New Geography

Tag: Charlotte

  • 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.”

  • Eros Triumphs…At Least in Some Places, Mapping Natural Population Increases

    As with other advanced capitalist societies, the US population is aging. About 30 percent of US counties experienced natural decrease – more deaths than births – in the 2000-2007 period.

    Nevertheless, the most exceptional feature of the United States remains its unusually high level of natural increase, and significant degree of population growth. This is often attributed to the high level of immigration, especially from Mexico, illegal as well as legal, and their high fertility. This process is indeed critical, even though most of the migration is in fact legal, and the share from Mexico is not as high as commonly perceived. Also most of the Hispanic population in the United States is native, not immigrant.

    Perhaps a more important feature of US society contributing to a smaller decline in fertility than in most other advanced countries is the extraordinary cultural traditionalism of perhaps half the American population. This is reflected in the so-called “culture wars”: a more educated modernism, pejoratively dubbed as “secular humanist,” versus a more traditional, religion-observing “moral majority.”

    Conservatives campaign against abortion and even contraception, and maintain an amazingly high level of religiosity and skepticism of science, creating a climate favorable to a level of fertility above replacement levels (2.1 per female). The super pro-child Mormon Church alone claims millions of members, and evangelical groups boast even more. This creates a fascinating, future-influencing tension between a younger-growing, more educated population choosing lower fertility on average, and a more traditional population more successful at reproducing themselves!

    Natural increase, then, can be expected in the following kinds of areas. One is heavily Hispanic areas. Those with more recent immigrant stock have higher fertility, but above replacement fertility seems to persist for several generations. Another lies in Native American Indian areas. The explanation here is controversial, but there is perhaps a sense of the need for more children as a reaction to a perceived threat of loss of identity.

    For areas with more vibrant economic growth, attracting and maintaining young workers constitute another focal point for natural increase. These are overwhelmingly urban, even metropolitan. Note that these areas may not have above replacement fertility, but will have natural increase, simply because of the younger age structure of the population.

    Other strong candidates for natural increase include military base areas, because of the prevalence of young families. Likewise Mormon areas, and fundamentalist religion areas, at least where there remain sufficiently young populations.

    Seventy percent of counties had natural increase, differing from counties with natural decrease by higher immigration, much higher levels of urban population, a much younger population, and far higher levels of racial and ethnic minorities, especially Hispanics.

    A little more than half (1193) of counties with natural increase had net domestic out-migration – more people leaving than moving into the county, and of these the majority (702) lost population, while in the other 492 natural increase was greater than the out-migration loss, resulting in population gains. Out migration counties differ from in-migration counties ONLY because of the markedly higher ethnic and racial minority shares, obviously reflecting much weaker economic performances. The population losing counties had especially high African American population shares and were more rural.

    The net in-migration counties (1093) are usefully separated into those in which natural increase exceeded the net in-migration (only 272 counties) and those in which net in-migration was dominant (821). The former had slightly higher minority shares, and were somewhat more urban.

    Geography of Natural Increase

    Figure 1 maps natural increase by five levels, with cooler colors having a small natural increase (here in the simple sense of the excess of births over deaths as a share of the base population), and warm colors indicated high levels of natural increase. Rates of over 10 percent are really startlingly high.

    Natural increase prevails over much of the country, with the exception of much of the Great Plains, from Texas to Canada, and northern Appalachia. High levels of natural increase, over 6 percent (orange and magenta on Map 1) occur in five kinds of areas that are really highly predictable.

    • First, areas of high Hispanic population, mainly from Texas to southern and central California, but also in parts of eastern Washington and southwestern Kansas.
    • Second, Native American Indian reservation areas, most obviously in Alaska, New Mexico, South Dakota, Arizona but also Montana and North Dakota.
    • Third, the Mormon “culture belt,” spreading from the “Zion” of Utah to Idaho, Nevada and Wyoming.
    • Fourth, rapidly growing suburban and exurban counties, most notably around Houston, Dallas, San Antonio, Austin, Atlanta, Washington DC, Chicago, Minneapolis, Charlotte and Denver, and
    • fifth, in counties with military bases, for example, in North Carolina, Georgia, Kansas, Oklahoma and several other states.

    Above average natural increase, from 4 to 6 percent, is typical of many modestly growing metropolitan areas, both central and suburban and exurban counties, and in a scattering of rural-small town counties, especially in the west (western Colorado is notable). Low natural increase, under 2 percent, is very widespread across both urban and rural areas, and is often indicative of slow-growing economies with out-migration (please see Map 2), and in areas moderately attractive to older migrants, thus depressing births, but not enough to cause natural decrease.

    Map 2 sorts counties according to in or out migration, population gain or loss, and the role of natural increase versus net in-migration. Four basic types are mapped, but then divided into high or low natural increase. Rapidly growing counties with net in-migration even greater than high natural increase (dark pink) are especially typical of suburban and exurban counties of large metropolises, and of fast-growing smaller metropolitan areas. Lower natural increase is more common for rural and small town amenity areas, as well as far exurban counties. Natural increase greater than in-migration (yellow) is not very common, and tends to occur in rural-small town counties, including several counties with high Mormon shares. Counties with out-migration but enough natural increase to permit overall population growth (green) are common in three kinds of areas. First are large central metropolitan counties – such as those containing Los Angeles, Houston, Dallas, and Miami – with high non-Hispanic white out-migration, but high Hispanic in-migration. The second type are border region counties with high Mexican in-migration, and the third are Native American Indian areas. Those counties experiencing population loss (purple) are much more like counties with natural decrease: dominantly rural or declining rust belt metropolitan areas.

    Finally, what areas have the highest rates of natural increase? These see increases of 16 to 19 percent from the base population. They are Wade-Hampton, Alaska (west of Bethel); Webb, Texas (Laredo); Utah (Provo); Hidalgo, Texas (McAllen); Loudoun, Virginia (Leesburg, northwest of Washington DC); Starr, Texas (Rio Grande City); and Madison, Idaho (Rexburg). Three are Hispanic, two Mormon, one Alaska native, and one fast growing suburban.

    Natural increase has remained higher than forecast 40 years ago due to far higher immigration, above replacement fertility even among the affluent and educated, and high teenage pregnancy in connection with constraints on abortion – i.e., America’s very high religious traditionalism. The unknowns ahead include the rate of future immigration, whether 2nd and 3rd generation Hispanics will reduce fertility markedly and whether education and modernism will reduce the power of tradition.

    See Richard’s similar piece on natural decreases in US population.

    Richard Morrill is Professor Emeritus of Geography and Environmental Studies, University of Washington. His research interests include: political geography (voting behavior, redistricting, local governance), population/demography/settlement/migration, urban geography and planning, urban transportation (i.e., old fashioned generalist)

  • How About a Rural Stimulus?

    In Pennsylvania, public and private funds mainly are directed into areas where people live and where people vote. As a result urban Pennsylvania has significant advantages over rural communities in securing public funds and private investment.

    Although rural Pennsylvania comprises a significant percentage of Pennsylvania’s geography it contains a very low percentage of the overall population and its political clout is dwindling. According to Trends in Rural Pennsylvania March/April 2003 overview of the state’s population, urban counties outnumber the population of rural by a ratio of more than 3 to 1.

    Politically rural and small town Pennsylvania once wielded considerable power. The “T” which ran up the center of Pennsylvania and east to west across the northern tier of the state was key to Republican victories statewide. In recent elections, it has been the southeastern region that has dominated politics. It has reached the point where it can be safely stated that no candidate can win statewide in Pennsylvania without carrying at least one of the five southeastern counties.

    All this puts rural Pennsylvania at a distinct disadvantage, particularly in terms of basic infrastructure. Rural Pennsylvania has 57,065 miles of highway compared to 62,577 in urban counties. Local governments receive only about 10 percent of state revenues from the Motor License Fund and the rest is funded by local taxes.

    In rural Pennsylvania, because miles of roadway responsibility are funded by a smaller tax base per mile, the choice is between higher taxes or ignoring the problem. More and more, residents in small, rural communities are driving on outdated highways and over creaky bridges. In many ways, highway infrastructure is moving backwards in time as bridges close or become weight restricted isolating rural communities.

    Mass transit is another issue in the divide. Pennsylvania has 46 fixed transit systems. Twenty-four serve small urban areas and another twenty service rural communities. This said the two systems that serve the cities of Philadelphia and Pittsburgh, SEPTA and PAAT, receive roughly 90 percent of all transit monies in the state.

    Transit receives about $900 in annual state subsidies. These funds come from a wide-variety of sources and are distributed under a myriad of conditions most of which the rural systems cannot meet. The result is the budgets of rural systems must rely more on passenger receipts and local subsidies than the much larger systems.

    In 2007, as part of an effort to find more funds for roads, bridges and transit, Act 44 was passed. Under this legislation Interstate 80 would be tolled. This superhighway runs through rural Pennsylvania. In blunt terms, the politics played out that rural Pennsylvania was being tolled to fund transit in Philadelphia. The only reason I-80 has not been tolled yet has been because the U.S. Department of Transportation rejected Pennsylvania’s proposal.

    There are other dramatic differences between the two Pennsylvanias in terms of basis infrastructure. Census data show that 36 percent of people in rural Pennsylvania get their drinking water from wells or some other sources. There are 5,697 active drinking water systems in rural Pennsylvania of which 70 percent are owned by investors or individuals according to n Trends in Rural Pennsylvania May/June 2004. Most of the sewer and other basic water systems are antiquated. The American Society of Civil Engineers’ that rural Pennsylvania needs $5.26 billion invested over the next 20 years in drinking water infrastructure and more than $6 billion over the same period to update sewage.

    Yet when Pennsylvania speaks about the upcoming stimulus, the primary voices are urban, epitomized by Governor Ed Rendell, a former Mayor of Philadelphia and fervent urbanist. We can expect that he will be working hard for more stimulus in the big cities, including for such things as the $800 million expansion of the Pennsylvania Convention Center which is now under way.(link to piece on this) Once again demographics and politics could be working against rural and small town communities where projects are on a much smaller scale, but equally important to the welfare of areas of rural Pennsylvania.

    Like many similar places around the country, rural Pennsylvania has many assets that would benefit from new infrastructure. It is an area of tremendous natural beauty and bountiful recreational opportunities. Most of these areas have good school systems and are safe areas to live. They could contribute to the nation’s economic recovery and provide an alternative for many urban residents who want improved quality of life or are thinking about retiring to an area that is less expensive. The problem is we have to get our own state officials, and the Obama administration to start paying attention.

    Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.