New Geography

Category: housing

  • That Sucking Sound You Hear…Solutions to America’s Housing Crisis Are Needed

    There is a crisis in America that’s not being attended to. It is the housing crisis, and its tentacles reach deep into the decline of the American middle class. Particularly, the interlocking dynamics of foreclosure, abandonment, and blight are draining the net worth of millions of Americans. The solutions to date have been piecemeal and ineffective. One possible initiative on the radar—which will be explained further below—entails a federal investment in the strategic demolishing of thousands of “zombie properties” that are eroding equity and quality of life.

    This erosion is real. Writes Howie Kahn of his recent tour with a City of Detroit demolition crew:

    Old roofs half-collapse under the weight of snow, forcing the walls to bulge outward. Moisture eats away the insides. Mold spoils the walls, softens the floors. In the summer, the sun bakes it all to a high stink and turns it crisp as tinder. Nature takes over. Trees sprout through the dormers. Animals get comfortable. We see this everywhere we go…So many innocent onetime starter homes, built on credit and striving, now in foreclosure. The holding company writes it off as a loss. And unless some crusading neighborhood association acts as a sentry, no one’s watching the house anymore. In essence, it belongs to nobody—or to everybody. Because once a house becomes worthless and unwanted…it’s everybody’s problem. Everybody’s crime scene.

    As both a policy researcher and a Clevelander, I know these realities first hand. The city was home to over 40,000 vacant housing units in 2010, or nearly 20% of its stock. Several of these units were across a street from me, the result of a foreclosure on a rental investment purchased during housing inflation heights. Tenants were kicked out around 2009. The place sat empty, but I soon noticed people constantly disappearing into the back of the building. Drug activity I thought. Then one day I found a pile of hypodermic needles on my front lawn while cutting the grass. I have a child. The very real effect of blight acted as a drain on my property value, not to mention my quality of life.

    And while I stayed in the City of Cleveland, many don’t. Cleveland lost 17% of its population from 2000 to 2010. The population decline (which is a long-term trend)—combined with the subprime mortgage crisis—created for unprecedented amounts of oversupply. Often, with both banks and homeowners walking away, the vacant structure devolves into blight until it becomes “a disamentiy effect”, which in plain-speak simply means living near something nobody would want to, with the unappealing prospect monetized in the devaluation of the house’s market value.

    This disamentiy effect has been quantified. For instance, my colleague Nigel Griswold found that in Flint, MI each abandoned structure within 500 ft. reduced a home’s sales price by 2.27%. A study by Thomas Fitzpatrick of the Federal Reserve Bank of Cleveland showed an additional property within 500 ft. that is either delinquent or vacant reduces prices by 1.3%. In low-poverty areas the effect is greater: 4.6%.

    Of course the larger problem is the broader economic effect, as depreciation goes beyond a lower return on investment and gets at household net worth. Specifically, according to the Census Bureau, household net worth declined 20% from 2005 to 2010 (40% since 2007). Of this decline, 76% was attributed to a loss of home equity. Minorities were hardest hit, with average Black household equity falling from $70,000 to $50,000 and average Hispanic household equity falling $90,000 to $40,000.

    Such declines in net worth have swelled the number of Americans stuck in precarious economic conditions. A recent report called “Living on the Edge: Financial Insecurity and Policies to Rebuild Prosperity in America” found that nearly half of Americans are “liquid asset poor”, meaning “they lack the savings to cover basic expenses for three months if unemployment, a medical emergency or other crisis leads to a loss of stable income.”

    Vacant house in Detroit. Courtesy of Streetsblog

    Such economic figures are alarming, and they call for intensive solutions aimed at reconstituting the American middle class, if only to achieve a broader economic recovery outside of the investor class. One such solution could entail a large-scale strategic demolition of “zombie properties” in America’s hardest hit areas, such as the Rust Belt.

    Why demolition?

    It is simple, really: by removing the disamentiy effect you are giving the value of the surrounding houses a chance, and there is initial empirical proof that this does in fact occur. Specifically, in his examination of Flint, MI, Griswold found that Genesee County’s demolition investment was paying off, with $3.5 million of demolition activity producing $112 million in improved surrounding property values. Not a bad ROI, and it’s a return that positively affects homeowners, investors, and government alike.

    The question remains: why isn’t there a concerted effort to once and for all excise the hundreds of thousands “zombie properties” that are draining value from the American economy?

    The reasons are varied, but one in particular relates to a lack of empirical proof that demolition has a definitive monetary impact. One current study, spearheaded by Jim Rokakis of the Thriving Communities Institute, aims to fill the gap. The study, headed by Nigel Griswold, myself, and the Center on Urban Poverty and Community Development at Case Western Reserve University, was partly conceived out of a September 2012 interagency meeting on Residential Property Vacancy, Abandonment and Demolition in which—after hearing pleas from a largely Midwestern contingent—officials from Federal Treasury issued a challenge: show through robust empirical means that demolition (1) retains value on nearby properties, and (2) decreases the likelihood of future foreclosures. If the results prove definitive, Treasury suggested they could make a federal strategic demolition initiative a reality.

    Vacant houses in Buffalo. Courtesy of the NY Times.

    Of course the operative word here is “strategic”, as bulldozing for the sake of bulldozing does not a solution to a crisis make. As such, the intent of this research is also to help those on the ground ascertain where an investment in demolitions could pay off most. For example, there are properties—particularly architecturally-rich properties with high intrinsic value—that should be preserved and shuttled down another path. As well, there are areas in cities in which population decline is shifting ever so slightly. The area I had lived was one of them. And the house that was once vacant across from me has been renovated and is now home to a number of tenants. Thus, the authors of the study are cognizant of the contextualization that exists in various hardest hit cities, and so recommendations will be matched with an understanding as such.

    That said, the study is currently ongoing, and while the results are as yet unclear—and in fact may not be robust enough to convince D.C. to act—the effect of “zombie properties” on the financial and mental well-being of regular Americans is anything but uncertain.

    As a Clevelander, I know this all too well.

    Richey Piiparinen is a writer and policy researcher based in Cleveland. He is co-editor of Rust Belt Chic: The Cleveland Anthology. Read more from him at his blog and at Rust Belt Chic.

    Vacant Cleveland house photo by Flickr user edkohler.

  • America’s Oldest Cities

    One of the most important turning points in the social history of the United States occurred at the beginning of the 1940s. This is not about Pearl Harbor or the Second World War, but  rather about the economic, housing and transportation advances that have produced more affluence for more people than ever before in the world.

    After being delayed by World War II, people began moving from the overcrowded cities to spacious (for that time) houses in the suburbs. They increasingly traveled to work and other destinations by car. These trends were at least two decades old at the time, but had been put on hold by the Great Depression. The prewar city (metropolitan area) was considerably denser, more oriented to mass transit and largely monocentric. By 2010, all major metropolitan areas had developed an urban form that was overwhelmingly suburban and polycentric, with the rise of edge cities and the even greater dispersion of edgeless cities. On average, areas outside the traditional downtowns (central business districts) accounted for 90 percent of metropolitan employment in 2000, ranging from a high of more than 95 percent in metropolitan areas like Phoenix, San Jose and Tampa-St. Petersburg to a low of 80 percent in New York.

    Rating Metropolitan Areas by Pre-War Residential Development

    Although dense urban cores persist in most metropolitan areas, their size and significance varies greatly. This can be illustrated by data from the 2007- 2011 American Community Survey, which makes it possible to rank metropolitan areas by their shares of pre-World War II residential development.

    This article uses the percentage of dwelling units, both owner and renter occupied constructed before 1940 to rate the ages of the nation’s 51 major metropolitan areas (those with more than 1 million population in 2010).  Overall, America’s major metropolitan areas are overwhelmingly postwar in their urban development, with approximately 14% of residences built before 1940. By comparison the 1940 populations of today’s major metropolitan counties were just 35 percent of their 2010 populations.

    Oldest Metropolitan Areas

    The nation’s oldest metropolitan areas, not surprisingly, are concentrated in the Northeast and the upper Midwest. Overall population growth has been modest in these regions compared especially to the South and the West.

    • Boston is the oldest with 35.7% of its residences built before 1940. This varies from 55.6% in the historical core city of Boston to roughly 32 percent in the suburbs, which are the oldest themselves in the country.   
    • Nearby Providence is the second oldest metropolitan area, with 33.1% of its dwellings built before 1940. The city of Providence is also the second oldest among historical core municipalities, at 58.8%. Providence overall share of pre-1940 housing stands at 30.2%. It is notable that the Office of Management and Budget now considers Boston and Providence to be in the same combined statistical area (consolidated metropolitan area).
    • Buffalo is the nation’s third oldest metropolitan area with 30.5% of its residences preceding 1940. The core city of Buffalo is the oldest historical core municipality, with 62.8% of its housing predating 1940. Buffalo suburbs, however, are considerably newer, with only 20.1% older than 1940.
    • New York is the nation’s fourth oldest metropolitan area, with 28.9% of its dwellings having been built before 1940. The city of New York has a much lower prewar housing percentage than the top four, largely because of the substantial amount of green field housing built in the more distant sections of Queens and especially in Staten Island during the 1950s and 1960s. New York’s suburbs, which have accounted for nearly all of the growth in the metropolitan area have a pre-1940 housing share of 18.9%.
    • Rochester is the nation’s fifth-oldest metropolitan area, with 28.8% of its housing prewar. The historical core municipality of Rochester has a high 58.1% of its housing in prewar stock, while the suburbs have a 21.1% share.

    The next five oldest metropolitan areas are Pittsburgh, at 27.2%, Milwaukee and 23.3%, Cleveland 22.7% Chicago and 21.3% and Philadelphia at 21.2%. Among these, the oldest historical core municipalities are Cleveland, at 51.9% and Pittsburgh at 50.3%. Pittsburgh has the highest suburban pre-1940 housing stock, at 23.5%, the third highest in the nation after Boston and Providence (Figure 1).

    Youngest Metropolitan Areas

    The nation’s youngest major metropolitan areas are concentrated in the South and West, comprising 28 of the 51.

    • Las Vegas is the youngest major metropolitan area.  "Sin City" has had the greatest percentage population growth since 1940, and is now approaching a population of 2 million, compared to less than 20,000 in 1940. Only 0.3% of the housing stock in Las Vegas was built pre-war.
    • Phoenix, which is grown from little more than 200,000 people in 1940 to more than 4 million people today, has a pre-1940 housing stock of only 1.0%. The city of Phoenix has a miniscule pre-1940 housing stock of 1.9%.
    • The third youngest major metropolitan area is Orlando with 1.7% of its housing stock having been built before 1940.
    • Perhaps surprisingly, Miami is the fourth youngest major metropolitan area with only 2.2% predating 1940. The historical core municipality of Miami, however, has one of the highest densities in the United States and a comparatively strong 10.6% of its housing is prewar.
    • Austin is the fifth youngest major metropolitan area, with 2.5% of its housing predating the war.

     

    Tampa St. Petersburg, Houston, Riverside-San Bernardino, Raleigh and Dallas-Fort Worth round out the 10 youngest major metropolitan areas. Each of these has a pre-1940 housing stock between 2.7% and 3.1% (Figure 2).

    Data for all metropolitan areas is provided in the table.

    Table
    Share of Housing Units Constructed Before 1940
    US Metropolitan Areas Over 1,000,000 Population in 2010
    Rank Metropolitan Area Metropolitan Area Historical Core Municipality(s) Rank Suburbs Rank HCM
    1 Boston, MA-NH 35.7% 55.6% 4 32.4% 1 1
    2 Providence, RI-MA 33.1% 58.8% 2 30.2% 2 1
    3 Buffalo, NY 30.5% 62.8% 1 20.1% 5 1
    4 New York, NY-NJ-PA 28.9% 41.3% 12 18.9% 6 1
    5 Rochester, NY 28.8% 58.1% 3 21.1% 4 1
    6 Pittsburgh, PA 27.2% 50.3% 7 23.5% 3 1
    7 Milwaukee,WI 23.3% 38.9% 16 14.0% 10 1
    8 Cleveland, OH 22.7% 51.9% 6 15.4% 8 1
    9 Chicago, IL-IN-WI 21.3% 43.8% 10 11.6% 13 1
    10 Philadelphia, PA-NJ-DE-MD 21.2% 39.1% 14 14.9% 9 1
    11 San Francisco-Oakland, CA 20.4% 45.5% 9 9.2% 15 1
    12 Hartford, CT 19.3% 43.1% 11 16.7% 7 1
    13 Cincinnati, OH-KY-IN 17.2% 41.3% 13 12.6% 11 1
    14 St. Louis,, MO-IL 15.8% 54.4% 5 10.3% 14 1
    15 Minneapolis-St. Paul, MN-WI 15.0% 46.7% 8 6.1% 24 1
    16 Baltimore, MD 14.4% 39.0% 15 6.8% 22 1
    17 Portland, OR-WA 13.1% 31.8% 19 5.5% 25 2
    18 Columbus, OH 12.5% 12.6% 31 12.4% 12 2
    19 Louisville, KY-IN 12.3% 16.9% 27 8.1% 20 2
    20 Indianapolis. IN 12.1% 15.6% 28 8.8% 16 2
    21 Los Angeles, CA 12.0% 20.2% 26 8.3% 18 2
    22 Detroit,  MI 12.0% 31.7% 22 8.2% 19 1
    23 Kansas City, MO-KS 11.9% 21.5% 24 8.8% 17 2
    24 New Orleans. LA 11.7% 31.7% 21 3.0% 35 1
    25 Seattle, WA 11.1% 29.9% 23 6.1% 23 2
    26 Richmond, VA 9.0% 32.0% 18 4.1% 31 2
    27 Salt Lake City, UT 8.9% 31.8% 20 3.1% 34 2
    28 Washington, DC-VA-MD-WV 8.6% 36.1% 17 4.6% 29 1
    29 Denver, CO 7.1% 21.4% 25 2.1% 43 2
    30 Birmingham, AL 6.8% 15.6% 29 4.5% 30 2
    31 Oklahoma City, OK 6.7% 8.8% 34 4.9% 27 2
    32 Memphis, TN-MS-AR 5.6% 8.8% 35 2.3% 41 2
    33 Virginia Beach-Norfolk, VA-NC 5.4% 1.1% 50 7.0% 21 2
    34 San Jose, CA 5.3% 5.5% 42 5.1% 26 3
    35 Nashville, TN 5.1% 6.9% 39 3.9% 33 2
    36 San Antonio, TX 5.1% 5.7% 40 4.1% 32 2
    37 Sacramento, CA 4.6% 11.5% 32 2.7% 36 3
    38 San Diego, CA 4.3% 7.0% 38 2.1% 42 2
    39 Charlotte, NC-SC 4.0% 3.3% 46 4.6% 28 2
    40 Jacksonville, FL 3.8% 4.7% 43 2.3% 40 2
    41 Atlanta, GA 3.2% 14.5% 30 2.0% 45 2
    42 Dallas-Fort Worth, TX 3.1% 5.7% 41 2.5% 38 2
    43 Raleigh, NC 2.8% 3.1% 47 2.6% 37 3
    44 Riverside-San Bernardino, CA 2.7% 7.9% 37 2.5% 39 3
    45 Houston, TX 2.7% 4.6% 45 1.6% 47 2
    46 Tampa-St. Petersburg, FL 2.7% 8.4% 36 1.9% 46 2
    47 Austin, TX 2.5% 3.0% 48 2.0% 44 3
    48 Miami, FL 2.2% 10.6% 33 1.5% 48 2
    49 Orlando, FL 1.7% 4.7% 44 1.3% 49 3
    50 Phoenix, AZ 1.0% 1.9% 49 0.6% 50 3
    51 Las Vegas, NV 0.3% 0.3% 51 0.3% 51 3
    Total 13.6% 25.5% 9.0%

    Notes:
    Calculated from American Community Survey 2007-2011
    HCM: Historical core municipality category: (1) Pre-War & Non-Suburban, (2) Pre-War & Suburban, (3) Post-War Suburban. There is one HCM per metropolitan area, except in in San Francisco-Oakland (San Francisco and Oakland) and Minneapolis-St. Paul (Minneapolis & St. Paul). Otherwise, the HCM is the first named municipality in the metropolitan area name, except in Virginia Beach-Norfolk, where it is Norfolk and Riverside-San Bernardino, where it is San Bernardino.

    Not All Core Cities are the Same

    This analysis indicates the substantial differences between not only the nation’s metropolitan areas, but even more the differences between the core municipalities. For example, the core cities of Phoenix and Philadelphia have approximately the same population. Yet they could not be more different. Philadelphia has a long history, including a time as the nation’s largest city around the period of the Revolutionary War. Phoenix, in contrast, is a product of the post-World War II boom. By 2010, Phoenix had become the nation’s 6th largest municipality. Its 65,000 population in 1940 would rank it around 600th today. Figure 3 shows the average, maximum and minimum pre-war housing stock percentages by metropolitan area, historical core municipality and suburbs.

    Categorizing Core Municipalities

    In Suburbanized Core Cities, we classified the nation’s core municipalities into three categories, based upon the extent of their pre-automobile development (This was described further in a paper co-authored with Peter Gordon of the University of California, Cities in Western Europe and America: Do Policy Differences Matter?).

    The categories included "Pre-War Non-Suburban," which are core municipalities that were of high density in 1940 and have expanded their boundaries little since that time. Philadelphia, Baltimore and Providence are examples of these. The second category was "Post-War and Suburban," which includes municipalities that had a dense core of more than 100,000 residents in 1940, but contain large swaths of post-War suburban development (such as Los Angeles, Milwaukee and Atlanta). The third category was Post-War Suburban, which includes core cities that had little or no dense urban core in 1940 (such as Phoenix, Austin and San Jose).

    Figure 4 illustrates the huge differentials in the pre-1940 housing stock between the metropolitan areas as classified by their historical core municipalities.

    Commonalities

    Even so, metropolitan areas are much more similar than their historical core municipalities. The bottom line is one different than one tends to hear in the urban-core-oriented press. In most of America the detached house predominates and virtually all development since 1940 has been suburban, both inside and outside the historical core municipalities.

    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: Boston (by author)

  • More Bubble Trouble in California?

    Just six years since the last housing bubble, California is blowing up another. This may seem like good news to homeowners and speculators alike but it could further accelerate the demise of the state’s middle class and push more businesses out of the state.

    On its face, a real estate turnaround should be a strong sign of an economic recovery. In Southern California, home sales have jumped 14 percent over last year and the median price is up 16 percent, some 25 percent in Orange County. We may not quite be at 2007 super-bubble levels but we’re getting there, particularly in the more desirable areas.

    Yet, before opening the champagne, we need to look at some of the downsides of this asset recovery. We are not seeing much new construction, particularly of single-family homes, so the supply is not being replenished as inventory sinks. Meanwhile, many of the homebuyers are not families seeking residences, but flippers, Wall Street types and foreign investors. A remarkable one-in-three Southern California home purchasers paid with cash, up from 27 percent from last year.

    It’s clear that this increase is not being fueled primarily by income growth among middle-class Californians; these "prices are rising disconnected from household incomes," notes one analyst. Indeed, California incomes have been dropping somewhat more rapidly, down $2,600 per household from 2007-11, according to the American Community Survey, compared with a $200 drop nationwide. California incomes are still 13 percent higher than the national average, but a lot less so than in the past, particularly given the much higher costs and taxation.

    This leads to what is becoming the biggest problem facing the state – a decline in the rates of affordability. The previous bubble left us a legacy of more-affordable housing, an advantage we may now be losing. Historically, and in much of the country, the median multiple, which compares the median-price home to median household income, was in the three range. At the height of the previous bubble, the median multiple for the Los Angeles-Orange County metropolitan area, reached 11.5 in 2007, then fell to a still-elevated 5.7 in 2009, notes demographer Wendell Cox. It remained steady in 2011, but in just the past year the measurement has shot up to 6.2. A few more years at this rate, and housing affordability could worsen materially.

    The new bubble can be seen elsewhere in the state. The most prominent inflation in housing values can be seen in the San Francisco Bay Area, which has enjoyed the most buoyant recovery from the recession. Never a cheap area, in 2006, San Francisco reached a median multiple of10.8 and Silicon Valley (San Jose) rose to 9.3. When the bubble imploded, the median multiple fell to 6.7 in both metropolitan areas, still well above any level recorded before the housing bubble. But now, amidst a concentrated boom in the western side of the Bay, the median multiple rose the equivalent of 1.1 years of income in San Francisco (to 7.8) and 1.0 years of income in San Jose (7.9) in a single year.

    Of course, you can argue that the higher prices in the Bay Area are explainable at least in part by a growth in employment and wealth generated by tech start-ups. But what about soaring prices in places like the Inland Empire (Riverside-San Bernardino), Sacramento or Fresno, where economic growth has been torpid, and unemployment remains well north of 10 percent? Over the past year, Sacramento’s median multiple has risen from an affordable 2.9 to 3.2, the Inland Empire from 3.2 to 3.7 while Fresno’s has gone from 3.1 to 3.5.

    As these prices rises, the California dream, already increasingly off-limits in the coastal areas, begins to become less achievable even in the inland areas. Already, barely 55 percent of Californians own their own home, down from the bubble-period high of 60 percent in 2005 and compared with upward of 65 percent nationally.

    Traditionally, the pent-up demand for houses would be met in the marketplace, but California’s Draconian planning laws make this very difficult. In the first 11 months of 2012, the Census Bureau reports that the Los Angeles-Orange County metropolitan area had half as many construction permits than much smaller Dallas-Fort Worth, 60 percent of Houston’s permits and fewer even than the relatively tiny Austin, Texas, metropolitan area. More to the point, more than 70 percent of L.A.’s construction was in multifamily units while the majority in most areas, (except for such areas as New York, San Francisco, San Jose and San Diego) was in single-family homes.

    Given the state’s planning preference for high-density housing, even in suburban and exurban areas, there’s little hope that California single-family home buyers can expect much relief. As millennials age, and seek out this form of housing as they start families, they will likely look increasingly elsewhere, for example, in Dallas-Fort Worth, Houston, Phoenix or Atlanta. The great California exodus, which slowed during the housing bust, will likely pick up, joining up with the continued movement of employers to more business-friendly states.

    In the short run, of course, not everyone loses from a new bubble. Owners of homes, particularly along the coast, will see a big increase in their net worth. There could be good times ahead again for what author Bob Bruegmann calls "the incumbent’s club." With projected new units running at one-half their 2007 level until 2015, scarcity will help the state’s graying gentry. These same citizens also enjoy a double bonus, since most are protected by Proposition 13 from paying higher property taxes on their rising property values.

    The bubble may also have short-term positive impact on local governments, which may benefit from high property taxes if more homes change hands at higher prices. The "wealth effect" could also bring new capital-gains income to a state government whose revenue stream increasingly depends on the upper-class taxpayer, particularly after the passage of Proposition 30, which increased the state’s reliance on high-income earners. In this sense, the asset inflation could help Gov. Jerry Brown enjoy his much-trumpeted surplus, and he may even avoid the deficit projected next year by the Legislative Analyst.

    These positive effects may be outweighed by bigger concerns. The pushback against single-family homes will restrain the growth of the construction industry, still down 400,000 jobs from its 2006 peak. This is particularly critical for working-class Californians, many of whom previous made decent livings in this industry.

    But workers and homebuilders won’t be the only ones affected; so, too, will consumers. Without a loosening of regulatory constraints, pent-up demand for housing, particularly the single-family variety, will remain largely unaddressed. This will further inflate the bubble even in unfashionable areas. We may soon see a surplus of rental apartments, but not enough single-family homes; the ownership market, as evidenced by the rising median multiples, will continue to tighten, and prices could rise even more, even in a mediocre economy.

    The groups hit hardest by this scenario will be middle- and working-class Californians, particularly above the age of 30-35, most of whom desire to own their own home. Unable to qualify, or unwilling to overleverage, many will be forced either to give up their dreams or look elsewhere, taking their talents and, eventually, their offspring, with them.

    Joel Kotkin is executive editor of NewGeography.com and a 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.

    This piece originally appeared in the Orange County Register.

    Photo by Sean Dreilinger: One of two adjacent bank owned homes.

  • Gentrification as an End Game, and the Rise of “Sub-Urbanity”

    “It took a bit of wind out of my sails, watching what happened in this neighborhood, watching how it happened…I don’t know how to beat this [gentrification]. I don’t know how anyone can beat this machine.”—From the article The Ins and Outs

    The Generalization of Gentrification

    The forces of gentrification are taking hold in America’s alpha cities. You can check the numbers or see the maps, but to get a good idea of its unprecedented rapidity, I’d suggest the blog Vanishing New York. There, you will see nearly each day the announcement of yet another old-school establishment losing the rent battle: Lenox Lounge in Harlem, Suzies Chinese Restaurant on Bleeker St., the Central Iron and Metal scrap yard below the High Line. And with the small-business soul of the city goes the regulars that gave places like New York City its identity before its global city branding.

    For instance, speaking about the closing of the Big Apple meat market in Hell’s Kitchen, writer Jeremiah Moss vents on the city’s whitewashing:

    The [Big Apple] exterior is wonderfully dreary, covered in graffiti and pigeon shit. Standing here, you could dream yourself into a lost New York. But not for long. It’s all coming down for more glass, more chain stores.

    A couple of years ago, the Times did a piece on Big Apple. The article includes a wonderful slideshow of photos, featuring the sort of person who shops at Big Apple, the sort of person that is also vanishing from New York, replaced by the svelte and distracted, the hollow men and women, tapping away at iPhones in sterilized Whole Foods aisles.



    Courtesy of The New York Times

    This is not a localized thing, as cities everywhere are grappling with the abruptness and consequences of such change. And while gentrification has been occurring here and there for decades, with community capital unwound on a street-by-street basis for higher returns and bigger tax receipts, the sheer push from above, like meat through a grinder, is now so systematic—and no longer personified by the Robert Moses’s of the world but by a kind of faceless force blowing a current of yield and tidiness in—that it has just become what is, with the late scholar Neil Smith referring to this latest iteration as the “generalization of gentrification”.

    In his article “New Globalism, New Urbanism: Gentrification as Global Urban Strategy”, Smith examines how gentrification has morphed from an unfortunate effect to an outright aim. One explanation for this relates to the ever-morphing private-public partnership in cities in which elected officials have forgone governing for investing, with policy no longer aspiring to guide economic growth but rather being crafted to “fit in the grooves” of market forces, particularly in the realm of real estate.

    Why real estate?

    Part of the reason is that economic leaders now primarily see Americans as consumers as opposed to producers, and so cities—particularly alpha dog global cities—have shifted their focus from payrolls to price per square feet, making real estate an increasingly important productive engine of cities as opposed to the productive capacity of the citizen. Enter, then, the volitional push of attracting as many creative class gentry as possible into the confines of a place, with real estate gimmicks—such as Mayor Bloomberg’s recent microapartment push—aimed at further squeezing blood from areas with far more density than available space.

    Does such wealth-packing inject capital into a given space? Yes. Is it a viable economic growth model? Wrote Aaron Renn in a recent New Geography piece:

    Indeed, all too much urbanism amounts to a sort of trickle down economics of the left, in which a “favored quarter” of artists, high end businesses, and the intelligentsia are plied with favors and subsidies while precious little ever makes it to those at the bottom rungs of society.

    This is not to disown the fact that global cities are economic engines in their own right. They are. It is only to state that their long-term economic growth prospects are being sold down the river at an exorbitant price. After all, people develop, not places.

    Gentrification of the Mind

    Allocating supply is one thing, but stoking the psychogeography of the creative class to want and squeeze into high-priced real estate is another. Historically, the common desire to move to an alpha dog city is to be where the action is. Moreover, NYC, Chicago and the like can graduate you. They can defang your limits while toiling the mind to the experiencing of new people and ideas. Said John Lennon:

    I regret profoundly that I was not an American and not born in Greenwich Village. It might be dying, and there might be a lot of dirt in the air you breathe, but this is where it’s happening.

    Yet this “if you can make it here you can make it anywhere” pull is arguably not what’s driving the generalization of gentrification. Rather, it is the idea of big city suburbanization, or more exactly: the hybridization of city “vitality” with the comforts of suburbanization, creating for a kind of third place called “sub-urbanity”.

    In many respects, this is not surprising, as the most recent “return-to-city” movement is largely fueled by younger suburbanites who are tired of missing out on big city action. Not the action per se of Charles Bukowski’s L.A. or Patti Smith’s New York, but the action of, well, Chandler, Kramer, and Carrie. Said Alan Ehrenhalt, author of The Great Inversion and the Future of American Cities:

    This is the generation, don’t forget, that watched Seinfeld and Sex and the City and Friends – usually from sofas safe in the confines of the suburbs. I think they find suburban life less exciting than urban life. While they are in a single or childless situation, they’re particularly eager to try it.

    And try it they should: varied experiences make varied lives make more richly contextualized societies. But the rub here is that the mentality sewn from “the confines of the suburbs” is not being sacrificed for the beautifully unnerving experience that is “the real” of city life, but rather that creative class enclaves are increasingly being appropriated into the domesticated lifestyle embodied by traditional suburbia.

    Of course John Lennon’s Greenwich Village this is not. And this bodes ill for alpha dog cities in that vanilla-ing a people and a place is a death knell to collective urgency, if only because comfort puts to sleep the burn that has traditionally sparked the next generation of ideas. Writes Sarah Schulman, author of The Gentrification of the Mind: Witness to a Lost Imagination:

    Gentrification is a replacement process. So it is where diversity is replaced by homogeneity, and this, I believe, undermines urbanity and changes the way we think because we have much less access to a wide variety of points of view. We are diminished by it. So literally, the range of our mind’s reach is much more limited because of gentrification.

    But again: lest we think this is all a mistake, or simply the byproducts of shifting demographics or economic and cultural change. Rather, it is the point. It is today’s path toward urban renaissance. And it’s a path creating for a “sub-urbanity” that is emerging when the generalization of gentrification meets the gentrification of the mind.

    So, what does this mean for the future of urban development? My guess is that there will be a growing unhappiness with sub-urbanity that’s going to create for a lot of people left wanting, be they young suburbanites longing for urban authenticity or indigenous urbanites who are tired of the schtick. As such, cities would do well to prepare for the “return-of-the-city movement”, which means prioritizing urban integrity and community capital against the temptations of the gentrifying machine.

    Richey Piiparinen is a writer and policy researcher based in Cleveland. He is co-editor of Rust Belt Chic: The Cleveland Anthology. Read more from him at his blog and at Rust Belt Chic.

    Lead photo by Liz Ferla, flickr user lism.

  • The Evolving Urban Form: Rio de Janeiro

    Rio de Janeiro was the capital of Brazil from before independence from Portugal was declared in 1822. That all changed in 1960, when the capital moved to the modern planned city of Brasilia, more than 500 miles (800 kilometers) inland. The move, however, did nothing to slow Rio de Janeiro’s growth, as the metropolitan area (as designated by Brazil’s census agency, the Instituto Brasileiro de Geografia e Estatística),  added 7 million people – a 150 percent increase in population – over the ensuing 60 years

    The placement of the federal government in Brasilia has had positive economic impacts on the interior, but it did not make Rio de Janeiro less crowded (factor Indonesian officials should note as they consider moving the capital from Jakarta,).

    The Urban Area

    However, it is clear that Rio de Janeiro has fallen behind even faster growing Sao Paulo, which has become one of the world’s 10 largest urban areas (with a population of approximately 20.5 million in 2013). Nonetheless, as an urban area with a 2013 population of 11.6 million (Figure 1) Rio de Janeiro still ranks among the world’s megacities (urban areas over 10 million).

    The urban area covers 720 square miles (1,870 square kilometers),   a population density of 16,100 per square mile (6,200 per square kilometer). This is similar to the density of Sao Paulo, 20 percent above that of Buenos Aires, but 35 percent less dense than the western hemisphere’s most dense megacity, Mexico City. In contrast, Rio is more than twice as dense as the most dense Canadian and US urban areas, Toronto and Los Angeles, but less than 1/6th the density of Dhaka, the world’s most dense megacity.

    Metropolitan Dispersion

    As this series on world urbanization has shown, cities tend to become less dense as they grow (at least until they reach predominantly automobile oriented densities). This can be seen in Rio de Janeiro as well. Since the 2000 census, virtually all of the population growth has been in less dense areas. The inner core (the districts or bairros of Zona Centro), for example, accounted for two percent of the urban area’s growth over the past decade. The larger, inner core (around the urban core) accounted for three percent of the growth (principally the Zona Sul and some additional bairros adjacent to Zona Cento and Zona Sul).

    A Suburbanized Core City: Like many core municipalities around the world, Rio de Janeiro contains large expanses of suburbanization (Photo: Rio’s In-City Suburbs). The suburban portions of the municipality accounted for 43 percent of the growth, while the outside-the-municipality suburbs and exurbs (inside the metropolitan area, but outside the urban area) represented 53 percent of the growth (Figure 2). Most of the growth outside the municipality of Rio de Janeiro has been across Guanabara Bay, with the large suburbs of Niteroi and São Gonçalo, and to the north, where there are a number of large municipalities (such as Duque de Caxias and Nova Iguaçu).


    Photo: Rio’s In-City Suburbs

    This preponderance of growth outside the dense core has been developing since 1950. The municipality of Rio de Janeiro has added 3.9 million residents since 1950, while the suburbs and exurbs have added 4.8 million. The municipality continues to have more than half of the population (53 percent), down from 76 percent in 1950 (Figure 3). However, the retention of this strong share of the population has been made possible only by the large amount of land available for suburban development within the municipality (this is similar to the experience of other suburbanized core cities, such as San Jose, Edmonton, Phoenix, Denver, and Kansas City).

    The Physical Setting

    Rio de Janeiro sits on the Atlantic Coast and is one of the world’s leading tourist beach areas (Copacabana and Ipanema). The urban area straddles Guanabara Bay, with the municipality of Rio de Janeiro on the west side. A bridge leads to Niteroi, on the east side. The municipality of Rio de Janeiro covers virtually the same land area as the city of Los Angeles and like its American counterpart also includes mountainous areas. The mountains include Sugar Loaf and Corcovado, site of the world famous "Cristo Redentor" statue ("Christ the Redeemer") and others.  North and West of the mountains are the broad plains that contain most of the suburbanization (both within and outside the municipality).

    Favelas

    Favelas, also called shantytowns or informal housing proliferate throughout much of Latin America. It is estimated that 20 percent of new municipality’s population lives in favelas. The largest of these is Rocinha, which accounted for a full one third of the inner and outer core growth over the last 10 years, despite having less than 5% of the population. Rocinha is located on a steep hill adjacent to affluent São Conrado, which provides employment for many residents. This is typical for shantytowns around the world, which are located near principally domestic labor opportunities, since residents generally have only limited mobility options to employment in the rest of the urban area. The favela to affluent neighborhood model represents an effective example of a "jobs – housing balance," though   rooted in poverty and gaping class distinctions. (Photo: Rocinha Favela & São Conrado, top).

    Transport

    Mass transit is very important in Rio de Janeiro. More than one half of all travel is on the Metro, commuter railways, buses and informal vans. In recent decades, the rail share of travel has been falling substantially, while the van share of travel has increased substantially. Vans have also made serious inroads into mass transit ridership in other urban areas of Brazil.

    This dependence on transit does not mean that the roads are uncongested. For example, Avenida Brasil, the main arterial leading to Centro from the North carries more than 200,000 vehicles each day, a figure that exceeds that of many US urban freeways. A new peripheral freeway is under construction arcing around the urban area from west to east.

    Gross Domestic Product

    According to the Brookings Institution Global Metro Monitor, Rio de Janeiro had a gross domestic product per capita of approximately $16,300 in 2012. This would rank Rio de Janeiro 100th out of the 300 top metropolitan area economies in the world (Note 1). This is below Latin American leaders Buenos Aires ($26,100) and Sao Paulo ($23,700). It is also below the more affluent Chinese metropolitan areas, such as Shenzhen ($28,000) and Shanghai ($21,400). Rio, however, ranked above Cape Town ($15,700) and Cairo ($10,000).

    Life After the Capital Leaves

    The growth of Rio de Janeiro shows that there is, indeed, life after the national capital leaves. Rio has experienced strong economic growth in recent years and remains a dynamic urban region.

    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.”

    —-

    Note: These rankings are based on the 300 metropolitan areas with the largest total gross domestic product (not per capita gross domestic product). As a result, many metropolitan areas that are more affluent per capita are not included because their total gross domestic product is not rank in the top 300. This would include a large number of metropolitan areas in the United States, Europe Canada and elsewhere. The ranking of metropolitan areas in China is adjusted for the 2010 census, which includes migrant workers. Additional details are provided in Endnote 19 in the Brookings Global Metro Monitor.

    Top Photo: Rocinha Favela & São Conrado (photos by author)

  • Britain’s Housing Crisis: The Places People Live

    For twenty years British house building has fallen behind demand, forcing up prices and rents. Here’s a series of photos showing some of the things people have had to do to live.

    Victoria Campbell was living in a shed in her parents’ garden in Havant, while she and her fiance saved up for a deposit, but the Council has told her that she has to move out.



    This family in Plashet Park have been living in a shed for some time.


    In East London, council officers are going checking out garden sheds to make sure that they are not being rented out, as they check too to see if houses are over-occupied.

    In Caledonian Road, super-exploiting landlord Andrew Panayi converted unprofitable shops into money-making flats, and decided to convert their cellars into more flats.


    This is the flats’ skylight, outside.



    This is the passage and stairway down to the flats.



    This is the underground landing with the flats’ front doors.



    And this is the interior.

    These garden sheds in Southall have been turned into homes, and ones like them are rented out to labourers.

    Carl Bond and Stacey Drinkwater converted a double-decker bus for somewhere to live.

    In Crystal Palace Laura Park lives in this converted public toilet.

    Many people have tried to evade the planning laws that stop people from building, but disguising homes as sheds or barns.

    Alan and Sarah Beesely built their home inside a barn, as you can see from the skylights. They were told by the council to knock it down.

    Carl Jones built this garage, but building inspectors decided it was really a house, and told him to take it down.

    So too this toolshed in a garden centre in Stroud was found to be a home, and ordered was ordered to come down.

    In the Pembrokshire National Park Brithdir Moor, Janet and Tony Wrench built the Roundhouse, which was also ordered taken down.

    For years now housebuilders in Britain have failed to build enough homes for people to live in.

    We were told that more homes would encroach on the ‘green belt’ and the countryside. Foolish commentators like Simon Jenkins and Tristram Hunt warned – laughably – of a ‘Tsunami of concrete’ threatening the countryside. Powerful lobbies like the Campaign to Protect Rural England, the Urban Taskforce and the Green Party did all they could to stop new building. But it turns out that less than one tenth of Britain is developed.

    Instead of developing the land we need government and municipal authorities said that they would ‘build up, not out’, and that they could get more people, into less space, by more compact, smart growth. At the time the development advocacy Audacity told them that this could only lead to overcrowding, and that their ‘smart growth’ would take us back to Victorian social problems.

    Today, more people are willing to acknowledge that there is a problem with a shortage of affordable housing – but too few are willing to grasp the nettle and say we need to build many, many more houses to meet housing need.

    Some commentators have made the point that there should be council housebuilding to meet the need. Others that the planning laws should be liberalised so that private developers can build. Both of those would be a good idea, but neither should be turned into a dogma that must be observed before new homes are built. The issue is that however it is done, Britain needs to build the houses that people need to live in.

    James Heartfield’s book Let’s Build! Why We Need Five Million New Homes in the next 10 Years is available from Amazon.

  • New Zealand Housing Hits Political Hot Button

    The release of the 9th Annual Demographia International Housing Affordability Survey on Monday appears to have caused a political storm in New Zealand. This year’s Survey was particularly controversial in New Zealand for two reasons.

    Not only did it show deteriorating housing affordability, as measured by a worsening of New Zealand’s ‘median multiple’ (median house price divided by gross annual median household income), but the foreword of the Survey was written by none other than New Zealand’s Finance Minister, Bill English, who had some stern words to say about the state of housing affordability in New Zealand, brought about largely by the strangulation of supply:

    “Housing affordability is an important focus for the New Zealand Government . Last year’s New Zealand Productivity Commission report on housing affordability, relying in part on Demographia affordability data, showed a substantial worsening in housing affordability in New Zealand in the last thirty years…

    In its response to the Productivity Commission, the Government agreed with the Commission’s analysis that supply side factors explain the deterioration in New Zealand’s housing affordability.

    The Government’s response to the Commission’s report concentrated on land supply, infrastructure provision, costs and delays due to regulatory processes, and improving construction sector productivity…

    It costs too much and takes too long to build a house in New Zealand. Land has been made artificially scarce by regulation that locks up land for development. This regulation has made land supply unresponsive to demand. When demand shocks occur, as they did in the mid-2000s in New Zealand and around the world, much of that shock translates to higher prices rather than more houses. It simply takes too long to make new land available for development.

    We may be seeing the beginning of a repeat of the mid-2000s demand shock. As interest rates stay below historic norms, expectations are shifting that these rates are here to stay. As a result, demand for real assets has increased, observed in booming equities markets in 2012. Demand for real estate is also increasing, with the median house price in Auckland recently exceeding the highs of 2007.

    Costs of other housing inputs contribute to New Zealand’s affordability problem. Building materials cost more in New Zealand than neighbouring Australia. The structure of infrastructure financing, and the timing levies are to be paid, raises the market price for housing. Appeals under the Resource. Management Act, New Zealand’s land use regulation, can hold up developments and city planning for a decade or more in some cases. Time is money because development is risky…

    Certainly, the affordability situation in New Zealand has, once again, started to deteriorate, with house prices in New Zealand’s two major markets – Auckland and Christchurch – rising strongly over the past two years (see next chart).


    In late 2009, the Reserve Bank of New Zealand dropped the official cash rate to just 2.5%, where it has remained ever since. In turn, the discount variable mortgage rate has fallen to just 5.45%, which has fueled a sharp rise in mortgage finance commitments and house prices (see below charts)



    At the same time as credit demand has been rising, the supply situation in New Zealand has also deteriorated. The February 2011 Canterbury earthquakes wiped‑out more than 10,000 homes in Christchurch, New Zealand’s second largest city, adding to the already tight housing supply.

    Meanwhile, in New Zealand’s largest city – Auckland – the Council has moved to tighten the city’s already highly restrictive urban growth boundary (called the “Metropolitan Urban Limit” or MUL) into an even tighter “Rural Urban Boundary” that would effectively ban development outside of the rural-urban line and limit the area in which development could take place (see here and here for details).

    The Productivity Commission’s Final Report into housing affordability, released last year, was scathing of land-use planning in New Zealand, citing a body of evidence showing that strict policies of urban containment and slow development approval times had adversely affected the rate of new home construction and housing affordability in New Zealand.

    In particular, the Productivity Commission’s Report noted that the land value of housing had risen significantly, particularly in Auckland, with land-use constraints a key driver of this escalation (see next chart).


    Moreover, the Productivity Commission report showed that the cost of new housing blocks had escalated in real terms, particularly in Auckland:


    And that the land price escalation has occurred at the same time as the number of sections sold has plummeted:


    The release of the Demographia Survey on Monday appears to have brought New Zealand’s housing affordability problems into the limelight.

    Yesterday, in response to the study, the New Zealand Prime Minister announced a reshuffle of Cabinet, assigning Nick Smith to housing in an attempt to improve affordability. The Government has also threatened to take planning control from local councils if they do not improve the supply situation, with the Auckland Council, in particular, in its sites.

    For its part, the Auckland Council is holding firm to its Plan to tighten the city’s growth boundary, stating that it doesn’t “agree with the unplanned wholesale release of land which is going to cost the ratepayers a fortune to service”.

    Meanwhile, the Opposition Labour Party has promissed to build 100,000 basic homes for first-home buyers, focusing on Auckland, over 10 years, in order to relieve the supply situation and improve affordability.

    It looks like housing affordability is, once again, gearing up as a hot political issue in New Zealand.

    This piece first appeared at Macro Business.

  • Demographic and Economic Challenges: The 9th Annual Demographia International Housing Affordability Survey

    The just released 9th Annual Demographia Housing Affordability Survey (pdf) indicates that housing affordability has deteriorated modestly in the last year. A number of major metropolitan areas remain severely unaffordable.

    Highlights: Metropolitan Areas

    Among the 337 Metropolitan markets analyzed, Hong Kong remained the most unaffordable, with a median multiple (median house price divided by pre-tax median household income) of 13.5, up nearly a full point from last year’s 12.6. No other housing market has ever reached such an intense level of unaffordability since the Survey began (Los Angeles reached 11.5 in 2007).

    Rounding out the least affordable major markets (over 1,000,000 population) were Vancouver at 9.5, Sydney at 8.3, San Jose (US) at 7.9, and a tie in fifth place between San Francisco and London (Greater London Authority) at 7.8. The most affordable markets were Detroit at 1.5 (Note 1); Atlanta, at 2.0 (Note 2); and Cincinnati, Rochester (US), and St. Louis at 2.5 (Figure 1).

    Rating Housing Affordability

    The Demographia Housing Affordability Surveydefines four housing affordability categories (Table 1), starting with "affordable." Affordable housing markets have a median multiple of 3.0 or less, the upper bound of overall housing affordability that existed virtually across all major markets in the United States, the United Kingdom, Canada, Australia, Ireland and New Zealand before the adoption of urban containment policy (also called densification policy, urban consolidation, compact cities, smart growth, or growth management).

     

    Table 1

    Demographia International Housing Affordability Survey

    Housing Affordability Rating Categories

    Rating

    Median Multiple

    Severely Unaffordable

    5.1 & Over

    Seriously Unaffordable

    4.1 to 5.0

    Moderately Unaffordable

    3.1 to 4.0

    Affordable

    3.0 & Under

     

     

    Highlights: Nations

    Of all nations, only the United States has affordable major markets and a strong representation in the moderately unaffordable category. Six major markets in the United States were rated in the severely unaffordable category, including San Jose, San Francisco, San Diego, Los Angeles and New York.

    Canada had two markets rated moderately unaffordable, while one half of its major markets were rated severely unaffordable, including Vancouver, Toronto and Montréal. Ireland’s one major market, Dublin, was rated moderately unaffordable.

    One half of the major markets in the United Kingdom were also rated severely unaffordable, including London (GLA), Plymouth & Devon, the London Exurbs (Southeast and East of England), Bristol, Liverpool, Newcastle, Birmingham, and Sheffield. All of the major markets in Australia (Sydney, Melbourne, Brisbane, Perth and Adelaide), China (Hong Kong), and New Zealand (Auckland) were rated severely unaffordable (Table 2).

    Hong Kong and Singapore are the world’s largest city-states. An analysis of a large share of the Singapore market suggests a median multiple of approximately 6.0, which is substantially more affordable than Hong Kong.

    Table 2

    Housing Affordability Ratings by Nation: Major Markets (Over 1,000,000 Population)

     Nation

    Affordable

    (3.0 & Under) 

    Moderately

    Unaffordable (3.1-4.0)

    Seriously Unaffordable (4.1-5.0)

    Severely Unaffordable (5.1 & Over)

     

     

    Total

     

    Median

    Multiple

     Australia

    0

    0

    0

    5

    5

    6.5

     Canada

    0

    2

    1

    3

    6

    4.7

     China (Hong Kong)

    0

    0

    0

    1

    1

    13.5

     Ireland

    0

    1

    0

    0

    1

    3.6

     New Zealand

    0

    0

    0

    1

    1

    6.7

     United Kingdom

    0

    0

    8

    8

    16

    5.1

     United States

    20

    20

    5

    6

    51

    3.2

     TOTAL

    20

    23

    14

    24

    81

     

     

    Longer Term Trends

    Over the years of the Demographia International Housing Affordability Survey, housing affordability has improved by far the most in Ireland. It has also improved in the United States. Affordability in Canada’s major markets was the most favorable in 2004, but has seen large Median Multiple increases in each of the three largest metropolitan areas. As a result, there is increasing concern about housing affordability in Canada.

    Australia and New Zealand have had the most unaffordable major markets, with every market being severely unaffordable in every year, reflecting earlier adoption of densification policy by states and metropolitan areas. Housing affordability has also been severely unaffordable in United Kingdom major markets over the period covered (Figure 2).

    A Competitive Land Supply: Key to Housing Affordability

    Overwhelming economic evidence indicates that urban containment policies, especially urban growth boundaries raise the price of housing relative to income. This inevitably leads to a reduced standard of living and increases poverty rates, because the unnecessarily higher costs of housing leave households with less discretionary income to spend on other goods and services. The higher costs ripple into rental markets, tightening the budgets of lower income households, who already suffer from lower discretionary incomes.

    The principal driver of unaffordable housing relative to median incomes is failure to maintain a "competitive land supply." Brookings Institution economist Anthony Downs describes the process, noting that more urban growth boundaries can convey monopolistic pricing power on sellers of land if sufficient supply is not available, which, all things being equal, is likely to raise the price of land and housing that is built on it. This has, more often than not, been associated with urban containment policy and virtually never with the more liberal land use policy that preceded it.

    Recent Policy Developments

    The last year has seen public policy progress. The New Zealand central government plans to expand the land supply and provide alternatives for infrastructure finance, both of which are likely to lead to improved housing affordability. In his Introduction to this years’ Survey, Hon. Bill English, Deputy Prime Minister of New Zealand pinpoints the factors leading to the policy changes:

    It costs too much and takes too long to build a house in New Zealand. Land has been made artificially scarce by regulation that locks up land for development. This regulation has made land supply unresponsive to demand. When demand shocks occur, as they did in the mid-2000s in New Zealand and around the world, much of that shock translates to higher prices rather than more houses.

    The Conservative-Liberal Democrat Coalition is proposing policies to build housing on more competitively priced land, to improve housing affordability. Planning Minister Nick Boles has called Britain’s lack of housing affordability "the biggest social justice crisis we have," and called it bigger than education and unemployment (video). These proposals have been long in coming. It has been four decades since Sir Peter Hall and associates documented the consequences of urban containment, and nearly a decade since the similar conclusions of Kate Barker for the Labour Government.

    In Hong Kong, facing public demonstrations on issues such as housing affordability, the government has adopted a plan to improve housing affordability.

    However, the policy is deteriorating in California, where state regulations could virtually outlaw new single-family housing on the urban fringe. In the last year housing affordability losses have been substantial and could portend another housing bubble in this state that precipitated Great Financial Crisis with its egregious house price increases.

    Evolving Perspectives

    Planning perspectives could be evolving. New York University Professor Shlomo Angel writes in his book Planet of Cities of the importance of housing affordability and argues against urban planning restrictions that restricting adequate housing to ordinary households.

    A team of UK academic researchers questioned the "default" preference for urban containment policy. This is an important development, since much of urban planning is committed to outlawing more liberal land-use policies.

    The Economic Challenge

    Nations around the world face serious economic challenges. Governments have taken on unaffordable obligations, and repayment continues to elude authorities in the United States, the European Union, and elsewhere. Future demographic trends are likely to only exacerbate this difficulty, driven by plummeting birth rates and a rising elderly population (See The Rise of Post-Familialism: Humanity’s Future?).

    Urban policy needs a "reset." The emphasis should be shifted away from "designing" urban areas toward facilitating a better standard of living for the people who live in them. In his epic Civilization: The West and the Rest, historian Niall Ferguson, in his Civilization notes that

    The success of the civilization is measured not just in its aesthetic achievements but also, and surely more importantly in the duration and quality of life of its citizens.

    This requires greater affluence and less poverty, both of which require more affordable housing.

    —–

    Note 1: The city of Detroit has experienced a severe economic decline. However, the Detroit metropolitan area (which includes the city, the suburbs and exurbs) has fared much better. The city (municipality or local government authority of Detroit experienced a population loss from 1,850,000 to 714,000 in the last 60 years, while suburban and exurban areas added 2.2 million. There are a variety of theories about Detroit’s municipal decline, involving both "push" and "pull" factors (such as the incompetence and corruption of the municipal government to the not unrelated attraction of suburban living).  Further, the overall population growth rate of the Detroit metropolitan area has not been strong, but exceeded that of the other three worst hit "Rust Belt metropolitan areas, Cleveland, Buffalo and Pittsburgh (which lost population). Metropolitan Detroit’s growth rate was similar to that of the New York metropolitan area (35 percent compared to 42 percent), which ranked 46th in growth (out of 51) compared to Detroit’s 48th.

    Note 2: At the peak of the housing bubble, affordability deteriorated to a moderately unaffordable 3.1 in Atlanta. Atlanta had been among the high income world’s fastest-growing metropolitan areas for at least three decades, but slowed briefly during the Great Financial Crisis. Growth has returned, with Atlanta ranking third in net domestic migration among US metropolitan areas with more than 5 million population.

    —-

    Photograph: Hong Kong (by author)

    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.”

  • Is America’s Future Progressive?

    Progressives may be a lot less religious  than conservatives, but these days they have reason to think that Providence– or Gaia — has taken on a bluish hue.

    From the solid re-election of President Obama, to a host of demographic and social trends, the progressives seem poised to achieve what Ruy Texeira predicted a decade ago:  an “emerging Democratic majority”.

    Virtually all the groups that backed Obama — singles, millennials, Hispanics, Asians — are all growing bigger while many of the core Republican groups, such as evangelicals  and intact families, appear in secular decline.

    And then, the Republicans, ham handed themselves, are virtually voiceless (outside of the Murdoch empire) in the mainstream national media.

    Whatever the issue that comes up — from Hurricane Sandy to the Newtown shootings or the “fiscal cliffs” — the Republicans, congenitally inept to start with, end up being portrayed as even more oafish.

    Not surprising then that progressive boosters feel the wind of inexorability to their backs. Red states, and cities, suggests Richard Florida are simply immature versions of blue state ones; progress means density, urbanity, apartment living and the decline of suburbs. Republicans, he argues, are “at odds with the very logic of urbanism and economic development.”

    Yet I am not sure all trends are irredeemingly progressive. For one thing, there’s this little matter of economics. What Florida and the urban boosters often predict means something less progressive than feudalist. The Holy Places of urbanism such as NewYork, San Francisco, Washington DC also suffer some of the worst income inequality, and poverty, of any places in the country.

    The now triumphant urban gentry have their townhouses and high-rise lofts, but the service workers who do their dirty work have to log their way by bus or car from the vast American banlieues, either in peripheral parts of the city (think of Brooklyn’s impoverished fringes) or the poorer close-in suburbs. This progressive economy works from the well-placed academics, the trustfunders and hedge funders, but produces little opportunity for a better life for the vast majority of the middle and working class.

    The gentry progressives don’t see much hope for the recovery of blue collar manufacturing or construction jobs, and they are adamant in making sure that the potential gusher of energy jobs in the resurgent fossil fuel never materializes, at least in such places as New York and California. The best they can offer the hoi polloi is the prospect of becoming haircutters and dog walkers in cognitively favored places like Silicon Valley. Presumably, given the cost of living there, they will have to get there from the Central Valley or sleep on the streets.

    Not surprisingly, this prospect is not exciting many Americans. So instead of heading for the blue paradises, but to lower-cost, those who move now tend towards low-cost, lower-density regions like Dallas-Fort Worth, Houston, Atlanta, Austin, Charlotte and Raleigh. Even while voting blue, they seem to be migrating to red places. Once there, one has to doubt whether they are simply biding their time for Oklahoma City to morph into San Francisco.

    In this respect, the class issue so cleverly exploited by the President in the election could prove the potential Achilles heel of today’s gentry progressivism. The Obama-Bernanke-Geithner economy has done little to reverse the relative decline of the middle and working class, whose their share of national income have fallen to record lows. If you don’t work for venture-backed tech firms, coddled, money-for-nearly-free Wall Street or for the government, your income and standard of living has probably declined since the middle of the last decade.

    If the main focus of progressives was to promote upward mobility, they would deserve their predicted political hegemony. But current-day leftism is more about style, culture and green consciousness than jobs and opportunity. It’s more Vogue’s Anne Wintour than Harry Truman. Often times the gentry agenda — for example favoring higher housing and energy prices — directly conflicts with the interests of middle and working class families.

    The progressive coalition also has little to offer to the private sector small business community, which should be producing jobs as they have in the wake of previous recessions but have failed to do so this time. A recent McKinsey study  finds that small business confidence is at a 20 year low, entrepreneurial start-ups have slowed, and with it, the innovation that drives an economy from the ground up.

    These economic shortcomings are unlikely to reverse themselves under the Obama progressives. An old Democrat of the Truman and Pat Brown, perhaps even Bill Clinton, genre would be pushing our natural gas revolution, a key to blue-collar rejuvenation, instead of seeking to slow it down. They would be looking to raise revenues from Wall Street plutocrats rather than raise taxes on modestly successful Main Street businesses. A HUD interested in upward mobility and families would be pressing for more detached housing and dispersal of work, not forcing the masses to live in ever smaller, cramped and expensive lodgings.

    Over time, the cultural identity and lifestyle politics practiced so brilliantly by the President and his team could begin to wear thin even with their core constituencies.  Hispanics, for example, have suffered grievously in the recession — some 28%  now live in poverty, the highest of any ethnic group.

    It’s possible that the unnatural cohesion between gentry progressives and Latinos will tear asunder. For one thing Hispanics seek out life in suburbs with homes and backyards, and often drive more energy-consuming cars that fit the needs of family and work, notably construction and labor blue collar industries — all targets of the gentry and green agenda.

    Arguably the biggest challenge for the blue supremacists may prove the millennials, a group I have called the screwed generation. They have been vulnerable in a torpid recovery following a deep recession since they depend on new jobs or having their elders move to better ones; more than half of those under 25 with college degrees are either looking for work or doing something that doesn’t require tertiary education.

    For now, millennials — socially liberal, ethnically diverse and concerned with economic inequality — naturally tilt strongly to the President. Their voting power continue to swell as they enter the electorate. As Morley Winograd and Mike Hais have demonstrated, if they remain, as they predict, solidly Democratic, the future will certainly be colored blue.

    But this result is not entirely assured. Now that the first wave of millennials are hitting their thirties, they may not want to remain urban Peter Pans, riding their bikes to their barista jobs, as they age. A growing number will start getting married, looking to buy homes to raise children. The urban developers and gentry progressives may not favor this, preferring instead they remain part of “generation rent”  who remain chained to leasing apartments in dense districts.

    And then there’s the economy. What happens if in two or four years, millennials find opportunity still lagging?  Cliff Zukin, at Rutger’s John J. Heidrich Center for Workforce Development, predicts the young generation will “be permanently depressed and will be on a lower path of income for probably all their life”. One has to wonder if, at some point, they might rebel against that dismal fate. Remember the boomers too once tilted to the left, but moved to the center-right starting with Reagan and have remained that way.

    Of course, the blues have one inestimable advantage: a perennially stupid Republican party and a largely clueless, ideologically hidebound conservative movement. Constant missteps on issues like immigration and gay rights could keep even disappointed minority or younger votes in the President’s pocket. You can’t win new adherents by being the party of no and know-nothing. You also have to acknowledge that inequality is real and develop a program to promote upward mobility.

    Unless that is done, the new generation and new Americans likely will continue to bow to the blue idols, irrespective to the failures that gentry progressivism all but guarantees.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared at Forbes.com.

    Barack Obama photo by Bigstock.

  • Urban Housing: A Master Plan for the Few

    How we, as a nation, find bounty and beauty in the future depends upon how we react to two trends emerging from the recent difficult period in American urbanism. The first of these trends is the increasing lack of affordability in mainstream urban America, with the costs of maintaining a middle-class lifestyle at a level where distinct have/have-not lines are now drawn. The second is the increasing authoritarianism in mainstream urban America, where decisions about how our cities function are guided by a new array of authority figures that represent the common good. Both trends point to a disempowerment of a vast section of the American population.

    Our loss of housing affordability is an insidious development that will continue to eat away at the urban triumphalism that marked the beginning of this century. Generation Xers, seniors on fixed incomes and the struggling middle class will have much in common during the coming decade, with fewer and fewer housing solutions designed for them. If half of our consumer goods are purchased by the top ten percent, then the rest of us are increasingly irrelevant in terms of goods, and services, as well as in housing,

    Affordability on Main Street was once a concern of Wall Street. It was broadly known as Fordism, from the days when Henry Ford paid decent wages so that his workers could afford his new product, the car. Today, with Main Street on its knees, Fordism is dead and Wall Street turns more and more to itself, and to large, multinational conglomerates for profits. Volume generated by the middle class comes from a few companies like Apple, and, as the class shrinks, psychological distance between the haves and have-nots widens the gap, especially for those with memories of the material wealth they had in earlier days.

    Solutions to the affordability gap in the urban realm are conspicuous by their absence. Desirable addresses, decent houses, and access to amenities are now the province of relatively few, who are serviced by those on the outside, commuting into town from less hip and trendy places. New residential housing, driven by the Wall Street investment community, is geared towards the market-rate. The linkage between mass transit and affordable housing has been deftly snipped apart by the investment community, where the topic of affordable housing generates a yawn.

    Solutions? We might do well to investigate anti-urban trends, where peripheral and rural communities are stable and growing, and look at how these communities cope. Housing solutions like prefabricated units (think trailer parks, America’s answer to the favela) might be studied.

    Non-affordability, as a trend, is strongly linked to a co-evolutionary partner that is driving a wedge between the haves and have-nots: an authority figure which has become a new interlocutor in of the urban conversation, a sort of urban do-gooder to save us from ourselves, pushing more requirements and accepting fewer improvisations. Affordable housing has less to do with the square footage that is in that space, and more to do with the ingredients found within the square footage.

    The gloved hand of quasi-government authority has come to rest upon our cities with an increasingly tight grip, in the name of the green lobby or in the name of the traditional town.

    Cities underwent rapid change in the fifties and sixties due to the car, and subsequently parking garages, commercial strips, suburbs and highway overpasses sprouted. All these developments facilitated growth and expansion. Americans were remarkably unsentimental about their historic urban fabric, and notably experimental about innovative technological solutions to remove obstacles to this growth.

    Today, our confidence is shaken. The rise of authorities to dictate urban form signals that the era of innovation and improvisation is over, and that American cities are entering a new era of more rigid control of what gets built. The authority, in the form of a Master Plan, treats the city as if it were a vast, private land holding, and its citizens as if they were animals in a forest that was about to be developed.

    Master Plans have already been passed in Denver, Philadelphia, and Miami, and are on the boards for other cities in 2013. When a developer Master-Plans his land, he relies upon a Master to create the vision for the land, and this Master – credentialed, experienced, and hopefully talented – sets out the form of the future construction. The Master may have a passing interest in the voices from the land itself – biologists who count endangered species, for example – but the overarching form comes out of his mind, and the developer then implements the plan.

    When the same process is used upon a living, dynamic city, the results vary. Future citizens, bound by the edicts of this Master Plan, may submit to the Master’s vision, or, they may chafe at its restrictions. These Master Plans are formulated with great citizen input and collaboration until the time at which they are set. After that, they are to be obeyed. The plans create a physical model, or form; they are like a glove into which the city must fit its future hand.

    Master Plans attempt to take all possibilities into account, while creating ‘perfect’ rules by which the city can grow. Physical order, it is hoped, will lead to social order, as buildings once again behave like they did before the car. Should the future evolve as the Master predicts, the glove will fit the grown-up hand However, the future is notoriously difficult to predict.

    The new regulatory regime has become fashionable as citizens, sickened by the dirt and ugliness of our cities, seek an authority to keep us from temptation. As such, Master Plans arise from a noble intent not unlike the one held by city planners at the turn of the 20th century: to improve urban hygiene. And they may be correct in thinking that emulating urban form as it was before the car might just bring walkability back into fashion once again.

    The future, however, is ephemeral and dynamic, not static like a Master Plan, and may become frustrating to the Master Planners who have created elaborate blueprints for our nation’s cities. America’s fluid economic situation is giving rise to in-home workplaces, negating the need for traditional office space. It is giving rise to in-home manufacturing, reducing the size and complexity of factories. Warehouses, in today’s era of just-in-time-delivery, are being converted into other uses. And finally, Master Plans all seem to reminisce about Main Streets with lovely, tree-lined rows of shops under apartment (parking would be safely tucked in the back). These shops, renting for top dollar, stand empty today, made even more remote from reality with the advent of online retail.

    In short, Master Plans that rigidly enforce an urban form of yesteryear may become next year’s white elephants. Cities bearing these master plans may find themselves with a regulatory burden that is reducing their desirability as places to live and work. Following these cities specifically, learning of their successes and failures, and analyzing how Master Plans are working will tell us a lot about the future.

    As affordability is reduced and regulation increases, American cities could soon evolve into forms that are quite different from those of our past. And as confidence in the future fades, our cities take increasing comfort in the past, fossilizing our urban form as the Romans once did. For those underneath the affordability curve, improvisation and innovation will still continue, and insight into both of these emerging trends will yield a new sense of direction for the places where we live and work.

    Richard Reep is an architect and artist who lives in Winter Park, Florida. His practice has centered around hospitality-driven mixed use, and he has contributed in various capacities to urban mixed-use projects, both nationally and internationally, for the last 25 years.

    Flickr photo by alesh houdek: A walled and gated Miami home.