Category: housing

  • Houston, City of Opportunity

    This essay is part of a new report from the Center for Opportunity Urbanism titled “The Texas Way of Urbanism“. Download the entire report here.

    Creative friction – unchaperoned and unprescribed – is Houston’s secret sauce.

    At a time when Americans’ confidence in all major U.S. institutions – minus the military and small business – has sunk below the historic average, and only about 20 percent of Americans say they spend time with their neighbors, one would expect pessimism to be universal. But come to the concrete sprawl just north of the Gulf and you’ll find a different vibe, one that other cities would do well to emulate.

    Of course things aren’t perfect in Houston, and the region is taking it a bit on the chin due to the drop in oil prices. But look over the mid- and long-term and the place has consistently lured people from around the country and the world.

    People continue to move to the flat and humid city in higher numbers than any other metropolis. According to the United States Census Bureau, from 2014-2015 metro Houston attracted 159,083 total and 62,000 net domestic migrants, topping the Census list on new metro area residents. Critically, the newcomers represent those population groups most telling of a metro’s future: millennials, immigrants, and families.

    “The American Dream is still alive here,” say those migrants, one after another. 81 percent of Houston residents rate the city as a good or excellent place to live, according to the 2016 Kinder Houston Area Survey. That’s up from 70 percent a decade ago. And despite the recent economic slowdown, 62 percent of Houston-area residents rated the local economy as “excellent” or “good.”

    Even the most conventional of popular figures have begun to figure this out. “Houston will surprise you,” wrote Katie Couric when she stopped here on a nationwide tour of up-and-coming cities. It was a more iconic statement than perhaps she realized. Outsiders often misperceive Houston as politically conservative and totally dependent upon the energy business, but the city consistently busts internal expectations, too. In Houston, you don’t have to drive far to run into unexpected languages, unexpected restaurants, a huge informal economy and just a pervasive – and bracing – sense of random.

    “It’s a cat city,” says Bill Arning, director of Houston’s celebrated Contemporary Arts Museum. He moved here in 2009 from Boston. “If you arrive without a tour guide, without a friend who knows the city, it’s hard to figure out where things are. There are no landmarks. Whereas Austin is a dog city – you know where the beautiful people are – Houston is a cat city. Its charms are there, but you’ve got to come to it. You’ve got to take a little time.”

    What sets Houston apart? What about the city makes so many residents confident they will find their version of the American dream here? If it is indeed a city of opportunity, what lessons might other cities absorb and weave into their own policies and cultural fabric? Through many interviews, data sleuthing and the everyday experience of living here, I found five traits that define Houston: affordable proximity, multipolarity, social deregulation, an active future orientation, and humility. What follows is a tour of the city that knows no limits.

    Affordable Proximity

    “There’s always been a haphazard nature to the city, from the beginning,” says Sanford Criner, a native Houstonian as well as vice chairman at CBRE, the world’s largest real estate firm. “Where Chicago – which was founded the same year [1836] – had an economic reason for being the day it was founded, Houston was a real estate play. These guys came down from the northeast – New York, Pennsylvania – and they bought some land and sent out flyers.

    “I’ve seen some [of the flyers], and they’re hysterical,” Criner continues. “‘Salubrious environment!’ said one. ‘Well-watered!’ said another. They’d have this picture that looks like a little Swiss valley, with chalets up the hill, and there wasn’t a house here! It was a scam. But that’s how we now date the founding of our city.”

    Where others saw only wilderness along the banks of Buffalo Bayou, Augustus Chapman Allen and John Kirby Allen saw promise, and convinced people to take a gamble and move. This rambunctious “come one, come all” attitude continues to define the city’s development, 180 years later.

    The city of Houston is famous for its no zoning policies, the fruits of which are visible in the hodge-podge of commercial and residential hubs evident on a first drive in from one of the two airports. The apparent haphazardness may dizzy outsiders, but for Houston residents it’s a gift that my colleague Tory Gattis calls “affordable proximity”: the ability to live near one’s place of employment while keeping the cost of living affordable. It’s a challenge that has become onerous in many cities, but one that Houston manages to tackle with surprising efficiency.

    “It’s definitely true that it’s easier to build things here than elsewhere,” says Criner. “We’ve been able to build things relatively inexpensively and rapidly that have generally benefited everybody.”

    Since 2010, Houston has expanded its housing stock to issue construction permits for 189,634 new units, paralleling the population growth. This is in sharp contrast to competitor cities such as New York, Los Angeles, Chicago and the Bay Area, where construction tends to lag behind population.

    Houston is uniquely able to create housing to meet demand. The populations in both New York City and Houston have grown significantly in the past six years, but New York, like many big cities, has not come close to meeting demand. A lot of this has to do with sheer land availability and willingness to expand outward, but Houston’s light regulatory touch has crucially allowed developers to be in sync with consumer need and preference, without the red tape that slows other cities’ building and adaptability. A key result has been a greater level of affordability, and of choice.

    In April of 2016, The Wall Street Journal highlighted groundbreaking research by Issi Romem, chief economist at real-estate site BuildZoom, showing that the cities that have expanded geographically have kept their house prices more affordable.

    According to the National Association of Home Builders/Wells Fargo Bank Housing Affordability Index, more than 60 percent of homes in the Houston metro area are now considered affordable for median-income families, compared with only 15 percent in Los Angeles, once ground zero for the dream of homeownership. According to Zillow, renters in New York spent 41.4 percent of their income on housing in 2015, whereas the share for their Houston counterparts was just 31 percent.

    The Demographia International Housing Affordability Survey provides ratings for all major metropolitan areas in the U.S., and Houston consistently ranks as more affordable than cities like Portland, New York, San Francisco and San Jose, all of which have more restrictive regulations.

    Houston’s housing is also diverse. Houston has become the national leader in new multifamily units, helping to preserve and expand access to urban living. At the same time, the Houston metro has led the country in new single-family houses.

    Availability of affordable land and a lighter regulatory environment allowing for outward expansion has made it possible for many to afford a residence near the city’s dispersed job centers. In addition, as City Observatory recently reported, a series of reforms adopted in 1999 shrunk the required residential lot size from 5,000 square feet to 1,400 square feet, enabling town home development in high demand areas proximate to jobs.

    Proximity to work is especially appealing to millennials, who have moved to Houston in droves. The U.S. Census Bureau showed a 25 percent increase in millennial residents between 2000 and 2013, with millennials currently making up 24 percent of Houston’s total population. Many of these new adults want to reduce their commutes, or even ditch their cars for the sake of enjoying a more seamless transition between professional and personal life. Houston offers this possibility across urban and suburban areas, the multipolarity of business centers providing flexibility to carve a nice triad of work, residence, and play.

    Despite the impression of endless freeways, Houston’s commute times are better than those in metros of comparable populations. One-way commutes were 28.4 minutes in 2014, according to the American Community Survey, making Houston the fourth best out of nine comparable cities.

    Houston also does very well on an international scale with respect to traffic congestion, according to TomTom in 2015. The region ranked fifth out of the 38 urban areas that have populations over 5 million.

    None of this suggests Houston lacks room for improvement in mobility, but it’s credit to the city’s decision to dramatically increase roadway capacity and arterial streets that it has managed to improve its ranking in traffic congestion while experiencing a huge increase in population. According to the Texas A&M Transportation Institute, in 1984 and 1985 Houston was ranked with the worst congestion in the country, even worse than Los Angeles. Now Houston is ranked 10th, even as it’s nearly doubled its population, from 3.5 million in the mid-1980s to 6.5 million today. Only Atlanta and Dallas can boast similar mobility improvements.

    Multipolarity and Economic Diversity

    Most Americans think of Houston as an oil and gas town. And while energy still undergirds much of the city’s economy, Houston boasts many other assets as well: the world’s largest medical center, one of the world’s busiest ports, the third largest manufacturing hub in the country, a booming technology sector and a wide range of small to medium-sized businesses, including a thriving informal sector of immigrant-run businesses. This has led to demand for labor at all skill and education levels, unique among the top ten largest cities.

    “Best Online Programs in 2016,” said U.S. News & World Report about the University of Houston. “Top Cities for Competitiveness to Attract Investment in Chemicals & Plastics,” said Conway about Houston in 2015. “Best Hospitals for Adult Cancer – University of Texas MD Anderson Cancer Center” said U.S. News & World Report in 2015. “Top Blue-Collar Hot Spots,” said Forbes in 2014. “Most Favorable Metro for STEM Workers [Nationally],” said WalletHub in 2015.

    Houston is no stranger to “Best Of” lists that today’s mayors scour. But what’s notable is the cross-sector nature of the superlatives. According to a June 2016 report from the Texas Workforce Commission, 20.3 percent of Houston’s workers are in Trade, Transportation and Utilities, 15.5 percent are in Professional and Business Services, 12.8 percent in Government, 12.7 percent in Education and Health Services, 10.2 percent in Leisure and Hospitality, 8 percent in Manufacturing and 7.4 percent in Construction.

    The city has learned from its mistakes. The 1980s, which saw a slump in oil prices much greater than that in 2015, bulged in profligate building and overconfidence. According to the Greater Houston Partnership, from 1982 to 1986, developers built more than 100,000 single-family homes, many of them without a signed contract from a purchaser. Even when the region lost more than 200,000 jobs, office developers continued to build, including adding more than 71.7 million square feet of office space while companies were laying off staff and declaring bankruptcy. Today, the office market is tighter, banking is better regulated and better capitalized, and few homes are built without a signed contract. Most importantly, the region is creating jobs that aren’t in energy, including in health care, business and professional services.

    Social Openness: A City for Everyone

    Houston is deregulated economically, but it’s of greater note that it’s deregulated socially. People come here from many walks of life and culture, and the relative youth of the city combined with its scrappy DNA means that there really isn’t a dominant Establishment, certainly not one that wants to block the efforts of ambitious newcomers.

    “If you talk to [old] Houstonians about social mobility,” says Sanford Criner, “they kind of give you this quizzical look. Like, ‘what do you mean?’ Like, ‘Sure, of course.’ It seems obvious.”

    This city’s always been a mixer; you just have to be willing to share what wakes you up in the morning. Marlon Hall is an African American filmmaker and native Houstonian who started Folklore Films, a documentary production company created to “tell better stories to our city about our city.” He and fellow filmmaker Danielle Fanfair have featured former Mayor Annise Parker, arts patron Judy Nyquist, internationally recognized musical artist DJ Sun and other community figures. As the Folklore Films crew has gotten better acquainted with Houston residents from across the social spectrum, Marlon locates the vocational “why” as central to the city’s currency.

    “Houston isn’t driven by who you know,” he says, “but by how you want to be known. It isn’t about what pedigree you have received, but about the possibilities you want to bring to bear.”

    This kind of invitation has attracted the motivated from all over the world, with the city now pulsating with 145 languages. An international city since the day it was founded, now more than one in five Houstonians are foreign-born, with the 2014 American Community Survey reporting that 63.9 percent of the foreign born population were Latin Americans, 25.2 percent were Asian, 5.1 percent were African and 4.6 percent were European. As of the 2010 Census, Greater Houston does not have a majority racial or ethnic group.

    People come to Houston seeking opportunity, and because they sense in the visible randomness the potential for surprise ingredients to leaven the traditions they’re bringing with them. This is as true for immigrants as well as domestic migrants, with the city’s celebrated restaurant scene born out of the unexpected merging of flavors from cultures that don’t typically mix. Underbelly’s Chris Shepherd, Bistro Menil’s Greg Martin and Lucille’s Chris Williams all cite Houston’s diversity as a major factor behind the city’s flavorful palate, in both story and succulence.

    “This is edible history,” says Chris Williams, the founding chef at Lucille’s, a restaurant that takes a modern approach to Southern classics. “The food that we do here pays homage to my great-grandmother, who was a chef and a pioneer and an American icon.”

    It’s not soul food, but Southern. With a rustic European style, and a multi-generational American story at the heart.

    “Like all chefs in [my great-grandmother’s] time, your style of food was defined by what was available to you. What you could afford to work with. The flavors that I grew up with…married with the techniques and the flair that I picked up working in Europe for four years. Everywhere from London to Lithuania. …I’m influenced by the simple rustic dishes – the ones about the culture, not the flashy ones. The perfect piece of fish fresh caught, served with good potatoes, great olive oil, fresh garlic, and a little bit of parsley.”

    Bistro Menil is another spot that takes a slice from Europe and re-interprets the classic dishes for Houstonians. Its patrons come from Rice University, the Medical Center, the Museum District and beyond, the attraction of the world-renowned Menil Collection standing just across the street. Inspired by the concept of cask wine, which head chef Greg Martin discovered on a trip to Rome, Bistro Menil relies heavily on relationships with cosmopolitan – yet locally centered – Houstonians.

    “I don’t want to compete with that dish that you had in Rome,” Martin says, aware of ingredient limits this side of the Atlantic. “I want to reinterpret it with more of a New American approach, with some fresh eyes on our market, using our ingredients. Our ingredients and produce come from everywhere…I work really closely with a local importer. We’ve been working together for 30 years. He brings in our duck legs from Canada, our jamón Serrano from Spain. He brings all of our cheese in from France, Italy and Spain.”

    It’s not just the food that shows Houstonians willing to work together across silos and lift up the local talent. “We have a very supportive gallery scene,” says Bill Arning, of the Contemporary Arts Museum. “Even the galleries that show a lot of major international and national artists, like the Texas Gallery and McClain Gallery, will not only show local artists, they’ll place them in the top collections in town. That’s unusual.”

    The social egalitarianism combined with a pervasive “show me what you got” curiosity creates something very unique. Hipster cocktail bars seem no more privileged than authentic Vietnamese restaurants than classic barbecue and the iconic Rodeo. The lack of zoning makes thoroughfares like Westheimer Road, which stretches for miles from the city center to the distant suburbs, an avenue of cultural mismatches: The New York Times’-celebrated Underbelly is sandwiched between three tattoo parlors, a Catholic guild clothing store and the latest in coffee-roasted curation. There are so many opportunities to mix with those different from you that only the snobby find themselves bored and excluded. Creative friction – unchaperoned and unprescribed – is Houston’s secret sauce.

    “This is a city that does not believe in censorship,” says Arning.

    Agile, Active, and Future-Orientated

    Houston is not Silicon Valley, but its entrepreneurial DNA is unmistakable, dispersed across many fields. The city emanates a conviction that people should have the freedom to determine their destiny, sometimes to the point of overlooking those that don’t have such clear vision, nor the resources and social networks to make it happen. The city is growth- and future-oriented, embracing change and risk. True to its namesake in Sam Houston – himself a failure before reinventing himself – Houston grants permission to fall hard.

    “Houston is the only town where a person with no prior experience in a particular vocation can get joint venture capital for something they’ve never done before,” says local arts patron Judy Nyquist in one of Marlon’s Folklore Films. “Simply by virtue of their commitment to their idea, and how it can make the city better.”

    This is true across sectors – for-profit, social service, and philanthropic.

    Ella Russell of E-dub-a-licious Treats was an African American single mom working for AT&T when a breakup with her partner caused significant financial hardship. Her two boys, then age 3 and 9, came home from school asking to bring in treats for a holiday party. Russell felt helpless, all disposable income had run dry. But she did find sugar, flour and eggs in her pantry.

    “I scraped up change to buy a bag of chocolate chips,” Russell recalls, “so I could make chocolate chip cookies. The kids took them in, and then I brought the leftovers in to work. My coworkers loved them, saying every future potluck would have to have my cookies.”

    Three years later, her friends urged Russell to turn the sweetness into a business.

    “I had no business experience other than what I knew working in corporate America,” Russell says. “I really winged it; I had no basis but the support of my friends.” In a couple years, she went from serving family and friends to delivering in seven different states.

    In the burgeoning scholarship entrepreneurship of the last decade, the work of Saras D. Sarasvathy of the Darden Business School at the University of Virginia stands out. She’s coined a term called “effectual reasoning” to describe the mindsets of master entrepreneurs, one that pairs well with Houston’s soil:

    Brilliant improvisers, the entrepreneurs don’t start out with concrete goals. Instead, they constantly assess how to use their personal strengths and whatever resources they have at hand to develop goals on the fly, while creatively reacting to contingencies. By contrast, [highly successful] corporate executives use causal reasoning. They set a goal and diligently seek the best ways to achieve it.

    Sarasvathy likes to compare expert entrepreneurs to Iron Chefs: “[They are] at their best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest,” she writes. “Corporate leaders, by contrast, decide they are going to make Swedish meatballs. They then proceed to shop, measure, mix, and cook Swedish meatballs in the most efficient, cost-effective manner possible.”

    If we could take her comparative study and extrapolate from it particular civic traits, you might see Chicago as the sort of personality for corporate leaders, Houston for the entrepreneurial. The city is rife with improvisers, fueled by a deep prioritization of human relationships, an affection for eccentrics and a perennial optimism that loves to build before over-planning. The fact that there are lots of open spaces to create, and fill, encourages new entrants into any kind of market, be it technological, artistic, or consumption-oriented.

    This goes well beyond profit-seeking ventures. The Chronicle of Philanthropy identifies Houston as one of the country’s most generous cities, ranking at #11 for giving as a percentage of adjusted gross income – three stops behind Dallas.

    “As [Dallas-Fort Worth and Houston] have each become centers of gushing economic production, and matured as communities, an energetic competition has grown up in their creation of impressive new parks, museums, hospitals, universities, and arts centers,” wrote Ari Schulman in the Fall 2015 issue of Philanthropy Magazine. “Burgeoning circles of local patriots wielding newly minted fortunes have dramatically changed the quality of life in both cities over the past decade or so.”

    This enhanced quality of life has involved a deeper renaissance in the arts, a proliferation in family-friendly green spaces, advancements in medical facilities and, increasingly, innovative educational ventures. Houston’s acclaimed Museum of Fine Arts is currently undergoing a $450 million redesign, two-thirds of that already raised with the help of giant gifts from pipeline entrepreneur Richard Kinder and money-manager Fayez Sarofim. Kinder and his wife Nancy have also given $30 million to a public-private partnership aimed at reviving a snaking bayou from a stagnant waterway to an attractive waterfront graced by 20 miles of hike-and-bike trails, canoe launches, playgrounds, art installations, and outdoor performance venues.

    “This kind of public-private partnership happens all the time,” says Criner. “In lots of other cities, philanthropic organizations tend to be run by the same group of guys that have been running stuff for a long time, and they treat them like their own turf. You don’t see that here at all. This is way more like, “if you can help, come on! What can you do? We’ll put you to work.”

    “We have a tradition of philanthropy that my colleagues in other cities [envy],” agrees Arning, of the Contemporary Arts Museum. “Privileged young people here feel they need to find their philanthropies early on. That is something uniquely Houston.”

    Humility and Cultural Accessibility

    Long considered the unattractive hothouse of the south, Houston has suffered from a long-running inferiority complex when comparing itself to other cities. Even since rising to the top of dozens of “Best of” lists in the last five years, the residue from generations of modesty remains.

    Before Marlon Hall was running Folklore Films, he and Danielle began something called the Eat Gallery, an incubator for budding chefs around the city that sought to turn food trucks into restaurants. In ramping up for this effort, they went around and asked Houstonians questions about where they found meaning, where they felt they fit, where they felt they made a difference. They discovered that people had low city esteem.

    “They’d go to a great ballet, and they’d be like, wow, this reminds me of Chicago, Hall recalls. “They’d go to a musical performance and be like, oh, this feels like New York. People were telling the worst stories to the city about the city.

    “So we said, what if we told better stories to Houstonians about Houstonians, featuring people that folks know and celebrate? But what if we began their stories with their brokenness, so that people would know that there’s something inherently broken about every beautiful person? So that’s what we did, that’s why we started Folklore Films. To raise the city esteem.”

    Folklore discovered that Houston is a city of new beginnings. When you move here, the past intrigues less than how you intend to exploit the future. Whether you’re an immigrant from overseas or a fellow American that’s left some entrenched failure behind, Houston pulses with a forward-looking frankness grounded in a humility shaped by whatever came before. This drive paired with an individual and corporate self-awareness defines the city’s character – culturally, spiritually and even economically.

    “There’s this at-homeness that people from Houston have,” Hall says. “When I think about people who have left Houston to do other things, like Beyonce, there’s this comfort to be who one is. She walks around with hot sauce in her purse – I mean, who else can say that from where else?”

    “There’s something about Houston that’s like…I’m not afraid to be who I am, even if it’s full of seeming contradictions.”

    “The collective body in Houston is significantly more adventurous than most cities,” Arning of the Contemporary Arts Museum says. “Both in use and collection. In most collection cities, you hear who supported or recommended the collection before going. Houstonians, because of their wildcat nature, [will try anything] they like.”

    Houston’s increasing diversity keeps the city vibrant and ever ready to accept change and innovation. There is no room for insularity because there is no homogeneity. Your ideas are constantly being chiseled and countered by the Other. No one has the luxury of feeling superior because everyone’s in a gem tumbler with folks not like them. It makes the city competitive, but not in a way that produces monopolies.

    “I think that Houston has come to this place where it’s a ‘My Space,’” says Marlon. People want to take ownership of their lives and creations here. “There’s a desire to own who you are in Houston, which is different from owning a business, a house a car.”

    Houston residents tend to be proud of their individual accomplishments, and feel an affection toward the place that allowed those accomplishments to happen. But there’s a recognition that success is the result of many different pieces coming together, usually organically and iteratively. The environment invites people to fulfill their individual destiny, and almost discourages any person or governing body to take credit for Houston’s successes as a whole.

    “I hesitate to say things like ‘I’m proud of Houston,’” Sanford Criner says. “What gives you the right to take pride in a place? Did you build it? Did you do it?”

    Challenges to Sustaining Opportunity

    Houston continues to beat the odds to this day. And while its adventurous impulse is what continues to draw people to Houston and make it the emblem opportunity city for 21st century dynamics and demographics, it must still be said that what you put into the world must survive. Houston is a much better place to live than it was 30 years ago. But will it continue on this trajectory, or even sustain the fruits of its triumphs?

    Houstonians recognize there needs to be a concerted effort to reform and improve Houston’s educational opportunities, its transportation and traffic infrastructure, and a more general care to respect tradition and an intensive effort toward more inclusive mobility. The city’s grown so big, so fast, it could inevitably buckle under its own weight.

    “We are not on track to make headway on a lot of the issues that are facing us,” says James Llamas, of Traffic Engineers, Inc. “We’re growing way faster than we’re adding transportation capacity or options, at the same time there does seem to be recognition that we need to do something and what we’ve been doing isn’t going to continue to work.”

    Despite precedent, massive infrastructure may not be the answer, especially given the shifting preferences of a younger population and the costs of maintenance. New mayor Sylvester Turner is considering expanding to two HOV lanes and providing express bus service. Others advocate for densification of the more traditional gridded neighborhoods that are far from holding their population capacity – but without adding infrastructure, and without pushing anyone out.

    And then there’s the perennial education challenges.

    “We are now in a different economy where education is critical,” says Stephen Klineberg, founding director of the Kinder Institute. “It never used to be critical, especially not in Texas. You made money by land – by exploiting all the natural resources you needed on the land. The great cattle, timber, oil. The source of wealth in the 21st century Houston, is knowledge. …If you don’t have education beyond high school, with the technical skills that allow you to get the jobs of the 21st century, and compete, you’re not going to make it. Texas hasn’t come fully to grips with it.”

    Conclusion

    In the last 20 years, Houston has cultivated a series of signaling mechanisms that continue to draw people into its orbit. It’s a welcoming city, supported by affordability and diversity. Majority opinion says “anything is possible if you’re willing to work hard,” a conviction increasingly on the decline in the rest of the country. And, crucially, it’s cultivated the conditions necessary for entrepreneurs to have a field day. “The assortment of motley ingredients” noted by innovation scholar Sarasvathy describes Houston in a nutshell, and the regulatory instinct has been to stay light, allowing imported imaginations to run experiments without interference.

    The city’s not beautiful upon first blush, nor does it offer the charm of pedestrian fancy that denser cities boast. But in an era of civic unrest, with many up and down the social spectrum feeling disconnected and robbed of agency, Houstonians can still shape their destiny. The city’s the clay; residents the potters. The wide range of home sizes and work-life arrangements makes Houston like the cowboy boot its Rodeo celebrates – adaptable to the needs of each life stage as residents progress through singleness, marriage, family and retirement. Residents are not trapped by the regulatory, financial or even social limits that other cities increasingly impose. The mindset is one of abundance, not scarcity.

    “This is the genius of this place,” wrote Cort McMurray in the Houston Chronicle in January of 2016, in a profile of an Iraqi refugee who had come to Houston with a B.S. in Chemistry, currently cleaning pools. “Houston will always be shambolic and stretched and not quite finished. We will never be the most beautiful city, or the most pedestrian-friendly city, or the most efficiently planned city: The heat and soul-sapping humidity, our adolescent fascination with cars and speed and shiny things, our perpetual craving for something new, all conspire against our best civic aspirations. Houston is a place to start over, and we do starting over better than any other city on the planet.”

    In an age of heightened political frustration, a sclerotic economy and shifting structural tectonics, it could be that the “starting over” ethos that Houston embodies is precisely what the country itself needs, and what other cities should seek to foster in their own policies and cultural climates. Innovation, reinvention and reinterpretation, after all, lie at the heart of the American genius.

    Anne Snyder is a Fellow at the Center for Opportunity Urbanism, a Houston-based think tank that explores how cities can drive opportunity and social mobility for the bulk of their citizens. She is also the Director of The Character Initiative at The Philanthropy Roundtable, a pilot program that seeks to help foundations and wealth creators around the country advance character formation through their giving. She previously worked at The New York Times in Washington, as well as World Affairs Journal and the Ethics and Public Policy Center. She holds a Master’s degree in journalism from Georgetown University and a B.A. in philosophy and international relations from Wheaton College (IL), and has published in The Atlantic MonthlyNational JournalThe Washington PostCity Journal and elsewhere.

    Top photo: Photo by Chris Doelle, Licensed under CC License.

  • The Texas Urban Model

    This essay is part of a new report from the Center for Opportunity Urbanism titled "The Texas Way of Urbanism". Download the entire report here.

    The future of American cities can be summed up in five letters: Texas. The metropolitan areas of the Lone Star state are developing rapidly. These cities are offering residents a broad array of choices — from high density communities to those where the population is spread out — and a wealth of opportunities.

    Historically, Texas was heavily dependent on commodities such as oil, cotton, and cattle, with its cities largely disdained by observers. John Gunther, writing in 1946, described Houston as having “…a residential section mostly ugly and barren, without a single good restaurant and hotels with cockroaches.” The only reasons to live in Houston, he claimed, were economic ones; it was a city “…where few people think about anything but money.” He also predicted that the area would have a million people by now. Actually, the metropolitan area today is well on the way to seven million.

    It would no doubt shock Gunther to learn that Texas now boasts some of the most dynamic urban areas in the high income world. Approximately 80 percent of all population growth since 2000 in the Lone Star state has been in the four largest metropolitan areas. People may wear cowboy boots, drive pickups and attend the big rodeo in Houston, but they are first and foremost part of a great urban experiment.

    The notion of Texas as an urban model still rankles many of those who think of themselves as urbanists. Most urbanists, when thinking of cities of the future, keep an eye on the past, identifying with the already great cities that follow the traditional transit dependent and dense urban form: New York, London, Chicago, Paris, Tokyo. And yet, within these five urban areas, there are large, evolving, dynamic sections that are automobile oriented and have lower density.

    Measuring Employment Success

    Since 2000, Dallas and Houston have increased jobs by 31 percent, growing at three times the rate of increase in New York and five times as rapidly as Los Angeles. Texas’ smaller but up-and-coming metropolitan regions are also thriving, with San Antonio and Austin, for example, boasting some of the most rapid job growth in the country.

    This growth is not all at the low end of the job market, as some suggest. Over the past fifteen years Texas cities have generally experienced faster STEM (Science, Technology, Engineering and Math-related) job growth than their more celebrated rivals. Austin and San Antonio have grown their STEM related jobs even more quickly than the San Francisco Bay Area has grown theirs, while both Houston and Dallas-Fort Worth have increased STEM employment far more rapidly than New York, Los Angeles or Chicago.

    The Texas cities also have enjoyed faster growth in middle class jobs, those paying between 80 percent and 200 percent of the median wage at the national level. Since 2001, these jobs have grown 39 percent in Austin, 26 percent in Houston, and 21 percent in Dallas-Fort Worth, a much more rapid clip than experienced in San Francisco, New York or Los Angeles, while Chicago has actually seen these kinds of job decrease.

    Recent Pew Research Center data illustrates that between 2000 and 2014, out of the 53 metropolitan areas with populations of more than 1,000,000, San Antonio had the second largest gain in percentage of combined middle-income and upper-income households; the percentage of households in the lower-income segment dropped. Houston ranked 6th and Austin ranked 13th, while Dallas-Fort Worth placed 25th, still in the top half.

    Much of the credit for this growth in jobs goes to the state’s reputation for business friendliness. Texas is consistently ranked by business executives as the first or second leading state. Needless to say, New York, California and Illinois do not fare nearly as well. The Texas tax burden ranks 41st in the country. Compare this to New York, which has the highest total state tax burden, Texas rates are also far lower than those in New York, neighbors Connecticut and New Jersey, or in California.

    The Demographic Equation

    No surprise, then, that people are flocking to the Texas cities. Over the last ten years, Dallas-Ft. Worth and Houston have emerged as the fastest growing big cities of more than five million people in the high-income world, growing more than three times faster in population than New York, Chicago, Los Angeles or Boston. Among the 53 US major metropolitan areas, four of the top seven fastest growing from 2010 to 2015 were in Texas.

    Foreign immigration, a key indicator of economic opportunity, is now growing much faster in Texas’ cities than in those of its more established rivals. Between 2000 and 2014 alone, Texas absorbed more than 1.6 million foreign born citizens. In numbers, that’s slightly less than California took in, but in proportion to Texas’ population it is 60 percent more.

    During that same time period the Latino population of Austin grew by 90 percent; Dallas-Fort Worth and Houston each grew by about 75 percent. In contrast, the Latino population in Los Angeles grew only 17 percent.

    Houston now has a far higher percentage of foreign born residents than Chicago does. Dallas-Ft. Worth draws even with Chicago in that measurement, with an immigrant population that has grown three times as fast as that of the Windy City since 2000.

    Economic opportunity explains much of the difference. Texas’ vibrant industrial and construction culture has provided many opportunities for Latino business owners. In a recent measurement of best cities for Latino entrepreneurs, Texas accounted for more than one third of the top 50 cities out of 150. In another measurement, San Antonio and Houston boasted far larger shares of Latino-owned businesses than Los Angeles, which also has a strong Latino presence.

    Texas is not a totally successful environment for minorities. Poverty levels for blacks and Hispanics remain high, and education levels lag in Houston, Dallas-Fort Worth and San Antonio. But the key factor is that Texas cities present superior prospects for upward mobility.

    Domestic Migration Trends

    Since 2000, Dallas-Ft. Worth has gained 570,000 net domestic migrants, and Houston has netted 500,000. In contrast, the New York area has had a net loss of over 2.6 million people, while Los Angeles hemorrhaged a net 1.6 million, and Chicago nearly 900,000. Dallas-Fort Worth, Houston, Austin and San Antonio were all among the top eleven in total net domestic migration gains. The smaller Texas cities have also experienced large gains in migrants.

    Many newcomers come from places — notably, California — where many Texans once migrated. Between 2001 and 2013, more than 145,000 people (net) have moved from greater Los Angeles to the Texas cities, while about 80,000 have come from Chicago and 90,000 from New York.

    As Dallas Morning News columnist Mitchell Schnurman says, “If oil prices don’t go up, Texas can always count on California — and New York, Florida, Illinois and New Jersey.”

    Creating the Next Generation of Urbanites

    Texas urban growth has occurred more or less in conjunction with market demand, without the strict controls and grandiose ‘visions’ that dominate planning in New York and California. Overall housing prices in Texas cities remain, on average, one-half or less than those in coastal California cities such as San Francisco, San Jose, San Diego and Los Angeles. They are a third below those in New York, and have not experienced the huge spikes in housing inflation seen elsewhere in the Northeast Corridor, such as in Boston.

    The lower house prices in Texas facilitate greater aspirations to home ownership, particularly among young people. The financial leap from renting to owning is far less daunting in Texas than it is the Northeast, or in some western US cities.

    These lower prices have been a boon to ethnic minorities, who make up an ever-growing percentage of the population in cities nationwide. Latinos and African-Americans are far more likely to be home owners in Texas cities than in New York, Los Angeles, Boston or San Francisco.

    A review of US Department of Commerce Bureau of Economic Analysis data indicates that housing costs are responsible for virtually all of the cost-of-living differences between the nation’s approximately 380 metropolitan areas. Consequently, it is far cheaper to live in Texas cities — even Austin — than in Boston, New York, Los Angeles, San Diego, Chicago and, most of all, the San Francisco and San Jose metropolitan areas.

    Some observers lament that, due to market forces, the vast majority of Texas metropolitan growth — nearly 100 percent — has taken place in the suburbs and exurbs. Yet the Texas cities mirror nationwide experiences: there is essentially no difference between the share of metropolitan development in the Texas suburbs and the share in most other areas. The average share for all major metropolitan areas is 99.8 percent, including in Portland, Oregon, the much ballyhooed model for densification.

    Ironically, dense housing development has grown more rapidly in Texas cities than it has in California, where the state has tried to mandate dense development. Building permit rates indicate that Texas cities have led the nation in both low density single family housing and in high density multifamily development. Between 2010 and 2015, Texas’ largest cities held three of the top five positions among the 53 major metropolitan areas in the issuance of multifamily building permits. Austin led the nation in these permits, while Houston and Dallas-Fort Worth had higher multifamily building permit rates than San Jose, Denver, Portland, Washington, or Los Angeles. At the same time, these three Texas cities also were in the top 10 in single-family building permits. Who occupies these new residences? Between 2010 and 2014 Texas cities, led by Austin and San Antonio, experienced higher rates of growth among college educated 25 to 34 year olds than did traditional ‘brain centers’ like New York, Boston, Chicago and even San Francisco. During the tech boom of the late 1990s, more people moved from Texas to the Bay Area than vice versa; in the current one, the pattern is reversed. A recent San Jose Mercury poll found that one-third of all Bay Area residents hope to leave the area, primarily citing high housing costs and overall cost of living.

    As young people mature, Texas’ major urban areas provide them with an array of choices. Texas city-dwellers, unlike many New Yorkers or San Franciscans, do not need to choose between living a middle class family lifestyle or staying in a city they love. Texas housing policies that allow organic growth driven by the market are attractive to young people seeking to establish careers or families, and to those who are already newly-established.

    These trends will have a long-term demographic impact, and suggest a continuing Texan ascendency. According to the American Community Survey’s ranking of elementary-age school children per family, Austin, Dallas-Fort Worth, Houston and San Antonio rank in the top six among the 53 major metropolitan areas. By comparison, Chicago ranks twenty-second, Los Angeles twenty-seventh, New York thirty-sixth, and San Francisco 45th.

    The Lone Star State is already home to two of the nation’s five largest metropolitan areas, the first time in history that any state has so dominated the nation’s large urban centers. At its current rate of growth, Dallas-Ft.Worth, could surpass Chicago in the 2040s, as would Houston a decade later. By 2050 the Lone Star state could dominate America’s big urban centers even more than it does now.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class ConflictThe 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.

    Welcome To Texas” flickr photo by David Herrera is licensed under CC BY 2.0

  • Tearing Down American Dream Boundaries: An Imperative

    Donald Trump’s election victory has been widely credited attracting households who have been “left behind,” by stagnating or declining income and lost jobs. But the left-behind also includes many households whose    standards of living are being reduced by the rising cost of housing. This is not about affordable housing for low-income households, itself very important, but a crisis among  middle-income households  no longer able to afford their own homes in some parts of the nation.

    Indeed, the lack of middle-income housing affordability has been associated with migration from more expensive to less expensive areas. Moreover, more people have been fleeing the states that supported Secretary Clinton, with their inferior housing affordability, and moving to those that supported Donald Trump (a net 1.45 million gain  in just  the last five years), where housing affordability is generally better.

    The differences in house prices are stunning. Between 1969 and 2014, the gap between the highest and lowest cost major metropolitan (over 1,000,000 population) housing markets had expanded 260 percent. This increase has been largely driven by markets that have become more restrictively regulated. In the more lightly regulated rental market the gap between the highest and lowest expanded only 30 percent, just one-ninth the change in the house price gap.

    In some highly regulated markets, notably California, it has become all but impossible to build the consumer-favored detached housing in the suburbs associated with the “American Dream.”

    In recent decades, California house prices have risen to as much as triple the costs relative to household incomes that exist in much of the rest of the country. A dense mesh of environmental regulation has been implemented,   far stronger than EPA regulations. Large parts of metropolitan areas are now off-limits for efficient housing tract construction, prohibited by “urban growth boundaries,” which can be characterized as “American Dream Boundaries.”

    Progressive politicians, dominant in California, talk incessantly about housing affordability, but blindly pursue policies that will make things even worse. It should not be surprising that the housing-cost adjusted poverty rate in California is the worst in union, underperforming even Mississippi. It should also not be surprising that Californians of every age group, including Millennials, are leaving state in larger numbers than they are being attracted.

    The San Francisco Bay Area’s two large metropolitan areas (San Jose and San Francisco) are the most unaffordable in the nation and rank fourth and seventh most unaffordable in the Demographia International Housing Affordability Survey among major metropolitan areas in nine nations. House prices have more than tripled relative to incomes since radical land-use regulation began. The problem is not a shortage of land. The Bay Area has more than enough developable land to accommodate up to four times the population. The shortage is in the amount of land governments allow to be developed. As a result, the Bay Area has become a rigged market that excludes many middle-income households by making housing unaffordable. This may be a boon for older property owners, but the burden falls most heavily on households that are minority or young. California’s housing affordability crisis is a profound public policy failure.

    The problem extends beyond California, especially to places like Oregon, Washington, Hawaii, Colorado, Maryland, and northern Virginia. The net effect is that households pay much more the necessary for housing and have a lower standard of living that is necessitated by government policy. It is no wonder that people think the future is less bright for their children.

    Moreover, no one should be misled by planning fantasies that backyard “Granny flats” or high-rise apartment towers are the answer. They have their market, but it does not include most aspiring households. Government has no business lowering living standards by forcing house prices up.

    A mortgage on a median priced house requires a qualifying income approximately double the median household income in San Diego, Los Angeles, San Francisco and San Jose (10 percent down payment assumption). In much of the country, by contrast, housing remains affordable, as in the past. A median income household can comfortably afford the median priced house in metropolitan areas like Dallas-Fort Worth, Atlanta and Kansas City.

    More Jobs and Economic Growth

    But beyond the lower standards of living attributable to American Dream Boundaries, building fewer detached houses than households demand has an important economic cost.

    Research by Chang-Tai Hseih of the University of Illinois, Chicago and Enrico Moretti at the University of California indicates that the gross domestic product was $2 trillion less than would have been expected in 2009, largely due to housing regulation. Matthew Rognlie of the Massachusetts Institute of Technology found that the widening inequality gap found by French economist Thomas Piketty was largely due to housing and suggested expanding the housing supply and re-examining land-use regulation.

    Jason Furman, President Chairman of President Obama’s Council of Economic Advisors has shown that single family houses make 2.5 times the contribution of apartment units to the gross domestic product. This fact eluded President Obama’s Department of Housing and Urban Development, which has spent years roaming the country inducing local officials to implement the policies like those noted above that make housing less affordable.

    But, as Furman’s data indicates, the detached housing Americans overwhelmingly prefer is better for the economy. This means more good jobs in building homes, economic ripple effects and additional revenues for local governments.

    Yet, seven years after the  Great Recession, California’s detached house construction rate is barely one half the national average.

    Much of this has to do with a planning philosophy called “smart growth,” often accompanied by prohibitions on new housing on the urban fringe. But there is nothing smart about policies that raise the price of houses for struggling families. Nor is there anything smart about reducing people’s standards of living. The more important priorities of facilitating better standards of living and reducing poverty are turned on their head by such myopic policies.

    It is time to restore priorities that put people first. Building the housing that people want would not only improve living standards, but would also boost the economy. The American Dream Boundaries need to be torn down.

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

    Photograph: Suburban Kansas City (by author)

  • San Francisco Observations

    I made quite a few trips to San Francisco during the late 90s into the early 2000s, but hadn’t been back in a very long time – probably close to 15 years.

    Recently I was there for a conference and a long weekend and got to spend some time exploring the city. I won’t claim a comprehensive review, but I did have a few takeaways to share.

    1. Fewer homeless than expected. Based on the rhetoric you read in the papers, I expected SF to be overrun with aggressive homeless people. This wasn’t the case. There were visible homeless to be sure, but no more than I remember from 15 years ago and no more than I see in New York. And they were not particularly aggressive in any way.

    2. A curiously low energy city. It’s tough to judge any American city’s street energy after living in New York, but San Francisco felt basically dead. Tourist areas around Union Square and the Embarcadero were crowded, and the Mission on a Friday night was hopping, but otherwise the city was very quiet. Haight-Ashbury was nearly deserted and many neighborhoods had the feel of a ghost town. It’s very strange to be walking around a city with such a dense built fabric but so few people.

    3. San Francisco is too small to support a centralized economy. The Financial District has a number of skyscrapers, and SOMA is awash in construction – the biggest changes I observed were in this district – but central San Francisco is too small to serve as a global city business center. And the city as a whole is not big enough to support that kind of a resident base. The bottom line is that San Francisco’s constrained geography renders the construction of a CBD in the style of a Chicago or New York very difficult. Also, at only around 856,000 people – an all time record high – the absorption capacity of the city is limited. Contrast with NYC at 8.5 million, LA with 4 million and Chicago with around 2.7 million in much bigger geographies. Also, the transport geography of San Francisco does not include the type of massive commuter rail system that NYC, London, Chicago, etc. have. In short, I don’t see SF having the capacity for a much greater degree of employment centralization.

    4. Major construction is undesirable in San Francisco. As I’ve written before, San Francisco is one of America’s most achingly beautiful cities with a very unique building stock. It’s also, like Manhattan, mostly fully developed. So new construction in most places would involve demolition of the existing building stock. No surprise SOMA is where the construction is, because there’s room to do it and/or lower quality buildings to replace. To make a serious increase in the quantity of residential or office space would involve significant damage to the character of the city and would not in my view be desirable. Nor, given the point above about its small size, is it likely to make much of a difference anyway. It’s hard to see how the city of San Francisco itself changes its trends without an economic pullback.

    5. San Francisco doesn’t feel like it has the services of a high tax city. Taxes are high in San Francisco, but it many ways it doesn’t feel like it. In New York, our taxes are high, but the level of services is highly visible, at least in Manhattan. Just as one small example, SF’s storm drains were often partially blocked with leaves, and there were pools of standing water even on Market St. In NYC, BID employees or building supers regularly clear storm drains and sweep water into sewers. Our parks are in better shape. I was surprised to see that SF still has curbs with no ADA ramps. In short, while the city is beautiful and such, it doesn’t radiate the feel of high services.

    6. Barrier and POP transit system. I ran into a curious situation while riding transit. Muni, the city’s transit agency, has a light rail system called Muni Metro. It runs as a subway under Market St. Because it runs on street elsewhere, the trainsets are pretty short. I rode the subway portion, which has a barrier system. But then on the train my ticket was checked again by a conductor. Why have barriers if you are running a POP system on top of it? I’m glad I saved my ticket.

    7. San Francisco Opera. I attended my first opera in San Francisco. The San Francisco Opera is a very globally respected company. The opera, Janacek’s The Makropulous Case, was very good. It was well-patronized but there were plenty of empty seats too. It has the feel of the Lyric Opera of Chicago, where the majority of attendees are subscribers. The average age was very high – much higher than the Met Opera, which although suffering a serious attendance problem draws quite a few young people. The SF Opera’s patron base is getting up there. I also took a look through the program. I did not see a single tech company on their list of corporate sponsor, nor did I see any tech names I recognized on their major donor list. Opera in San Francisco appears to be an old money affair, with the emphasis on old. This doesn’t bode well for the future of this flagship cultural organization if it can’t find a way to tap into younger attendees and donors. I’d have to caveat this somewhat given that my investigation is very limited. But this is a trend affecting many similar organizations.

    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.

  • Overcrowded California

    In its decades of unprecedented population growth, California was a land of superlatives. Regrettably, the superlatives have changed from mostly positive to largely negative. For example, the latest Census Bureau Supplemental Poverty Estimates, indicated that California continues to have the highest poverty rate of any state, after adjustment for housing costs (Figure 1). Not even Mississippi can compete with that, sitting 3.6 percentage points lower. California metropolitan areas undoubtedly resemble this shameful performance, though the Census Bureau does not provide data below the state level.

    It should not be surprising that this backdrop is accompanied by some of the highest rates of housing overcrowding in the nation, according to the latest American Community Survey data (2015). Overcrowding is estimated by the number of people living in a dwelling unit per room. That raises the critical question of what is a room? The American Community Survey gives the following instruction on how to count rooms:

    "When counting the number of rooms in a home for the American Community Survey (ACS), please count rooms separated by built-in archways or walls that extend out at least 6 inches and go from floor to ceiling. Include only whole rooms used for living purposes, such as living rooms, dining rooms, kitchens, bedrooms, finished recreation rooms, family rooms, enclosed porches suitable for year-round use, etc.

    DO NOT count bathrooms, kitchenettes, strip or pullman kitchens, utility rooms, foyers, halls, open porches, balconies, unfinished attics, unfinished basements, or other unfinished space used for storage."

    Overcrowding is generally defined as a household having more than one person (of any age) per room in a dwelling unit. Severe overcrowding is more than 1.5 persons per room. A household is the people living in a housing unit, whether a detached house, an apartment, a mobile home or other.

    Degrees of Overcrowding

    California generally leads in both overcrowding and severe overcrowding. The state’s share of overcrowded households in the nation is 27 percent, while the state has 30 percent of severely overcrowded households, almost 3 times its 11 percent share of households.

    Only Hawaii has a higher severe overcrowding rate than California, at 3.8 percent of households California’s severe overcrowding rate is 2.9 percent. By contrast, average for the United States is a much lower 1.1 percent. Alaska has the third most severe overcrowding rate, at 2.3 percent, while New York has the fourth most severe overcrowding, at 2.1 percent. Arizona ranks fifth at 1.5 percent (Figure 2).

    The situation is similar with respect to basic overcrowding, more than one person per room. Hawaii also leads in this category at 9.7 percent, followed by California at 8.4 percent. The national overcrowding rate is 3.4 percent. Again, Alaska ranks third at 6.1 percent, followed by New York and 5.4 percent and Texas at 4.9 percent (Figure 3).

    Metropolitan Areas

    California metropolitan areas dominate in terms n both of the highest severe overcrowding rates and the highest overcrowding rates, to a far greater extent than one would expect from a highly developed, still affluent state.

    California is home to 12 of the 106 metropolitan areas with more than 500,000 population (as of 2015). 10 of the 15 most severely overcrowded metropolitan areas are in California. My birthplace of Los Angeles has the worst rate in the United States, with 4.5 percent of its households in living in severely overcrowded conditions. This is more than four times the national rate of 1.1 percent. McAllen, Texas, in the Rio Grande Valley, is the second most severely overcrowded (4.2 percent), leading the third ranked Honolulu (4.2 percent) in the second digit.

    Two of California’s and the nation’s most wealthy metropolitan areas are among the most severely overcrowded (more than 1.5 persons per room), both in the San Francisco Bay Area. These include San Francisco itself (#4) and San Jose (#5). New York is the sixth most severely overcrowded.

    Other California metropolitan areas among the most severely overcrowded are Oxnard (#7), in the Los Angeles area, Bakersfield (#8) and Fresno (#11) in the San Joaquin Valley, San Diego (#9), Riverside San Bernardino (#10) in the Los Angeles area as well as Santa Rosa (#12) and Stockton (#14) in the San Francisco Bay Area (Figure 4).

    Only two of California’s metropolitan areas with more than 500,000 residents do not rank in the most severely overcrowded metropolitan areas, Sacramento and Modesto.

    California’s dominance in basic overcrowding (over one person per room) is more complete, with 11 of its 12 largest metropolitan areas represented in the most overcrowded 15. Only Sacramento was exempted.

    The same three metropolitan areas lead the pack, though in a somewhat different order. McAllen has an overcrowding rate of 13.2 percent, nearly 4 times the national rate of 3.4 percent. Los Angeles is the second most overcrowded, at 11.1 percent, while Honolulu repeats its third ranking at 10.3 percent.

    The next at nine most overcrowded metropolitan areas are all in California, including Fresno (#4), Bakersfield (#5), San Jose (#6), Riverside-San Bernardino (#7), Stockton (#8), San Diego (#9),
    San Francisco (#10), Modesto (#11), in the San Joaquin Valley and Oxnard (#12). Santa Rosa has the 14th largest overcrowding rate (Figure 5).

    Contributing Factors

    Two characteristics stand out with respect to the states and metropolitan areas most overcrowded, high international immigration rates and high housing costs. High housing costs were cited as a factor in California’s high overcrowding rates by the state Legislative Analyst. High housing costs are also a problem in Hawaii and New York, which are among the 10 most crowded states in both categories as are there largest metropolitan areas. In addition, states that are magnets for international immigration are also represented among the most overcrowded, such as California, New York, Arizona, New Mexico and Nevada.

    Overcrowding has important social consequences, especially for children. For example, Claudia D. Solari at the University of North Carolina, Chapel Hill and Robert D. Mare of UCLA found in research focused on the city of Los Angeles that overcrowded housing significantly harms children, regardless of socioeconomic characteristics, negatively impacting school achievement, behavior and physical health. They conclude that these factors can persist throughout life, affecting their future socioeconomic status and adult well-being.”

    California, with its progressive ideals, needs to match its performance with its rhetoric. The state’s working class is clearly being hemmed in, and face a future that is hardly that promised by its political class.

    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: Downtown Los Angeles toward the Hollywood Hills and the San Fernando Valley (by author)

  • Cat and Mouse in Frogtown

    A friend recently expressed an interest in how some cities are reforming their land use regulations. “I mean, there are places like LA that say they’ve thrown out the code books and are rewriting their zoning.” My short response was… No. The reality is that the city plays an expensive and byzantine game of cat and mouse with each individual neighborhood.

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    There’s a little sliver of brassiere shaped land wedged between the Los Angeles River and the Golden State Freeway that sums up a lot of what constitutes the land use regulation process in LA. When poor Mexicans were forcibly removed in order to build Dodger Stadium in the late 1950’s they resettled in this inexpensive semi-industrial zone called the Elysian Valley, which is also commonly known as Frogtown.

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    It’s been a solid working class neighborhood for decades. Families have long managed to own modest homes and live in respectable obscurity among the auto body shops, plumbing supply warehouses, and municipal maintenance facilities.

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    In recent years the adjacent neighborhoods of downtown Los Angeles, Echo Park, Silver Lake, Atwater Village, and Glassell Park (all previously ignored and undervalued) have become newly fashionable and prohibitively expensive. Pent up market demand acts like a balloon – if you squeeze the middle the ends bulge. In this case home buyers, renters, and businesses have scoured the area looking for alternatives. Frogtown is a centrally located and relatively affordable compromise.

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    Design firms, architects, photographers, tech incubators, high end specialty fabricators, and other such enterprises have moved in to the nondescript buildings of Frogtown. If you’re willing to celebrate concrete block walls and corrugated steel as honest industrial materials you can create the trendy Dwell look with paint and landscaping on the cheap. Compare this process with the expense of restoring a more exotic historic property in a tony neighborhood.

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    Art Yanez is a Los Angeles native and the son of immigrants. He’s also the principal of FSY Architects. He purchased three contiguous parcels in Frogtown and created a campus for his firm.

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    The space incorporates pre-existing industrial warehouses as well as new construction with shops and offices that are now rented for supplemental income. The architecture firm’s own offices are currently oversized to accommodate anticipated expansion as business continues to ramp up. But construction is a cyclical industry, so the space can be subdivided and rented during future downturns.

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    The new building achieves the legally required off street parking standard as well as the fire marshal’s demand that a full size fire engine be able to drive around the entire structure in an emergency. The parking is convenient (this is Los Angeles after all), but the outdoor space does double duty as a plaza for human activities on occasion. Strings of cafe lights, movable furniture, potted plants, and people transform the place quickly and easily.

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    Part of FSY’s strategy was to create a place that would activate the entire community, not just a building containing offices. The initial concept involved repurposing shipping containers and pressing them into service as small shops. The building code wouldn’t permit that so a stick built version mimics the container look and scale. Actual containers are parked in back and are used for low cost storage. Local artists were invited to install distinctive motifs for the exterior of the corner cafe. All of this was as-of-right construction within the established city code.

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    For the last century the Los Angeles River has been a concrete industrial drainage canal sealed off by barbed wire fences and cinder block walls. Most people in LA have no particular relationship to the “riverfront.” But that’s changing as city officials have announced a billion dollar program to transform the river into a ribbon of green and blue public amenities lead by none other than starchitect Frank Gehry.

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    The success of small infill developments in Frogtown along with the city’s plans to transform the river have attracted large scale production developers. Previously ignored sites began to sprout upscale apartment buildings and condo complexes on dead end streets at the river’s edge.

    This process was viewed with scorn by existing property owners and community organizers who haven’t forgotten how their families were bulldozed to make way for Dodgers Stadium. So they lobbied for new regulations to make it harder to build anything new and to work around the perception that political figures are corrupt and on the take for developer’s money. The new regulations now make projects like Art Yanez’s building non-conforming and subject to special review processes for height, bulk, and so on.

    The result is that now only very small projects can be built as-of-right, and only very large and expensive projects can overcome the newly implemented regulatory hurdles. All the incremental in-between projects that might have been built are now much less viable and far more expensive to push through. This is what land use policy actually looks like on the ground.

    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.

    Top photo: John Sanphillippo

  • Canada’s Middle-Income Housing Affordability Crisis

    The Canadian Mortgage and Housing Corporation (CMHC) has issued a “red warning” for the entire housing market in Canada.” According to CMHC the red warnings are due to “strong evidence of problematic conditions for Canada overall. Home prices have risen ahead of economic fundamentals such as personal disposable income and population growth. This has resulted in overvaluation in many Canadian housing markets.”

    This pattern has been present  in Canada for at least a decade. This was the subject of a policy report authored by Ailin He, a PhD candidate in economics at McGill University (Montréal) and me (Canada’s Middle-Income Housing Affordability Crisis), which was published by the Frontier Centre for Public Policy in Winnipeg. The report covered all census 33 metropolitan areas and two smaller census agglomerations.

    The Executive Summary (adapted) and selected charts from Canada’s Middle-Income Housing Affordability Crisis are reproduced below.

    Canada has a serious middle-income housing affordability crisis. Canada’s house prices have grown nearly three times that of household income since 2000. This contrasts with the stability between growth in house prices and household income during the previous three decades. These house-price increases have raised serious concerns at the Bank of Canada and at international financial organizations such as the Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF).

    This public policy report examines overall housing affordability in 35 housing markets, including all 33 CMAs and two census agglomerations (Section 1).

    Higher house prices reduce the standard of living and constrain economic growth. Housing affordability is analyzed using indicators with comparisons between housing markets and within individual housing markets over time. Price-to-income multiples are used. Higher house prices mean less home buyer discretionary income (the amount left over after paying for necessities such as housing, food, clothing and transportation). Households have less income available for purchasing other goods and services, which can constrain economic growth and job creation. Moreover, less discretionary income translates into lower standards of living (Sections 1.1 and 1.2).

    There was serious deterioration in middle-income housing between 2000 and 2015. This analysis shows that house prices rose faster than income in each of the 35 markets. The largest losses in housing affordability occurred in the six markets with a population of more than one million (Calgary, Edmonton, Montréal, Ottawa-Gatineau, Toronto and Vancouver), where house prices rose on average 3.3 times that of household income. More alarmingly, house prices rose more than four times household income in Vancouver and Toronto. In the five metropolitan areas with between 500,000 and one million residents (Hamilton, Kitchener-Waterloo, London, Québec and Winnipeg), house prices rose 3.2 times that of household income. Even in the smaller markets, house prices rose on average by at least double that of household income (Section 2).

    Substantial mortgage affordability losses could occur with the expected interest increases. Should mortgage interest rates rise by 2020 as projected by The Conference Board of Canada, approximately 800,000 fewer households will be able to qualify for a mortgage on an average-priced house, all else being equal. This could have an impact sooner than expected, since many Canadian mortgages require renewing every five years (Section 3).

    Higher house prices have made it more difficult for middle-income households to afford the housing that Canadians have preferred for decades. Higher house prices appear to have been a principal factor in a trend toward smaller houses and condominiums across Canada between 2001 and 2011. This shift is most evident in Vancouver and Toronto, where housing markets also have the most-restrictive land-use regulation (Section 4).

    Restrictive land-use policy is associated with housing affordability losses. International economic literature associates more-restrictive land-use regulation with diminished housing affordability. The largest housing affordability losses have occurred in metropolitan areas (markets) that have adopted urban containment land-use strategies, which severely limit the land that can be used for building houses on and beyond the urban fringe. Consistent with basic economics, this reduction of land supply is associated with rising land prices, which lead to higher house prices. Without the substantial reform of restrictive land-use policies, housing affordability is likely to continue deteriorating (Section 5).

    Higher house prices impose adverse social and economic consequences. Higher house prices are associated with increased rates of internal migration out of higher-cost markets, increased inequality, overcrowding, the greater public expenditure that is required to support low-income housing and losses to the economy (Section 6).

    Solving the middle-income housing affordability crisis will require policy reforms. There is considerable evidence that restrictive land-use policies are associated with significant losses in housing affordability in Canada as is the case elsewhere. Metropolitan areas with restrictive land-use policy should undertake reforms aimed at improving housing affordability. There should be a moratorium on the adoption of urban containment policy where it is not yet in place. Concerns have been expressed about the potential for high house prices and high household debt to complicate the ability of central banks (such as the Bank of Canada) to perform their monetary policy responsibilities.  Conclusion:  that middle-income housing affordability in Canada is a profound social and economic crisis that warrants serious and concentrated public policy attention (Section 7).

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

    Photograph: Calgary (by author)

  • Real Estate Doesn’t Make an Economy

    From Southern California to Shanghai and London, inflated real estate prices have evolved into a simulacrum for broader prosperity. In an era of limited income gains, growing inequality, political dysfunction and fading productivity, the conjunction of low interest rates and essentially free money for the rich and well-placed has sparked the construction of often expensive, high-density residential housing.

    This heady period of rapid real estate asset inflation could soon be coming to an end, followed by a potentially nasty correction in high-density, high-cost, more urban core locations. Since the 2008 crash, centered in overpriced single-family housing, density has been the new mantra, a trend largely echoed in the media, academia and among the planning professions.

    The notion that dense, expensive urban real estate would dominate the future rested on two assumptions. First, it was widely explained to developers that millennials would prefer to rent small apartments for the foreseeable future, padding the profits of the investor class. Second, it was assumed that money would continue to pour into elite Western cities from the newly rich of China, Russia, Latin America and the Middle East.

    Today, both trends are diminishing. Millennials are getting older, and by 2018 more will be in their 30s — when most people seek out single-family homes — than in their 20s. We are already reaching “peak urban millennials,” as University of Southern California demographer Dowell Myers suggests, while the replacement generation, known as the “Z” or “plurals,” will be somewhat less numerous.

    At the same time, high-end residential investors from the once booming BRICS countries — Brazil, Russia, India, China and South Africa — are, with the exception of India, now experiencing slower or negative growth. They are likely to be a far less reliable source of funds for high-end luxury housing.

    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, will be published in April by Agate. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Photo by Mark Lyon — Full Floor For Rent.

  • Toronto Area Housing Market Rigged Against Millennials

    In a Globe and Mail column, Margaret Wente accurately describes Toronto’s housing affordability crisis and its principal cause. The Toronto area’s house prices have escalated strongly relative to incomes since the province enacted its “Places to Grow” urban planning regime. The resulting destruction of the competitive market for new residential has driven prices up, just as oil prices rise when OPEC implements strong supply restrictions.

    Wente concluded her article:

    “The solution to the affordability crisis isn’t high-density housing and mass transit in the burbs. It’s to give people what they want – by getting the ideologues out of the way and restoring a sensible balance between supply and demand. Can we do that and be environmentally responsible too? Central planners who think we can’t should be required to raise their families in an apartment block in Oshawa and take the bus to work. They’d find a better way soon enough.”

    It’s no wonder that international researchers are increasingly pointing to house price escalation as a leading driver of rising inequality. Nor should it be surprising that a new Canada Mortgage and Housing Corporation report will issue its first “red warning” on Canada’s housing market, principally due to out of control house price escalation in the Vancouver and Toronto metropolitan areas.

  • Unsustainable solutions in the name of sustainability

    The other day when I was riding my bike in Minneapolis crossing I-94 near Riverside I encountered a small townhome project built during the first (failed) green era under the Carter administration. It was built to showcase the future. One thing I’ve learned over the years building my own green homes is to not listen blindly to the experts who parrot others’ ideas without thinking of the ramifications.

    The world’s first solar and earth-berm grass-roof townhome projects look like this today:

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    The original townhomes were built with earth covered roofs, with south facing solar panels for heating, and stored the heat collected over a long period of time in a room full of boulders. In 1983, I also owned an earth-berm solar heated home overlooking a lake in another part of town. Back then we thought, as the world freezes over (no global warming at that time), we would be nice and toasty in our ‘energy-independent’ homes powered by the sun itself. I went even further with a 10kW Bergey Wind Generator on a 100′ tall tower. Heated by the sun and powered by the wind.

    As you see in the above pictures, this experiment, which had the University of Minnesota involved (from what I remember), did not age well, nor did it work – at all! Gone are the solar panels that used to collect the heat positioned along the bare brown steel roof panels, and gone is grass roof that leaked. Banished is the room full of boulders to store the heat, which got so hot often windows needed to be opened to let in cold winter air, a problem my own solar home had also.

    In 1983, my 4,000 square foot lake front solar home cost $120,000 and after tax credits, my Wind Generator cost $12,000. These smaller townhome units cost $80,000 at the time. One of the original residents who stayed over the decades experienced failed systems and lawsuits. They eventually sold their home – for $80,000! Quite the investment these fancy schmancy trendy homes. A Nigerian investment scheme via an E-Mail might have been less risky. You would think the first home owners would have been the architects and professors who were behind this project – but they themselves didn’t buy in, so there’s an indication that maybe the idea was not so terrific. This is the lesson I’ve learned, never take advice from anyone who is not willing to personally invest and take the same risk as they suggest to others in a new concept.

    The Carter era was a troubled one, with energy widely predicted to be running out, and home mortgage rates as high as 18%. It’s hard to imagine there was any new housing being built, but some were. The initial residents of these townhomes (including myself) believed we were the smart ones, preparing for the energy costs skyrocketing and never having to worry. Hell could freeze over – but we wouldn’t.

    That was then, but how does this apply to now, especially with an election just days away?

    Hillary Clinton was promising half a billion solar panels on rooftops. OK, now picture the above bare rooftops – that’s how the roofs will look when the lifespan of those half billion heavily subsidized solar panels reach the end of their usefulness – in two decades. Where do you think most solar panels are made today? If you answered China, you deserve a star! And if a roof needs repair or replacement prior to the end of the panels’ lifespan, will the government subsidize the extra cost of repairs? Who will pay for cutting down the mature trees along the streets so that the sun can reach these panels? Oh, wait, you are supposed to keep those mature, beautiful, and value increasing shade trees? My bad. You think Obama Care was a terrible idea… just wait for the Hillary program, and the social engineering sure to follow, and sure to fail.

    Trump? I imagine he’d be politically incorrect of course, calling those solar townhomes: ugly, hideously, awful useless, fat, blemished, blight… only unlike comments about women, he’d have a lot who would agree. I don’t know what a Trump administration would look like, but I’m pretty confident that it would not involve social engineering, nor have subsidies go to China or Mexico. I hope that if he had a wind or solar agenda, the panels would be produced here with a fair and proper competition to award the vendors with the best price/performance ratio and make them bond a 20 or 30-year fund if the mechanisms wear prematurely.

    I hope that Trump or Clinton look into creating new programs that encourage private new developments or large scale redevelopment to have their own ground based solar gardens instead of the current wave of public investments of solar farms which have federal tax advantages but seem, at least to me, a questionable investment at best. They are even promoting these solar investments at the Best Buy store in Minnetonka, Minnesota with the promise of a consistent energy cost, but they require a 20-year commitment, even though the average home sells once every 6 years.

    These are heavily subsidized by you, the tax payers. Some of these solar fields are supposed to supply the power companies themselves, for example Ivanpah in the California desert which was to supply power for PG&E. Ivanpah was a solar system using mirrors heating up over 170,000 panels to create steam, but failed to deliver the power the ‘experts’ promised. Besides killing thousands of birds, the 1.5 billion dollars of your tax money was pretty much a really bad investment – oopsie! A more viable alternative is to create a more localized system as part of new developments or large scale redevelopments.

    Having a solar garden in a subdivision eliminates the problem with roof-top application, cleaning ice and snow off the panels, and streets could still have those shade trees. Each resident in the subdivision would have their share of the power and as technology improves, every resident would benefit from the latest technologies – be it solar, wind, or both. Such a Federal program does not exist – but should.

    Top photo by https://pixabay.com/en/users/Kenueone-2397379/ [CC0], via Wikimedia Commons

    Rick Harrison is President of Rick Harrison Site Design Studio and Neighborhood Innovations, LLC. He is author of Prefurbia: Reinventing The Suburbs From Disdainable To Sustainable and creator of LandMentor. His websites are rhsdplanning.com and LandMentor.com