New Geography

Tag: Atlanta

  • Personal Income in the 2000s: Top and Bottom Ten Metropolitan Areas

    The first decade of the new millennium was particularly hard on the US economy. First, there was the recession that followed the attacks of 9/11. That was followed by the housing bust and the resulting Great Financial Crisis, which was the most severe economic decline since the Great Depression.

    Per capita personal incomes in America’s major metropolitan areas vary widely. Moreover, the changes in per capita incomes from 2000 to 2009 have also varied. The differences are particularly obvious when average incomes are adjusted for metropolitan area Consumer Price Indexes. The US Bureau of Labor statistics produces a Consumer Price Index for nearly 30 metropolitan areas. Among these, 28 metropolitan areas are covered by these local Consumer Price Indexes.

    While overall national inflation was approximately 25 percent between 2000 and 2009, the metropolitan area inflation indexes ranged from 16 percent in Phoenix to more than 32 percent in San Diego. Five additional metropolitan areas had 2000 to 2009 inflation of more than 30 percent, including Los Angeles, Riverside-San Bernardino, Miami, Tampa-St. Petersburg and San Diego. Four metropolitan areas experienced inflation of less than 20 percent, including Atlanta, Detroit and Cleveland and Phoenix.

    Overall, the 28 metropolitan areas covered by metropolitan inflation indexes averaged a per capita income decrease of 0.1 percent, after adjustment for inflation. Increases were achieved in 18 metropolitan areas, while decreases occurred in 10. The overall average declines occurred because the steepest loss (19 percent in San Jose), was far outside the plus 10 percent to minus 8 percent range of the other 27 metropolitan areas (Table).

    Metropolitan Area: Per Capita Income
    Metropolitan Areas Covered by Metropolitan Consumer Price Indexes
    Inflation Adjusted
    Rank Metropolitan Area
    2000 in 2009$
    2009
    Change
    1 Baltimore
    $    43,729
    $    47,962
    9.7%
    2 Pittsburgh
    $    39,024
    $    42,216
    8.2%
    3 Washington
    $    53,753
    $    56,442
    5.0%
    4 Philadelphia
    $    43,572
    $    45,565
    4.6%
    5 St. Louis
    $    38,636
    $    40,342
    4.4%
    6 Milwaukee
    $    40,028
    $    41,696
    4.2%
    7 Los Angeles
    $    41,382
    $    42,818
    3.5%
    8 Houston
    $    42,232
    $    43,568
    3.2%
    9 Cleveland
    $    38,396
    $    39,348
    2.5%
    10 Chicago
    $    42,761
    $    43,727
    2.3%
    11 Phoenix
    $    33,594
    $    34,282
    2.0%
    12 San Diego
    $    44,812
    $    45,630
    1.8%
    13 Kansas City
    $    39,020
    $    39,619
    1.5%
    14 New York
    $    51,638
    $    52,375
    1.4%
    15 Cincinnati
    $    37,852
    $    38,168
    0.8%
    16 Seattle
    $    48,651
    $    48,976
    0.7%
    17 Boston
    $    53,396
    $    53,713
    0.6%
    18 Minneapolis-St. Paul
    $    45,690
    $    45,750
    0.1%
    19 Denver
    $    46,205
    $    45,982
    -0.5%
    20 Miami-West Pallm Beach
    $    41,937
    $    41,352
    -1.4%
    21 Riverside-San Bernardino
    $    30,600
    $    29,930
    -2.2%
    22 Portland
    $    39,703
    $    38,728
    -2.5%
    23 Tampa-St. Petersburg
    $    38,048
    $    36,780
    -3.3%
    24 San Francico
    $    61,831
    $    59,696
    -3.5%
    25 Dallas-Fort Worth
    $    41,575
    $    39,514
    -5.0%
    26 Detroit
    $    40,412
    $    37,541
    -7.1%
    27 Atlanta
    $    39,775
    $    36,482
    -8.3%
    28 San Jose
    $    68,185
    $    55,404
    -18.7%
    Unweighted Average
    $    43,801
    $    43,700
    -0.2%

    The Top Ten: The strongest per capita personal income growth between 2000 and 2009 was in Baltimore, which had an inflation adjusted increase of 9.7 percent. This strong performance is not surprising due to Baltimore’s proximity to Washington and the federal government’s high paying jobs. It also receives spillover lucrative employment from federal contracts to health, defense and security companies. In fact, Baltimore did better than Washington. Washington, which extends from the District of Columbia and into Maryland, Virginia and West Virginia. Not that DC did badly; it boasted the third highest income growth, and 5.0 percent.

    However, perhaps the biggest surprise is the metropolitan area that slipped into the number two position between Baltimore and Washington. The Pittsburgh metropolitan area, which may have faced the most severe economic challenges of any major metropolitan area over the past 40 years, achieved per capita personal income growth of 8.2 percent. The Pittsburgh gain is all the more significant in view of the local financing difficulties which placed the city of Pittsburgh in the near equivalent of bankruptcy under Pennsylvania’s Act 47. However, as is the case in on number of metropolitan areas, the central city has become much less dominant and no longer seals the fate of the larger metropolitan area. Today, the city of Pittsburgh accounts for only 15 percent of the metropolitan area population.

    Philadelphia, the other long troubled region across the state, constitutes another surprise. Philadelphia placed fourth in per capita income growth at 4.6 percent only slightly behind Washington. The Philadelphia metropolitan area borders on that of Baltimore, stretching from Pennsylvania into New Jersey, Delaware and Maryland. Together with Washington and Baltimore, Philadelphia anchors the northern end of a corridor of comparative prosperity.

    Four of the next six positions are occupied by Midwest metropolitan areas. This may be unexpected because of the significant job losses sustained in this area since 2000. St. Louis, which stretches from Missouri into Illinois, ranked fifth in per capita income growth, at 4.4 percent. Milwaukee ranked sixth in its per capita income growth at 4.2 percent. Cleveland ranked ninth with per capita income growth of 2.5 percent, while Chicago placed 10th, with a gain of 2.3 percent in per capita personal income.

    Los Angeles was the only metropolitan area in the West to place in the top 10 in per capita income growth. Los Angeles ranked seventh growth of 3.5 percent. Houston replaced eighth with personal income growth of 3.2 percent.

    Overall, the East and Midwest captured six of the top ten income positions, while the South and West occupied four of the top ten positions.

    The Bottom 10: If the top 10 contained surprises, the bottom 10 could be even more surprising. Last place (28th) was occupied by San Jose, which experienced a stunning 18.7 percent decline in per capita inflation adjusted income between 2000 and 2009. This income loss is more than double that of the second-worst performing metropolitan area and more than triples that of all but two other metropolitan areas.

    The second worst position (27th) also contained a surprise, in Atlanta, which has enjoyed decades of unbridled growth. Yet, Atlanta experienced a per capita income loss of 8.3 percent. There was no surprise in the third to the last ranking (26th) of Detroit, with its automobile industry employment losses and the physical deterioration of its central city, which may be unprecedented in modern peace-time. Per capita incomes declined 7.1 percent in Detroit.

    Dallas-Fort Worth, which has also experienced strong growth in the past, posted a surprising fourth worst, with a per capita income decline of 5.0 percent. San Francisco, which has now replaced San Jose as the metropolitan area with the highest per capita income, ranked fifth worst and experienced a decline of 3.5 percent.

    All of the remaining bottom 10 positions were occupied by metropolitan areas that have developed a reputation for strong growth. Tampa St. Petersburg ranked 6th worst, with a per capita income loss of 3.3 percent. Portland (Oregon) ranked 7th worst with a personal income loss of 2.5 percent. Riverside San Bernardino, with the lowest per capita income ranking out of the 28 metropolitan areas, ranked 8th worst with a per capita income drop of 2.2 percent.

    The Miami (to West Palm Beach) metropolitan area ranked 9th in personal income growth with a loss of 1.4 percent from 2000 to 2009, while Denver topped out the bottom 10, ranking, with a per capita income loss of 0.5 percent

    Overall, the South and the West captured nine of the bottom ten positions, while only one Midwestern metropolitan area, Detroit, broke into the bottom ten.

    Of course, the 2000s certainly were an unusual time. But it does suggest that the dogma about the geography of regional prosperity needs to be challenged and perhaps thoroughly revised.

    Photo: Pittsburgh: Second Fastest Growing Income per Capita 2000-2009 (photo by author)

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

  • Decade of the Telecommute

    The rise in telecommuting is the unmistakable message of the just released 2009 American Community Survey data. The technical term is working at home, however the strong growth in this market is likely driven by telecommuting, as people use information technology and communications technology to perform jobs that used to require being in the office.

    In 2009, 1.7 million more employees worked at home than in 2000. This represents a 31% increases in market share, from 3.3 percent to 4.3 percent of all employment. Transit also rose, from 4.6% to 5.0%, an increase of 9% (Note). Even so, single occupant automobile commuting also rose, from 75.7% to 76.1%, despite the huge increase in gasoline prices. The one means of transport that continued to decline was car pooling, which saw its share decline from 12.1% in 2000 to 10.0% in 2009.

    The increase in working at home was pervasive in scope. The share of employees working at home rose in every major metropolitan area (over 1,000,000 population), with an average increase of 38%. The largest increase was in Charlotte – ironically a metropolitan area with large scale office development in its urban core – with an 88% increase in the work at home market share. In five metropolitan areas, the increase was between 70% and 80% (Richmond, Tampa-St. Petersburg, Raleigh, Jacksonville and Orlando). Only five metropolitan areas experienced market share increases less than 20% (New Orleans, Salt Lake City, Rochester, Buffalo and Oklahoma City). Nonetheless, the rate of increase in the work at home market share exceeded that of transit in 49 of the 52 major metropolitan areas. Transit’s increase was greater only in Washington, Seattle and Nashville (where the transit market share is miniscule).

    The working at home market share increase was also strong outside the major metropolitan areas, rising 23%.

    Working at home is fast closing the gap with transit. In part driven by the surge in energy prices since earlier in the decade, transit experienced its first increase since data was first collected by the Bureau of the Census in 1960. Yet working at home is growing more rapidly, and closing the gap, from 1.7 million fewer workers than transit in 2000 to only 1.0 million fewer in 2009. At the current rate, more people could be working at home than riding transit by 2017. This is already the case in much of the country outside the New York metropolitan area, which represents a remarkable 39 percent of the nation’s transit commuters. Taking New York out of the picture, 31% more people (1.35 million) worked at home than traveled by transit, more than 4 times the 7% difference in 2000 (Table 1, click for additional information).

    Table 1
    Transit & Work at Home Share of Commuting
    Major Metropolitan Areas: 2000 & 2009
      Transit Work at Home
    Metropolitan Area 2000 2009 2000-2009 2000 2009 2000-2009
    New York 27.4% 30.5% 11.4% 2.9% 3.9% 32.6%
    Los Angeles 5.6% 6.2% 11.6% 3.5% 4.8% 35.3%
    Chicago 11.3% 11.5% 2.0% 2.9% 4.0% 37.1%
    Dallas-Fort Worth 1.8% 1.5% -13.3% 3.0% 4.1% 37.0%
    Philadelphia 8.9% 9.3% 3.7% 2.9% 3.9% 35.0%
    Houston 3.2% 2.2% -29.2% 2.5% 3.4% 37.4%
    Miami-West Palm Beach 3.2% 3.5% 9.7% 3.1% 4.5% 48.0%
    Atlanta 3.4% 3.7% 8.7% 3.5% 5.6% 59.9%
    Washington 11.2% 14.1% 26.6% 3.7% 4.5% 22.7%
    Boston 11.2% 12.2% 9.8% 3.3% 4.3% 31.9%
    Detroit 1.7% 1.6% -4.7% 2.2% 3.1% 40.1%
    Phoenix 1.9% 2.3% 17.5% 3.7% 5.3% 44.3%
    San Francisco-Oakland 13.8% 14.6% 6.0% 4.3% 6.0% 40.5%
    Riverside 1.6% 1.8% 9.0% 3.5% 4.6% 32.6%
    Seattle 7.0% 8.7% 25.0% 4.2% 5.1% 23.6%
    Minneapolis-St. Paul 4.4% 4.7% 6.4% 3.8% 4.6% 20.6%
    San Diego 3.3% 3.1% -7.0% 4.4% 6.6% 50.2%
    St. Louis 2.2% 2.5% 14.2% 2.9% 3.5% 22.5%
    Tampa-St. Petersburg 1.3% 1.4% 11.0% 3.1% 5.5% 75.7%
    Baltimore 5.9% 6.2% 5.8% 3.2% 3.9% 23.2%
    Denver 4.4% 4.6% 4.3% 4.6% 6.2% 36.4%
    Pittsburgh 5.9% 5.8% -2.9% 2.5% 3.2% 28.5%
    Portland 6.3% 6.1% -3.0% 4.6% 6.1% 32.9%
    Cincinnati 2.8% 2.4% -13.4% 2.7% 3.8% 40.3%
    Sacramento 2.7% 2.7% 0.8% 4.0% 5.4% 33.1%
    Cleveland 4.1% 3.8% -8.1% 2.7% 3.4% 25.0%
    Orlando 1.6% 1.8% 15.4% 2.9% 4.9% 71.4%
    San Antonio 2.7% 2.3% -12.5% 2.6% 3.4% 29.0%
    Kansas City 1.2% 1.2% 4.6% 3.5% 4.3% 24.7%
    Las Vegas 4.4% 3.2% -26.8% 2.3% 3.3% 45.1%
    San Jose 3.4% 3.1% -9.6% 3.1% 4.5% 44.4%
    Columbus 2.1% 1.4% -35.0% 3.0% 4.1% 36.7%
    Charlotte 1.4% 1.9% 32.2% 2.9% 5.4% 88.1%
    Indianapolis 1.3% 1.0% -22.2% 3.0% 3.7% 24.7%
    Austin 2.5% 2.8% 11.7% 3.6% 5.9% 64.6%
    Norfolk 1.7% 1.4% -17.7% 2.7% 3.4% 27.9%
    Providence 2.4% 2.7% 12.8% 2.2% 3.6% 64.5%
    Nashville 0.8% 1.2% 38.5% 3.2% 4.3% 34.6%
    Milwaukee 4.2% 3.7% -12.5% 2.6% 3.2% 25.3%
    Jacksonville 1.3% 1.2% -9.1% 2.3% 4.0% 73.8%
    Memphis 1.6% 1.5% -8.1% 2.2% 3.1% 41.3%
    Louisville 2.0% 2.4% 20.2% 2.5% 3.1% 22.9%
    Richmond 1.9% 2.0% 6.5% 2.7% 4.7% 76.8%
    Oklahoma City 0.5% 0.4% -13.0% 2.9% 3.1% 4.7%
    Hartford 2.8% 2.8% -1.3% 2.6% 4.0% 53.6%
    New Orleans 5.4% 2.7% -50.3% 2.4% 2.9% 19.2%
    Birmingham 0.7% 0.7% -2.3% 2.1% 2.7% 29.5%
    Salt Lake City 3.3% 3.0% -10.1% 4.0% 4.7% 17.8%
    Raleigh 0.9% 1.0% 10.7% 3.5% 6.0% 74.4%
    Buffalo 3.3% 3.6% 7.9% 2.1% 2.3% 8.3%
    Rochester 2.0% 1.9% -4.3% 2.9% 3.3% 13.7%
    Tucson 2.5% 2.5% 1.8% 3.6% 5.0% 36.3%
    Total 7.5% 8.0% 6.4% 3.2% 4.4% 37.7%
    Other 1.0% 1.2% 12.3% 3.4% 4.2% 23.0%
    National Total 4.6% 5.0% 9.2% 3.3% 4.3% 30.9%
    Major metropolitan areas: Over 1,000,000 population in 2009
    Metropolitan Area definitions as of 2009
    Data from 2000 Census and 2009 American Community Survey

    The rise of working at home is illustrated by the number of major metropolitan areas in which it now leads transit in market share. In 2000, working at home had a larger market share than transit in 28 of the present 52 major metropolitan areas. By 2009, working at home led transit in 38 major metropolitan areas, up 10 from 2000. Between 2000 and 2009, the working at home market share increased nearly 6 times as much as the transit share in the major metropolitan areas (38.4% compared to 6.4%).

    Working at Home Leaps Above Transit In Portland and Elsewhere: Perhaps most surprising is the fact that Portland now has more people working at home than riding transit to work. This is a significant development. Portland is a model “smart growth” having spent at least $5 billion additional on light rail and bus expansions over the last 25 years. Portland was joined by other metropolitan areas Houston, Miami-West Palm Beach, New Orleans and San Jose, all of which have spent heavily on urban rail systems. Working at home also passed transit in Cincinnati, Hartford, Las Vegas, Raleigh and San Antonio (Table 2).

    Table 2
    Work at Home Share Greater than Transit
    Major Metropolitan Areas
    Atlanta Houston Norfolk Sacramento
    Austin Indianapolis Oklahoma City Salt Lake City
    Birmingham Jacksonville Orlando San Antonio
    Charlotte Kansas City Phoenix San Digo
    Cincinnati Las Vegas Portland San Jose
    Columbus Louisville Providence St. Louis
    Dallas-Fort Worth Memphis Raleigh Tampa-St. Petersburg
    Denver Miami-West Palm Beach Richmond Tucson
    Detroit Nashville Riverside
    Hartford New Orleans Rochester
    Indicates working at home passed transit between 2000 and 2009

    Further, the shares are close enough at this point that working at home could surpass n transit in Milwaukee, Cleveland and Minneapolis-St. Paul in the next few years.

    Transit: About New York and Downtown

    As noted above, transit also has gained during this decade. However, the gains have not been pervasive. Out of the 52 major metropolitan areas, transit gained market share in 29 and lost in 23. As usual, transit was a New York story, as the New York metropolitan area saw its transit work trip market share rise from 27.4% to 30.5%. New York accounted for 47% of the increase in transit use, despite representing only 37% in 2000. New York added nearly 500,000 new transit commuters. This is nearly five times the increase in working at home (106,000). Washington also did well, adding 125,000 transit commuters, followed by Los Angeles at 73,000 and Seattle at 41,000.

    Transit’s downtown orientation was evident again. This is illustrated by the fact that more than 90% of the increased use in the major metropolitan areas occurred in those metropolitan areas with the 10 largest downtown areas (New York, Los Angeles, Chicago, Philadelphia, Houston, Atlanta, Washington, Boston, San Francisco and Seattle). Among these, only Houston experienced a decline in transit commuting.

    Implications

    Working at home has been the fastest growing component of commuting for nearly three decades. In 1980, working at home accounted for just 2.3% of commuting, a figure that has nearly doubled to 4.3% in 2009. This has been accomplished with virtually no public investment. Moreover, this seems to have happened without any loss of productivity. Companies like IBM, Jet Blue and many others have switched large numbers of their employees to working at home. These firms, which necessarily seek to provide the best return on their investment for stockholders and owners would not have made these changes if it had interfered with their productivity.

    Over the same period, and despite the recent increases, transit’s market share has fallen from 6.4% of commuting in 1980 to 5.0% in 2009. At the same time, gross spending over the period rose more than $325 billion (inflation and ridership adjusted) from 1980 levels. Inflation adjusted expenditures per passenger mile have more than doubled since that time.

    Given the remarkable rise of telecommuting, its low cost and effectiveness as a means to reduce energy use, perhaps it’s time to apply at least some of our public policy attention to working in cyberspace. It presents a great opportunity, perhaps far greater and far more cost-effective than the current emphasis on new rail transit systems.

    ———-

    Note: Work trip market share reflects transit in its strongest market, trips to and from work. Transit’s overall impact, measured by total roadway and transit travel (passenger miles) is approximately 1%, compared to the national work trip market share of 5%.

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

    Photograph: DDFic

  • The Suburbanization of Religious Diversity

    You can see the changes. A drive through suburban Lake County, IN, an hour from downtown Chicago makes you feel like you are somewhere between the set of Jean Shepherd’s A Christmas Story and the movie Hoosiers. Cultural and religious diversity would probably be the last two things on your mind in a region known more for its steel industry than its sacred space.

    Yet a quick glance to the east side of Colorado Street heading south makes you question your assumptions. Neatly tucked between farm land and homes sitting on lots of an acre or more, you see two structures that cause you to scratch your head and wonder, “Am I really in Indiana?” The Northwest Indiana Islamic Center and the region’s Sikh Temple of the Sikh Religious Society of Indiana sit side by side. They provide a visual reminder that suburban America has changed.

    In fact, much has changed. Religion in America is alive and well, but it’s different. Although Christian churches continue to dominate the religious landscape in the United States, there are new religious neighbors. Cultures and religious traditions that once existed “somewhere over there”, have moved beyond the large cities of the U.S. into the suburbs and exurbs, places where evangelical mega-churches have flourished for decades.

    Today, the United States is arguably the most religiously diverse place on the planet. And if the ethnic makeup of the U.S. stays its course for the next half-century, religious diversity will grow exponentially. The Census Bureau predicts that minorities will become the majority in the U.S. within 40 years. Religion in America could have a more robust Latino-Catholic flavor, with Hispanics numbering one in three U.S. residents by 2050. American religious geography will also include influences from Asian Indian cultural traditions. In Bible Belt states like Georgia, Hinduism is one of the fastest growing religions with more than 40,000 Hindus in the state, according to the New Georgia Encyclopedia. By 2000, Islam had already surpassed Southern Baptists in Chicago, with more than 120,000 adherents. Less than 10 years later, Chicago’s Muslim population is estimated to be around 400,000. The big new thing is that this diversity is increasingly found in suburbs. Throughout the country’s history, the places where religious and cultural diversity have been most concentrated were her cities. In fact, this has been the case around the globe. Immigrants journeyed to urban contexts en masse. The city provided the best place for jobs, people networks, and ethnic and cultural affinities. And, a smorgasbord of religious enclaves in the city made it easy for spiritually-minded people to connect and worship with other adherents in their particular tribe.

    On the other hand, the suburban and rural places were viewed as narrow-minded and ethnically homogenous. They were often seemed – and sometimes were – hostile to different religions and cultures.

    In the not-too-distant past, the suburbs were, for the most part, devoid of religious adherence outside of Catholic, mainline, or evangelical groups. However, demographic shifts have put the suburbs on a different trajectory. And religious traditions have followed suit.

    From an ethnic and religious standpoint, cities and suburbs have changed. Some would say they have changed sides. Of course cities will continue to grow, as more than 50 percent of the world’s population lives in city-regions today. City-regions will undoubtedly become more diverse. However, there are major changes to the way we think about communities and their populations in an area of globalization and urbanization. Demographers like Audrey Singer of the Brookings Institution have pointed out that cities have become more suburban-like, and suburbs have become more city-like, though this transition has been slowed to some degree by the current recession.

    Newer cities like Atlanta and older ones like Baltimore share this same pattern. It does not matter if the city is more suburban-like, or if the city is more like the archetypical city built with an infrastructure suitable for immigrants. Both are regions where foreign-born populations bypass the city altogether. This process was well under way before the turn of the last century, when census data revealed that foreign-born populations preferred suburbs over cities.

    Not surprisingly, this phenomenon also brought changes in the country’s religious landscape. Yes, the city and her urban districts remain a viable context to find places of faith, but things have shifted a bit.

    For example, in the past century, Islam, by design an urban religion, certainly migrated to large cities in the U.S. – notably Detroit, Chicago, and New York. But today the ummah has spread to smaller cities and suburban settings. Many Muslims have moved beyond the urban perimeter. Dearborn, MI and Northwest Indiana’s Lake County are two good examples, but these are by no means the exceptions.

    Suburban-friendly cities with large evangelical populations like Atlanta have also seen an increase in other faith traditions. In 2006 and 2007, the BAPS Shri Swaminarayan Mandir Atlanta, said to be the largest Hindu temple of its kind in the United States, was built in suburban Gwinnett County in Lilburn, GA. Much of Georgia’s Hindu population is centered in the sprawling suburbs around Atlanta. The Daily Beast recently ranked Atlanta #6 on their list of the 30 leading cities for Muslims in America (see America’s Muslim Capitals). Two other smaller cities in Georgia made the list, — Albany and Columbus.

    Not only are other religious traditions navigating the suburbs and smaller cities well, but non-Anglo evangelical populations are trending suburban too. Atlanta’s large Korean population is primarily suburban, as are the city’s Korean churches. In the ethnically diverse Atlanta suburb of Duluth, a city of roughly 26,000, the majority of new churches started since 2000 have been Korean. The Korean Church of Atlanta (UMC) is on the path to become a mega-church with new construction and an estimated 1700 people who regularly attend. Korean churches in Duluth and the surrounding area are very diverse themselves, denominationally speaking. Korean congregations include churches from Methodist, Presbyterian, Baptist, and Independent denominations.

    Back in Northwest Indiana, despite the decline of manufacturing jobs and high unemployment rates, the region continues to grow, albeit incrementally. Perhaps the most intriguing statistic is the number of immigrants who have moved to the region in recent years. Between 1990 and 2000, more than 70 percent of Lake County’s growth was attributed to immigration, according to a Purdue University study on immigration in Indiana. Ethnic changes in Lake County brought shifts to the area’s religious geography, too. In the county’s suburban communities of Merrillville and Crown Point, residents can find the aforementioned Islamic Center, an Islamic school, an Indian Cultural Center, the Sikh Temple, and Serbian, Macedonian, and Croatian congregations.

    Some of these changes to Lake County’s religious community came during a period of rapid decline in church attendance. In 2008, The Northwest Indiana Times reported a drop in church attendance of almost 30 percent between 1990 and 2000. This does not mean that all churches in the county are shrinking. Some, in fact, have become quite large. But their biggest source of growth may not be from less familiar religious traditions.

    Economic and social values will continue to intersect new religious traditions in the suburbs as minorities and immigrant populations grow. The culture of suburbs, with individualist values, will continue to have a varying affect on how religious groups establish and sustain themselves. It will be interesting to see how new religious groups affect the culture around them in the suburban neighborhoods they now call home.

    Religion is not going away as some 20th century scholars presumed. What is changing is the country’s religious complexion. How communities grapple with this change may say much about how they thrive in the future.

    Since 2006, Travis Vaughn has conducted community studies in a number of U.S. cities. He is a visiting instructor at Covenant Theological Seminary and is the catalyst behind cityandcitizen.com, coming in the fall of 2010.

  • “James Drain” Hits Cleveland

    The ten story of mural of LeBron James is coming down in Cleveland. This one hurts. James wasn’t just the latest embodiment of Cleveland’s hopes, he was a local kid who, unlike so many, had stayed home in Northeast Ohio. His joining of the Cleveland exodus at a time of severe economic distress prompted Cavaliers owner Dan Gilbert to pen a now infamous open letter to fans:

    As you now know, our former hero, who grew up in the very region that he deserted this evening, is no longer a Cleveland Cavalier…..The good news is that the ownership team and the rest of the hard-working, loyal, and driven staff over here at your hometown Cavaliers have not betrayed you nor NEVER will betray you….This shocking act of disloyalty from our home grown “chosen one” sends the exact opposite lesson of what we would want our children to learn. And “who” we would want them to grow-up to become….

    Forty years of frustration boiled over in that letter. Gilbert is from Detroit, but perhaps that’s why he too shares these feelings so viscerally.

    Cleveland’s “Big Thing Theory”

    In a sense though, Cleveland’s disappointment was inevitable. LeBron James was never going to turn around the city. No one person or one thing can. Unfortunately, Cleveland has continually pinned its hopes on a never-ending cycle of “next big things” to reverse decline. This will never work. As local economic development guru Ed Morrison put it, “Overwhelmingly, the strategy is now driven by individual projects….This leads to the ‘Big Thing Theory’ of economic development: Prosperity results from building one more big thing.”

    These have all failed, now even “King James”. The trend lines haven’t changed, even where the individual projects have done well. But often even that hasn’t happened. For example, the Flats, a once-thriving entertainment district in an old warehouse district, now resembles, as one local comedian put it, a “Scooby Doo ghost town.”

    Combating “James Drain”

    James’ departure also fits the narrative of generalized anxiety around “brain drain” and cities losing their best and brightest of each generation. As lots of people really have left Cleveland, this is understandable. But the real story is much more complex. A look at IRS tax return data shows that in reality Cleveland doesn’t have especially high out-migration. Its metro out-migration rate* in 2008 was 28.02. Miami’s was 40.34 and for even the boomtown of Atlanta it was 38.95. Not only is Cleveland not losing an especially high number of people, you can actually argue it is losing too few. A big part of the problem in Cleveland’s economy is that too many people are stuck there.

    Conversely, a real migration problem is that too few people are moving in. As local attorney Richard Herman noted, “New York City and Chicago, like most major cities, see significant out-migration of their existing residents each year. What is atypical is that Cleveland does not enjoy the energy of new people moving in.” The Cleveland metro in-migration rate was only 22.19. Miami’s was 30.36 and Atlanta’s a robust 51.91.

    Cities need new blood. Cleveland isn’t getting it. Its circulatory system is shut down. Cleveland needs more natives to leave and more newcomers to arrive. Both sides win. Those Cleveland departees will move on to be part of the new energy other cities so desperately need. James is going to get to live the high life he wants in South Beach, but somebody else will be fired up to get the opportunity to play in Cleveland.

    Selling Cleveland

    But that begs the question, what’s going to get more people to move to Cleveland? The fact is, James wasn’t getting the job done, and never would. Nor will amenities like the Cleveland Orchestra or the Rock and Roll Hall of Fame Museum.

    The mistake Cleveland and other Rust Belt cities make is that they are too worried about the likes of LeBron James moving to Miami. For people with the means and the desire to choose a place like South Beach, Cleveland simply can’t compete. And let’s not forget, James snubbed Chicago, New York, and Los Angeles too.

    Rather than trying to take on the Chicagos, Miamis, and New Yorks of this world at their strongest points, Cleveland would be far better served ceding that market and fighting where it can best compete. Believe it or not, not everyone wants to live in a huge global city. There are plenty of people who might choose to live in Cleveland, if the city focused on the basic blocking and tackling of city services, quality of life, and business climate instead of splashy grands projets. As Anthony Bourdain said this week:

    I think that troubled cities often tragically misinterpret what’s coolest about themselves. They scramble for cure-alls, something that will “attract business”, always one convention center, one pedestrian mall or restaurant district away from revival. They miss their biggest, best and probably most marketable asset: their unique and slightly off-center character….Cleveland is one of my favorite cities. I don’t arrive there with a smile on my face every time because of the Cleveland Philharmonic.

    In short, Cleveland needs less South Beach, less Chicago Loop, and more American Splendor. Ultimately, my bet is Cleveland will end up missing Harvey Pekar a lot more than it will any multi-millionaire sports star.

    Shooting the Messenger

    Who is going to get that message out about Cleveland? After that sendoff, it sure won’t be LeBron James. That’s a shame. As Jim Russell has richly illustrated, people make migration – and investment – decisions based on knowledge, not just information. Nobody picks a city to live in by entering reams to statistics into a sixteen tab spreadsheet. They’re more likely to move to be near family, friends, or places they know. That knowledge comes from first hand experience – and trusted recommendations.

    Until the switch flips on Cleveland’s brand, it needs to be out earning that trust of prospective residents. The people who’ve left aren’t Judases, they’re your field sales force – or at least they should be. James could have been a missionary “Witness” for Cleveland in a foreign land. Instead, Cleveland blew an enormous opportunity, and left itself with little more than soured memories and a partially demolished mural as an ephemeral reminder of yet another failed Next Big Thing.

    * Tax return exemptions migrating per 1000 overall tax return exemptions in the base year.

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

    Photo by alexabboud

  • Entrepreneurship Fuels Recession Recovery in Sweden

    In a time when many European nations are burdened by high debts and difficulties to get spending under control, the Swedish economy is amongst the most well managed in Western Europe.

    The nation’s GDP fell dramatically, by more than four percent, when the financial crisis struck. This decline was twice the average of the OECD-15 countries. Despite this, Swedish employment actually increased between the last quarter of 2006 and 2009.

    Sweden was hit hard by the crisis since the country relies heavily on exports. On the other hand, the new center-right government that was elected in 2006 has implemented considerable supply side reforms in terms of tax cuts and tightening of welfare and social insurance benefits. These reforms have encouraged work rather than dependence on handouts, balancing out much of the negative impacts of the crisis.

    This reformist trend is rarely acknowledged in the United States. However, during the last two decades both center-right and social democratic governments have implemented free market reforms, tax reforms, pension reforms, privatization of state owned firms and increased reliance on private production of public services such as education and health care.

    The country has also followed a surprisingly conservative fiscal policy. The welfare state remains, but Sweden is no longer an extreme case in terms of socialist policies. This now helps Sweden stay on top as Europe starts on the road to recovery.

    Bu what are Sweden’s long-term prospects for turning the crisis into an opportunity for growth? As history shows, when the macroeconomic shocks subside, growth to a large extent depends on innovation and entrepreneurship. Typically, entrepreneurship is not included as a factor in economic models. In real life however, the business climate matters.

    This is illustrated by how well Sweden handled the great depression. Between 1930-33 170,000 jobs were lost, leading to a six percent drop in employment. However, the downturn soon turned to growth.

    At this time, Sweden was far from a socialist welfare state. The nation boasted low taxes, a flexible labor market and a good business climate. The solution for many who lost their jobs was to start their own business.

    Job creation spurred. Already in 1935 more people were employed compared to before the depression. One reason is that the Swedish economy already had gone through a recession in the 1920s, sparking structural changes.

    New and innovative ventures were started to replace the jobs that had been lost. Several famous Swedish firms, that still today remain as top employers, were formed during and shortly after the depression, such as: Volvo Aero, the mining company Boliden, Securitas and SAAB.

    Swedish social democrats have a surprisingly strong tradition of being quite pro-growth, and even pro-business. However, the hard left resurgence in the 1960s, culminating in the turmoil of 1968 radicalized the Social Democratic party. The tax level started climbing (through hidden taxes on labor and consumption), the labor market became dominated by labor union influence and regulations and the incentives for work, education and entrepreneurship were severely limited.

    As policy shifted, the growth of highly successful entrepreneurial ventures stagnated. A study by economist Sten Axelsson (Axelsson 2006) has examined the entrepreneurial ventures that had the highest revenues in Sweden in 2004. Only two out of 38 firms had been formed after 1970. If the firms were instead ranked after how many the employed, not a single one was shown to have been formed after 1970!

    Another study by economist Jonny Ullström (Ullström 2002) has looked at all the firms that were started in Sweden between 1986 and 1996. Among the 180,000 examined firms, 90 percent had fewer than five employees in 1997. Less than one among a thousand firms had 50 employees or more. Only eight of all the firms had 200 employees or more.

    The drop in entrepreneurship affected Sweden’s ability to deal with downturns. In the beginning of the 1990s, a new crisis hit Sweden. The global economy was growing strongly, but major obstacles faced the Swedish welfare state. Employment fell with almost twelve percent between 1990 and 1993. Within a few years the economy began to grow again. But employment stagnated. It remained until 2008 until Sweden reached the same level of employment as before the crisis.

    However, due to the previously mentioned reforms, the Swedish economy in 2008 was far more flexible than previous years, and thus better able to withstand the international downturn. Since the beginning of the 1990s, Swedish politicians amongst both the right and the left have realized the importance of moving towards greater share of economic freedom and following a generally fiscally conservative path In this time of worldwide crisis, this has helped Sweden’s economy to perform better than many others.

    This is not to say that more reforms are not needed to promote growth and entrepreneurship. Labor market regulations and taxes still depress successful entrepreneurship. For example, a person increasing her or his income with 100 Swedish Kronors has to pay fully 74 Kronors in hidden and visible taxes on employment and consumption taxes.

    Successful entrepreneurs are often highly educated people who already have a good career within large firms. But why spend time and energy on a new venture if up to three quarters of the gains are taxed away?

    Sweden is a nation with a strong history of entrepreneurship, great scientific institutions and strong working ethics. Today the nation stands stronger thanks to reforms towards greater level of economic freedom. But as long as taxes and labor market regulations block the way of growing businesses, the country cannot hope to repeat its stellar recovery course seen during the 1930s.


    Nima Sanandaji is president of the Swedish think tank Captus. He is the author of the book ”Entrepreneurs who go against the stream – what the 90s successful entrepreneurs can teach us” (Swedish title: ¨”Entreprenörer som går mot strömmen – vad 90-talets succéföretagare kan lära om dagens utmaningar”) for Fores.

    Photo by: jdlasica

    References:
    Axelsson, Sten (2006). ”Entreprenören från sekelskifte till sekelskifte – kan företag växa i Sverige?”, in Dan Johansson och Nils Karlsson (ed.), ”Svensk utvecklingskraft”, Ratio.

    Ullström, Jonny (2002). ”Det svenska nyföretagandet 1986-1997: förändringar i företagsstruktur och sysselsättningseffekter”,Vinnova.

  • Despite Transit’s 2008 Peak, Longer Term Market Trend is Down: A 25 Year Report on Transit Ridership

    In 2008, US transit posted its highest ridership since 1950, a development widely noted and celebrated in the media. Ridership had been increasing for about a decade, however, 2008 coincided with the highest gasoline prices in history, which gave transit a boost.

    Less reported was the fact that despite higher ridership, transit’s market share (of transit and motor vehicles) has fallen since the 1950s. In 1955, transit’s market share was over 10%. By 2005, transit’s share had dropped to 1.5%, but recovered only to 1.6% in 2008. Transit’s all time peak ridership was in 1945, driven up by World War II and gas rationing. It is thus not surprising that national transit ridership (boardings) declined 3.8% in 2009 as gasoline prices moderated.

    Market Share by Major Urban Area

    Demographia has released urban area roadway and transit market share estimates for 2008, based upon Federal Transit Administration and Federal Highway Administration data. The table below compares 2008 with 1983 market share data for 56 urban areas with a corresponding metropolitan area population of more than 900,000 (complete data).

    Urban Areas: Roadway & Transit Market Share: 2008
    Ranked by 2008 Transit Market Share
    With 25 Year (1983) Comparison
        2008 1983 Roadway Share % Change
    Rank Urban Area Roadway Share Transit Share:  Roadway Share Transit Share: 
    1 New York 89.0% 11.0% 87.7% 12.3% 1.5%
    2 San Francisco 95.0% 5.0% 93.7% 6.3% 1.4%
    3 Washington 95.5% 4.5% 96.1% 3.9% -0.6%
    4 Chicago 96.1% 3.9% 94.2% 5.8% 2.0%
    5 Honolulu 96.2% 3.8% 93.2% 6.8% 3.2%
    6 Boston 96.7% 3.3% 97.5% 2.5% -0.8%
    7 Seattle 97.2% 2.8% 97.6% 2.4% -0.4%
    8 Philadelphia 97.3% 2.7% 96.0% 4.0% 1.4%
    9 Portland 97.7% 2.3% 97.6% 2.4% 0.1%
    10 Salt Lake City 97.8% 2.2% 99.1% 0.9% -1.3%
    11 Los Angeles 98.1% 1.9% 98.1% 1.9% 0.0%
    12 Denver 98.2% 1.8% 98.5% 1.5% -0.3%
    13 Baltimore 98.3% 1.7% 97.7% 2.3% 0.6%
    14 Pittsburgh 98.6% 1.4% 97.3% 2.7% 1.3%
    15 Miami-West Palm Beach 98.7% 1.3% 98.8% 1.2% -0.1%
    16 Atlanta 98.8% 1.2% 98.0% 2.0% 0.8%
    16 Cleveland 98.8% 1.2% 98.0% 2.0% 0.8%
    16 Las Vegas 98.8% 1.2% 99.6% 0.4% -0.8%
    16 Minneapolis-St. Paul 98.8% 1.2% 98.8% 1.2% 0.0%
    16 San Diego 98.8% 1.2% 99.3% 0.7% -0.5%
    21 San Jose 99.0% 1.0% 99.0% 1.0% 0.0%
    22 Austin 99.1% 0.9% 99.7% 0.3% -0.6%
    22 Houston 99.1% 0.9% 99.0% 1.0% 0.1%
    22 Milwaukee 99.1% 0.9% 98.3% 1.7% 0.8%
    22 Sacramento 99.1% 0.9% 99.0% 1.0% 0.1%
    22 San Antonio 99.1% 0.9% 98.7% 1.3% 0.4%
    27 St. Louis 99.2% 0.8% 99.0% 1.0% 0.2%
    28 Buffalo 99.3% 0.7% 98.5% 1.5% 0.8%
    28 Providence 99.3% 0.7% 98.9% 1.1% 0.4%
    30 Charlotte 99.4% 0.6% 99.3% 0.7% 0.1%
    30 Cincinnati 99.4% 0.6% 98.7% 1.3% 0.7%
    30 Dallas-Fort Worth 99.4% 0.6% 99.4% 0.6% 0.0%
    30 Hartford 99.4% 0.6% 98.7% 1.3% 0.7%
    30 Orlando 99.4% 0.6% 99.7% 0.3% -0.3%
    30 Phoenix 99.4% 0.6% 99.4% 0.6% 0.0%
    30 Rochester 99.4% 0.6% 98.9% 1.1% 0.5%
    30 Tucson 99.4% 0.6% 98.9% 1.1% 0.5%
    38 Detroit 99.5% 0.5% 98.8% 1.2% 0.7%
    38 Fresno 99.5% 0.5% 99.3% 0.7% 0.2%
    38 New Orleans 99.5% 0.5% 97.4% 2.6% 2.2%
    38 Norfolk-Virginia Beach 99.5% 0.5% 99.2% 0.8% 0.3%
    38 Riverside-San Bernardino 99.5% 0.5% 99.6% 0.4% -0.1%
    43 Columbus 99.6% 0.4% 98.6% 1.4% 1.0%
    43 Louisville 99.6% 0.4% 98.9% 1.1% 0.7%
    43 Memphis 99.6% 0.4% 99.4% 0.6% 0.2%
    43 Tampa-St. Petersburg 99.6% 0.4% 99.5% 0.5% 0.1%
    47 Bridgeport 99.7% 0.3% 99.8% 0.2% -0.1%
    47 Jacksonville 99.7% 0.3% 99.4% 0.6% 0.3%
    47 Kansas City 99.7% 0.3% 99.4% 0.6% 0.3%
    47 Nashville 99.7% 0.3% 99.4% 0.6% 0.3%
    47 Raleigh 99.7% 0.3% 99.9% 0.1% -0.2%
    47 Richmond 99.7% 0.3% 99.1% 0.9% 0.6%
    53 Indianapolis 99.8% 0.2% 99.3% 0.7% 0.5%
    54 Birmingham 99.9% 0.1% 99.5% 0.5% 0.4%
    54 Oklahoma City 99.9% 0.1% 99.9% 0.1% 0.0%
    54 Tulsa 99.9% 0.1% 99.6% 0.4% 0.3%
    Unweighted Average 98.7% 1.3% 98.3% 1.7% 0.4%
    All Urban Areas Combined 98.4% 1.6% 97.5% 2.5% 0.9%
    Based upon passenger miles
    Core urban areas in metropolitan areas with more than 900,000 population in 2009.
    Derived from Federal Transit Administration and Federal Highway Administration data
    Los Angeles and Mission Viejo urban areas combined
    San Francisco, Concord and Livermore urban areas combined
    Historic transit market share data at http://www.publicpurpose.com/ut-usptshare45.pdf
    Maryland commuter rail (MARC) assigned to Washington, DC

    In 1983, transit systems started receiving support from federal taxes on gasoline. This was also the first year that the National Transit Database reported on the same annual basis as it does today. One justification for using funds from road users was the hope of attracting people from cars to transit. The national data above and the urban area below show that the overwhelming share of new travel has, nonetheless, continued to be captured by motor vehicles rather than transit. Among the 56 urban areas, 13 experienced gains in transit market share from 1983 to the peak year of 2008, while 37 posted losses and six had no change. Transit was able to capture only 0.9% of new urban travel between 1983 and 2008, while roadways captured 99.1%. (Note 1).

    The Top 10: Still a New York Story

    #1: New York: The nation’s predominant urban area remains New York, with an 11.0% transit market share. In 2008, 41% of the national transit ridership (passenger miles) was in New York, with much of it either in or focused upon New York City. The New York City Transit Authority, and a host of local public and private systems, principally serve New York City destinations and account for a remarkable 38% of the nation’s transit ridership. Even so, transit’s market share dropped from 12.3% in 1983. As a result, the roadway market share in New York increased 1.5% between 1983 and 2008, the fourth largest gain in the nation. Transit attracted 8.7% of the new demand between 1983 and 2008, while roadways attracted 91.3%.

    #2: San Francisco: San Francisco had the nation’s second highest transit market share in 2008, at 5.0%. This is a decline from 6.3% in 1983. Nonetheless, San Francisco moved up from 6th place in 1983. This produced a 1.4% increase in the roadway market share between 1983 and 2008, the fifth largest gain in the nation. Transit accounted for 2.2% of the new demand, while roadways attracted 97.8%.

    #3: Washington: Washington placed third in transit market share in 2008, at 4.5%. This represents a gain from 3.9% in 1983 and an improvement from 6th place. Washington was the only urban area among the top five to experience an increase in transit market share. Much of Washington’s transit increase was on its expanding Metrorail system and the MARC commuter rail system (most of the ridership on this Maryland based system commutes to Washington. Overall, transit in Washington has attracted 5.1% of new travel over the past 25 years, while roadways attracted 94.9% of new demand.

    #4: Chicago: Chicago ranked fourth in transit market share, at 3.9%. In 1983, Chicago had ranked 3rd, with a market share of 5.8. The roadway market share in Chicago increased 2.0% from 1983 to 2008, the third largest road travel gain in the nation. Transit attracted 1.3% of new demand over the period in Chicago, while roadways attracted 98.7%.

    #5: Honolulu: Honolulu ranked fifth in transit market share, at 3.8%. This is a significant drop from 1983, when Honolulu ranked 2nd in the nation, with a transit market share of 6.8%. Honolulu’s roadway market share gain was the largest in the nation between 1983 and 2005, at 3.8%. Transit ridership also dropped in Honolulu from 1983 to 2008, so that roadways accounted for all new travel.

    #6: Boston: Boston ranked sixth in transit market share in 2008, at 3.3%. This is a gain from 2.5% in 1983, when Boston ranked 9th. Much of Boston’s increase is attributable to its commuter rail expansion. Transit captured 4.1% of new demand, while roadways attracted 95.9%.

    #7: Seattle: Seattle’s principally all bus transit system ranked 7th in 2008 with a market share of 2.8%. This is an increase from 2.4% in 1983, when Seattle ranked 10th. Transit captured 3.1% of new travel over the past 25 years, while roadways accounted for 96.9%.

    #8: Philadelphia: Philadelphia slipped from the 5th largest transit market share in 1983 (4.0%) to 8th in 2008, at 2.7%. Philadelphia’s transit system, one of the most comprehensive in the nation, captured just 1.4% of new travel over the last quarter century, while roadways captured 98.6%.

    #9: Portland: Portland ranked 9th in transit market share in 2008, at 2.3%. This is a decline from 2.4% in 1983 and occurred despite opening the most extensive new light rail system in the nation over the period. Transit attracted 2.2% of new travel over the period, while roadways attracted 97.8%.

    #10: Salt Lake City: Salt Lake City, at 10th, is a new entrant to the top 10 transit market share urban areas, with a share of 2.2%. In 1983, Salt Lake City ranked 34th, with a transit market share of 0.9%. Even with this increase, however, roadways captured the bulk of new travel, at 96.2%, while transit attracted 3.8%, due to transit’s small 1983 base.

    Other Urban Areas: There were also notable developments among the urban areas that did not place in the top 10 in 2008 transit market share.

    Las Vegas: Las Vegas improved its ranking more than any other urban area, moving from 49th in 1983 to 16th in 2008 (in a tie with Atlanta, San Diego, Cleveland and Minneapolis-St. Paul). In 1983, Las Vegas had a transit market share of 0.4%, which improved to 1.2% in 2008. This was an especially notable achievement, because Las Vegas experienced substantial population growth over the period. During the period, Las Vegas established a 100% competitively contracted transit system, the only such transit system in the nation and has seen ridership expand by more than 10 times. Nonetheless, as in other gaining urban areas, such as Salt Lake City and Washington, the transit ridership base was so small that roadways captured nearly all the new demand, at 98.6% (transit obtained 1.4%).

    Atlanta: Atlanta both (1) was the fastest growing larger urban area in the developed world between 1983 and 2008 and (2) built the second most new rail capacity in the nation, in its expansion of the MARTA Metro (trailing only Washington’s Metro). Yet, Atlanta’s transit market share fell from 2.0% to 1.2% between 1983 and 2008, with transit attracting only 0.9% of new travel.

    New Rail Urban Areas: Transit market shares generally failed to increase in urban areas opening new light rail or metro systems over the period (excludes urban areas with new rail systems that were not open at the beginning of fiscal year 2008).

    • Six urban areas with new rail systems experienced market share declines, including Portland, Baltimore, Houston, Sacramento, St. Louis and Buffalo.
    • Four urban areas with new rail systems had static transit market shares, including Los Angeles, Minneapolis-St. Paul, San Jose and Dallas-Fort Worth.
    • Three urban areas with new rail systems experienced transit market share increases. The largest increase was in Salt Lake City (and the largest of any urban area). Denver and Miami-West Palm Beach also experienced increases.

    Where from Here? It might have been expected that transit would have attracted far higher ridership numbers when gasoline prices achieved such heights. Yet, nationally, transit market share increase was only from 1.5% to 1.6%, even as roadway demand was declining modestly.

    Transit’s principal marketing problem lies in its problem serving destinations outside downtown. Downtowns typically account for only 10% of urban area employment. Some trips in an urban cannot even be made on transit. For example, Portland’s extensive transit system connects only about two-thirds of the jobs and residences within the (Tri-Met) service area (Note 2). Further Tri-Met’s award deserving internet trip planner shows that some trips to outside downtown destinations can require more than two hours, even when light rail is used.

    Note 1: This data relates only to passenger transportation. Urban roadways, unlike transit, also carry a substantial amount of local and intercity freight, which is not reflected in this data.

    Note 2: According to Metro’s 2004 Regional Transportation Plan, 78% of the residences and 86% of the jobs in the Tri-Met service area were within walking distance (1/4 mile) of a transit stop. This means that approximately 67% of residences and jobs are within 1/4 mile of a transit stop (0.78 * 0.86). Metro’s plans envision this figure dropping to 59% by 2020 (this data does not include Clark County in Washington, part of which is in the urban area).

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

  • Time to Dismantle the American Dream?

    For some time, theorists have been suggesting that it is time to redefine the American Dream of home ownership. Households, we are told, should live in smaller houses, in more crowded neighborhoods and more should rent. This thinking has been heightened by the mortgage crisis in some parts of the country, particularly in areas where prices rose most extravagantly in the past decade. And to be sure, many of the irrational attempts – many of them government sponsored – to expand ownership to those not financially prepared to bear the costs need to curbed.

    But now the anti-homeowner interests have expanded beyond reigning in dodgy practices and expanded into an argument essentially against the very idea of widespread dispersion of property ownership. Social theorist Richard Florida recently took on this argument, in a Wall Street Journal article entitled “Home Ownership is Overvalued.”

    In particular, he notes that:

    The cities and regions with the lowest levels of homeownership—in the range of 55% to 60% like L.A., N.Y., San Francisco and Boulder—had healthier economies and higher incomes. They also had more highly skilled and professional work forces, more high-tech industry, and according to Gallup surveys, higher levels of happiness and well-being. (Note)

    Florida expresses concern that today’s economy requires a more mobile work force and is worried that people may be unable to sell their houses to move to where jobs can be found. Those who would reduce home ownership to ensure mobility need lose little sleep.

    The Relationship Between Household Incomes and House Prices

    It is true, as Florida indicates, that house prices are generally higher where household incomes are higher. But, all things being equal, there are limits to that relationship, as a comparison of median house prices to median house prices (the Median Multiple) indicates. From 1950 to 1970 the Median Multiple averaged three times median household incomes in the nation’s largest metropolitan areas. In the 1950, 1960 and 1970 censuses, the most unaffordable major metropolitan areas reached no higher than a multiple of 3.6 (Figure).

    This changed, however, in some areas after 1970, spurred by higher Median Multiples occuring in California.

    William Fischel of Dartmouth has shown how the implementation of land use controls in California metropolitan areas coincided with the rise of house prices beyond historic national levels. The more restrictive land use regulations rationed land for development, placed substantial fees on new housing, lengthened the time required for project approval and made the approval process more expensive. At the same time, smaller developers and house builders were forced out of the market. All of these factors (generally associated with “smart growth”) propelled housing costs higher in California and in the areas that subsequently adopted more restrictive regulations (see summary of economic research).

    During the bubble years, house prices rose far more strongly in the more highly regulated metropolitan areas than in those with more traditional land use regulation. Ironically many of the more regulated regions experienced both slower job and income growth compared to more liberally regulated areas, notably in the Midwest, the southeast, and Texas.

    Home Ownership and Metropolitan Economies

    The major metropolitan areas Florida uses to demonstrate a relationship between higher house prices and “healthier economies” are, in fact, reflective of the opposite. Between August 2001 and August 2008 (chosen as the last month before 911 and the last month before the Lehman Brothers collapse), Bureau of Labor Statistics data indicates that in the New York and Los Angeles metropolitan areas, the net job creation rate trailed the national average by one percent. The San Francisco area did even worse, trailing the national net job creation rate by 6 percent, and losing jobs faster than Rust Belt Pittsburgh, St. Louis, and Milwaukee.

    Further, pre-housing bubble Bureau of Economic Analysis data from the 1990s suggests little or no relationship between stronger economies and housing affordability as measured by net job creation. The bottom 10 out of the 50 largest metropolitan areas had slightly less than average home ownership (this bottom 10 included “healthy” New York and Los Angeles). The highest growth 10 had slightly above average home ownership (measured by net job creation). Incidentally, “healthy” San Francisco also experienced below average net job creation, ranking in the fourth 10.

    Moreover, housing affordability varied little across the categories of economic growth (Table).

    Net Job Creation, Housing Affordability & Home Ownership
    Pre-Housing Bubble Decade: Top 50 Metropolitan Areas (2000)
    Net Job Creation: 1990-2000 Housing Affordability: Median Multiple (2000) Home Ownership: Rate 2000
    Lowest Growth 10  7.4%                                2.8 62%
    Lower Growth 10 14.9%                                3.1 63%
    Middle 10 22.8%                                3.2 64%
    Higher Growth 10 30.9%                                2.6 61%
    Highest Growth 10 46.9%                                2.9 63%
    Average 24.7%                                2.9 62%
    Calculated from Bureau of the Census, Bureau of Economic Analysis and Harvard Joint Housing Center data.
    Metropolitan areas as defined in 2003
    Home ownership from urbanized areas within the metropolitan areas.

    Home Ownership and Happiness

    If Gallup Polls on happiness were reliable, it would be expected that the metropolitan areas with happier people would be attracting people from elsewhere. In fact, people are fleeing with a vengeance. During this decade alone, approximately one in every 10 residents have left for other areas.

    • The New York metropolitan area lost nearly 2,000,000 domestic migrants (people who moved out of the metropolitan area to other parts of the nation). This is nearly as many people as live in the city of Paris.
    • The Los Angeles metropolitan area has lost a net 1.35 million domestic migrants. This is more people than live in the city of Dallas.
    • The San Francisco metropolitan area lost 350,000 domestic migrants. Overall, the Bay Area (including San Jose) lost 650,000, more people than live in the cities of Portland or Seattle.

    Why have all of these happy people left these “healthy economies?” One reason may be that so many middle income people find home ownership unattainable is due to the house prices that rose so much during the bubble and still remain well above the historic Median Multiple. People have been moving away from the more costly metropolitan areas. Between 2000 and 2007:

    • 2.6 million net domestic migrants left the major metropolitan areas (over 1,000,000 population) with higher housing costs (Median Multiple over 4.0).
    • 1.1 net domestic migrants moved to the major metropolitan areas with lower house prices (Median Multiple of 4.0 or below).
    • 1.6 million domestic migrants moved to small metropolitan areas and non-metropolitan areas (where house prices are generally lower).

    An Immobile Society?

    Florida’s perceived immobility of metropolitan residents is curious. Home ownership was not a material barrier to moving when tens of millions of households moved from the Frost Belt to the Sun Belt in the last half of the 20th century. During the 2000s, as shown above, millions of people moved to more affordable areas, at least in part to afford their own homes.

    Under normal circumstances (which will return), virtually any well-kept house can be sold in a reasonable period of time. More than 750,000 realtors stand ready to assist in that regard.

    Of course, one of the enduring legacies of the bubble is that many households owe more on their houses than they are worth (“under water”). This situation, fully the result of “drunken sailor” lending policies, is most severe in the overly regulated housing markets in which prices were driven up the most. Federal Reserve Bank of New York research indicates that the extent of home owners “under water” is far greater in the metropolitan markets that are more highly restricted (such as San Diego and Miami) and is generally modest where there is more traditional regulation, such as Charlotte and Dallas (the exception is Detroit, caught up in a virtual local recession, and where housing prices never rose above historic norms, even in the height of the housing bubble). Doubtless many of these home owners will find it difficult to move to other areas and buy homes, especially where excessive land use regulations drove prices to astronomical levels.

    Restoring the Dream

    There is no need to convince people that they should settle for less in the future, or that the American Dream should be redefined downward. Housing affordability has remained generally within historic norms in places that still welcome growth and foster aspiration, like Atlanta, Dallas-Fort Worth, Houston, Indianapolis, Kansas City, Columbus and elsewhere for the last 60 years, including every year of the housing bubble. Rather than taking away the dream, it would be more appropriate to roll back the regulations that are diluting the purchasing power and which promise a less livable and less affluent future for altogether too many households.

    —

    Note. Among these examples, New York is the largest metropolitan area in the nation. Los Angeles ranks number 2 and San Francisco ranks number 13. The inclusion of Boulder, ranked 151st in 2009 seems a bit curious, not only because of its small size, but also because its advantage of being home to the main campus of the University of Colorado. Smaller metropolitan areas that host their principal state university campuses (such as Boulder, Eugene, Madison or Champaign-Urbana) will generally do well economically.

    Photograph: New house currently priced at $138,990 in suburban Indianapolis (4 bedroom, 2,760 square feet). From http://www.newhomesource.com/homedetail/market-112/planid-823343

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

  • Is It Game Over for Atlanta?

    With growth slowing, a lack of infrastructure investment catching up with it, and rising competition in the neighborhood, the Capital of the New South is looking vulnerable.

    Atlanta is arguably the greatest American urban growth story of the 20th century. In 1950, it was a sleepy state capital in a region of about a million people, not much different from Indianapolis or Columbus, Ohio. Today, it’s a teeming region of 5.5 million, the 9th largest in America, home to the world’s busiest airport, a major subway system, and numerous corporations. Critically, it also has established itself as the country’s premier African American hub at a time of black empowerment.

    Though famous for its sprawl, Atlanta has also quietly become one of America’s top urban success stories. The city of Atlanta has added nearly 120,000 new residents since 2000, a population increase of 28% representing fully 10% of the region’s growth during that period. None of America’s traditional premier urban centers can make that claim. As a Chicago city-dweller who did multiple consulting stints in Atlanta, I can tell you the city is much better than its reputation in urbanists circles suggests, and it is a place I could happily live.

    Yet the Great Recession has exposed some troubling cracks in the foundations of Atlanta’s success. Though perhaps it is too early to declare “game over” for Atlanta, converging trends point to a possible plateauing of Atlanta remarkable rise, and the end of its great growth phase.

    Growth Is Slowing

    As with many other boomtowns, in Atlanta growth itself has been among the biggest industries. Construction particularly played a big role in its economy. The housing crisis cut the legs from under Atlanta’s real estate machine. Though prices didn’t collapse, new home building did. From 2005 to 2009 Atlanta’s number of annual building permits fell by 66,352, the biggest decline of any metro area.

    Atlanta grew strongly in the 2000s, with growth of over 1.2 million people, a 29% rise that beat peer cities like Dallas and Houston. But look at the recent past and see a very different dynamic. Domestic in-migration has cratered, only reaching 17,479 last year, or 0.32%. While migration did slow nationally last year due to the economy, Dallas and Houston continued to power ahead. Dallas added 45,241 people (0.72%) and Houston added 49,662 (0.87%). Even Indianapolis added 7,034, but that’s 0.42% on a smaller base, meaning Atlanta is actually getting beat on net migration by a Midwest city; its in-migration rate is about on par with Columbus, Ohio, another healthy Midwest metropolis..

    The collapse in in-migration should be very worrying to Atlanta’s leadership. No new people, no new housing demand, thus no construction jobs. It should come as no surprise that Atlanta’s 10.8% unemployment rate is well ahead of the 9.7% national rate.

    The Infrastructure Brick Wall

    Last July, Judge Paul Magnuson ruled that Atlanta had been illegally taking water from Lake Lanier, the principal source of the region’s water supply. The ruling may not stick but it nevertheless has brought into focus the long term insufficiency of the water supply for Atlanta. Lake Lanier almost ran dry during a recent drought, but has since recovered in the recent wet years. The problem is more political than environmental. Atlanta has not appreciably expanded its water sources in 50 years despite all that growth.

    Atlanta has a myriad of infrastructure problems. It suffers some of the highest water and sewer rates in the nation, double those of New York City. And these are only going to get worse as the city embarks on a multi-billion dollar Clean Water Act Compliance program. This is an ominous sign for a city whose attractiveness is in large part due to its low costs. As Councilwoman Clair Muller put it, “I’m not sure being No. 1 in the country for water and sewer rates is a good selling feature for Atlanta.”

    But the biggest infrastructure issue for Atlanta is transportation. Atlanta is famous for its bad traffic and attendant pollution. Its freeways are among the world’s widest, but this disguises the extent to which the roadway infrastructure is woefully insufficient. Atlanta has a simple beltway and spoke system similar akin to Indianapolis and Columbus, much smaller cities. Other big cities like Houston, Dallas, Minneapolis, and Detroit have much more elaborate systems. In particular, rather than relying on a single ring road, these cities have webs of freeway with multiple “crosstown” routes.

    But Atlanta’s greatest road problem lies in the lack of arterial street capacity. Atlanta’s suburban arterial network is mostly former winding country roads, many of which have never been upgraded to handle the traffic demands on them. Most upgraded streets are radial routes, not crosstown ones, which forces even more traffic onto the overloaded freeway network.

    For those who prefer transit, Atlanta hasn’t invested there either. It built the MARTA heavy rail system as an extremely forward looking transportation investment, mostly in the 1970s and early 80s. This was built before Portland’s system and is far better than light rail to boot. But there has been almost no expansion of the network. The state of public transport has been largely frozen for some time. Meanwhile, Dallas, Houston, Phoenix, and others have invested billions.

    Competition Is Here

    Bad traffic congestion and other infrastructure ills didn’t matter much when Atlanta was the only game in town. For a long time, anyone who needed a presence in the Southeast found Atlanta the easy default answer. In many cases it was the only real possibility.

    That’s no longer true. Atlanta is now surrounded by upstart, much faster growing cities such as Charlotte and Raleigh-Durham in North Carolina, Nashville, Tennessee and Charleston, South Carolina – all in many ways now have the ambitions once characteristic of Atlanta.

    Atlanta’s problem lies in its insufficient differentiation from these other places. Other than the airport, a clear major asset to Atlanta, what do you actually lose by moving to Charlotte or Nashville? Your commute is likely to be less. Except for certain groups – African Americans or gays – the city seems to be losing allure.

    These other cities also have the talent to compete for a lot of the business Atlanta used to pick up without working for it. The new head of the Atlanta Regional Commission declared Atlanta’s love affair with the edge city high rises all but over. Planners always talk like this, but it is still a startling sentiment to hear in Atlanta, formerly the most boosterish of cities. That’s the sound of a city losing its mojo. Meanwhile, Charlotte chamber of commerce chief Bob Morgan says, “To understand Charlotte, you have to understand our ambition. We have a serious chip on our shoulder. We don’t want to be No. 2 to anybody.” That’s the way Atlanta used to talk.

    Caught in the Middle

    Atlanta does seem to realize it’s in a different competitive world. It must elevate its game and upgrade its product. Like Chicago and other growth stories before it, as Atlanta got big and rich, it decided it needed to get classier as well. To go for quality, not just quantity. And to embrace a more urban future for its core.

    But it might be too little, too late. Atlanta is urbanizing, but despite the huge influx of people into the city, it’s not there yet. Atlantic Station got built and attracted lots of press, but numerous other mixed use projects were killed by the poor economy. Ambitious projects like the Beltline park and transit project lack funding.

    Atlanta is left as a sort of “quarter way house” caught between its traditional sprawling self and a more upscale urban metropolis. It offers neither the low traffic quality of life of its upstart competition, nor the sophisticated urban living of a Chicago or Boston.

    Here too, Dallas and Houston continue to power ahead of Atlanta. Both are seeing significant urban infill and are also making major investments in cultural infrastructure that far outstrip those of Atlanta. For example, Dallas just opened a showplace performing arts complex, with buildings by the likes of Norman Foster and Rem Koolhaas. Houston has emerged as a dynamic multi-cultural city. Both have a long way to go, but are in a much stronger growth position to pull it off.

    Atlanta at Maturity

    Cities, like companies, go through a life cycle. There’s the youthful founding, the explosive growth phase, then maturity and, for some, decline. Chicago and Detroit were two of the huge growth stories of the industrial era, for example. Atlanta, Houston, and Dallas have been three of the boomtowns of the current age. Like other cities before them, that growth will come to an end one day. It is then that we’ll see if, like Chicago and New York, they will succeed as mature regions and truly take their place in the pantheon of great American cities, or, like Detroit or to a lesser extent Philadelphia, will decline or stagnate.

    Atlanta is far from dead, but it may be facing the beginning of the end of its growth cycle. If so, this will be the true test and measure of the greatness of that city. Will Atlanta make the grade? And how?

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

    Photo by james.rintamaki

  • The Myth of the Strong Center

    At the height of the foreclosure crisis the problems experienced by some so-called “sprawl” markets, like Phoenix and San-Bernardino-Riverside, led some observers to see the largest price declines as largely confined to outer ring suburbs. Some analysts who had long been predicting (even hoping for) the demise of the suburbs skipped right over analysis to concoct theories not supported by the data. The mythology was further enhanced by the notion – never proved – that high gas prices were forcing home buyers closer to the urban core.

    Yet a summary of the trends over the past 18 months show only minor disparities between geographies within leading urban regions. Overall house prices escalated similarly in virtually all areas within the same metropolitan areas and the price drops appear to have also been similar. This is in contrast to a theory that suggests that huge price drops occurred in the outer suburbs while central city prices held up well.

    Summary of 18 Month Subarea Price Declines: This is indicated by a review of 8 metropolitan areas: Los Angeles, the San Francisco Bay Area, San Diego, Sacramento, Atlanta, Chicago, Portland and Seattle (see end note), for which subarea data is readily available (see table). On average, central area median house prices (all houses, including condominiums), fell 3% in relation to the overall metropolitan area average. Inner suburban areas experienced a 3% gain relative to metropolitan area prices, while outer suburban areas changed at the metropolitan area average. In actual price reduction terms, core areas declined 28.8%, inner suburban areas declined 25.7%, and outer suburban areas declined 27.1%. The overall average metropolitan area decline was 27.2%. There was, however, considerable variation in the figures by metropolitan area (see figure below).

    MEDIAN HOUSE PRICE CHANGES BY GEOGRAPHICAL SECTOR
    8 Metroplitan Areas
    CALIFORNIA MARKETS Central Inner Suburbs Outer Suburbs Overall
    Los Angeles -45.3% -30.0% -41.5% -37.1%
    San Francisco Bay -38.0% -39.1% -38.6% -38.6%
    San Diego -36.5% -37.4% -37.0% -36.9%
    Sacramento -53.6% -36.3% -37.5% -44.0%
    OTHER MARKETS
    Atlanta -11.6% -17.0% -15.8% -15.8%
    Chicago -21.0% -16.3% -17.5% -17.8%
    Portland -10.0% -14.5% -15.7% -13.5%
    Seattle -14.2% -14.7% -13.2% -13.7%
    AVERAGE -28.8% -25.7% -27.1% -27.2%
    Estimated from Data Quick information
    California Markets: July 2008 to January 2010
    Other Markets: 2008-2nd Quarter to 2009-4th Quarter

    Where Central Area Losses were Greatest: Over the past 18 months, central areas posted the largest losses in three of the areas. Further, in each of these areas, the smallest price drops were experienced in the inner suburbs.

    • Sacramento had the steepest central area relative price decline. Central area prices declined 37% relative to inner suburban prices, where the smallest losses occurred. The central area price loss averaged 53.6%, compared to the overall metropolitan area loss of 44.0%. The inner suburbs experienced the smallest loss, at 36.3%.
    • Los Angeles also had a steep central area relative price decline. Central area prices declined 45.3%, compared to the overall metropolitan area loss of 37.1%. The inner suburbs experienced the smallest loss, at 30.0% while outer suburbs lost 41.5%.
    • Chicago’s greatest losses also occurred in the central area, but were of a much smaller magnitude. Central area prices declined 21.0%, compared to the overall metropolitan area loss of 17.8%. The inner suburbs experienced the smallest loss, at 16.3%. The outer suburbs lost 17.5%.

    Where Suburban Losses were the Greatest: In two areas, the central area price losses were the least, Atlanta and Portland. Yet, the magnitude of these losses was modest. It is interesting to note that the metropolitan areas with the smallest relative losses in the central areas pursued radically different policies with respect to development. Portland’s “smart growth” policies favor central development at the expense of suburban development, while Atlanta’s more liberal policies do not attempt to steer development to the core.

    • Atlanta’s greatest price declines occurred in the inner suburbs, which experienced a loss of 17.0%, slightly more than that of the outer suburbs (15.8%). In comparison, the central area price drop was the least, at 11.6%, The metropolitan area loss was 15.8%.
    • Portland’s greatest price declines occurred in the outer suburbs which experienced a 15.7% loss, compared to the inner suburbs, at 14.5. The lowest decline was in the central area at 10.0%. The metropolitan area loss was 13.5%.

    Little Difference in Some Markets: There was little difference in the price declines among geographic sectors in three of the metropolitan areas. In the San Francisco Bay area, San Diego and Seattle, the differences between central, inner suburban and outer suburban price declines were all within a 2% range.

    Core Condominium Market Crisis

    However, core area markets where condominiums predominate indicate substantial difficulties in some of the metropolitan areas. These markets are generally only a small part of central cities, principally around downtown areas or major centers. For example, in the Portland area, the core condominium areas ring the downtown area and include the Pearl District and the South Waterfront District. The central area, which encompasses the entire city of Portland, however, is much larger and has a much larger share of detached housing.

    Demand has been so weak in the core condominium markets that substantial price reductions have occurred and a number of buildings have been forced to sell units at auction. Other buildings have given up altogether on selling and have rented condominiums. Some of the price drops, especially in Atlanta, Portland and Seattle are far greater than occurred overall in the respective metropolitan markets. The condominium implosion has not received nearly the level of attention in the national or local media that was accorded the housing bubble and collapse itself.

    Portland: A local television station video indicates that Portland’s condominium market is in crisis. A report in The Oregonian indicates that the downtown area has a “glut” of condominiums and that February sales prices averaged 30% below list. A luxury new 15-story building in the Pearl District (The Wyatt) is now being leased instead. Units at The Atwater in the South Waterfront district were auctioned, with minimum bid prices more than 50% lower than list. The John Ross, also in the South Waterfront District, is Portland’s largest condominium project and will be auctioning its units. Minimum bid prices average 70% below the previous top list prices. The smallest units have a minimum bid price of $110,000. By comparison, over the past year, the median house price in the Portland metropolitan area has dropped approximately 10%.

    Atlanta: Atlanta has a “vast oversupply” of condominiums. The uptown (including Atlantic Station) and Buckhead markets of Atlanta appear to be experiencing some of the worst market conditions in the nation. The prestigious Mansion on Peachtree, a combination hotel and condominium development, was unable to sell 75% of its residences and was recently sold in foreclosure at approximately $0.30 on the dollar. The winning auction bids at The Aqua condominium in Uptown averaged 50% below the last asking price. In Atlantic Station, units at The Element were auctioned at substantial discounts. Among conventional sales, condominium price reductions of up to 40% have been reported. One building has offered discounts of $100,000 per bedroom. Some new buildings have been converted to rentals, while planned projects have been placed upon hold.

    Seattle: Things are little better in Seattle. The overbuilt downtown area condominium market has experienced a median price decline of 35% over the past year. Units at The Gallery in tony Belltown were auctioned off at minimum prices 50% below the last list prices (which had already been discounted). Units at The Brix, on Capitol Hill, attracted bids at auction averaging 30% below previous list prices. Later this month, unsold units at 5th & Madison will be auctioned, at minimum prices below 50% of previous list. For comparison, median house prices in the Seattle metropolitan area declined 6% over the past year.

    Chicago: The downtown area of Chicago has been among the most vibrant condominium markets for more than a decade. However, in 2009, condominium sales fell to the lowest level since 1997. At current sales rates, the downtown area has a supply of more than five years, with annual sales of less than 600 and more than 3,000 units available or under construction.

    Los Angeles: Few markets have seen as many condominium buildings planned as downtown Los Angeles, and few have seen so many put on hold. A recent issue of the Los Angeles Downtown News lists approximately 50 downtown condominium projects. More than three-quarters of the projects have been scaled back, have had construction slowed or are on “hold.” The market has been so weak that a number of developers have taken losses by auctioning condominium units that they have not been able to sell conventionally.

    San Diego: The downtown San Diego condominium is substantially overbuilt. Developers have leased units that were to have been sold and there is virtually no construction of new units.

    Rental Conversions: Even these grim reports, however, may mask an even bigger problem. It is estimated that more than 20,000 condominiums units are completed or nearly completed, but are not listed for sale in Miami. In what is by far the nation’s strongest condominium market, Manhattan, more than 6,000 condominium units are completed or nearly completed, but not listed for sale.

    In core cities, few issues have been as divisive as the conversion of rental units to condominiums. But, now the opposite is now occurring – condominiums are being converted into apartments for rent: This is trend that undermines markets in a way that cannot be measured by median prices, since it replaces generally high-paying condo owners for generally less flush renters. This puts those who bought at higher prices in these markets at a particular disadvantage.

    Conclusion: Overall, contrary to the mythology developed early in the bubble, suburbs and even exurbs have generally performed about as well as closer in markets. The big imponderable will be the future of the core condominium market, which is experiencing significant financial reverses largely ignored by the national media.

    Note: As used in this article, the Los Angeles metropolitan area is the Los Angeles-Riverside Combined Statistical Area, the San Francisco area is the San Francisco-San Jose Combined Statistical Area and all other metropolitan areas are the corresponding metropolitan statistical areas. http://demographia.com/db-prdistr2010.pdf>Subareas defined.

    Photograph: Condominium construction, Atlanta, weekend of the Lehman Brothers collapse.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

  • New Traffic Scorecard Reinforces Density-Traffic Congestion Nexus

    Inrix, an industry provider of traffic information, has just published its third annual Traffic Scorecard, which ranks the nation’s 100 largest metropolitan areas based upon the intensity of their peak hour traffic congestion in 2009. The results provide further evidence of the association between higher urban population densities and more intense traffic congestion.

    Los Angeles, Again: Not surprisingly, Los Angeles is again the most congested metropolitan area over 1,000,000 population. In Los Angeles, roadway travel takes nearly 34.7% more in peak periods than when there is no congestion. This means that a trip that would take 30 minutes without congestion would take, on average 40.5 minutes during peak periods.

    The principal measure used by Inrix is the Travel Time Index, which was developed by the Texas Transportation Institute (TTI), for its congestion reports that started in 1982. TTI’s latest Urban Mobility Report is for 2007. The Inrix measures are developed from actual GPS vehicle readings. This information is also provided to TTI to assist in preparation of its annual Urban Mobility Report.

    Measuring Delay: In the new edition, Inrix switches from using the Travel Time Index to what it calls the Travel Time Tax. The difference between the two measures is that the Travel Time Tax measures the percentage of delay, such as 35% in Los Angeles, while the Travel Time Index would state the figure as 1.35. The new method is preferable because differences in traffic congestion are more readily apparent. . For example, a metropolitan area having a Travel Time Tax of 15% would have 50% worse traffic congestion than a metropolitan area having a Travel Time Tax of 10%. This large difference is not as obvious when comparing the Travel Time Index values of 1.15 and 1.10. The “Travel Time Tax” parlance, however, is less than optimal and this article will use “average congestion delay” instead.

    Ranking the Metropolitan Areas: The average congestion delay in Los Angeles was much worse than in the other largest metropolitan areas, just as its core urban area density is well above that of anywhere else in the US, including New York (where far less dense suburbs more than negate the density advantage in the core city). It also doesn’t help that a number of planned freeways were cancelled in Los Angeles over the last 50 years.

    Among the large metropolitan areas, Washington, DC had the second worst Average congestion delay, at 22.4%, followed by San Francisco, at 21.5%, Austin at 20.7% and New York at 19.7%. Austin may seem to have placed surprisingly high, however this was the nation’s last large metropolitan area to open a full freeway to freeway interchange and has only recently begun to develop a comprehensive freeway system, through the addition of toll roads. Austin’s late roadway development is the result of two factors. Austin was too small in 1956 to receive a beltway under the interstate highway system and an anti-freeway movement delayed construction for decades.

    Inrix also develops an average congestion delay for the worst commuting hour. Los Angeles also has the most congested worst hour, with an average congestion delay of 69%. Austin ranked second worst at 55%, while San Francisco was third at 46%, Washington, DC fourth at 45% and New York fifth at 44%.

    Honolulu: Almost as Bad as Los Angeles: Smaller metropolitan areas also exhibited intense traffic congestion. Honolulu had an average congestion delay nearly as bad as Los Angeles, at 32.4% and a worst hour average congestion delay of 64%. The core urban area of Honolulu has the highest density of any metropolitan area between 500,000 and 1,000,000 population. New York exurb Bridgeport-Stamford had a worst hour average congestion delay of 63%, with a peak period average congestion delay of 18.0%.

    Inrix: Density and Traffic Congestion: Virtually all of the congestion and most of the analyzed road mileage is in the urban areas, rather than in the rural areas that make up the balance of the metropolitan areas. The metropolitan areas with more dense urban areas tend to have worse traffic congestion, as the table below indicates.

      • Metropolitan areas with core urban densities (see Note 1) of more than 4,000 per square mile had peak period average congestion delays of 18.4%, which is more than three times that of metropolitan areas with core urban densities of less than 2,000 (5.9%).

      • Metropolitan areas with core urban densities of more than 4,000 per square mile had worst peak hour average congestion delays of 37.5%, which is nearly 2.4 times that of metropolitan areas with core urban densities of less than 2,000 (15.9%).

    These relationships are similar to those indicated in the Texas Transportation Institute data for 2007.

    Traffic Congestion & Urban Density in the United States: 2009
    Core Urban Area Density (2000) Peak Period Average Congestion Delay: 2009 Compared to Least Dense Category Worst Hour Average Congestion Delay: 2009 Compared to Least Dense Category
    Over 4,000 18.4% 3.26 37.5% 2.36
    3,000-3,999 10.0% 1.76 22.3% 1.41
    2,000-2,999 7.3% 1.30 17.7% 1.12
    Under 2,000 5.6% 1.00 15.9% 1.00
    Density: Population per square mile
    Travel Time Tax: Additional travel time required due to traffic congestion
    2000 population density is the latest reliable data
    Calculated from INRIX & 2000 Census data

    Sierra Club Data Also Shows Nexus: Moreover, the association between higher densities and greater traffic congestion is indicated by the ICLEI-Local Governments for Sustainability Density-VMT Calculator, which is based upon Sierra Club research. According to the Calculator, under the “smart growth” scenario, residential housing would be 15 units per acre, as opposed to its “business as usual” scenario at a typical density of four housing units per acre. The density of traffic (vehicle miles per square mile) under the higher density “smart growth” strategy would be 2.5 times as high as under the “business as usual” scenario (Figure).

    The Inevitable Comparisons: Invariably, analysts (smart growth advocates and me) like to point out relationships between Portland, with its “smart growth” policies and Atlanta, the least dense major urban area in the world. The Inrix data shows Portland to have an average peak hour delay of 12.2%, which is 15% worse than Atlanta (10.6%). Portland is nearly twice as dense as Atlanta, while Atlanta’s traffic congestion is made worse by one of the most decrepit freeway and arterial systems in the nation.

    A National Vision: Inrix has also developed a monthly national congestion delay factor. Inrix notes that traffic congestion had been improving as driving declined due to the Great Recession. However, Inrix refers to reduction in driving as “lucky,” and notes that without a “national vision” that “includes addressing congestion as a national priority,” greater traffic congestion will result.

    There is indeed good reason to address traffic congestion. As David Hartgen and M. David Fields have shown, there is a strong relationship between the higher levels of mobility that occur with less congestion and greater economic growth. Obviously that relationship extends to higher urban densities, which are associated with economically counter-productive levels of traffic congestion.

    But there is more than jobs and the economy. More intense traffic congestion produces more intense air pollution as well as more greenhouse gas emissions. It is well to remember that public health was the rationale for air pollution regulation. Air pollution’s negative impacts are so local that they are measured in the quality of life of individual people, especially those in close proximity to unnecessarily overcrowded roads. It is ironic that the higher density promoted by smart growth advocates exposes urban residents to more intense air pollution.

    Note 1: 2000 core urban area (urbanized area) population densities are used in this analysis because there is no later reliable information. The next reliable urban area density data will be a product of the 2010 census. The Federal Highway Administration (FHWA) produces later urban area density figures, many of which are substantially inconsistent with those of the United States Bureau of the Census, which is the primary source of such information. For example, as late as 2005, FHWA reported the Houston urban area to have 1.3 million fewer people than the Bureau of the Census, while reporting a land area nearly 250 square miles larger than the census had measured. Of course, this is a physical impossibility. The result was that Houston’s density was overstated by 45%.

    Note 2: Inrix also ranks metropolitan areas using an “overall congestion” measure, which is simply all congestion added up. As a result, the overall congestion measure is heavily weighted by population. This is illustrated by comparing Los Angeles and Honolulu. These metropolitan areas have very similar average congestion delays, as noted above. This means that drivers encounter similar traffic delays during peak in Los Angeles and Honolulu. However, Honolulu’s overall congestion measure is 95% less than that of Los Angeles, principally driven by the fact that Honolulu’s population is 93% less. As such, the overall congestion measure is of little relevance to people in their day to day commute or as a comparative measure of the intensity of congestion between areas.

    Photograph: Los Angeles City Hall.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”