Tag: Houston

Why Affordable Housing Matters

Economists, planners and the media often focus on the extremes of real estate — the high-end properties or the foreclosed deserts, particularly in the suburban fringe. Yet to a large extent, they ignore what is arguably the most critical issue: affordability.

This problem is the focus of an important new study by Demographia. The study, which focuses largely on English-speaking countries, looks at the price of housing relative to household income. It essentially benchmarks the number of years of a region’s household income required to purchase a median-priced house.

Overall, the results are rather dismal in terms of affordability, particularly in what Wharton’s Joe Gyourko dubs “superstar cities.” These places — such as London, New York, Sydney, Toronto and Los Angeles — generally tend to be more expensive than second-tier regions commonly found in the American South and heartland.

Even with their usually higher incomes, these regions, for the most part, still have a ratio of five years median income to median house price; this is far higher than the historical ratio of three. In some areas the ratios are even more stratospheric. Sydney and Melbourne, for example, have ratios over nine; London, New York, San Jose and Los Angeles approach six or more.

Urbanists often assume that these high prices — unprecedented in a tepid economy — reflect the greater attractiveness of these regions. This is somewhat true, particularly for parts of London and New York, which can survive high ratios because their markets are less national and middle-income and more tied to the global upper classes.

In places like Mayfair or New York’s Upper East Side, the buying “public” extends beyond the local market to high-income markets in places like the United Arab Emirates, Moscow, Shanghai, Singapore or Tokyo. Many owners are not full-time residents and consider a home in such places as just another expression of their wealth and privilege.

Yet such markets are exceptional. In most regions, the vast preponderance of homebuyers are either natives or long-term migrants. Their less glamorous tastes — notably access to affordable single-family dwellings — drives migration from one region to another. Over the past decade, and even since the crash, this has meant a general trend of migration from high-end, unaffordable markets to less expensive regions. In the U.S., for example, people have been flocking to the South, particularly the large metropolitan areas of Texas.

One factor driving this migration, the Demographia study reveals, is differing levels of regulation of land use between regions. In many markets advocacy for “smart growth,” with tight restrictions on development on the urban fringe, has tended to drive up prices even in places like Australia, despite the relatively plentiful supply of land near its major cities.

More recently, “smart growth” has been bolstered by claims, not always well founded, that high-density development is better for the environment, particularly in terms of limiting greenhouse gases. Fighting climate change (aka global warming) has given planning advocates, politicians and their developer allies a new rationale for “cramming” people into more dense housing, even though most surveys show an overwhelming preference for less dense, single-family houses in most major markets across the English-speaking world.

Limits on the kind of residential living most people prefer inevitably raises prices. As the Demographia study shows, the highest rise in prices relative to incomes generally has taken place in wherever strong growth controls have been imposed by local authorities.

Perhaps the poster child for “smart growth” has been the U.K. Long before the climate change debate, both of England’s major parties embraced the notion of strict constraints on suburban development — not only in London, but across the country. As a result, even places with weak economies are not as affordable as they should be. Liverpool, Newcastle and the Midlands have affordability rates higher than Toronto, Boston, Miami and Portland — and not much lower than those of New York or Los Angeles.

But the most remarkable impact of “smart growth” policies has been in Australia, which once had among the most affordable housing prices in the English-speaking world. Houses in Sydney and Melbourne, for example, are now less affordable than in London or San Francisco. Even secondary markets like Adelaide and Perth are more expensive than Toronto, New York, Los Angeles or Chicago. Most recently these policies have even caught the attention of the OECD, which linked overly regulated housing markets not only to the Great Recession, but to a continued slow economic recovery.

Compared with the U.K. and Australia, the U.S. housing market is more hopeful, with a host of regions — notably Houston, Dallas, Austin, San Antonio, Phoenix and Kansas City — with affordability rates around three and under. Low prices by themselves, of course, are no guarantor of success; in economically challenged places like Detroit and Cleveland, out-migration and high unemployment have driven prices down.

But in many, if not most, cases affordability has promoted economic and demographic growth. Generally speaking, affordable markets tend to draw migrants from overpriced ones, for example to Houston or Austin from Los Angeles or New York.

Nor is this necessarily a case of “smart” people heading to dense, expensive cities while the less cognitively gifted head to the low-cost regions — as news outlets like The Atlantic have claimed. In fact, the American Community Survey reveals that between 2007 and 2009 college graduates generally gravitated toward lower-cost, less dense markets — such as Austin, Houston and Nashville — than to the highly constrained, denser ones. Overall growth in affordable markets — with a ratio of three or four — among college graduates was roughly 5%; in the more expensive places , it was barely 3%.

How could this be, if everyone with an above-a-room-temperature IQ supposedly favors hip, cool, dense cities? Perhaps it’s because of factors often too small or mundane for urban pundits to acknowledge. Most people, particularly as they enter their 30s, aspire to a middle-class lifestyle — and being able to afford a house constitutes a large part of that.

So what does this tell us about future growth? Clearly affordability matters. Areas that combine strong income and job growth, along with affordable housing, are poised to do best. This will be particularly true once the economy recovers and a new generation of millennial buyers, entering their 30s in huge numbers over the next decade, start their search for a place where they can settle down and start raising families.

This piece originally appeared in Forbes.

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

Photo by Je Kemp

January 24, 2011

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”

January 24, 2011

Greetings From Recoveryland: Ten Places to Watch Coming Out of the Recession

Like a massive tornado, the Great Recession up-ended the topography of America. But even as vast parts of the country were laid low, some cities withstood the storm and could emerge even stronger and shinier than before. So, where exactly are these Oz-like destinations along the road to recovery? If you said Kansas, you’re not far off. Try Oklahoma. Or Texas. Or Iowa. Not only did the economic twister of the last two years largely spare Tornado Alley, it actually may have helped improve the landscape.

We have compiled a list of the 10 American cities best situated for the recovery. These are places where the jobs are plentiful, and the pay, given the lower cost of living, buys more than in bigger cities. In other words, places unlike much of the rest of the country. The cities, most of which lie in the red-state territory of America’s heartland, fall into three basic groups. There’s the Texaplex—Austin, Dallas, San Antonio, and Houston—which has become the No. 1 destination for job-seeking Americans, thanks to a hearty energy sector and a strong spirit of entrepreneurism. There are the New Silicon Valleys—Raleigh-Durham, N.C.; Salt Lake City; and urban northern Virginia—which offer high-paying high-tech jobs and housing prices well below those in coastal California. And then there are the Heartland Honeys—Oklahoma City, Indianapolis, and Des Moines, Iowa—which are enjoying a revival thanks to rising agricultural prices and a shift toward high-end industrial jobs.

Unlike the Sun Belt states and cities along the East and West coasts, these locales not only grew during the boom of the mid-2000s, they suffered least in the Great Recession. The fact that they are mostly in red states should give the newly ascendant GOP comfort as it tries to deliver on its election-year promise to right the economy. That isn’t to say all the blue states will remain weather-beaten. Wall Street, heady with cheap money, has sparked a return to opulence. And the strong demand for high-tech products and services will likely keep places like Boston, San Francisco, and San Diego from devolving into fancy versions of Detroit. Yet given the results of last week’s election and the increasing odds against another bailout of state governments, the near-broke and highly regulated blue states will be hard-pressed to generate much new employment.

Of course, not everyone living in our Top 10 cities has avoided the heartache. And the continued slow pace of the economic recovery could hamper expansion even in the most-favored cities. If energy tanks as a result of a renewed global slowdown, it could hurt Texas and Oklahoma; dropping agricultural prices would hit some of the Heartland Honeys hard. But relatively—and that is the operative word in this tough economy—our 10 cities should fare better than most anywhere in America. And they could offer us a road map for what the nation’s economy will look like once the dust settles.

THE TEXAPLEX

For sheer economic promise, no place beats Texas. Though the Lone Star State’s growth slowed during the recession, it didn’t suffer nearly as dramatically as the rest of the country. Businesses have been flocking to Texas for a generation, and that trend is unlikely to slow soon. Texas now has more Fortune 500 companies—58—than any other state, including longtime corporate powerhouse New York.

Austin boasted the strongest job growth in our Top 10, both last year and over the decade. Home to the state capital and the ever-expanding University of Texas, the city is arguably the best-positioned of the nation’s emerging tech centers. It enjoys good private-sector growth, both from an expanding roster of homegrown firms and outside companies, including an increasing array of multinationals such as Samsung, Nokia, Siemens, and Fujitsu.

Yet Austin’s newfound prosperity isn’t simply a product of its university culture or its synergetic collection of technology firms. Its success owes a great deal to simply being in Texas—a state itching to eclipse its historic archrival, the increasingly troubled California. Indeed, Texas is becoming to the Golden State what Arizona, Nevada, and Oregon were in the last decade: a refuge for workers and companies fed up with California’s high unemployment, cost of living, and dysfunctional state government.

The Texas economy has benefited from widening diversification. Houston has a robust energy business and medical-services industry, and thriving international trade—all long-term growth areas. Dallas enjoys an expanding tech sector and well-developed business-service industries tied to a powerful corporate base. San Antonio has a strong military connection and an expanding manufacturing capacity, and it is a key locale for the growing Latino marketplace. What’s more, Texas offers pro-business policies and relatively low taxes, and the physical infrastructure in the cities is generally as good or better than in many East and West coast metropolitan areas.

People are voting with their feet. All four Texas cities are enjoying strong immigration from the rest of the country and abroad. Houston and Dallas have higher rates of immigration than Chicago, and if the job picture stays the same, those cities could someday rival New York and Los Angeles in terms of ethnic diversity.

THE NEW SILICON VALLEYS

Although Massachusetts and California are lauded as the places “where the brains are,” neither ranked high in the growth of tech jobs over the past decade. More important is where the brains are headed.

A lot of them are going to North Carolina, Virginia, and Utah. The population of Raleigh-Durham grew faster than any major U.S. metropolitan area during the recession, and the city ranked third on our list in terms of job growth over the last decade. To the north, in Virginia, lies another Silicon Valley wannabe, stretching across Alexandria, Arlington, and Fairfax counties. And then there’s Salt Lake City and its environs, buoyed by the arrival of such big names as Adobe, Twitter, and Electronic Arts. The Greater Salt Lake region, which follows the Wasatch Mountains from Provo to Ogden, has much to attract tech companies: short commutes, decent public schools, spectacular nearby recreation, and, perhaps most important, affordable housing. Roughly 75 percent of households in Salt Lake can afford a median-priced house, as compared with 45 percent in Silicon Valley and roughly half that in New York City and San Francisco. The cost advantages of cities like Salt Lake and the other high-tech hubs are expected to prove especially attractive to millennials—the generation born after 1982—as they begin forming families and buying homes en masse.

None of these Silicon Valleys may ever reach the critical mass of the real thing in California, but they will become increasingly more effective competitors and take an expanding market share of the nation’s technology business.

THE HEARTLAND HONEYS

The oft-ignored center of the country boasts a thriving economy that seems poised for further expansion. The region is well positioned to take advantage of growing markets for agricultural commodities and farm machinery in fast-growing countries such as India and China. The Great Plains and parts of the southern Midwest have also attracted new investments in manufacturing, both from domestic and foreign firms.

Having largely missed out on the housing bubble, the region also avoided the hangover. As a result, after watching generation after generation move away, several heartland cities are enjoying a noticeable uptick in domestic migration as well as immigration. During the Great Depression, it was Oklahomans who moved to California to escape the Dust Bowl. Now there are considerably more people moving from California to Oklahoma than the other way around.

Indianapolis, once written off as “Indiana no-place,” is one emerging hotspot. The area’s housing affordability now stands at a remarkable 90-plus percent. Although the recession has hit some of Indiana’s manufacturing-oriented northwest corner, over the past decade Indianapolis’s population grew at a rate 50 percent greater than the national average, notes urban analyst Aaron Renn. Much of this success is due to an aggressively pro-business attitude that promotes growing clusters such as life sciences, motor sports, and Internet marketing.

Oklahoma City and Des Moines have also enjoyed steady growth in both jobs and net migrants over the past decade. Des Moines was recently rated the No. 1 spot in the country for business and careers by Forbes magazine, thanks to a surging agricultural sector and strength in the business-services segment. And Oklahoma City—which enjoys low unemployment as a result of its steadily growing energy and aerospace sectors—has been ranked among the best job markets for young people, ahead of Dallas, Seattle, and even New York (having Kevin Durant lead the NBA’s Oklahoma City Thunder for the foreseeable future can only improve the buzz).

Of course, none of the cities in our list competes right now with New York, Chicago, or L.A. in terms of art, culture, and urban amenities, which tend to get noticed by journalists and casual travelers. But once upon a time, all those great cities were also seen as cultural backwaters. And in the coming decades, as more people move in and open restaurants, museums, and sports arenas, who’s to say Oklahoma City can’t be Oz?

	Job Growth				Net Domestic Migration				Total 2010	2009
	10yr	7yr	2yr	1yr	9yr	6yr	2yr	1yr	Emplymt	Population
Northern Virginia	13.8%	11.5%	-1.0%	1.2%	12.3	3.2	10.1	8.3	1,309,675	2,558,256
Raleigh	13.5%	13.7%	-4.9%	-0.4%	236.7	186.6	47.2	18.4	496,900	1,125,827
Salt Lake City, Ogden, Provo	7.7%	8.5%	-6.7%	-1.4%	9.2	15.9	7.4	2.4	961,900	2,227,413
Austin	14.1%	17.8%	-0.9%	1.7%	177.2	136.5	37.3	15.5	768,500	1,705,075
Dallas-Fort Worth	3.7%	8.1%	-3.6%	0.8%	59.3	44.8	14.3	7.2	2,876,925	6,447,615
Houston	11.7%	10.9%	-3.6%	-0.5%	51.2	42.9	15.5	8.7	2,518,675	5,867,489
San Antonio	11.4%	10.8%	-2.7%	-0.2%	102.1	86.4	21.3	9.3	833,325	2,072,128
Oklahoma City	4.9%	6.7%	-2.2%	1.0%	37.8	32.7	11.6	7.3	561,125	1,227,278
Des Moines	7.8%	7.4%	-3.5%	-0.9%	63.6	56.2	14.0	6.1	316,975	562,906
Indianapolis	1.6%	0.3%	-5.5%	-0.3%	45.9	34.6	8.0	4.1	870,850	1,743,658
New York	-1.5%	0.3%	-4.1%	-0.5%	-104.7	-82.6	-13.8	-5.8	8,288,300	19,069,796
Los Angeles	-6.2%	-5.2%	-8.0%	-1.0%	-107.9	-89.0	-15.7	-6.3	5,118,950	12,874,797
San Francisco	-13.1%	-6.0%	-8.9%	-2.6%	-83.1	-57.6	3.4	1.9	1,853,350	4,317,853
Chicago	-8.0%	-4.8%	-7.4%	-1.7%	-60.0	-45.8	-8.8	-4.2	4,235,175	9,580,567
Nation	-1.2%	0.4%	-4.9%	-0.1%					130,690,750

Areas are Metroplitan Statistical Areas
Northern Virginia, Va. includes Arlington, Clarke, Fairfax, Fauquier, Loudoun, Prince William, Spotsylvania, Stafford, and Warren Counties and Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, and Manassas Park Cities in Virginia.
Salt Lake City region includes Ogden and Provo Metroplitan Statistical Areas
Job growth uses May-August average for each year.
Job data: U.S. Bureau of Labor Statistics, Current Employment Survey
Migration data: U.S. Census Population Estimates. Migration is cumulative over 10, 7, 2, or 1 yr period. Number is rate per 1,000 residents in base year.

—————-

This article originally appeared in Newsweek.

Praxis Strategy Group and Zina Klapper provided research for this article.

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

Photo: Jeanette Runyon

November 9, 2010

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

October 6, 2010

How Texas Avoided the Great Recession

Lately, Texas has been noted frequently for its superior economic performance. The most recent example is the CNBC ratings, which designated the Lone Star state as the top state for business in the nation. Moreover, Texas performed far better than its principal competitor states during the Great Recession as is indicated in our How Texas Averted the Great Recession report, authored for Houstonians for Responsible Growth.

Introduction: How Texas averted the Great Recession:

One reason that Texas did so well is that it fully escaped the “housing bubble” that did so much damage in California, Florida, Arizona, Nevada and other states. One key factor was the state’s liberal, market oriented land use policies. This served to help keep the price of land low while profligate lending increased demand. More importantly, still sufficient new housing was built, and affordably. By contrast, places with highly restrictive land use policies (California, Florida and other places, saw prices rise to unprecedented heights), making it impossible for builders to supply sufficient new housing at affordable prices (overall, median house prices have been 3.0 times or less median household incomes where there are liberal land use policies).

The Great Recession: The world-wide Great Recession was the deepest economic decline since the Great Depression: This downturn hit average households very hard. According to Federal Reserve Board “flow of funds” data, gross housing values declined 9 quarters in a row through the first quarter of 2009. The previous modern record is a single quarter. From the peak to the trough, household net worth was reduced a quarter, which is more than 1.5 times the previous record decline.

Texas Largely Avoided the Great Recession. Texas has largely escaped the economic distress experienced around the nation, and especially that of its principal competitors, California and Florida. By virtually all measures, Texas has performed better in growth of gross domestic product, employment, unemployment, personal income, state tax collections, and consumer spending This is in part due to much less mortgage distress in Texas. At the bottom of the economic trough, the Brookings Institution Metropolitan Monitor ranked the performance of the 6 largest Texas metropolitan areas among the top 10 in the nation. The latest Metropolitan Monitor ranked each of the 6 metropolitan areas in the highest performance category.

Throughout the past decade, Texas has experienced far smaller house price increases than in California, Florida and many other states. During the bubble, California house prices increased at a rate 16 times those of Texas, while Florida house prices increased 7 times those of Texas. As a result, after the bubble burst, subsequent house price declines were far less severe or even non-existent in Texas. Texas had experienced its own housing bubble in the 1980s, however even then overall prices did not exceed the Median Multiple of 3.0 (The Median Multiple is the median house price divided by the median household income).

Unlike Texas, all of the markets with steep house price escalation had more restrictive land use regulations. This association between more restrictive use regulation and higher house prices has been noted by a wide range economists, from left-leaning Nobel Laureate Paul Krugman to the conservative Hoover Institution’s Thomas Sowell. It is even conceded in The Costs of Sprawl —2000, the leading academic advocacy piece on more restrictive land use controls, which indicates the potential for higher house or land prices in 7 of its 10 recommended strategies.

Comparing Texas and California: Unlike California, housing remained affordable in Texas. California’s housing affordability – in relation to income – largely tracked that of Texas (and the nation) until the early 1970s (Figure). After more restrictive land use regulations were adopted prices started to escalate. This relationship has been well demonstrated by William Fischel of Dartmouth University. Other factors have had little impact. Construction cost increases have been near the national average in California. Other factors, like underlying demand as measured by domestic migration, have been lower in California than in Texas..

Comparing Texas and Florida: The contrast with Florida is similar. Housing affordability in Florida was comparable to that of Texas as late as the 1990s. However, with strict planning control of land for development in Florida, land prices rose substantially when profligate lending increased demand.

Comparing Texas and Portland: Further, the Texas housing market avoided the huge price increases that have occurred in Portland (Oregon), which relies on extensive restrictive land use regulation. In 1990, Portland house prices relative to incomes were similar to those of the large Texas metropolitan areas. At the recent peak, the median Portland house price soared to approximately 80% above Texas prices. Portland did not experience the price collapses of California, but due to the greater price volatility associated with smart growth price declines in relation to incomes that were five times those of Texas.

How the Speculators Missed Texas: Speculation is often blamed as having contributed to the higher house prices that developed in California and Florida. This is correct. Moreover, with some of the strongest demand in the United States, Texas would seem to have been a candidate for rampant speculation. After all, it happened back in the 1970s when a huge oversupply of housing, industrial, retail and office space collapsed in the face of falling energy prices.

But it did not happen this time, despite solid population growth. During the housing bubble, Dallas-Fort Worth and Houston ranked second and third to Atlanta in population increases among metropolitan areas with more than 5 million population. Austin is the nation’s second fastest growing metropolitan area with more than 1 million population. Each of these metropolitan areas had strong underlying demand, as indicated by domestic migration data.

Yet the speculators were not drawn to the metropolitan areas of Texas. This is because speculators or “flippers” are not drawn by plenty, but by perceived scarcity. In housing, a sure road to scarcity is to limit the supply of buildable land by outlawing development on much that might otherwise be available.

However, the speculators did not miss California and Florida. Nor did they miss Las Vegas or Phoenix, where the price of land for new housing rose between five and 10 times as the housing bubble developed. Despite their near limitless expanse of land, much of it was off limits to building, and the exorbitant price increases were thus to be expected.

The Threat: Yet, despite the success of the less restrictive land use policies in Texas, there are strong efforts there to impose more smart growth policies. The impact could be devastating, especially from strategies that ration land that would raise land and house prices, as has occurred in California and Florida. In 2009, Governor Perry vetoed a bill that would have required the state to promote smart growth. Federal initiatives, under proposed climate change and transportation acts could do much to destroy not only the affordability of Texas metropolitan markets, but could also make Texas less competitive in the decades ahead.

Photograph: Suburban San Antonio (by the author)

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.”

July 20, 2010

Kudos to Houston Traffic from IBM

IBM has released its annual “Commuter Pain Index,” which ranks traffic congestion in 20 metropolitan areas around the world. According to IBM, the Commuter Pain Index includes 10 issues: “1) commuting time, 2) time stuck in traffic, agreement that: 3) price of gas is already too high, 4) traffic has gotten worse, 5) start-stop traffic is a problem, 6) driving causes stress, 7) driving causes anger, 8) traffic affects work, 9) traffic so bad driving stopped, and 10) decided not to make trip due to traffic.”

Each metropolitan area is given a score between 0 and 100, with the highest score indicating the worst traffic congestion (See Table).

IBM Commuter Pain Index: 2010
Metropolitan Areas Ranked by Worst Traffic Congestion

Rank	Metropolitan Area	Score (Worst to Best)
1	Beijing	99
1	Mexico City	99
3	Johannesburg	97
4	Moscow	84
5	Delhi	81
6	Sao Paulo	75
7	Milan	52
8	Buenos Aires	50
9	Madrid	48
10	London	36
10	Paris	36
12	Toronto	32
13	Amsterdam	25
13	Los Angeles	25
15	Berlin	24
16	Montreal	23
17	New York	19
18	Melbourne	17
18	Houston	17
20	Stockholm	15

Favorable Urban Planning Characteristics Associated with Intense Traffic Congestion: The worst traffic congestion was recorded in the developing world metropolitan areas of Beijing, Mexico City, Johannesburg, Moscow, Delhi and Sao Paulo. In many ways, these metropolitan areas exhibit characteristics most admired by current urban planning principles. Automobile ownership and per capita driving is low. Transit carries at least 40% of all travel in each of the metropolitan areas. Yet traffic is intense. This is due to another urban planning “success,” objective, high population densities. Higher population densities are inevitably associated with greater traffic congestion (and more intense local air pollution), whether in the United States or internationally. All six of these metropolitan areas scored 75 or above, where a score of 100 would be the worst possible congestion.

The next five metropolitan areas have accomplished nearly as much from an urban planning perspective. Milan, Buenos Aires, Madrid, London and Paris all achieve more than 20% transit market shares, and their higher urban densities also lead to greater traffic congestion. Each scores between 35 and 52.

Traffic congestion is less in the next group, which includes Toronto, Los Angeles, Berlin, Amsterdam and Montreal. With the exception of Berlin, transit market shares are less, though the urban densities in all are above average US, Canadian and Australian levels. Amsterdam, the smallest metropolitan area among the 20, scores surprisingly poorly, since smaller urban areas are generally associated with lower levels of traffic congestion.

The Least Congested Metropolitan Areas: Four metropolitan areas scored under 20, achieving the most favorable traffic congestion ratings. New York scores 19, with its somewhat lower density (the New York urban density is less than that of San Jose). Even lower density Melbourne and Houston score 17, tying for the second best traffic conditions. Stockholm achieves the best traffic congestion score, at 15, despite its comparatively high density. Stockholm is probably aided by its modest size which is similar to that of Orlando (Florida).

The Houston Advantage: Perhaps the biggest surprise is Houston’s favorable traffic congestion ranking.

Houston has the lowest urban density of the 20 metropolitan areas.
Houston has the lowest transit market share, by far, at only 1%.
Houston also has the highest per capita automobile use among the IBM metropolitan areas.

Yet Houston scored better than any metropolitan area on the list except for much smaller Stockholm. As late as 1985, Houston had the worst traffic congestion in the United States, according to the annual rankings of the Texas Transportation Institute. Public officials, perhaps none more than Texas Highway Commission Chair and later Mayor Bob Lanier led efforts to improve Houston’s road capacity, despite explosive population growth. Their initiatives paid off. By 1998, Houston had improved to 16th in traffic congestion in the United States. The population growth has been incessant, so much so that Houston has added more new residents since 1985 than live in Stockholm and more than half as many as live in Melbourne. While Houston had slipped to 11th in traffic congestion by 2007, the recent opening of a widened Katy Freeway and other improvements should keep the traffic moving in Houston better than in virtually all of the world’s other large metropolitan areas.

Photo: Freeway in Houston

July 5, 2010

Houston: Model City

Do cities have a future? Pessimists point to industrial-era holdovers like Detroit and Cleveland. Urban boosters point to dense, expensive cities like New York, Boston and San Francisco. Yet if you want to see successful 21st-century urbanism, hop on down to Houston and the Lone Star State.

You won’t be alone: Last year Houston added 141,000 residents, more than any region in the U.S. save the city’s similarly sprawling rival, Dallas-Fort Worth. Over the past decade Houston’s population has grown by 24%–five times the rate of San Francisco, Boston and New York. In that time it has attracted 244,000 new residents from other parts of the U.S., while older cities experienced high rates of out-migration. It is even catching up on foreign immigration, enjoying a rate comparable with New York’s and roughly 50% higher than that of Boston or Chicago.

So what does Houston have that these other cities lack? Opportunity. Between 2000 and 2009 Houston’s employment grew by 260,000. Greater New York City–with nearly three times the population of Houston–has added only 96,000 jobs. The Chicago area has lost 258,000 jobs, San Francisco 217,000, Los Angeles 168,000 and Boston 100,004.

Politicians in big cities talk about jobs, but by keeping taxes, fees and regulatory barriers high they discourage the creation of jobs, at least in the private sector. A business in San Francisco or Los Angeles never knows what bizarre new cost will be imposed by city hall. In New York or Boston you can thrive as a nonprofit executive, high-end consultant or financier, but if you are the owner of a business that wants to grow you’re out of luck.

Houston, however, has kept the cost of government low while investing in ports, airports, roads, transit and schools. A person or business moving there gets an immediate raise through lower taxes and cheaper real estate. Houston just works better at nurturing jobs.

It’s not just smug coastal places getting smoked by Texas. Since the collapse of the housing bubble Houston has outperformed Sunbelt counterparts like Phoenix, Las Vegas and Los Angeles. A big factor has been that manufacturing, professional services, international trade and technology industries have been the primary drivers of the city’s economic growth–rather than construction and speculation. Ironically, this has increased home values. Since 2007 prices of homes in Houston have ticked slightly higher, while those in Las Vegas, Phoenix, Los Angeles and the Bay Area each are down by more than 35%.

Some traditional urbanists will concede these facts but then try to shift the focus to “qualitative” factors: the best-educated residents, the highest salaries, the most expensive real estate. Although it also attracts a large number of low-skill migrants, Houston has considerably expanded its white-collar workforce. According to the Praxis Strategy Group, Houston’s ranks of college-educated residents grew 13% between 2005 and 2008. That’s about on par with “creative class” capital Portland, Ore. and well more than twice the rate for New York, San Francisco or Los Angeles.

But Houston’s biggest advantage cannot be reduced to numbers. Ultimately it is ambition, not style, that sets Houston apart. Texas urbanites are busy constructing new suburban town centers, reviving inner-city neighborhoods and expanding museums, recreational areas and other amenities. In contrast with recession-battered places like Phoenix, Houston remains remarkably open to migrants from the rest of America and abroad.

Houston, perhaps more than any city in the advanced industrial world, epitomizes the René Descartes ideal–applied to the 17th-century entrepreneurial hotbed of Amsterdam–of a great city offering “an inventory of the possible” to longtime residents and newcomers alike. This, more than anything, promises to give Houstonians the future.

This article originally appeared in Forbes.com.

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

Photo by telwink

May 20, 2010
Drew Carey and John Stossel Tell Cleveland to Learn From Houston

What started as a humble video segment for Reason TV has mushroomed into a lot of positive PR for Houston (and less than positive for Cleveland). It started with famous actor and comedian Drew Carey working with the libertarian Reason Foundation on a video series about saving Cleveland, his hometown. Houston is held up as a “best practice” example for land use regulation. There are lots of suggestions and positive comparisons to Houston on red tape (minutes 29:20 thru 32), zoning (37:30), and opportunity (47:50). Yours truly has a short cameo at 38:55. (If you want to be able to jump around, the trick is to start playing it, then hit Pause. You’ll see the grey loading indicator continue to download the video. Come back later after it’s fully loaded and you’ll be able to jump to any point you like.)
After the series was released to the internet and Forbes declared Cleveland the Most Miserable City in America, John Stossel at FOX Business News picked it up. A friend of mine loaned me a DVD of the 45 minute show (thanks Nolte), but I haven’t been able to find it online. There are shorter segments about it here and here. The first one jumps right into talking about Houston 16 seconds in, and the second one jumps into Houston around 40 seconds and 58 seconds in. The Cleveland newspaper writes about the show here.
Unfortunately, one of the professors he has on the show to present the other side brings up another one of those Houston myths that just won’t die: that you can build anything next to anything, including a strip club next to a day care center or school. No, we have narrow nuisance and SOB regulations to prevent that. We also have private deed restrictions. You don’t have to prescriptively control everything to prevent the worst-case scenarios.
Then Bill O’Reilly picks up the story in an interview with Stossel (hat tip to Jessie):

STOSSEL: People go to where the weather is good. We already have…

O’REILLY: Well, you can’t blame the city for the weather. I mean, look at Chicago. Great city, bad weather. Boston, come on. You can’t blame the city for the weather.
STOSSEL: You can rank them for that. And you can blame the politicians for saying we’re going to raise taxes to build our wonderful projects, and that’s going to make things better. The cities that prosper like Houston are the cities that have fewer rules and lower taxes.
O’REILLY: But remember Houston used to be the crime capital? They cleaned that place up pretty well.
STOSSEL: But Cleveland has 22 zoning categories. Houston has none.
O’REILLY: Twenty-two zoning categories? Very hard.
STOSSEL: In Cleveland, to start a business, a politician bragged, “We could get you in there in just 18 months.” In Houston, one day.
O’REILLY: One day? The problem with no zoning is you can have, you know, the No-Tell Motel right next to you. And…
STOSSEL: You could. But that rarely happens. And it’s not an ugly city, Houston.
O’REILLY: No, I didn’t say it was ugly. Who said it was ugly?
STOSSEL: Lots of people. No zoning. The city planner said it will be ugly. You will have…
O’REILLY: We have a lot of Houstonians watching “The Factor,” and I love going to Houston. All right. There you are, the Forbes magazine list, and Stossel laying it down.

We’ve come a long way. Five or ten years ago, you couldn’t find many people – including libertarians – that were willing to hold Houston up as a land-use model in public because our reputation was so bad. But now they do, and it’s (slowly) changing our national reputation for the better.

This post originally appeared at HoustonStrategies.com

April 28, 2010
Don’t Mess With Texas

One of the most ironic aspects of our putative “Age of Obama” is how little impact it has had on the nation’s urban geography. Although the administration remains dominated by boosters from traditional blue state cities–particularly the president’s political base of Chicago–the nation’s metropolitan growth continues to shift mostly toward a handful of Sunbelt red state metropolitan areas.

Our Urbanist in Chief may sit in the Oval Office, but Americans continue to vote with their feet for the adopted hometown of widely disdained former President George W. Bush. According to the most recent Census estimates, the Dallas and Ft. Worth, Texas, region added 146,000 people between 2008 and 2009–the most of any region in the country–a healthy 2.3% increase.

Other Texas cities also did well. Longtime rival Houston sat in second, with an additional 140,000 residents. Smaller Austin added 50,000–representing a remarkable 3% growth–while San Antonio grew by some 41,000 people.

In contrast, most blue state mega cities–with the exception of Washington, D.C.–grew much more slowly. The New York City region’s rate of growth was just one-fifth that of Dallas or Houston, while Los Angeles barely reached one-third the level of the Texas cities.

These trends should continue: According to Moody’s Economy.com, Texas’ big cities are entering economic recovery mode well ahead of almost all the major centers along the East or West Coasts. This represents a continuation of longer-term trends, both before and after the economic crisis. Between 2000 and 2009 New York gained 95,000 jobs while Chicago lost 257,000, Los Angeles over 167,000 and San Francisco some 216,000. Meanwhile, Dallas added nearly 150,000 positions and Houston a hefty 250,000.

This leads me to believe that the most dynamic future for America urbanism–and I believe there is one–lies in Texas’ growing urban centers. To reshape a city in a sustainable way, you need to have a growing population, a solid and expanding job base and a relatively efficient city administration.

None of these characteristics apply to places like President Obama’s hometown of Chicago, which continues to suffer from the downturn–but you would never know it based on media coverage of the Windy City.

The New Yorker, for example, recently published a lavish tribute to the city and its mayor, Richard Daley. But as long-time Chicago observer Steve Bartin points out, the story missed–or simply ignored–many critical facts. Mistaking Daley’s multi-term tenure as proof of effectiveness, it failed to recognize the region’s continued loss of jobs, decaying infrastructure, rampant corruption and continued out-migration of the area’s beleaguered middle class.

Generally speaking, as Urbanophile blogger Aaron Renn points out, the repeated reports of an urban renaissance in older northern cities should be viewed with skepticism. In the Midwest region over the past year the share of population growth enjoyed in core counties–an area usually much larger than the city boundary–actually declined in most major Midwestern metros, including Chicago.

Yet urbanists generally have not embraced the remarkable growth in the major Texas metropolitan areas. Only Austin gets some recognition, since, with its hip music scene and more liberal leanings, it’s the kind of place high-end journalists might actually find tolerable. The three other big Texas cities have become the Rodney Dangerfields of urban America–largely disdained despite their prodigious growth and increasingly vibrant urban cores.

Part of the problem stems from the fact that all Texas cities are sprawling, multi-polar regions, with many thriving employment centers. This seems to offend the tender sensibilities of urbanists who crave for the downtown-centric cities of yesteryear and reject the more dispersed model that has emerged in the past few decades.

Yet despite planners’ prejudices, places like Houston and Dallas are more than collections of pesky suburban infestations. They are expanding their footprints to the periphery and densifying at the same time.

Of course, like virtually all other regions, Houston and Dallas suffer excess capacity in both office buildings and urban lofts. But the real estate slowdown has not depressed Texans’ passion for inner city development. Indeed, over the past decade the central core of Houston–inside the boundaries of the 610 freeway loop–has experienced arguably the widest and most sustained densification in the country.

An analysis of building permit trends by Houston blogger Tory Gattis, for example, found that before the real estate crash, the Texas city was producing more high-density projects on a per-capita basis than the urbanist mecca of Portland. Significantly, as Gattis points out, the impetus for this growth has largely resulted not from planning but from infrastructure investment, job growth and entrepreneurial venturing.

This process is also evident in the Dallas area, which has experienced a surge in condo construction near its urban core and some very intriguing “town center” developments, such as the Legacy project in suburban Plano. In Big D, developers generally view densification not as an alternative to suburbia but another critical option needed in a growing region.

It’s widely understood there that many people move to places like Dallas, whether in closer areas or exurbs, largely to purchase affordable single-family homes. But as the population grows, there remains a strong and growing niche for an intensifying urban core as well.

Dallas and other Texas cities substitute the narrow notion of “or”–that is cities can grow only if the suburbs are sufficiently strangled–with a more inclusive notion of “and.” A bigger, wealthier, more important region will have room for all sorts of grand projects that will provide more density and urban amenities.

This approach can be seen in remarkable plans for developing “an urban forest” along the Trinity River, which runs through much of Dallas. The extent of the project–which includes reforestation, white water rafting and restorations of large natural areas–would provide the Dallas region with 10,000 acres of parkland right in the heart of the region. In comparison, New York City’s Central Park, arguably the country’s most iconic urban reserve, covers some 800 acres.

If it is completed within 10 years, as now planned, the Trinity River project will not only spawn a great recreational asset, but could revitalize many parts of the city that have languished over the past few decades. It could become a signature landmark in the urban development of 21st-century America.

As we look at the coming decades, this Texan vision may help define a new urban future for a nation that will grow by roughly 100 million people by 2050. To get a glimpse of that future, urbanists and planners need to get beyond their nostalgic quest to recreate the highly centralized 19th-century city. Instead they should hop a plane down to Dallas or Houston, where the outlines of the 21st-century American city are already being created and exuberantly imagined.

This article originally appeared at Forbes.com.

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

Photo by Stuck in Customs

March 30, 2010

SPECIAL REPORT: Metropolitan Area Migration Mirrors Housing Affordability

On schedule, the annual ritual occurred last week in which the Census Bureau releases population and migration estimates and the press announces that people are no longer moving to the Sun Belt. The coverage by The Wall Street Journal was typical of the media bias, with a headline “Sun Belt Loses its Shine.” In fact, the story is more complicated – and more revealing about future trends.

Domestic Migration Tracks Housing Affordability: There have been changes in domestic migration (people moving from one part of the country to another) trends in the last few years, but the principal association is with housing affordability.

Severe and Not-Severe Bubble Markets: Overall, the major metropolitan markets with severe housing bubbles (a Median Multiple rising to at least 4.5, see note) lost nearly 3.2 million domestic migrants (all of these markets have restrictive land use regulation, such as smart growth or growth management) from 2000 to 2009. However, not all markets with severe housing bubbles lost domestic migrants. “Safety valve” bubble markets drew migration from the extreme bubble markets of coastal California, Miami and the Northeast. These “safety valve” markets (including Phoenix, Las Vegas, Portland, Seattle, Riverside-San Bernardino, Orlando, Tucson and Tampa-St. Petersburg), gained a net 2.2 million from 2000 to 2009, while the other bubble markets lost 5.3 million domestic migrants from 2000 to 2009 (See Table below, metropolitan area details in Demographia US Metropolitan Areas Table 8). At the same time, the markets that did not experience a severe housing bubble (those in which the Median Multiple did not reach 4.5) gained a net 1.5 million domestic migrants.

The burst of the housing bubble explains the changes in domestic migration trends. Housing affordability has improved markedly in the extreme bubble markets, so that there was less incentive to move. Then there was the housing bust-induced Great Recession, which also slowed migration since people had more trouble selling their homes or finding anew job. As a result, the migration to the “safety valve” markets and to the smaller markets dropped substantially.

During 2009, the “safety valve” markets gained only 51,000 net domestic migrants, one-fifth of the annual average from 2000 to 2008.
At the same time, the other severe housing bubble markets lost 236,000 domestic migrants in 2009, compared to the average loss of 638,000 from 2000 to 2008.
Areas outside the major metropolitan areas also experienced a significant drop in domestic migration, dropping from an annual average of 203,000 between 2000 and 2008 to 23,000 in 2009.
The major metropolitan markets that did not experience a severe housing bubble gained 161,000 domestic migrants in 2009, little changed from the 169,000 average from 2000 to 2008. These markets are concentrated in the South and Midwest. Indianapolis, Kansas City, Nashville, Louisville and Columbus as well as the Texas metropolitan areas continued their positive migration trends.

Domestic Migration by Severity of the Housing Bubble
Metropolitan Areas over 1,000,000 Population
2000-2008

Metropolitan Areas	2000-2009	2009	2000-2008 Average
Withouth Severe Housing Bubbles	1,509,870	160,514	168,670
With Severe Housing Bubbles	(3,161,514)	(184,486)	(372,129)
Not "Safety Valve" Markets	(5,347,211)	(235,838)	(638,922)
"Safety Valve" Markets	2,185,697	51,352	266,793
Outside Largest Metropolitan Areas	1,651,644	23,972	203,459

Severe housing bubbles: Housing costs rose to a Median Multiple of 4.5 or more (50% above the historic norm of 3.0).
Median Multiple: Median House Price/Median Household Income
"Safety Valve" refers to markets with severe housing bubbles that received substantial migration from more expensive markets (coastal California, Miami and the Northeast). These markets include Las Vegas, Phoenix, Riverside-San Bernardino, Sacramento, Portland, Seattle, Orlando, Tucson and Tampa-St. Petersburg.

Moreover, the Census Bureau revised its previous domestic migration figures for 2000 to 2008 to add more than 110,000 from the markets without severe housing bubbles, while taking away more than 150,000 domestic migrants from the markets with severe housing bubbles. This adjustment alone rivals the 2009 domestic migration loss of 183,000 in these markets

Population Growth: The Top 10 Metropolitan Areas: Sun Belt metropolitan areas continued to experience the greatest population growth. Between 2000 and 2009, the fastest growing metropolitan areas were Atlanta, Dallas-Fort Worth and Houston, In 2009, Washington, DC was added to the list (Details in Demographia US Metropolitan Areas, Table 2).

New York: The New York metropolitan area remains the nation’s largest, now reaching a population of over 19 million. More than 700,000 new residents have been added since 2000. However, New York’s population growth has been the second slowest of the 10 largest metropolitan areas since 2000 (Figure 1). Moreover, New York’s net domestic out-migration has been huge. New York has lost 1,960,000 domestic migrants, which is more people than live in the boroughs of The Bronx and Richmond combined. Overall, 10.7% of the New York metropolitan area’s 2000 population left the metropolitan area between 2000 and 2009. More than 1,200,000 of this domestic migration was from the city of New York. Between 2008 and 2009, New York’s net domestic out-migration slowed from the minus 1.32% 2000-2008 annual rate to minus 0.58%., reflecting the smaller migration figures that have been typical of the Great Recession.

Los Angeles: For decades, Los Angeles has been one of the world’s fastest growing metropolitan areas. Growth had ebbed somewhat by the 1990s, when Los Angeles added 1.1 million people. The California Department of Finance had projected that Los Angeles would add another 1.35 million people between 2000 and 2010. Yet, the Los Angeles growth rate fell drastically. From 2000 to 2009, Los Angeles added barely one-third the projected amount (476,000) and grew only 3.8%. Unbelievably, fast growing Los Angeles became the slowest growing metropolitan area among the 10 largest. In 2009, Los Angeles had 12.9 million people. Los Angeles lost 1.365 million domestic migrants, which is of 11.0% of its 2000 population, and the most severe outmigration among the top 10 metropolitan areas (Figure 2).

Chicago: Chicago continues to be the nation’s third largest metropolitan area, at 9.6 million population, a position it has held since being displaced by Los Angeles in 1960. Chicago has experienced decades of slow growth and continues to grow less than the national average, at 5.1% between 2000 and 2009 (the national average was 8.8%). Yet, Chicago grew faster than both New York and Los Angeles. Chicago also lost a large number of domestic migrants (561,000), though at a much lower rate than New York and Chicago (6.2%). Even so, Chicago is growing fast enough that it could exceed 10 million population in little more than a decade, by the 2020 census.

Dallas-Fort Worth: Dallas-Fort Worth has emerged as the nation’s fourth largest metropolitan area, at 6.4 million, having added 1,250,000 since 2000. In 2000, Dallas-Fort Worth ranked fifth, with 500,000 fewer people than Philadelphia, which it now leads by nearly 500,000. Dallas-Fort Worth added more population than any metropolitan area in the nation between 2008 and 2009 and has been the fastest growing of the 10 top metropolitan areas since 2006. As a result, Dallas-Fort Worth has replaced Atlanta as the high-income world’s fastest growing metropolitan area with more than 5,000,000 population. Dallas-Fort Worth added a net 317,000 domestic migrants between 2000 and 2009.

Philadelphia: Philadelphia is the nation’s fifth largest metropolitan area, at just below 6,000,000 population. Like Chicago, Philadelphia has had decades of slow growth, yet has grown faster in this decade than both New York and Los Angeles (4.8%). Philadelphia has lost a net 115,000 domestic migrants since 2000, for a loss rate of 2.2%, well below that of New York, Los Angeles and Chicago.

Houston: Houston ranks sixth, with 5.9 million people and is giving Dallas-Fort Worth a “run for its money.” Like Dallas-Fort Worth, Houston has added more than 1,000,000 people since 2000. Over the same period, Houston has passed Miami and Washington (DC) in population. Houston has added a net 244,000 domestic migrants since 2000, and added 50,000 in 2008-2009, the largest number in the country. Like Dallas-Fort Worth, Houston accelerated its annual domestic migration growth rate in 2008-2009. At the current growth rate, Houston seems likely to pass Philadelphia in population shortly after the 2010 census.

Miami: Miami (stretching from Miami through Fort Lauderdale to West Palm Beach) is the seventh largest metropolitan area, with 5.6 million people. Miami has added more than 500,000 people, for a growth rate of 10.4%. However, Miami has suffered substantial domestic migration losses, at 287,000, a loss rate of, 5.7% relative to its 2000 population.

Washington (DC): Washington recaptured 8th place, moving ahead of Atlanta, which had temporarily replaced it. Washington’s population is 5.5 million and added 655,000 between 2000 and 2009, for a growth rate of 13.6%. However, Washington lost a net 110,000 domestic migrants, 2.2% of its 2000 population. That trend was reversed in 2008-2009, when a net 18,000 domestic migrants moved to Washington, perhaps reflecting the increased concentration of economic power in the nation’s capital.

Atlanta: Atlanta is the real surprise this year. For more than 30 years, Atlanta has had strong growth, however, this year it slowed. Atlanta is the 9th largest metropolitan area in the nation, at 5.5 million. Since 2000, Atlanta has added 1.2 million people, though added only 90,000 last year. Atlanta has added a net 429,000 domestic migrants since 2000, though the rate slowed to only 17,000 in 2008-2009.

Boston: Boston is the nation’s 10th largest metropolitan area, with 4.6 million people. During the 2000s, Boston has added nearly 200,000, growing by 4.2%. Yet, Boston has also experienced a net domestic migration loss of 236,000, or 5.4% of its 2000 population. In 2008-2009, Boston, like Washington, reversed its domestic migration losses, adding 7,000.

Trends by Size of Metropolitan Area: As throughout the decade, the slowest growing areas of the nation have been metropolitan areas over 10,000,000 population (New York and Los Angeles), which grew 3.9% and non-metropolitan areas, which grew 2.6% during the decade Metropolitan areas that had between 2.5 and 5.0 million population in 2000 boasted the biggest jump (these include fast growing Houston and Atlanta, which are now more than 5 million), at 13.4% for the decade. All of the other size classifications grew between 8.9% and 11.3% over the decade (see Demographia US Metropolitan Areas, Table 1). Metropolitan areas that began the decade with between 5,000,000 and 10,000,000 population gained 10.0%. Those with 250,000 to 500,000 grew 10.4%, those with 500,000 to 1,000,000 grew 10.2% and the smallest metropolitan areas, those from 50,000 to 250,000 grew 8.9%

Metropolitan areas over 1,000,000 population lost 2.19 million domestic migrants during the decade, but smaller metropolitan areas added 2.24 million domestic migrants. Non-metropolitan areas lost 50,000 domestic migrants. In 2009, the smaller metropolitan areas gained 125,000 domestic migrants, while the larger metropolitan areas lost 30,000. Non-metropolitan areas lost more than 90,000 domestic migrants. As noted above, these smaller figures for 2009 reflect the more stable housing market and the extent to which the Great Recession has reduced geographic mobility (See Demographia US Metropolitan Areas, Tables 1 and 3).

Note: The Median Multiple is the median house price divided by the median household income. The historic standard has been 3.0.

Photograph: Dallas

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.”

March 29, 2010