Suburbs

The Future of Residential and Commercial Real Estate

Joel Kotkin — Sun, 24 May 2020 09:29:28 -0400

What is the future of real estate after Covid-19? Please join Richard Florida, Joel Kotkin, Marshall Toplansky and other leading experts to see where the real estate market is going. We will be discussing issues including the future of office space, retail, affordable housing, inner cities, suburbs and small towns.

Save the date: June 2nd 10:30AM - 12:00PM (1:30PM to 3:00PM EDT)

Find event information at: https://chapma.nu/AskTheExpertsCovid19

The New Geography of America, Post-Coronavirus

Joel Kotkin — Wed, 20 May 2020 20:29:01 -0400

When there is a general change in conditions, it is as if the entire creation had changed, and the whole world altered — Ibn Khaldun, 14^th Century Arab historian

For a generation, a procession of pundits, public relations aces and speculators have promoted the notion that our future lay in dense — and politically deep-blue — urban centers, largely on the coasts. Just a decade ago, in the midst of the financial crisis, suburbia’s future seemed perilous, with experts claiming that many suburban tracks were about to become “the next slums.” The head of President Obama’s Department of Housing and Urban Development proclaimed that “sprawl” was now doomed and people were “moving back into central cities.”

That idea was always overwrought with enthusiasm, but, with the COVID-19 pandemic heavily concentrated in these urban centers, the case for forced densification promoted by “urban supremacists” seems increasing dubious. By some estimates, the death rate in large urban counties has been well over twice those of high-density suburbs, nearly four times higher than lower-density ones, with even larger gaps with smaller metros and rural areas.

The pandemic has been toughest on those areas that suffer what demographer Wendell Cox called “exposure density.” In the worst case, which is in New York’s outer boroughs, this pattern is exacerbated by living in crowded apartments, walking packed streets, traveling cheek to jowl in the subway and then forced into a crowded workplace. This could explain why sprawling, large and relatively less-dense urban areas in Texas, California and Florida — each with their own pockets of poverty — have also experienced far lower infection and fatality rates than New York.

Building on existing trends

Of course, it is impossible to predict the pandemic’s impact beyond the immediate future, but it is not likely to be favorable for dense urbanity. A recent Harris poll suggested that nearly two in five urban residents are considering a move to a less crowded place. Since the pandemic, more people are seeking out single houses with such things as yards and workspaces, notes the National Association of Realtors.

Mass transit, a critical component in the urban supremacists’ calculation, may be particularly out of favor. Already declining or stagnating around the country before the pandemic, mass transit has taken a particularly nasty hit, with more people than ever looking for alternatives, notably telecommuting. Most people now working from home — 60 percent according to Gallup — express a preference to continue doing so for the foreseeable future.

This is not so much a break but an acceleration of pre-existing conditions. In contrast to 2001, when New York was last under assault, the city is now losing population and suffering mounting out-migration. The same dynamics are already seen in our two other large metropolitan centers, Chicago and Los Angeles.

Increasingly, migration trends have favored sprawling sunbelt cities such as Austin, Dallas, Orlando, and Nashville. More recently, Americans have been heading to even smaller cities. The fastest growth in domestic migration, notes demographer Cox, is now to cities with less than a million people, a dramatic change from just a decade earlier. In virtually all areas — with the notable exception, at least so far, of New York — an increasing share of population growth has also shifted to suburban locales.

The emerging economic future

The pandemic is also likely to diminish the power and influence of our largest and densest cities. This is particularly true if we continue to demand more social distancing — in offices, subways, elevators and lobbies. This is not likely to make dense urban living more affordable or pleasant. Social distancing means that offices can only accommodate a shrinking number of employees. Long waits to get on the subway, and perhaps everywhere else, might become commonplace, making getting around even more difficult.

In contrast, largely suburban areas such as Raleigh, San Jose, Austin and Denver are well-positioned, with high rates of telecommuting for the post-COVID future. These areas are dispersed and dominated by single-family homes. With the exception of the two large tech centers — the Puget Sound and the San Francisco Bay Area — high-end job creation, paralleling migration, has been shifting to these smaller cities.

To these trends, cities are now increasingly adding unforced errors in social policy. Increasingly radicalized city governments — for example, in Seattle and New York — have pushed new businesses out, with new taxes and regulation. Streets filled with homeless people, drug addicts, petty thieves and even sex offenders threaten to bring back something of the bad old days before the most recent urban renaissance.

Read the rest of this piece at The Hill.

Joel Kotkin is the author of the just-released book The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute — formerly the Center for Opportunity Urbanism. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin

Photo credit: Sam Beebe via Flickr under CC 2.0 License

Domestic Migration to Dispersion Accelerates (Even before COVID)

Wendell Cox — Mon, 18 May 2020 20:29:01 -0400

In what could turn out to be a “dry run” for the post-COVID19 era, net domestic migration has strongly shifted away from the larger metropolitan areas, to smaller areas. This “sea-change” has occurred since 2015, according to the latest Census Bureau estimates. Domestic migration is reported by the Census Bureau when a resident or household moves from one US county to another (No migration below the county level is reported in Census Bureau population estimates). The era of big metropolitan area domination, so widely proclaimed by pundits, planners and academics, may be coming to an end.

The new data shows that the major metropolitan areas (over 1,000,000) population, have seen their annual net domestic migration plummet from an annual gain of 68,000 from 2010 to 2015 to an annual loss of 167,000 from 2015 to 2019 (Figure 1). We recently reported that within the major metropolitan areas, migration has increased strongly from the central to suburban counties. At the same time, smaller metropolitan and micropolitan areas (referred to as MSA’s in this article) and other areas have improved their net domestic migration categories (Note 1).Unlike in the past, MSAs and areas outside MSAs are doing much better. Some of these are in the smallest population categories and are outside the retirement communities that have attracted so many new residents, principally in Florida.

The strongest net domestic migration performance is in the metropolitan areas with from 500,000 to 1,000,000 population, nearly matched by those with from 100,000 to 500,000 population. Both categories have experienced big gains in net domestic migration from earlier in the decade. Neither did nearly as well in the recent past.

Metropolitan areas with from 50,000 to 100,000 population, which hemorrhaged residents for years, have also improved and have begun to gain net domestic migrants. The smallest metropolitan areas (under 50,000) and areas outside metropolitan areas (Note 2) are still suffering modest losses, but doing much better than earlier in the decade. Both of the smallest categories are also attracting hundreds of thousands more in net domestic migrants than the major metropolitan areas (Figure 2).

There has also been a substantial increase in the percentage of MSA’s below the major metropolitan category that gained domestic migrants from 2015 to 2019, compared to 2010 to 2015 (Figure 3).

Overall Leaders and Losers

The ten leading net domestic migration leaders from 2015 to 2019 (out of a total of 926) exclude all MSAs with more than 500,000 population. The Villages, Florida had the strongest net domestic migration, with a 4.5 percent annual addition to its population in 2015-2019. Summaries for each of the population categories are below.

The top ten is dominated by retirement areas and MSAs within or adjacent to combined statistical areas (CSAs). All ten are in the South or West (Figure 4).The MSAs with the largest domestic migration losses are in all four Census Regions, with the largest loss in Liberal, KS (Figure 5).

Major Metropolitan Areas (over 1,000,000 Population)

Austin continues to have the strongest net domestic migration among the major metropolitan areas, at 1.68% annually from 2015 to 2019 (2015 base). All but two of the top ten were in the South, which were joined by Las Vegas and Phoenix from the West. Seven of the top 10 had higher annual net domestic migration in 2015-2019 than in 2010-2015 (Figure 6).

In contrast, the bottom 10 had larger net domestic migration losses in 2015-2019 than in 2010-2015. The biggest losses were in San Jose, New York, Chicago, Los Angeles and Miami. The five densest major urban areas, as defined by the US Census Bureau are within the boundaries of this bottom ten (Los Angeles, San Francisco, San Jose, New York and Miami).

500,000 to 1,000,000 Population

Five of the six leading gainers in the 500,000 to 1,000,000 category were in Florida (North Port-Sarasota, Lakeland, Cape Coral, Deltona-Daytona Beach and Palm Bay). Nine of the top ten had more annual net domestic migration than in 2010-2015. A number of the top gainers are known as strong retirement communities, such as North Port-Sarasota and the other Florida metropolitan areas. Two of these MSAs are included in the Orlando CSA (Lakeland and Deltona-Daytona Beach), also indicating the spreading of growth from the core metropolitan areas, while North Port-Sarasota is within 90 minutes of the Tampa-St. Petersburg urbanization (Figure 7).

Boise Spokane, Fayetteville (AR) and Charleston (SC) are diversified MSAs that seem well positioned for continued growth. Two have particularly strong commercial bases, Fayetteville, headquarters of the world’s largest retailer (Wal-Mart) and Charleston with the Boeing Assembly plant, although this could suffer from the current aerospace depression. Nine of the top 10 had higher annual net domestic migration in 2015-2019 than in 2010-2015.

Nine of the bottom 10 had had larger net domestic migration losses in 2015-2019 than in 2010-2015. The largest losses were in Honolulu, Bridgeport-Stamford, Syracuse, El Paso and New Haven (with the two Connecticut MSAs in the New York CSA).

100,000 to 500,000 Population

The 100,000 to 500,000 category gainers are strong retirement destinations, such as The Villages, FL, Myrtle Beach, SC, Punta Gorda, FL, St. George, UT and Homossassa Springs, FL. Coeur d’Alene is in the Spokane CSA and Greeley, CO is in the Denver CSA. Nine of the top 10 increased their domestic migration in comparison with 2010-2015 (Figure 8).

Nine of the bottom 10 had had larger net domestic migration losses in 2015-2019 than in 2010-2015. Manhattan, KS and Watertown, NY had the largest losses, at over 2%.

50,000 to 100,000 Population

Unlike the other categories, the domestic migration gainers in the 50,000 to 100,000 category are not principally retirement destinations. Eight of the top ten are either in or close to CSAs, as metropolitan dispersion continues. The largest gainers were #1 Jefferson, GA (Atlanta CSA), #2 Granbury, TX (Dallas-Fort Worth CSA), #3 Fernley, NV (Reno CSA) and #5 Shelton, WA (Seattle CSA). My interest in demographics began in my youth in Shelton, which had experienced little growth then (Photograph above).

In addition, #7 Centralia WA is in the Seattle CSA and #9 Heber UT is in the Salt Lake City CSA. Three others are all within 90 minutes to reach Seattle CSA urban amenities: #6 Port Angeles, WA and #8 Aberdeen, WA (Figure 9). Cedar City, UT (#4) and #10 Statesboro, GA are the only ones not within or near a CSA. Nine of the top 10 had higher annual net domestic migration in 2015-2019 than in 2010-2015.

Nine of the 10 largest losses were greater in the later period than in the earlier. Minot, ND and Gillette, WY had the largest losses, both over 2%.

MSAs Under 50,000

The Pacific Northwest dominates the category with six of the top ten positions in the smallest MSAs. Four are in Oregon, led by Prineville and followed by #5 Newport, #7 Brookings and #9 Astoria. The other two Northwest entries are #3 Sandpoint, ID and #4 Ellensburg, WA, the latter within 90 minutes of the Seattle CSA urbanization.

Three of the top ten are in CSAs, including #6 Lewisburg, TN (Nashville CSA), #8 Bonham, TX (Dallas-Fort Worth CSA) and #10 Los Alamos, NM (Albuquerque CSA). The last, #2 Pahrump, NV, within 90 minutes of Las Vegas casinos and shopping. Each of the top 10 had higher annual net domestic migration in 2015-2019 than in 2010-2015.

All of the bottom 10 had had larger net domestic migration losses in 2015-2019 than in 2010-2015. Liberal, KS, Fort Polk South, LA and Guymon, OK had the largest losses, each at 3% or more (Figure 10).

Increasing Constituency for Exurbanization?

Such a quick switch of growth from the major metropolitan areas to smaller MSAs and non-MSAs is unprecedented. With the greater interest in working from home, as a result of virus related lockdowns, the dispersion may well become substantially greater as we move from the large metro age to “the city of bits”.

Note 1: Labor markets are designated by the Office of Management and Budget (OMB), using cross-county commuting patterns. These include metropolitan areas, which have a core urban area (built up urban area) of at least 50,000 residents and micropolitan areas, which have a core urban area of between 10,000 and 50,000 residents. In 2019, metropolitan areas varied in population from 55,000 (Carson City, NV) to nearly 20 million (New York, NY-NJ-PA).Micropolitan areas varied from 13,000 (Lamesa, TX) to 217,000 (Lebanon, VT-NH). Metropolitan areas and micropolitan areas be “combined statistical areas” (CSAs), designated by OMB, using less stringent commuting criteria.

Note 2: Areas outside MSAs should not be confused with “rural” areas. All MSA’s, including the major metropolitan areas, cover far more rural land than urban land, though their populations are predominantly urban (See: “The Rural Character of America’s Metropolitan Areas”). As a result, metropolitan area population densities cannot be used as urban densities, because they include rural densities.

Photograph: Shelton, Washington, one of the many smaller “turnaround” domestic migration MSAs. This photograph includes the Rayonier Corporation’s 375 foot smokestack, which was reputedly the second tallest in the world when built, and dismantled in 1967. Source: Good Free Photos, under Public Domain

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Urban Reform Institute - formerly Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed by Mayor Tom Bradley to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. Speaker of the House of Representatives appointed him to the Amtrak Reform Council. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Dispersion in US Metros Increases Even Before COVID-19: New Census Estimates

Wendell Cox — Tue, 05 May 2020 20:29:01 -0400

The latest US Census Bureau metropolitan area population estimates (for 2019) were largely lost in the coverage of the COVID-19 pandemic. Yet the new results, released a few weeks ago, indicate that people are moving to where social distancing is less challenging — the suburbs and exurbs, with their lower density and perhaps from a pandemic point of view, their lower exposure density — with less intense human interaction and hence lower infection risk associated with ground-oriented housing (detached and attached houses and townhouses), travel by car and generally less crowded conditions, such as in stores.

Moving to Lower Densities

The new data indicates that within the major metropolitan areas, domestic migration away from the core counties was 2.23 million from 2010 to 2019. In contrast, the suburban and exurban counties gained 1.94 million. The suburban and exurban counties attracted 4.2 million more moving residents than the core counties (Figure 1). The rate has been accelerating. In the first two years of the decade, the suburbs and exurbs had about a 175,000 domestic migration advantage over the core counties. In the last three years, the suburban advantage has widened to over 600,000 (Figure 2).

This is just another manifestation of the trends that have been underway since World War II. Most recently, since 2010, 92% of major metropolitan area growth was outside the functional urban cores (Figure 3). Employment dispersion continues, with more than 90% of new jobs being created outside the downtowns (central business districts) of the major metropolitan areas since 2010 (Figure 4).

Generally Declining Growth

Population growth has fallen off strongly among the major metropolitan areas. Eight of the largest 10 had slower growth from 2015 to 2019 than the first four years of the decade. Only Atlanta and Phoenix had larger growth rates in the later period (Figure 5).

Declining Megacities

The nation’s two megacities continued their decline. New York has lost nearly 120,000 residents since 2016. Domestic migration accounted for a loss of 196,000 New York metropolitan area residents in just the last year, 1.02% of its 2018 population. Second largest Los Angeles has lost more than 60,000 residents since 2017, while its net domestic migration loss was 122,000 in the last year. This is a loss of 0.92% of its 2018 population.

Wannabe megacity Chicago continues to slip away from the 10 million status, with a population stuck at less than 9.5 million. The metropolitan area has lost about 90,000 residents since 2014 and has slightly fewer residents than in 2010. If Chicago had continued to grow at its tepid 2000s rate, the 10 million figure might have been achieved by the mid 2020s. Now, that may never occur. But as grim as things may seem, Chicago’s net domestic migration was the lowest in five years, and less as a percent of its population (0.79%) than in New York or Los Angeles.

All three largest metropolitan areas lost overall population at a similar rate last year, with New York dropping 0.31%, Los Angeles 0.27% and Chicago 0.26%.

The “Five Million” Metros

Dallas-Fort Worth retained its fourth position, three other over-5 million metropolitan areas, Houston, Washington and Miami each moved up a place, as Philadelphia fell from 5th to 8th. Philadelphia had been ranked fourth from 1950 to 2000. There was a time when Philadelphia was the nation’s largest urban center, with the city and adjacent suburbs (Southwark and Northern Liberties) having a population greater than New York City in 1790 and 1800.

Phoenix: The Next 5 Million Metropolitan Area

The “star” of this year’s population estimates was Phoenix (photo above), which reached 4,948,000 and has probably already passed five million. Phoenix became the 10th largest metropolitan area, having displaced long time top 10 incumbent Boston. It also moved past San Francisco earlier in the decade. Phoenix grew 2.0% over the past year, a feat exceeded only by Austin (2.8%) and Raleigh (2.1%) among the nations 53 metropolitan areas with more than 1,000,000 population.

Phoenix added 399,000 net domestic migrants between 2010 and 2019, trailing only Dallas-Fort Worth (449,000). In the last year (2018-2019), Phoenix led the nation, with 71,000 net domestic migrants, easily outdistancing Dallas-Fort Worth (46,600).

Moving Away from the Largest Metropolitan Areas

Overall, domestic migration patterns have shifted away from the largest metropolitan areas. The metropolitan areas with more than 1,000,000 population had net domestic migration of a minus 328,000 from 2010 to 2019. Metropolitan areas with from 500,000 to 1,000,000 gained 583,000. Metropolitan areas with 100,000 to 500,000 population gained 460,000. The balance of the nation, which includes smaller metropolitan areas as well as all areas outside metropolitan areas lost 716,000 (Figure 6).

After COVID-19?

The big question is how things will change in light of the COVID-19 epidemic and the lockdowns.

The metropolitan areas with the greatest pockets of urban density have a substantial challenge in controlling an epidemic that requires social distancing. The problem, as we have discussed before is not so much the population density at any macro level, but rather the personal level (See: Exposure Density and the Pandemic). Exposure density is intensified for individuals by crowded conditions (such as crowded subways, residences, elevators, shopping, events, etc.) far more than any theoretical area-wide population density. Combined with all this is the evidence that low-income citizens are more likely to fall victim to the epidemic than the rest of the population (see: Data Suggests Many New York City Neighborhoods Hardest Hit by COVID-19 Are Also Low-Income Areas).

The ability of commerce and public policy — companies, governments and people — to respond to the necessity of social distancing through internet meetings has been a revelation. Business meetings, not all, but most, can be conducted without any concern about social distancing. There could be substantial benefits to the extent that technology can virtualize the work place for millions of people.

Foremost could be the environmental gains as millions more eliminate the work trip (working at home, mostly telecommuting), along with shorter commutes made possible by lessened traffic congestion. Even before the epidemic, working at home had raced ahead of transit as a commute option in the United States. In 2018, working at home led transit in 44 of the 53 metropolitan areas with more than 1,000,000 population.

Not being tied to a physical commute every day could make it possible for households to move to places they would prefer more. This is not just the continuing movement of people away from the crowded urban cores to the suburbs and exurbs, but even beyond. The key, obviously, is that they be able to carve out an affluent standard of living out of the post-COVID economy.

Little of this seems to portend any sort of greater centralization. It seems likely that the dispersion that has been going on for decades in the United States (and around the world) will continue.

Photograph: The Central Avenue corridor (downtown) in Phoenix (by author).

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed by Mayor Tom Bradley to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. Speaker of the House of Representatives appointed him to the Amtrak Reform Council. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Who Will Prosper After the Plague?

Joel Kotkin — Wed, 15 Apr 2020 20:29:01 -0400

The COVID-19 pandemic is likely to widen even further the growing class divides now found in virtually every major country. By disrupting smaller grassroots businesses while expanding the power of technologies used in the enforcement of government edicts, the virus could further empower both the tech oligarchs and the “expert” class leading the national response to the crisis.

In our increasingly feudal society, the small property owning yeomanry who operate the local businesses essential to Los Angeles shopping streets, and New York neighborhoods are already under threat and will be squeezed further by both the pandemic and its aftermath. But even more hard-pressed will be the growing, propertyless serf class that includes laid-off workers and the roughly 50 to 60 million workers in essential jobs, notes a new report from Richard Florida, and of those, 35 to 40 million require close physical proximity as opposed to those who can retreat to safety behind their computers. Roughly 70% of these workers are in low-wage professions, such as food preparation, and often, despite their increased risk, often lack health insurance from their employers.

Plagues, such as in the 14th century, may have wiped out as much as one third of Europe’s population, and devastated great Renaissance trading cities. In the Middle Ages, the wealthy sought safety in their country estates, much like the affluent now fleeing major European and American cities. Diets and survival rates varied enormously between the upper and lower classes. As one 14th-century observer noted, the plague “attacked especially the meaner sort and common people—seldom the magnates.”

But the wreckage also created new opportunities for those left standing. Abandoned tracts of land could be consolidated by rich nobles, or, in some cases, enterprising peasants, who took advantage of sudden opportunities to buy property or use chronic labor shortages to demand higher wages. “In an age where social conditions were considered fixed,” historian Barbara Tuchman has suggested, the new adjustments seemed “revolutionary.”

What might such “revolutionary” changes look like in our post-plague society? In the immediate future the monied classes in America will take a big hit, as their stock portfolios shrink, both acquisitions and new IPOs get sidetracked and the value of their properties drop. But vast opportunities for tremendous profit available to those with the financial wherewithal to absorb the initial shocks and capitalize on the disruption they cause. As in 2016, politicians in both parties have worked hard in the new stimulus to get breaks for their wealthy constituents, whether they are big retail chains, rich California taxpayers, or, in some cases, themselves.

Over time, the crisis is likely to further bolster the global oligarchal class. The wealthiest 1% already own as much as 50% of the world’s assets, and according to a recent British parliamentary study, by 2030, will expand their share to two-thirds of the world’s wealth with the biggest gains overwhelmingly concentrated at the top 0.01%.

In an era defined by “social distancing,” with digital technology replacing the analog world, the tech companies and their financial backers will prove the obvious winners. In a sign of what’s to come, tech stocks have already soared.

The biggest long-term winner of the stay-at-home trend may well be Amazon, which is hiring 100,000 new workers. But other digital industries will profit as well, including food delivery services, streaming entertainment services, telemedicine, biomedicine, cloud computing, and online education. The shift to remote work has created an enormous market for applications, which facilitate video conferencing and digital collaboration like Slack—the fastest growing business application on record—as well as Google Hangouts, Zoom, and Microsoft Teams. Other tech firms, such as Facebook, game makers like Activision Blizzard and online retailers like Chewy, suggests Morgan Stanley, also can expect to see their stock prices soar as the pandemic fades and public acceptance of online commerce and at-home entertainment grows with enforced familiarity.

Read the rest of the piece at Tablet.

Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute — formerly the Center for Opportunity Urbanism. His last book was The Human City: Urbanism for the Rest of Us (Agate, 2017). His next book, The Coming of Neo-Feudalism: A Warning to the Global Middle Class, is now available to preorder. You can follow him on Twitter @joelkotkin

Photo credit: USDA via Flickr in Public Domain.

The Coronavirus is Changing the Future of Home, Work, and Life

Joel Kotkin — Mon, 13 Apr 2020 20:29:01 -0400

The COVID-19 pandemic will be shaping how we live, work and learn about the world long after the last lockdown ends and toilet paper hoarding is done, accelerating shifts that were already underway including the dispersion of population out of the nation’s densest urban areas and the long-standing trend away from mass transit and office concentration towards flatter and often home-based employment.

Amid 20 years of fanfare about how big, dense cities are the future, the country had kept spreading out with nearly all population growth since 2010 occurring in the urban periphery and smaller cities. As a new study from Heartland Forward, where I am a senior fellow, demonstrates, both immigrants and millennials—the key groups behind urban growth—are increasingly moving to interior cities and even small towns.

The coronavirus, which has hit major American cities hardest so far, is likely to accelerate that trend.

Both cases and deaths have been overwhelmingly concentrated so far in Seattle, Los Angeles, San Francisco, Boston and New York. Gotham has been the American epicenter; dense regions seem especially susceptible to pandemics. This has also been the case in Europe. Half of all COVID-19 cases in Spain for example have occurred in Madrid while the Milan region accounts for half of all cases in Italy and almost three-fifths of the deaths.

Suburban, exurban and small-town residents are, of course, vulnerable too, and will soon share some of the cities’ pain but far less than subway riders who live in crowded apartments. The people outside big cities, for example, get around in the sanctuary of their private cars and don’t have to push elevator buttons to get to and from their residences. Most rural areas, outside of some resorts, have suffered far less, benefiting from less crowding and unwanted human contact.

Simply put, pandemics are bad for dense urban areas, particularly those that are diverse and relatively free. This has been very much the case since antiquity. The more global and vital an urban system—Rome, Alexandria, Cairo, Venice, Florence, London, Paris—the more susceptible it is to the pandemics that seem to be occurring regularly over the past two decades. Cities no doubt will recover, particularly if real estate prices continue to fall, but the pandemics limit their upward trajectory and will continue to drive people elsewhere.

In this era, the most prominent physical expression of urban greatness—once cathedrals or great public works—has been the office building and the luxury housing tower. The growth of steel and glass towers reflect the magnetic economic power of big cities. And to be sure, we still see some new ones on occasion in places like New York and Chicago, and even more so in the rising cities of East Asia and the Middle East.

Read the rest of this piece at Daily Beast.

Photo credit: Felipe Esquivel Reed via Wikimedia under CC 4.0 License.

The Battle of Oak Grove

Randal OToole — Fri, 21 Feb 2020 20:29:06 -0500

“People Come and Go. I Plan for the Land.”

Our initial efforts to save Oak Grove from densification were pretty naïve. First, we thought we could persuade the Clackamas County planners that densification was a bad idea. We invited the lead planner to walk the neighborhood with some of us, a walk that ended with a visit in Jeanne Johnson’s home.

Johnson, a schoolteacher, lived with her husband in a beautiful, 1908 craftsman-style home. After walking around the area on a sunny spring day, the planner exclaimed to Johnson, “What a lovely neighborhood. The only other time I’ve ever walked around here was last fall. It was raining, the edges of the streets were muddy, and I couldn’t figure out why anyone would want to live here.” She was from the government and she was here to help us Neotraditionalize our neighborhood.

Johnson’s neighbors, some of whom had lived their entire lives in Oak Grove, then tried to explain why they didn’t like the plan. Some feared higher densities would bring back the crime that once infested the area. Others worried about congestion. After listening, the planner–who had spent no more than a few hours in the area–looked at the Johnsons’ 87-year-old river-rock fireplace and replied, “People come and go, but the land remains. I plan for the land.” In other words, our concerns didn’t matter; she knew what was best.

I gave the planner a paper I had written describing incentive-based tools for reducing congestion and pollution and protecting open space. Later she sent me nice letter thanking me for my “participation,” but saying my ideas “aren’t part of our business-as-usual” and “would take major paradigm shifts to accomplish.”

In a demonstration of how unfamiliar I was with Oregon land-use politics, I decided to call 1000 Friends of Oregon, which had been started by my former OSPIRG supervisor, Henry Richmond. I thought of them as the land-use watchdogs who people went to when the government was trying to impose bad plans on people. I couldn’t have been more wrong.

Robert Liberty was director of 1000 Friends at the time and he flat out told me that he supported densification. “I grew up on a 50-by-100 lot,” he said, “and what was good enough for me should be good enough for everyone else.”

Later, I learned that densification was really his brainchild. Oregon’s original land-use rules, written in the 1970s, required every city over 10,000 people to draw an urban-growth boundary. But the rules also required them to review the boundaries every five years so that there would always be enough vacant land to supply 20 years of expected housing demand. Nowhere in the rules was densification contemplated.

That began to change in 1989 when Liberty convinced a number of large foundations to fund a study called Land Use Transportation Air Quality (LUTRAQ). This study claimed to show that the best way to reduce air pollution was to increase urban densities, which would lead people to drive less. In reality, it didn’t show this at all: as USC planning professor Genevieve Giuliano’s analysis of LUTRAQ showed, “land use policies appear to have little impact on travel outcomes.” Instead, most of LUTRAQ’s reduction in driving came from an assumption that all parking in the Portland area would impose charges at least one-third as high as the cost of parking in downtown Portland–something that Metro never tried to impose on the region.

This was totally ignored by 1000 Friends, which by this time was the most powerful group in the state of Oregon. It had its fingers in all sorts of other groups, its board included many powerful political and business leaders, and it received funding from, among others, the Environmental Protection Agency’s program aimed at reducing driving and therefore reducing air pollution.

When LUTRAQ was published, planners listened to what 1000 Friends said that it found, not what it really found. When Portland homebuilders sued Metro to make sure that it would add more land to Portland’s urban-growth boundary to meet housing demands, Metro went to the state legislature and got the law revised to allow it to meet housing needs through densification instead. That meant rezoning neighborhoods like Oak Grove to higher densities.

Since then, densification has become the primary goal of Portland planners. In 1996, Metro adopted a plan that set a target of reducing the share of Portland-area households who lived in single-family homes from 65 percent (which it was in 1990) to 41 percent by 2040. (As of 2018, it is down to 58 percent.)

The Oak Grove Plan

As the outlines of the county’s plan became clear, I was struck with what was missing from it. First, there were no data. Any requests for populations or numbers of homes were met with, “we haven’t got our geographic information system working yet.” They didn’t get it working until the plan was almost done. Second, there were no alternatives. Except for a few maps (“60s suburban,” “pure neotraditional,” and “Metro 2040”) that were apparently dismissed after the first planning meeting, this plan considered none. Finally, there was no analysis of impacts, just pretty pictures showing tree-lined streets.

A week after our neighborhood meeting, planners had scheduled a public meeting at the local school gymnasium so that they could present their plan to the community. To let people know about the meeting, planners distributed another innocuous flyer that talked about bikeways, “public space,” and “common sense zoning,” whatever that is.

In response, I wrote a counterflyer that emphasized high density, multifamily dwellings, mixed use, and prescriptive zoning. We used our photocopier to print up a thousand copies that my neighbors and I distributed to people’s homes.

Obviously expecting a small turnout, planners had set out around 100 chairs in the gym. In fact, nearly 200 angry residents showed up. Planners took an informal poll that showed that fewer than 20 people attended in response to the planners’ leaflet, while at least half came as a result of our flyer.

Planners were ready with a program that devoted an hour-and-a-half to boring presentations about bike paths and pedestrian ways before saying anything about zoning. The presentations were made by the “neighbors” on the planning committee–one of whom was an absentee business owner–thus deflecting people’s anger from the planners to the committee.

At the end of the presentations, planners refused to allow any member of the public to comment and provided only 15 minutes for questions and answers. But it was clear that people opposed the plan, and the meeting was punctuated by frequent outbursts such as “go home” and “who asked you, anyway?”

Earlier in the planning process, one of the planners had lamented that “It is too bad that Oak Grove doesn’t have a community identity because it isn’t incorporated.” At the end of this meeting, she announced, “Well, if nothing else, at least we’ve helped you get a community identity.”

After the meeting, planners decided that they “made a mistake in not allowing more people to talk, and in not letting people make more comments.” So they held another meeting three weeks later. My neighbors and I leafleted again and 150 people attended. Two hours of questions and acrimonious debate made it clear that community members at the meetings were almost unanimously opposed to the plan. Some people liked the idea of revitalizing downtown, but no one wanted increased density, more multi-family zones, granny flats, or design codes.

The local residents and absentee business owners who had been on the public involvement committee that had supported the plan quickly backed off. Several of them publicly said that they were duped by the planners and that they would never have agreed to the plan if they had understood its true implications.

Planners could see they weren’t getting anywhere, and promised that they would drop the plan if that is what the community wanted. “But if you don’t let us pass this plan now,” warned one, “Metro will make us impose even more densification on you later.”

Why Oak Grove?

Since planners were threatening Oak Grove residents with the Metro “bogeyman,” people began to wonder why Metro had picked Oak Grove to be a town center in the first place. Metro’s council made that decision the previous December, but a September draft plan did not include Oak Grove among the town centers.

County planners said that the town center designation came “at the request of North Clackamas business leaders.” But Oak Grove businesspeople anxiously assured residents that they had nothing to do with it.

It turned out that the requests came from the sewer, water, and fire districts. The heads of these districts apparently believed town center designation would make them eligible for more federal or other funds. “Funds and resources would be channeled into these centers,” the fire chief told his district board of directors. Town centers “will be focal points for development and funds” said the water board. The boards for all three districts petitioned Metro to add Oak Grove to the list of town centers.

I reviewed Metro documents and interviewed Metro staff, but could find no evidence that town centers would be special recipients of any funds. “There might be some transportation funds to make the areas more pedestrian friendly,” Metro staffer Mark Turpel told me, “but that’s all.”

Curiously, the fire chief opposed Neotraditional designs. “My fire trucks sometimes have to get into people’s backyards,” he told me. “That’s why we need at least five feet of setbacks along property lines” (which would mean at least ten feet between buildings). When I told him that the town center zoning codes would forbid such setbacks, he was surprised but didn’t think such buildings would ever be constructed. (Since then, housing with such close setbacks have been built in the immediate vicinity of downtown Oak Grove.)

A memo I found written by the fire chief revealed something else. “Metro planning staff, specifically John Fregonese [Metro’s growth management director], agrees” that Oak Grove should be a town center. “He stated that it was designated but the county planning staff removed it.” Later, county planners told me that they remembered that, during preparation of the 1980 plan for Oak Grove, residents had fought long and hard against any zoning denser than four units per acre.

“We Aren’t Even Going to Read this Plan”

Jeanne Johnson and her neighbors decided that they had to try to convince Metro to undesignate Oak Grove as a town center. A few weeks after the public hearing, the planning committee met with two of Clackamas County’s three county commissioners.

By this time, the strong responses at the public meetings had completely transformed the situation. Most of the original committee members distanced themselves from the plan, saying they were duped. A poll of committee members who actually lived in the neighborhood revealed them to be 100 percent opposed to the plan that they had previously acquiesced to. In fact, it was almost impossible to find anyone who actually admitted to being on the land-use committee that dealt with densification–everybody claimed to have been “someplace else.”

The day before the meeting with the county commissioners, the head of the sewer district, Kent Squires, had lunch with the commission chair, Judie Hammerstad. Squires told her that people were just confused about the term “town center” because the area’s largest shopping center was called “Clackamas Town Center.”

Although no one leafleted for the meeting, it had a fairly large turnout. Hammerstad spent several minutes trying to explain that a “town center” was not the same as a large shopping mall. Finally, someone said, “No one is confused about what a town center is. We just don’t want more apartments, mixed-uses, and higher densities–and that’s what Metro’s town centers are all about.”

After listening to comments from many more people–some of whom said they had felt misled by planners–Hammerstad held up the 120-page Oak Grove plan and said that “the commission will probably not approve this plan.” “Does that mean that you might approve this plan?” someone asked.

“We aren’t even going to read this plan,” she said, and slammed it down on the table.

After the meeting, one of the planners approached me and said she had talked with some friends who worked for the Mt. Hood National Forest, and she wanted to know if I was the same Randal O’Toole who brought down so many Forest Service plans, and if I was now going to focus on urban plans. I didn’t answer, but that is exactly what happened.

On July 24, 1995, Clackamas County Commission Chair Judie Hammerstad sent a letter to Metro requesting that Oak Grove not be designated a town center. “There is no community support for a `town center,’ ” she wrote. She added that “we found in our planning that parcelization patterns, transportation systems, market forces, and underlying geology make it difficult to make a town center work,” but these were just rationalizations for Metro’s sake–the real reason was neighborhood opposition.

Planners held a final meeting with residents a few days later. The planning team leader somewhat wistfully stated that “Metro staff told me that a public hearing would get people upset. They said I should just hold open houses, like they do.” But, she said, she didn’t believe that open houses gave the public a fair chance to comment on a plan.

A few months later, Metro sent out a newsletter with the latest map of its 2040 plan. Oak Grove was not listed as a town center. Except for the corridor around the “superhighway,” Oak Grove is just an “inner neighborhood.”

Oak Grove was one of 36 neighborhoods that Metro had designated a town center. The residents of many of the other neighborhoods engaged in long and bitter battles against densification, but all of them lost. Oak Grove was the only neighborhood that succeeded in having the town center designation reversed.

The 2040 plan still called for inner neighborhoods to increase their density to an average of 12 people per acre–about 50 percent more than Oak Grove’s current density. “Infill” of vacant sites will probably satisfy Metro’s requirements–especially since county planners aren’t likely to try changing zoning codes in Oak Grove anytime soon.

The first 500 feet of the large block bounded by Oak Grove Boulevard on the north and Rupert and Arista on the east and west now has a strange development of large homes crowded on tiny lots. Yet this is entirely unnecessary as there are many large vacant parcels on this block and even larger ones on nearby blocks.

Oak Grove hasn’t changed much in the 24 years since these events took place. Portland built a light-rail line to the edge of Oak Grove, and that has led to tax-subsidized densification of Milwaukie, the city between Portland and Oak Grove, but it hasn’t had much of an impact on Oak Grove. A few homes were built on tiny lots just south of downtown Oak Grove, yet there are still vacant parcels of land within a block of downtown that are more than an acre in size.

Perhaps the biggest change is that the Oak Grove Elementary School I remember has been turned into a high school and renamed New Urban High School. Except for that name, you would be hard pressed to find any signs of New Urbanism in the community.

This piece first appeared on the Antiplanner.

Randal O’Toole is a senior fellow with the Cato Institute specializing in land use and transportation policy. He has written several books demonstrating the futility of government planning. Prior to working for Cato, he taught environmental economics at Yale, UC Berkeley, and Utah State University.

The City as a Self-Organizing, Adaptive System - Part 2

Fanis Grammenos — Thu, 13 Feb 2020 18:31:01 -0500

In a preceding article, I argued that a "city-as-an-artifact" approach to planning misses the organic nature of cities, and, when used in action, this approach could result in disappointing, if well-intended, outcomes. Similarly, biomorphic models for cities fail to construct a unified, actionable theory of planning.

The previous article pointed to the universal constancy of trip-to-work time as a clear example of a city’s self-organizing, adaptive nature, which produces robust outcomes without top-down intervention—a key identifier of an "organic whole." We also alluded to the possibility of more examples of a city’s self-organizing, adoptive nature. This article will examine a second example—the robustness of a city’s road network composition.

Self-Organizing Systems

Referring to the World Wide Web, University of Texas professor N. Salingaros writes: “None of this structure has been imposed -- it has all grown incrementally. Here we have an excellent example of self-organization, the process by which forces manage to act in balance to grow a complex system into a stable working structure.”

Similarly, while individual roads are normally built to a plan, their collective assembly tends to grow piecemeal, often in unpredictable ways, and partly because of their time scale, often many decades long. The outcome of all these separate influences resembles a patchwork rather that a neatly woven fabric. Each new addition to the system not only becomes context for the subsequent one, but is also conditioned by factors that emerge in the long interim—new modes of transportation, for example (i.e., a process analogous to morphogenesis). Moreover, once built, road systems may undergo changes that alter their composition either through gradual transformation or drastic intervention, as in the case of 19th century Paris with the works of Baron Haussmann.

Fig. 1: Distribution of road miles by functional road type of two groups of US MSAs. These groups vary greatly in area, total road miles and population. (Source: Office of Highway Policy Information)

Given the sporadic, disjointed manner in which road networks are built, grow, and mutate, it might be expected that the outcome would be disorganized, even chaotic, as cities themselves frequently appear to be. Could there be hidden order in the apparent messiness?

What Data Show

Figure 1 answers the question of a robust working order. Though the network size of one group is a multiple of the other (341,861 vs 122,852 miles), the ratios of their parts are virtually identical (as shown by their percentages). These two groups contain cities that vary in age and geographic settings as well as to their populations, area, and densities. In spite of these differences, it seems that their road network systems maintain an invariable composition.

Fig. 2: Growth of Functional Road Categories in a 35-year period – nearly double. (Source: Office of Highway Policy Information. Chart by author.)

This invariable composition is true also in spite of substantial growth; in the 35 years between 1980 and 2014. (Fig. 2) they have almost doubled. It might be expected that growth might have introduced fluctuations in the network structure. As figure 3 shows, however, throughout this entire period the ratios between the constituent components of the networks have remained remarkably stable.

Fig. 3: Ratios between the six road network components, with local road miles set as a base=100 (not shown). (Source: Office of Highway Policy Information. Chart by author.)

Change and Stability

Existing city road networks regularly experience transformations—often minor, but also, infrequently, major. Examples of minor changes include the re-designation of residential roads into collectors or arterials, usually followed by selectively limiting access to the road by means of closures of intersecting streets or forced turns. Such changes sometimes necessitate widening of the pavement and adding a lane. Strategic local streets occasionally become de facto collectors or arterials by being designated for one-way traffic or by providing ramp access to a highway. Another common example of street transformation is pedestrianization, which removes a street from the vehicular network. Many more incremental changes occur over time—too many to mention individually. It is unknown whether such changes significantly affect the calculus of a system’s components given their incidental nature and their likely limited cumulative length.

Examples of major transformations at key historical points, as a result of exponential city growth, political upheavals, wars, or new transport means are limited but non-trivial. The sack of Miletus, a military event in 494 BC, gave birth to the Hippodamian grid. More recently, in the 19th century, a drastic transformation occurred in Paris, one that achieved iconic status and has been studied extensively ever since.

Fig. 4. Left: Hausmann’s staged (1854 -1870) circulation surgery, located within a 10 km diameter. Right: The shaded square–enlarged–showing the current grain of street structure that covers the gamut from narrow, crooked, short streets to wide, very long straight avenues (i.e., arterials); a patchwork maze of block sizes, shapes, and orientations. Graphics recreated from Paris Reborn and maps.

Change and Stability

The 19th century Paris, France’s main industrial and commercial center , experienced frequent revolts, rebellions, and uprisings, as well as consequent changes in government.. During the 20 years of Haussmann’s tenure as a prefect (Fig 4), Paris doubled in population, from nearly a million in 1850 to two million in 1870. This growth brought enormous pressures for change and adaptation on many fronts: social, political, institutional, economic, and, inevitably, infrastructural. Salingaros writes: “As it grows, a city requires larger and larger roads. A network is always driven to adjust its communication infrastructure towards and inverse power HIERARCHY. This is the reason why the mediaeval city -- with short-range pedestrian connections -- could not survive unchanged.” In this 1860s case, the infrastructure is streets, as existed in a century when the foot and the hoof were the predominant modes of transportation.

The modified Parisian network and its new organic hierarchy are shown through a chart of total street length by street width range. (Fig. 5)

Fig. 5. This graph shows the distribution according to width including the sidewalk. “The corresponding Pareto distribution is based on a fractal dimension of 1. 68, a high value that stresses a high street hierarchy.” The deviation from an ideal distribution is said to be low confirming its proximity to an optimum. (Source: Urban Morphology Laboratory. Graph reconstructed as an approximation by this author from City Forms by Serge Salat and maps.

Of the many diverse, well documented motives for the extensive transformation of Paris’ network, the restructuring of its network composition was not one of them; it was a coincidental, collateral outcome. Many old European capitals seem to have flourished without an expansive, Haussmanian surgery, instead undergoing slow, evolutionary adaptations.

The Road Ahead

This piece revealed the constancy of the distribution of road types primarily among U.S. cities over a lengthy period. This distribution inevitably reflects the multiple motorized modes that emerged in, and characterize, the 20th century, that were entirely absent in the 19th century. One might ask whether this distribution is the “correct” one for the current transportation needs. The answer can only be speculative: Not necessarily, but neither, arguably, very unlikely. If this distribution is seen as a product of organic evolution it must, in principle, serve its purpose satisfactorily or it would have been coerced into a different distribution. For now, we can only consider it as a robust outcome of a complex system. Assuming that it may somehow be found not ideal, would a Haussmann-type intervention be a proper response or the slow, bottom-up “organic” reconstitution? That's an open planning question.

This short excursion into the composition of current urban road networks confirms the possibility that road networks are one of the robust, invariant outcomes of a self-organizing system—the city - which are complex, “organic wholes,” and can be studied as such. It also raises once more the question of the precise role of planning in the evolution of cities.

Fanis Grammenos is the director of Urban Pattern Associates in Ottawa, Ontario and the author of Remaking the City Grid: A Model for Urban and Suburban Development (i.e. the Fused Grid). Reach him by email with questions or comments.
This article first appeared on Planetizen, reproduced here with thanks

The Next Economy: Following the Trail of U.S. Job Growth

Joel Kotkin and Mark Schill — Wed, 12 Feb 2020 17:02:09 -0500

A decade ago, in the wake of the Great Recession, Lee County, Florida was dubbed “the foreclosure capital of the country” by the national media, the poster child for all that had gone wrong with the American economy.

“Homes are selling at 80 percent off their peak prices,” reported The New York Times in February, 2009. “Only two years after, there were more jobs than people to work them, fast-food restaurants are laying people off or closing. Crime is up, school enrollment is down, and one in four residents received food stamps in December, nearly a fourfold increase since 2006.

“Welcome,” boomed The Times, “to the American dream in reverse.”

What a difference a decade makes. Today, Florida—and Lee County—is thriving again, with thousands of businesses and hundreds of thousands of people flocking to the Sunshine State annually. It seems that—surprise!—warm weather and zero income tax are catnip for employers and workers alike.

But Florida is hardly alone. Job growth in the U.S. over the past decade has been about 13 percent but some states and some regions have been outperforming the nation by a large margin. So which states are hot, and which are not? And what does the future hold—especially in key sectors like technology and professional services?

To find out, we analyzed recent job growth data for all 50 states over ten-, five-, and one-year periods. For each time period we looked at overall growth, as well as the manufacturing, high-tech and professional and technical business services sectors.

What emerges is a picture, particularly for job creation, that is complex but consistent over the past 10 years—and likely will be for the decade ahead. All people may have been created equal—but states are not. Simply put, the big winners are all in the Sunbelt and the Intermountain West. And we project that trend will continue.

At the top of the heap—with growth rates over 20 percent—are, in order, Utah, Nevada, Florida, Texas and Colorado. Their growth has been more than the rate of growth of states like New York and others on the Atlantic seaboard, as well as most Midwestern states. Not surprisingly, these states all boast the highest population growth rates and are home to many of the nation’s fastest growing metros. Austin leads the pack, followed by Orlando. Denver, Dallas and Las Vegas can all be counted among the fastest growing metropolitan regions.

At the end of the list, sadly, there’s consistency as well. The bottom rungs are dominated by poor, resource-dependent states such as Louisiana, West Virginia and Wyoming—but also now include traditionally buoyant economies such as Connecticut, whose 3.3 percent growth over a decade is roughly one quarter of the national average. There’s nothing in the data we looked at that shows these trends will change, either.

Momentum Tilts to the Heartland and the Sunbelt

In our modern high-velocity economy, 10 years can seem like an epoch. Yet our top states generally have remained remarkably consistent in performance. The slowing growth in hyper-regulated California and the generally mediocre performance along the Northeast corridor has boosted the status of states like Texas, Florida, Arizona and Idaho, which are benefiting from mass migration of both companies and people.

Unlike its East Coast counterparts, the Golden State, however, has been a solid performer, though growth has slowed in the past year. It ranked a solid 9th over the past decade, with almost 18 percent growth. California’s strength can be attributed in part to its economic diversity, with strong concentrations in agriculture, information, professional services and entertainment.

It has started to fade, likely due to high housing prices, rising out-migration (Los Angeles lost population last year) and sky high taxes. Last year, the state ranked 13th and, given the fires and new regulatory burdens, one can expect that to drop further. The state’s manufacturing economy is withering, and after averaging about 100,000 new healthcare jobs annually in the nine years before 2018, just 20,000 were created in the last year.

We may be on the cusp of continued weakening for high-tax, highly regulated states—particularly those that lack California’s ideal weather (most of the time) and spectacular topography. New York ranked a respectable 19th over 10 years, but last year it dropped to 22nd. Massachusetts, 16th over the decade, fell to 27th last year. Other traditional leaders, like Illinois, which dropped from 17th worst over 10 years to 4th worst last year and especially Connecticut also are losing momentum, according to last year’s figures. All have dropped off their 10-year pace.

Where Tech Is Headed

Of course, not all jobs are the same. Some tend to pay more, and some occupations are expanding more rapidly as the economy changes. High-tech employment has grown in almost all our leading states, but the biggest winners over ten years have been varied: led by North Carolina, Utah, South Dakota, California and New York.

But here again last year’s numbers project something of a different cast. The biggest change was the emergence as the fastest-growing state in the past year: Idaho. Over 10 years, Idaho registers in the bottom third, but last year it enjoyed the fastest tech growth in the nation. Boise and its surrounding region are booming, with newcomers pouring in from the West, not only California. It is now the fastest-growing metro in the nation.

Click to read the rest of this piece at chiefexecutive.net.

Joel Kotkin is the presidential fellow in urban futures at Chapman University and executive director of the Center for Opportunity Urbanism. His most recent book is The Human City: Urbanism for the Rest of Us. Mark Schill is the Vice President of Research and a community and economic development planner at Praxis Strategy Group.

Make America Affordable Again

Randal OToole — Tue, 04 Feb 2020 20:29:01 -0500

The Department of Housing and Urban Development has asked for comments on eliminating regulatory barriers to affordable housing. This is my response.

Fifty years ago, housing was affordable everywhere in the country. The 1970 census found that the statewide ratio of median home prices to median family incomes was greater than 3.0 only in Hawaii (where it was 3.04). Price-to-income ratios were under 2.5 in every other state, and under 2.2 in California, New York, and other states that today are considered unaffordable.

Click image to download a five-page PDF of this policy brief.

A home that costs three times a family’s income is considered affordable because (depending on mortgage interest rates) the family can generally pay off a mortgage on that home in 15 years. When the home is four times the income, it can take 30 years, while families cannot pay off a conventional mortgage on a home that is five times their income. Higher home prices also mean higher down payments, which make housing even more unaffordable. Housing is in crisis today because price-to-income ratios have risen above 5.0 in California, Hawaii, and the District of Columbia, and above 4.0 in Colorado, Oregon, and Washington (calculated from tables B19113 and B25077 of the 2018 American Community Survey).

This modest house in San Jose was once affordable but today homes in this neighborhood typically sell for well over a million dollars or up to $900 per square foot.

High housing prices are not due to demand. Housing remains affordable, with price-to-income ratios well below 3, in some of the fastest-growing states in the nation, including Georgia, North Carolina, and Texas. Prices remain affordable in these areas because a lack of government restrictions allow developers to meet just about any demand for new housing.

There is a growing consensus that government land-use regulation is the cause of housing affordability problems. But there is less consensus about which regulations are actually the source of those problems: some blame the problem on single-family zoning; others on urban-growth boundaries and other rural land-use restrictions. Understanding the problem means discovering which regulations are more stringent in the states that have housing affordability problems and less stringent or non-existent on states that have no such problems.

Such an examination reveals that the real cause of housing affordability problems is restrictions on development in rural areas, often referred to as smart growth or growth management. The only way to make housing affordable again is to end those restrictions.

The War on Sprawl

For nearly sixty years, urban planners have waged a war on sprawl. They claim that low-density urbanization threatens farmlands, increases congestion, and contributes to air pollution. They are supported by city officials who want to collect the taxes generated by new developments and environmentalists who seek to preserve rural open space.

The weapons planners use in their war on sprawl include growth boundaries, service boundaries, greenbelts, concurrency requirements, large-lot zoning in rural areas, and similar measures aimed at containing urbanization within fixed limits. Together, planners describe these policies as growth management. They are more accurately described as the New Feudalism, a property-rights system in which people are allowed to own land but development rights to that land are held by the government.

Growth management can be applied at the county level, such as in Montgomery County, Maryland, which has placed two-thirds of the land in the county off limits to development by putting it in agricultural reserve zones or through conservation easements. It can also be used at the metropolitan area level, such as in the Denver metro area, where the Denver Regional Council of Governments has drawn an urban-growth boundary limiting the growth of dozens of cities in the region. Or it can be legislated at the state level, such as in Hawaii, Oregon, and Washington, which have passed state growth-management laws that restrict development of rural areas.

Smart growth is a special form of growth management that aims to increase the density of lands that have already been urbanized rather than spreading low-density development into lands that are not yet urbanized. Boulder, Colorado’s Danish plan, which limited the number of building permits that would be issued each year, is a form of growth management but not smart growth. San Francisco’s Plan Bay Area, which called for high-density developments along transit corridors to increase population densities, is smart growth.

Why Sprawl Is Not a Problem

As it turns out, the war on sprawl was wrongfully fought. It identified the wrong enemy and used the wrong tools. The 2010 census found that all of the urban areas in the country, including all urban clusters of 2,500 people or more, occupy just 3 percent of the nation’s land. Even the most heavily developed states, New Jersey and Rhode Island, are more than 60 percent rural.

Urbanization poses no threat to farm productivity. The United States has 1.1 billion acres of agricultural land and uses only about a third of them for growing crops. The number of acres used for growing crops has declined in recent decades not because of urbanization but because the per-acre yields of most major crops are growing faster than the nation’s population.

Nor do urban containment measures relieve congestion or reduce air pollution. Instead, they dramatically increase congestion because the effect of increased densities on driving is small. A doubling of densities might reduce per capita driving by 10 percent, but that still means that there would be 80 percent more driving on the existing road network. Since cars pollute most in congested traffic, the result would be more air pollution, not less. As University of California economist David Brownstone concluded after studying the relationship between urban form and driving, the effect of increased densities is “too small to be useful” in saving energy or reducing air pollution.

Why Anti-Sprawl Is Unaffordable

The war on sprawl has had one major effect: it increased housing prices and made housing unaffordable for most people in areas that practice growth management. It did so in several ways. First, limiting the amount of land available for development in growing areas caused land prices inside the containment zones to go up. The average price of land in regions practicing growth management can be ten times greater than in areas that don’t, and land inside of growth boundaries commonly sells for many times more than land outside the boundaries.

The regions with the highest land prices also happen to be the regions with the strictest growth-management regimes. Source: NBER

Second, limiting the land available for development allowed cities to heavily regulate development in ways they wouldn’t dare do if developers could build on inexpensive land outside the cities. In Texas, where counties aren’t even allowed to zone much less impose growth boundaries, applying for a permit to build a home in Dallas or San Antonio might take a few weeks and is almost certain to be approved. Getting a similar permit in the San Francisco Bay Area, even just to build on a vacant lot next to existing homes, can take several years and there is a high risk that such a permit might never be approved. Impact fees also tend to be much higher in growth managed areas for the same reason: cities know that developers won’t be able to escape the fees by building outside of the containment areas.

Third, while planners often argue that cities contain plenty of vacant land suitable for infill development, such infill projects cost more, per square foot, than housing developments on large areas of undeveloped land. The economies of scale of building, say, 500 homes on 100 acres makes those homes less expensive than building 500 homes on 500 vacant lots scattered around a city.

California developer Nicholas Arenson estimates that high-rise construction costs per square foot can be as much as 7.5 times the cost of single-family homes.

Fourth, while planners claim developers can overcome high land costs by building higher densities, the cost of high-density construction is significantly greater, per square foot, than low-density construction. Due to the increased need for steel, concrete, and similar materials, the cost of building three or more stories is progressively greater the more stories are built. One California developer calculates that building three stories costs 30 to 50 percent more, per square foot, than two-stories; four to seven stories costs 200 to 300 percent more; and eight or more stories costs 450 to 650 percent more.

Fifth, when housing gets expensive, labor costs rise as well as the workers who build new homes need to have places to live or commute long distances. A 2004 study comparing housing costs in San Jose and Dallas found that more than half the difference was due to San Jose’s higher land prices; a quarter was due to a lengthy and costly permitting process; a little more than 10 percent was due to higher labor costs; and the rest was due to higher impact fees.

Finally, once growth management has made housing expensive, cities often respond with “affordable housing” policies that actually make most housing even more expensive. These policies include inclusionary zoning, which requires developers to sell or rent a percentage of new dwellings at below-cost rates; developer impact fees to pay for affordable housing; and increased property taxes to build such housing. Such policies may provide a few lucky people with housing at below-market rates at the cost of increasing housing prices for everyone else.

So-called affordable housing projects built in these cities are anything but affordable. A mid-rise project planned in Seattle is expected to cost $530 per square foot. Individual units in this project will cost about $360,000, which would be reasonable for Seattle except that the units are only about 660 square feet. A mid-rise project in Portland is also expected to cost $530 per square foot of living area for units that will average 730 square feet. When planners use the word “affordable,” what they mean is “tiny.” By comparison, the median price of housing in fast-growing urban areas that don’t practice growth management, including Atlanta, Charlotte, and Dallas-Ft. Worth, is typically $130 to $140 per square foot.

According to Zillow, the median list price per square foot in areas with the strongest growth-management laws can be more than four times the price in areas with no growth management.

This also raises the importance of distinguishing between affordable housing and housing affordability. The former is subsidized housing built for people who can’t afford market-rate housing. The latter is a measure of the ability of everyone in the region to afford housing. Growth-management policies that increase housing prices may increase the need for affordable housing subsidies, but society can’t afford to subsidize housing for everyone. Yet that would be needed if the median price of all housing in the country cost five to ten times median family incomes.

Growth Management and Housing Affordability

Unfortunately, the Wharton Index of local land-use regulations does not take growth boundaries and similar regional regulations into consideration. Yet a close look at state and regional planning reveals that there is nearly a one-to-one correspondence between regions that practice growth management and regions that have housing affordability problems, meaning price-to-income ratios of 4 or more. Moreover, as shown in this comparison of price-to-income ratios by urban area over time, there is also a correspondence between when regions adopted growth management policies and when their housing became less affordable, usually a few years after the policies were adopted.

Hawaii passed the nation’s first growth-management law in 1961, which helps explain why Hawaii had the nation’s least-affordable housing in 1970. Prices continued to grow and by 1980 median Honolulu prices were 5.5 times median family incomes.

The California legislature passed a law in 1963 requiring each county in the state to form a local-area formation commission (LAFCO) made up of representatives of each city in the county that would authorize annexations and the creation of new cities or service districts. By 1975, many if not most LAFCOs in the state had used this power to stop urban expansion. In particular, urban-growth boundaries in the five counties around San Francisco—Alameda, Contra Costa, Marin, San Mateo, and Santa Clara—put about 70 percent of those counties off limits to development.

San Jose’s urban-growth boundary has been unchanged since 1974, pushing the price of homes such as the one shown on page 1 of this paper to well above a million dollars.

The problem was compounded when courts ruled that an expansion of an urban-growth boundary would require an environmental impact report under the state’s environmental quality act. Since such reports cost tens of millions of dollars, this has effectively frozen the growth boundaries in place. As a result, the density of California urban areas today is approximately twice the density of urban areas in the rest of the country, and 95 percent of the people in the state are forced to live on just 5.3 percent of the land. No other state is this concentrated. The 1980 census found that median housing prices in many California urban areas had climbed above four times median family incomes.

Oregon passed a growth-management law in 1973 that required all major cities to draw urban-growth boundaries. Prices in some Oregon urban areas exceeded three times family incomes in 1980. Due to the severe impact of the 1980s recession on Oregon’s timber-based economy, prices fell in 1990 but recovered by 2000.

Housing in Seattle was affordable in 1980. King County, home of Seattle, drew an urban-growth boundary in 1985, pushing prices above three times median family incomes in 1990. Other Washington urban areas were still affordable, but in 1990 the state legislature required most cities to write growth-management plans. By 2005, prices in Bellingham, Bremerton, Olympia, and Tacoma had also risen well above three times family incomes.

Florida passed a growth-management law in 1985. Implementation took some time and housing was still affordable in 2000. But by 2005 median prices had jumped to more than five times family incomes in Miami and Naples, more than four times in Fort Lauderdale and Sarasota, and well over three times in Orlando, Tampa, and many other parts of the state.

Most statewide growth-management laws were passed by coastal and New England states, but a few interior regions practice growth management without a state law. Boulder adopted the Danish plan, purchasing a huge greenbelt around the city to prevent rural development and limiting the number of annual building permits inside the city, in 1976. It has since become the least affordable city in any interior state. The Denver Regional Council of Governments adopted an urban-growth boundary in 1997. Denver housing was still affordable in 1999, but by 2005 price-per-income ratios had risen to 3.5 and by 2018 they were 4.2.

Regulation at the county level, particularly in Loudoun County, Virginia and Montgomery County, Maryland, has pushed up Washington, DC-area housing prices. State and local regulation in New Jersey and New England states, most of which have abolished the county level of government, have made housing expensive in New York City and Boston.

Thus, growth management accounts for almost every case of high price-to-income ratios. The main exception is Nevada, which has no growth-management laws or plans. Nevada’s problem is that it is still a feudalist society, with more than 80 percent of its land owned by the federal government. Federal lands form an effective urban-growth boundary around Nevada cities, especially Las Vegas. This pushed the state’s price-per-income ratio just above 4.0 in 2018. While half or more of the land in other high-cost states is private, growth-management laws have created a New Feudalism in which people can own land but the government tells them what they can do with it.

Blaming Single-Family Zoning

Rather than admit that their urban containment policies have made housing more expensive, density advocates divert attention from their own bad policies by blaming residents of single-family neighborhoods who, they say, are racist and classist in objecting to the construction of high-density housing within their neighborhoods. The city of Minneapolis and state of Oregon have abolished single-family zoning in order to encourage more high-density development.

Aside from housing costs, residents of single-family neighborhoods have at least three good reasons to object to denser developments: congestion, crime, and taxes. Low-density neighborhoods are rarely congested, but adding dense housing to a neighborhood whose street network was built for low-density housing is going to significantly increase congestion.

High-density neighborhoods tend to have more crime not because the residents of such neighborhoods are more likely to commit crimes but because housing developments with more common areas, which are typical of denser housing projects, are more difficult to defend than neighborhoods with more private lots. This is documented in Creating Defensible Space, a book by architect Oscar Newman published in 1996 by the Department of Housing and Urban Development.

While density advocates point to costs-of-sprawl studies showing that urban-service costs are lower in dense developments, these studies compare the costs of providing such services to high-density vs. low-density greenfield developments. Increasing the density of low-density neighborhoods often means tearing up streets to install water and sewer facilities capable of serving the increased population, and existing residents will be expected to pay “their share” of these costs in increased water fees or taxes. Despite the findings of costs-of-sprawl studies, which are mostly hypothetical, actual comparisons of taxes and density find that residents of higher-density urban areas pay more taxes than low-density ones.

San Antonio is the nation’s eleventh-largest city at the heart of one of the fastest-growing urban areas. The city has single-family zoning, yet new homes such as this 2,425-square-foot model are available for under $225,000, or less than $100 per square foot.

For all these reasons, homeowners prefer either single-family zoning or protective covenants in which they willingly give up some of the rights to develop their land provided their neighbors do the same. Subdivisions built in areas without single-family zoning are usually accompanied by protective covenants because developers know that people will pay more to live in areas protected from commercial, industrial, or high-density incursions. Abolishing single-family zoning represents a betrayal of the interests of the people who live in such areas because such covenants would have been used if they hadn’t had zoning. Nor does abolishing zoning “restore” anyone’s property rights because almost everyone today who owns a home in a neighborhood zoned for single-family homes bought it after such zoning was applied.

Density Is Not the Solution

There is no evidence that single-family zoning makes housing more expensive or that abolishing it will make it more affordable. By 1960, almost every city in America except Houston had approved zoning codes that put large portions of their cities in single-family zoning. Yet housing remained very affordable nationwide, mainly because there were few limits on new home construction outside of cities. It was only when states, counties, and regional governments began to restrict rural development that housing in the cities became unaffordable.

Contrary to those who say that density is the solution to affordability problems, California urban areas have become less affordable even as their densities increased. Between 1970 and 2018, the population density of the Los Angeles urban area grew by 37 percent while its price-to-income ratio grew from 2.2 to 8.0. The density of the San Francisco-Oakland urban area grew by 55 percent while its price-to-income ratio grew from 2.3 to 7.7. The density of the San Jose urban area grew by 71 percent while its price-to-income ratio grew from 2.2 to 7.8.

Density is strongly correlated with reduced housing affordability. Source: 2018 American Community Survey

Comparing densities and affordability in the nation’s 60 largest urban areas reveals a strong correlation between the two. Of these urban areas, none whose price-per-income ratio is under three has a density greater than 3,600 people per square mile. Only one whose density is greater than 4,000 people square mile has a price-per-income ratio less than four, and the ratio there is 3.8. The correlation coefficient between density and price-per-income ratios is 0.82, where 1.0 is a perfect correlation and 0.0 is no correlation.

In areas practicing growth management, abolishing single-family zoning won’t make housing more affordable because it doesn’t solve the twin problems of high land prices and higher construction costs of multi-story buildings. The only solution to those problems is to abolish urban-growth boundaries and other growth-management policies.

Making America Affordable Again

High housing prices have serious repercussions on the nation’s economy. Homeownership rates are stuck below 65 percent when rates in other, supposedly less-wealthy, countries are much higher. This reduces the rate of small business formation as equity in a business owner’s home is a major source of capital for start-ups.

A paper by MIT (now Northwestern University) economist Matthew Rognlie revealed that high housing prices are the main source of wealth inequality. Indeed, while some people accuse single-family zoning of perpetuating segregation, census data show that the number of black people in high-cost areas such as San Francisco and Los Angeles is declining while the number in affordable areas such as Atlanta and Dallas is growing faster than the regions’ populations as a whole.

Adding insult to injury, states and regions that have made housing unaffordable then demand that the federal government “fix” the problem by providing more funding for affordable housing. Under federal guidelines, people of median incomes or less are eligible for some federal housing subsidies. Since low-income people have been pushed out of high-cost areas, this means that people earning well over $100,000 a year can be eligible for housing assistance.

To make housing affordable again, states, regions, and counties need to abolish the urban-growth boundaries and other policies that restrict rural development. The Department of Housing and Urban Development can promote this by denying housing funds to states and metropolitan areas whose price-to-income ratios are more than 3.0 as a result of rural land-use restrictions. Ending the New Feudalism will play a key role in making America great again.

This article first appeared on the Antiplanner

Randal O'Toole is an land-use and transportation policy analyst and the author of American Nightmare: How Government Undermines the Dream of Homeownership.