New Geography

Category: housing

  • The New Geography of Apartment Rentals

    “Supply and demand” describes the interaction between the available amount of a resource and the need for it by consumers. In the world of community development, nowhere is this dynamic more pronounced than in the rental housing market.

    Recessionary times have combined with barriers to homeowner financing to spark a surge in rental demand within many U.S. cities and regions. At the same time, erosion in worker salaries over the past decade has led to a record number of households devoting a disproportionate amount of their income towards rental payments. An uptick to increase the supply of rental units and keep pace with an escalating demand needs to occur, but instead, there’s been slow movement in rental housing construction. Where are we seeing the most profound results of this combination of factors – and how can communities best accommodate the new flood of renters?

    According to a study conducted by the Harvard Joint Center for Housing Studies in conjunction with the MacArthur Foundation, participation in the home rental market is at its highest level in more than a decade for all age groups. The US now has 43 million renter households, representing 35 percent of all households. This report also found that housing affordability issues have soared, since nearly half of renters possess annual incomes below $30,000, including 22 percent with incomes below $15,000. More than half of all renters — 21 million households — dole out more than 30 percent of their income for housing. These figures represent the greatest number of cost-burdened renters on record.

    The Colorado Front Range and the Bakken Region of North Dakota and Montana are examples of areas where high levels of population growth have led to meteoric shifts in the rental housing markets. Over the last three years or so, the influx of new residents has driven monthly rates to unprecedented heights.

    The Front Range refers to the most populous areas of Colorado: cities like Boulder, Fort Collins, Castle Rock, Colorado Springs, and Denver, which have become the primary hotspots for new resident growth. Much of the development there is a result of incoming highly educated workers, who are arriving in droves from California, Ohio, Texas, Florida, and the Dakotas. Denver has had the distinction of being ranked first among U.S. metros for total population gain in the 25-34 age range between 2008 and 2010, and the Census Bureau estimates that by 2020 Metro Denver’s population will soar from 2.9 to 3.2 million.

    Northeast of Colorado is a region that has seen explosive growth due to an oil boom, with a population that now includes thousands of migrated workers filling the numerous jobs. This sudden movement to lucrative location is reminiscent of the California gold rush era. According to the U.S. Energy Information Association, oil production in this region is expected to top one million barrels a day by year-end 2013.

    The black gold hotspot is the Bakken Region, which extends from parts of North Dakota into Montana, encompassing 12 counties. The Bakken Region has seen its working population swell by 70% since 2010. While the economic trend has been a boost to fortunes, a chronic shortage of living accommodations for transient workers has led to a serious imbalance in the housing supply/demand equilibrium. The result: home and rental housing costs that boggle the mind and terrify the wallet, sending many arriving workers into hysterics as they try to find a place to rest their heads at night. There is frequent talk of workers that are forced to live in their cars while earning $100,000 a year. Trailer parking spots can be found for rates that have escalated to $800 a month, and hotel prices are even higher; a one-night stay can be $300, or even more.

    The operative question for city leaders and planners in these regions is how to build large swaths of new housing without the supporting infrastructure to accommodate the expansion. Michael Leccese, Executive director of Urban Land Institute Colorado (ULI), notes that during the recession the area’s boom in apartment living has played a crucial role in keeping real estate development afloat. “The pace of apartment construction has provided needed housing for the region’s growing population of Millennials, as well as for empty nesters and those shut out of the for-sale market for whatever reason,” says Leccese. “Many of these apartments have been constructed in walkable, urban infill and transit-accessible locations, and often feature innovative, green building designs.”

    The massive push to expand housing supply has raised the question of whether the market is being overcorrected to the point that supply will exceed demand. As construction begins on more and yet more new apartment buildings, will the Front Range and the Bakken Region continue to see the massive growth that has characterized the last few years?

    Leccese asserts, “There is no doubt that we are seeing some concern on the part of our ULI members in terms of this overbuilding, as well as the lack of diversity in product type and price point. Some are, in fact, wondering whether this might be the new housing bubble.” If growth does slow, this will mean good news for renters, who will likely see more affordable rental rates. For rental housing companies, however, it would not be a call for celebration.

    Along with the Colorado Front Range and the Bakken Region, cities throughout the nation with growing populations will be facing similar challenges as they strive to insure an appropriate supply of reasonably priced rentals to accommodate regional housing needs. The issue shows no sign of abating in cities and regions possessing rich harvests of jobs that attract new entrants to their area.

    Age and cultural demographics also factor in. It’s estimated that the number of renters 65 and older will increase by 2.2 million between 2013 and 2023. Hispanics are also projected to account for a substantial share of renter growth over this period.

    Addressing this issue will require thoughtful decision-making based on sound information about demographic shifts and job availability — and a firm understanding of trends in regional supply and demand.

    Michael Scott is a writer, speaker and researcher specializing on the interconnection between people and their community environments. He can be reached at urbanvisionary@gmail.com

    Flickr Photo by Sam Mooney – Rental Sign: Are cheap rents soon to be history?

  • The Evolving Urban Form: Charlotte

    There may be no better example of the post World War II urban form than Charlotte, North Carolina (a metropolitan area and urban area that stretches into South Carolina). Indeed, among the approximately 470 urban areas with more than 1 million population, Charlotte ranks last in urban population density in the United States (Figure 1) and last in the world. According to the United States Census Bureau, Charlotte’s built-up urban area population density was 1685 per square mile (650 per square kilometer) in 2010. Charlotte is not only less dense than Atlanta, the world’s least dense urban area with more than 4,000,000 residents, but it is only one-quarter the density of the supposed  “sprawl capital” of Los Angeles (Figure 2).

    Over the last seven decades, Charlotte also has been among the fastest growing metropolitan areas in the United States. Charlotte is the county seat of Mecklenburg County, and as recently 1940 as was home to 101,000 residents while with its suburbs in Mecklenburgh County was barely 150,000.

    Declining Densities in the Core City

    Charlotte is also in example of the difficulty of using the core municipality data for comparisons to the suburban balance of metropolitan areas. With North Carolina’s liberal annexation laws, Charlotte has pursued a program of nearly continuous annexation such that in every 10 years since 1940, the city has added substantial new territory.

    In 1940, the city of Charlotte covered a land area of 19 square miles (50 square kilometers) and had a population density of 5200 per square mile (2,000 per square kilometer). For a prewar core municipality, this was not at all dense. For example, Evansville Indiana, which had approximately the same population at the time, had a population density nearly twice that of Charlotte. Other larger core municipalities approached triple or more Charlotte’s population density, such as Trenton, Buffalo, Providence, and Milwaukee.

    Over the last seven decades, the city’s population has risen by 6.2 times, while its land area has increased by 14.4 times (Table $$$). The result is a 53% decline in the city of Charlotte’s population density, to 2456 per square mile (948 per square kilometer). This is only slightly above average density of the US built-up urban area – which includes the smallest towns and suburbs of every size – of 2,343 per square mile (1,455 per square kilometer). Indeed, the average far flung suburbs (30 miles distant) of Los Angeles, such as Pomona and Tustin, are more than 2.5 times as dense.

    City of Charlotte (Municipality)
    Population & Land Area: 1940-2010
    Census Population Area: Square Miles Area: Square KM Density (Sq. Mile) Density (KM)
    1940           100,899 19.3 50.0          5,228          2,019
    1950           134,042 40.0 103.6          3,351          1,294
    1960           201,564 64.8 167.8          3,111          1,201
    1970           241,178 76.0 196.8          3,173          1,225
    1980           314,447 139.7 361.8          2,251             869
    1990           395,934 174.3 451.4          2,272             877
    2000           567,943 242.3 627.6          2,344             905
    2010           731,424 297.8 771.3          2,456             948
    Change 625% 1443% 1443% -53.0% -53.0%

     

    Growth by Geography

    The core city of Charlotte’s ever-fluctuating boundaries make it necessary to use smaller area measures to estimate the distribution of population growth. This can be accomplished using zip code data from the 2000 and 2010 censuses.

    Inner Charlotte, for the purposes of this analysis (zip codes 28202 through 28208) covers approximately 28 square miles (73 square kilometers) and had a population of approximately 92,000 in 2010 . This is a larger area than the city of Charlotte in 1940, which covered only two thirds as much land area and had more people. Between 2000 and 2010, this inner area population rose by 6,200 residents. All the gain was in the central zip code that comprises the downtown area (central business district), which in Charlotte is called "Uptown." Outside this small 1.8 square mile area (4.7 square kilometers), the inner area actually lost 1,400 residents.

    Overall, the inner area of Charlotte – which has somewhat an obsessive hold on many city leaders – accounted for 1.0% of the metropolitan area growth from 2000 to 2010. This is not unlike other major metropolitan areas, which have experienced slow growth, particularly in areas adjacent to the downtown cores. Among the 51 US metropolitan areas with more than 1,000,000 population in 2010, net gain occurred within two miles of city hall, while this gain was erased by a loss of 272,000 between two and five miles of city hall.

    Another 13% (64,000) of the 2000-2010 growth occurred in the middle Mecklenburg County zip codes (28209 to 28217), virtually all of which is in the city of Charlotte. This 185 square mile area, combined with the inner area, exceeds the land area of the city in 1990.

    Mecklenburg County’s outer zip codes, many of which are in the city, captured 37% of the metropolitan area’s growth (184,000). The remaining 49% (247,000) of growth in the Charlotte metropolitan area was outside Mecklenburg County (Figure 3).

    From 1990 to 2010, Charlotte was the seventh fastest growing metropolitan area out of the 51 with a population exceeding 1 million. Early data for the present decade shows Charlotte to have slipped to ninth fastest growing; however during this period, Charlotte has displaced Portland, Oregon as the nation’s 23rd largest metropolitan area. Between 1990 and 2012, Charlotte added nearly 1,000,000 residents and now has 2.4 million residents.

    Uptown: The Commercial Story

    Unlike other post-World War II metropolitan areas (such as Phoenix, San Jose, and Riverside-San Bernardino), Charlotte has developed a concentrated, high rise downtown area." Part of this is due to the city’s strong financial sector. Charlotte is the home to Bank of America, the nation’s second largest bank and the successor to the San Francisco-based California bank of the same name that was the largest bank in the world for decades. Nation’s Bank, the predecessor to Bank of America, erected a 60 story tower in 1992 that was among the tallest in the United States.

    Charlotte was also home to Wachovia Bank, which built its 42 floor headquarters before, and nearby the Bank of America Tower. Wachovia had intended to move to a larger, 50 story building. However, the time it was completed, Wachovia had been sold to Wells Fargo Bank, a casualty of the US financial crisis. The new building was renamed the Duke Energy Center.

    Thus, Charlotte consumed one San Francisco bank, and lost another to San Francisco. Now Uptown Charlotte has six buildings more than 500 feet in height (152 meters). With six buildings of this height,  Charlotte has developed by far the concentrated central business district among the newer metropolitan areas.

    However, the high employment density has not converted into a transit oriented business district, as some might have predicted. American Community Survey (CTPP) data indicates that approximately 87% of uptown employees use cars to get to work. Further, more than 90% of the jobs in the metropolitan area are outside Uptown.

    Uptown: The High Rise Condominium Story

    Uptown’s commercial progress has not been replicated in the residential market, as overzealous high rise condominium developers apparently may have confused Charlotte for Manhattan or Hong Kong. One of the more recent 500 foot plus towers was The Vue, a 50 story condominium tower. Too few condominiums were sold, and a foreclosure auction followed. The new owner has converted the condominiums to rental units. A 40 story condominium project ("One Charlotte") was to feature units priced from $1.5 million to $10 million, but was cancelled. Another condominium building, the 32 story 300 South Tryon was also cancelled. A tower base was prepared for a 50 plus story condominium monolith, but this was never built, while depositors were claiming they could not find the developer to get their deposits back. It was also reported that legendary developer Donald Trump had plans for the tallest building in town, a 72 story condominium tower, which would have been joined by another tower. These have also been cancelled (for artists renderings, click here).

    Charlotte’s Continuing Dispersion

    While Uptown condominium developers were unable to sell many units, Charlotte’s labor market dispersed so much between 2000 and 2010 that the Office of Management and Budget expanded the metropolitan area by four counties. The net addition to the population of this revision was approximately 460,000.  This is by far the largest percentage increase to a metropolitan area over the period, though much larger New York added counties with 660,000 residents.

    Charlotte seems to say it all with respect to the ill-named "back to the city movement" (ill named, because most suburbanites did not come from the city to begin with). Yes, there is growth downtown and yes, it is important and yes, it is healthy. But, in the overall scheme of things, it is small, and relative to the rest of the thriving region, likely to remain less important in the years ahead.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.

    Photo: Uptown Charlotte courtesy of Wiki Commons user Bz3rk

  • NewGeography’s Top Stories of 2013

    A new year is upon us, here’s a look back at a handful of the most popular pieces on NewGeography from 2013. Thanks for reading, and happy New Year.

    12. Gentrification as an End Game, and the Rise of “Sub-Urbanity” In January Richey Piiparinen points out that gentrification driven by affluent young people moving back to the city might be creating “a ‘sub-urbanity’ that is emerging when the generalization of gentrification meets the gentrification of the mind.”

    11. The Cities Winning the Battle for the Biggest Growth Sector in the U.S. Joel and I put this index together to measure growth and concentration of the professional, technical, and scientific services sector among the nation’s largest metropolitan areas. As high-end services become easier to export, this sector is becoming a critical region-sustaining sector in many parts of the country. This piece also ran at Forbes.com.

    10. A Map of America’s Future: Where Growth will be Over the Next Decade Working with Forbes Magazine in September, Joel and I laid out seven regions and three city-states across the nation. Regional economic diversity is one of America’s most critical attributes.

    9.  The Dutch Rethink the Welfare State Nima Sanandaji outlines the trajectory of the social services culture in the Netherlands.

    8.  Suburb Hating is Anti-Child In this provocative, widely-discussed piece, Mike Lanza takes it to politicians and commentators who advocate against suburbs, pointing out that “we need to fix suburbs and the way families utilize them,” but “what we shouldn’t do is try to force families to live in dense city centers.”

    7.  Fixing California: The Green Gentry’s Class Warfare Joel Kotkin points out that many green policies are pro-gentry and anti-middle class, particularly in California. This piece originally appeared at U-T San Diego.

    6.  How Can We Be So Dense? Anti-Sprawl Policies Threaten America’s Future In this piece from Forbes, Joel Kotkin argues that high-density housing advocates should be open to a broader range of housing options because policies pushing high density often favor real estate investors over the middle class and the concept of upward mobility.

    5.  Class Warfare for Republicans Joel takes the Republican Party to task for ignoring the issue of class and small business growth in favor of rhetoric about social conservatism, gun control, and free market idealism. This piece originally ran in the Orange County Register.

    4.  Houston Rising: Why the Next Great American Cities Aren’t What you Think In this piece from The Daily Beast, Joel argues that a city’s most important quality is its ability to foster upward mobility and to sustain a middle class, not its urban form.

    3.  The New Power Class Who Will Profit from Obama’s Second Term Who stands to benefit most from the second Obama administration? Joel argues that it’s the plutocrats of Silicon Valley and new media industries and the clerisy of academia. This piece originally appeared at Forbes.com.

    2.  Why are there so Many Murders in Chicago? Aaron Renn lays out seven possible reasons contributing to violent crime in Chicago and calls for an adjustment in strategy to fight it.

    1.  Gentrification and its Discontents: Notes from New Orleans The most read piece of the year is this excellent expose of gentrification and its impact on the culture and age demographics of New Orleans by local geographer Richard Campanella.

    Mark Schill is a community strategist and analyst with Praxis Strategy Group and New Geography’s Managing Editor.

  • The Law’s No Ass: Rejecting Hollywood Densification

    The city of Los Angeles received a stunning rebuke, when California Superior Court Judge Alan J. Goodman invalidated the Hollywood Community Plan. The Hollywood district, well known for its entertainment focus, contains approximately 5% of the city of Los Angeles’ population. The Hollywood Plan was the basis of the city’s vision for a far more dense Hollywood, with substantial high rise development in "transit oriented developments" adjacent to transit rail stations (Note 1).

    The Hollywood Plan had been challenged by three community groups (Savehollywood.org, La Mirada Avenue Neighborhood Association of Hollywood, and Fix the City), which argued that the approval process had violated provisions of California law, and most particularly had relied on population projections that were both obsolete and inaccurate.

    Judge Goodman called the Hollywood Plan "fatally flawed," and noted that it relied on errors of both "fact and law." He ordered the City to:

    (1) Rescind, set aside and vacate all actions approving the Hollywood Plan and prepare a replacement that is lawful and consistent with the City’s general plan.

    (2) Grant no permits or entitlements from the Hollywood Plan until it has been replaced with a lawful substitute.

    An "Entirely Discredited" Population Baseline

    The principal issue in the case revolved around out-of-date and erroneous population estimates (Note 2). The city based its densification plan on an assumption that the population of Hollywood would rise from 200,000 in 2000 to 224,000 in
    2005. This estimate was produced by the Southern California Association of Governments (SCAG), which is the metropolitan planning organization for all of Southern California outside San Diego County. SCAG had further projected that Hollywood’s population would rise to 250,000 by 2030.

    To house these additional residents, the city reasoned that higher density development was necessary. In a related matter, the Los Angeles City Council approved Millennium Hollywood, a pair of 35 and 39 story mixed use towers. This was in spite of warnings from the State Geologist that the property was bisected by a dangerous earthquake "rupture" fault (Note 3). Litigation is pending.

    But there’s a fly in this planning ointment, rather than gaining population, Hollywood is losing people.   Before the Hollywood Plan was finally approved, 2010 United States Census data was released that indicated the population had dropped to 198,000. This revealed both the SCAG estimate of the actual population and its 2030 projection to be highly inaccurate. Judge Goodman referred to the SCAG 2005 estimate as "entirely discredited."

    Elementary Questions Raised

    Nonetheless, the city proceeded based upon the incorrect population data. This led the Judge to raise elementary questions about the process (paraphrased below).

    (1) Why was the SCAG population estimate used as a baseline by the city of Los Angeles if the US Census count, readily available before the environmental process was completed, had shown a significantly smaller population?

    (2) Why was the 2030 projection (from SCAG) not adjusted in the Plan based on the new, lower 2010 US Census population count?

    The City defended using the stale and erroneous population data. Judge Goodman commented: "That clearly is a post-hoc rationalization of City’s failure to recognize that the HCPU (Hollywood Plan) was unsupported by anything other than wishful thinking" (parentheses and emphasis by author). The Judge continued that this resulted in a "manifest failure to comply with statutory requirements."

    The Judge set out the burden faced by the City to achieve a legal (and rational outcome):

    …if the population estimate for 2030 were to be adjusted based on what the 2010 Census data had shown, then all of the several  analyses which are based on population would need to be adjusted, such as housing, commercial building, traffic, water demand, waste produced -as well as all other factors analyzed in these key planning documents.

    To its discredit, the city incredibly argued that "it was entitled by law to rely on the SCAG 2005 population estimate." The Judge disagreed. Any other conclusion would have proven "the law to be an ass" (Note 4).

    Abuse of Discretion

    The La Mirada Avenue Neighborhood Association argued that the city of Los Angeles had failed to exercise "good faith effort at full disclosure," contrary to the requirements of California environmental law. Judge Goodman appeared to agree, finding that the city of Los Angeles had abused its discretion, noting "A prejudicial abuse of discretion occurs if the failure to include relevant information precludes informed decision-making and informed public participation, thereby thwarting the goals of" the environmental process.

    Inaccurate Population Estimates and Projections

    This is not the first time that Southern California population projections have been so wrong. With more than a century of explosive population growth, more recent trends may have eluded some of the planning agencies. In 1993, SCAG projected that the city of Los Angeles would reach a population of 4.3 million by 2010. SCAG’s predicted increase of more than 800,000 materialized into little more than 300,000. This is not to suggest that projecting population is an exact science, nor that SCAG has been alone in its inaccuracy.

    In 2007, the state’s official population projection agency, the Department of Finance projected that Los Angeles County would reach 10.5 million residents in just three years. But the 2010 US Census counted only 9.8 million residents (See 60 Million Californians? Don’t Bet on It). In contrast with the previously accustomed growth from other parts of the country, Los Angeles County lost a net 1.2 million residents to other parts of the nation while the rate of immigration fell.  

    Not a Unique Problem

    This instance of overinflated and inaccurate projections is not unique to Los Angeles. The use of out-of-date or erroneous information is increasingly being used in regional planning. Recently, the Association of Bay Area Governments and the Metropolitan Transportation Commission approved the San Francisco Plan Area Plan, which used population projections substantially higher even than those of the Department of Finance (despite that agency’s previous over-optimism).

    As in Los Angeles, Plan Bay Area also used outdated data for automobile greenhouse gas emission factors that have long since been rendered obsolete by technological advancements. Other planning agencies around the nation have engaged in similar practices.

    Planners in the Bay Area, SCAG and elsewhere in California are using similarly flawed projections that presume a substantial change in housing preferences toward multifamily and smaller lots. Yet, years later, the projected trends have not emerged in any significant way (See: A Housing Preference Sea-Change: Not in California).

    Wishful Thinking: No Basis for Action

    Judge Goodman’s decision could have relevance well beyond Los Angeles and the state of California. Regional plans must be based upon current and reliable data, no matter how late received.  To proceed based on faulty data is no different than not changing course when an iceberg appears in the navigation path. Wishful thinking has no place in rational planning.

    ——–

    Note 1: The Hollywood rail stations are on the Red Line subway, which was projected to carry 300,000 daily riders by 2000. The Red Line is carrying approximately 170,000 daily riders and would need three-quarters more to reach the projection for more than a decade ago (see: Report on Funding Levels and Allocations of Funds, Urban Mass Transportation Administration, 1991, page B-49)

    Note 2: The plaintiffs also argued that the Hollywood Plan’s densification would result in additional traffic congestion. This is a serious concern, given Hollywood’s central location in the second most congested metropolitan area in North America (following Vancouver, which recently ended the decades long reign of Los Angeles). Greater traffic congestion is associated with higher population densities.

    Note 3: LA Weekly said that the fault might be capable "of opening the Earth, splitting buildings in half" (See: How the Hollywood Fault Made Millennium’s Future Uncertain, and L.A. a Laughingstock).

    Note 4:  "The law is an ass" (as in a donkey) refers to cases in which the law is at odds with common sense. This phrase was used by Charles Dickens, but appears to have first been used in a play as early as 1620.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.

    Photograph: Los Angeles City Hall (by author)

  • Downsizing the American Dream

    At this time of year, with Thanksgiving, Hanukkah and Christmas, there’s a tendency to look back at our lives and those of our families. We should be thankful for the blessings of living in an America where small dreams could be fulfilled.

    For many, this promise has been epitomized by owning a house, with a touch of green in the back and a taste of private paradise. Those most grateful for this opportunity were my mother’s generation, which grew up in the Great Depression. In her life, she was able to make the move from the tenements of Brownsville, Brooklyn, first to the garden apartments of Coney Island and Sheepshead Bay, and, eventually, to a mass-produced suburban house on Long Island.

    This basic American dream of upward mobility may not, according to the pundit class, planners and many developers, be readily available for my children. Indeed, in the years since the 2007 housing bust, there’s been a steady stream of commentary suggesting a future that resembles the past, where most people were renters and, in urban centers, lived chock-a-block in crowded apartment buildings.

    The advocates for a return to this not-so-great past are a diverse lot, spanning the ideological spectrum from the free-market Right to the green, regulation-loving Left. Many on the right, such as economist Tyler Cowen, suggest that the era of the “average” American is now past, and that most of us will have to dial down our expectations about how we live, particularly in costly places such as California. The blessed 15 percent might aspire to live high on the hog, and even in luxury, but for the rest of us it’s eating rice and beans, and living small. Goodbye, Levittown, and back to Brownsville.

    Some in the financial community also salivate at the possibilities contained in downgrading the American dream. The very people who rode the mortgage boom and left millions of homeowners to deal with the consequences, now hail the ushering of what Morgan Stanley’s Oliver Chang has dubbed a “rentership society.” Rather than purchasing a home, the middle class is now being downgraded into either renting a foreclosed home snatched by the Wall Street sharpies or being stuffed into small, multifamily housing.

    In either case, the financial hegemons win, since they, essentially, get to have someone else to pay their mortgages. As for society, it’s a losing proposition. Rather than the yeoman with his own place, and the social commitment that comes with it, we now have the prospect of a vast lower class permanently forced to tip its hat to – and empty its wallet for – its economic betters. This is the fate ardently hoped for by many urbanists, who see a generation of permanent renters as part of their dream of a denser America.

    One would expect that this diminution of the middle class would offend liberals, who historically supported both the expansion of ownership and the creation of a better life for the middle class. But today’s liberals – or progressives – share Wall Street’s enthusiasm, albeit for different reasons, for renting and ever-greater densities.

    This reverses the policies of the New Deal and its successors. Half of postwar suburban housing, notes historian Alan Wolfe, depended on some form of federal financing. In fact, the progressive position increasingly is worse than that of free-market conservatives and their Wall Street allies. The Right sees profit in densification and renting, but would likely support other options if they seemed advantageous. In contrast, the progressive Left increasingly sees the single-family home and ownership – what made middle-class people like my mother lifelong Democrats – as outdated, even destructive.

    This can be seen in the writings of progressive thinkers like Richard Florida, who, in the midst of the mortgage crisis, proclaimed homeownership as “overrated” and urged Americans to give up the dream of owning their own digs, particularly in the much-disrespected suburbs. In Florida’s “creative age,” the proper aspiration is to live in a dense, expensive city, such as San Francisco or Manhattan, where only a fraction of the population can conceivably own their residence.

    To accommodate this vision, we inevitably get back to a world that looks similar to that of the tenement era. Already, in part due to regulatory policies making new construction prohibitively expensive, there is severe overcrowding in New York, the Bay Area and throughout Southern California. According to the Center for Housing Policy and National Housing Conference, 39 percent of working households in the Los Angeles metropolitan area spend more than half their incomes on housing, along with 35 percent in the San Francisco metro area and 31 percent in the New York City area. The national rate is 24 percent, itself far from tolerable.

    What we are witnessing today is oddly reminiscent of the Brooklyn of my mother’s childhood. She and her four siblings generally lived in three or fewer rooms, sharing her bed with her sisters until she got married. Yet, over time my mother’s generation did well, and all my relatives were able to ascend into the middle class, or even better, by the late 1950s. Most bought homes on Long Island, although one purchased a co-op in Brooklyn.

    Today, our cognitive betters embrace a more déclassé vision, with fewer families, more singles and less focus on upward mobility. Indeed, some, particularly among the environmental community, actually embrace downward mobility. Millennials, by not buying homes and cars, and perhaps also not growing into family life, are portrayed by the green magazine Grist as “a hero generation” – one that will march willingly, even enthusiastically, to a downscale future.

    How will we live in this brave new America? It won’t be exactly a return to the tenements that housed Depression era families, but will involve much smaller, less-communal arrangements. To serve the hip and cool youthful urban crowd, planners embrace microunits of 200-300 square feet. These are either being built or planned in such cities as Seattle, New York, San Francisco, Santa Monica and Portland. Soon, they will become something every second-tier wannabe burg will want to duplicate in their often madcap drive to ape cool cities’ hip urbanism.

    Such units may make developers’ mouths water with anticipation of ever more profitable cramming. But in the process, they will be further encouraging the shift away from housing for married couples, not to mention, children. Families do not make up the prime market for dense housing; married couples with children constitute barely 10 percent of apartment residents, less than half the percentage for the overall population.

    And what if you can’t afford a trendy “pad” in a hip downtown? The urban advocates embrace another dismal back-to-the-future solution: the boarding house. It’s time, argues the Atlantic recently, to jettison our “middle-class norms of decency” governing housing and bring back the boarding house of the 19th and early 20th centuries.

    All said, this is a dismal future being dialed up for the next generation, largely by boomer ideologues and their developer allies. It’s not clear, fortunately, that the millennials will willingly go along. This gives us hope that, when families celebrate the holidays decades from now, they still will have as much to be thankful for as did my mother’s generation, or for that matter, my own.

    This story originally appeared at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • Suburban End Games

    Are America’s suburbs facing end times? That’s what a host of recent authors would have you believe.  The declaration comes in variety of guises, from Alan Ehrenhalt’s The Great Inversion (2012), to “the peaking of sprawl” pronounced by urban planner  Christopher Leinberger to, most recently, to Leigh Gallagher’s The End of Suburbs(2013).  Suburbs and sprawl have joined the ranks of “history” and “nature” as fixtures of our lives that teeter on the verge of demise—if we’re to lend credence to this latest clamor from journalists, planners, and academics. 

    When you declare the “ending” of a place where you acknowledge over half of Americans now live, just what does that mean?  One sure bet is that their demise won’t prove nearly as definitive or thorough-going as advertised. Looking around the Long Island neighborhood and town where I’ve lived for the last twenty years, I don’t see them vanishing any time soon. Moreover, from my own perspective as a long-time resident as well as historian of such places, the particulars grounding this narrative point to something very different: the rise of conditions, as yet only starting to be realized, for a new suburban progressivism. 

    This media wave of talk about suburbs or sprawl “ending” mirrors an earlier one in the decades after World War II, which fleshed out a rise of “mass suburbia.” That earlier wave turned out to be well-nigh mythological in its selectivity, its choice of emphases and its silences.  Embellishing the idea of suburbs as more than just a place, as an entire, distinctive way of life, it built upon age-old notions of suburbs as simply the edges of cities, also a change commencing over two hundred years ago among cities in the industrial West.  Cities began to grow less through the spread of a discrete and distinct rim than via a widening transition zone between city and countryside.  But only after World War II did the idea of “suburbia” congeal into a solid stereotype: those subdivisions of lawns and single family homes occupied by a white middle class.    

    Among the earliest discoverers was 1950s Fortune correspondent William Whyte, who found in the suburbs an entire generation of upwardly mobile, affluent, younger families, in search of the American dream.  Journalists concentrated mainly on places that fit this story line, the very largest and newest housing developments around the very largest of cities.   Early coverage celebrating these suburbs classless-ness was quickly followed by more critical accounts.  Commentators such as Whyte and Frederick L. Allen distinguished this “new suburbia” from an older one they preferred, quieter and smaller and more securely elitist.  Sociologists taking a more even-handed approach, such as Herbert Gans and Bennett Berger, also questioned the “myth” of these places’ classlessness, by highlighting more working class homeowners and communities.  The great majority of those moving into such places had also been white, and as the racial imagery of a white “donut” surrounding a black core consolidated with the urban and busing crises over the 1960s and 70s, an ambivalent imagery of postwar “suburbia” stuck.  At once affluent, middle class, and white, but also vaguely declassé, suburbs were self-satisfied and reactionary places that deserved the progressive city-dweller’s disdain. 

    As current-day Fortune correspondent and professed “city girl” Leigh Gallagher, makes clear, such attitudes are alive and well, for instance, at cocktail parties where those hearing her book title offer “high fives and hurrahs.”   Today’s literature on suburbia’s end has the distinct ring of wish fulfillment for a long tradition of city-bound suburb-bashers, of a piece with their eagerness finally to declare downtowns “resurgent [as] centers of wealth and culture.”  But just as most characterizations of “suburbia” in the 1950s ignored the pockets of poverty and minority enclaves in its midst, so even the most balanced of today’s expositors of suburbs’ end can be quite selective.  For instance, even though the Charlotte metro area’s 42% growth between 2000 and 2013 came through a momentous build-out of subdivisions and malls, even though the city itself has eagerly annexed nearly 25% more suburban land since 2000, Ehrenhalt dwells solely upon its reconstruction of the downtown.  We hear nothing about how, even with its expanded limits, this city still contains only 31% of the population of this urban region.

    While these authors do leaven their arguments with a lot more demographic yeast than their 1950s predecessors, they still leap to generalizations that, in an era of soaring income inequality, bear more scrutiny than they get.   When Gallagher refers to how “we rebuild once or twice a century in this country,” just who is this “we” she means? It is not hard to draw some unsettling answers. As an editor at Fortune, as avowed resident of Greenwich Village, whose one-bedroom rentals are the most expensive in Manhattan, she seems heavily identified with affluent, especially the movers and shakers in the development community.  Whether singling out recent failures of building projects in outer suburbs or exurbs, concentrating on suburban malls that have been abandoned or are being retrofitted, or homing in on downtown reconstructions, “end of suburbs” authors often tacitly adopt a financial standard for future promise: where the most real-estate money is to be made. 

    By the same token, this literature of suburbia’s end offers astonishing little reflection on the implications of its favored trends for the ways in which our cities divide the wealthy from the rest.   Today’s declarations of an “end of suburbs” come just as rents in places like Manhattan are hiking out of reach of the merely middle class, generating anxieties tilled, most recently, by Bill de Blasio’s successful campaign for mayor. Yet when Gallagher sweepingly contends that “millenials hate the suburbs,” she doesn’t even ask how many young people are actually going to be able to afford living in cities. And at this point, as well, her definition of “suburbs” itself suddenly narrows: just the subdivisions and malls, not the new “planned community” or the “urbanized small town or suburb” that may lie nearby.

    The trend of urbanizing suburbs offers the most compelling angle of this reputed “end” for us actual suburbanites. For a good while in suburbs like my own Long Island, proponents of smart growth and the New Urbanism have pushed for multiuse, for bringing apartments into old town centers, for recreating walkability there.  Having watched and participated in the political rows stirred by such projects, like Avalon Bay’s plan to build an apartment complex near the Huntington train station, I can say this: those people most likely to see these projects as an “end of suburbs” are their opponents.  For the rest of us, their supporters, they look more like diversifying: taking us away from the old “suburbia” stereotypes, but not by leaving subdivisions behind.  All those stores, restaurants, and events available in walkable downtowns have the virtue of enhancing the suburban experience for those of us who remain homeowners, even as they furnish living quarters for renters who might otherwise leave: twenty-somethings, singles, and the elderly.  

    That suburbs are also becoming societal repositories for newly arriving immigrants, blacks and other minorities, as well as poverty, does undermine that old “suburbia” imagery, but in ways that stir hopes for suburbs’ future. Largely because of these trends, indexes measuring metropolitan segregation have been gradually declining—and that’s a good thing.  Of course, suburbanites’ reputation for racial animosity is still plenty justified:  just look at Atlanta’s Gwinnett County as depicted by Ehrenhalt, or the hostility found on Long Island to undocumented immigrants. But there’s an as yet little-told story of how suburban opposition to these attitudes has also emerged. When a homeless camp of mostly immigrant workers was discovered in Huntington Station in the early 2000s, a remarkable coalition of social service agencies and churches cobbled together a program for housing and feeding them over the winter that involved over a thousand volunteers. This outpouring crossed lines of class and race, drawing many from the suburban church I attend, which itself is pretty evenly split between blacks and whites.  I don’t think my fellow travelers there, or in pro-immigrant groups like Long Island Wins, would surmise as Gallagher does that ours is some “suburban experiment” that has “failed.”

    “The end of suburbs”—it’s a dramatic claim, and as mythological as that old “myth of suburbia,” especially for those of us living in the places that are supposed to be ending. I prefer another narrative, with a more positive spin. The demographic and other changes underway in our suburbs may well wind up breaking the old stereotype in another way, by building the basis for a newly inclusive and forward-looking politics in the suburbs. 

    Christopher Sellers is a Professor of History at Stony Brook University and author of Crabgrass Crucible; Suburban Nature and the Rise of Environmentalism in Twentieth-Century America (2012), He is now writing on, among other things, the historical relationship between suburbanizing, race, and environmentalism around Atlanta. 

    Home illustration by Bigstock.

  • The Geography Of Aging: Why Millennials Are Headed To The Suburbs

    One supposed trend, much celebrated in the media, is that younger people are moving back to the city, and plan to stay there for the rest of their lives. Retirees are reportedly following suit.

    Urban theorists such as Peter Katz have maintained that millennials (the generation born after 1983) show little interest in “returning to the cul-de-sacs of their teenage years.” Manhattanite Leigh Gallagher, author of the dismally predictable book The Death of Suburbs, asserts with certitude that “millennials hate the suburbs” and prefer more eco-friendly, singleton-dominated urban environments.

    Green activists hope this parting of the ways between the new generation and the preferences of their parents will prove permanent. The environmental magazine Grist even envisions “a hero generation” that will escape the material trap of suburban living and work that engulfed their parents.

    Less idealistic types, notably on Wall Street, see profit in this new order, hoping to capitalize on what Morgan Stanley’s Oliver Chang dubs a “rentership society”; in this scenario millennials remain serfs paying rent permanently to the investor class.

    But a close look at migration data reveals that the reality is much more complex. The millennial “flight” from suburbia has not only been vastly overexaggerated, it fails to deal with what may best be seen as differences in preferences correlated with life stages.

    We can tell this because we can follow the first group of millennials who are now entering their 30s, and it turns out that they are beginning, like preceding generations, to move to the suburbs.

    We asked demographer Wendell Cox to crunch the latest demographic data for us to determine where people have moved by age cohort from 2007 to 2012. The data reveals the obvious: People do not maintain the same preferences all their lives; their needs change as they get older, have children and, finally, retire. Each stage leads them toward somewhat different geographies.

    As it turns out, the vast majority of young people in their late teens and 20s – over 80 percent — live outside core cities. Roughly 38 percent of young Americans live in suburban areas, while another 45 percent live outside the largest metropolitan areas, mostly in smaller metro areas.

    To be sure, core urban areas do attract the young more than other age cohorts. Among people aged 15 to 29 in 2007, there is a clear movement to the core cities five years later in 2012 — roughly a net gain of 2 million. However, that’s only 3 percent of the more than 60 million people in this age group.

    Surprisingly, most of this movement to the urban centers comes not from suburbs, but from outside the largest metro areas, reflecting the movement of people from areas with perhaps lower economic opportunity. It also is likely reflective of the intrinsic appeal of metro areas to younger, single people, as well as the presence of many major universities and colleges in older “legacy cities.”

    Here’s how the geography of aging works. People are most likely to move to the core cities in their early 20s, but this migration peters out as people enter the end of that often tumultuous decade. By their 30s, they move increasingly to the suburbs, as well as outside the major metropolitan areas (the 52 metropolitan areas with a population over 1,000,000 in 2010).

    This pattern breaks with the conventional wisdom but dovetails with research conducted by Frank Magid and Associates that finds that millennials prefer suburbs long-term as “their ideal place to live” by a margin of 2 to 1 over cities.

    Based on past patterns, by the time people enter their 50s, the entire gain to the core cities that builds up in the 20s all but dissipates, as more people move to suburbs and to outside the largest metropolitan areas.

    Similarly millennials have not, as some hope, given up on home ownership, something closely associated with suburbia. Magid’s surveys of older, married millennials found their desire to own a home was actually stronger than in previous generations. Another survey by the online banking company TD Bank found that 84 percent of renters aged 18 to 34 intend to purchase a home in the future, while another, by Better Homes and Gardens, found that three in four identified homeownership as “a key indicator of success.”

    These attitudes, particularly among the older edge of the millennials, is particularly critical, as these are the first of this largest generation in American history to enter full adulthood. Indeed the peak of the millennial generation is already in their mid-20s, and by the end of the decade, the vast majority of the roughly 42 million millennials will be entering their 30s, with some approaching their 40s. This group of mature millennials (adding in the 20-24 cohort) is expected to expand by 22.5 million in the next 10 years. They are likely to prove wrong the argument that, with boomers entering their sunset years, there will be no one to buy their houses.

    In contrast, the next wave of young people — now under 10 — will be about 1.7 million less numerous. These “plurals” are likely to stay in the suburbs for the next five to 10 years, and some wil start moving into core cities as they enter their 20s, but in decidedly fewer numbers.

    Perhaps the most salient fact driving these migratory patterns is family formation. Our analyses of cities around the world have shown definitively that people with children tend to avoid urban cores, even in the most gentrified environments. Manhattan, Washington, D.C., San Francisco and Seattle tend to have the lowest numbers of children per capita.

    These trends can be seen on a nationwide basis. Among the cohort of children under 10 in 2007, the number who lived in core cities as of 2012, when they were 5 to 14 years of age, was down by 550,000. Families are the group most likely to move either to the suburbs or smaller towns. This movement, plus the high degree of childlessness in large urban cores, suggests that many of those who are leaving the core cities in their early 30s are parents with young children.

    And what about the older cohorts, notably the baby boomers, who, along with millennials, dominate the nation’s demography? The shift out to the suburbs and to outside the larger metropolitan areas does not stop with the child-bearing years but gains more traction with age, peaking in the early 60s. At this stage, only half as many seniors, on a percentage basis, live in core cities compared to people in their early 20s. Overall, the core cities are home to approximately 15% of the U.S. population, but that falls to under 12% of the population in the 64- to 79-year-old demographic.

    This is not to say that most older people leave the suburbs. Almost 40 percent of seniors remain in suburban areas. Nevertheless there is some movement among the senior population, and among aging boomers, not “back to the city” as common alleged but actually towards the non-metropolitan areas, where costs are often lower and the pace of life slower. Among those now in their 60s, nearly half live outside the major metropolitan areas, four times as many as live in the urban core.

    What do these finding suggest about the geography of aging? First, it makes clear that many people’s preferences change as they age: In aggregate there is a slight tendency toward core cities in the late teens and 20s, and then, to suburbs and outside the major metropolitan after that. Second, it seems clear that older Americans leave core cities all the way to their 70s rather than cluster there, as is often maintained in the media.

    The demographic picture that emerges is complex, but suggests the best way for metropolitan areas to “lure” people — and companies — may be to encourage a wide range of housing lifestyles, ranging from inner city to suburban and exurban/rural. The urban pundit class may never change their preferences or abandon their claims of a secular “back to the city” trend, but in aggregate, people, it appears, do tend to change preferences as they age, something rarely acknowledged but certain to shape our geography for decades to come.

    This story originally appeared at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • Affordable Housing in Suburbia

    Like many older suburbs in high priced regions, Long Island faces two great crises: a loss of younger residents and a lack of affordable housing for the local workforce, including those employed as nurses, teachers and other professionals.

    Often, proposed developments on Long Island are tailored to be geared towards “luxury” or are age-restricted for residents 55 or older. These proposals serve to almost completely ignore the middle class or the region’s young professionals. While the depth of the "Brain Drain", or flight of the young from Nassau and Suffolk Counties is debatable, the fact remains that housing stock for the area’s younger families is woefully deficient. Thanks to limited job opportunities and affordable housing, Long Island isn’t the attractive bedroom to Manhattan that it once was.  

    Long Island’s housing woes have been in the public eye for the last few months and it’s critical for residents and policymakers alike to understand the issues. The Town of Huntington recently issued a press release announcing that applications are being accepted for 43 affordable rental apartments that are part of the 379-unit Avalon at Huntington Station development. The rents range from $932 a month for a one-bedroom to $1,148 for a two-bedroom to $1,646 for a three-bedroom.

    “Affordable” vs. “Attainable”

    For once, the rents being billed as “affordable” seem aligned with the term. Hypothetically, a Young Islander making $45,000 and renting the single-bedroom option would pay roughly 24.8 percent of his or her salary toward housing, far less than the 35 percent threshold that is considered by the Long Island Index as a “high housing cost burden.”

    Compare these rents to the “attainable” 300- to 400-square-foot micro-unit options that were presented by a group recently, which, when rented at $1,400 a month, would account for about 37 percent of someone’s $45,000 salary (both examples are calculated without utilities, Internet, cable, etc.).

    The Avalon project contains a total of 303 rentals and 76 for-sale townhouses. Forty-three apartments and 11 townhouses will be affordable, while the remaining 260 apartments and 65 townhouses will be market-rate. The project site is a 26.6-acre parcel roughly half a mile from the Huntington Long Island Rail Road station.

    A drop in the bucket

    The Avalon Huntington Station project has rents that seem affordable, but the total amount of units are a drop in the larger bucket when it comes to addressing the Long Island’s greater affordable housing need of 41,429 units. After Avalon is constructed, there will be 41,375 units to go. Is that progress?

    Compare both projects: The microunit approach is “attainable” at $1,400 a month, while Avalon is “affordable” at $932-$1,646 a month. Both terms lack the standardization and definite boundaries necessary to legitimize them in the minds of the public. Is attainable really worth $500 more than the term affordable? Where does “workforce” fall into this ever-sliding scale?

    Our patchwork approach to affordable housing needs to change. For every press release issued touting two affordable units here or 11 workforce homes shoehorned there, the elephant in the room is tackling the monumental demand in the face of our paltry, undefined supply.

    Some big questions

    The issue of overall demand is a very big question that our region has faced for the last 50 years and will continue to face in the immediate future. What Long Islanders must move toward is first quantifying the issue. How many truly affordable units do we have? How many can we reasonably build? What is the true market demand for housing in Nassau and Suffolk counties? Are municipalities able to successfully increase density while preserving land elsewhere?

    Countless times, important planning terms like “sustainable,” “smart growth,” “walkable,” “green” and now “affordable” and “attainable” are cheapened by misuse. These terms once represented important and innovative planning techniques that were once progressive tools in crafting a better community. When the terms are misused by stakeholders and industry insiders the result is a volatile cocktail of higher density suburban sprawl and poor urban design that further leads to suburban blight, and the public’s broken faith in the system.

    A democracy gets the policy it deserves. Currently, Long Islanders are disengaged with the land-use process, and have allowed it to become dominated by biased stakeholders who have much to gain by allowing those important terms to become shallow. It’s easy to sell a project as “green” or “smart” when few, if any, people know what the term means.

    The beauty of it all is that a democracy also can create the policy it needs. This is why it’s so important to take the time to give these critical issues the attention they deserve, and work towards a better Long Island.

    Why do we issue press releases celebrating the creation of 54 affordable units, or 0.13 percent of our regional need? It is because, at this point, not much else is or can be done to tackle this massive problem until we fully understand it.

    Richard Murdocco is a digital marketing analyst for Teachers Federal Credit Union, although the views expressed in this post are Murdocco’s alone and not shared by TFCU. Follow him on Twitter @TheFoggiestIdea, visit thefoggiestidea.org or email him at Rich@TheFoggiestIdea.org.

    Photo from Avalon Communities

  • Urban Containment and the Housing Bubble in Ireland

    Economist Colm McCarthy says that urban containment policy played a major role in the formation of the housing bubble. In a commentary in the Sunday Independent, Ireland’s leading weekend newspaper, McCarthy relates how urban planning regulations led to higher house prices in the Dublin area (Note 1).

    “Ireland passed its first major piece of land-use planning legislation in 1963, modelled on the UK’s Town and Country Planning Act of 1947. The intentions were laudable, to restrict the construction of unwelcome developments and to empower local authorities to take a more active role in shaping the built environment. There was no desire to screw up the residential housing market, but that is eventually what happened.”

    The Great Financial Crisis in Ireland

    The bursting of the housing bubble led to an economic decline in Ireland that was among the most devastating of any nation during the Great Financial Crisis. Household incomes dropped, unemployment rose to above 15 percent and Ireland was eventually forced into a bailout loan of €67.5 billion (approximately $90 billion) from the European Union and the International Monetary Fund. Ireland’s economy (gross domestic product) declined nine percent, nearly four times the decline suffered by the United States, according to World Bank data.

    This is a sharp contrast to Ireland’s image as the “Celtic tiger”. In 1980, Ireland’s gross domestic product per capita (purchasing power adjusted) trailed those of the United Kingdom and the four strong new world economies (United States, Canada, Australia and New Zealand) by approximately 25 percent to 50 percent. By its 2007 peak, Ireland had passed all but the United States, which it nearly caught. By 2012, however, Ireland’s GDP per capita had fallen behind that of Australia (Figure 1).

    Migration trends reflect the result of this decline. Net in-migration reached 105,000 in 2007, when the economy peaked when, a notable number for a nation with only 4.5 million residents with a long history of sending its denizens out to the rest of the world (Note 2). In the less robust economy of the last four years, a net 125,000 migrants have left Ireland (Figure 2).

    McCarthy, of University College, Dublin and one of the nation’s most respected economists was called in by the government to lead the “Special Group on Public Service Numbers and Expenditure Programs,” which published the McCarthy Report, detailing recommendations for public expenditure reductions to help Ireland “weather” the financial storm.

    The Housing Bubble in the Dublin Area

    As in the United States, a housing price bubble (centered in the Dublin area) precipitated an economic downturn, which was the greatest since the Great Depression. Our annual Demographia International Housing Affordability Surveys had shown house prices in the Dublin area to peak at a “severely unaffordable” median multiple (median house price divided by median household income) of 6.0, well above the normal 3.0 relationship between prices and incomes. Paying more for housing reduces household discretionary incomes and lowers the standard of living.

    After peaking in 2007, Dublin house prices plummeted. Single family house prices fell 53 percent from 2007 to 2012, while apartment prices dropped 61 percent, according to the Central Statistics Office property price index (Figure 3). This year, finally, prices have begun to trend upward.

    Decoupling from the Fundamentals

    Like in Dublin, this decoupling of housing from the fundamentals occurred not only in Dublin, but also in both vibrant other markets   such as Sydney, Vancouver, and the San Francisco Bay area, as well as severely depressed markets like Liverpool, Glasgow. In each case, the decoupling has been accompanied by strictly enforced enforcement urban containment policies that prohibit development on considerable suburban and exurban land, through the use of such devices as urban growth boundaries and the priority growth areas (a euphemism for the only places that development is permitted).  As is commonly the case, with these strategies upset the balance between the demand and supply for land, forcing house costs up substantially, just as oil embargoes lead to higher prices at the gas pump.

    McCarthy places the blame squarely on urban containment policies.

    “…there was and still is no shortage of land in the greater Dublin area, one of the lowest-density urban areas in Europe. There is, however, a shortage of planning permission – an entirely man-made creature of the planning legislation and its restrictive implementation by the Dublin-area councillors and planning officials.”

    He describes how artificial scarcity raises prices (other things being equal), a process anyone who listened in Economics 101 would understand. McCarthy says:

    “Before land-use zoning came along, house-builders extended the city by buying up farms on the city’s edge and building at whatever densities the market would support. But as more and more lands were withdrawn from the buildable stock by the planners, prices began to rise and the house-builders moved further away from the city proper.”

    With new house building consents so rigidly controlled, a Dublin area house prices escalated well beyond incomes and prices in the rest of the nation. As McCarthy puts it:

    “In the principal residential suburbs of Dublin an artificial scarcity (of planning permission, not of buildable land) was allowed to develop and prices rose, from the mid-Seventies onwards, to a 50 per cent or 60 per cent premium over comparable homes outside Dublin.”

    In addition to the houses for commuters that were further from Dublin, a government encouraged rural building boom led to over-building in more remote areas (Note 3).

    Economics and Urban Containment

    The consequences of urban containment policy have been known for a long time. More than four decades ago, Sir Peter Hall and his colleagues documented the extent to which house prices have been driven upward in England as a result of the land-use policies that have been copied in Ireland and elsewhere (See: The Costs of Smart Growth: A 40-Year Perspective).

    More recently, Brian N. Jansen and urban economist Edwin S. Mills (Northwestern University) took the argument further (See: The Consequences of Urban Containment) and tied the Great Recession directly at the foot of smart growth policies. They noted that “…. it is difficult to imagine another plausible cause of the 2008–2009 financial crisis,” and concluded:  “In the absence of excessive controls, housing construction would quickly deflate a speculative housing price bubble.”

    My analysis of metropolitan markets for the National Center for Policy Analysis showed that 73 percent of the house price value losses from the peak of the US housing bubble to the housing bust precipitated Lehman Brothers bankruptcy occurred in just 11 markets in California, Florida, Arizona and Nevada, all of them with severe land restrictions (see The Housing Crash and Smart Growth). Had those losses been smaller (as they would have been if prices had not risen so high), the Great Financial Crisis might have been less severe or even avoided.

    Ireland’s Challenge

    More recently, there is good news out of Ireland. The government has announced that it will no longer need the EU/IMF line of credit and will exit the bailout program. The 2012 gross domestic product nudged above the 2007 peak. But that does not mean that those who suffered economic losses during the downturn were made whole. Economic downturns massively redistribute wealth, and there is good reason to not repeat history on this score.

    McCarthy comments that: “It is quite remarkable that the contribution of restrictive zoning to the house price bubble has been so little acknowledged.” He stresses the importance of avoiding “Bubble Mark II,” and urges planning system reform:

    “The key policy measure required is the zoning for residential development of the very large volume of derelict and undeveloped land in the Dublin area.”

    Failing that, a another shock to the standard of living could face the Irish, who have already suffered one, at least partly due to urban containment policy. It could be time, again, for the government to follow Colm McCarthy’s advice. The only housing bubble that cannot burst is one that never forms.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.

    Dublin Bay photo by Colm MacCárthaigh.

    —-

    Note 1: Leith van Onselen of Macrobusinessprovides additional analysis on the Irish housing bubble in How Planning Exacerbated Ireland’s Housing Bust.

    Note 2: President John F. Kennedy referred to people as Ireland’s only export as people, on an Irish visit in 1963. The 1961 census had shown a population of 2.8 million, down from an 1841 6.5 million in the present area of the Republic of Ireland (before the pre-potato famine). This loss of 57 percent may be unprecedented in recent world history.

    Note 3: This was due to the combination of “easy money” for building from the financial sector and generous central government tax credits for building in remote Ireland (since repealed). Nearly all of this vacant housing is beyond commuting distance from Dublin, according to the 2011 census (much of it in the northwest and in the counties the west coast). This also fed into the Irish financial reversals.

  • Long Island’s Flawed Housing Policy is the Real Brain Drain

    Affordable housing is Long Island’s greatest regional failure and the key to our success in the 21st century. Yet, for such an important topic, there is still a fundamental lack of understanding of the problem, and a marked lack of standardization in studying it. We don’t have a regional standard when it comes to affordability, nor do we have an accurate assessment of how many existing units can be considered “affordable.”

    Worse, the approach in which we’re addressing the problem is significantly flawed. This flawed approach is the byproduct of two larger trends in urban planning that I’ve seen on Long Island: shoehorning urban solutions onto suburban problems and allowing stakeholders to dominate the discussion of the issues.

    Recently, I attended a housing design forum hosted by a group that is spearheaded by a development firm that is actively working to “cultivate a spirit of community-driven visioning, entrepreneurship and local investment.”

    In general, I support any initiative that seeks to discuss and address Long Island’s regional issues, and think it’s an important effort. It is critical that the topics of housing, our economy and reversing suburban decline are discussed with the general public. I enjoy attending the events and participating in the discussion. Yet, time and time again, it’s been the same trend – stakeholders, be it developers, environmentalists or so on, all of which have “a dog in the fight” or something to lose or gain, dominate the conversation regarding our regional issues and push to benefit their own agendas.

    We get the policy we deserve

    The group I mentioned earlier has recently a launched a focused campaign to build attainably priced housing. The crux of their proposed solution is the creation of micro-unit apartments across Long Island’s downtown areas. These hypothetical micro-units range in size from 300- to 400-square-foot (roughly three times the size of the average prison cell) unit studios, up to two-bedroom units in the 800- to 900-square-foot range. The theory is that the smaller units, located in a transit-oriented development in the heart of a downtown area, will lead to a more efficient lifestyle. This efficiency will promote sustainable living that is the opposite of suburban waste, reduce energy consumption (because the units are so small) and so on.

    This is all well and good, but when it comes to dollars and cents, the plan makes no sense.

    DLI Pricing

    The hypothetical units, as proposed during a design forum, could rent for between $1,000 and $1,400 for 300- to 400-square foot units up to $2,000 to $2,500 for the 800- to 900-square-foot variants. These rents do not include utilities or cable/internet. To be fair though, the projected rents do not reflect any government subsidies either.

    Regardless, in what world is this considered “affordable?” Um… I mean… workforce. Or is it ”attainable” housing these days?

    Give me a break.

    Granted, these are hypothetical units, but the fact these were presented as a viable option to get excited about in an absolutely serious manner with a straight face, is insulting.

    This is what we get for allowing developers, not planners, economists and others detached from the process, to take the lead when it comes to addressing our regional housing issues. When developers helm the discussion we get proposals such as these.

    A mentor of mine raised a good point when we were discussing the issue. Can the real estate industry play a constructive role in the discussion of housing issues on Long Island? Can the goals of the real estate industry (make as much profit in as short a time frame as possible) harmonize with the goal of planners (to keep land use in balance with the socio-economic needs of residents and the environment)? Often, no; the goals of private industry conflict with the planning ideals.

    One could say, “Well, Mr. Know-it-all, Long Island’s young professionals need different options or they’ll leave. There is a brain drain you know.” The only brain drain I’ve seen is our approach to housing policy.

    If we are losing the young, why not focus on job creation that goes beyond low-wage retail. Stop advocating for mixed-use with integrated retail and create wealth and opportunity that will allow Long Island’s younger generations to stay, be single and eventually start a family. With each Target superstore built, we lose the opportunity to create a strong manufacturing, green or tech base. Land on an island is finite. We must ask ourselves, are we maximizing our open space? Are we creating a business climate that will appeal to startups and entrepreneurs?  What can be done to lower costs, drive up business and allow for a multitude of housing options?

    Enough is Enough

    Drop the buzzwords, drop the flowery language such as “attainable” or “workforce” and let’s actually start to tackle our problem.

    Here is a newsflash: A thousand bucks for a 300-square-foot closet will not fly with millennials raised in homes with bedrooms larger than that. Long Island’s young people are getting priced out of a restricted, stagnant housing market with high costs of living, high property taxes and a distinct lack of affordable housing. They can’t afford nicer living because our job opportunities stink, but don’t insult young islanders with shoe boxes priced astronomically high. If we wanted to live in a tight space, Manhattan is a train ride away.

    We Long Islanders have driven ourselves into a ditch and expect to build our way out of it. Well, you can’t build your way out of a recession. Maybe it’s time to enact a “fair-share” housing policy that requires each and every municipality on Long Island to create a quota of truly affordable development. Perhaps it’s time to stare our property tax problem in the eye, buck up and start looking into consolidation.

    Problems aren’t solved by tip-toeing around the issues and giving us gilded solutions that sit on a shelf and gather dust. The public, especially Long Island’s millennials, deserve better. Why is suburban growth stagnant? It’s because of the stakeholders and their stagnant solutions.

    This piece originally appeared on LIBN’s Young Island.

    Richard Murdocco is a digital marketing analyst for Teachers Federal Credit Union, although the views expressed in this post are Murdocco’s alone and not shared by TFCU. Follow him on Twitter @TheFoggiestIdea, visit thefoggiestidea.org or email him atrich.murdocco@gmail.com.

    Photo by cinderellasg.