New Geography

Category: housing

  • Leaving California? After slowing, the trend intensifies

    Given its iconic hold on the American imagination, the idea that more Americans are leaving California than coming breaches our own sense of uniqueness and promise. Yet, even as the economy has recovered, notably in the Bay Area and in pockets along the coast, the latest U.S. Census Bureau estimates show that domestic migrants continue to leave the state more rapidly than they enter it.

    First, the good news. People may be leaving California, but, overall, the rate of leaving is about three-quarters less than that experienced in the first decade of the millennium. In the core, booming San Francisco metropolitan area, there was even a shift toward net domestic migration after 2010, something rarely seen since the 1980s.

    Outmigration dropped with the initial economic slowdown of the last recession, particularly as housing prices in some areas, notably the Inland Empire and the Sacramento area, drifted toward the national norm of three times incomes by 2010, having been twice that high or more in the boom times. The initial recovery after 2010 may also have encouraged people to stay as well.

    Back to mounting outmigration

    The San Francisco Bay Area lost more than 600,000 net domestic migrants between 2000 and 2009 before experiencing a five-year respite. Now, sadly, the story seems to be changing again. Housing prices, first in the Bay Area and later in other metropolitan areas, have surged mightily, and are now as high as over nine times household incomes. In 2016, some 26,000 more people left the Bay Area than arrived. San Francisco net migration went from a high of 16,000 positive in 2013 to 12,000 negative three years later.

    Similar patterns have occurred across the state. Between 2010 and 2015, California had cut its average annual migration losses annually from 160,000 to 50,000, but that number surged last year to nearly 110,000. Losses in the Los Angeles-Orange County area have gone from 42,000 in 2011 to 88,000 this year. San Diego, where domestic migration turned positive in 2011 and 2012, is now losing around 8,000 net migrants annually.

    The major exceptions to this trend can be found in the somewhat more affordable interior regions. Sacramento has gained net migration from barely 1,800 in 2011 to 12,000 last year. Even some still-struggling areas, like Modesto and Stockton, have seen some demographic resurgence as people move farther from the high-priced Bay Area.

    Read the entire piece at The Orange County Register.

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

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

    Photo: Marco Varisco, CC License

  • Deindustrialisation in Sydney

    According to property analysts CoreLogic, the Sydney median vacant land selling price has hit $450,000, a massive 20.5 per cent higher than the same time last year. This follows the New South Wales Valuer-General’s January announcement that in the 12 months to July 2016, land values across the city’s north-western and south-western corridors rose by around 25 per cent. Yet a general reluctance to identify out-of-control land values as the prime cause of our housing crisis is matched by a strange indifference to their distorting effects on Sydney’s economic structure. One exception is Michael Cook of Investa Property Group, who recently captured the essential problem. “South Sydney, once the domain of the industrial juggernaut Goodman, is now dotted with high-density Meriton apartments,” he writes. “Where once ‘office’ or ‘industrial’ was the highest and best use, residential is now commanding the big bucks.”

    Cook’s observations are consistent with this account of classic “deindustrialisation” from land economist Alan Evans of Reading University, applicable in many respects to conditions in Sydney:

    It has already been argued that the high price of land will have led to the substitution of other factors for land where this is possible. Where substitution is more difficult, industries will face higher costs, and competition from countries where land or other prices are lower will force them to contract. The net result will have been a shift of production and employment away from some activities which use a lot of space, primarily in manufacturing industry, and towards activities which use relatively little space, primarily services. In this way the planning system will have contributed to the so-called de-industrialisation of Britain over the last 30 years or so.

    While most of our civic and opinion leaders contemplate a “truly global city” for the world’s best and brightest, processes of contraction and dislocation are reshaping Sydney’s industrial base. “The broad trends being observed within Metropolitan Sydney, amplified over the past two years”, said Sass J-Baleh of Colliers International in March, “has been the shift in preference for industrial users, particularly those large users within the manufacturing and logistics industry sectors, to locate further west of Sydney, and the urban renewal of industrial-zoned land in pockets of inner and middle ring areas.” By ‘urban renewal’ she means the conversion of industrial land for residential and ‘mixed use’ purposes, and ‘pockets of inner areas’ means, mostly, the old industrial transportation axis of South Sydney, stretching from Sydney Harbour down to Central Station, Alexandra Canal, Kingsford-Smith Airport and Port Botany.

    In a 2015 report to the NSW Department of Planning, consultancy Urbis note that “industrial land users traditionally located around Sydney’s East and South subregions (ie Botany, Mascot, Banksmeadow etc) have progressively moved west as the city’s population and urban footprint expanded and competition from alternative land uses increases.” Urbis found that in the east and south industrial development has been “priced out … because of their diminishing industrial base (a function of increased inner-city residential densities and planning pressures).” South Sydney industrial land values for larger sites reached $700 per square metre in 2012, say Urbis, while south west and outer south west values were as low as $300 and $250. In the case of industrial development that differential has a large impact, since it’s “delivered at lower margins than development for other land uses.” In other words “land value has a greater role in determining the overall feasibility of development.”

    Colliers report that South Sydney land and capital values achieved a record growth rate of 19.4 per cent over 2016.

    Across metropolitan Sydney, 35 hectares of industrial land was rezoned for other uses in 2013, of which 18.3 hectares was rezoned for medium-density housing. Unsurprisingly a high 79 per cent occurred in Botany Bay LGA (Local Government Area), the lower sector of the old South Sydney hub closest to the port, encompassing Mascot, Botany and Banksmeadow (renamed Bayside LGA in September 2016). While local industrial land values reached $850 per square metre in 2014, the equivalent figure for residential values in Mascot was $1,385. Hence the observation by Colliers’ Edward Princi in 2015, that “residential approvals and rezoning have reduced the traditional industrial base of the city’s south by about 2 million square metres.” CBRE Research estimate that South Sydney will lose 210,000 square metres of industrial stock over the next 5 years. In contrast, the residential populations of Botany Bay LGA and City of Sydney LGA were forecast to grow by 23 and 30 per cent respectively.

    From the gentrified, inner-city band around the CBD, City of Sydney LGA extends down to the industrial zone’s northern Alexandria-Waterloo-Zetland sector. Here residential land values are more than triple those of Botany Bay, as much as $4,751 per square metre in the old factory suburb of Waterloo, just 4 kilometres south of the CBD. “Greater high density development and ongoing gentrification are underpinning the evolution of South Sydney from a blue collar, industrial working class area to an upmarket, mixed-use precinct with a rapidly growing local population”, say agents Jones Lang Lasalle. In June 2015, City of Sydney Council rezoned what are officially called the Southern Employment Lands (“employment lands” are roughly equivalent to industrial lands in NSW planning jargon) to allow for a range of other business activities and housing (parts like Green Square were already the subject of special arrangements). This may just be a case of responding to pressure from landowners, but Lord Mayor Clover Moore’s “green, global and connected” administration would have needed little encouragement.

    By the 1940s, Alexandria/Waterloo was the “largest industrial municipality in Australia”, 415 hectares crowded with 550 smokestack factories churning out products as diverse as soap, tallow, fertilisers, springs, brushes, aircraft, storage batteries, furniture, sporting goods, glass, matches, industrial gases, paper containers, paints and varnishes. “The Birmingham of Australia”, was its nickname. Today Alexandria, Waterloo and Zetland converge on a very different landscape. “One of the largest urban renewal projects undertaken in Australia”, Green Square is a complex of towers providing 20,000 new apartments around a Town Centre with two public plazas, at least one park, an ‘urban stream’, an aquatic centre, a library, and an underground railway station. With an estimated 2030 population of 61,000 packed into 2.78 square kilometres, it will be the country’s most densely populated urban area. The economic principle, elaborated by Evans and others, that “capital is substituted for land in the production of space as land becomes more expensive”, is thus borne out.

    Other parts of industrial South Sydney are being similarly transformed. In 2015 alone, no less than 1,701 apartments were planned or being built amidst the derelict factories and workingmen’s bungalows of neighbouring Rosebery.

    While South Sydney was the heartland of the old industrial zone, it also branched off along the south shore of the harbour west of the CBD, where waterfront sites attracted bulk commodity processing industries reliant on seaborne transportation. Among them the woolstores at Darling Harbour, timber sawing at Rozelle Bay, coal-fired power generation at White Bay, sugar refining at Pyrmont, then further west as Sydney Harbour becomes the Parramatta River, livestock slaughter at Homebush Bay, iron ore smelting at Rhodes, coal-fired gasworks at Mortlake, and oil refining at Camellia. Over the decades, these industrial hubs were uprooted by rising land values and rents, and factors like the availability of motorised transportation. For instance, Urbis point out that between 1993 and 2012 (before the most recent explosion in prices) standard residential land values within a 15 kilometre radius of Sydney CBD rose at double the rate of small industrial land values, by 8.38 per cent and 4.44 per cent respectively.

    Mostly, the old waterfront sites were rezoned for residential, commercial or recreational purposes, but not other industrial uses. Darling Harbour is now a convention, exhibition and entertainment precinct. Rozelle Bay and White Bay, along with Johnston Bay and Blackwattle Bay, are part of The Bays Precinct, an urban renewal plan for mixed use and 16,000 new dwellings on 95 hectares of derelict waterfront land. The small peninsula of Pyrmont is currently Australia’s most densely populated suburb following the completion of Jacksons Landing, a planned community featuring five massive high-rise apartment blocks. Redeveloped as the site of the Sydney Olympics, Homebush Bay is the subject of a 2030 Master Plan for several 45-storey residential towers housing 21,000 more people in 10,700 new apartments. At Rhodes, a project allowing up to five 25-storey buildings will take the expected population to 11,000, “making it one of the most densely populated areas of Sydney outside the CBD.” And Camellia has its own government Land Use and Infrastructure Strategy, proposing “a town centre … public plazas, high-rise apartments and parks.”

    Dislocating land values are having an impact beyond the traditional zones, however. Now they are rippling out to the secondary or middle ring of industrial sites in Sydney’s central west region. From the 1960s and 1970s, places like Blacktown, Holroyd, Rydalmere, Rosehill, Silverwater, Chullora, Villawood, Milperra, Smithfield, Moorebank and Wetherill Park emerged as industrial centres in conjunction with the shift of working class population to the western suburbs and highway upgrades. Urbis identify Smithfield, Wetherill Park and Chullora, along with South Sydney, as locations from which industrial operators are relocating to the outer west and south west.

    Ray White Commercial’s head of research Vanessa Rader explains that “the market extending from Enfield to Moorebank, taking into account regions such as Milperra, Villawood and Chullora in recent years, has been contracting due to competition from other uses such as retail and residential, resulting in increases in land value …” She describes the region as “home to manufacturing, fabrication and wholesale type uses.” Similar analysis came from CBRE’s Raj Chaudhary, who said “the withdrawal of about 100,000 square metres from the central west industrial market, due to rezoning and conversion to residential, is reducing supply in an already tight market …” Last year’s sale of 3 warehouse units in Holroyd for a price equivalent to more than $3,000 per square metre was “the highest industrial per square metre building rate ever achieved in the area.”

    These processes of contraction, dislocation and relocation have transformed Sydney’s industrial geography. According to the NSW Department of Planning’s last Employment Lands Development Program (ELDP) report, 79 per cent of Greater Sydney’s total zoned employment lands, and 93 per cent of the 22 per cent zoned but not yet developed, are now in the central west, south west and outer west subregions. This is up from 60 per cent of all employment lands in 1991, say Urbis. The question is whether planning authorities are supplying enough zoned land serviced with water, sewerage, electricity and road connections on the western periphery to meet demand from new operators and those driven out of other locations, and to relieve pressure on land values generally. While this will receive more detailed treatment on another occasion, the evidence suggests they are failing. “Under the average take-up rate of 163 hectares per annum there is only 2.8 years of supply”, says the ELDP report, “this does not meet the supply standard for undeveloped and serviced land (5-7 years supply).” Malcolm Tyson of Colliers warns that Sydney could run out of industrial land in just 6 years. Dreaming of “global city” amenities like dense housing, commuter rail, walkability and bike paths, our planning elites may be occupied elsewhere. But this is a crisis in the making.

    John Muscat is a co-editor, along with Jeremy Gilling, of The New City, a web journal of urban and political affairs.

    Photo: Derelict White Bay Power Station, Rozelle, Sydney, 2014

  • California: The Republic of Climate

    To some progressives, California’s huge endorsement for the losing side for president reflects our state’s moral superiority. Some even embrace the notion that California should secede so that we don’t have to associate with the “deplorables” who tilted less enlightened places to President-elect Donald Trump. One can imagine our political leaders even inviting President Barack Obama, who reportedly now plans to move to our state, to serve as the California Republic’s first chief executive.

    As a standalone country, California could accelerate its ongoing emergence as what could be called “the Republic of Climate.” This would be true in two ways. Dominated by climate concerns, California’s political leaders will produce policies that discourage blue-collar growth and keep energy and housing prices high. This is ideal for the state’s wealthier, mostly white, coastal ruling classes. Yet, at the same time, the California gentry can enjoy what, for the most part, remains a temperate climate. Due to our open borders policies, they can also enjoy an inexhaustible supply of cheap service workers.

    Of course, most Californians, particularly in the interior, will not do so well. They will continue to experience a climate of declining social mobility due to rising costs, and businesses, particularly those employing blue-collar and middle-income workers, will continue to flee to more hospitable, if less idyllic, climes.

    California in the Trump era

    Barring a rush to independence, Californians now must adapt to a new regime in Washington that does not owe anything to the state, much less its policy agenda. Under the new regime, our high tax rates and ever-intensifying regulatory regime will become even more distinct from national norms.

    President Obama saw California’s regulatory program, particularly its obsession with climate change, as a role model leading the rest of the nation — and even the world. Trump’s victory turns this amicable situation on its head. California now must compete with other states, which can only salivate at the growing gap in costs.

    At the same time, foreign competitors, such as the Chinese, courted by Gov. Jerry Brown and others to follow its climate agenda, will be more than happy to take energy-dependent business off our hands. They will make gestures to impress what Vladimir Lenin labeled “useful idiots” in our ruling circles, but will continue to add coal-fired plants to power their job-sapping export industries.

    Read the entire piece at The Orange County Register.

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

    Photo: By User “Neon Tommy” (https://www.flickr.com/photos/neontommy/8117052872) [CC BY-SA 2.0], via Wikimedia Commons

  • Portland Housing Stupidity Grows

    Here’s an incredibly stupid idea to deal with Portland’s housing affordability problems: Multnomah County proposes to build tiny houses in people’s backyard. The people will get to keep the houses on the condition that they allow homeless people to live in them for five years.

    That’s supposed to be an incentive. For five years, you have to share your yard with a homeless person who may be suffering from a variety of problems, after which you get to keep whatever is left of the tiny home. But as one Portland neighborhood activist points out, what homeless people need is healthcare and social work, not to be warehoused in someone else’s backyard.

    I suspect homeowners are going to be wary of this offer because they will have little control who lives in their yard. Not only would the homeowners be required to maintain the tiny houses while the homeless person or people lived in them, Portland is making it increasing difficult for landlords to evict unwanted tenants.

    Update: Despite my pessimism, 580 homeowners have “inquired about hosting a homeless family in their backyards.” Initially, the county will build four, and if it can raise the funds, it will build as many as 300 more.

    More important, this plan is stupidly expensive. The county estimates that each 220-square-foot tiny house will cost $75,000. That’s $341 per square foot! There are an estimated 3,800 homeless people in Portland, so housing them all this way would cost $285 million. That assumes one person per tiny house; some may house two, but housing people in tiny homes will also attract more homeless people into the area.

    There’s also a not-so-hidden agenda here: “creating a denser, more affordable city.” At least, that’s the plan. The reality is density doesn’t make cities more affordable. In fact, the densest cities tend to be least affordable.

    In Portland, people who build tiny houses in their yards face a huge increase in property taxes. That’s because, under Oregon law, their existing home is taxed at its 1996 value, plus a small annual increase for inflation, while new construction is taxed at today’s value. Thus, a new, 220-square-foot tiny house may be taxed more than the 2,000-square-foot house it shares a lot with.

    Multnomah County says it will “try” to waive property taxes for people willing to accept tiny houses for homeless people in their yards, at least for the five years that homeless people live in them. How generous! Mercy, thy name is Multnomah County! Except really, it’s name is Stupid.

    Randal O’Toole is a senior fellow with the Cato Institute specializing in land use and transportation policy. He has written several books demonstrating the futility of government planning. Prior to working for Cato, he taught environmental economics at Yale, UC Berkeley, and Utah State University.

    Photo: DubbaG [GFDL or CC-BY-SA-3.0], via Wikimedia Commons

  • Suburban and Urban Housing Cost Relationships

    Perhaps this is old hat to you, but this came across as a bit of an epiphany to me earlier today.

    I was listening to the local public radio station this morning and there was a segment about the Chicago regional housing market that was fairly interesting.  Real estate and personal finance expert Ilyce Glink talked about home buying in the Chicago regional market.  Like many other housing markets nationwide, Chicago took an incredible hit in 2008-09 via the Great Recession, and regionally, home prices have been slow to rise from the depths of the early parts of the 2010s.  There’s some greater optimism that prices might be up throughout the area, even as the potential for higher mortgage rates increases, too. 

    In describing the Chicago regional housing market, Glink described many things in our recent housing history that are familiar to a lot of people in metro Chicago, and in other metros as well — depressed prices, numerous foreclosures, and a razor-thin inventory.  But she also alluded to the pre-Great Recession pattern that defined the region’s housing market — the continued movement outward of new home construction at the edges of the region — and how that essentially stopped around 2009 and hasn’t resumed since. 

    That got me thinking.  YIMBYs, the “yes-in-my-backyard” group that’s been pushing for relaxed housing regulation so that more housing units are built in cities to address affordable housing, have been effective in using the obscene housing prices and rents of cities to justify new city housing construction, despite my repeated objections.  My contention has usually been that prices rose so steeply in the hottest city neighborhoods because the demand was so high.  There was a newfound preference for city living, especially among young professionals.  However, there simply wasn’t enough of Lincoln Park or Wicker Park for everyone that wanted in.  Furthermore, there are other neighborhoods, like South Shore, that have the same positive qualities (lakefront location, easy public transit, close to the Loop) that should make it appealing to those wanting to live in the city, but it was being bypassed.  My argument was that such neighborhoods might actually welcome investment.  The combination of these factors, I believed, led to the price and rent spikes in the hottest areas, and it could be resolved in part by city newcomers considering previously unconsidered parts of the city.

    Here’s the epiphany — what if the lack of housing supply, at the regional level, has less to do with the lack of housing production within cities, and more to do with the lack of housing production at the metro area’s margins?

    Just before and well after the last recession, I worked for a city at our region’s edge and it was a huge beneficiary of the pre-2007 housing free-for-all.  In fact, the city where I worked more than doubled its population between 1990 and 2010 on the strength of annexation and new housing construction, becoming one of the largest cities in Illinois.  In 2007, weaknesses in the housing market were becoming apparent; in 2008, the bottom fell out; in 2009 and 2010, people were wondering when the old normal would return, or if a new normal would set in.  I think it’s fair to say the latter, since nothing approaching the pre-2007 boom has returned to the metro edges. 

    This would require further study and analysis by someone far more qualified than me, but here’s what I’m thinking.  Maybe, in a strange way, early urban pioneering was dependent on housing growth at the margins.  It could be affordable for those who chose to live there because it was one part of a housing market conveyor belt: first step a trendy but safety-optional urban apartment, second step a safer and quieter apartment or condo, third step a house in the suburbs.  The lack of edge housing construction disrupts that model, especially if there’s a shift in housing preferences as well.

    In other words, what’s broken is not the ability of cities to accommodate new construction, but the edge-driven model we’ve had for the last 60-70 years. 

    Don’t get me wrong.  I don’t see a return to our suburban-sprawl frenzy as a way to reduce prices and rents in cities.  But maybe it pays to examine the entirety of a regional housing market before designating a culprit.

    Pete Saunders is a Detroit native who has worked as a public and private sector urban planner in the Chicago area for more than twenty years.  He is also the author of “The Corner Side Yard,” an urban planning blog that focuses on the redevelopment and revitalization of Rust Belt cities.

    An unfinished subdivision.  Source: joyyehle.com

  • Big Box Jesus

    One of my cousins recently attended an event at a suburban church and I tagged along. I’m amoral and omnivorous. I’ll go to any house of worship on the odd chance I might actually learn something useful – and I often do. And I meet a lot of really nice people along the way. But mostly I like to explore the landscapes other people inhabit. Church provides an intimate glimpse into what people are thinking and feeling in a particular location.

    I was immediately impressed with how much this church looked and functioned like a shopping mall. The size, shape, and general construction of the buildings and surrounding parking lots were indistinguishable from a large retail center. I spent more time than I probably should have trying to figure out which denomination it was. Catholic? Definitely not. Lutheran? Not exactly. Baptist? Meh. Mormon? Nope. It was a generic all inclusive Christian arrangement that celebrated the lack of any specific affiliation. Come and worship. We take all kinds. And enjoy the ample free parking and food court while you’re here. There was a well populated Christian school, a substantial auditorium, and all manner of programs and facilities. It was a highly successful suburban version of Big Box Jesus.

    The event my cousin was attending wasn’t strictly religious in nature. It was more of a collection of speakers who each preached a version of financial independence with a Christian slant. The majority of the attendees were suburban women like my cousin looking to start or improve an independent business venture.

    A borrower is a slave to his master. A thousand heads nodded. Always set aside 25% of everything you earn. The congregants listened intently. Start small and build up incrementally. There were biblical parables about prudence leading to abundance. Knowing smiles of agreement followed. There were some folksy stories about the misguided foolishness good people often stumble into. Laughs ensued from the audience. I liked these people.

    But then I looked out at the parking lot. How many people paid cash for their cars? I explored the subdivisions all around the church. How many people bought their suburban homes with cash? How many people are capable of setting aside even a sliver of savings on a regular basis ever. How many people bought their clothes and shoes and had their hair done with a credit card that got rolled over into a big ball of vague but gradually mounting debt? How many people are approaching middle age and still paying off student loan debt?

    I understand the dynamics of contemporary accounting. Carrying mortgage debt provides a substantial tax advantage. Using “other people’s money” at a low interest rate to invest in an asset that consistently rises in value is smart and frees up cash to be deployed in other more productive ways. Putting cash into savings is inefficient since it sits in a bank earning near zero interest these days. Stock values keep rising so investing in equities is a no brainer.

    You can’t go around wearing thrift store clothes and sporting a bowl haircut and expect to be taken seriously in a professional business setting. You don’t want to drive around in an old clunker and put your family at risk when you could have the latest safety and reliability features of a newer car bought on credit. If you can buy that car with a home equity loan and get the tax deduction, all the better. Everything about respectable modern life is predicated on people spending a certain amount of money in a very specific way that is nearly impossible to achieve on a cash basis. And that set of arrangements is in direct conflict with the traditional virtues of frugality, saving, and self reliance. Big Box Jesus takes Visa, Mastercard, and American Express.

    This particular suburb is still very much in the aggressive growth phase of development. Everything is shiny and new. Did the developers build this town on a cash basis? No. It’s built on an Everest of commercial debt. How many of the people at the church earn their living selling real estate, or cars, or brokering mortgages, or refinancing people’s obligations, or helping them manage their stock portfolios? How many people are critically dependent on other people buying their products or services on credit? One way or another… almost everyone.

    Is the city paying as it goes for infrastructure with funds set aside for maintaining and replacing all the pipes, pumps, and pavement when they wear out? Are pensions fully funded? Will this development pattern generate enough taxable value as it ages to support and maintain all the critical public infrastructure of schools, police, and fire protection? I’ve spent a lot of time exploring the municipal finances of towns all over the country for years. They’re all functionally insolvent beyond a certain not-too-distant point.

    What all these practices and institutions need – what they can’t function without – is constant growth based on ever more leverage and debt. This can’t go on forever. Sooner or later there’s going to have to be a day of reckoning when the whole house of cards comes down. If I were a religious man I’d start praying right about now. Instead, I actually do what the preachers say. Pay cash, live below your means, save for the future, and opt out of the situations that trap you in a dysfunctional living arrangement with no future.

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

    All photos by Johnny Sanphillippo

  • Canada’s Urban Areas: Descent from Affordability

    Canada is a nation of wide open spaces, yet it has high urban area densities recently driven higher by a redefinition of urban area criteria (Note 1). Canada’s largest urban area (population centre) is Toronto, with a population of 5.4 million continues to be the densest of the 59 with more than 50,000 residents. Toronto has a population of 3,028 per square kilometer (7,843 per square mile), approximately five percent above the European Union average. Montréal (population of 3.5 million) has a density of 2,720 per square kilometer (7,045 per square mile), followed by third ranked Vancouver (2,584/6,693), which has a population of 2.2 million.  The top ten is rounded out by Milton, a fast growing Toronto exurb with a density of 2,520 per square kilometer or 6.527 per square mile, Calgary (2,112/5,470), Regina, the capital of Saskatchewan (2,082/5,391) and Winnipeg, which has seen renewed recent growth (2,070/5,360).

    Four other population centres have densities greater than 1,950 per square kilometer (5,000 per square mile , including  Oshawa and Hamilton, which are adjacent to Toronto, as well as Saskatoon, Saskatchewan and Kanata, an exurb of Ottawa (Figure 2).

    Comparisons to the United States

    The new, higher density figures are not surprising considering the especially compact suburbs in view when landing at Pearson Airport in Toronto, or even in Calgary or Edmonton. A combined Canada-US urban area density list illustrates the higher density of Canadian urban areas relative to those in the United States.  Among the five densest urban areas in Canada and the United States, four are in Canada. Los Angeles, the densest large urban area in the United States for the last three censuses, ranks third behind Toronto and Montréal. Vancouver and Milton rank fourth and fifth, just ahead of 6th ranked San Francisco. Immediately behind San Francisco is virtually all post-World War II suburban San Jose. Delano, California, an exurb of Bakersfield in the San Joaquin Valley has about 55,000 residents and ranks 8th on the combined list.

    Residents of Calgary, Regina and Winnipeg, where densification advocates repeatedly condemn their perceived local urban sprawl (a pejorative term for urban dispersion) will doubtless be surprised to know that their population density exceeds that of New York. Only one more US urban area makes the top 20, Sacramento exurb Davis, at 14th, with a population of 73,000 (Figure 3).

    Where’s Portland?

    To those inclined to venerate Portland’s internationally famous densification policies, this list may be disconcerting. Calgarians who bemoan the inferiority of their city in relation to Portland should be heartened to find out that Calgary’s density is more than 50 percent higher than Portland’s (Calgary’s transit market share is more than double Portland’s).

    Portland is not among the densest 20 urban areas , but ranks 72nd, just behind all-suburban Riverside-San Bernardino and a bit ahead of Halifax. If Portland were in Canada, it would rank 38th in population density out of the largest 59 urban areas.

    And Boston?

    Boston has a reputation as one of the densest cities in the United States. Yet, Boston’s huge urban area  is denser than only three of Canada’s urban areas on the list, Belleville, ON, North Bay, ON and Fredericton, NB. Each is smaller than Boston suburb Somerville, which has about 75,000 residents. Among the urban areas of  Canada and the US Boston is 218th in density. (Note 3).

    Urban Containment Not Density Associated with Unaffordability

    Canada’s urban areas illustrate that density does not have to mean unaffordable housing. There has been some densification since 2000, but Canada’s urban areas were nearly as dense even then. For example, in the last 15 years, the completely developed city of Toronto, with all its new residential towers, has added only 10 percent to its population. Five of Canada’s six major metropolitan areas Toronto, Montréal, Ottawa-Gatineau, Calgary and Edmonton were affordable at the beginning of the new century, hovering around a median multiple 3.0.

    All that has changed, however, with the imposition of urban growth boundaries and equivalent policies. Ailin He and I showed in a Frontier Centre study (Canada’s Middle Income Housing Affordability Crisis) that house prices had “exploded” relative to household incomes between 2000 and 2015. This cannot be attributed to the modestly higher densities. The big change took place in land use policy, with, for example, Toronto and Calgary adopting urban containment policy that has been strongly associated with the destruction of housing affordability. Residents of Vancouver  — an urban area widely praised among planners —  have been paying the price for urban containment for much longer (Figure 4).

    Canada’s experience up to the end of the 20th century proves that dense and affordable urban areas can be achieved. But since that time, as house prices have risen relative to incomes, Canada’s experience shows that all that can be reversed in an environment of binding urban containment policy.

    Note 1: Between 2011 and 2016, Canada’s urban areas increased more than 40 percent in population density, according to Statistics Canada data. This, however, was not a miracle of urban containment policy or smart growth, it was rather an improved method adopted by Statistics Canada for measuring urbanization. Urban areas are the "physical city," which unlike the metropolitan area has only urban land. Canada now calls its urban areas "population centres," having changed to the new label in 2011, when the United Kingdom labeled them "built up urban areas."

    In 2011 and before, the Census had used municipalities as building blocks for urban areas. Often, those municipalities included large swaths of rural land (as did Los Angeles until well into the 1950s). Now, the building blocks for urban areas in Canada are "blocks", the lowest enumeration geography of the Census (the same revision was implemented by the US Census in 2000). Under the old definition, Canada’s urban areas had a density of 1,180 per square kilometer (3,057 per square mile) in 2011. Now it is 1,698 per square kilometer (4,397 per square mile), a 44 percent increase.

    Note 2: The comparisons are between the 2016 Census of Canada data and the 2010 US Census data, since urban area (population centre) data is only developed in the censuses (the next US census will be in 2020). The list is developed from the 59 urban areas in Canada and the 499 in the United States with 50,000-plus residents in the last censuses.

    Note 3:  A recent article found Boston to be almost five times as dense as Houston. However, this was in municipal (inside the city limits) density. City limits are artificial, political constructs that have nothing to with the organic city (the physical city , also called urban area or the economic city, or the metropolitan area , which is the labor market).  The Houston urban area, with its reputation for "sprawl" is actually one-third denser (1150/2979 ) than Boston’s (856 /2,278). At the physical city level, the urban area is the best indication of urban density. Using metropolitan density as an indicator of urban density is nonsensical, since all metropolitan areas include substantial rural territory.

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

    Photo: Suburban density in Toronto (Markham) by IDuke – English Wikipedia, CC BY-SA 2.5

  • Vancouverizing Seattle?

    A recent Wall Street Journal article (“For Chinese buyers, Seattle is the new Vancouver”) reported that Seattle was replacing Vancouver as the most popular destination for Chinese buyers in North America. For years, there has been considerable concern about foreign investment in the Vancouver housing market, especially Chinese investment. This   demand is widely believed to have driven Vancouver house prices “through the roof.” In response, the British Columbia government recently imposed a 15 percent foreign buyers tax that has had the impact of significantly reducing new foreign investment in Vancouver’s housing market.

    Yet the impact of the tax has still been muted. Houses remain just about as unaffordable as before. The Real Estate Board of Greater Vancouver benchmark price has dropped less than four percent from six months ago, before the foreign buyers tax was imposed. This compares to an 80 percent increase over the last 10 years and 47 percent increase over just the last three years (Figure).

    Clearly there is something other than Chinese investment driving up Vancouver house prices. Since 2004, Vancouver’s median multiple (median house price divided by median household income) has risen from 5.3 to 11.8. This means that that the median house has increased in price more than six times the annual median household income.

    The primary cause of Vancouver’s difficulties is a rigged housing market. For decades, Vancouver has had some of the strongest urban containment policy in the world. Regional land-use authorities have prohibited  housing development from being built on a large agricultural reserve. This land is hardly needed for such use in a nation that has increased its gross agricultural output more than 150 percent since 1961, while reducing its land in farms by three times as many acres as is occupied by all urban settlements combined, according to the 2016 Canadian census. Of course, urban containment restrictions on new housing have driven up house prices, just as Middle East oil supply reductions used to drive up gasoline prices, before the recent supply increases from Canadian and US oil production.

    Vancouver has literally become the third most unaffordable city (metropolitan area) in the nine nations covered by the Demographia International Housing Affordability Survey. This makes a mockery of the Vancouver’s frequent citation as one of the most livable cities in the world. The first principle of livability is affordability — you cannot live where you cannot afford. Most young families of normal economic means cannot hope to ever buy a modest detached house with a yard as their parents or grandparents did decades ago in the Vancouver area. Only Hong Kong and Sydney are less affordable.

    In a recent column (“Not much can or will be done to make Vancouver housing more affordable”) by Gordon Clark in The Province (Vancouver newspaper) describes how things have changed, in a story similar to what you will hear in Sydney, San Francisco and others of the world’s most unaffordable cities. In 1941, his postal supervisor grandfather purchased a house on Oak Street (a main central arterial leading toward downtown) for 1.5 years of income. In 1979 his teacher mother purchased a house in the city of Vancouver for 2.5 times her income. Now with houses costing nearly 12 times incomes, Clark regretfully concludes that nothing can be done: “because the solutions are unacceptable to most people.”

    This illustrates what is perhaps the most powerful characteristic of urban containment regulation — that it creates a strong lobby of support among those who have seen their house values irrationally escalate as a result of unwise government policy. In this environment, public officials simply wring their hands, decry the problem and implement nothing of substance to change the essentially flawed policies. 

    With this rigged market, it should not be surprising that people with money from outside Vancouver, and abroad, would seek to buy houses in Vancouver. After all, the policies all but guaranteed strong returns to anyone with enough capital to enter the market.   It is as if a “Speculators Welcome” banner has been hung from Lion’s Gate Bridge. Not so welcome are those middle-income households being driven out of the market

    Lessons for Seattle

    All of this is a cautionary tale for the Seattle metropolitan area, which also has urban containment policy, but of more recent vintage. Just 140 miles or 225 kilometers south of Vancouver, Seattle’s has housing affordability that already as bad as Vancouver’s  only 12 years ago.

    Seattle has a severely unaffordable median multiple of 5.5, slightly worse than Vancouver’s 5.3 in 2004. In the late 1980s, before Seattle imposed its metropolitan- urban containment policy, the median multiple was as low as 2.4 (Table). Today, a Seattle household with the median income must pay three additional years of income for the median priced house.

    Rising housing demand with severely constricted supply is associated with higher house prices compared to incomes. In this regard, Seattle has multiple risks, from households escaping California to escape from the even higher prices, Seattle is a bargain compared to the “dogs breakfast” of unaffordable housing associated with California where median multiples now exceed 8.0 in all of the major coastal metropolitan areas (Los Angeles, San Francisco, San Diego and San Jose). Prices are so high in California that a seller can buy a comparable house in Seattle for hundreds of thousands less. There may not be as much sun in Seattle, but there’s plenty of money left over for umbrellas and other goods and services.

    Now the pressure is likely to increase as foreign investors who shop the world for rigged housing markets promise quick profits now turn their attention to the Puget Sound. In this environment, it would not be surprising for additional serious house price escalation to be in the offing, and Seattle to indeed become the new Vancouver in the next decade or two.

    Given these forces, we can expect Seattle housing prices   will continue to increase disproportionately to incomes unless there is land use policy reform. Sufficient supply must be allowed on greenfield land to keep house prices from rising farther. And “building to the sky”— which is very expensive and not very family friendly —  is not likely to restore housing affordability in Seattle any more than it has anywhere else. For example, the Manhattanization of central Toronto, with its many new residential towers, has not prevented its median multiple from doubling from 3.9 to 7.7 in the last 12 years. Nor has it prevented a far less obvious (at least to the press) 80 percent share of population growth to be in the suburbs between 2011 and 2016.

    Lost in all of this are ordinary middle and working class people, who routinely take a back seat in public policy to planning obsessions over urban form, and a “sense of place.” Middle-income households are far more in need of a “decent place” to live at a reasonable price. Architectural marvels or sleek streetscapes are no substitute. The issue is not ideological, it is rather practical and human. Nor is it about property rights, or free markets. The issue is that people are being denied the housing they desire by urban containment policy and its distorted priorities. As Paul Cheshire, Max Nathan and Henry G. Overman of the London School of Economics have pointed out, “people rather than places” should be the focus of urban policy.

    It is ironic that progressive metropolitan areas, like Vancouver, where inclusionary zoning drip feeds housing to lower income households, have become, large exclusionary zones where average income households cannot afford houses. Seattle is headed down the same path.  Soon it may be time to hang a “Speculators Welcome” banner from the Space Needle.

    Photograph: Downtown Seattle (by author)            

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

  • The High Cost of a Home Is Turning American Millennials Into the New Serfs

    American greatness was long premised on the common assumption that each generation would do better than the previous one. That is being undermined for the emerging millennial generation.

    The problems facing millennials include an economy where job growth has been largely in service and part-time employment, producing lower incomes; the Census bureau estimates they earn, even with a full-time job, $2,000 less in real dollars than the same age group made in 1980. More millennials, notes a recent White House report, face far longer periods of unemployment and suffer low rates of labor participation. More than 20 percent of people 18 to 34 live in poverty, up from 14 percent in 1980.

    They are also saddled with ever more college debt, with around half of students borrowing for their education during the 2013-14 school year, up from around 30 percent in the mid-1990s. All this at a time when the returns on education seem to be dropping: A millennial with both a college degree and college debt, according to a recent analysis of Federal Reserve data, earns about the same as a boomer without a degree did at the same age.

    Downward mobility, for now at least, is increasingly rife. Stanford economist Raj Chatty finds that someone born in 1940 had a 92 percent chance of earning more than their parents; a boomer born in 1950 had a 79 percent chance of earning more than their parents. Those born in 1980, in contrast, have just a 46 percent chance.

    Since 2004, homeownership rates for people under 35 have dropped by 21 percent, easily outpacing the 15 percent fall among those 35 to 44; the boomers’ rate remained largely unchanged.

    In some markets, high rents and weak millennial incomes make it all but impossible to raise a down payment (PDF). According to Zillow, for workers between 22 and 34, rent costs now claim upward of 45 percent of income in Los Angeles, San Francisco, New York, and Miami, compared to less than 30 percent of income in metropolitan areas like Dallas-Fort Worth and Houston. The costs of purchasing a house are even more lopsided: In Los Angeles and the Bay Area, a monthly mortgage takes, on average, close to 40 percent of income, compared to 15 percent nationally.

    Like medieval serfs in pre-industrial Europe, America’s new generation, particularly in its alpha cities, seems increasingly destined to spend their lives paying off their overlords, and having little to show for it.

    Rather than strike out on their own, many millennials are simply failing to launch, with record numbers hunkering down in their parents’ homes. Since 2000, the numbers of people aged 18 to 34 living at home has shot up by over 5 million.

    One common meme, particularly in the mainstream media, has been that millennials don’t want to buy homes. The new generation, as Fast Company breathlessly reported, is part of “an evolution of consciousness.” Other suggest the young have embraced “the sharing economy,” so that owning a home is simply not to their taste. The well-named site Elite Daily asserts that the vast majority of millennials are headed to “frenetic metropolis” rather than becalmed suburbs.

    And it’s not just ideologues claiming millennials have evolved out of home ownership. Wall Street speculators like Blackstone are betting that the young are committed to some new “rentership society,” with that firm investing $10 billion to scoop up existing small homes to rent, and even building tracks of homes exclusively for rent.

    It’s not a lifestyle choice, but economics—high prices and low incomes—that are keeping millennials from buying homes. In survey after survey the clear majority of millennials—roughly 80 percent, including the vast majority of renters—express interest in acquiring a home of their own. Nor are they allergic, as many suggest, to the idea of raising a family, albeit often at a later age, long a major motivation for home ownership. Roughly 80 percent of millennials say they plan to get married, and most of them are planning to have children.

    Overall, more than 80 percent of millennials already live in suburbs and exurbs, and they are, if anything, moving away from the dense, expensive cities. Since 2010 millennial population trends rank New York, Chicago, Washington, and Portland in the bottom half of major metropolitan areas while the young head out to less expensive, highly suburbanized areas such as Orlando, Austin, and San Antonio.

    Age will accelerate this process. Economist Jed Kolko notes as people enter their thirties they tend to head out of core cities to suburban locations; roughly one in four people in their mid to late twenties lives in an urban location but by the time those people are in their early thirties, that number drops precipitously and continues dropping into their eighties. In fact, younger millennials, notes the website FiveThirtyEight, are moving to the ’burbs at at a faster clip than previous generations. What’s slowing that trend is economics. Many can’t afford to move or transition to a traditional adulthood.

    The millennial housing crisis is reshaping the geography of opportunity. Although millennial rates of homeownership have dropped nationwide, the most precipitous declines have been in such metropolitan areas as New York, Miami, San Francisco, Portland, Seattle, and Los Angeles. In all these areas, public policy has regulatory barriers in the way of suburban and exurban affordability. It is in these markets where such things as “tiny houses” and “micro-apartments”—not exactly a boon to people looking to start families—are being touted as solutions to housing shortages.

    Nowhere is this dynamic more evident than in California, where the state government has all but declared war on single-family homes by banning new peripheral development, driving up house prices throughout metropolitan areas. Regulatory fees typically add upward of $50,000, two-and-a-half times the national average; new demands for “zero emissions” homes promise to boost this by an additional $25,000.

    Due largely to such regulatory restraints, overall California housing construction over the past 10 years has been less than half of that it averaged from 195 to 1989, forcing prices up, particularly on single-family houses. The state ranks second to the last in middle-income housing affordability, trailing only Hawaii. It also accounts for 14 of the nation’s 25 least affordable metropolitan areas.

    Home ownership rates in California are among the nation’s lowest, with Los Angeles-Orange having the lowest rate of the nation’s 75 large metropolitan areas. For every two homebuyers who come to the state, five families leave, notes the research firm Core Logic.

    The irony is that the state’s progressive policies are contributing to a less mobile society and a potential demographic crisis. For one thing, fewer young people can form families—Los Angeles-Orange had one of the biggest drops in the child population of any of the 53 largest metros from 2010 to 2015.

    This also has a racial component, as homeownership rates African American and Latino households—which often lack access to family wealth—have dropped far more precipitously than those of non-Hispanic Whites or Asians. Hispanics, accounting for 42 percent of all California millennials, endure homeownership roughly half that seen in other parts of the country.

    This is not the planners’ happy future of density dwelling, transit-riding millennials but a present of overcrowding, the nation’s highest level of poverty and, inevitably, a continued drop in fertility in comparison to less regulated, and less costly, states such as Utah, Texas, and Tennessee that have been among those with the biggest surges in millennial migration.

    Once identified with youth, California’s urban areas are now experiencing a significant decline in both their millennial and Xer populations. By the 2030s, large swaths of the state—particularly along the coast—could become geriatric belts, with an affluent older boomer population served by a largely minority servant class. How feudal!

    Ownership of land has always  been a critical component of middle-class wealth and power. Those celebrating the retreat from homeownership among millennials are embracing the long-term decline of that middle class, two thirds of whose wealth is in their homes.

    The potential decline in ownership also represents a direct assault on future American prosperity. Jason Furman, who served as chairman of President Obama’s Council of Economic Advisors, calculated that a single-family home contributes 2.5 times as much to the national GDP as an apartment unit. Investment in residential properties has dropped to its lowest share of overall spending since World War II; by some estimates reviving that would be enough to return America to 4 percent growth.

    With so many millenials unable to afford homes, or even to see a path to future ownership, household formation has been far slower than in the recent past. Rather than a surge of middle-class buyers, we are seeing the rise of a largely property-less generation whose members will remain economically marginal into their thirties or forties. Indeed by 2030, according to a recent Deloitte study, millennials will account for barely 16 percent of the nation’s wealth while home-owning boomers, then entering their eighties and nineties, will still control a remarkable 45 percent of the nation’s wealth.

    If this continues, we may have to all but abandon the notion of the United States as a middle-class nation. Instead of having a new generation that strikes out on their own, we may be incubating a culture that focuses on such things as the latest iPhone, binge watching on Netflix, something they do far more than even their Xer counterparts.

    Progressives who embrace these developments are abandoning one of the central tenets of mainstream liberalism. In the past, many traditional liberals embraced the old American ideal of dispersed land ownership. “A nation of homeowners,” President Franklin D. Roosevelt believed, “of people who own a real share in their land, is unconquerable.” Homeownership is not only critical to the economy but provides a critical element of our already fraying civic society; homeowners not only tend to vote more than renters, but they also volunteer more and, as Habitat for Humanity suggests, provide a better environment for raising children.

    On the flip side, high housing prices tend to suppress birthrates. Many of the places with the highest house costs—from Hong Kong to New York, Los Angeles, Boston, and San Francisco—also have very low birthrates. The four U.S. areas ranked among the bottom 10 in birthrates among the 53 major metropolitan areas in 2015. Over time these can have a dampening impact on economic growth, as is clearly seen today in places like Japan and much of Europe, and increasingly here in the U.S.

    It’s time for millennials to demand politicians abandon the policies that have enriched the wealthy and stolen their future. That means removing barriers to lots of new housing in cities and, crucially, embracing Frank Lloyd Wright’s notion of Broadacre Cities, with expansive development along the periphery.

    These new suburbs, like the Levittowns of the past, could improve people’s lives, while using new technology and home-based work  to make them more environmentally sustainable. They could, as some suggest, develop the kind of urban amenities, notably town centers, that may be more important to millennials than earlier generations. One thing that hasn’t changed is the demand for affordable single-family homes and townhomes. But the supply is diminishing—those under $200,000 make up barely one out of five new homes.

    There are some reasons for hope. The soon-to-develop tsunami of redundant retail space will open up millions of square feet for new homes. A move to prefabricated homes, already common in Europe and Japan, could help reduce costs. Certainly there’s potential demand at the right price—ones that young people can reasonably aspire to and then build lives in.

    The alternative is to travel back to serfdom and a society sharply divided between a small owner class and many more permanent rent payers. By then, the American dream will be reduced to a nostalgic throwback in an increasingly feudalized country.

    This piece first appeared in The Daily Beast.

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

  • The Brooklynization of Brooklyn

    The New Brooklyn: What It Takes to Bring a City Back
    by Kay Hymowitz

    My City Journal colleague Kay Hymowitz has written a number of great articles on Brooklyn, the borough that is her home. This inspired her to write a great book on the topic of the transformation of Brooklyn called The New Brooklyn.

    It starts with a two-chapter history of the borough from its earliest settlement to the present day, followed by a series of chapters looking at Brooklyn today. This includes the transformation of Park Slope (where she and her husband moved in the early 1980s), Williamsburg, Bed-Stuy, and the Navy Yard.

    But she recognizes that Brooklyn is not all hipster gentrifiers. It is still a borough of immigrants and still too often poverty. A quarter of Brooklyn’s residents are below the poverty line. So she also presents case studies of this other face of the new Brooklyn, including the looking at the Chinese of Sunset Park, the West Indians of Canarsie and the African-Americans of Brownsville.

    There’s a lot of great details in here. For example, that there were once slaves in Brooklyn:

    It’s worth lingering over this jarring fact: when you walk past the fine townhomes and churches of Brooklyn Heights, eat at a pizza joint in Bensonhurst, or wander through the art galleries of Bushwick, you are traversing land once tilled by African slaves – and a substantial number of them, given the small size of the white population.

    Also how NYCHA income limit rules helped segregate public housing that had formerly been at least partially integrated.

    NYCHA residents were required to move out once their income surpassed a certain ceiling. That made sense; public housing was supposed to be for those who couldn’t afford to live in private developments. The problem was that most of those who reached the income ceiling were white. Antipoverty advocates argued that it was only fair to give preference to the most disadvantaged on waiting lists. Perhaps; but as a result, upwardly mobile whites were replaced by poor black refugees both from the South and the cleared slums of other parts of New York.

    There are also some passages that would give Richard Florida the tingles:

    The postindustrial crowd settling in Park Slop had a somewhat different profile from their educated suburban cousins, a profile that continues to dominate gentrified neighborhoods everywhere. They were an artsy-literary bunch; today, we would call them the “creative class”…Whatever the reasons, the original gentrifiers were in conscious retreat from suburban conformity. Though gentrifier tastes have veered back towards mid-century modern, the Tiffany lamps, stained glass and Victorian antiques that the pioneers collected were a far cry from the harvest-gold kitchen appliances and plastic chairs and dishes favored by suburbanites.

    A few of the essays were previously published in City Journal, but the majority of the book is new. The writing is very accessible and not academic. The New Brooklyn provides not just a highly readable look at the current conditions in Brooklyn, but a sense of how we got to where we are. As someone who lacks in-depth knowledge of Brooklyn, I found it very informative.

    You can also listen to Kay talk about her book in a recent episode of the City Journal podcast.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.