New Geography

Category: housing

  • The Trouble With The Congress For New Urbanism

    I’ve been asked to submit a proposal for the next Congress for New Urbanism in May of 2018 by one of the organizers in Savannah, Georgia. I declined the first two times I was asked, then reluctantly agreed to offer a tentative outline the third time I was approached. I’m not convinced the committee will have much use for what I have to say.

    CNU has done some amazing things over the years that are worth celebrating. They’ve taken the standard building blocks of suburbia and infused them with some of the elements of earlier forms of traditional architecture and urbanism. Simple things like front porches, interconnected street grids, and garages at the rear along back alleys were subtle, but important refinements to the typical cul-de-sac arrangement. Bringing pocket parks, bike lanes, schools, and churches right in to residential neighborhoods was a huge struggle that challenged prevailing regulatory orthodoxy, but were instantly embraced by homebuyers hungry for this kind of community. And integrating storm water management, wildlife preservation, bike lanes, and urban agriculture into the master plan turned tedious problems into beloved amenities. None of this was easy.

    Urban infill has also been reinvented by CNU in a way that satisfies market demand as well as the endless regulations concerning off street parking requirements, fire codes, the Americans with Disabilities Act, and the parameters set down by institutional investors who fund these projects. These buildings are popular with a certain demographic, boost the local tax base, are profitable for those who build them, and contribute to the revitalization of older neighborhoods.

    My criticism of these New Urbanist activities is that they are fantastically large, complex, and hideously expensive relative to the resources and skills of a simple mom and pop who might want to build something small and incremental in their hometown. CNU has worked with an army of professionals to create noticeably better places. Kudos. But it’s impossible for ordinary people to participate in the process. If anything, it’s substantially more difficult to build or even modify anything at the household level now than it was twenty six years ago when CNU first formed. To be fair, changing the larger society hasn’t been an option. Instead CNU learned to do the things that worked and to scale up to meet the regulatory and political environment as needed.

    So what is it that I might say to the assembled professionals in Savannah next spring – assuming anyone wants to listen? First, CNU is now captive to the same institutional get-big-or-get-out Ponzi dynamics as every other part of society. The twentieth century was about growth of all kinds and our banks, production builders, corporations, and government agencies ramped up to manage that growth. The twenty first century is all about hitting limits, paying old bills that are coming due, maintaining an endless amount of aging infrastructure, and accommodating contraction. Absolutely no one in any position of authority has any idea of how to scale back down.

    Second, the overwhelming majority of communities outside the economic bubbles of places like Seattle, D.C. Miami, Dallas, New York, and San Francisco are visibly in decline with half dead strip malls and abandoned gas stations constituting the tax base and employment center. These places will never be reinvented as tree lined boulevards with streetcars and pedestrian oriented infill development. The money isn’t there. The market demand isn’t there. The political will isn’t there. And the remaining middle class residents of these places will come out with pitchforks and firebrands in opposition to public transit and higher density. These places never had a traditional Main Street to dust off and infuse with new life. They will have no choice but to adapt in place more or less as they are physically.

    Half the country is going to have to find a way to make things work on a shoestring budget in the absence of any new construction, professional planners, bank financing, and official permission. I see evidence of successful sub rosa household adaptation everywhere I go. Unfortunately I can’t write about most of it because it’s illegal. Quietly converting a single family home into a de facto duplex, planting a productive veggie garden on the front lawn, or operating a business out of the garage is treated with the same military style police response as drug trafficking and the sex trade. People are figuring this stuff out on the fly and on the cheap all by themselves and it works – not in spite of the lack of master planning, corporate investment, and government intervention – but because of it. CNU is irrelevant to this process.

    This piece first appeared on Granola Shotgun.

    John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He’s a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

  • 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

  • The South’s Big Cities Moment

    August’s tragic events in Charlottesville kickstarted a somber debate about the appropriate way to commemorate the war that gave all Americans their freedom. It also triggered a conversation about whether the south’s legacy of rebellion and independence – with slavery a painful and regretful part of its past – is a legacy worth remembering.

    These discomforting conversations are a reminder that the south’s antebellum past continues to affect it in the present. Beyond civil rights, these impacts are profoundly felt in the south’s continuing urbanization, which is among the most rapid in the country despite occurring largely within the frameworks of cities whose prewar, pre-industrial bones were never suited for the “big city” qualities filled by their northern cousins. Today’s globally-connected southern cities grew largely from antebellum-era towns that were not the commercial or industrial powerhouses of the past, and yet they are growing dramatically anyway.

    The result is a murmuring culture war about the future of southern cities. The media may be fixated on statues, but the real issue is how these cities – thanks to a variety of historical and developmental factors that differentiate them from those in the north – are growing in ways that may not appeal to many planners and local boosters.

    Many of the south’s transformations have been enviable and measurable: between 2000 and 2012 most large southern metro grew by at least 20 percent, with some like Charlotte and Austin growing at more than twice that rate. Since air conditioning became a norm rather than an exception, growth has trended toward warmer climates, with half of America’s population growth in the last 50 years going to the eight states with the warmest climates. Southern cities have been particularly successful in attracting black families, a declining demographic in nearly every large northern city. They have by and large remained affordable, and continue to be attractive relocation destinations for big companies: metro Atlanta, for instance, is now home to more Fortune 1000 companies than vaunted San Francisco.

    The result is a set of increasingly economically significant and connected large cities with ever-larger suburbs and de-centralized economic gravity. Compared to northern cities, southern ones are less urban, less clustered, and less tall, on average with about half the number of skyscrapers per capita as major northern cities, based on data available from Emporis.com. This dispersion reflects their expanding ethnic diversity. Counties that were once entirely rural are now increasingly suburban, and attractive to minorities and immigrants. Georgia’s recent 6th District election in 2017 and Hillary Clinton’s victory in Fort Bend outside Houston reflects this unpredictable new southern political world.

    Planners have celebrated the urban revitalization in many large existing cities in the north, but largely have been less enthusiastic about this continued growth of sprawling cities in the south. In turn, they have sought increasingly to steer their growth in a more traditional northern pattern. Foremost among the goals of these planners is to densify and re-orient these cities around downtowns that have generally never embodied a strong urban character. This has created a number of awkward dualities: the push for walkability in places that have never before been walkable; the push for rail in cities where the density doesn’t support it; and the push for outdoor living in cities where being outside is uncomfortable for much of the year. This push for glassy Chicago-style downtowns does not always come naturally to cities whose strongest urban legacy is that of sleepy tree-lined Georgian mansions, and it has forced cities from Charlotte to Charleston to contemplate what kind of cities they want to be in the future.

    Conventional urban planning is simply not well-suited to the south’s dynamic new urban environments. New urbanism, for instance, while influential in the south, has made its name through quaint town making largely in the suburbs. Typical urban approaches like the repurposing of downtowns back into modern reinventions of what they once were – do not reflect the development, demographic, infrastructural, or character-driven challenges of cites without urban or industrial legacies.

    Now, the south has begun inventing its own new brand of experimental urban development, often heavily fueled by the private sector. In Atlanta, for instance, the public-private development of the Battery and Sun Trust Park is a public-private typology virtually unimaginable in the north. Boldly, the Atlanta Braves major league baseball team uprooted from its perfectly acceptable downtown home to move closer to its suburban fan base; a county without a discernible center delivered on much of the financing, and worked with the Braves to develop, from scratch, an entire new ballpark-oriented urban district to compete with downtown Atlanta and help fund both the cultural evolution and the cash flows needed to sustain the ballpark.

    The Battery was a form of urbanization and regional re-positioning delivered through a single project. Rather than a renewed focus on the urban core through adaptive reuse and infill, all gospel to planners in the north, metro Atlanta has shaped its own new downtown at a convenient juncture in the sprawl. These kinds of large-format development projects that create their own energy and introduce their own anchors are a hallmark of southern city-making, and build upon the “edge cities” idea first extensively written about by Joel Garreau in the early 1990s.

    The most impressive forms of project-driven development have been those where private developers have taken on urbanization efforts too massive for governments. In Florida and Texas, for instance, private developers are trying to implement high-speed rail lines by leveraging potential profits from real estate development around stations as part of the funding package. And Sandy Springs, Georgia received abundant attention in 2012 when it became a “contract city”, the ultimate privatization experiment when it bid out nearly all of its city services to outside contractors. By relying on private industry to take on these kinds of complex development and governance projects, southern cities are trying to avoid the government boondoggles as well as budget and debt ceiling shortfalls many northern cities face. In turn, however, those delivering on the projects have tremendous power over the formation of these cities, while urbanization is rarely happening according to plan.

    Acknowledging the power of these leaps and bounds innovations, some cities are trying to better channel the urbanization through example projects designed to inspire the private sector to develop in a more organized way. In Raleigh, for instance, the development market has been slow to deliver on high-quality urban projects, so in response the City is taking on the challenge itself: its own new City Hall campus may end up being the most powerful piece of modern architecture in the city. In turn, it is hoped to have catalytic potential to induce dramatic change across a downtown smattered with low-rise buildings. In many such cities, there is an underlying belief that channeling the pent-up private development market toward areas where land values are already the highest will maximize tax revenues and fiscal stability, and improve those cities’ urban qualities. Whether it’s a strategy with staying power is yet to be seen.

    There is no rulebook for how urban change is occurring in the south, but there is no doubt it is occurring more rapidly there. The universal themes in southern city-making today are diversification and creativity, ideas imbuing innovation that would be unlikely if they borrowed conventional approaches verbatim from the north. This new creativity on behalf of big steps and bold visions belies many recommendations from nationally-focused planners toward government consolidation and the belief that all new good things must happen through incremental steps in traditional downtowns. Perhaps this new form of southern rebellion will have staying power; much better, and better for its citizens, than the last one.

    Roger Weber is a city planner specializing in global urban and industrial strategies, urban design, zoning, and real estate. He leads the Urban Policy Practice Area for Skidmore, Owings & Merrill’s City Design Practice and holds a Master’s degree from the Harvard Graduate School of Design. Research interests include urban finance, demographics, architecture, housing, and land use.

    Photo: Thomson200 [CC0], via Wikimedia Commons

  • U.S. Cities Have A Glut Of High-Rises And Still Lack Affordable Housing

    Perhaps nothing thrills mayors and urban boosters like the notion of endless towers rising above their city centers. And to be sure, new high-rise residential construction has been among the hottest areas for real estate investors, particularly those from abroad, with high-end products accounting for 8o% of all new construction.

    Yet this is not an entirely high-end country, and these products, particularly the luxury high-rises in cities, largely depend on a small segment of the population that can afford such digs.

    No surprise, then, that we see reports of declining prices in areas as attractive as New York, Miami and San Francisco, where a weakening tech market is beginning to erode prices, much as occurred in the 2000 tech bust, John Burns Real Estate Consulting notes. There have been big jumps in the number of expired and withdrawn condo listings, particularly at the high end; last year, San Francisco saw a 128% spike in the number of withdrawn or expired listings for condos over $1.5 million.

    Several factors suggest the high-rise residential boom is over, including a growing recognition that these structures do little to relieve the housing affordability crisis facing middle-class residents, the inevitable aging of millennials and their shift to suburbs and less expensive cities, and the impending withdrawal of some major foreign investors who have come to dominate the market in many cities.

    Cost And Affordability

    One common refrain among housing advocates and politicians is that high-rise construction is a solution to the problem of housing affordability. The causes of the problem, however, are principally prohibitions on urban fringe development of starter homes. Critics also note that high-rises in urban neighborhoods often replace older buildings, which are generally more affordable.

    One big problem: High-density housing is far more expensive to build. Gerard Mildner, the academic director of the Center for Real Estate at Portland State University, notes that development of a building of more than five stories requires rents approximately two and a half times those from the development of garden apartments. Even higher construction costs are reported in the San Francisco Bay Area, where 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.

    Almost without exception, then, the most expensive areas are precisely those that have the most high-rise buildings: New York, San Francisco, Seattle and Miami. More to the point, these buildings don’t tend to be occupied by middle-class, much less working-class, families. And in many cases, these units are not people’s actual homes; in New York, as many as 60% of new luxury units are not primary residences, leaving many unoccupied at any given time.

    Even worse, a high-density strategy tends to raise the price of surrounding real estate. As Tim Redmond, a veteran San Francisco journalist, points out, luxury apartments often tend to be built in areas with older, more affordable buildings. The notion that simply building more of an expensive product helps keep prices down elsewhere misses the distinction between markets; the high-rises in Washington, DC, are not the affordable units that the vast majority of city residents need.

    Other cities favored by luxury developers – like Vancouver, Toronto, Seattle and San Francisco – have also seen deteriorating affordability and, in some cases, a mass exodus of middle- and working-class residents, particularly minorities. San Francisco’s black population, for example, is roughly half of what it was in 1970. In the nation’s whitest major city, Portland, African-Americans are being driven out of the urban core by high-density gentrification, partly supported by city funding. Similar phenomena can be seen in Seattle and Boston, where long-existing black communities are gradually disappearing.

    The New Demography Works Against This Trend

    It is common in retro-urbanist circles to maintain that more Americans, particularly younger ones, will opt to remain customers for ever-greater density, a preference that could sustain an ever-growing market for high-rises. Yet that notion may be past its sell-by date, with demographic evidence suggesting that most Americans, including younger ones, are looking less for an apartment in the sky than for a house with a little backyard.

    Suburbs, consigned to the dustbin of history by many urban boosters, are back. Demographer Jed Kolko, analyzing the most recent Census Bureau numbers, suggests that population growth in most big cities now lags that of their suburbs, which have accounted for more than 80% of metropolitan growth since 2011. Even where the urban core renaissance has been most prominent, there are ominous signs. The population growth rate for Brooklyn and Manhattan fell nearly 90% from 2010-11 to 2015-16.

    The real trend in migration is to sprawling, heavily suburbanized areas, particularly in the Sun Belt. To be sure, there are high-rises in most of these markets – quite a gusher of them in Austin, for instance – but the growth in all these regions is overwhelmingly suburban.

    The most critical factor over time may be the aging of millennials. Among those under 35 who do buy homes, four-fifths choose single-family detached houses, a form found most often in suburbs. Surveys consistently find that most millennials see suburbs as the ideal place to live in the long run. According to a recent National Homebuilders Association report, more than 66%, including those living in cities, would actually prefer a house in the suburbs.

    The largely anecdotal media accounts of millennial lifestyles conflict with reality, Kolko notes. Although younger millennials have tended toward core cities more than previous generations, the website FiveThirtyEight notes that those ages 30-44 are actually moving to suburban locales more than in the past.

    The China Syndrome

    Given the limits of the domestic market, the luxury high-rise sector depends heavily on foreign investors.

    Already, harder times for some traditional investors – Russians and Brazilians, for example – have hurt the Miami market, long attractive to overseas buyers. There is now three years’ worth of inventory of luxury high-rises there, with areas such as Edgewater, Midtown and the A&E District suffering an incredibly high inventory of seven and a half years. Miami Beach is faring a bit better but is still a buyer’s market at a little over two years of inventory.

    Still, the greatest threat to the luxury high-rise market may come from the Far East, the region of the world with the most surplus capital and, given the rapidly aging society, often the fewest profitable places to put it. Korea and Japan have lots of money sitting around looking for a home. Japan and its companies, according to World Bank data, are hoarding more than $2 trillion in unused liquid assets.

    But as in all things East Asian, China stands apart. Last year, the country had a record $725 billion in capital outflows, according to the Institute of International Finance. China is now the largest foreign investor in US real estate.

    But now the Chinese government has placed strong controls on these investments, which could leave some places vulnerable. In Downtown Los Angeles, according to local brokers, many of the new high-rise towers are marketed primarily in China. (LA claims to have the second-highest number of cranes, behind only Seattle.)

    These expensive units are far out of reach for the younger people who tend to inhabit the neighborhood, instead serving as what one executive called “vertical safe deposit boxes” for people trying to get their money out of China. If the new crackdown on such investments is strongly enforced, this could leave a lot of expensive units without buyers. Prices have already softened, and with several new luxury buildings coming up, Downtown is likely to experience a glut.

    Even in Manhattan, another market long dependent on foreign investment, projects are now stalled, including some once-hot properties in Midtown that are delaying their sales launches. Overall sales of condos over $4 million dropped 18% last year from the high levels of the previous three years. The ultra-premium market for condos over $10 million saw a 5% sales decrease in 2016.

    Changes Ahead

    The current slowdown, and perhaps longer-term stabilization, could lead to lower rates of migration out of the expensive cores.

    Yet this trend is not likely to reverse the movement of younger people to less dense areas. Luxury high-rise units were not built for families, and they are often located in areas with poor schools and limited open space. They may simply become high-priced rentals, attractive no doubt to childless professionals but not to middle- and working-class families.

    In the end, the real need is not for more luxury towers. What is needed, particularly in America’s cities, from the urban core to the urban fringe, is the kind of housing middle- and working-class families can afford.

    This piece originally appeared at 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.

    Photo: Sharon Mollerus, 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

  • Postcards From the Zombie Apocalypse

    I’m regularly accused of being a doomer whenever I point out the obvious – that many aspects of how we’ve organized our affairs over the last several decades aren’t meant to last. So they won’t. The end of Jiffy Lube and Lean Cuisine isn’t The End. Civilization will carry on without them, I assure you. But when it’s suggested that our current set of arrangements won’t last forever people immediately imagine Mad Max, as if no other alternative exists. Things are going to change. They always have and they always will. The future will just be different. That’s absolutely not the same as saying the world is coming to an end. Clear eyed individuals who are paying attention can start to get a feel for who the new winners and losers are likely to be and place themselves in the best possible situation ahead of the curve. That’s a pragmatist’s view – not a doomer’s.

    It helps to explore previous versions of these regularly occurring historical shifts. Think of them as postcards from the last few rounds of the Zombie Apocalypse. Here’s a small farm town in rural Nebraska. Its population peaked in the 1920s. The period between World War I and the Great Depression was an especially prosperous time for such towns as commodity prices were high and technological innovation (the telephone, radio, automobiles, tractors, etc.) created an enormous amount of new wealth and opportunity. The 1920s was also an era of rampant unsustainable practices of all kinds that lead to the ruined soils and draughts of the Dustbowl and the collapse of speculative credit based financial institutions. The population of this town began to decline in the 1930s and is currently down to a few dozen souls.

    Remnants of some of that early twentieth century technology still litter pastures on the edge of town. One resourceful farmer organized these old car carcasses into a makeshift corral for his livestock.

    It’s possible to connect the dots from rural Nebraska to Detroit where those very same vintage vehicles were manufactured all those decades ago. Detroit peaked in population, economic power, and political influence in 1950. Today huge swaths of Motown look remarkably similar to the abandoned farms and small towns of the prairie. Entire city blocks are now cleared of people and buildings. The Zombie Apocalypse arrived there too. If small scale agriculture was made redundant by mechanization and industrial scale production, then industry itself was hammered by other equally powerful forces. Everything has a beginning, middle, and end.

    The most recent iteration of the Zombie Apocalypse has already begun to unfold in some places. Suburbia was exactly the right thing for a particular period of time. But that era is winding down. The modest tract homes and strip malls built after World War II  are not holding up well in an increasing number of marginal landscapes. I have been accused of cherry picking my photo ops, particularly by people who engage in their own cherry picking when discussing the enduring value of prosperous suburbs. But there’s too much decay in far too many places to ignore the larger trend. The best pockets of suburbia will carry on just fine. But the majority of fair-to-middling stuff on the periphery is going down hard.

    The desire to push farther out and build ever more upscale suburban developments in increasingly remote locations is palpable. That’s what a significant proportion of the population desires on some level. But in the same spots – often next to each other – is ample evidence that there’s something profoundly wrong.

    Not all farm towns died. Not all industrial cities collapsed into ruin. Not all suburbs will fail… But the external forces at work are going to favor some places much more than others moving forward. The trick is to understand what those forces are before everyone else does and position yourself to benefit instead of getting whacked by the shifts. Would you have rather sold your house in Detroit in 1958 when things were still pretty good, or wait until 1967 when the panicked herd began to stampede? Would it have been better to buy property in the desert in 1970 and take advantage of a wave of growth for a few decades, or buy now at the top of that cycle and slide down from here on out?

    The future drivers of change will be the same as the previous century – only in reverse. The great industrial cities of the early twentieth century as well as the massive suburban megaplexes that came after them were only possible because of an underlaying high tide of cheap abundant resources, easy financing, complex national infrastructure, and highly organized and cohesive organizational structures. Those are the elements of expansion.

    But once the peak has been reached there’s a relentless contraction. The marginal return on investment goes negative as the cost of maintaining all the aging structures and wildly inefficient attenuated systems becomes overwhelming. The places that do best in a prolonged retreat from complexity are the ones with the greatest underlying local resource base and most cohesive social structures relative to their populations. The most complex places with the most critical dependencies will fail first as the tide recedes.

    The next Zombie Apocalypse will relentlessly dismantle superficial decorative landscapes and highly leveraged economies of scale. Take away the twelve thousand mile just-in-time supply chains, heavy debt loads, and limitless cheap resources and you get a very different world. Over the long haul Main Street has a pretty good chance of coming back along with the family farm. But the shorter term in-between period of adjustment to contraction is going to be rough as existing institutions attempt to maintain themselves at all costs.

    This piece first appeared on Granola Shotgun.

    John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He’s a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

  • Ontario’s Labor & Housing Policies: US Midwest Opportunities?

    The Globe and Mail, a Canadian national newspaper, reports concerns raised by Magna International, Inc. that proposed provincial labor legislation (the “Fair Workplaces Better Jobs Act”) could result in seriously reduced economic competitiveness for Ontario, Canada’s most populous province (“Magna says new Ontario labour bill threatens jobs, investment”). Ontario accounts for about 40 percent of the Canadian economy and has approximately twice the gross domestic product of second ranking Québec. Magna is Canada’s largest employer in the automotive sector, which The Globe and Mail characterizes as “one of a handful of homegrown Canadian companies that have risen to the status of global giants.”

    Magna told the provincial parliamentary standing committee on finance that “For the first time in our 60 year history, we find ourselves in the very untenable position questioning whether we will be able to operate at historical levels in this province.” Stressing the need to remain competitive, the company added: “This is especially important when our main competitor to the south is working harder than ever to reduce costs, regulatory burdens and promote business efficiency and productivity. From our perspective, the province of Ontario seems to be moving in the opposite direction.”

    The proposed legislation would increase mandatory annual vacation and personal leave requirements and increase the minimum wage. The legislation would also reduce work scheduling flexibility. This would, according to Magna, make the “just in time” production “impossible,” in a North American industry that has used the practice to compete more effectively. According to Automotive News, Magna noted the difficulty of manufacturing where it calls the cost of electricity, payroll and pension costs and the provincial “cap and trade” policy are among the highest in the G-7. Magna said that the “Fair Workplaces Fair Jobs Act” is “extremely one-sided.

    At the same time that Ontario seems poised to make business investment more difficult, some key nearby US states are doing the opposite. Michigan, Indiana and Kentucky, all on the NAFTA Highway (Interstate 69) have enacted voluntary unionism laws (called “right to work”). Ohio has reduced taxes among the most of any state over the past five years. None of these states seems inclined to follow Ontario’s example. Another nearby regulation liberalizing state, Wisconsin (where voluntary unionism was also enacted), has just won the $10 billion first US plant to be built by China’s large electronics contractor Foxconn, edging out Ohio.

    Becoming Less Competitive: Ontario’s Housing Regulation

    Ontario’s competition threatening actions are not limited to business and labor policy. Land-use and housing policies are also making Ontario less competitive, first in the Toronto metropolitan area and now spreading across the province. About a decade ago, the province imposed its “Places to Grow” program that not one, but two urban containment boundaries. The highly publicized Greenbelt designates a huge swath of land on which development is not permitted.

    Then there is the second urban containment boundary, the “settlement boundary,” which largely ensures that new development is limited to a far smaller area around the urbanization, further intensifying the price-escalating impact of the Greenbelt. In this crazy quilt of regulation, land owners operate in a sellers’ market, able to drive prices up for their scarce holdings, to the detriment of home buyers. This environment is particularly welcome to speculators. Consistent with the fundamentals of economics, urban containment boundaries lead to higher land prices where new housing is permitted, and higher house prices.

    The procedures for supplying sufficient new greenfield development land require amendments of official community plans, a slow and cumbersome bureaucratic process. It is not surprising that Mattamy Homes Founder and CEO Peter Gilgin told Bloomberg that despite his largest homebuilding firm in the Toronto area having plenty of land for new houses, the necessary approvals are very difficult to obtain.

    The effects on house prices have been dramatic. In 2004, Toronto’s median house price was 3.9 times its median household income (median multiple). At that point, it had actually been reduced from 4.3 in 1971 and had hovered around 3.5 in the intervening years. According to the 13th Annual Demographia International Housing Affordability Survey, by 2016 house prices virtually doubled relative to incomes, with a median multiple of 7.7. This means a lower standard of living and greater relative poverty.

    Meanwhile, the house price increases are spreading from Toronto to nearby metropolitan areas. For example, house prices in Kitchener – Waterloo, Canada’s “Silicon Valley” rose 40 percent in the single year ended April 2017. This is nearly double the rate of Toronto that over the same period.

    The most recent domestic migration data indicates that people are moving out of the Toronto metropolitan area in droves. Since the 2011 census, more than 125,000 more people have left the Toronto area for other parts of Ontario that have moved in. This is the same dynamic apparent in the United States, where differentials in housing affordability have been cited as a principal reason for domestic migration gains and losses, as households flee from higher cost to lower-cost areas.

    A recently imposed foreign buyers tax led to somewhat lower prices in the Toronto area last year, but they are still 6.3 percent above a year ago and rising at a rate three times that of average earnings. Without restoring the competitive market for land on the periphery, it is likely that house prices will continue rising relative to incomes, to the detriment, in particular, of younger households.

    Meanwhile, house prices are substantially lower in US states nearby Ontario. As late as the mid-2000’s, there was little difference between the housing affordability across Ontario, including Toronto, and the Michigan, Ohio, Indiana and Kentucky. That is no longer the case.

    Immigration laws, however, do not permit the free movement of labor across the Canadian-US border, so there is no likelihood that Ontarians will move to the United States for lower cost housing. But capital is far more mobile. Companies that develop new business locations, especially manufacturing, often locate where they can maximize returns for their shareholders. Moreover, companies establishing new facilities are also interested in their employees being able to live close enough to commute to the plant.

    Figure 1 shows the metropolitan area housing affordability, measured by the median multiple, for Toronto, as well as major metropolitan areas in the four nearby states. Residents of Cleveland and Cincinnati pay nearly two-thirds less of their income for their houses than do residents of Toronto. In Indianapolis, Detroit, Grand Rapids, Columbus and Louisville, residents pay approximately 60 percent less for their houses than in Toronto. Meanwhile, no one should confuse the sometimes characterized as decrepit city of Detroit, reeling from decades of misgovernance, with its leafy suburbs, where 85 percent of the metropolitan area’s people live.

    Figure 2 indicates that things are a bit better among other Greater Golden Horseshoe metropolitan areas. Residents pay from 4.7 to 5.0 times their incomes in Brantford, Barrie and Peterborough. This is still up to double the 2.5 times incomes that residents pay in Toledo (Ohio) and Fort Wayne (Indiana). House prices are slightly higher in Dayton and Kalamazoo, but still at least than 40 percent below the three Ontario metropolitan areas.

    The Need for Competitive Policies

    Maintaining economic growth and the standard of living is important to Ontario’s 14 million people. At the same time, the world is becoming more competitive. Ontario needs to be careful, or economic development departments from across the increasingly competitive states of the Midwest could reap a harvest in business investment and jobs.

    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.

    Photograph: Pearson International Airport (Mississauga, Brampton and Toronto), Canada’s Largest employment centre (by author)

     

  • Deep Ellum

    I recently wrote about the need to embrace reality when it comes to land use regulation, culture, politics, and economics. My interpretation can seem a bit… dark. It’s not my intention to discourage people looking to make a positive difference in their communities. I’ve just seen how things tend to play out and the process doesn’t exactly favor mom and pop operations that are juggling day jobs, raising kids, and working on limited budgets. Telling motivated individuals to go out into the world and build great new small scale walkable mixed use urbanism of the kind once found on every Main Street in North America is disingenuous. Yes, it’s “possible.” But it’s also incredibly unlikely in most places. Building from scratch or even modifying existing properties isn’t the answer for these folks. We need to be honest about that.

    I’ll use the Deep Ellum neighborhood in Dallas as an example. A few years ago I was in Dallas to attend a series of overlapping city planning conferences. Deep Ellum was a recurring theme and a number of events were held there as demonstration projects. Back in 1973 city officials bulldozed most of the neighborhood to make way for a massive elevated highway. Urban removal killed two birds with one stone. State and federal money provided commuter infrastructure that supported the ever growing new middle class suburbs on the edge of town while simultaneously wiping away blight near downtown. What’s not to love? (Anyone want to guess who lived in Deep Ellum before it was razed?)

    Dallas locals like Jason Roberts of Build a Better Block as well as fellow participants from out of state like Street Plans Collaborative advocate fast, cheap, temporary, and iterative programming for neglected neighborhoods. Potted plants, inexpensive outdoor furniture, food trucks, street vendors, bicycle accommodations, string lights, outdoor movie nights, and live music can reactivate otherwise dead streets, vacant lots, and disused storefronts. If done sensitively with the active participation of the people who already live in the neighborhood these techniques can be transformative. The goal is to discover what works and build upon those successes incrementally over time. It’s bootstrap urban revival on a shoestring budget.

    These days market demand for urban living is strong and there’s money to be made in redeveloping what’s left of these old neighborhoods. They have “authenticity” and “texture” that can’t be duplicated in new construction. Deep Ellum is well located within walking and biking distance of the central business district as well as Baylor University Medical Center. There’s a spread between what these buildings are now and what they could be with new investment and institutional support.

    While I was in town conference hopping I attended a side presentation organized by a group of prominent business leaders who advocate pulling down the highway that cuts through Deep Ellum. This meeting was held at the behest of the American Conservative and D Magazine populated by a lot of old white guys in suits, not crunchy hippie treehuggers.

    The business argument is simple. The aging highway is at the end of its design life and neither the city of Dallas nor the Texas Department of Transportation has the money to rebuild it since both are functionally insolvent. Dismantling the highway would liberate a huge amount of downtown land that could be redeveloped by the private sector. Construction jobs would be created up front, market demand for urban living would be satisfied, and substantial tax revenue would be generated for the city for many decades into the future. In other words, a cost center would become a profit center.

    And let’s not forget there’s a tremendous amount of money to be made for well placed developers with deep pockets. Hence all the wine and cheese gatherings and thought leaders with their PowerPoints. I hasten to add this isn’t corruption per se. The cost in time, money, and political wrangling is enormous. Only exceptionally well funded organizations can work their way through these endless processes and achieve any kind of worthwhile goal. Why would anyone bother if there wasn’t an equally massive payoff at the end?

    The reality of how land is redeveloped in this context is simple. The cost of buying distressed property, site remediation, upgrading the infrastructure, accommodating all the requirements of multiple bureaucracies from the fire marshal to institutional investors – all while still creating a product the market wants and can actually afford to pay for… leads to this. It’s referred to as the Texas Doughnut. It’s an entire city block of multi-storied parking garages wrapped in a skin of apartments. Sometimes they’re rentals, sometimes they’re condos for sale. If your goal is to recreate the fine grained individually owned mom and pop buildings of a previous century that’s just not going to happen. Again, it’s not impossible. It’s just highly unlikely to pan out for a dozen reasons having to do with the fact that the society that build Main Street no longer exists.

    So let’s go back to the smaller older existing buildings in Deep Ellum. These are at a scale an average family can wrap its mind around. Lots of people dream of owning an independent business and living upstairs. It’s a great arrangement that’s been used successfully for eons all around the world. But there are complications here. The most pragmatic way to purchase and renovate buildings like these is with cash. Some people have it. Most don’t. Private equity (A.K.A. asking your father-in-law or a collection of dentists and chiropractors from the country club for money) works if you have that kind of personal situation and charisma…

    Don’t expect to go to just any random bank and get a thirty year mortgage for one of these places. Almost all banks see such properties as “non-conforming.” They’re used to writing loans for four bedroom two bath homes on cul-de-sacs and then bundling them off at the end of the month to pension funds that require consistency in the product profile. If these were ten thousand square foot strip malls with fifty seven parking spaces on a road with forty thousand cars driving by each weekday there’d be an institutional bundle for that. Same with a two hundred unit garden apartment complex. But a fifteen hundred square foot bakery or barber shop with an apartment upstairs? What kind of freaky platypus is that?

    Some people will sit you down and calmly explain that the guidelines for plain vanilla federally insured mortgages technically include buildings with up to four units and up to 25% commercial space in an otherwise residential building. On paper it’s no different than a single family home. That’s absolutely true. But many older buildings are closer to fifty/fifty residential/commercial. Even if you find a building that does conform you still need to find a banker who will grant that loan in this neighborhood. Again, it’s absolutely possible. But it’s not easy. And if a building is too cheap – generally under $50,000 – no bank will write a mortgage either.

    A commercial loan with a short term – typically eight years – and a significantly higher interest rate might be offered instead of a standard thirty year mortgage. Maybe. As part of the due diligence process the right bank will make you prove that the building is structurally sound, conforms to modern codes, and has a pro forma that can cash flow properly. And then there’s the cost of renovations, complying with the Americans With Disabilities Act, the fire code, and existing zoning regulations… It can be done. But something as basic as installing fire sprinklers or an elevator can easily kill a proposed project. It’s just too expensive in a building with too little value. Sorting out all this stuff takes real skill and experience. I know several seasoned mid-size property developers who lost everything to bankruptcy because their high quality projects came on line just in time for a big market correction and they couldn’t service their debts. And these folks were light years ahead of an ordinary person looking to invest in a modest property.

    The scenario I see all over the country is formulaic. Older buildings in formerly derelict neighborhoods are bought and renovated by well funded and skilled firms who specialize in this kind of development. Shops and apartments are then rented to individuals. These legacy districts become amenity centers that add value to new large scale infill development of the Texas Doughnut variety. There are exceptions, but that’s mostly what I see. It’s neither good nor bad. People sometimes complain about gentrification, but the alternative is for these neighborhoods to continue to decline until they can’t be saved at all. It might be nice if every aspect of society changed to allow other options, but I’m not holding my breath. At the end of the day we live in the world we live in. We have the rules and procedures we have. Shrug. Mom and Pop need to find a new gig.

    This piece first appeared on Granola Shotgun.

    John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He’s a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

  • Moving Away from Toronto and Montréal

    The latest Statistics Canada data indicates that people are leaving Toronto and Montréal in large numbers since the 2011 census. Even so, both metropolitan areas continued to grow through the 2016 census as a result of net international migration and the natural increase of births over deaths (Figure 1). It turns out that Canada’s urban pattern is much more like that of the US, as well as other high-income countries, than many may suppose.

    Toronto

    Toronto lost 128,000 net domestic migrants, while Montréal lost 89,000 representing 2.3 percent of its total 2011 population.

    At the same time, the migration has been regional rather than national. In the case of Toronto, more than 90 percent of the net migration loss was to other areas of Ontario (118,000), as opposed to other provinces (10,000). The metropolitan area losses were concentrated in the city of Toronto, which lost a net 119,000 domestic migrants, while the suburbs lost 9,000. The city’s loss of 4.5 percent was nearly double that of the metropolitan area and 15 times that of the suburbs.

    Despite the late 1990s municipal amalgamation that increased the population of the city by three times, Toronto has become a majority suburban metropolitan area. The city of Toronto now has fallen to 46 percent of the population from 53 percent in 2001.

    Part of the metropolitan area loss is likely the result of Toronto’s higher house prices and shortage of single family homes that people prefer (see: Ryerson University Research Cites Urban Containment Policy as Major Factor in Toronto House Price Escalation), with nearby metropolitan areas experiencing strong net domestic migration gains. Up to one-half of Toronto’s loss may have been picked up by Oshawa (16,000), Hamilton (12,000), St. Catharine’s-Niagara (8,000), Barrie (7,000), Guelph (4,000), Brantford (4,000) Kitchener-Cambridge-Waterloo (1,000) and Peterborough (1,000), which are served by the commuter rail or bus services of Go Transit (Metrolinx).

    Moreover, with its highly dispersed employment patterns, commuters from exurban metropolitan areas can find employment much closer to home than downtown Toronto, with its less than 15 percent of metropolitan employment. A few years ago, it was reported that the largest employment center in Canada was the sprawling area around Pearson International Airport (Toronto-Missassauga-Brampton), rather than downtown Toronto. Meanwhile, the Kitchener-Cambridge-Waterloo area has emerged as Canada’s answer to Silicon Valley.

    Montréal

    Things were similar in Montréal, which lost 89,000 net domestic migrants, also representing 2.3 percent of its 2011 population. Unlike Toronto, Montréal’s loss was evenly split, with 45,000 moving out of Quebec and 44,000 moving to other parts of Québec.

    The concentration of net domestic migration losses were even more concentrated in the core than in Toronto. The ville de Montréal lost 117,000 net domestic migrants, while the suburbs gained 28,000. The ville’s loss of 7.0 percent was three times the rate of the total metropolitan area.

    Vancouver

    Vancouver, the third largest metropolitan area, also lost domestic migrants (12,000) at a rate of 0.5 percent relative to its 2011 population. Vancouver gained 10,000 net domestic migrants from other provinces, while losing 22,000 to other parts of British Columbia. Kelowna and Victoria appear to have prospered at Vancouver’s expense, both adding a 7,000 net intraprovincial migrants.

    Alberta: Calgary and Edmonton

    As has been the case for years, Alberta’s two largest metropolitan areas have led the national statistics. Calgary, the fourth largest metropolitan area added 55,000 net domestic migrants between 2011 and 2016. Much of this 4.6 percent gain was from other provinces (41,000). With the recent oil bust, which has hit Alberta hard, net interprovincial migration dropped from 7,000 in 2014-2015 to minus 1,000 in 2015-2016.

    Edmonton, Alberta’s second largest metropolitan area and Canada’s sixth largest, added even more net domestic migrants (72,000), for the strongest performance in the country. This 6.2 percent gain was also concentrated in people from outside the province (48,000). As in Calgary, net interprovincial migration fell strongly from 2014-2015 to 2015-2016, from 10,000 to 2,000.

    It remains to be seen how the recovering energy industry will impact the economy and migration trends in Alberta.

    Ottawa-Gatineau

    Ottawa-Gatineau (Ontario- Québec) has Canada’s capital and is the only major metropolitan area that spans two provinces. Ottawa-Gatineau is Canada’s fifth largest metropolitan area although likely to be overtaken almost at any time by faster growing Edmonton. Ottawa-Gatineau gained 14,000 net domestic migrants between 2011 and 2016 (1.1 percent). Most of the net domestic migration was from other parts of Ontario or Québec (10,000).

    Smaller Census Metropolitan Areas

    Among the other 27 census metropolitan areas that had been designated by the 2011 census, the largest percentage gain was in Kelowna, BC, at 8.4 percent. Saint John, New Brunswick had the largest net domestic migration loss at minus 3.5 percent.

    Overall Results

    Approximately two thirds of Canada’s population resides in the census metropolitan areas. Between 2011 and 2016, there was a net domestic migration of only 17,000 from outside the metropolitan areas (Table). Among the six major metropolitan areas, there was a net domestic migration loss of 89,000, probably driven in large measure by the “severely” or “seriously” unaffordability of housing virtually everywhere but Ottawa-Gatineau. While new metropolitan areas are likely to be designated (like Lethbridge, Alberta since 2011), it may be that there will be little additional net domestic migration to the largest metropolitan areas, and what will occur is largely in the suburbs.

    Net Domestic Migration: Canada Metropoltian Areas: 2011-2016
    Census Metropolitan Area 2016 Census Population Net Domestic Migration % of 2011 Population
    Toronto, Ontario      5,928,040         (128,432) -2.3%
    Montréal, Quebec      4,098,927           (88,913) -2.3%
    Vancouver, British Columbia      2,463,431           (11,928) -0.5%
    Calgary, Alberta      1,392,609             55,415 4.6%
    Ottawa-Gatineau, Ontario/Quebec      1,323,783             14,119 1.1%
    Edmonton, Alberta      1,321,426             71,620 6.2%
    Québec, Quebec         800,296               2,683 0.3%
    Winnipeg, Manitoba         778,489           (17,812) -2.4%
    Hamilton, Ontario         747,545             12,208 1.7%
    Kitchener-Cambridge-Waterloo, Ontario         523,894               1,390 0.3%
    London, Ontario         494,069               4,534 1.0%
    St. Catharines-Niagara, Ontario         406,074               8,030 2.0%
    Halifax, Nova Scotia         403,390               2,926 0.7%
    Oshawa, Ontario         379,848             16,028 4.5%
    Victoria, British Columbia         367,770             17,647 5.1%
    Windsor, Ontario         329,144                  (48) 0.0%
    Saskatoon, Saskatchewan         295,095               8,672 3.3%
    Regina, Saskatchewan         236,481               2,004 0.9%
    Sherbrooke, Quebec         212,105               1,792 0.9%
    St. John’s, Newfoundland and Labrador         205,955               7,949 4.0%
    Barrie, Ontario         197,059               6,943 3.7%
    Kelowna, British Columbia         194,882             15,171 8.4%
    Abbotsford-Mission, British Columbia         180,518               2,952 1.7%
    Greater Sudbury, Ontario         164,689             (1,285) -0.8%
    Kingston, Ontario         161,175               5,572 3.5%
    Saguenay, Quebec         160,980                (782) -0.5%
    Trois-Rivières, Quebec         156,042               2,721 1.8%
    Guelph, Ontario         151,984               3,384 2.4%
    Moncton, New Brunswick         144,810               2,425 1.7%
    Brantford, Ontario         134,203               3,603 2.7%
    Saint John, New Brunswick         126,202             (4,512) -3.5%
    Peterborough, Ontario         121,721               1,394 1.2%
    Thunder Bay, Ontario         121,621                (330) -0.3%
    Total    24,724,257             17,140 0.1%
    Derived from Statistics Canada data

     

    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: Photo: Old City Hall, Toronto (by author)

  • Is California Anti-Family?

    In its race against rapidly aging Europe and East Asia, America’s relatively vibrant nurseries have provided some welcome demographic dynamism. Yet, in recent years, notably since the Great Recession and the weak recovery that followed, America’s birthrate has continued to drop, and is now at a record low.

    Nowhere is this decline more marked than here in California. Once a state known for rapid population growth, and above-average fecundity, the state’s birthrate is also at a historic low. The results are particularly dismal in coastal Southern California. Los Angeles’ population of people under 17 already has dropped a precipitous 13.6 percent, with drops even among Latinos and Asians, while Orange County has fallen by 6 percent since 2000. The national growth, in contrast, was up 2.2 percent. Despite claims that people leaving California are old and poor, the two most recent years of data from the IRS show larger net losses from people in the 35 to 54 age group. Net out-migration is also larger among those making between $100,000 and $200,000 annually. This is your basic child-bearing middle class.

    Why are we eating our seed corn?

    Why is this shift to an increasingly child-free population occurring more in Southern California than elsewhere? One logical source may be housing prices, particularly near the coast, which present a particular problem for middle-class, middle-aged families. In contrast, the growth in the number of children under 17 is much higher in more affordable metropolitan areas such as Dallas-Fort Worth, Atlanta, Phoenix, San Antonio, and Charlotte and Raleigh in North Carolina.

    Housing affordability certainly drives migration. Major metropolitan areas where the cost of housing is at least four times that of annual incomes have seen a net out-migration of 900,000 since 2010. This compares to a net gain of 1.1 million in the more affordable areas.

    Hardest hit of all are the groups who will dominate our future — young people, minorities and immigrants. California boomers, as we discussed in a recent Chapman University report, have a homeownership rate around the national average, but for people aged 25 to 34 the rate is the third-lowest in the nation, behind just New York and Washington, D.C. The drops among this demographic in the San Jose and Los Angeles areas since 1990 are roughly twice the national average.

    It is no surprise, then, that places like Southern California have also seen a decline in the next demographic group: people between 35 and 49, who are generally the age of parents, and also tend to be at their peak earning years. The one population group on the upswing is seniors, particularly in Orange County, who bought their homes when they were much less expensive.

    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.

    Photo by Kat Grigg, via Flickr, using CC License.