Category: Urban Issues

Transit Ridership Increases: No Escape from New York

Transit ridership is increasing in the United States. The American Public Transportation Association (APTA) has reported that 10.8 billion trips were taken on transit in 2014, the largest number since 1956. With a more than 80% increase in gasoline prices since 2004, higher transit ridership was to be expected. However, it would be wrong to suggest the transit ridership is anywhere near its historic peak, nor that the increases have been broadly spread around the nation.

Highest Ridership Since 1956 (Which was the Lowest Since 1912)

Total transit ridership in 2014 was the highest since 1956. That’s just the beginning. The 2014 modern record ridership was lower than every year from 1956 all the way back to at least 1912, the last year of William Howard Taft’s presidency, when transit carried 13.2 billion riders.

Transit ridership has virtually collapsed since that time in relative terms. In 1912, the average man, woman and child rode transit at least 170 times a year. Today, the figure is about 35, down 80% from 1912. During the intervening century, non-farm employment increased by more than five times and the urban population, transit’s principal market, also increased more than five times. Ridership was elevated to its peak by gasoline rationing during World War II. Before that, transit ridership had peaked in 1926, as car ownership and suburbs rose before the Great Depression.

The Continuing Dominance of New York

Further, contrary to some media accounts, recent transit increases have not really been national in scope. Nearly all of it was on transit systems that serve local mobility in the City of New York as well as the rail systems serving the City from the suburbs. In the City, most of the service is provided by the Transit Authority. Additional services are provided by the New York City Department of Transportation and the Staten Island Railway. The suburban rail systems are the Long Island Railroad, the Metro North Railroad, New Jersey Transit Rail and PATH Rail. On these systems, nearly 90% of national work trip travel was to the city of New York and nearly three-quarters of those were to Manhattan.

Transit and New York: The Last Decade

Overall, the enormous system of buses and subways of New York City alone accounted for 88 percent of the national ridership increase from 2013 to 2014. If the ridership on the four large suburban rail systems that serve New York City (the Long Island Railroad, the Metro-North Railroad, New Jersey transit commuter rail, and the PATH trains) is added, City related transit accounts for 94 percent of the increase. A great achievement for the City, but not one that is being repeated in the rest of the nation.

This is nothing new. National transit ridership has increased about 10 percent over the decade since 2004. Much of the increase — 79 percent — has been on New York City’s buses and subways. The suburban rail systems raise that total to 84 percent. This does not include the many commuter buses that enter the city especially from New Jersey and other suburbs, which cannot extracted from the data because it is not separately reported (Figure).

New York’s transit turnaround has been nothing short of impressive. Nearly all of the nation’s progress in transit has been on a bus and subway system that carries one third of the national rides.

The results have not been nearly so positive in the rest of urban America, where 30 times as many people live. While New York City related transit services experienced a ridership increase of 33% in the last decade, in the rest of the nation, the increase was less than three percent. Even huge ridership increases in New York City cannot make much of a difference nationally. In 2004, transit accounted for approximately 1.6% of urban travel. By 2014, it had risen to only 1.7%. Without taking anything from New York City’s impressive transit record, these results are not likely to be replicated elsewhere. New York City is a very unique place. It is home to the world’s second largest business district, after Tokyo, the area south of Central Park in Manhattan. Approximately 2 million peoplework in this small area, a number approximately four times the next largest central business districts, in Chicago and Washington.

Approximately three quarters of Manhattan employees reach work by transit. This is 15 times the national average, New York City’s population density (excluding Staten Island, with its postwar suburbanization) is by far the highest and most extensive in the nation. The city of San Francisco comes the closest to New York City, with little more than half the population density and only 1/10 the total population.

Transit is often suggested as a substitute for the car. The reality is that transit can compete with the car only to the largest downtowns. Destinations within the six transit "legacy cities," (not metropolitan areas) of New York, Chicago, Philadelphia, San Francisco, Boston, and Washington account for most of the nation’s transit work trips. And, 60% of these trips are to downtown.

Transit cannot compete elsewhere, because travel times tend to be double those of the automobile (according to the American Community Survey) and it provides little practical access to most jobs. University of Minnesota research indicates the average employee can reach fewer than 10 percent of jobs in less than one hour by transit in 46 major metropolitan areas. By contrast, approximately 65% of people who drive reach their jobs in less than 30 minutesby car in the major metropolitan areas. Building new rail systems doesn’t change the equation. At least 20 new urban rail systems have been built in the last four decades, though transit’s percentage of work trips has generally not improved, despite representations about reducing traffic congestion to the contrary. For example, in Portland, Washington, Los Angeles, Dallas-Fort Worth, and Atlanta, which have among the most extensive new rail systems, a smaller percentage of commuters use transit than before rail opened, when there were only buses.

Even low income workers, who are often portrayed as "transit dependent," use cars much more than transit, and at a rate nearly equal to that of others in the labor force.

Yet, transit funding advocates continue to seek even more money, claiming that transit can attract drivers from their cars and reduce traffic congestion. That may be true in New York City’s uniquely transit-friendly environment, but not elsewhere.

Wendell Cox was a three-term member of the Los Angeles County Transportation Commission and chaired two APTA national committees. He is a public policy consultant in St. Louis and is a senior fellow at the Center for Opportunity Urbanism.

Photo: Bart A car Oakland Coliseum Station

April 11, 2015
Affordable Housing Maui Style

I was recently at a friend’s wedding on Maui. It was a beautiful ceremony in a magnificent location. The wedding was a week-long affair and the other guests were thrilled to enjoy the beach and sip drinks along the cascade of infinity pools at the resort. But I’m weird. I can’t sit still that long so I started to explore how the place works – not just the one resort, but the whole Maui tourist economy. First, I checked out real estate prices in the area. The cost of even the most modest homes and apartments are off the charts expensive. Property is pegged to what wealthy outsiders from the mainland and abroad are willing and able to pay rather than what the local population can afford.

I was recently at a friend’s wedding on Maui. It was a beautiful ceremony in a magnificent location. The wedding was a week-long affair and the other guests were thrilled to enjoy the beach and sip drinks along the cascade of infinity pools at the resort. But I’m weird. I can’t sit still that long so I started to explore how the place works – not just the one resort, but the whole Maui tourist economy. First, I checked out real estate prices in the area. The cost of even the most modest homes and apartments are off the charts expensive. Property is pegged to what wealthy outsiders from the mainland and abroad are willing and able to pay rather than what the local population can afford. That got me thinking about where the hotel staff lived. So I asked the people I encountered how they manage under the circumstances. There were a few standard answers.



First, there was upper management who were highly trained and well educated professionals who earned tolerable salaries and, with a spouse’s professional income and a little help from family, were able to own a modest property within a reasonable commute from work. Next, were the clerks, waiters, bartenders, and such. They were generally young and spending a bit of post-college pre-marriage time in a gorgeous place doing work that was either pleasant or at least bearable given the location. The largest proportion of these folks lived in nearby properties owned by older relatives. If dad or grandma is providing free or heavily subsidized accommodations it really doesn’t matter what the place costs on the open market. A good percentage of these homes are seasonal second or third homes and would sit empty or rented to strangers anyway. Having young family members occupy these vacation and retirement properties while they work at the hotels makes perfect sense. The third most common housing arrangement involved a few people pooling their resources and sharing a single apartment to cover the rent. There was a general lack of space and privacy in these situations, but everyone understood it was temporary for a season or two. The Hawaiian adventure was worth any inconvenience.

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Within a fifteen minute drive of the beachfront resorts I discovered a variety of housing types ranging from multi-million dollar single family homes to three hundred square foot studio apartments. None of these were what anyone with a normal budget or a family to support would ever call “affordable”. But one way or another the young front-end staff at the hotels find ways to make things work.

As I explored I was fascinated by the market segmentation of each product type. The subdivisions were sealed off from each other. It would be inconceivable for the people in a $5,000,000 home on a half acre lot to exist in the same pod as a complex of $900,000 two bedroom condos. The condos would be far too trashy for them. And the folks who owned $900,000 condos would be scandalized if someone tried to build $1,800 a month studio rental apartments inside their pod. That would attract “the wrong element”. The pods could all exist next to each other across the shrubbery and landscaped berms so long as they each had their own home owners associations and the roads in and out were completely segregated – preferably with a gate. Endless rules and restrictions, both private and municipal, control each pod to ensure property values are maintained at the appropriate level. This is the default suburban arrangement all over North America – give or take a few zeros and a comma.



It was a little trickier to discover where the maids and gardeners lived. The majority were older than the kids waiting tables and working the front desk and they were overwhelmingly immigrants from the Philippines. Unlike bartenders they were not generally inclined to chat with hotel guests in a casual manner. My inquiries about affordable workforce housing were met with confusion or slight suspicion. But I was eventually able to identify a few neighborhoods and the general living arrangements.



There’s simply no economic or political force on Maui that can provide sufficient affordable housing for the number of low wage workers required to run the tourist economy. Land is too expensive. Government and philanthropic funds are entirely inadequate. And political will to construct subsidized housing absolutely anywhere is a non starter at every level of the approval and community engagement process. The minimum wage in Hawaii is $7.25 per hour. The best paid housekeepers on Maui earn no more than $14.50 per hour. The median home price on Maui is $527,500 although that half million dollar number is actually misleading due to the geography of the island. Jobs are concentrated in a handful of locations where housing is significantly more expensive. Lower cost housing is in remote areas that are outside a reasonable commuting distance. HOA restrictions and a host of municipal regulations prevent too many people from sharing a rented apartment in the more expensive regions. Landlords in prime locations can pick and choose who to rent to and they tend toward Canadian tourists rather than immigrant cleaning ladies. So the sweet spot for these workers involves ordinary tract homes in specific older subdivisions that lack HOAs, are far enough from wealthy neighborhoods to escape regulatory push back, yet are close enough for a tolerable commute.

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Here’s an example I pulled from a real estate site. This 1962 three bedroom one bath tract home is among the least expensive properties on the island. It’s listed for $449,000. It doesn’t get any more affordable than this. It’s been on the market for a year and the price was recently cut by $100,000. If someone were to buy this place with a standard 20% down payment of $90,000 the monthly mortgage would be $1,642. At either $7.25 or $14.50 per hour for low wage workers the numbers don’t add up unless many people occupy the space to get the per person rent or mortgage down to a manageable level. So each bedroom gets multiple sets of bunk beds. The living room is a bedroom. The dining room is a bedroom. The garage is a bedroom. People work day, night, and swing shifts so the same beds and parking spots are used at different times by different people. They call these homes “hot beds” since the mattresses are always occupied and never have a chance to cool. (This is exactly how my Sicilian grandparents grew up in Brooklyn during the Great Depression and war years. This kind of arrangement isn’t really new or different.)



This particular subdivision is protected from gentrification and redevelopment since it’s sandwiched between the airport runway and the oil tank farm of the industrial seaport. Most of these homes are owned and occupied by extended multigenerational families. Cousins arrive, work and save, send money back to their home country, or prioritize their children’s advancement. They scrub things clean and give the walls fresh paint. They make due with the resources they have. The arrangement might not be ideal, but it gets the job done in the absence of any other option. Neighbors tend to live and let live since they’re all in the same position. Local authorities are disinclined to engage in too much code enforcement since the county would simply create a homeless problem they know they can’t resolve. Employers at the resorts wouldn’t like it too much either if members of their cleaning and gardening staff suddenly stopped showing up for work. So there you have it. Affordable housing – Maui style.

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.

April 6, 2015
Asian Augmentation

California, our beautiful, resource-rich state, has managed to miss both the recent energy boom and the renaissance of American manufacturing. Hollywood is gradually surrendering its dominion in a war of a thousand cuts and subsidies. California’s poverty rate – adjusted for housing costs – is the nation’s worst, and much of the working class and lower middle class is being forced to the exits. Our recent spate of high-tech growth has created individual fortunes, but few jobs, outside the Bay Area. The agricultural heartland is suffering not only from drought, but from green policies that allow a torrent of unused water to flow into the Sacramento Delta and San Francisco Bay while huge parts of the Central Valley go fallow.

But California retains one powerful trump card that our leaders in Sacramento have not yet found a way to squander: Its link to Asia. True, the state’s growth-restrained ports are increasingly tied up, and, over time, much of our trade with China and other Asian countries might pass, instead, through the Panama Canal en route to Houston and other ports. But geography, culture and family ties have a way of overcoming even the most deluded policy environments.

In the 19th century, many in California railed against the “Asian invasion,” and led the drive to restrict Asian immigration to America. As early as 1850, Asians accounted for one-tenth of the state’s non-native American population. Early on, Chinese, Indian and Japanese immigrants showed remarkable ingenuity, largely as farmers and merchants, which only made whites more antagonistic. “Indispensable as the Chinese are,” one grower report admitted, “they must go, as gradually as possible.”

Read the entire piece at the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Los Angeles, CA.

Wendell Cox is principal of Demographia, an international public policy and demographics firm. 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 was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Map courtesy of U.S. Census.

April 2, 2015
Can Hipsters Save Providence?

Providence regularly lands on the lists of top hipster cities and top hipster colleges for its cool factor, having earned plaudits from Travel and Leisure to Buzzfeed for live music, coffee shops, and hip culture.

But can hipsters save Providence?

In 2013, when Providence took the number four slot on Travel and Leisure’s list of America’s Top Cities for Hipsters, the publication stated of Rhode Island’s capital city, “On the west side, you can order vegan cuisine at The Grange, hear concerts at the Columbus Theatre (with a clever 1492 seats), or browse the vintage fashions, ceramic poodles, and kitschy kitchenware at Rocket to Mars.”

Aaron Renn, urban analyst and senior fellow at the Manhattan Institute, offered his perspective on the “hipster impact” in Providence — and nationally.

“There are not enough “hipsters” to plausibly resurrect the urban economies of America,” said Renn. “If you’re in downtown Providence, in the proximity to its center, you can live an eminently hipster lifestyle, and ask yourself, ‘Where would Providence be without it?’ And it would probably not be as great.”

“Is that the solution to the jobs issue on the south side of Providence? No. [The hipster economy] has its positives, but it’s something that’s happening more now everywhere,” said Renn. “I was just in Indianapolis. There were plenty of beards, plaid shirts, and locally sourced food there.”

Part of Economy

“It’s a great thing to be considered a livable city with a vibrant nightlife and art scene,” said Providence City Council President Luis Aponte. “Our goal is to have a city that draws interest and investment at all levels. The artists and designers need to be part of the city — but so do blue collar and white collar workers as well.”

Renn noted that in his view, Providence’s relatively rooted hipster culture put it in a different position than newer hipster destinations.

“People are going to come and go, that’s the nature of a college town, but the people that I know that decided to stay in Providence did so for relatively concrete reasons,” said Renn. “They’re ‘sticky’– they didn’t seem like the people to flee to Detroit because it’s the next hip city. Many people have reasons that they picked Providence that aren’t applicable to a Detroit. Having New England roots, for instance, or wanting to be close to New York, Boston, but having a lower cost of living.”

“I’m not anticipating there’s going to be any mass exodus of the creative class, that’s a positive note — the people that are in Providence are loyal, but if you don’t have a job, that’s a big problem,” added Renn.

Renn noted some advantages that emerging hipster markets have that Providence does not.

“Take Detroit and its collapse,” said Renn. “The ability for the government to function is barely coming around. That’s allowed people to take chances, to know the building inspector isn’t necessarily going to bother you. New England is so heavily regulated, it’s a daunting process to come in and do something. I think the people who move to Providence have a reason, they didn’t just up and move because they heard it was cool.”

Urban Growth Factor

“I think Providence has fallen flat compared to hipster cities such as Portland [Oregon],” said Renn. “There’s more of an economy build in say Portland [Oregon] for small business. For a lot of people, to go to Providence, you have to bring money from somewhere else, there’s not a ton of jobs. For the most part, if you’re a younger, creative person, there’s simply a limited number of positions in Providence right now. You’ve got to figure out how to make money, and that’s namely exporting services and goods, and that brings some wealth in.”

City Council President Aponte noted that the firm that the City Council recently hired to do cluster analysis identified that at least a fifth of Providence’s workforce are contract workers.

“What they found is that 21% of folks earning in Providence are 1099 workers,” said Aponte of the classification of contract workers. “That’s high as compared to other parts of the region and the country as a whole. If people are disconnected to an employer, and selling their services as consultants, how much spin off does that create? We have an older housing stock, which is attractive to hipster types, and having them here means something for our tax base. We need to see where the jobs are though, and enable growth there.”

Renn spoke to where he saw Providence could succeed.

“Rhode Island has had some wins in the past, we just need a lot more. On a whole, if I were Providence, I’d feel pretty good about the number of people in that creative class who have an affinity for the city and aren’t likely to leave,” said Renn. “The industries that are booming, however, are ones where Rhode Island isn’t necessarily well placed. Everybody and their brother is chasing biotech. Boston is booming, and Rhode Island just doesn’t have the assets. There are only so many coders — if you’re that good, you’re going to another city.”

“Where Providence and Rhode Island has the skills is in design,” said Renn. “The question is how do you parlay that beyond a boutique firm. You can argue Alex and Ani did it, that it’s effectively a design firm that leverages the state’s jewelry expertise. That’s just one example. Providence needs lots of people starting businesses. Very few will become successful, and usually it takes on average 7 to 10 years to make it. But to do so you have to build it.”

This piece first appeared at GoLocalProv.com.

Kate Nagle is a writer and editor at GolocalProv. Find her on Twitter @naglekate78.

April 1, 2015
Big Box Urbanism

I’m ambivalent about big box stores. I occasionally shop at places like Walmart, Costco, and Target just like most people. I buy various packaged goods in bulk from these mega retailers to take advantage of a volume discount. I don’t moralize over these things. But when it comes to meat, dairy, and fresh produce I walk around the corner or down the street to my local mom and pop stores, farmers market, or Community Supported Agriculture plan. I’m fine with buying a pallet of inexpensive toilet paper that was manufactured on an industrial scale. Chicken? Not so much.

But I’m really interested in the giant retail buildings themselves. A large proportion of the North American landscape is dominated by big box stores and the associated land use pattern that we’ve all come to recognize. They’re so ubiquitous that we tend not to question how they came into being. This blog post will explore the retail development in the Antelope Valley in California, but I use this example because it’s typical rather than unique. Whether you live in Florida, Texas, or Nebraska the same dynamics are at work.

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The story begins with a rivalry between the two contiguous municipalities of Lancaster and Palmdale. If you were to drive through the Antelope Valley you would have no way of knowing when you had passed through one town and into the other. Not only are they composed of identical building types, but their borders are incredibly intertwined and gerrymandered after decades of annexation in an arms race to see who could grow the fastest. The big prize is always sales tax revenue from high volume retailers: car dealerships, big box stores, department stores, chain restaurants… Anything with a cash register will do. Like most towns the property tax revenue from residential development isn’t nearly enough to cover the costs of city services such as schools, road maintenance, and police and fire protection. Sales tax receipts are desperately needed to fill the gap. The construction and service jobs associated with new retail are also welcomed by city authorities. New growth is paramount at the economic development agencies.

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With this in mind the City of Lancaster prepared a site for a regional shopping mall in the late 1980’s. The land next to the freeway was set aside, it was properly zoned, expensive infrastructure was installed, a “business friendly” package of heavy subsidies and sweeteners was put in place, and an extensive lobbying campaign was launched. Basically, Lancaster hiked up its skirt, put on a Wonder Bra and a lot of rouge and hoped a big strong regional shopping mall would come calling.

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Unfortunately for Lancaster it was Palmdale that successfully wooed the mall developer with a $20,000,000 incentive package back in 1990. The customer traffic heading to and from the new mall spawned a dozen adjacent retail sites that sprouted big box stores and a penumbra of chain restaurants and strip malls. It was a city planner’s dream for almost eighteen years.

But then Palmdale was hammered by the economic crash of 2008. The mall lost its Gottschalk’s and Mervyn’s anchor stores. Palmdale’s economic development team felt it had no choice but to entice Macy’s and others to fill the void with multi million dollar tax deferments and business “incentives”. Remember, a big mall with no anchor stores rapidly fails as foot traffic declines. In fact, no developer can even secure bank financing to build or improve a retail complex unless they already have signed contracts with a couple of big stores. That’s why the largest stores in any mall pay the lowest proportional rent. The real cost of the mall is carried by the smaller shops and very often the tax payers. A Cinnabon pays a great deal more per square foot in rent than a big anchor like Macy’s. The Cinnabon is also far more productive and pays more tax and employs more people pound for pound. The anchors effectively take up a lot of space, negotiate with veiled threats, pay as little rent as possible, and virtually no tax. That’s standard business practice across the country.

The idea that a town can repeatedly offer tax abatements to the same property in the short term in order to create tax revenue and prosperity over the long haul is a bad economic model. In fact, having neighboring towns race to see who can repeatedly impoverish themselves the most in an attempt to grow rich on new business is also a bad plan. Both towns know private corporations actively game the system, yet they can’t seem to help themselves. They still wet their pants at the thought that the next town over might get the new Applebee’s or Jiffy Lube instead of them. It’s a form of institutional insanity.

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Since Lancaster couldn’t have the regional mall it needed to find a new use for the land it had set aside. There aren’t that many things that can fill that kind of space. Like the mall in Palmdale it needed to be something that would serve as a catalyst for growth all around it. And it had to be something that Palmdale didn’t already have. So Lancaster built what was intended to be a regional entertainment center with a baseball stadium, hotel, multiplex movie theater, and a premium outlet mall. “Build it and they will come.”

In 1995 the city of Lancaster spent $14,500,000 to build the baseball stadium in the hope that economic growth and development would spring up all around it. So a decade on what does the area look like?



Near the ball park is the Lancaster Marketplace – an outlet mall. I checked the official management website and the leasing agent lists half the stores as “available”. The spaces that are occupied include a dialysis clinic, a dentist, various nail solons, a recycling center, an evangelical church, and a few outlet stores that sell sneakers and jeans. This clearly isn’t the economic engine or tax base that the city had originally envisioned. It wasn’t simply the economic crash of 2008 that brought this place down. It was the institutional over supply of retail space across the entire region. No town needs the insane number of shops that were induced into being by overly optimistic developers and tax starved municipal authorities.

Here’s the movie theater with all the modern bells and whistles: 22 screens, IMAX, 3D, stadium seating, all digital, a sound system that can pull the gold fillings out of your teeth… you name it. It’s a massive stand alone building with an even bigger parking lot. In fact, the collection of reserved handicapped parking spots close to the front door is as large as many ordinary parking lots at lesser movie theaters. But here’s the problem.

This is the old 12 screen movie theater half a mile away. It’s now a “second run” theater catering to the discount matinee crowd because it can’t possibly compete on anything other than price with the new super deluxe theater down the road.

And here’s the old, old movie theater that used to play second run shows when the 12 screen opened up. It was eventually driven out of business. The building sat empty for a long while until someone attempted to operate a hairdressing school at the location. That business failed and now the place sits empty again. The new growth isn’t adding to the town’s economy. New bigger buildings simply replace old buildings that never get repurposed.



Across the street from the struggling outlet mall and old 12 screen movie theater is a Walmart. In fact, there are two Walmarts right next to each other. The older “small” Walmart was built in 1990. In 2006 Walmart decided it was time for a new larger super store and there was still plenty of land available in the same retail complex. Even as I stood on the far edge of the enormous parking lot with a special wide angle camera lens I still couldn’t get the two side-by-side buildings into view in a single frame. These buildings are massive.

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I found photos of the old Walmart on the building contractor’s website. They were proud of the fact that this was the very first Walmart built in the state of California and they delivered the project on time and on budget.



Here’s what that same Walmart looks like today – just twenty five years later. In theory a new big box retailer would have opened up in the old Walmart building, but instead it has remained empty since 2006. There’s simply no market demand for these hulking ruins.

Across the street from the two Walmarts is another strip of big and medium sized retail buildings. When the regional shopping mall fell through the idea was that the new Super Walmart would draw enough traffic to the area to support additional shops. “With thousands of folks driving to Walmart everyday the new Circuit City will thrive!” The building pictured above was once a Circuit City. Past tense. Not only was there too much retail space built in the Antelope Valley, but many of these chain stores have gone out of business entirely due to competition from on-line retailers who deliver goods directly to customers via UPS and FedEx.



One of the popular urban planning strategies in vogue these days is to reuse dead retail buildings by converting them to “meds and eds”. Junior colleges and medical centers are of a suitable size that they can fill old big box stores and help reactivate the surrounding space. The above photos are of the newest medical center in Lancaster. It’s solar powered and hyper energy efficient. The native draught tolerant landscaping is irrigated with recycled gray water. High quality regionally appropriate public art is in abundance. And it’s almost exactly the same size as the old Walmart that’s been sitting empty for the last decade. But where is it?

If you were to search out the least developed patch of this already sprawling hopscotch part of Lancaster… that’s where. Why? I’m sure there were all sorts of reasons having to do with the medical people, the developers, the city planners, the banks… Maybe the medical center is expected to be the engine of economic development in this patch of the desert and they want loads of extra room so they can spread out in the future. Or maybe that’s where the really cheap land was near a freeway cloverleaf. Or perhaps the medical center was too prestigious to be located in a low rent shopping plaza. Who knows?

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There was still a big chunk of the old mall site that couldn’t be filled with much of anything. Reluctantly the city rezoned it for single family residential subdivisions. Housing wouldn’t bring in tax revenue the way retail development would, but it was better than nothing. Growth was growth and Lancaster needed it badly. From Google Earth view you can see the cul-de-sacs carved into the desert. So far… no takers.



Here are a few views of that old regional shopping mall site: the back of the 22 screen movie theater, the back of the outlet mall, the back of the baseball stadium, and the back of the hotel. Notice the roads that were built to accommodate all the anticipated growth.

But they built it and they didn’t come.

Again, this isn’t unique to the Antelope Valley. These same patterns of development play out all over the country. Some of you may dismiss this particular part of the world and assume your town is much better at managing its affairs. You may have more employers pumping money into your local economy. Or perhaps you live in a more sensible state with a pro business legislature, unlike the folks who run California. The truth is that California just did everything earlier and faster and on a grander scale than other places. Your turn is coming.

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.

March 31, 2015

Still Moving to Texas: The 2014 Metropolitan Population Estimates

Texas continues to dominate major metropolitan area growth. Among the 53 major metropolitan areas (with more than 1 million population), Texas cities occupied three of five top positions in population growth, and four of the top 10 (Figure 1).

Other parts of the nation are adding population in large numbers as well. The six top 10 cities not in Texas were split evenly between the South and the Mountain West. In the South, Raleigh ranked third, Orlando ranked fourth and Nashville was eighth. Out West, sixth-ranked Denver is maintaining its quick growth rate as the middle of the decade approaches. Two cities that were especially hard hit by the housing bust now seem to be making progress. Las Vegas, has recovered to become the seventh fastest growing city, largely on the strength of substantially improved domestic migration numbers. In 2013-2014, the rate of net domestic migration quadrupled in Las Vegas. Phoenix (9th) is also recovering, and is now established as the nation’s 12th largest metropolitan area, having passed Riverside-San Bernardino.

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But the biggest gains were in Texas.

Houston gained the most population between 2013 and 2014, adding 166,000 new residents. This is nearly as much as the gain in the entire Midwest states (177,000) which is home to 10 times as many people. Since 2000, Houston has risen from the nation’s eighth largest metropolitan area to its fifth, passing Washington, Miami, and earlier in this decade, Philadelphia.

For the first time in US history, two of the five largest cities in the nation are in Texas. Just ahead of Houston is fourth-ranked Dallas-Fort Worth, which had the second largest population gain at 127,000. This is a larger increase than occurred in the Northeast, which stretches from Pennsylvania, New Jersey, and New York through New England and has more than eight times as many people as Dallas-Fort Worth. While Dallas-Fort Worth’s population increase has been slower than Houston’s in recent years (10th in 2013-2014), it has risen from a position of ninth in 1992 fourth today (present metropolitan boundaries).

Other Texas cities are also performing well. Austin, as has often been the case since the moderation of growth in Las Vegas during the last decade, has by far the largest population growth rate, at 3.0%, compared to the Houston’s 2.5%.

San Antonio, so often overlooked in a state with Houston, Dallas-Fort Worth, and Austin ranked fifth in population growth rate between 2013 and 2014.

Net Domestic Migration

The top cities in net domestic migration almost duplicate the top 10 in population growth. Charlotte and Tampa-St. Petersburg replace Phoenix and Dallas-Fort Worth among the top 10 in net domestic migration (Figure 2).

A number of cities suffered substantial net domestic migration losses (Figure 3). The largest loss was in New York, which lost nearly one percent of its residents to other parts of the country. New York’s net domestic migration loss increased more than a third from that of 2011 through 2013, rising to 163,000 in 2014. Almost a net 100,000 left New York City, up from 69,000 in 2012-2013. The suburbs experienced a smaller loss, 64,000, up from 44,000.

The other two largest cities, Los Angeles and Chicago also had larger domestic migration losses (61,000 66,000 respectively) than the other cities. Washington had by far the largest reversal, experiencing a domestic migration loss of 25,000, down from a plus 43,000 between 2012 and 2013.

Additional Developments

There’s also a new member of the million person metropolitan club, Tucson, the 53rd major metropolitan area.

Chicago’s growth has virtually stalled. Over the last year, the metropolitan area added only 0.1% to its population. This is less than one quarter the longer-term rate that had previously been projected. At that rate, Chicago would have reached 10 million residents within a decade. At the most recent growth rate, it would take nearly a half century. In light of the expected slower growth rates in the future, Chicago may never reach megacity status, unless its commuting shed expands enough to add new counties along its metropolitan fringe.

However, even without Chicago, the United States could add two new megacities within the next two decades. Both Houston and Dallas-Fort Worth would exceed 10 million by 2040 population if their current growth rates were to be maintained.

Despite being passed by Houston and Dallas-Fort Worth in the last two decades, Washington appears sure to emerge larger than Philadelphia by next year’s population estimates. This year, Washington exceeded 6 million population for the first time.

Domestic Migration: Core and Suburban Counties

This is indicated by domestic migration trends, which are reported by the Census Bureau only at the county level. Suburban counties continue to increase their net domestic migration and over the last year attracted nearly 420,000 more new residents from other parts of the nation than the core counties. The suburban counties gained 230,000 net domestic migrants, while the core counties lost 190,000. The low point of suburban net domestic migration occurred in 2012 when the gap relative to core counties was approximately 155,000. In each of the years of this decade, core counties have lost domestic migration, while suburban counties have gained more new residents from elsewhere (Figure 4).

As the nation continues its tepid recovery from the Great Recession, the largest number of people are moving to the suburbs and away from the core counties. This suggests that, normalcy may be gradually returning, with strong growth both in the suburbs and throughout the Sunbelt.

Major Metropolitan Area Population Estimates
		Population			2013-2014
Rank	Metropolitan Area	2010	2013	2014	% Change	Net Domestic Migration	Rank: Domestic Migration
1	New York, NY-NJ-PA	19,567	20,002	20,093	0.45%	-0.81%	53
2	Los Angeles, CA	12,829	13,176	13,262	0.66%	-0.47%	47
3	Chicago, IL-IN-WI	9,461	9,545	9,555	0.10%	-0.69%	51
4	Dallas-Fort Worth, TX	6,426	6,823	6,954	1.92%	0.72%	13
5	Houston, TX	5,920	6,334	6,490	2.47%	1.04%	6
6	Philadelphia, PA-NJ-DE-MD	5,965	6,036	6,051	0.25%	-0.34%	42
7	Washington, DC-VA-MD-WV	5,636	5,967	6,034	1.12%	-0.41%	45
8	Miami, FL	5,565	5,863	5,930	1.13%	-0.21%	35
9	Atlanta, GA	5,287	5,525	5,614	1.61%	0.58%	15
10	Boston, MA-NH	4,552	4,698	4,732	0.73%	-0.22%	37
11	San Francisco-Oakland, CA	4,335	4,530	4,594	1.42%	0.32%	21
12	Phoenix, AZ	4,193	4,404	4,489	1.93%	0.93%	11
13	Riverside-San Bernardino, CA	4,225	4,390	4,442	1.18%	0.24%	23
14	Detroit, MI	4,296	4,295	4,297	0.03%	-0.47%	48
15	Seattle, WA	3,440	3,614	3,671	1.60%	0.48%	16
16	Minneapolis-St. Paul, MN-WI	3,349	3,461	3,495	0.97%	-0.02%	31
17	San Diego, CA	3,095	3,223	3,263	1.27%	0.08%	28
18	Tampa-St. Petersburg, FL	2,783	2,874	2,916	1.44%	0.99%	10
19	St. Louis,, MO-IL	2,788	2,802	2,806	0.16%	-0.28%	39
20	Baltimore, MD	2,710	2,774	2,786	0.43%	-0.23%	38
21	Denver, CO	2,543	2,700	2,754	2.02%	1.09%	4
22	Charlotte, NC-SC	2,217	2,337	2,380	1.84%	1.03%	7
23	Pittsburgh, PA	2,356	2,361	2,356	-0.19%	-0.12%	33
24	Portland, OR-WA	2,226	2,315	2,348	1.45%	0.71%	14
25	San Antonio, TX	2,143	2,282	2,329	2.04%	1.09%	5
26	Orlando, FL	2,134	2,271	2,321	2.22%	1.01%	8
27	Sacramento, CA	2,149	2,218	2,244	1.21%	0.37%	19
28	Cincinnati, OH-KY-IN	2,115	2,139	2,149	0.51%	-0.04%	32
29	Kansas City, MO-KS	2,009	2,055	2,071	0.77%	0.05%	29
30	Las Vegas, NV	1,951	2,029	2,070	1.99%	1.00%	9
31	Cleveland, OH	2,077	2,065	2,064	-0.08%	-0.38%	44
32	Columbus, OH	1,902	1,969	1,995	1.30%	0.44%	17
33	Indianapolis. IN	1,888	1,953	1,971	0.93%	0.11%	26
34	San Jose, CA	1,837	1,929	1,953	1.25%	-0.37%	43
35	Austin, TX	1,716	1,886	1,943	3.05%	1.75%	1
36	Nashville, TN	1,671	1,759	1,793	1.94%	1.13%	3
37	Virginia Beach-Norfolk, VA-NC	1,677	1,707	1,717	0.54%	-0.30%	40
38	Providence, RI-MA	1,601	1,606	1,609	0.24%	-0.16%	34
39	Milwaukee,WI	1,556	1,570	1,572	0.13%	-0.45%	46
40	Jacksonville, FL	1,346	1,396	1,419	1.65%	0.92%	12
41	Memphis, TN-MS-AR	1,325	1,342	1,343	0.11%	-0.55%	50
42	Oklahoma City, OK	1,253	1,321	1,337	1.23%	0.43%	18
43	Louisville, KY-IN	1,236	1,262	1,270	0.59%	0.12%	25
44	Richmond, VA	1,208	1,247	1,260	1.06%	0.36%	20
45	New Orleans. LA	1,190	1,242	1,252	0.80%	0.16%	24
46	Raleigh, NC	1,130	1,215	1,243	2.28%	1.18%	2
47	Hartford, CT	1,212	1,216	1,214	-0.14%	-0.71%	52
48	Salt Lake City, UT	1,088	1,142	1,153	1.03%	-0.32%	41
49	Birmingham, AL	1,128	1,140	1,144	0.37%	0.02%	30
50	Buffalo, NY	1,136	1,136	1,136	0.02%	-0.22%	36
51	Rochester, NY	1,080	1,084	1,083	-0.06%	-0.52%	49
52	Grand Rapids, MI	989	1,017	1,028	1.03%	0.25%	22
53	Tucson, AZ	980	998	1,005	0.65%	0.09%	27
	In 000s
	Data from Census Bureau

——–

Note: Core counties are the counties with the largest historical core municipalities as well as the five counties that make up the core city of New York.

Photograph: Houston Suburbs by author

Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris since 2002. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey and Demographia World Urban Areas.

March 27, 2015

California Should Make Regular People More of a Priority

California in 1970 was the American Dream writ large. Its economy was diversified, from aerospace and tech to agriculture, construction and manufacturing, and allowed for millions to achieve a level of prosperity and well-being rarely seen in the world.

Forty-five years later, California still is a land of dreams, but, increasingly, for a smaller group in the society. Silicon Valley, notes a recent Forbes article, is particularly productive in making billionaires’ lists and minting megafortunes faster than anywhere in the country. California’s billionaires, for the most part, epitomize American mythology – largely self-made, young and more than a little arrogant. Many older Californians, those who have held onto their houses, are mining gold of their own, as an ever-more environmentally stringent and density-mad planning regime turns even modest homes into million-dollar-plus properties.

What about California society as a whole? The Chapman University Center for Demographics and Policy released a report this month, by attorneys David Friedman and Jennifer Hernandez, on “California’s social priorities.” It painstakingly lays out our trajectory over the past 40 years. For the most part, it’s not a pretty picture and – to use the most overused word in the planning prayer book – far from sustainable from a societal point of view.

Read the full article at The Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Los Angeles, CA.

Photo by Thomas Pintaric (Own work) [GFDL or CC-BY-SA-3.0], via Wikimedia Commons

March 26, 2015
Where We Live: The Case for Suburban Renewal

The advent of Australian ‘urban renewal’ in the 1990s has been such a blistering policy success that it’s now arguably well out of proportion to the realities of need based on where people actually live. It’s as if the magic “5 kilometre ring” around our city centres has become a policy preoccupation and an industry obsession. One look at the evidence though suggests perhaps it’s time we turned attention to the suburbs, where the vast majority of us live, to restore some balance.

The middle and outer suburbs may not capture the interest of intellectual elites or (with some exceptions) provide the homes of the wealthiest in our society, but they do continue to house the vast majority of Australians. All the hype and excitement about “inner city café lifestyles” belies the statistics which show in stark reality that Australia is not only a nation of city dwellers, but within those cities we are overwhelmingly a nation of sub-urban, as opposed to urban, dwellers.

Gushing media reports about inner city real estate markets and frantic development activity, public transport projects, parkland projects, bikeways, cultural facilities and the like fail to mention that only 10% of us, at most, live within the 5 kilometre ring. A thumping majority of 90% to 95% of Australians, in the major cities of Sydney, Melbourne and Brisbane, live outside the 5 kilometre ring of privilege. As a rule, 70% to 80% of us live further than 10 kilometres from the city centre, in outer-middle and outer suburban areas. It’s also true that the majority of us not only live beyond the inner city, but we also work outside it. Our pattern of living is not only overwhelmingly suburban, but so is our economy. (More on this next month).

So how do our three largest cities shape up on the evidence?

Sydney

There are just over 330,000 Sydney residents living within 5 kilometres of the city centre. There are a total of 4.34 million people living within 50 kilometres of the city centre, so that’s a fairly small 8% of the total who call the inner city home. Twice as many people – 675,000 – live from 5 to 10 klms out and the numbers and percentages continue to rise the further out you go. They may live at lower densities in the outer suburbs but numerically they outnumber inner city residents ten to one. If we think of suburbs from 10 to 20 klms out as ‘outer middle’ areas and those over 20 klms out as ‘outer’, then 80% of the Sydney population lives further than 10 klms from the city centre.

Melbourne

There are fewer people living within 5 klms of the Melbourne City Centre than even Brisbane. Of the total 4.154 million people who live within 50 klms of the city centre, this is just 5% of the total. There are a further 13% of Melburnians who call the 5 to 10 klm band home, while a very substantial 82% of Melburnians call the outer-middle and outer bands home. Even if the number of people living within the 5 klm ring of Mebourne’s CBD doubled, it would have next to no impact on the overwhelmingly suburban distribution of the population across the Melbourne metro area.

Brisbane

In Brisbane, there are around a quarter of a million people within 5 klms of the city centre. That represents 11% of the total 2.15 million people who live within 50 klms of the centre. A further 17% or 356,500 live from 5 to 10 klms out, which actually makes Brisbane the more centrally populated of the three cities studied. 72% of Brisbane residents live further than 10 klms out in middle-outer and outer suburbs which is still a very large majority but not quite the 80% of Sydneysiders nor the 82% of Melburnians.

Observations

One observation worth making is that our governance systems aren’t well designed to deal with large metro regions. Sydney has an astonishing 38 local governments across its metro area, and Melbourne has 12. Brisbane is the exception, with one large local authority providing local government services to 1.13 million people. But even in Brisbane’s case that leaves a further 1 million people living within 50 klms of the city centre governed by a number of different local authorities.

I am not suggesting we should have single local governments for our entire metro areas. In fact there are some good reasons for the ‘local’ in local government to focus on smaller areas. However, if we want metro wide solutions to apply policy attention and taxpayer funds equitably to suburban and urban areas, local governments may not be best vehicle. You could hardly expect, for example, the highly exclusive Sydney City Council – which at 25 square kilometres covers an area not much larger than its CBD and nothing more – to put up their hand and say “we don’t really need NSW taxpayers to subsidise our outrageously expensive light rail extension because we understand there are higher priorities for people in Bankstown or Hornsby.”

Which means that state governments, working with local and federal agencies, are the ones needed to adopt a broader governance approach to metro regions, with a focus on sustaining and developing the suburban economy along with the inner urban.

The other, more glaring observation is that democracy seems to be failing the suburbs. Nine out of ten city dwellers may live in the suburbs and more eight in ten also work there, but increasingly it’s hard to shake the suspicion that it’s the people who live and work within a 5 klm ring of our city centres that are making the decisions and spending the money.

From politicians to heads of government departments, media organisations and industry leaders: the well off and the influential are overwhelmingly from the inner city. They live there, they work there, and primarily socialise and circulate within this hot house of privilege and influence. It may also explain why in some urban planning circles, there is an increasing sense of anti-suburban elitism creeping in. The suburbs and their ‘McMansions’ are topics of disdain for some, which is a pity.

The people who live in the middle-outer and outer suburbs of our cities in the main don’t live there because they have to: they live there because they want to. They don’t deserve derision, nor are they looking for sympathy. It may surprise inner city elites, but many have little interest in battling congested inner city traffic or paying excessive real estate prices or living in crowded inner urban arrangements or paying exorbitant parking fees for the privilege of working or living in or simply visiting in the inner city and what it has to offer.

Yet while numerically superior in every way, the suburban existence remains largely shunned in policy circles. The more that the intelligentsia become isolated from the suburban heartland of our economy and way of life, the weaker we become as a nation.

Ross Elliott has more than 20 years experience in property and public policy. His past roles have included stints in urban economics, national and state roles with the Property Council, and in destination marketing. He has written extensively on a range of public policy issues centering around urban issues, and continues to maintain his recreational interest in public policy through ongoing contributions such as this or via his monthly blog The Pulse.

March 25, 2015
How the California Dream Became a Nightmare

Important attention has been drawn to the shameful condition of middle income housing affordability in California. The state that had earlier earned its own "California Dream" label now limits the dream of homeownership principally to people either fortunate enough to have purchased their homes years ago and to the more affluent. Many middle income residents may have to face the choice of renting permanently or moving away.

However, finally, an important organ of the state has now called attention to the housing affordability problem. The Legislative Analyst’s Office (LAO) has published "California’s High Housing Costs: Causes and Consequences," which provides a compelling overview of how California’s housing costs have risen to be by far the most unaffordable in the nation. It also sets out the serious consequences.

The LAO says that:

Today, an average California home costs $440,000, about two-and-a-half times the average national home price ($180,000). Also, California’s average monthly rent is about $1,240, 50 percent higher than the rest of the country ($840 per month).

LAO describes the evolution:

Beginning in about 1970, however, the gap between California’s home prices and those in the rest country started to widen. Between 1970 and 1980, California home prices went from 30 percent above U.S. levels to more than 80 percent higher. This trend has continued.

Much of the LAO focus is on California’s coastal counties, where:

….community resistance to housing, environmental policies, lack of fiscal incentives for local governments to approve housing, and limited land constrains new housing construction.

These causes result from conscious political decisions. While California’s coastal counties do not have the vast stretches of flat, appropriately developable land that existed 50 years ago, building is increasingly prohibited on that which remains (for example, Ventura County, northern Los Angeles county and the southern San Jose metropolitan area).

Demonstrating an understanding of economic basics not generally shared by California policymakers or the urban planning community, LAO squarely places the blame on the public policy limits to new housing construction:

This competition bids up home prices and rents.

In other words, where the supply of a demanded good is limited, prices can be expected to rise, other things being equal. LAO describes the impact of so-called "growth control" policies, which are also called "urban containment" or "smart growth:"

Many Coastal Communities Have Growth Controls. Over two-thirds of cities and counties in California’s coastal metros have adopted policies (known as growth controls) explicitly aimed at limiting housing growth. Many policies directly limit growth—for example, by capping the number of new homes that may be built in a given year or limiting building heights and densities. Other policies indirectly limit growth—for example, by requiring a supermajority of local boards to approve housing projects. Research has found that these policies have been effective at limiting growth and consequently increasing housing costs.

According to LAO, the problem is exacerbated by voter initiatives: "More often than not, voters in California’s coastal communities vote to limit housing development when given the option." It is hard to imagine a more sinister disincentive to aspiration, under which voters can deny equality of opportunity in housing to others by artificially driving up the price. Because new housing further from coast is also limited, options for a middle income living standard are also diminished.

These public policies have consequences.

Notable and widespread trade-offs include (1) spending a greater share of their income on housing, (2) postponing or foregoing homeownership, (3) living in more crowded housing, (4) commuting further to work each day, and (5) in some cases, choosing to work and live elsewhere

Each of these consequences is described below.

LAO Consequence #1: Spending a Greater Share of Income on Housing

LAO models the market situation from 1980 to 2010 to estimate the prices that would have prevailed if the regulatory environment had permitted building sufficient to satisfy customer demand at previous lower price levels. In both years, LAO estimates that the median priced house would have cost 80% more than in the rest of the nation (actual data in 1980, modeled data in 2010). This would have kept California house price increases at the national level. I think it would have been better to have modeled from 1970, before the huge house prices before 1980 described by Dartmouth economist William Fischel.

I have applied this LAO model estimate to the median multiple for California’s six major metropolitan areas (Los Angeles, San Francisco-Oakland, Riverside-San Bernardino, San Diego, Sacramento, and San Jose) to identify how much better middle income housing affordability would be without California’s excessive regulation. Using the LAO estimates the median multiple (median house price divided by median household income) in 2014 would have been at least 40% lower than the actual level in each of the metropolitan areas (Figure 1).

Many California households already have been priced out of the market. In the worst case, it is estimated that in the San Francisco metropolitan area, a median income White Non-Hispanic household will have nearly $60,000 annually left over after paying the mortgage on the median priced house. This is less than they would have if house prices had remained reasonable, but it’s enough to live on. The median income Asian household would do almost as well, with about $50,000 left over. The median income Hispanic household would have less than $20,000 left, which is considerably less than is likely to be needed for other essentials. The median income Black household would have less than $3,000 left over (Figure 2). If the price ratios of 1980 were controlling, that amount would rise by $16,000.

LAO also points out that the Golden State has the highest housing cost adjusted poverty rate in the nation. The latest data shows housing-adjusted poverty rate is far higher even than that in states with a reputation for grinding poverty. California’s housing adjusted poverty rate is more than 50% higher than that of Mississippi and approaches double that of West Virginia (Figure 3, LAO Figure 13)

LAO Consequence #2: Postponing or Forgoing Homeownership

LAO indicates that California ranks 48th in homeownership percentage, behind only New York and Nevada. LAO emphasizes the value of home ownership:

Homeownership helps households build wealth, requiring them to amass assets over time. Among homeowners, saving is automatic: every month, part of the mortgage payment reduces the total amount owed and thus becomes the homeowner’s equity. For renters, savings requires voluntarily foregoing near-term spending. Due to this and other economic factors, renter median net worth totaled $5,400 in 2013, a small fraction of the $195,400 median homeowner’s net worth.

Californians are buying their first houses later. LAO indicates that the average first home buyer in California is three years older than the national average.

LAO Consequence #3: Living in More Crowded Housing

The nation’s worst overcrowding is an unfortunate result of California’s housing policies.

LAO indicates that California’s overcrowding rate is well above that of the rest of the nation’s rate. Among Hispanics, which were expected to exceed the White-Non-Hispanic population in 2014, to become the state’s largest ethnic group, California overcrowding is more than 2.5 times the Hispanic rate elsewhere. Among households with children, overcrowding in California is four times the national households with children rate. Among renters, overcrowding in California is more than three times the national renter rate (Figure 4, LAO Figure 15).

This has important negative social consequences. According to LAO, research indicates that overcrowding retards well-being and educational achievement:

Individuals who live in crowded housing generally have worse educational and behavioral health outcomes than people that do not live in crowded housing. Among adults, crowding has been shown to increase stress and aggression, lead to social isolation, and weaken relationships between parents and their children. Crowding also has particularly notable effects on children. Researchers have found that children in crowded housing score lower on standardized math and reading exams. A lack of available and distraction-free studying space appears to affect educational achievement. Crowding may also result in sleep interruptions that affect mood and behavior. As a result, children in crowded housing also displayed more behavioral problems at school.

Overcrowding is particularly acute in the higher cost coastal metropolitan areas of Los Angeles, San Francisco, San Diego, and San Jose. There, overcrowding among households with children reaches 10%, and among Hispanic households, overcrowding reaches 18%. Among households with children the figure is slightly higher (Figure 5, LAO Figure 16). Overcrowded housing is generally worse, according to LAO, in areas with higher house prices.

In a state with a political establishment that prides itself in watching out for low income citizens and ethnic minorities, the need to reform the responsible policies could not be clearer.

LAO Consequence #4: Commuting Farther to Work

LAO finds that California’s average work trip commuting times are only moderately above the national average. However, LAO suggests that the commute lengthening impact of higher house prices may be reduced by California’s widespread (I call it dispersed) development pattern, its freeway system and the "above-average share of commuters who drive to work. (Driving commutes are generally fast, and therefore metros with higher shares of driving commuters tend to have shorter commute times.)"

Nonetheless, according to LAO:

…our analysis suggests that California’s high housing costs cause workers to live further from where they work, likely because reasonably priced housing options are unavailable in locations nearer to where they work.

LAO Consequence #5: Choosing to Work and Live Elsewhere

LAO also indicates that California’s high housing prices are likely to have reduced its population (and economic) growth. LAO sites the strong net outmigration of California households to other states. LAO also finds in its national metropolitan area analysis that counties with higher growth rates tend to have better housing affordability than counties with lower growth rates.

There has also been strong net outmigration from the coastal counties to inland counties. This is most evident in the growth of the Riverside-San Bernardino metropolitan area (the Inland Empire) between 2000 and 2010. The Inland Empire captured more than two thirds of the population growth of the Los Angeles Combined Statistical Area (Los Angeles, Orange, Riverside, San Bernardino and Ventura counties). LAO notes the impact of the excess of demand in the coastal counties, again recognizing the nexus between overzealous regulation and the loss of housing affordability:

This competition bids up home prices and rents. Some people who find California’s coast unaffordable turn instead to California’s inland communities, causing prices there to rise as well.

LAO also refers to the difficulty that employers have in retaining and recruiting staff. LAO cited survey data from the Silicon Valley, which has for years been California’s economic "Golden Goose" in recent years:

In a 2014 survey of more than 200 business executives conducted by the Silicon Valley Leadership Group, 72 percent of them cited “housing costs for employees” as the most important challenge facing Silicon Valley businesses.

In addition, there has been a strong movement of California companies to other parts of the nation, where more liberal regulations foster a better business climate.

Restoring Housing Affordability

LAO indicates the importance of fundamental reform and calls for putting "all policy options on the table."

Major changes to local government land use authority, local finance, CEQA (California Environmental Quality Act), and other major polices would be necessary to address California’s high housing costs.

In addition:

The greatest need for additional housing is in California’s coastal urban areas. We therefore recommend the Legislature focus on what changes are necessary to promote additional housing construction in these areas.

Perhaps the only weakness of the report deals with densification, particularly in coastal counties. For example, LAO suggests that without the housing restrictions the city of San Francisco is population would be 1.7 million, rather than the approximately 800,000 who live there today. In fact that would be unprecedented beyond belief. No core city that had become fully developed and reached 500,000 people by 1950 has achieved growth of this magnitude. The greatest growth was less than 10%, in this category of 60 core cities (which includes the city of San Francisco). Even less likely would be public support for such huge population growth in the second densest major municipality in the nation.

While LAO does not indicate the additional population that its estimates would have placed in the core of Los Angeles, given the scale of the San Francisco increase, this could be a number of up to 3 million. This area, the broadest expanse of over 10,000 population per square mile density in the nation outside New York City is in the middle of the urban area with the nation’s worst traffic congestion, according to the Texas A&M Transportation Institute. It is doubtful that residents would have the "stomach" to expand roadway capacity to keep the traffic moving. Transit could not have made much difference. Even with its now extensive rail network that has opened since the early 1990s, driving alone accounted for 85% of the additional travel to work from 2000 to 2013 in the city of Los Angeles. Yet, the city of Los Angeles has the most extensive transit in the metropolitan area, including service by all rail lines.

In reality, core densification is likely to be modest. Keeping housing affordability from getting worse requires regulatory liberalization throughout California, including coastal and inland areas
The reality is that if California had permitted growth, it would naturally occurred mostly on the periphery. Even with the restrictions on building, the preference for suburban living (largely in detached housing) could not be repressed between 2000 and 2010. Less than 10% of the population growth in the Los Angeles and San Francisco Bay areas occurred in the cores.

The Challenge

Should the state of California begin to seriously discuss housing affordability, it will be important to ease restrictions throughout the state, not just in the coastal counties. There are serious barriers to placing the appropriate priority on improving the standard of living and minimizing poverty rates among California’s diverse population. Perhaps the biggest impediment is Senate Bill 375, which is being interpreted by the state and its regional planning agencies to require even more stringent land-use regulation.

In this environment, LAO rightly raises this concern:

If California continues on its current path, the state’s housing costs will remain high and likely will continue to grow faster than the nation’s. This, in turn, will place substantial burdens on Californians—requiring them to spend more on housing, take on more debt, commute further to work, and live in crowded conditions. Growing housing costs also will place a drag on the state’s economy.

It is to be hoped that California’s distorted policy priorities will be righted to restore the California Dream.

Photograph: Dense suburban development: Inland Empire (San Bernardino Freeway with Uplard toward the top and Ontario toward the bottom) – By author

Wendell Cox is an international public policy consultant and principal of Demographia in St. Louis. He is a native Los Angelino, having been born within two miles of City Hall. He was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. Full biography is here.

March 24, 2015
Singapore After Lee Kuan Yew: Future Is Uncertain For The Utilitarian Paradise He Created

In this age of political Lilliputians, we must acknowledge the passing of giants. Although he ran only a small city-state, Lee Kuan Yew, along with late Chinese Premier Deng Xiaoping, ranks among Asia’s most pivotal figures of the past 50 years.

These two men — a tall, aristocratic scion of a Hakka trading family and the diminutive Chinese revolutionary — came from very different perspectives, but shared a pragmatic streak, and ultimately strategies that came to be widely copied. You can see their legacy today across the continent, in rapid urbanization and growing economic power.

But it was Lee who first formulated the essentials of the new Asian economic approach, blending capitalistic modernity with a state-directed economy and authoritarianism. Although repression of dissidents in both countries rightfully offends Westerners, particularly journalists, it has not deterred foreign capital, technology and capital from seeking to cash in on Asia’s growth.

American and British capital may have fueled global capitalism’s 20th century triumph, but Lee and Deng shaped its expansion in the 21st.

Lee’s Achievement

This is not merely a testament to Lee’s tenure as prime minister from 1959 to 1990, the longest of any in world history, but the singularity and durability of his accomplishment. From Singapore’s independence to the present day, Lee helped fashion what is arguably the most successful and best run city in the world.

In 1965, after Singapore’s acrimonious exit from Malaysia, its outlook was far from promising. Unemployment was high and the fledgling city-state was wracked by internal dissension between its ethnic mix of Chinese, Indians and Malays, and between conservatives and communists, who seemed in political ascendancy as elsewhere in Southeast Asia. The then rough-edged Asian metropolis, an important trading center, boasted a per capita GDP of$2,667 in 1990 dollars, more than double the average for East Asian countries and trailing only Japan in the region, but well behind European countries and North America.

Faced with imminent disaster, Lee’s response was to create a new political system that blended a mildly socialist program with a development strategy aimed at attracting foreign capital and building up the manufacturing sector. Lee and his People’s Action Party (PAP) focused on developing a modern infrastructure — from the port and roads to education — that is second to none.

Perhaps PAP’s most remarkable achievement was the creation of the Housing Development Board, which turned the vast majority of Singaporeans from slum-dwellers to owners of apartments that were small but clean and modern. As Asian real estate markets have heated up, HDB has helped keep Singaporean housing costs far more reasonable than in China’s primary cities, or Hong Kong or Tokyo.

Lee believed widespread homeownership would make Singapore more stable, but it was not enough to make it rich. Under his guidance, everything — from cleaning the streets to developing arguably the best primary education system in the world — was calculated to attract foreign companies and skilled individuals; this at a time when China, India and much of Southeast Asia was either closed to investment, embroiled in lethal civic conflict or primarily dominated by crony capitalists.

And the world did come, making Singapore among the favored destinations for international corporations. In 1968 Texas Instruments TXN +1.26% established a chip-making plant there, the break Lee later credited with helping transform the city into a technology hotspot.

A 2011 Roland Berger study named Singapore as the leading location for European companies to establish headquarters in the Asia-Pacific region.Companies with regional headquarters include Microsoft MSFT +1.12%, Google GOOGL +0.16%, Exxon Mobil XOM +0.15%, and Kellogg’s. Singapore now has more than twice as many regional headquarters as far-larger Tokyo, not to mention Asia’s less affluent megacities.

Lee’s Chinese Legacy

Cambridge-educated, and with the demeanor of a British aristocrat, Lee promoted English as the country’s primary language, a decision that made the city particularly attractive to foreign investors and workers. But in many ways he remained very Chinese. Lee’s People’s Action Party blended British parliamentary forms with a highly authoritarian, centrally directed system. Author Alex Josey compared Lee’s role in the PAP to Mao Zedong’s suzerainty over the Chinese Communist Party.

When Deng visited the city-state in 1978, he saw it as an appealing model for his poor country: a top-down, mandarin-led system that could appeal to global capitalists. Deng, Lee would later recall, was most captivated by Singapore’s modern prosperity: “What he saw in Singapore in 1978,” he recalled in his book Third World to First, “had become the point of reference as the minimum the Chinese people should achieve.”

Anyone visiting China today can see the results of Deng’s insight: gleaming cities, massive expansion of educational institutions, modern roads and transit systems, and most of a general prosperity that has lifted the mother country of most Singaporeans to almost unimagined heights.

The story is not so positive for those who believe in liberal democracy. Although Singapore is generally less repressive than China, it did show the Chinese communists that being “free” was not necessary for becoming rich. It’s a lesson that many developing countries around the world — in the Middle East, Africa and Latin America — have taken to heart.

Singapore After Lee

Lee bequeathed to Singapore prosperity and order, but the durability of his legacy is in question. To some extent, this reflects the technocratic cast of the Republic; Lee may have been a “founding father” of his country, but he did not leave behind a system of beliefs that can tie people together in the manner of George Washington & co. in the United States. Lee is revered simply for being effective.

Indeed despite massive government efforts to promote a sense of identity, a recent survey found half of all Singaporeans indifferent to their citizenship as long as their wealth could be maintained. Stabilizing forces like religion and family, have also been weakened by the rush to embrace what former foreign minister S. Rajaratnam labeled “moneytheism.” The emptiness of this religion can be seen in the fact that residents of this highly successful city-state are now among the most pessimistic of peoples, alongside understandably dour residents of Greece, Spain, Cyprus, Slovenia and Haiti.

So even as the Republic prospers, there is growing disaffection, with the PAP’s support dwindling to the lowest level since independence. Fed up with government controls and the increasingly high cost of living, many Singaporeans are considering a move elsewhere. Already some 300,000 now live abroad, almost one in 10. As many as half of Singaporeans, according to a recent survey, would leave if they could

The utilitarian paradise created by Lee will also have to face competition from Chinese cities like Shanghai and Beijing, notes Ravi Menon, the former head of the Ministry of Trade and Industry. Companies that might once have located operations in Singapore now feel pressure to locate in Asia’s dominant economy. Once Asia had few places where advanced technology and services could be developed; now it has many. China alone has 13 cities larger than Singapore, many of them with breathtakingly modern infrastructure and far less expensive workforces.

There is also widespread dissent about PAP’s policy prescription. One particularlyunpopular proposal has been to boost the city-state’s population from 5 million to roughly 7 million by 2030, largely through immigration. To help accommodate this growth, planners have suggested building a vast underground city with shopping malls, public spaces, pedestrian links and cycling lanes. Even normally docile and sociable Singaporeans may recoil from spending their lives like Morlocks in H.G. Wells’ Time Machine.

The city also has become more dependent on imported labor, not surprising in a county that has one of the world’s lowest birth rates. Many Singaporeans feel the foreign influx is turning them into strangers in their own city. In 1980, over 90% of residents were citizens. Today the percentage is 63% and, by 2030, if the government’s plans hold up, foreigners will outnumber the natives.

Yet despite these problems, Lee Kwan Yew’s accomplishments are undeniable. He took a struggling, ununified city and left it an urban jewel. That history has moved on is inevitable, but one has to wonder, among all the current chiefs of state, whether any will leave behind anything approaching Yew’s legacy when they pass from this world.

Percentage Change In Asian Population Since 2000: +23.5%

This piece first appeared at Forbes.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Los Angeles, CA.

Singapore skyline photo by Bigstockphoto.com.

March 23, 2015