UK usually led this undesirable ranking).

    It’s been clear for the last few years that housing was becoming the primary investment vehicle for many American families, who otherwise had a negative savings rate. Everything that happened up to 2007 was built on that premise. So here we are in 2008, facing an unraveling not just of the housing market and its financial networks, but much more besides. As the cliché has it, the devil is in the details, and those are getting much less attention. Obsessed with design features and public-private contrasts, it is hard for many urbanists to return to the old-fashioned concern for what is happening ‘on the ground’. Long gone are the days when researchers tramped the streets; now Google and GIS have replaced shoe leather.

    This is unfortunate, because there is a ‘new geography’ emerging from the wreckage. During the bubble, home buyers would purchase larger and more expensive homes because that was how they maximized the returns on their investment. And, for several years, that worked. Now, as I roam around in my neighborhood, I see that it’s the newest and largest homes that are standing empty.

    Why? In large part these were speculative constructions, and the speculation went awry. Elsewhere in this relatively affluent part of Phoenix, small subdivisions are standing virtually idle, the construction workers long returned to Central America. But this is one of the costlier parts of town. In the blue-collar West Valley, the impact has been hardest on the new master planned communities of relatively affordable homes. These were examples of what is sometimes termed in the trade ‘qualifying by driving’—that is, the homes are cheap because they are a long way from job concentrations. Many first time buyers were lured into home ownership with the teaser rates that have been replaced by higher monthly payments, along with higher gas prices. The result: whole developments with a forest of ‘for sale’ signs.

    Most discussion of the mortgage crisis has been at the elite level — where it impacts banks, Wall Street investment houses, interest rates, liquidity. But on the street level, there are other, less obvious, consequences. Animals are abandoned as owners decamp; untended swimming pools breed mosquitoes. Abandoned dwellings in far suburbs don’t attract vagrants but they do get used by human smugglers as drop houses, since there are few neighbors to notice. Owners stop paying their HOA dues and maintenance is neglected, even as the dues escalate for those who stay behind. And much of the time there is no-one to do the work, due to the disappearance of the Latino labor-force.

    So what happens now as the current crisis blows through suburban neighborhoods and some form of federal bailout comes into place? If a new Resolution Trust agency begins to buy up hundreds of thousands of single family homes, we could find ourselves face to face with a new form of public housing that hasn’t been seen since the end of the First World War. In the UK, for instance, local government built many thousands of duplexes, in what are now inner suburbs, for returning soldiers. These were high quality dwellings which provided excellent accommodation for decades, until they were sold off, at suitably inflated prices, by the Thatcher government. Over time, this design experiment was forgotten, as public housing across Europe and the US became associated instead with the construction of vast apartment complexes that turned into visions of hell, strewn with burned out cars. Only in Singapore was this kind of failure avoided, for very specific social, political and cultural reasons.

    So, we may be on the verge of reconnecting with that original vision of public housing, one that emphasized homes in neighborhoods rather than vast and anonymous apartment blocks. For this to happen, the impulse to scoop up these bad mortgages and dump them back on the market at fire-sale prices will have to be avoided.

    Instead, the Federal government should venture back into the public housing sector by keeping these bad mortgages and re-letting the properties that it accumulates. There are two good reasons for this. First, they are, in the main, desirable homes of acceptable quality, so there will be no stigma attached to public housing. Second, because no-one will be building publicly-owned houses from scratch, they will not be concentrated in public housing enclaves. Rather, they will be diffused across the city, concentrated in some neighborhoods to be sure, but not to the exclusion of other forms of tenure. Of course, some existing owners will be less than pleased to find renters living next door—but at least the grass will be mowed and the pool will cease to stink.

    How to prevent this crisis from reoccurring when things get better? Rules need to be observed. Three times your income dictates your mortgage, and you can’t buy a home in an HOA if you aren’t going to live in it. This would greatly restrain speculative frenzy. And let’s take advantage of this crisis by making affordable homes available to families in a variety of forms—as permanent rentals, as leases, or as leases-to-own. And most important, this new public housing will not be concentrated in the inner cities, far from most employment opportunities, or in dense Stalinesque apartment complexes. For years, planners have been wringing their hands about how to get low-income housing into desirable neighborhoods. Perhaps fate has now shown them the way forward.

    Andrew Kirby is the editor of the interdisciplinary Elsevier journal “Cities.”This is his 20th year as a resident of Arizona.

  • Andrew Kirby

  • The Phoenix Lament (with apologies to J. K. Rowling)

    Fifty years ago, Phoenix was Tiny Town in the Desert, smaller than Oshkosh or Santa Fe today. Now, it is larger than Philadelphia and the metro area has the bulk of Arizona’s population. That does not mean it gets any respect; on the contrary, it is, to many, a joke, with all of Los Angeles’ traffic and smog but without the ocean, the celebrities or the Lakers. When it surpassed the City of Brotherly Love, Pennsylvania newspaper columnists waspishly described the Valley of the Sun as ‘‘a loose accumulation of crummy vinyl-sided houses occupied by sunburned retirees who happen to share a zip code.”

    They went on to note that “Phoenix has no downtown. . .and neighborhoods? None to speak of… [it] doesn’t rate as an actual city. . .it’s more like a place where a lot of people happen to live. Phoenix would kill to have a walkable city the way we do.’’ More recently, an anonymous commentator in The Economist reported that crime and other social ills were turning the city into an inhospitable and ungovernable mess. Time to roll up those sidewalks and move on—oh, that’s right, there are none. The worst opprobrium is generally reserved for the audacity, or insanity, of growing a city in a desert. As a blogger on the Grist site recently wrote, Phoenix is “a poster child for environmental ills.”

    Phoenix is hardly perfect, and it certainly violates most traditional urban principles. A city of over three million, it possesses virtually no corporate headquarters. In a globalized world, Phoenix seems a nonentity, with virtually no corporate financial institutions. Home to the world’s sixth largest airport, it has few direct links to the rest of that world with the exception of a handful of daily flights to Toronto, Mexico City and London. This is the same airport that closed one summer when the temperature reached 122 degrees.

    So then, why do people keep moving here? It is usually best to follow the advice of sociologist Juliet Schor and try not to start with the assumption that people are idiots. So, let’s rationally examine what keeps the place growing. The first factor is the weather. There is none. For half the year, it is warm, and for half it is hot. It rarely snows, and there are no tornadoes or hurricanes. It rains and it floods, but the water disappears by the next day.

    The ground may be hot, but it’s also securely tethered—the earthquake risk is about as high as that for ice storms. This may seem trivial, but consider that liabilities from natural catastrophic events throughout the U.S. have exceeded $300 billion since 1988, and nearly three quarters of that can be attributed to tornadoes and tropical storms. Viewed this way, lots of people live in the wrong place but Phoenix is not one of them.

    But what about the folly of living in the desert? How sustainable is that? Well, more so that you might think. A home in Minneapolis has to be heated from zero 60 degrees to maintain comfort, and must use energy for six months, 24 hours a day. A home in Phoenix needs to be cooled for less than five months, typically for 12 hours a day, in order to bring the temperature down from 110 to 80 degrees. Cooling devices are more efficient, and use less energy.

    Research undertaken by Michael Sivak shows that the most energy efficient cities, like San Diego and Miami, are coastal, although these are also among the most vulnerable to catastrophic natural events. The least efficient are cold—Minneapolis, Chicago, Denver. In addition, Phoenix and Las Vegas come in right in the middle of the pack.

    What about water? Like its neighbor Las Vegas, Phoenix loves to display fountains and other water features. The largest of these is the Tempe Town Lake, an entirely artificial recreational pond that evaporates the equivalent of five-acre feet each day. Where does this water come from? Largely from the development of agricultural land devoted to intensive irrigation, which consumes far more water per acre than suburban houses. Of course, this cannot go on forever—if nothing else, evaporation is a waste. But when water is properly priced, creating a natural incentive for conservation, it will be used more appropriately.

    And what about the fundamental criticism, namely that Phoenix is a dreadful example of sprawl? Clearly Phoenix epitomizes a large, low-density city. But sprawl also occurs when people leave the downtown and move to the suburbs, as we see, for instance, in Detroit. In Phoenix, a growing population is filling up Maricopa County; we have few of the neglected areas that are common in many Northeastern and Midwestern cities.

    Overall, the average journey to work is comparable with other American metro areas. And most important, low-density development is cheap development. Phoenix remains one of the most affordable large housing markets in the country, even after housing speculators from California took their equity and drove up costs in Arizona and other parts of the West in 2005-07. Current estimates suggest that when the dust settles, the median new house price will once again fall below $200,000.

    Sprawl is perhaps one of the easiest insults to fling at any city. It is associated with everything from the collapse of civic life to the rise of obesity. Yet in Arizona, low-density development, which involves building large number of homes on raw land, is cheap development. Sprawl clearly involves the cost of new infrastructure, but that has to be placed against the high costs of renewing infrastructure in existing urban neighborhoods, which can involve deep excavation, specialized equipment and higher risks (like the cranes that keep collapsing in New York).

    In the end, Phoenix’s growth machine succeeds in offering a commodity that people need—an affordable home. Few families want to live in small expensive apartments—many want the amenities of a low-cost house, and in Phoenix, that can mean as little as $150,000. It is easy to demand an end to sprawl, as has been tried in California and Oregon, but the result frequently is to price single family homes out of reach for most households. In a society that offers little to its working and middle class in terms of necessities like health care, it seems uncaring to demand an end to affordable single family housing as well.

    Phoenix and its desert neighbors do not match up to the 19th century city. They lack the grand rail termini, the city halls, the cathedrals and the parks. The grandeur of the modernist era does not extend to these experiments in low-density private space—malls, office parks, homeowner associations. Yet they succeed brilliantly as bastions of successful low-cost development for middle class families. In the future they can also serve as laboratories for alternative energy usage, water recycling and, in time, more efficient transportation. The challenge is to let them change on their own terms, not make a vain effort to reconstitute them along the lines of older cities like New York, Chicago and Paris.

    Andrew Kirby is the editor of the interdisciplinary Elsevier journal “Cities.”This is his 20th year as a resident of Arizona.