New Geography

Author: Joel Kotkin and Wendell Cox

  • Rising Rents Are Stressing Out Tenants And Heightening America’s Housing Crisis

    The home-buying struggles of Americans, particularly millennials, have been well documented. Yet a recent study by Hunt.com found that the often-proposed “solution” of renting is not much of a panacea. Rents as a percentage of income, according to Zillow, are now at a historic high of 29.1%, compared with the 25.8% rate that prevailed from 1985 to 2000.

    No surprise, then, that 58% of the 1,300 renters in the Hunt survey said they felt “stressed” about their rent, or that many respondents said they couldn’t save for future purchases like homes. Rather than the sunny freedom promised by those who promote a “rentership society,” most of those surveyed said that finding a convenient place with the amenities they required – for example, fitness rooms, places for pets and adequate space – was very difficult. Some renters have been forced to euthanize their pets, spend upwards of 50 days looking for a place or move farther from family and friends.

    All of this is taking place at a time when the national vacancy rate has fallen to 7.3% (in the second quarter of 2017), from 11.1% in the third quarter of 2009. That trend has continued even with apartment construction in many areas, notably core cities, because the new buildings tend to be too expensive for most renters.

    Fuel for a Housing Crisis

    There is a strong relationship between high rents and high house prices. Although rents have not risen as much as house prices generally, they tend to attract people who in the past might have become homeowners but instead have been crowded out by the high prices. This essentially brings into the rental market more affluent tenants who directly compete with those with lower incomes.

    The result in many places, such as Southern California, is overcrowding. Two-thirds of the places in the United States (municipalities and census-designated places) with more than 5,000 residences and with more than 10% of housing units being overcrowded are in California, according to the American Community Survey.

    The rent-related stress also points to a bigger crisis: the decline in the purchase of homes. One of the most prominent reasons for not buying a house directly relates to higher rents: It becomes all but impossible to save enough for a down payment. This also reflects changes in the labor market; service and blue-collar workers, whose incomes have been down in relation to rents, are the most burdened by rising rents. In San Francisco, even a teacher has been driven into the ranks of the homeless.

    The situation is worst in the most expensive markets. In New York City, incomes for millennials (ages 18–29) have dropped in real terms compared with the same age cohort in 2000, despite considerably higher education levels, while rents have increased 75%. New York, Los Angeles and San Francisco have three of the nation’s four lowest homeownership rates for young people and among the lowest birthrates.

    According to Zillow, for workers ages 22-34, rent costs claim up to 45% of income in the Los Angeles, San Francisco, New York and Miami metropolitan areas, compared with closer to 30% of income in metros like Dallas-Fort Worth and Houston. Home prices provide an even starker contrast. Dallas-Fort Worth, the nation’s fastest-growing housing market, as well as Houston, San Antonio and Charlotte have prices that are more like one-third those of the superstars.

    That helps explain why, according to the Hunt survey, the highest percentage of people who cannot save for future purchases (almost 60%) live on the pricey West Coast. The West Coast also had the largest percentage of people stressed about their rent, followed, not surprisingly, by the East Coast.

    High rents may also help explain recent shifts in migration to lower-rent areas. A recent survey by Apartmentalist.com found that the best prospects for renters becoming homeowners are in metropolitan areas like Pittsburgh, Provo, Madison, San Antonio, Columbus, Oklahoma City and Houston; the worst are, not surprisingly, in California, New York, Boston and Miami.

    Profound Implications

    What emerges from the Hunt study, and other research, is a renting population that may never achieve homeownership. This represents a sort of social evolution from the culture of self-assertion and independence that once so clearly characterized America after World War II and was so important to the unprecedented spread of middle-income affluence. Rather than striking out on their own, many millennials are simply failing to launch, with record numbers living with their parents or forced to shell out much of their income rent.

    The implications of high rent, and declining home ownership, could be profound over time. In survey after survey, a clear majority of millennials — roughly 80%, including the vast majority of renters — express interest in acquiring a home of their own. A Fannie Mae survey of people under 40 found that nearly 80% of renters thought that owning made more financial sense, a sentiment shared by an even larger number of owners. They cited such things as asset appreciation, control over the living environment and a hedge against rent increases.

    But it won’t just be renters impacted by rising rents. Jason Furman, who served as chairman of the Council of Economic Advisors under President Obama, calculated that a single-family home contributed two and a half times as much to the national GDP as an apartment unit.

    The decline in investment in residential properties has dropped to levels not seen since World War II. By some estimates, if we had that kind of housing investment again, we would return to 4% growth, as opposed to our all-too-familiar 2% and below.

    America’s housing crisis, long tied to ownership, is now extending into rising rents. But the stress that renters are feeling impacts all of us.

    This piece originally appeared on Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo: Omar Bárcena, via Flickr, using CC License.

  • California Politicians Not Serious About Fixing Housing Crisis

    California’s political leaders, having ignored and even abetted our housing shortage, now pretend that they will “solve it.” Don’t bet on it.

    Their big ideas include a $4 billion housing subsidy bond and the stripping away of local control over zoning, and mandating densification of already developed areas. None of these steps addresses the fundamental causes for California’s housing crisis. Today, barely 29 percent of California households, notes the California Association of Realtors, can afford a median-priced house; in 2012, it was 56 percent.

    At the heart of the problem lie “urban containment” policies that impose “urban growth boundaries” to restrict — or even prohibit — new suburban detached housing tracts from being built on greenfield land. Given the strong demand for single-family homes, it is no surprise that prices have soared.

    Before these policies were widely adopted, housing prices in California had about the same relationship to incomes as in other parts of the country. Today, prices in places like Los Angeles, the Bay Area and Orange County are two to three times as high, adjusted for incomes, as in less-regulated states. Even in the once affordable Inland Empire, housing prices are nearing double that of most other areas, closing off one of the last remaining alternatives for middle- and working-class families.

    How did we get here?

    Largely in response to regulatory constraints, the state has been underproducing housing since the 1970s. So far this year, Los Angeles, the nation’s second-largest metropolitan region, has produced fewer homes than much smaller areas like Dallas-Fort Worth, Houston and Atlanta.

    The California Environmental Quality Act and other laws and restrictions have helped to make building the number of houses needed by California’s middle-income families unattainable. The state’s more recent draconian climate change policies are also making the building of more affordable homes, usually on the fringe of urban areas, almost impossible.

    Some developers and planners blame much of the problem on NIMBYs, or “not in my backyard” activists, who oppose high-density development in their communities. NIMBYism, often aligned with green policies, is part of the problem, but high-density housing is expensive, and there are not enough people looking for “micro-apartments” to solve the affordability crisis.

    Indeed, housing in buildings of more than five stories requires rents approximately two-and-a-half times those from the development of garden apartments, notes Gerard Mildner, academic director of the Center for Real Estate at Portland State University. In the San Francisco Bay Area, the cost of townhouse development per square foot can double that of detached houses (excluding land costs), and units in high-rise condominium buildings can cost up to seven-and-a-half times as much.

    Longtime San Francisco journalist Tim Redmond points out that luxury apartments tend to replace the often more affordable older buildings in urban neighborhoods. There’s been a gusher of high-rises built in places like San Francisco or Los Angeles, but these are generally very expensive, and have not discernibly lowered prices.

    Read the entire piece at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo credit: refundrealestate.com

  • Spotlight on Infrastructure After Harvey

    The recent tragic events in Houston and across the Gulf Coast once again demonstrated the woeful inadequacy of our infrastructure. Hopefully, some good will come of Hurricane Harvey. Hopefully, it will jump-start the long-awaited Trump initiative on infrastructure, which may be the one issue that could unite this country.

    Northeastern University’s post-disaster resiliency expert Daniel Aldrich notes the need for better storm water drainage systems and for fortifying existing infrastructure — and not just in Houston. Helping promote such investments represents perhaps the last best chance for creating a significant Trump legacy.

    Once a leader in world infrastructure, the United States now ranks 11th in the overall quality of its infrastructure, according to the latest World Economic Forum Global Competitiveness Index. This decline has consequences. In California, for example, the lack of investment in water storage both worsened the recent drought and reduced the state’s ability to take advantage of heavy rains when they arrived.

    A concerted effort to restore our nation’s bridges, roads, harbors and other critical infrastructure would also mark a significant break from the Obama era stimulus which focused more on propping up renewable energy and often underused mass transit systems. Meanwhile, our overall infrastructure continued to deteriorate during the Great Recession, even with the stimulus, with spending in decline from over $300 billion in 2008 to under $250 billion in 2013.

    Spending Smartly

    “Efficiency is doing things right,” legendary management guru Peter F. Drucker once proclaimed. “Effectiveness is doing the right things.” In the context of infrastructure, being effective means placing our bets on things that are really needed, and could reward our society with greater productivity, wealth and new employment.

    At Newgeography.com, where I serve as executive editor, we recently carried a report from the Houston-based Center for Opportunity Urbanism, “Doing the Right Things Right,” which lays out what an infrastructure strategy would look like given current budget constraints. The United States faces a national debt of $20 trillion, while the federal government deficit was projected to reach $693 billion for fiscal year 2017.

    A strong U.S. transportation infrastructure system facilitates economic growth, job creation, a better standard of living and less poverty by minimizing travel times and improving labor market efficiency. Yet, as “Doing the Right Things Right” makes clear, not all investments are the same, or should receive federal subsidies, whether for direct expenditures or to issue infrastructure bonds to support private investment. There have been too many examples of spending on lower priority infrastructure because politicians were more interested in securing pork, or votes, than accelerating economic growth or reducing constituents’ travel times.

    To be sure, America’s infrastructure has performed well enough to provide the highest standard of living for the largest number of people in the world. The legacy of earlier infrastructure decisions, such as the completion of the interstate highway system, is still evident. Overall, the amount of time America’s commuters spend in peak period traffic congestion is generally better than that of international competitors.

    Yet traffic problems are increasing in the nation’s largest metropolitan areas. A recent study found that traffic congestion imposed $132 billion in excess fuel and time costs for automobile drivers and $28 billion in freight costs annually — all ultimately absorbed by consumers.

    The key question is how we meet these challenges. One proposed solution is to increase spending on traditional mass transit. This works well largely in “legacy cities” such as Washington, Chicago, Boston, Philadelphia, San Francisco and New York. The city of New York alone represents a remarkable 36 percent of all U.S. transit commuting, yet has only 3 percent of the jobs. Outside of these cities, the new transit projects, principally rail lines, have done little or nothing, as a recent report on transit from Chapman University demonstrates, to slow congestion or attract significant ridership.

    Among 19 metropolitan areas that added high-capacity transit systems since 1980, both bus and rail, transit’s market share has fallen from 4.7 to 4.6 percent compared to the last data before the systems opened. Transit has not, on balance, reduced solo driving, which increased from an average of 73.0 percent to 76.6 percent.

    The cities with rail systems opening after the 1990 Census experienced a modest decline in transit work trip market share, from 3.8 percent in 1990 to 3.7 percent in 2013.

    Take the absurd example of Los Angeles, which has spent over $15 billion trying to become what some mass transit enthusiasts call the “next great transit city.” Yet, Los Angeles County Metropolitan Transportation Authority system ridership stands at least 15 percent below 1985 levels, when there was only bus service, at a time when the population of Los Angeles County was 20 percent lower. Since 1990, transit’s work trip market share in the Los Angeles metropolitan area has dropped from 5.6 percent to 5.1 percent. No surprise, then, that according to a recent USC study, the new lines have done little or nothing to lessen congestion.

    Doing Your Homework

    The irony is that billions are being spent on these ineffective systems, when the places that depend on transit, like New York and Washington, are seeing their systems become less reliable and even dangerous. We are dumping money in some locations that don’t work all that well, but can’t find funds to fix systems that remain essential to “legacy cities” with large downtowns ideal for transit ridership.

    With the expense and ineffectiveness of new rail systems, it seems that the time has arrived for transit services that focus on less expensive bus systems, including those run by private companies, which can carry so many more riders for so much less in taxpayer subsidies. There are also opportunities to make lightly used but highly subsidized services more cost-effective by adding ride-hailing systems, like Uber and Lyft, cited as a factor in recent ridership declines in Los Angeles and even New York. In suburban San Francisco, a local transit operator has established a pilot program to extend service through ride-hailing and cancelled a lightly patronized bus route, reducing costs while providing quicker door-to-door service.

    One of the most promising alternatives, virtually ignored by transit advocates, is to encourage options for working at home. In many metropolitan areas, more people already telecommute than take transit. Since 1980, the number of people working at home has grown three times that of transit riders. All this, at virtually no cost to taxpayers.

    In the future, rapidly evolving autonomous technologies could make our present transit systems archaic in most cities. Under any circumstance, these advances seem likely to further weaken conventional transit. Given these trends, why base our transit policy on 19th century technologies when we are about to enter the third decade of the 21st?

    Back to the Gulf: Resiliency, not Hysteria

    “Smart growth” advocates have been quick to argue that Hurricane Harvey’s unprecedented damage can be traced to Houston’s freewheeling, free-market approach to real estate development. Sure, the area got 50 inches of rain, but it fell both on communities that eschew strict zoning and those which embrace it. They somehow forget that a lesser storm, Hurricane Sandy, devastated the highly planned communities of greater New York just a few years ago, causing $19 billion in damage in the city alone – and with far less rain.

    Rather than imitate Portland or San Francisco, Houston and other Gulf communities need to maintain policies that have allowed it to avoid the kind of insane price hikes one sees on the West Coast and some Northeastern housing markets. To force Houston to act like San Francisco would kill its economy. If Texas real estate prices approach California’s, people will simply move elsewhere, where prices are lower.

    Some changes may be necessary, including “coastal restoration” efforts that limit the impact of storms like Harvey. Major engineering challenges, like building more water storage facilities and improved drainage, need to be imposed, as well.

    What Houston needs, and would naturally adopt, is a kind of enlightened free market approach. After the devastation of Galveston in 1900 hurricane, Houston famously built a ship channel while Galveston built an elaborate sea wall; Houston is no less a creation of private innovation and government than New York or Los Angeles. Like America itself, Houston thrives by combining good public investment with a maximum of economic flexibility.

    The more these decisions are made locally, by people who are directly impacted, the better. My colleague Tory Gattis, based in Houston, suggests that new developments and older ones “should be required to have adequate rainwater retention, either with ponds, tanks, or permeable surfaces.” There are already examples of some of this kind of planning, particularly in exurban communities such as the Woodlands. This may mitigate the ill effects of such storms, but not likely to prevent disasters like Harvey from inflicting huge damage.

    These policies could mean, over time, that Houston and other Gulf communities might build an infrastructure more reminiscent of Frank Lloyd Wright’s Broadacre City, scattered communities with ample open land around them. But the vision must be a localized one, not drawn from example of generally slower-growing, older regions facing very different natural challenges. The benefits to customizing local infrastructure is go beyond economic reality and even disaster mitigation. With enough focus on local needs, we need not wait for natural disasters to witness the heartwarming sights of multi-cultural first responders – and ordinary citizens – all pulling together. “Social networks and cohesion are an important part of recovery and survival,” professor Aldrich suggests. “Houston should be investing in bringing neighborhoods together.”

    This is the real secret sauce for resiliency, as Houston has been showing throughout this crisis. The more that people who are impacted control the till, whether repairing levees, imposing regulations or planning transit systems, the better. Rather than let Leviathan rule and impose conformity, we should let regions — whether in Texas or elsewhere — figure out how to meet infrastructure challenges that effect every community differently.

    This piece originally appeared on Real Clear Politics.com.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo: Hurricane Harvey flooding by Jill Carlson, via Flickr, using CC License.

  • The Great Transit Rip-Off

    Over the past decade, there has been a growing fixation among planners and developers alike for a return to the last century’s monocentric cities served by large-scale train systems. And, to be sure, in a handful of older urban regions, mass transit continues to play an important — and even vital — role in getting commuters to downtown jobs. Overall, a remarkable 40 percent of all transit commuting in the United States takes place in the New York metropolitan area — and just six municipalities make up 55 percent of all transit commuting destinations.

    But here’s an overlooked fact: Transit now serves about the same number of riders as it did in 1907, when the urban population was barely 15 percent of what it is today. Most urban regions, such as Southern California, are nothing like New York — and they never will be. Downtown Los Angeles may be a better place in which to hang out and eat than in the past, but it sorely lacks the magnetic appeal of a place like Manhattan, or even downtown San Francisco. Manhattan, the world’s second-largest employment center, represents a little more than 20 percent of the New York metropolitan area’s employment. In Los Angeles, by contrast, the downtown area employs just 2 percent.

    Transit is failing in Southern California

    As we demonstrate in a new report for Chapman University, our urban form does not work well for conventional mass transit. Too many people go to too many locales to work, and, as housing prices have surged, many have moved farther way, which makes trains less practical, given the lack of a dominant job center. But in its desire to emulate places like New York, Los Angeles has spent some $15 billion trying to evolve into what some East Coast enthusiasts call the “next great transit city.”

    The rail lines have earned Mayor Eric Garcetti almost endless plaudits from places like the New York Times. Yet, since 1990, transit’s work trip market share has dropped from 5.6 percent to 5.1 percent. MTA system ridership stands at least 15 percent below 1985 levels, when there was only bus service, and the population of Los Angeles County was about 20 percent lower. In some places, like Orange County, the fall has been even more precipitous, down 30 percent since 2008. It is no surprise, then, that, according to a recent USC study, the new lines have done little or nothing to lessen congestion.

    This experience is not limited to L.A. Most of the 19 metropolitan areas with new mass transit rail systems — including big cities like Atlanta, Houston, Dallas and even Portland, Ore. — have experienced a decline in transit market share since the systems began operations.

    Read the entire piece at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo: Esirgen (Own work) [CC BY-SA 3.0], via Wikimedia Commons

  • California’s Coming Youth Deficit

    Images of California, particularly the southern coast, are embedded with those associated with youthfulness — surfers, actors, models, glamorous entrepreneurs. Yet, in reality, the state — and the region — are falling well behind in the growth of their youthful population, which carries significant implications for our future economic trajectory and the nature of our society.

    The numbers, provided by demographer Wendell Cox, based on U.S. Census Bureau estimates, should concern every business and community, particularly across the high-priced coastal areas. On the other hand, the stronger youthful growth in the interior, notably the Inland Empire, may become the basis for a regional resurgence, given a less draconian state regulatory regime.

    What the numbers say

    Let’s start with the millennials, the population that was aged between 20 and 34 in 2015. Since 2000, the growth of this segment of the population has been, for the most part, very slow along the coastal regions, well below the 6 percent national average. In Los Angeles and Orange County, the youth population grew by roughly 3 percent, about half the national average. San Francisco-Oakland, did a bit better, at 7 percent, but Silicon Valley-San Jose experienced a barely 1 percent increase.

    In comparison, the millennial population of Orlando, Fla., grew by 47 percent, while in Las Vegas it increased by 42 percent. The four big Texas cities — led by San Antonio, with a 43 percent increase — all registered well over 20 percent growth. Rising tech regions, like Raleigh, N.C., saw 30 percent growth — 30 times the rate in Silicon Valley.

    Yet, not all of California is losing out in the coming generation. The fastest-growing region for young people among the 53 largest metropolitan regions is right here in Southern California, the Riverside-San Bernardino area, which saw its 20-34 population expand by a remarkable 47 percent. Another inland standout in California, Sacramento, grew by over 30 percent, far ahead of any of the coastal areas.

    Read the entire piece in the Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo by vlasta2 [CC BY 2.0], via Wikimedia Commons

  • Will Donald Trump Expose America’s Great Mass Transit Hoax?

    Whatever you think of President Trump, his claims about the lousy condition of America’s basic infrastructure are widely accepted—even by resisting Democrats grinding their teeth on a L.A. freeway or waiting for a New York or D.C. train to arrive. His call for a trillion-dollar infrastructure plan may be his last best bet for finding bipartisan support.

    The question is if he’s at all serious about the urgent need to fix the failing mass-transit systems we have, or if he’ll repeat what Washington’s done to get us in this mess, and offer funds that encourage cities to build shiny new systems few will actually ride even as the existing ones decay.

    As we’ve demonstrated in a new paper for Chapman University (PDF), nowhere is the infrastructure deficit more obvious than in urban transit, which last year lost over 3.1 percent of its ridership, according to the American Public Transit Association (PDF). Despite the vast sums spent by the federal government on light rail, subways, and trolleys since 1970, most mass transit systems fail to meet the needs of commuters.

    In many cases, as in New York and Washington, vast expenditures on new lines have occurred even as maintenance has been deferred, with overall service deteriorating. Many billions of dollars more have been spent in other cities on new rail systems that haven’t reduced the number of people driving to work.

    How the Feds Failed Legacy Cities

    Rail transit works best in what might be considered the “legacy cores.” Approximately 55 percent of America’s transit commuters have destinations in the urban cores (and many of those rides to the central business districts) of six older cities (not metropolitan areas)—New York, Washington, Boston, Philadelphia, Chicago, and San Francisco. New York, by itself, has a remarkable 56 percent of its jobs in its urban core.

    Between 2006 and 2015, those six metropolitan areas captured 77 percent of the national increase in transit work trip destinations.

    These cities were shaped when public transit held a virtual monopoly on both motorized and horse-drawn passenger transport within U.S. cities. Annual transit ridership peaked in the early 1920s, except for the period around the Second World War, the high-water mark for transit nationally. Between 1960 and 2015, transit’s work trip market share dropped more than 50 percent, from 12.1 percent to 5.2 percent. Until very recently, the demographic recovery of legacy cores, notably New York, drove a slight increase in transit share. But this progress is threatened by growing safety and reliability issues. Part of the problem stems from a decision by New York’s political elite, starting with Michael Bloomberg, to build a new, ultra-expensive line—the Second Avenue subway—while maintenance on other lines deteriorated. This decision reflects political realities including federal incentives for new systems, and the greater political rewards for building shiny new things.

    The result is that service delays in New York have skyrocketed as antiquated signals break down, with breakdowns now twice as frequently as they were just five years ago. After decades of increases, ridership has declined while the extensive commuter rail system serving Manhattan from the suburbs (the nation’s largest) is experiencing its own substantial difficulties.

    The picture is similar in Washington, D.C., where the U.S. secretary of Transportation went so far as to threaten a shutdown of the system due to fatal accidents, attributed to policies that prioritized system expansion over safety. D.C.’s transit ridership, growing for decades, has now declined as well.

    The Real Train Robbery

    Yet even as cities that depend on transit, such as New York, suffer from under-investment, Washington has poured billions into new rail system in cities created largely in the auto-dominated era. Among 19 metropolitan areas that have opened substantially new urban rail systems since 1980, the share of riders using mass transit remains below the national average while the share of those driving alone has increased.

    Nowhere is the power of ideology and entrenched interests over the common good more evident than in Los Angeles, the pioneer for the multi-polar and highly dispersed post-1950 metropolis.

    On the surface, L.A. provides the sunbelt’s best case for transit—it once had a robust transit system, is the densest urban area in the country, has a huge poverty population and ideal weather for waiting outside for the train. L.A. has been widely celebrated as “the next great transit city,” and The New York Times and others are continually celebrating its imminent conversion from a car culture to a train one. Some believers, like Los Angeles architectural critic Christopher Hawthorne, envision “a third Los Angeles” that will see the eclipse of the freeways, single family homes, and suburban neighborhoods.

    Yet despite this Manhattan envy among its elites, L.A. simply does not follow the “model” of urbanist paragons such as New York, Chicago or San Francisco. Downtown Los Angeles is a relative economic pygmy, accounting for barely 2 percent of regional employment, less than a tenth of lower Manhattan’s share. Transit works best when most commuters are headed to a dominant core destination. The more scattered the destinations, the less likely trains can muster a decent commuter share. The entire Los Angeles MTA system carries fewer riders than New York’s Lexington Avenue line.

    Money is not the issue. Since 1990, Los Angeles has opened seven new urban metro and light-rail lines and two exclusive busways at a cost of more than $15 billion. During this period, transit’s work trip market share has dropped from 5.6 percent from 5.1 percent in 2015. Ridership is at least 15 percent below 1985 levels, when there was only bus service and when Los Angeles County had about 20 percent fewer people. No surprise, then, that according to a recent USC study, the new lines have done little or nothing to lessen the area’s infamous congestion.

    Rather than hop on the rails, more residents are addressing traffic woes by simply staying home. By 2015, more Los Angeles-area residents were working at home than were taking transit. Since 1990, the number of people working at home increased eight times as rapidly as the number of people using the transit system. The number of people driving increased even more rapidly.

    This story is repeated in other sunbelt cities. In Houston, 3.2 of residents commuted to work in 2000, before the city’s $1.5 billion new light-rail system opened. In 2015, the share of commuters had dropped by a third, to 2.2 percent.

    It’s Atlanta, though, that most fully epitomizes the futility of conventional transit spending. With the opening of MARTA in 1979, Atlanta built the third largest new metro system (fully grade separated rail) in the U.S. Since then, transit share has plummeted—from 6.8 percent in 1980 to 3.1 percent in 2015, 40 percent below the average national transit market share. Traffic congestion more than doubled over the same time span.

    The most recent addition to Atlanta’s rail system is a central city streetcar line some locals have nicknamed it “a streetcar named undesirable” for its low ridership.

    Even urban planning model Portland, which opened its MAX light rail system in 1986, has seen its transit market share drop from 7.9 percent in 1980 to 6.9 percent in 2015, only modestly above the national transit-riding average. The percentage of people working at home rose from 2.3 to 6.4 percent, at virtually no cost to the public treasury, compared to the more than $3 billion to build urban rail.

    But the award for the country’s most absurd project should go to the Honolulu elevated rail line. In a metropolitan area of barely a million people, the attempt to build a 20-mile elevated train has increased in cost from $5 billion to an estimated $10 to $13 billion, with the feds chipping in $1.6 billion. The impact on state finances—for an estimated 1 percent drop in road traffic—so disturbed former Governor Ben Cayetano, a Democrat, that he’s publicly called on President Trump to cut future funding. The Honolulu Star-Advertiser recently referred to the elevated lines as an “epic fail on rail.”

    The Future of Transit

    Before President Trump or Congress tackle infrastructure, they should work to remove federal involvement in control of local transit spending. Some experts like David Levinson of the University of Minnesota, blame federal policy for distorting investment to new project that favor “ribbon-cuttings for politicians” while resulting in neglect for local operations.

    In most of the country, simply put, localities would be better off not investing in new rail schemes. Americans seem generally happy with their overwhelmingly suburban lifestyle and their ability to reach places of employment faster than most of those in the high-income world can. Today, over 75 percent of jobs are in the suburbs and exurbs combined. Between 2010 and 2015, 81 percent of job growth was in the suburbs and exurbs. Similarly 85 percent of major metropolitan area residents live outside the urban core, in the suburbs and exurbs, where transit service is sparse.

    This is not likely to change much in the near or even medium term. Rather than centralizing, the consulting firm Bain envisions evolution toward a “post-urban economy” that will be more localized and home-based. By 2025, it reports, more people could live “beyond the traditional commuting belt” than inside.

    These realities suggest that rather than the “one size fits all” model, metropolitan areas should better customize their transportation spending to local needs. To achieve this, we need to jettison the quasi-religious affection for rail transit and explore in most of the country technologically enabled solutions such as telework, which is growing faster than any form of commuting, as well as rideshare technology. This is particularly true in suburbs, such as Dublin, California, which eliminated their local bus system in exchange for providing vouchers for Uber-like services for those unable to afford or drive cars.

    Over the longer term, the autonomous car could make even more revolutionary impacts on both the urban form and transit. Automated car proponents claim that the cost of operations will be considerably below that of today’s cars. If that should be achieved, the autonomous car could be used to provide door-to-door mobility not only for the elderly and disabled, but also for people who currently cannot afford their own cars. Under any circumstances, this innovation seems certain to further weaken conventional transit outside the cities with legacy cores.

    Ultimately it will take common sense, even more than just money, to fix our transit problems. In dispersed places like southern California, Dallas-Fort Worth, and Houston, the emphasis may be on using new technologies as well as private express bus service to connect their widely dispersed communities. Monies that go into rail transit, suggest urban analyst Aaron Renn, should be focused on maintaining and improving current service in cities where they make sense. As Renn puts it succinctly: “The priority should be: repairs to existing mission critical rail lines, and helping distressed communities.”

    The current trend of wasting billions of dollars to serve a urban theology may be popular among planners, speculators and engineering firms. It hasn’t been particularly helpful to the people who need to get, in appropriate time and without too much stress, from one place to another.

    This piece originally appeared on the Daily Beast.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo by Gage Skidmore, via Flickr, using CC License.

  • Forget the Urban Stereotypes: What Millennial America Really Looks Like

    Perhaps no generation has been more spoken for than millennials. In the mainstream press, they are almost universally portrayed as aspiring urbanistas, waiting to move into the nation’s dense and expensive core cities.

    Yet like so many stereotypes — often created by wishful thinking — this one is generally exaggerated and even essentially wrong. We now have a solid 15 years of data on the growth of young people ages 20-34, from 2000 to 2015, which covers millennials over the time they entered college, got their first jobs and, in some cases, started families.

    What The Numbers Say

    An analysis of Census Bureau data by demographer Wendell Cox contradicts much of the conventional wisdom. Take, for example, the #1 region for growth in the number of young people since 2000 (out of the 53 largest metropolitan areas). True, it’s in California, but it’s not San Francisco, Los Angeles or even Silicon Valley; rather, it’s the sprawling Inland Empire (Riverside-San Bernardino), which saw a remarkable 47.7% growth in young people, adding more than 315,000.

    Cities widely seen as millennial magnets — like Seattle, San Francisco, San Jose, Los Angeles, New York and Chicago — did considerably worse. Seattle performed the best among those superstar cities, ranking 15th on our list with a healthy 24.2% growth, adding more than 75,000 young people. The Bay Area lags behind, with San Francisco at #39 with 7.7% growth and San Jose at #49 with growth of barely 1%. Together, the two areas added 78,000 young people — one-fourth the growth of the Inland Empire even though they have roughly twice its total population.

    The performances of New York, Los Angeles and Chicago were also unimpressive. New York (#43) saw growth of 6.2%, slower than the national increase of 12.9%. Los Angeles (#47) did even worse, at 3.3% growth, while Chicago ranked 50th with a meager 0.5% increase in the demographic.

    Housing And Rent Costs

    Behind these developments may well be the rising cost of housing, combined with paltry economic prospects. Young people face an economy that, according to the Luxembourg Income Study, has produced relatively lower incomes and too few permanent, high-paying jobs. New York City reported that the incomes of residents ages 18-29 in 2014 had dropped in real terms compared with those of the same age in 2000, despite considerably higher education levels; rents in the city, meanwhile, increased by 75 percent from 2000 to 2012. According to data from Zillow, rent costs claim upward of 40% of income for workers ages 22-34 in Los Angeles, San Francisco, Miami and New York, compared with closer to 30 percent of income in metropolitan areas like Washington, Dallas-Fort Worth, Houston and Chicago.

    Virtually all the fastest growing millennial locations — including Riverside-San Bernardino and the rest of the top 10 metropolitan areas (Orlando, San Antonio, Las Vegas, Austin, Houston, Sacramento, Jacksonville, Raleigh, Tampa-St. Petersburg) — have even lower housing costs.

    Of course, cheap housing is not enough to attract millennials by itself. They also need jobs, and most of the areas in our top 10, as well as #12 Nashville and #13 Denver, have done well, not just in terms of overall job growth but also in such critical fields as professional and business services. Low-priced cities with mediocre or poor growth — #53 Detroit, for example — have fared worse; the Motor City and its environs have seen their youth numbers drop by 9.3% since 2000, amounting to a loss of more than 83,000.

    What The Future Holds

    A more recent subset of the data, from 2010 to 2015, shows similarities to the broader set, but in this case, it’s booming San Antonio that comes in first. The tech boom has helped boost millennial growth in some markets, such as San Francisco, Boston and San Jose, but as this generation ages, these places seem likely to continue lagging behind the fast-growth markets, which are largely in the Sun Belt.

    There remains a school of thought, particularly in the mainstream media, that millennials have little interest in purchasing homes and will avoid suburbs, and sprawling places, at all costs. Yet more than 80% of people ages 25-34 in major metropolitan areas already live in suburbs and exurbs, according to the latest data. Further, since 2010, nearly 80 percent of population growth in this group has occurred in the suburbs and exurbs, even though the millennials living in urban cores are better educated and more celebrated by the media. Among those under 35 who do buy homes, four-fifths choose single-family detached houses, which are more affordable in the fast-growing cities and suburbs.

    These trends may deepen as these young people enter their 30s. As economist Jed Kolko notes, adult responsibilities tend to make people move to affordable suburbs; the website FiveThirtyEight notes that as millennials have aged, they have actually been more likely to move to suburban locations than those their age in the past. We have already passed, in the words of USC demographer Dowell Myers, “peak urban millennial” and may be witnessing the birth of a new suburban wave.

    Economic Impacts

    Over time, it’s likely that younger workers, oppressed by high housing prices, will continue to follow this pattern as they seek affordability. As shown in a new report from the Center for Demographics and Policy at Chapman University, the decline in the home ownership rate for Californians ages 25 to 34 stands at 25 percent, compared with the 18 percent national loss. In San Francisco, Los Angeles and San Diego, the 25-34 home ownership rates range from 19.6 percent to 22.6 percent — approximately 40 percent below the national average.

    It’s clear that, for the most part, high housing prices lead to out-migration — among millennials and other generations — as illustrated by the continuing exodus from California, indicated by the last two years of IRS data. This follows a national pattern: People leave areas where house prices are higher, relative to incomes, for places that are more affordable, a pattern documented in Harvard research.

    In the end, it boils down to aspirations. At their current savings rate, millennials would need about 28 years to save enough for a 20% down payment on a median-priced house in the San Francisco area, but only five years in Charlotte or three years in Atlanta, according to a study by Apartment List. This may be one reason, a recent Urban Land Institute report notes, that 74 percent of all Bay Area millennials are considering a move out of the region in the next five years. Unwilling to accept permanent status as apartment renters, many millennials, so key to California’s dynamism, could be driven out.

    Millennials represent the nation’s largest living generation, and where they choose to move will shape local economies over the coming years. Although some will likely continue to move to superstar cities like New York and San Francisco, with their evident allures, the bulk of growth in millennial America is likely to take place elsewhere, offering opportunities to those economies that best attract and retain them.

    This piece originally appeared on Forbes.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo by Michael Adams [CC BY-SA 3.0], via Wikimedia Commons

  • The Great Train Robbery: Urban Transportation in the 21st Century

    Below is an excerpt from a new report published by the Chapman University Center for Demographics and Policy titled, “The Great Train Robbery: Urban Transportation in the 21st Century.” Read the full report (pdf) here.

    Productive cities could not exist without transportation. Economic performance and job creation in a city — by which we mean a metropolitan area — generally improve when people can reach more job destinations more rapidly. Over time, the ways in which people have reached their worksites has changed. In the distant past, nearly all people walked. Later, they relied on mass transit. Now, people in metropolitan areas rely primarily on cars for transportation to their jobs.

    However, in some cities, transit remains both critical and effective.
    These are metropolitan areas with strong historic — legacy — urban cores, which include large, downtown central business districts or CBDs. This is most notable in New York’s central business district, which accounts for a dominant 40 percent of all transit work trip destinations in the country, despite having only two percent of the nation’s jobs.

    Overall, barely 5.2 percent of all commuter trips nationally are on some form of mass transit. Among the nation’s 53 major metropolitan areas (places with over 1,000,000 population), only 11 exceed this 5.2 percent average.

    Read the full report here.

  • Fading Promise: Millennial Prospects in the Golden State

    This is the introduction to a new report published by the Chapman University Center for Demographics and Policy titled, “Fading Promise: Millennial Prospects in the Golden State.” Read the full report (pdf) here.

    Along with the report, a new video from Chapman University and the California Association of Realtors talks about the housing crisis in California. Watch it here.

    Throughout much of American history there was a common assumption that each generation would do better than the previous one. That assumption is now being undermined. The emerging millennial generation faces unprecedented economic challenges and, according to many predictions, diminished prospects.

    These problems are magnified for California’s millennials. Their incomes are not higher than those in key competitive states, but the costs they must absorb, particularly for housing, are the highest in the country. Their prospects for homeownership are increasingly remote, given that the state’s housing prices have risen to 230 percent of the national average.

    The long-term implications for California are profound. The lack of housing that can be afforded by middle-income households—particularly to buy—has driven substantial out-migration from the state. California has experienced a net loss in migrants for at least the last 15 years. This includes younger families—those in their late 30s and early 40s—which is the group most likely to leave the state. For every two home buyers who came to the state, five homeowners left, notes the research firm Core Logic.

    Over the next decade, as the majority of millennials reach these ages, the long-term implications for employers and communities are profound. Rising house prices and rents are already impacting employers, including in Silicon Valley. High prices can also mean a rapidly aging population, something that is likely to sap the economic potential and innovation in our communities.

    Many of California’s problems are self-inflicted, the result of misguided policies that have tended to inflate land prices and drive up the cost of all kinds of housing. Since housing is the largest household expenditure, this pushes up the cost of living.

    California still has the landmass and the appeal to power opportunity for the next generation. It is up to us to reverse the course, and restore The California Dream for the next generation.

    Read the full report here.

  • California Squashes Its Young

    In this era of anti-Trump resistance, many progressives see California as a model of enlightenment. The Golden State’s post-2010 recovery has won plaudits in the progressive press from the New York Times’s Paul Krugman, among others. Yet if one looks at the effects of the state’s policies on key Democratic constituencies— millennials, minorities, and the poor—the picture is dismal. A recent United Way study found that close to one-third of state residents can barely pay their bills, largely due to housing costs. When adjusted for these costs, California leads all states—even historically poor Mississippi—in the percentage of its people living in poverty.

    California is home to 77 of the country’s 297 most “economically challenged” cities, based on poverty and unemployment levels. The population of these cities totals more than 12 million. In his new book on the nation’s urban crisis, author Richard Florida ranks three California metropolitan areas—Los Angeles, San Francisco, and San Diego— among the five most unequal in the nation. California, with housing prices 230 percent above the national average, is home to many of the nation’s most unaffordable urban areas, including not only the predictably expensive large metros but also smaller cities such as Santa Cruz, Santa Barbara, and San Luis Obispo. Unsurprisingly, the state’s middle class is disappearing the fastest of any state.

    California’s young population is particularly challenged. As we spell out in our new report from Chapman University and the California Association of Realtors, California has the third-lowest percentage of people aged 25 to 34 who own their own homes—only New York and Hawaii’s are lower. In San Francisco, Los Angeles, and San Diego, the 25-to-34 homeownership rates range from 19.6 percent to 22.6 percent—40 percent or more below the national average.

    Read the entire piece at City Journal.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo: Dirk Beyer (Own work) [GFDL, CC-BY-SA-3.0 or CC BY-SA 2.5], via Wikimedia Commons