New Geography

Category: Urban Issues

  • Vancouver: Planner’s Dream, Middle Class Nightmare

    Vancouver is consistently rated among the most desirable places to live in the Economist’s annual ranking of cities. In fact, this year it topped the list. Of course, it also topped another list. Vancouver was ranked as the city with the most unaffordable housing in the English speaking world by Demographia’s annual survey. According to the survey criteria, housing prices in an affordable market should have an “median multiple” of no higher than 3.0 (meaning that median housing price should cost no more than 3 times the median annual gross household income). Vancouver came in at a staggering 9.3. The second most expensive major Canadian city, Toronto, has an index of only 5.2. Even legendarily unaffordable London and New York were significantly lower, coming in at 7.1 and 7.0 respectively. While there are many factors that make Vancouver a naturally expensive market, there are a number of land use regulations that contribute to the high housing costs.

    Vancouver is a unique real estate market: it’s the only major Canadian city that doesn’t experience frigid winters. This makes it a major draw for high skilled, high salary employees. It is also a major destination for wealthy Canadian retirees, who choose to actually spend their winters in Canada. There is little doubt that it is a naturally expensive real estate market. As with coastal California cities, people pay a premium for (in this case relatively) hospitable weather. The proximity to world class skiing, fishing, and hiking are no doubt another factor in the city’s high real estate costs. There is certainly a premium to be paid for living less than two hours away from the world’s best ski resort.

    Moreover, Vancouver has become an appealing real estate market for overseas investors, particularly Chinese nationals. There has been a good deal of news recently about how many of the nouveau riche in China are now looking to Vancouver, rather than Los Angeles or New York as an immigration destination. In absolute dollar terms, Vancouver is still cheaper than either city. This, combined with the more hospitable Canadian immigration system, has made Vancouver so attractive to overseas investors that real estate agents are now organizing house hunting tours for potential Chinese buyers.

    To be sure, geography deserves much of the blame for Vancouver’s high housing costs. But a large chunk of the blame lies with restrictive municipal and provincial land use policies. Since the introduction of the city’s first comprehensive plan in 1929, Vancouver has used various land use regulations to create dense mixed use development in order to protect green space surrounding the city. In 1972, the provincial government passed legislation aimed at protecting BC farmland. This left less than half of the already scarce land in Greater Vancouver off limits to developers. As a result, the city is circled by undeveloped land, referred to as the Green Zone. The Green Zone acts as a de facto urban growth boundary, largely designed to prevent sprawl.

    As a result, Vancouver is one of the few North American cities that have been growing almost exclusively upwards, rather than outwards for the last century. Its narrow streets and lack of a major highway running through the city make it one of the least automobile friendly cities on the continent. Unsurprisingly, Vancouver was ranked the most smart growth oriented city in the Pacific Northwest by the Sightline Institute. Roughly three times more Vancouver residents live in compact neighborhoods as a percentage of the population compared than Portland or Seattle. This arguably makes Vancouver the most smart growth oriented city in North America.

    Smart growth has become a truism for urban planners. Walkable communities with a mix of commercial and residential units combined with strict zoning regulations to encourage transit usage is a formula increasingly prescribed for North American cities. Though many smart growth principles are attractive, there is an strong correlation between heavy land use regulations and housing costs. Using data from the Wharton Residential Land Use Regulation Index (WRLURI), and Demographia’s International Housing Affordability Survey, a simple scatter plot diagram has been included to illustrate this correlation.

    The WRLURI measures the stringency of land use controls imposed on various US jurisdictions by state and local governments. There is a clear correlation between high regulations, and low housing affordability. Though the index does not include Canadian cities, it does include neighboring Seattle. Seattle ranks fifth of 47 cities on the Wharton Index. According to a recent study in Boston College International & Comparative Law Review by David Fox, Vancouver is decades ahead of Seattle in terms of smart growth policies. This means that Vancouver would rank at least fifth in North America on the index, though it is more realistic to assume it would most certainly top the index.

    In addition to smart growth policies, Vancouver also has very stringent inclusionary zoning laws. Inclusionary zoning requires developers to provide a certain number of affordable housing units in any given development. This policy might seem to make the city more affordable, but it functions exactly like rent control. Those fortunate enough to find spaces in the affordable housing units pay less, but the subsidized rent is made up for by higher rent in adjacent units. In a study of inclusionary zoning in California cities, Benjamin Powell and Edward Stringham from the Department of Economics at San Jose State University found that inclusionary zoning imposes an additional $33,000-$66,000 cost on adjacent market rate units.

    There have been some recent policy initiatives that may reduce the cost of housing marginally. In 2004, the city amended its zoning code to permit secondary suites throughout the city. Secondary suites are subdivided units of owner occupied homes that are used as rental units. This zoning change brought tens of thousands of relatively low cost units into the market. There are currently 120,000 secondary suites in the province. The city recently went one step further to allow homeowners to convert laneway garages into rental units. These units have a maximum of 500 square feet. There are 70,000 homes in Vancouver that are eligible for conversion, though it is unclear how many will take up the offer. This will add to the stock of relatively affordable rental housing in the city, but may not significantly reduce housing costs. In fact, by increasing the revenue generating potential of houses, it may actually increase the cost of purchasing a single dwelling home. After all, if the potential rental income of a single dwelling unit increases, the market price of the unit is likely to do the same. This isn’t necessarily an argument against the policy, though it does underscore the fact that housing costs in Vancouver will never decrease without liberalizing municipal and provincial land use policies.

    In short, the City of Vancouver and Province of British Columbia have chosen to favor compact growth over affordable housing costs. This likely makes the city more attractive to affluents from both the rest of Canada and abroad, but increasingly makes it unaffordable for middle class families. There is certainly some substance to the Economist’s claim that Vancouver is the most livable city on earth. It is a very attractive place for those who can afford it. Nevertheless, creating a city fit only for the wealthiest segments of society and non-families is hardly something to be proud of.

    Downtown Vancouver photo by runningclouds

    Steve Lafleur is a public policy analyst and political consultant based out of Calgary, Alberta. For more detail, see his blog.

  • City Thinking is Stuck in the 90s

    The 1990s proved to be quite a nice decade indeed for most of America’s largest cities. It was an era of general prosperity in all of America to be sure, but in contrast to previous decades, the turnaround also extended from the suburbs to many of the nation’s biggest cities, notably New York, Chicago, Miami, San Francisco and San Jose. The notion – popular in the 70s and 80s – associating cities with a sour and fatalistic sense of decline and dysfunction, or even anarchy, in the 90s finally began to evaporate. There emerged a bracing new sense of optimism that these large cities had found a new role for themselves in the world.

    This is evident from the large decreases in crime in these cities where lawlessness once reigned and also from the job numbers from that decade, when all of America’s tier one metros added jobs.

    Some of these places lagged overall US growth, but considering their lower rate of population growth most of these cities enjoyed robust economies. The aerospace and defense center of Los Angeles, hit hard by the post-Cold War “peace dividend”, and the devastating 1992 riots, was a partial exception.

    The 90s saw the convergence of two trends that profoundly benefited these cities: the digitization and globalization of business. The 90s were the heart of the digital revolution. At its beginning, corporate “data processing” was still dominated by mainframes and personal computers were not yet fully deployed even on corporate desktops. By the end of it, the internet was widespread and had caused a business revolution. In the middle were several waves of technology change and disruption: first client/server, then internet based computing, PC and mobile phone ubiquity in business, the Y2K retrofit, and the beginnings of integrated Enterprise Resource Planning systems.

    The 90s also saw a lesser known revolution in American business: deregulation and structural changes. In the past many businesses that had previously operated on a local or regional basis – banking, utilities, retail, etc – got rolled up into much larger super-regional, national, and increasingly global players.

    These shifts provided big benefits to these tier one cities. Obviously high tech havens like the Bay Area, DC, and Boston did particularly well in this decade. Also performing strongly were professional services hubs like Chicago. These rapid waves of technology and business change created a lot of new openings for professionals to master, not just by creating and implementing technology, but also in adapting business processes to the new realities as well as managing the organizational change journey. These newly rolled up businesses also needed the types of services firepower typically located in larger locales, stimulating further demand. Notably, virtually all of this demand was satisfied with employment growth on shore, much of it in these tier one cities.

    The 2000s, however, were a very different story. This decade began with the dot com bust and its associated recession, a funk from which the Bay Area economy has yet to fully recover despite Silicon Valley’s continued reign as high tech capital. Similarly, while specialized professional services still flourish, the more mainline areas, such as IT implementations or business process outsourcing, found themselves under significant pressure as digital business matured.

    This caused one commentator to famously declare that “IT Doesn’t Matter.” Then the offshore wave, which had been a born in the 1990s, began to suck away services work just as had occurred previously in manufacturing. This included not just low skill business process outsourcing like invoice processing, but also high value IT engineering and other services not dependent on face to face interaction. This, we found out, could be performed by high skill, low cost labor in places like India.

    This helped to create a so-called “lost decade” of job creation in the US during the 2000s. The tier one metros, save for recession-proof Washington, fared even worse, losing jobs during the decade.

    These are facts and trends that barely impacted the world of urbanists, who continued to act as if nothing had changed. The media, located almost totally in primary cities, bought the message but rarely looked at the basic facts.

    As a result, when it comes to thinking about America’s big cities, too many people remain stuck in the 90s.

    Partially this is understandable. The 2000s saw strong increases in GDP per capita in many of these cities. Also, they experienced huge real estate booms and an associated increase in high end amenities of all kinds: swanky hotels, starchitect buildings, upscale new restaurants and shops, etc. But a lot of this has proved somewhat self-delusional. Like Citigroup CEO Chuck Prince’s now infamous statement that “As long as the music is playing, you’ve got to get up and dance,” these cities continued to party like it was 1999 even as their job base continued to erode and the real estate bubble headed for a crash.

    Today, as the Great Recession has civic finances in a vice grip, and places like Chicago and Los Angeles face stunning budget shortfalls, people are less sanguine. Advocates for the big city model still refuse to face up to the core problems that face our large cities. The real issue should not be how to restart the condo boom, but how to restore what drove the resurgence of the 90s: job creation. This is a national problem to be sure, but not one that seems to interest most big city advocates. It’s almost as if there’s an assumption the jobs will come without working for them. The stimulus and bailout, which helped key urban sectors like green building, university research and public employees, is now running out of steam and political support. In the long run they may have served largely to exacerbate complacency.

    So rather than a focus on private sector job growth, many urban boosters have remained free to focus on other things like sustainability and lifestyle enhancers in the assumption they would generate jobs But what if it doesn’t work out that way? What if the current economy, unlike those boom years of the 90s, does not generate enough money and employment to support these huge regions?

    These cities would be well-advised to go beyond counting skyscrapers, new condo construction, green roofs, and bike share programs. Those things are all good, but basic measures of civic health and dynamism like job growth ultimately underpin those things for the long haul. More than anything, these cities need to be fundamentally focused on their commercial success. Their great challenge is figuring out how to recapture that previous era of job growth, and once again become engines of employment.

    Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile.

    Photo by Werner Kunz (werkunz1)

  • Urban Legends: Why Suburbs, Not Dense Cities, are the Future

    The human world is fast becoming an urban world — and according to many, the faster that happens and the bigger the cities get, the better off we all will be. The old suburban model, with families enjoying their own space in detached houses, is increasingly behind us; we’re heading toward heavier reliance on public transit, greater density, and far less personal space. Global cities, even colossal ones like Mumbai and Mexico City, represent our cosmopolitan future, we’re now told; they will be nerve centers of international commerce and technological innovation just like the great metropolises of the past — only with the Internet and smart phones.

    According to Columbia University’s Saskia Sassen, megacities will inevitably occupy what Vladimir Lenin called the “commanding heights” of the global economy, though instead of making things they’ll apparently be specializing in high-end “producer services” — advertising, law, accounting, and so forth — for worldwide clients. Other scholars, such as Harvard University’s Edward Glaeser, envision universities helping to power the new “skilled city,” where high wages and social amenities attract enough talent to enable even higher-cost urban meccas to compete.

    The theory goes beyond established Western cities. A recent World Bank report on global megacities insists that when it comes to spurring economic growth, denser is better: “To try to spread out economic activity,” the report argues, is to snuff it. Historian Peter Hall seems to be speaking for a whole generation of urbanists when he argues that we are on the cusp of a “coming golden age” of great cities.

    The only problem is, these predictions may not be accurate. Yes, the percentage of people living in cities is clearly growing. In 1975, Tokyo was the largest city in the world, with over 26 million residents, and there were only two other cities worldwide with more than 10 million residents. By 2025, the U.N. projects that there may be 27 cities of that size. The proportion of the world’s population living in cities, which has already shot up from 14 percent in 1900 to about 50 percent in 2008, could be 70 percent by 2050. But here’s what the boosters don’t tell you: It’s far less clear whether the extreme centralization and concentration advocated by these new urban utopians is inevitable — and it’s not at all clear that it’s desirable.

    Not all Global Cities are created equal. We can hope the developing-world metropolises of the future will look a lot like the developed-world cities of today, just much, much larger — but that’s not likely to be the case. Today’s Third World megacities face basic challenges in feeding their people, getting them to and from work, and maintaining a minimum level of health. In some, like Mumbai, life expectancy is now at least seven years less than the country as a whole. And many of the world’s largest advanced cities are nestled in relatively declining economies — London, Los Angeles, New York, Tokyo. All suffer growing income inequality and outward migration of middle-class families. Even in the best of circumstances, the new age of the megacity might well be an era of unparalleled human congestion and gross inequality.

    Perhaps we need to consider another approach. As unfashionable as it might sound, what if we thought less about the benefits of urban density and more about the many possibilities for proliferating more human-scaled urban centers; what if healthy growth turns out to be best achieved through dispersion, not concentration? Instead of overcrowded cities rimmed by hellish new slums, imagine a world filled with vibrant smaller cities, suburbs, and towns: Which do you think is likelier to produce a higher quality of life, a cleaner environment, and a lifestyle conducive to creative thinking?

    So how do we get there? First, we need to dismantle some common urban legends.

    Perhaps the most damaging misconception of all is the idea that concentration by its very nature creates wealth. Many writers, led by popular theorist Richard Florida, argue that centralized urban areas provide broader cultural opportunities and better access to technology, attracting more innovative, plugged-in people (Florida’s “creative class“) who will in the long term produce greater economic vibrancy. The hipper the city, the mantra goes, the richer and more successful it will be — and a number of declining American industrial hubs have tried to rebrand themselves as “creative class” hot spots accordingly.

    But this argument, or at least many applications of it, gets things backward. Arts and culture generally do not fuel economic growth by themselves; rather, economic growth tends to create the preconditions for their development. Ancient Athens and Rome didn’t start out as undiscovered artist neighborhoods. They were metropolises built on imperial wealth — largely collected by force from their colonies — that funded a new class of patrons and consumers of the arts. Renaissance Florence and Amsterdam established themselves as trade centers first and only then began to nurture great artists from their own middle classes and the surrounding regions.

    Even modern Los Angeles owes its initial ascendancy as much to agriculture and oil as to Hollywood. Today, its port and related industries employ far more people than the entertainment business does. (In any case, the men who built Hollywood were hardly cultured aesthetes by middle-class American standards; they were furriers, butchers, and petty traders, mostly from hardscrabble backgrounds in the czarist shtetls and back streets of America’s tough ethnic ghettos.) New York, now arguably the world’s cultural capital, was once dismissed as a boorish, money-obsessed town, much like the contemporary urban critique of Dallas, Houston, or Phoenix.

    Sadly, cities desperate to reverse their slides have been quick to buy into the simplistic idea that by merely branding themselves “creative” they can renew their dying economies; think of Cleveland’s Rock and Roll Hall of Fame, Michigan’s bid to market Detroit as a “cool city,” and similar efforts in the washed-up industrial towns of the British north. Being told you live in a “European Capital of Culture,” as Liverpool was in 2008, means little when your city has no jobs and people are leaving by the busload.

    Even legitimate cultural meccas aren’t insulated from economic turmoil. Berlin — beloved by writers, artists, tourists, and romantic expatriates — has cultural institutions that would put any wannabe European Capital of Culture to shame, as well as a thriving underground art and music scene. Yet for all its bohemian spirit, Berlin is also deeply in debt and suffers from unemployment far higher than Germany’s national average, with rates reaching 14 percent. A full quarter of its workers, many of them living in wretched immigrant ghettos, earn less than 900 euros a month; compare that with Frankfurt, a smaller city more known for its skyscrapers and airport terminals than for any major cultural output, but which boasts one of Germany’s lowest unemployment rates and by some estimates the highest per capita income of any European city. No wonder Berlin Mayor Klaus Wowereit once described his city as “poor but sexy.”

    Culture, media, and other “creative” industries, important as they are for a city’s continued prosperity, simply do not spark an economy on their own. It turns out to be the comparatively boring, old-fashioned industries, such as trade in goods, manufacturing, energy, and agriculture, that drive the world’s fastest-rising cities. In the 1960s and 1970s, the industrial capitals of Seoul and Tokyo developed their economies far faster than Cairo and Jakarta, which never created advanced industrial bases. China’s great coastal urban centers, notably Guangzhou, Shanghai, and Shenzhen, are replicating this pattern with big business in steel, textiles, garments, and electronics, and the country’s vast interior is now poised to repeat it once again. Fossil fuels — not art galleries — have powered the growth of several of the world’s fastest-rising urban areas, including Abu Dhabi, Houston, Moscow, and Perth.

    It’s only after urban centers achieve economic success that they tend to look toward the higher-end amenities the creative-classers love. When Abu Dhabi decided to import its fancy Guggenheim and Louvre satellite museums, it was already, according to Fortune magazine, the world’s richest city. Beijing, Houston, Shanghai, and Singapore are opening or expanding schools for the arts, museums, and gallery districts. But they paid for them the old-fashioned way.

    Nor is the much-vaunted “urban core” the only game in town. Innovators of all kinds seek to avoid the high property prices, overcrowding, and often harsh anti-business climates of the city center. Britain’s recent strides in technology and design-led manufacturing have been concentrated not in London, but along the outer reaches of the Thames Valley and the areas around Cambridge. It’s the same story in continental Europe, from the exurban Grand-Couronne outside of Paris to the “edge cities” that have sprung up around Amsterdam and Rotterdam. In India, the bulk of new tech companies cluster in campus-like developments around — but not necessarily in — Bangalore, Hyderabad, and New Delhi. And let’s not forget that Silicon Valley, the granddaddy of global tech centers and still home to the world’s largest concentration of high-tech workers, remains essentially a vast suburb. Apple, Google, and Intel don’t seem to mind. Those relative few who choose to live in San Francisco can always take the company-provided bus.

    In fact, the suburbs are not as terrible as urban boosters frequently insist.

    Consider the environment. We tend to associate suburbia with carbon dioxide-producing sprawl and urban areas with sustainability and green living. But though it’s true that urban residents use less gas to get to work than their suburban or rural counterparts, when it comes to overall energy use the picture gets more complicated. Studies in Australia and Spain have found that when you factor in apartment common areas, second residences, consumption, and air travel, urban residents can easily use more energy than their less densely packed neighbors. Moreover, studies around the world — from Beijing and Rome to London and Vancouver — have found that packed concentrations of concrete, asphalt, steel, and glass produce what are known as “heat islands,” generating 6 to 10 degrees Celsius more heat than surrounding areas and extending as far as twice a city’s political boundaries.

    When it comes to inequality, cities might even be the problem. In the West, the largest cities today also tend to suffer the most extreme polarization of incomes. In 1980, Manhattan ranked 17th among U.S. counties for income disparity; by 2007 it was first, with the top fifth of wage earners earning 52 times what the bottom fifth earned. In Toronto between 1970 and 2001, according to one recent study, middle-income neighborhoods shrank by half, dropping from two-thirds of the city to one-third, while poor districts more than doubled to 40 percent. By 2020, middle-class neighborhoods could fall to about 10 percent.

    Cities often offer a raw deal for the working class, which ends up squeezed by a lethal combination of chronically high housing costs and chronically low opportunity in economies dominated by finance and other elite industries. Once the cost of living is factored in, more than half the children in inner London live in poverty, the highest level in Britain, according to a Greater London Authority study. More than 1 million Londoners were on public support in 2002, in a city of roughly 8 million.

    The disparities are even starker in Asia. Shenzhen and Hong Kong, for instance, have among the most skewed income distributions in the region. A relatively small number of skilled professionals and investors are doing very well, yet millions are migrating to urban slums in places like Mumbai not because they’ve all suddenly become “knowledge workers,” but because of the changing economics of farming. And by the way, Mumbai’s slums are still expanding as a proportion of the city’s overall population — even as India’s nationwide poverty rate has fallen from one in three Indians to one in five over the last two decades. Forty years ago, slum dwellers accounted for one in six Mumbaikars. Now they are a majority.

    To their credit, talented new urbanists have had moderate success in turning smaller cities like Chattanooga and Hamburg into marginally more pleasant places to live. But grandiose theorists, with their focus on footloose elites and telecommuting technogeniuses, have no practical answers for the real problems that plague places like Mumbai, let alone Cairo, Jakarta, Manila, Nairobi, or any other 21st-century megacity: rampant crime, crushing poverty, choking pollution. It’s time for a completely different approach, one that abandons the long-held assumption that scale and growth go hand in hand.

    Throughout the long history of urban development, the size of a city roughly correlated with its wealth, standard of living, and political strength. The greatest and most powerful cities were almost always the largest in population: Babylon, Rome, Alexandria, Baghdad, Delhi, London, or New York.

    But bigger might no longer mean better. The most advantaged city of the future could well turn out to be a much smaller one. Cities today are expanding at an unparalleled rate when it comes to size, but wealth, power, and general well-being lag behind. With the exception of Los Angeles, New York, and Tokyo, most cities of 10 million or more are relatively poor, with a low standard of living and little strategic influence. The cities that do have influence, modern infrastructure, and relatively high per capita income, by contrast, are often wealthy small cities like Abu Dhabi or hard-charging up-and-comers such as Singapore. Their efficient, agile economies can outpace lumbering megacities financially, while also maintaining a high quality of life. With almost 5 million residents, for example, Singapore isn’t at the top of the list in terms of population. But its GDP is much higher than that of larger cities like Cairo, Lagos, and Manila. Singapore boasts a per capita income of almost $50,000, one of the highest in the world, roughly the same as America’s or Norway’s. With one of the world’s three largest ports, a zippy and safe subway system, and an impressive skyline, Singapore is easily the cleanest, most efficient big city in all of Asia. Other smaller-scaled cities like Austin, Monterrey, and Tel Aviv have enjoyed similar success.

    It turns out that the rise of the megacity is by no means inevitable — and it might not even be happening. Shlomo Angel, an adjunct professor at New York University’s Wagner School, has demonstrated that as the world’s urban population exploded from 1960 to 2000, the percentage living in the 100 largest megacities actually declined from nearly 30 percent to closer to 25 percent. Even the widely cited 2009 World Bank report on megacities, a staunchly pro-urban document, acknowledges that as societies become wealthier, they inevitably begin to deconcentrate, with the middle classes moving to the periphery. Urban population densities have been on the decline since the 19th century, Angel notes, as people have sought out cheaper and more appealing homes beyond city limits. In fact, despite all the “back to the city” hype of the past decade, more than 80 percent of new metropolitan growth in the United States since 2000 has been in suburbs.

    And that’s not such a bad thing. Ultimately, dispersion — both city to suburb and megacity to small city — holds out some intriguing solutions to current urban problems. The idea took hold during the initial golden age of industrial growth — the English 19th century — when suburban “garden cities” were established around London’s borders. The great early 20th-century visionary Ebenezer Howard saw this as a means to create a “new civilization” superior to the crowded, dirty, and congested cities of his day. It was an ideal that attracted a wide range of thinkers, including Friedrich Engels and H.G. Wells.

    More recently, a network of smaller cities in the Netherlands has helped create a smartly distributed national economy. Amsterdam, for example, has low-density areas between its core and its corporate centers. It has kept the great Dutch city both livable and competitive. American urbanists are trying to bring the same thinking to the United States. Delore Zimmerman, of the North Dakota-based Praxis Strategy Group, has helped foster high-tech-oriented development in small towns and cities from the Red River Valley in North Dakota and Minnesota to the Wenatchee region in Washington State. The outcome has been promising: Both areas are reviving from periods of economic and demographic decline.

    But the dispersion model holds out even more hope for the developing world, where an alternative to megacities is an even more urgent necessity. Ashok R. Datar, chairman of the Mumbai Environmental Social Network and a longtime advisor to the Ambani corporate group, suggests that slowing migration to urban slums represents the most practical strategy for relieving Mumbai’s relentless poverty. His plan is similar to Zimmerman’s: By bolstering local industries, you can stanch the flow of job seekers to major city centers, maintaining a greater balance between rural areas and cities and avoiding the severe overcrowding that plagues Mumbai right now.

    Between the 19th century, when Charles Dickens described London as a “sooty spectre” that haunted and deformed its inhabitants, and the present, something has been lost from our discussion of cities: the human element. The goal of urban planners should not be to fulfill their own grandiose visions of megacities on a hill, but to meet the needs of the people living in them, particularly those people suffering from overcrowding, environmental misery, and social inequality. When it comes to exporting our notions to the rest of the globe, we must be aware of our own susceptibility to fashionable theories in urban design — because while the West may be able to live with its mistakes, the developing world doesn’t enjoy that luxury.

    This article originally appeared at Foreign Policy

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

    Photo: Mugley

  • New York Commuting Profile: From Monocentrism to Edgeless City

    The US Bureau of the Census has just released detailed county to county and place (municipality) to place work trip flow tables. This new data is the most comprehensive since the 2000 census and covers 2006 to 2008.

    The county to county data is particularly useful for analysis in the nation’s largest metropolitan area (Note 1), New York. The New York metropolitan area has more than 19 million people and stretches across 6,700 square miles of land area, one half of it in the urban area, which is the urban footprint that includes all areas, including suburbs, in the continuous urbanization (3,350 square miles) and the other half rural (Note 2). This area is composed of 23 counties, which makes far finer grain analysis possible than in Los Angeles, with just two counties or San Diego, where its single county precludes any county based metropolitan area analysis.

    The New York metropolitan area’s counties extend east to west from Suffolk on Long Island to Pike in Pennsylvania and north to south from Putnam in the Hudson Valley to Ocean on the New Jersey shore. Surprisingly, it does not include Fairfield and New Haven counties in Connecticut, which have strong economic ties to the urban area (and which are a part of the larger, Census designated “combined statistical area”). Indeed, major parts of these two counties can be considered part of the New York urban area (Note #3).

    Median house age is a useful indicator of the urban form in segments of a metropolitan area. This examination breaks the New York metropolitan area into rings. The core is New York County (Manhattan, where the median construction date of owned dwellings is 1942). The first ring is the other four boroughs of New York City. The inner ring includes counties outside the city in which the median aged house was built in the 1950s, while the outer ring includes counties in which the median aged house was built in the 1960s or later. The one anomaly is Staten Island (Richmond County) which although politically part of the city of New York, demonstrates a mean housing age closer to that of the outer ring (median construction date 1971). Visually it resembles late suburban New Jersey much more than it does the rest of the city. However, Staten Island’s strong ties to the city justify its classification with the other boroughs.

    Comparatively Centralized: New York is one of the most centralized large urban areas in the high income world,with only Tokyo ranking higher among areas over 5 million population. The Manhattan business district, located to the south of 59th Street is the world’s second largest (following Tokyo’s Yamanote Loop). But in terms of employment density Manhattan has more than double the employment density. What was, at least until recently, indisputably the world’s most spectacular skyline leads many to conclude that nearly everyone works in Manhattan.

    A Highly Decentralized Metropolitan Area: Yet in reality, New York is a highly decentralized metropolitan area. Approximately 74% of employment is outside Manhattan and the jobs are comparatively evenly dispersed among the sectors. There is more employment in the inner ring suburbs than in Manhattan (28%). Even the outer ring is competitive has nearly as many jobs, at 24%. Finally, the balance of the city, the four boroughs, has 22% of the employment (Figure 1).

    Wide Variations in the Jobs-Housing Balance: It is hard to understate the intensity of Manhattan’s central business district employment. Manhattan has 2.71 jobs for every resident worker. An important tenet of modern urban planning theory is to achieve a balance of jobs and housing. Manhattan’s jobs/housing imbalance is certainly the most acute of any county in the United States, yet it is to Manhattan that purveyors of smart growth densification policies are routinely drawn.

    Manhattan’s huge excess of jobs contrasts with employment the rest of the the city, where the jobs-housing balance at the county level is 0.67, the lowest in the metropolitan area. The inner ring suburbs have the highest jobs-housing balance at 0.93, while the outer suburbs have a jobs-housing balance of 0.87 (Figure 2), nearly one-third higher than the non-Manhattan boroughs (three of which are more dense than any major municipal jurisdiction in the nation). The city’s strongest jobs-housing balance is in Brooklyn (Kings County), at 0.72, which is lower than all of the suburban counties except for the most remote (Pike, Putnam and Sussex).

    Manhattan’s Impact: Diminishing Rapidly with Distance: There is no doubt that Manhattan remains the core of the New York economy, but that is less true the further you go out. While nearly 70% of the core’s workers commute from outside Manhattan, the employment influence of Manhattan drops off like the temperature falls the further you get away from a fireplace.

    86% of Manhattan’s resident workers have jobs in Manhattan, but only 35% of workers living in the city’s other boroughs work in Manhattan. This falls off to 14% in the inner suburban counties and 6% in the outer suburban counties (Figure 3). In Sussex County and Ocean County, New Jersey, only 2% of resident workers commute to Manhattan.

    Working Close to Home: At the same time a larger number of resident workers outside Manhattan work in their home counties than work in Manhattan. In the balance of the city, 46% of workers have jobs in the same counties. The inner suburban counties employ 56% of their resident workers, while the outer suburban counties employ 63%. Overall, 58% of New Yorkers work in their county of residence, more than double the share that work in Manhattan (Figure 4). In Richmond County (Staten Island), Suffolk County and Rockland counties in New York and Pike County, Pennsylvania, more than 80% of jobs are filled by local residents.

    Local Workers Generally Come from the Same Counties: A review of the residential location of workers by job location reinforces the dominantly local nature of commuting in New York. Overall, 56% of jobs are filled by residents of the same county. The figure is the highest in the outer ring suburban counties, at 73%. The inner ring suburban areas draw 60% of their workers from the same county, while the balance of the city draws 69%. In Manhattan, with its seriously out of balance jobs and housing, just 32% of the jobs are filled by it residents (Figure 5).

    Dispersion: Past and Present. All of this is a huge change from a half-century ago. In 1956 (according to data in the classic Anatomy of A Metropolitan Area, by Edgar M. Hoover and Raymond Vernon), Manhattan accounted for 43% of the metropolitan area’s employment (1950 metropolitan definition). Since that time, employment has fallen substantially in Manhattan and risen elsewhere. There have been gains in the outer boroughs, related principally to the strong population growth Queens and Staten Island. There were also gains in the inner suburban counties. The strongest gains were in the outer suburban counties (Figure 6).

    The dispersion is continuing. As Ed McMahon and I showed in Empire State Exodus, there is considerable migration from New York to Pennsylvania, as people are moving to metropolitan areas such as Allentown and Wilkes-Barre. Obviously, as the modest level of commuting from the outer counties of metropolitan New York indicates, relatively few of these people are commuting to Manhattan. This impression may be more a product of the fact the Manhattan-based media only recognizes workers when they actually make it into town; those who stay in the periphery, it seems, might as well live on another planet.

    New York, with as by far the strongest central business district in the nation, still has moved from virtual monocentrism, to the Edge Cities polycentrism of Joel Garreau and increasingly even to the amorphous Edgeless Cities employment dispersion of Robert Lang. The strong core continues to regenerate, but no longer exerts anything like its former dominant influence.

    ——-

    Note 1: For complete data.

    Note 2: For a description of urban terms (metropolitan area, urban area, etc).

    Note 3: Demographia World Urban Areas includes the continuous urbanization of southwestern Connecticut as a part of the New York urban area.

    ——-

    Table 1
    COMMUTING IN THE NEW YORK METROPOLITAN AREA (2006-2008): SUMMARY BY GEOGRAPHIC RING
    RINGS Ring Jobs/Housing Balance (Jobs per Resident Worker) Workers Employed in Residence County Share of Jobs Filled by County Residents Workers Employed in New York County (Manhattan) Average One-Way Work Trip Time (Minutes): Residence Average One-Way Work Trip Time (Minutes): Workplace Median Year Owned Housing Built
    NYC: Manhattan 1 2.719 86.3% 31.7% 86.3%                30.3                49.1 1942
    NYC: Balance 2 0.674 46.4% 68.8% 35.6%                42.0                37.3 1939-1971
    Inner Ring 3 0.927 56.0% 60.4% 14.4%                30.5                29.1 1950-1956
    Outer Ring 4 0.870 63.1% 72.5% 6.2%                31.3                26.0 1967-1983
    New York MSA 1.000 57.6% 57.6% 26.1%                34.5                35.5 1955
    Derived from American Community Survey data (2006-2008)
    Note: MSA work trip times (residence and work location) differ because commuters from outside the MSA are included

     

    Table 2
    COMMUTING IN THE NEW YORK METROPOLITAN AREA (2006-2008): SUMMARY BY COUNTY
    COUNTIES Ring Jobs/Housing Balance (Jobs per Resident Worker) Workers Employed in Residence County Share of Jobs Filled by County Residents Workers Employed in New York County (Manhattan) Average One-Way Work Trip Time (Minutes): Residence Average One-Way Work Trip Time (Minutes): Workplace Median Year Owned Housing Built
    New York Co., NY 1 2.719 86.3% 31.7% 86.3%                30.3                49.1 1942
    Bronx Co., NY 2 0.676 44.3% 65.6% 36.8%                41.1                35.7 1950
    Kings Co., NY 2 0.721 51.2% 71.0% 36.7%                42.3                39.0 1939
    Queens Co., NY 2 0.645 42.4% 65.7% 36.0%                42.0                37.5 1949
    Richmond Co., NY 2 0.585 47.3% 80.8% 26.3%                42.7                29.8 1971
    Bergen Co., NJ 3 0.960 56.7% 59.1% 15.0%                29.3                27.2 1956
    Essex Co., NJ 3 1.052 53.6% 50.9% 9.7%                30.8                31.8 1953
    Hudson Co., NJ 3 0.892 47.1% 52.8% 23.6%                32.4                35.1 1950
    Passaic Co., NJ 3 0.797 45.3% 56.8% 4.3%                27.0                28.0 1954
    Union Co., NJ 3 0.969 50.7% 52.3% 7.1%                33.0                27.6 1954
    Nassau Co., NY 3 0.884 59.1% 66.8% 14.8%                31.6                30.0 1954
    Westchester Co., NY 3 0.928 67.3% 72.6% 19.9%                33.6                27.7 1955
    Hunterdon Co., NJ 4 0.736 49.5% 67.2% 3.7%                31.4                28.2 1978
    Middlesex Co., NJ 4 0.943 58.5% 62.0% 7.7%                26.9                25.8 1968
    Monmouth Co., NJ 4 0.880 63.4% 72.0% 8.2%                33.2                23.8 1970
    Morris Co., NJ 4 1.097 58.7% 53.5% 5.4%                29.4                31.2 1967
    Ocean Co., NJ 4 0.723 63.4% 87.7% 2.0%                31.1                21.3 1977
    Somerset Co., NJ 4 0.988 46.7% 47.3% 5.6%                31.0                31.1 1978
    Sussex Co., NJ 4 0.565 44.5% 78.8% 2.3%                38.2                23.7 1972
    Putnam Co., NY 4 0.441 30.9% 70.1% 8.0%                37.0                24.4 1967
    Rockland Co., NY 4 0.763 61.2% 80.1% 12.0%                29.8                25.1 1969
    Suffolk Co., NY 4 0.872 76.2% 87.4% 5.7%                29.8                23.5 1967
    Pike Co., PA 4 0.574 45.9% 80.0% 4.6%                44.1                25.2 1983
    New York MSA 1.000 57.6% 57.6% 26.1%                34.5                35.5 1955

    ——-

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

    Photo: Levittown (Nassau County): Inner Suburban (photo by author)

  • A Localist Solution

    By Richard Reep

    “There is a great deal of historical evidence to suggest that a society which loses its identity with posterity and which loses its positive image of the future loses also its capacity to deal with present problems, and soon falls apart.”
    –Kenneth Boulding, economist and philosopher (1966)

    Written in the depths of the Cold War, when nuclear annihilation appeared imminent, if not inevitable to some, Boulding’s words remain applicable to today’s popular culture. Increasingly unable to imagine a positive future since the 1990s, we have largely replaced the end of the nuclear threat with the beginning of global warming, among other environmental threats. Others have raised the spectre of Chinese global domination or a prolonged and destructive jihad from the Islamic world.

    Fatigued by perpetual threat, our society appears today to have largely lost its capacity to deal with present problems. Government, media and academia all have largely adopted, and even sought to expand their own power, by exacerbating this sense of omnipresent threat. Pick your thesis and line up your dialectical arguments, and you can almost hear the politicians and business leaders talking past each other already. And so goes our contemporary cultural conversation.

    In this circumstance, the task of rebuilding a sense of optimism and resilience has fallen on a number of local community groups seeking to find an alternative pathway out of the current zeitgeist. As the politicians turn up the volume, individuals are simply turning them off, and inventing solutions that address tomorrow’s needs. From these efforts come the most significant optimism for the future.

    Nondialectical change seems to be the only hope in a society where progress, particularly for the hard-pressed middle class, seems increasingly dubious. Small, isolated, cumulative efforts that begin on the grassroots level – localism – are our best, most positive pathway out of the seemingly intractable argument engaging western scientific society.

    Based in communities, families and churches, these groups are very different from those – on both sides of the political aisle, in the corporate world, the media, the scientific and academic communities – who hope to benefit from a climate of gloom and hopelessness. These are people who are thinking not how to gain more power or influence, but to make lives better for themselves, their neighbors and their children.

    Intentional communities. People creating a community around the intention of responsible environmental stewardship began this movement in Vermont in the 1990s. They represent a vehicle for a community to take responsibility for its environmental impact, wherein homeowners’ dues go towards an engineer’s time to monitor the community’s own wastewater treatment system, electrical power generation, and other needs defined by the community. It has parted company with conventional towns and cities, and today this movement represents any groupings of like-minded individuals around ecological concerns, religious affiliations, and other niche interests as a way of dropping out of the mainstream. Coping with stress by removing oneself from the city helps the individual, but leaves the city behind.

    The transition movement, begun in the United Kingdom, may be another pathway, based on the notion of peak oil. Encouraging bicycle riding, walking, and preparation for a low-hydrocarbon future, transition at least increases everyone’s exercise level. It is spreading quickly across America with local organizers creating visioning meetings and action plans, hoping that community strength will be a force multiplier. These movements are building in cities, where the hard work needs to be done. In Central Florida, Transition Orlando leader Jim Belcher facilitates community workshops focused on creating a shared vision for the future of this region. By July, its third gathering attracted over 60 people coming to realize that the future starts here, not in Washington or New York.

    The Living Building Challenge, begun in the Pacific Northwest, is yet another pathway, based on the notion that buildings can actually produce energy and clean water while cleaning pollution. Turning the conventional model on its head, building owners engaging in this process have already produced a few examples that appear to meet their self-imposed requirements to be restorative in character. This initiative takes the existing real estate development industry, sorely in need of reform, down a new road as well. With over 70 buildings being analyzed for compliance with this very new standard, four are close to meeting this challenge: a residence in Victoria, British Columbia; the Tyson Living Learning Center in Eureka, Missouri; the Omega Center for Sustainable Living in Rhinebeck, New York; the Hawaii Preparatory Academy Energy Laboratory in Waimea, Hawaii and the EcoCenter at Heron’s Head Park in San Francisco, California. More projects like these will have an impact on how people think about the role of buildings in society.

    In all these movements, the emphasis is on the process rather than the product. No leadership claims to have all the answers. The importance of this cannot be overstated. With a sense of desperation, communities seem too quick to turn solutions – often concocted from the outside by groups with distinct national or global agendas – that closes off all future dialogue and process, as if the future cannot be trusted to meet its own needs. These approaches may appear to address this generation’s anxiety over the future, but zips the lips of the future generation. A more open, indeterminate vision allows inconsistencies and conflicts to be solved as they arise. Teleological fantasies can only go so far.

    Due to their small size these micro-movements and others mean little if considered individually, and they are easy to dismiss as experiments. They are also reactions to the dialectic, whether peak oil or global warming. The important thing about them is not which side they react to, but rather what they are doing about it, and the gradual, step-by-step basis through which individuals and communities can act.

    These developments should be watched carefully if a positive image of the future is yet to be regained. Enough destruction has occurred, and rather than bemoan the loss of our past lifestyles and bemoan a future of scarcity, the middle class might look at it rather as a freedom to change and grow stronger, more resilient, and less dependent upon the oligarchy of organized interest groups, academic influence, media money and power.

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

    Photo by photobunny

  • Mass Transit: The Great Train Robbery

    Last month promoters of the Metropolitan Transit Authority’s Los Angeles rail projects, both past and future, held a party to celebrate their “success.” Although this may well have been justified for transit-builders and urban land speculators, there may be far less call for celebration among L.A.’s beleaguered commuters.

    Despite promises that the $8 billion invested in rail lines over the past two decades would lessen L.A.’s traffic congestion and reshape how Angelenos get to work, the sad reality is that there has been no increase in MTA transit ridership since before the rail expansion began in 1985.

    Much of the problem, notes Tom Rubin, a former chief financial officers for the MTA’s predecessor agency, stems from the shift of funding priorities to trains from the city’s more affordable and flexible bus network. Meanwhile, traffic has gotten worse, with delay hours growing from 44 hours a year in 1982 to 70 hours in 2007.

    Sadly, this situation is not unique to Los Angeles. In cities across the country where there have been massive investments in light rail–from the Portland area to Dallas and Charlotte, N.C., and a host of others–the percentage of people taking transit has stagnated or even declined. Nationwide, the percentage of people taking transit to work is now lower than it was in 1980.

    None of this is to argue that we should not invest in transit. It even makes sense if the subsidy required for each transit trip is far higher than for a motorist on the streets or highways. Transit should be considered a public good, particularly for those without access to a car–notably young people, the disabled, the poor and the elderly. Policy should focus on how we invest, at what cost and, ultimately, for whose benefit.

    In some regions with large concentrations of employment, downtown major rail systems often attract many riders (although virtually all lose lots of money). The primary example would be the New York City area, which is one of only two regions (the other being Washington, D.C.) with over one-fifth of total employment in the urban core. In the country as a whole barely 10% of employment is in the city; and in many cities that grew most in the 20th century, such as Dallas, Miami, Los Angeles and Phoenix, the central business district’s share falls well under 5%.

    Some other urban routes–for example between Houston’s relatively buoyant downtown and the massive, ever expanding Texas Medical Center–could potentially prove suitable for trains. But most transit investments would be far more financially sustainable if focused on more cost-efficient methods such as rapid bus lanes, which, according to the Government Accountability Office, is roughly one-third the cost of light rail.

    Making the right choices has become more crucial during the economic downturn, even in New York City. The city and the federal government continue to pour billions into a gold-plated Second Avenue subway but now plan to cut back drastically on the bus service that serves large numbers of commuters from the outer boroughs and more remote parts of Manhattan.

    Ultimately the choice to invest in new subways and light rail as opposed to buses reflects both a class bias and the agenda of what may best described as the “density lobby.” The people who will ride the eight-mile long Second Avenue subway, now under construction for what New York magazine reports may be a total cost of over $17 billion, are largely a very affluent group. The new subway line will also provide opportunity for big developers to build high-density residential towers along the route. In contrast, the bus-riders, as the left-of-center City Limits points out, tend to be working- and middle-class residents from more unfashionable, lower-density districts in the Bronx, Queens, Brooklyn and Staten Island.

    The proposals for High Speed Rail–a favorite boondoggle of the Obama administration and some state administrators–reveals some of the same misplaced fiscal priorities. California’s State Treasurer, Democrat Bill Lockyer, has lambasted the proposed HSR line between Los Angeles and the Bay Area, suggesting the state may not be able to sell private investors on between $10 billion and $12 billion in bonds without additional public subsidies.

    Other prominent Democrats as well as the State Auditor’s office have challenged the promoters’ claims about the viability of the system and its potential drain on more reasonable priced transit project.

    This issue funding priorities was raised recently by the current administrator of the Federal Transportation Authority, Peter Rogoff, who questioned the wisdom of expanding expensive rail and other transit projects when many districts “can’t afford to operate” their own systems. He noted that already almost 30% of all existing “transit assets” are in “poor or marginal condition.”

    Ultimately we need to ask what constitutes transit’s primary mission: to carry more people to work or to reshape our metropolitan areas for ever denser development. As opposed to buses, which largely serve those without access to cars, light rail lines are often aimed at middle-class residents who would also be potential buyers of high-density luxury housing. In this sense, light rail constitutes a critical element in an expanded effort to reshape the metropolis in a way preferred by many new urbanists, planners and urban land speculators.

    The problem facing these so-called visionaries lies in the evolving nature of the workplace in most parts of the country, where jobs, outside of government employment, are increasingly dispersed. Given these realities, transit agencies should be looking at innovative ways to reach farther to the periphery, in part to provide access to inner-city residents to a wider range of employment options. Considering more than 80% of all commuter trips are between areas outside downtown, priority should be given to more flexible, less costly systems such as rapid commuter bus lines, bus rapid transit, as well as subsidized dial-a-ride and jitney services that can work between suburban centers.

    If reducing energy use and carbon emissions remains the goal, much more emphasis should be placed as well on telecommuting. In many cities that have invested heavily in rail transit–Dallas, Denver and Salt Lake City, for example–the percentage of people working from home is now markedly larger than those taking any form of mass transit. Since the approval of the Dallas light rail system in the 1980s, for example, the transit share of work trips has dropped from 4.3% to 2.1%; the work-at-home share has grown from 2.3% to 4.3%.

    In fact, people who work from home now surpass transit users in 36 out of 52 metropolitan areas with populations over 1 million–and receive virtually no financial backing from governments. Yet if New York, home to roughly 40% of the nation’s transit commuters, was taken out of the calculations, at-home workers already outnumber the number of people taking transit to work; and since 2000 their numbers have been growing roughly twice as fast as those of transit riders.

    Clearly we should not spend our ever more scarce transit resources on a nostalgia crusade to make our cities function much the way they did in the late 1800s. Instead, we need to construct systems reflecting the technology and geographic realities of the 21st century and place our primary focus on helping people, particularly those in need, find efficient, economically sustainable ways to get around.

    This article originally appeared at Forbes.com.

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

    Photo: Michael | Ruiz

  • Supporting Small Business in NYC: The Harlem Metro Market Project

    The Harlem Community Development Corporation has come up with a rather unique plan to combat high real estate prices in the district. It proposes establishing an open-air market under the Metro North tracks spanning one mile, or 22 city blocks. This new market would accommodate about 900 vendors, helping to increase the now low number of local entrepreneurs and independent retail stores in Harlem.

    The market would not only attract vendors, but tourist traffic as well, which would help rejuvenate a neighborhood hampered by soaring commercial real estate costs. It costs anywhere from $125 to $225 per square foot for commercial space in Harlem’s prime locations, resulting in only 42 stores for every 10,000 residents. The Metro market project would ease pressure on small, independent retailers and allow potential entrepreneurs the chance to create viable businesses in the city.

    This need for such a project reflects the economic trends and challenges facing the larger New York urban area’s middle class. New York City has the nation’s highest cost of living, and like the rest of the nation, is still experiencing the effects of the recession. The middle class, including small business owners facing high rents, struggles to make the six-figure salaries needed to meet the city’s high cost of living.

    Harlem’s Metro market project, which would encourage an independent entrepreneurial spirit, embodies the required plan of action for New York City. The city needs to find inventive ways to deal with its economic reality in order to reverse the recession and revitalize its appeal to the energetic and the ambitious.

  • Melbourne: Government Seeking Housing Affordability

    Once a country known as “lucky” for its affordable quality of life, Australia has achieved legendary status as a place where public policies have destroyed housing affordability for the middle class. Draconian land rationing policies (called “urban consolidation” in Australia and more generally “compact city” policy or “smart growth”), have made it virtually illegal to build houses outside tightly drawn urban growth boundaries that leave virtually no room for new construction beyond the urban fringe. As a result, house prices have increased to the point that Australia now suffers one of the most unaffordable markets in the world.

    The consequences of this may finally be dawning on some governments. The state of Victoria, for example, is expanding its urban growth boundary around Melbourne.

    Severely Unaffordable Australia: The Reserve Bank of Australia (the central bank) has described the considerable extent to which house prices have increased relative to incomes since the 1980s. The annual Demographia International Housing Affordability Survey makes similar findings, showing that the price of housing has doubled or tripled relative to household incomes over the past quarter century. All major markets in Australia are “severely unaffordable.” This has occurred in a country that has long boasted one of the largest home ownership shares in the world, which epitomized the “Great Australian Dream.” Until urban consolidation policies were widely adopted and strictly enforced, Australia’s housing affordability (measured by the Median Multiple, which is the median house price divided by median household income) was virtually the same as that of the United States.

    That has changed radically. Over the past two years, the median house price in Melbourne, has risen by 30%.

    Expanding Melbourne’s Urban Growth Boundary: In this environment, it comes as welcome news that the Brumby Labor government has enacted an expansion of the Melbourne urban growth boundary. The initiative attracted broad based support, including that of the Liberal-National opposition in the Victoria (state) parliament. The government expects that the expansion will “maintain” housing affordability.

    There was, not surprisingly, the kind of hysteria that has become typical of Australian land use debates. Suburban Casey Mayor Lorraine Wreford expressed concern that the expansion would consume agricultural land and increase food costs. In fact, the higher costs that Melburnians are paying for housing as a result of the urban growth boundary is more than enough to pay grocery bills for the neighbors on both sides.

    The “loss of agricultural land” argument is even more daft in Australia than in the United States. Australia’s agricultural production continues to improve, which has permitted huge amounts of land to be abandoned and returned to its natural state. Since 1981, an area nearly the size of New South Wales has been taken out of agricultural production. Lest anyone think that urbanization is a factor, this is more than 50 times the land area of all the urbanization that has developed in Australia since western colonization began.

    Will it be Enough? The risk, however, is that the urban growth boundary expansion may not be enough to materially improve housing affordability. The expansion is modest, at less than 170 square miles (440 square kilometers*). Worryingly, the government indicates that this will be the last urban growth boundary expansion in this generation.

    How Much Land is Needed for Housing Affordability? However, US experience indicates that a surprisingly small amount of developable land beyond the urban fringe may be enough to keep land and house prices from escalating.

    For example, Portland’s urban growth boundary appears to have had little cost escalation impact on house prices until the 1990s, when urban fringe developable land within the urban ground boundary fell to less than 10% compared in relation to the already developed urban footprint (Note). This is the equivalent of a developable ring around Portland of less than one/half mile (0.8 kilometers in Portland).

    As the developable land became more scarce, house prices escalated. Now, Portland house prices are more than one-third above the historic Median Multiple norm of 3.0 and they peaked at more than 60% above during the housing bubble.

    Similarly, there are virtual urban growth boundaries in Las Vegas and Phoenix. These development constraints are defined by circumferential government owned land, which has been released to the market at rates intended to maximize revenues, which means they minimize housing affordability. Yet these constraints appear to have had little impact on prices until developable fringe land dropped to below 20% relative to the urban footprint.

    Strengthening Melbourne’s Competitive Position? The Victorian action may have been impelled by a recognition that the affordability-driven economic stagnation already existent in Sydney could well spread. This could help to restore Melbourne to its role as Australia’s principal urban area, more than a century after having been dethroned by Sydney. Bernard Salt, one of the nation’s leading demographers, has predicted that Melbourne’s population will exceed that of Sydney by in less than 20 years.

    Offering Australia’s future generations the chance to live out the Great Australian Dream by improving housing affordability could not only expand Melbourne’s competitive edge over Sydney, but could even neutralize fast-growing Brisbane’s trajectory. Ross Elliot has suggested that the new Southeast Queensland Regional plan could seriously retard growth in that vibrant area.

    Are Australian House Prices in a Bubble?

    There is a raging debate over whether Australia’s housing price boom is an asset bubble. International financial analysts Edward Chancellor, who correctly predicted the Great Recession, believes that Australian housing is a bubble that will burst before long. Others disagree. Either way, Australia loses.

    • If Australia’s price boom is a bubble, history says it will burst (as virtually all do), likely inflicting serious damage to the economy. In this regard, Australia could be more at risk than the United States was in its housing bubble burst, since housing in virtually every market, large and small, has been driven up to unsustainable levels. In the United States, the bubble was contained within markets accounting for about one-half of housing, where Australian-type planning policies were in operation. Other markets, such as Houston, Dallas-Fort Worth, Atlanta and much the Great Plains did not experience the bubble.
    • If Australia’s planners have simply succeeded in raising the long term price of housing and there is no bubble (as many Australian analysts suggest), then future generations of Australians will have much less money to spend and their standard of living will lower than it would otherwise have been.

    Regrettably, the spirited debate over an Australian “bubble” is far different that the public deliberations that preceded the adoption of urban consolidation policies in Australia. For the most part, state governments and planning academics carefully avoided any discussion of the housing affordability consequences. Perhaps this was out of ignorance. But whatever the intentions, the smart growthers have imposed great costs on both present and future generations of Australians.

    —–

    Note: This is a far smaller area than recent research suggesting a relationship between geographic constraints (mountains and other undevelopable land) and higher house prices. Research by Albert Saiz at Wharton uses a 50 kilometer (30 mile) radius from the urban core to identify the share of land that can be developed. The data in the research would indicate that more than 1,750 square miles are developable, yet Portland is among the more geographically constrained according to this analysis. This seems to be an unreasonably large area for measuring the impact of geographical constraints. It is nearly 4 times the urban footprint of Portland and is nearly 60 times the developable land area that exhibited virtually no impact on housing affordability in Portland in the early 1990s and is more land area than covered by all but 8 of the world’s largest urban areas. It is to be expected that that politically imposed development constraints (strongly enforced as in Portland and Australia) render any more remote geographical constraints irrelevant.

    Photo: Inside the expanded urban growth boundary: Western Freeway toward Melton (photography by author)

    *The original version of this essay read 17 square miles and 44 square kilometers.

  • Can The Suburban Fringe Be Downtown Adjacent?

    For many suburban Americans, the thought of migrating to a center-city environment holds an intriguing appeal, fueled by urbanists who tout the benefits of stunning cityscape views, walkability, proximity to civic and cultural amenities, and street vibrancy. I happen to be among those suburbanites who have harbored a secret fantasy of living in a dense downtown environment, replete with throngs of creative millennials roaming the streets, fancy coffee houses, and close access to fine dining. A decision to move from suburban Sacramento to Denver has been the result.

    The urban/suburban residential conundrum has generated epic debates that match the joys of city living against the benefits of suburbia. Terms such as “sprawl,” “drivable urbanism,” and the “slumming of suburbia” appear in the news regularly, often in an attempt to sway the pendulum in favor of dense city living.

    The tsunami of hoopla around “urban livability” has been of growing interest to my family and me as we prepare to relocate to Denver. I’ve come to believe the accuracy of the assertion, often voiced on this site, that America’s interest in suburbia has not abated. It has become abundantly clear from the brisk interest of potential buyers of our current Folsom, California residence, that living in a suburban locale still holds a special appeal. The environmentalist clamor aside, what people really want from a community is amenities that appeal to their specific interests. Folsom, a city of 72,000 nestled on the outskirts of Sacramento, offers myriad advantages for leisure — such as boating and biking — to basic requirements like low crime rates and quality schools.

    For us, the move to Denver is a transition from suburbia that’s been a challenge. Despite steady buyer interest, our 3100-square-foot house is still on the market. Suburban critics, like Urban Land Institute-fellow Christopher Leinberger, would likely cite a potential cause as being declining interest in what are affectionately known as McMansions, those big cumbersome houses replete with big lawns, big mortgages, and big utility bills. Demographic trends also show a steady rise in the number of adults without children, who are presumably less likely to purchase a big house. And, as a real estate professional pointed out to us, people are holding out for a windfall deal these days amid the abundance of foreclosures in the Sacramento metro area.

    Finding a family home in Denver has been even more interesting. While the downtown Lo-Do District has great appeal to us because of its vibrancy, civic amenities, and proximity to Coors Field (Rockies Baseball), Invesco Field (Broncos Football) and the Pepsi Center (Nuggets Basketball and Avalanche Hockey), it simply doesn’t strike my wife and me as the ideal environment for raising our seven-year-old daughter. The questionable schools in the city-center core were the deal breaker, and the catalyst for our decision to explore quasi- suburban areas on the fringe of downtown.

    As is the case with many downtowns across the country, real estate values in central-city Denver have taken a severe beating. With tepid demand, large inventories of condos have sat vacant for months, leading some developers to convert them into rentals.

    After several exploratory trips and careful consideration of our options, particularly since our house in California is still on the market, we elected to rent in a neighborhood called Cheeseman Park. An eclectic, diverse enclave just on the outskirts of downtown, the area offers the hybrid urban/suburban environment that we were seeking. It also has a top-notch elementary school for our daughter.

    Our choice of location within the Denver area seems to support a national trend that was much discussed at the recent Urban Land Institute Summit/ Spring Council Forum in Boston; namely, that the vast majority of population growth in U.S. urban regions will occur not in downtown cores, but in suburbs, and of those, most notably the close-in suburbs exuding an urban feel.

    This is something that leaders in our current home region of Sacramento failed to grasp recently. The City Council made the decision to pursue a mixed-use project with 256 housing units in the downtown core, over a more ambitious proposal outside of downtown featuring a complex with live music, a year-round farmer’s market, and a venue showcasing California’s rich agricultural history. The choice seems ill-advised, since previous downtown housing projects have failed, in part due to tepid residential demand.

    In the end, urban living has its benefits, although decisions to reside in a denser environment should be sprinkled with a dose of pragmatism. The large population is one factor that maintains Denver’s robust spectator sports scene, which is a huge draw for me personally. And, like many bigger cities, it also offers a wider selection of social and cultural activities than that of the Sacramento region. While urban housing has captured the imagination of many Americans, downtowns may be best suited for the role of civic and cultural centers – places that people come to visit, rather than where they reside.

    Photo by Michael Scott of a “suburban” neighborhood in Denver.

    Michael P. Scott is a Northern California urban journalist, demographic researcher and technical writer. He can be reached at michael@vdowntownamerica.com.

  • Ownership Subsidies: Dream Homes or Disasters?

    Home ownership has been considered an integral part of the American Dream for as long as anyone can remember. Now it has come under scrutiny, notably in a June Wall Street Journal piece by Richard Florida, which claims that that home ownership reduces employment opportunities for young adults, since it limits their mobility. To support ownership, others — particularly Wendell Cox — have argued that home ownership levels do not correlate with the economic productivity of cities, and cite the rapid suburban development in the Sunbelt as evidence that home ownership is as valuable as ever.

    My inclination is that the truth lies somewhere in between the two sides of the debate. For the sake of simplicity, I’ll refer to them as New Urbanist supporters versus Smart Growth opponents (I realize these are broad generalizations). While they disagree on the merits of home ownership, there’s an interesting point of agreement: both sides oppose subsidies to homeowners. I’d argue that both sides should focus on getting the issue of discontinuing subsidies onto the national agenda.

    Like many 20-something young professionals, I have no aspirations towards home ownership. I ditched my car when I moved out of the suburbs, and I refuse to sign a lease that lasts more than three months. This affords me the flexibility that my life as a freelancer requires. If I were in a profession that didn’t call for a great deal of mobility, perhaps home ownership would be appealing. When North America was a manufacturing powerhouse, most people were in that situation. But an increasingly dynamic labor market requires an increasingly mobile workforce… to an extent.

    For those of us in the 18-30 demographic who work in fairly mobile industries, home ownership isn’t necessarily as big a hindrance as Florida suggests. There are people like me who work in volatile industries and simply can’t be tied down to one city, but we’re in the minority. For the majority, it really depends on the location. If your home is within commuting range of a major city, it should be possible to find work in your field without uprooting.

    But jobs come before home ownership in order of priority. In a scenario where state and local governments create a fiscal climate inhospitable to economic growth, rather than chase cheap housing, people migrate to the strongest economic region (for example, the Sunbelt).

    While home ownership isn’t going to be obsolete any time soon, in decaying cities like Detroit and Buffalo, and in towns far from urban centers, it can be a major hindrance to finding a job. Home owners invest a large amount of their net worth in their homes, and it becomes difficult to simply abandon unsellable homes and pay rent in a new city, though this does happen. There are roughly 90,000 abandoned homes in Detroit alone. Old manufacturing and resource town centers are especially vulnerable, since their economies typically lack the diversity to attract new employment opportunities. This isn’t a fault of government policy, but an unavoidable economic reality.

    Incentives such as the omnibus of initiatives created by the Bush administration’s Ownership Society led to an increase in home ownership levels. But no good can come of home owner subsidies; they lead to inflated prices and distorted patterns of urban development. A survey of first time homeowners in 2009 by Keller Williams Research found that 10% of first time home buyers were primarily motivated to purchase a home because of the $8000 tax credit. A further 4% were primarily motivated by low interest rates. This may seem trivial, but it should be pointed out that the average age of first time US home buyers has decreased to 26. That is a full 8 years younger than in the UK, where the average age is on the upswing. While higher home costs in the UK (partially due to more stringent land use regulations) are probably a major factor, one cannot help but think that the First Time HomeBuyers Tax Credit and subsidized mortgages contributed.

    Subsidies for home ownership are incongruent with the ideological underpinnings of both New Urbanists and Smart Growth opponents (who are mainly conservatives and libertarians). Some Smart Growth opponents are likely to be in favor of these subsidies, since they buy the rationale behind the Ownership Society model. Namely, they believe that ‘pride of ownership’ leads to flourishing communities. On this point, they are probably correct. But the ‘pride of ownership’ argument is based on the ‘broken window theory’ that blight leads to an increase in crime. Ownership Society partisans argue that since owners have more of an incentive to maintain their homes, high home ownership rates should lead to less crime. There is quite a bit of evidence to support this theory. Then again, apartment renters do not control yards or frontage, so the ‘pride of ownership’ argument seems far less relevant with respect to high density development.

    Both sides should take a time out to get the issue of ending housing subsidies on the national agenda. In the wake of a major recession caused partly by misguided housing and mortgage policies, this is an issue that could gain traction with the electorate. The two sides will have plenty of time — and issues — to fight over later.

    “Mid-Century Suburban Home,” Paradise Palms Home, Las Vegas, Nevada by Roadsidepictures

    Steve Lafleur is a public policy analyst and political consultant based out of Calgary, Alberta. For more detail, see his blog.