The Power and the Money

Bad news in tragedy avoided: building codes and the Mexican earthquake

Four days ago, I worried that the smaller force of the recent quake meant that we could not be sure that better building standards were the reason fewer buildings collapsed. There was some pushback in comments, noting that the epicenter was much closer to Mexico City in 2017 than in 1985. There was also some pushback on Twitter making a similar point. The Twitter exchange ended with Leticia Arroyo-Abad presciently saying that we could tell nothing from the size the quake because “it would depend on how different frequencies affect different structures.”

And she is absolutely right. The New York Times now reports that the closer distance of the 2017 quake meant that the shaking was far less damaging to buildings above six stories in height. Moreover, a 2016 study showed that many new buildings did not meet the minimum requirements of the building code. 

This photograph was taken in the same neighborhood as the new high rise mentioned in the NYT article, the one which collapsed. (More details here.) We know people who live in new buildings in that neighborhood. They dodged a bullet. There should have been no bullet to dodge, even in a 7.1 quake. That makes me angry. 

 

The jury is still out, but evidence is piling up that repeat of the 1985 quake would have killed far more people than the one Mexico City just experienced. The heads of bureaucrats and politicians in CDMX need to roll. The Line 12 saga shows that Mexico can have such a reckoning ... and once we are over counting our blessings and celebrating the heroism of the citizenry, this reckoning should be big. 

Godspeed to Houston and some urban policy questions about the flood

I like Houston. I always have. It is a hideous city, way too car-dependent, and has a climate designed to get me to hate it. But I have friends there and I like Texans. I really like Texans. Which is weird, when you think about it. I am from Brooklyn, and somebody just released a (sadly terrible, I can report) movie in which Texas quite literally invades Brooklyn.

Please help, either with your money or your time.

Remember, Texans are American, sometimes despite themselves. I have two very good friends in Houston and many others in greater Austin. One them told me, to my honest shock, that his kids have to say a pledge of allegiance to the State of Texas at school every day. Really, they do, although ironically that only dates back to 2003. Honor the Texas flag; I pledge allegiance to thee, Texas, one state under God, one and indivisible. Should I ever wind up moving to Houston (which I would do if my wife were not utterly opposed) I have to admit that I would insist that my children not say the Texas pledge. 

The U.S. is a republic worth allegiance. Any given state, not so much. Plus, America might be better off if Texas were split up. 

Self-referential intro over, there are two important policy questions about this storm.

The first, of course, is how much it is due to global warming. Right now, it appears as if the flooding has exceeded the 500-year-watermark. 

That implies the storm was unlikely. But it does not tell us how much less unlikely such storms have become as temperatures have risen. Heavy precipitation is up in the United States, but that is circumstantial evidence. What do climate scientists have to say?

The second is whether urban policies have contributed to the disaster. As Market Urbanism has pointed out, there is some very stupid commentary trying to link the disaster to Houston’s lack of zoning. That is dumb. Inasmuch as zoning has anything to do with anything, the lack thereof has allowed for taller structures to be built, which right now is saving lives and property.

But even though Houston is unzoned, American and Texan policies contribute to sprawl and the paving over of open space that might have otherwise absorbed rainfall. For example:

1. Minimum parking requirements;
2. State subsidies for roads and sewer hookups;
3. Property taxes that tax land values and structures at equal rates, discouraging intensive use of land.

And that in addition to the problem that floodplains are a classic example of a public good. Leaving the land open reduces the impact of floods on developed land, but the owner bears the cost while other property owners reap the benefits.

That said, what I do not know is how much policies have contributed to sprawl. Nor do I know how much sprawl has contributed to the damage from flooding. Sure, both have made the storm worse, but significantly worse? I do not know. But if such storms are becoming more common, then there is a lot riding on the answer to those questions.

Does anyone have any evidence?

But for now, while I wait for the internet to point me in the direction of answers (hah) Godspeed to the people of East Texas on their path through this storm. Again, please help, with money or time.

Departures

With four of us, we will be calling a carshare to take us to the airport. I know, right now “Uber” has become a generic word, the way “Fridgidaire,” “Hoover,” and “Xerox” used to be. Since I dislike the company with a passion, however, I will do my part to insure that it remains a proper noun. “Carshare!”

It is slightly easier than calling a radiocab, I suppose, and it does insure working seat belts in the back. I am of mixed minds, to be frank. In Mexico City there is an upwards redistribution of income, since carsharing drivers tend to be richer.

And I miss taking the subway to and from the airport. It’s an experience that most middle and upper-middle class chilangos avoid, for reason that I do not understand. You do have to traverse the entire terminal from the international area to get to the station, but it isn’t that big a terminal: call it twelve Manhattan blocks, a little over a half-mile. You will also have to change trains at least once, since Line 5 runs a peripheral route down the middle of the Interior Circuit expressway. But unless you’re encumbered with bags or headed beyond the reach of the metro, it’s cheaper and faster than taking a taxi.

So why don’t more people do it? Well, practically, the station interchanges are a major PITA. They are long labyrinths. Not unpleasant, but not efficient. The reason the connections between lines are so ridiculous is that Mexico City, wisely, decided to build its metro on the cheap. Sure, you could have had lines dive under each other with platforms carefully laid out to make transfers quick and easy — the Washington Metro is pretty good in this respect — but building cathedrals to urban transit is not how Mexico City rolls. So other than the first three lines (1, 2, and 3, easily enough) everything is jury-rigged.

The most relevant connection for this post is La Raza, which connects Line 5 (the airport line) to Line 3 (a north-south line that runs through a lot of nice middle class neighborhoods). The damn thing is over a half-mile long (like the airport) but rather less pleasant. The first time you do it you will notice the science museum laid out along the walls, covering the history of the universe. The 78th time you do it, you will start to feel like the transfer has taken you the entire age of the universe. I can see this being a deterrent, but come on. By the time you have memorized the panels on the evolution of the cockroach, you can start people watching instead.

The wildest is Chabacano, which connects lines 2, 8, and 9 in wild mess of tunnels, bridges, and escalators. Up-down up-down up-down, great for kids, less so for commuters. But the brutalist architecture is so cheap that it’s charming. In fact, you might recognize some it: they filmed the subway shootouts in Total Recall there. Click the link. The station really is laid out just like the chase! No directorial tricks; they just had Arnie make the transfer. With people shooting at him.

The weirdest is Ermita connecting Line 2 and the newest Line 12. The corridors zig and zag like a protractor. I have no idea why, but if I had to guess, it was much cheaper than just barreling a straight connection through. Kinda triples the distance.

The best is Zapata. Just take it. Much more interesting stuff on the walls than the science museum at La Raza.

And the longest? Oh sweet Mary mother of God, Atlatilco. It connects Line 8 and Line 12. It goes on forever. I did it precisely once, just to see it. I will not voluntarily do it again.

I could go on.

Anyway, the long La Raza connection is not why few people take the airport line. Nor is it crowding. (Want to go to Condesa? Line 5 to Line 9. Annoying transfer; you gotta climb a lot of escalators. But it is still crazy fast and there is very little crowding, even by D.C. standards.)

No, it is just that too many upper middle class chilangos still feel weird on the metro. You know, people selling you candy and phone chargers and music CDs. (I do not understand that market.) Which is too bad.

But which will soon change. Mexico City is building a new airport right outside the city. The talk is of extending Line B to it ... but the real project will be an express train running from Observatorio, where the new commuter rail from Toluca will come in, out to the new airport. It will not be part of the Metro system (although it will connect to it) and it will cost a lot more than the current 29¢. So the middle class will take it, but the poor will not, and so transit will remain class segregated.

It also looks like the airport might be open before the airport connections, which is going to be a Godawful mess, but that is another story.

The beginning of the end of parking?

Mexico City is creaking under the number of cars on its streets. For details, see this post. So what to do about it?

The metro is already a modern miracle and is being expanded. Notably more middle-class people appear to be riding it. It should be expanded faster, but there are practical limits to how fast that can be done. 

Road-pricing is a distinct possibility, but would be politically, administratively, and technically extremely difficult in this town. Mexico City is much nicer than it was, but it still ain’t London. Although they have managed to close off major streets in the city center on Sunday.

Which leaves you with ... limit parking! In a brilliant move, the Ciudad de México just moved to limit parking spaces in new residential construction. Current regulations mandate minimums, on the assumption that people will drive no matter what. (For offices, it was one spot for more-or-less every 300 square feet.) The newest office tower downtown, for example, has more than 3,000 parking spaces.

Now there are no minimums. The maximum is three per apartment (which is rather high) or one per 300 square feet of office space. (See pages 7-8 of the new regulation here.) You can build more, but you need to pay a tax. 

The literature says that this should discourage driving. European cities have de facto parking limits, and they do indeed have fewer auto trips than American ones. The question for Mexico is whether this is enough to keep all of the future middle class from commuting by automobile. The question for the rest of North America is whether this policy can or should be emulated.

Thoughts?

The Trump wall keeps getting shorter, another guide for New Yorkers

Man, at first the Trump Wall was 60-feet high. That was a wall! A tenement-high wall. You could be impressed by that.

But now the specs are calling for prototypes between 18 and 30 feet tall. Dude. That is not tall. Thirty feet would make it shorter than the row of taxpayers behind me in this photo:

 

Sad! Come on. If we are going to go stupid, we should go stupid bigly. I say 80 feet!

By the way, for those of you who are curious, those taxpayers are where they are because the zoning will not allow anything higher on that corner. That is ironic, since they were tossed up in the first two decades of the 20th century as placeholders awaiting a skyscraper boom that took ten decades to arrive. Now that it is here, you cannot build there. Also sad!

NIMBY from renters is not crazy, but it is still likely wrong

I have been involved in urban real estate markets, in addition to my own house. (Details to come.) As a potential owner, what was my response to a declaration that an eight-story building was going up that would block part of the view from the unit? One guess would be, “That is terrible, it will block part of my view.”

That would be wrong. So another guess might be, “That is great, it will lower housing prices!” That statement would be logically correct, but does not really capture why I was not dissuaded by the loss of the view. My real response was:

“That is great, this crappy neighborhood I grew up in is going to become way more valuable. People want to build unsubsidized luxury housing here.” 

And this is what drives renters to be NIMBYs in high rents cities. Here is a description of the logic from Michael Hankinson (Harvard) in his recent paper:

Imagine you are a renter in a city with high housing prices, living in one of the few remaining affordable neighborhoods. On your street, a new condominium is proposed, to be rented at market-rate, defined as the unsubsidized or ‘typical’ price for housing that renters are willing to pay. Generally, you believe that new supply helps to mitigate rising prices. However, this one condominium is a minuscule addition to the overall supply, making it unlikely to appreciably lower prices citywide. Meanwhile, the new building may signal to other developers that your neighborhood is an undervalued investment. Your landlord may see the new building and consider renovating her own, leading to your eviction. In the end, while the new condominium may marginally ease prices citywide, it may also attract demand locally, driving a spatially localized rise in rent. To you, the long run benefit of lower citywide prices is eclipsed by the immediate, short run cost of displacement.

That said, I am not sure that the logic Hankinson describes is correct. Consider my mental model. The construction of the eight-story building is confirmation that the neighborhood is becoming more desirable. But does said construction actually make the neighborhood more desirable on its own? Not at all. I would be as happy to know that a luxury four-story building were under construction. In fact, I would happier to learn that an upscale restaurant were opening with no additional units, at least as far as my property values were concerned. 

(I would actually not be thrilled about any of the above for I am not in this market to maximize my returns, although I would prefer to minimize my opportunity cost as regards other potential investments. So bring on the building.) 

Coincidentally, the policy recommendations from the paper jibe with the lack of pushback in this particularly neighborhood to new developments: for reasons particular to the city and locality, many of the residents are either protected against displacement or owners.

But the overall point holds: renters oppose new development in overheated markets because they believe that such developments create “positive” externalities that will raise their housing costs and drive them out. If you want to change the political economy of urban growth, then you need to address that belief.

Did Jane Jacobs swing the election for Trump?

Added clarification: This post argues that freeing up Californian housing markets after 1970 would not have caused the California population to grow enough to swing the 2016 election.

This idea comes from Matthew Kahn at USC. In 2010, he published a paper showing that more liberal cities in California reduced the number of housing permits they issued, all other things being equal. That is to say, liberal antipathy to housing came from ideological preferences; it wasn’t a secondary effect of liberals being better-educated or concentrating in more geographically-constrained areas or whatever. 

Kahn’s mechanism is that urbanites vote more Democratic, but zoning has constrained the number of urbanites. Without housing constraints, California would have 80 million people with the corresponding number of electoral votes.

But is 80 million likely? Brad Delong has an amusing back-of-the-envelop calculation for what California would look like with an unconstrained housing market. It assumes that Los Angeles is reasonably unregulated and produces a rough estimate of 8 million more people in the state, all in the Bay Area. That would give you 47 million Californians. 

But his supply curve also assumes that Los Angeles is unconstrained save by its population size. Consider the below graph, from Greg Morrow’s (U-Calgary) dissertation. It shows the population that existing zoning would have allowed to live in Los Angeles if completely built-out:

The thing is, zoning restrictions certainly prevented the population of the Westside from doubling or tripling; it is less certain that it kept the population of the entire Southland from growing. Fewer people in Santa Monica, more in Riverside County.

There is another back-of-the-envelop calculation that favors a 47 million counterfactual. Growth restrictions became significant around 1970 and began to bite by 1980. Well, if California had grown at the same rate as Texas since 1970, it would have 48 million people today, not too far off the Delong counterfactual. (If it had grown at the same rate since 1980, California would have 45 million people.) 

Now, to really figure out if this swung the electoral college you would have to guess at where the extra nine million people came from. Some might be from states that received Californian outmigration; others might be immigrants who would go to California rather than elsewhere. But we will ignore that for now. 

Well, 37 million people got California 55 electoral votes in 2010; 45 million (remember, the 2010 population would be below 2016) would have gotten it 65-66 electoral votes. 

No, not really enough to swing the election. 

But if you assume that New York, New Jersey,  and Massachusetts would also be much bigger, then you start getting somewhere ... and there is a completely different channel by which Jane Jacobs could be blamed for the outcome ...

Establishing the rule of law is not easy

The rule of law is something that is very hard to define. We know when it is not there at all: chaos and warlords. We also know when it barely exists: bribery and impunity. But it is very possible for a state to operate without outright bribery and impunity and yet still lack the benefits of the rule of law. 

Consider the recent Casas Geo bankruptcy in Mexico. (Hat tip: Xóchitl Herrera.) Casas Geo started by building small modern houses for poor Mexican families. The houses would be built in long rows, sharing foundations, with modern utilities already hooked up. A small four-bedroom house went for around $46,000. Reforms that made mortgage credit widely available fueled the company’s growth.

 

In February 2013, however, the new administration announced a change in housing policy: federal subsidies would be redirected from suburban expansion to more center-city housing. The reason was that Mexican suburbs had outrun their cities’ transportation nets, leaving increasing amounts of vacant housing around the outskirts and burdening poor households with crushing commutes. The problem was that the housing companies had accumulated a lot of land outside existing built-up areas. Geo was particularly hard hit. In April, the company announced a 38% decline in quarterly sales. (Page 2.) By May, the company had begun to default on some of its bonds. To be fair, housing construction had been in trouble before then and the reform was sorely needed. But it sent Geo over the edge into bankruptcy. Geo sought protection under the 2013 amendments to Mexico’s 2000 Bankruptcy Protection Act. 

The Mexican congress modeled the Bankruptcy Protection Act on American bankruptcy law. (A comparison can be found here.) As in the United States, federal courts run bankruptcy proceedings. Creditors cannot make an end-run around the bankruptcy proceeding by appealing to state or lower federal courts. 

Only they did! A bunch of would-be homeowners whose made down payments but never received a house wanted cash instead of the promise of a future house. So they sued in a different federal court. And now the whole reorganization is at risk; Geo might be forced to liquidate, which would leave everyone worse off.

That is not supposed to happen; you are not supposed to be able to get around a bankruptcy court decision by filing in a non-bankruptcy court. But since it did happen, well, now it is not clear if Mexico even has a functioning bankruptcy law. 

This sort of thing is not as obvious as corruption or an executive branch that flaunts judicial decisions. But it is nonetheless pernicious. The rule of law looks similar everywhere, but every place that lacks it lacks it in its own way. 

Does past performance predict future results for American cities?

In recent decades, the following trends have held in the United States:

1. A few metro areas have prospered at the expense of everyone else;
2. Within those metros, specific core neighborhoods (and a few suburbs) have prospered at the expense of everyone else;
3. Housing and office costs in those neighborhoods have exploded, effectively preventing large numbers of businesses and employees from sharing in the prosperity they generate.

Now Conor Sen suggests that this process may have run its course. Housing and office costs have reached so high that people might finally take advantage of recent improvements in communication technology to move employment outside the core parts of the lucky metros. Just because the past quarter-century has watched the inexorable advance of a few metros does not mean that the next quarter century will do the same.

If he is right, two things will happen. First, we may still have expensive playground cities, like (I hate to say this) Manhattan and Brooklyn, but their exclusivity will no longer directly hurt the people who cannot partake in that exclusivity. They will be like Disneyland or a fancy restaurant. Living there will be an exclusive consumption good rather than an investment that increases the income of people who can afford to make it. Second, the people who predicted an urban to rural migration back in the 1970s will be proved right. 2040 will look about the way we expected it to back in 1970. 

The analogy is with the automobile: mass produced from 1908 onwards, it did not really start to reshape the American landscape until 1945.

I am not so sure. Face-to-face meetings and random interactions seem as important as they ever were. The agglomeration economies in our cities do not look set to dissipate. And the communications technologies are here and have been here for a decade or more; no Interstate Highway Systems necessary.  And inasmuch as metropolitan dominance is policy-driven, those policies show no sign of going away. 

So what will the cities of 2040 look like? There are three possibilities:

1. Gated communities. The agglomeration economies persist; more people get priced out. The recent trend of Americans for the first time ever migrating from richer areas to poorer ones continues. Cities remain pleasant; overall society, not so much.
2. Urban growth. The dam breaks and America lets suburbs urbanize and cities Manhattanize. This makes cities less pleasant for many, of course, but it increases opportunities for people currently locked out. The Bay Area balloons to 15 million people, Los Angeles becomes a forest of four-story buildings, Brooklyn becomes Manhattan. 
3. Things turn around. Some cities remain playgrounds, but who cares? 

My money is on (1). 

Alt-stupid

Wow, the alt-right sure came out into the open fast. Like cockroaches from under a rock. One minute, invisible, next one, all over the place. Jesus, what an election.

Anyway, I was drawn to one thing from the Vox explainer. Apparently, Curtis Yarvin liked to cite this description of London in 1876, to show how much better things were back then:

There are, of course, in most great cities, some quarters of evil repute in which assault and robbery are now and again committed. … But any man of average stature and strength may wander about on foot and alone, at any hour of the day or the night, through the greatest of all cities and its suburbs, along the high roads, and through unfrequented country lanes, and never have so much as the thought of danger thrust upon him, unless he goes out of his way to court it.

But how is that not a perfect description of America in 2016?

Anyway, here is a picture of someone of above average stature and strength, wandering through the greatest of all cities, also known as the four-eight in the Bronx. Six murders in 2015, down from 137 in 1990. 

I feel sorry for Yarvin, so consumed by fear and detached from reality. What a terrible way to live. And, to my surprise, it appears that he is not alone.

Andrew Cuomo can make New York City better

Senate Bill S5469 has made it out of the legislature in Albany and awaits the Governor’s signature. Hooray!

And what does this bill do? Well, right now, state law prohibits buildings with a floor-area-ratio (FAR) greater than 12 unless they have at least six operating elevators. That makes it really expensive to build anything taller than 12 stories but shorter than a skyscraper. In addition, the law means that if you want to build higher, you need to buy the air rights from an adjoining lot.

(A FAR of 12 means that a building that covers the entire lot cannot rise higher than 12 stories.) 

The bill now gives New York City an exception. Since midtown Manhattan and downtown Brooklyn have no city-imposed height limits, it will now be much easier to build tall. And building tall means that affordable-housing requirements will kick in, forcing developers to include 20% affordable housing. 

It is not the millenium, but it is a good move. 

The problem with San Francisco is ...

 No points for guessing!

This essay (hat tip: Jon Rabinowitz) is a great read. Yes, the econometrics are pretty basic. Sure, the data is a little less-than-robust. (The guy collected rent data for S.F. back to 1949, but did not adjust for quality.) But the basic conclusion seems pretty good: letting development rip will at best hold back the tide. 

I would add two points, however.

First, I worry about the model, simply because San Francisco is part of a metropolitan housing market. It really needs to include suburban development. Of course, the Bay Area has slammed suburban building shut even further than the County of San Francisco, but it is easier to imagine doubling the number of housing units in San Mateo and Alameda than it is to imagine doubling them in S.F. proper. Surely that would have a major effect.

Second, S.F. may be setting itself up for a major recession some day. I suspect not, to be honest: a gilded metro area looks depressingly plausible, particularly for the center of the computer industry. But a combination of a tech boom bust combined with an exhaustion of the supply of skilled people willing to live in the world’s first gilded metro area will kill the place dead. 

At that point, New York will get another filip and the people who didn’t buy in Upper Manhattan and the Bronx when it was still relatively cheap will regret it. You know who you are. It isn’t too late. 

Jane Jacobs was wrong

 Hillary as president, big burst of traffic. Mexico shows the amazing advance of solar power, something that may save the planet even if You-Know-Who is elected, meh. Oh, well.

Anyhoo, I just saw this email from Randy McDonald: “I’d be pretty curious to see your reaction to Jacobs on the blog. I know you’re a Moses fan, but that’s it.”

So, at his request, I’ll talk about Jane Jacobs. I did not intend to say anything, because why speak ill of the dead? I’m sure that she was a very nice person.

But my short version is: Death and Life of Great American Cities is bullshit. 

Now, bullshit is a technical term. Bullshit is basically truthiness by another name. And Jacobs was truthy. She made claims about social cohesion coming from architecture for which she had no evidence. She refused to acknowledge that the pathologies of American cities in the 1960s were due to racism, not construction. She blasted entirely functional and pleasant “towers in the park” buildings but ignored the way well-intentioned traffic engineers were making suburbs unnecessarily unpleasant. 

In fact, you can see how much bullshit she wrote from her defenders. Here is an essay Randy linked to called  “Was Jane Jacobs right?” The dude manages to contradict himself. First, he claims that Torontonian neighborhoods have gentrified and become full of retail monocultures because of too much construction. Well, that is the purest form of bullshit: as Randy has documented, rising rents are creating such monocultures in old neighborhoods. Then he confuses typology for hypothesis testing, by showing us that dense districts in Milan are more dense. (No, really. That is what he shows.) 

In a normal world, I might like Jane Jacobs. I am by no means ideologically averse to regulations that drive up housing costs. (Frex, requiring first-floor retail on Fourth Avenue in Brooklyn.) She was right about highway building. (I like that Moses built stuff; I am less convinced that he built the right stuff, although really do wish the Cross-Brooklyn existed.) She was certainly right about most urban planning of the time, and her arguments apply to modern suburban planning quite well.

But we do not live in a normal world. We live in a world where Jacobite (Jacobin?) ideology means that everyone thinks it is entirely okay that the law protects cute streets like mine from the scourge of high rises. (Calling Eric Moore!) Hell, from the scourge of triple-deckers. 

We live in a world where people can pretend that filtering does not exist. (The link goes to a study of the California housing market. Theory here.) And while the worst problems are in fact in the suburbs, where I suspect Jacobs would be fine with replacing quarter-acre plots with “missing middle” construction, the fact that we have decided to preserve our older neighborhoods in amber is creating just as many problems.

In short ... I usually do not buy slippery slope arguments, but it seems to me that the United States slid all the way down the goddamned slope that Jacobs greased back in the 1960s. If we need to bulldoze the West Village to get back to a normal housing market that serves all Americans (while making our cities greener in the process) then so be it. 

Jane Jacobs caused none of that, of course. But she was emblematic. Her ideas have enabled much of the horror show that is the current American economy. Ironically, Canadian cities are doing (slightly!) better (in the face of worse pressure) because they are less beholden to her ideas than American ones. 

Hasta la vista, cuteness. Bring on more buildings! 

I hope that changed your mind, Randy! And even if it didn’t, when are you coming to D.C.?

When affordable housing isn’t affordable

 Even when exurban housing remains affordable in booming American metros, the result is to push poorer people into longer and more expensive commutes. In this post we linked to the evidence that such commutes have adverse effects on upward mobility. Something bad happens to children whose parents need to travel long distances every day. 

Now, John Renne (Florida Atlantic University) and Shima Hamidi (University of Texas) have examined a similar question. (Hat tip: Will Baird.) How high are the commuting costs faced by the recipients of federal housing subsidies? As rents have increased in urban centers, subsidy recipients increasingly live in the far suburbs. In theory, that should drive up their commuting costs. The question is: by how much?

Context: The federal government (reasonable if somewhat arbitrarily) defines commuting affordability as 15% of their household income. That would be around $7,500 a year for the median American household. In a poor urban county, like the Bronx, that would be about $400 per month for the median household. Not coincidentally, the median income in the Bronx is just a hair under the Section 8 income limit for a family of four. Most subsidized households are considerably poorer, however, with an average market income around $14,000 per year. For them, the affordability limit would be around $170 per month. That would get you an unlimited pass on the New York subway or the D.C. buses. It isn’t quite enough to get you an unlimited pass on the D.C. metro, but it could get you a pass that would allow you take unlimited trips inside the District proper.

Results: 44% of the households in the sample faced commuting costs that exceeded 15% of their income. In smaller southern metros, none of the Section 8 properties had reasonable commuting costs. They also found, however, that in expensive but transit-served metros like the Bay Area, 97% of the properties were affordable. 

So that might bring a sigh of relief. The problem is the urban structure of America’s small stagnant metros, not rising costs in its big vibrant ones. Except there is a catch. In their words, “Section 8 Multifamily Programs are relatively small and thus dwarfed by tenant-based vouchers and low-income housing tax credits. In addition, these programs are mostly in preservation and operation mode, no longer subsidizing new construction/substantial rehabilitation.” 

In other words, their data comes from existing properties that have been in the Section 8 program for a while. It does not come from families receiving vouchers that they can use anywhere. In places like San Francisco and New York, these properties have been in the system for a while. The evidence does not tell you how badly the situation may be worsening.

But it is interesting. 

More on why northern California is turning into a terrible place

 Citylab just published a nice piece on why San Jose generated so much upward mobility compared to other American metropoli ... and why it will be dystopic in a few more decades.

Why was it so good at fostering upward mobility?

1. Poor people in proximity to Silicon Valley exposed children to opportunities and role models they would not have had;
2. Factor (1) in reverse: weathy people contributed directly to helping poorer neighbors;
3. Housing was cheap and affordable;
4. Commutes were short (this in particular has statistical backing).

And all of that is going away because people do not want to build more houses.

I have an old friend, Kris M., whose thoughts I would really like to hear on this issue. Why is NIMBY, so strong across America, even stronger in California? 

Housing prices and upward mobility

 Two years ago, this blog noted that San Jose, California, had incredible upward mobility. But it also suggested that rising house prices put that upward mobility at risk, by reducing geographical mobility. That in turn might prevent people from taking advantage of educational and job opportunities.

Now, the Atlantic voices the same worry: “Today, young Americans increasingly have to choose one or the other—they can either settle in affordable but stagnant metros or live in economically vibrant cities whose housing prices eat much of their paychecks unless they hit it big.”

In California, for example, the problem has only gotten worse. The very same 3-bedroom apartment in Mountain View that we rented for $1,724 in 1993 (in 2015 dollars, $1,040 at the time) now rents for $3,750 — a real increase of 118%. 

There are cities where housing is still within the grasp of young middle class people. For example, my 20-something cousin Adam and his girlfriend just purchased a very nice 2-bedroom townhouse in Philadelphia for what amounts to a monthly payment of roughly $1,700, before the interest deduction. But that is not as easy as it sounds. It is true that said monthly payment is basically flat (in real terms) since 1999. (The price of the house has risen by 124% in nominal terms, but interest rates were a lot higher back in 1999.) But because the nominal price of the house has more than doubled, you need a bigger down payment to qualify ... and student loan burdens are a lot heavier now. 

Moreover, there are two other drawbacks. First, one of the reasons why housing is still affordable in that part of Philly is that the schools are awful (albeit improving). You want better schools — and upward mobility with it — you pay more either in housing or in tuition. Second, Philadelphia, for all its charms, is not a first-tier job market the way that Boston, New York and Washington have become. (Let alone San Francisco!) You have to give up other opportunities in order to have decent housing within reach of a normal 20-something income.

America’s coastal housing shortage is good for me, as a homeowner, but terrible for the country. 

Baby steps in California

 My last post was not real. There is no such legislation and there is likely to be no such legislation. Nor is there likely to be any sort of judicial intervention along such lines, which would be one upside to a severely conservative Supreme Court. Sadly, judicial conservatives are not likely to support such interventions. Thus my plaintive call to the Koch brothers.

So we are in the world of baby steps towards turning Palo Alto into East New York and building $50,000 homes. One came from Sacramento, California, in October 2015. The Density Bonus Act of 2015 reduces the maximum parking requirement for affordable developments within a half-mile of a major transit stop to 0.5 spaces per unit. At a cost of $24,000 per space ($34,000 if inside the structure) that is a big saving. Hooray!

But it is a baby step. First, not a whole lot of developments devote 10% of their units to low-income households. Even if they do, they will only get a 20% density bonus. In other words, if you could have built ten units on a parcel, adding a low-income unit will let you bump that number up to 12. This is less than huge.

Second, major transit stops are rail stations or stops serving more than two bus routes with 15-minute frequencies. A half-mile from them does not cover a whole lot of places. 

Finally, the underlying zoning code is still the underlying zoning code. For example, the entire southwestern half of the ½-mile circle around the Palo Alto Caltrain is unbuildable for residential housing. (See map.)

So, yeah, a baby step. Nice, yes, but nothing will change.

Homeowner’s Bill of Rights to Preempt State and Local Zoning Laws

 Story from here.

“After weeks of fraught negotiation, House of Representatives Speaker Paul Ryan (R-Ohio) announced that both houses of Congress had reached agreement on passing the Homeowner’s Bill of Rights (HOBOR), which uses the preemption doctrine to abolish most local planning restrictions. President Obama announced that he would sign the bill, which includes several provisions pushed by urban environmentalists. While the majority of Republicans announced their intention to vote yes and the majority of Democrats announced they would vote no, HOBOR relies on cross-bench support, as several prominent Republican lawmakers identified with the Tea Party, including presidential hopefuls Senators Ted Cruz (R-Texas) and Rand Paul (R-Kentucky), announced they would oppose the bill on the grounds of federal overreach.

“Despite early environmentalist hopes that the bill would be narrowly targeted at suburban single-family zoning, HOBOR casts a wide net. It preempts any separation of residential, commercial, and industrial uses; maximum heights and floor area ratios; open space requirements; environmental restrictions including noise limits and endangered species protections; urban growth boundaries; parking minimums and maximums; single-family mandates; form-based codes; anti-McMansion ordinances and minimum lot sizes; affordable housing mandates; and setback requirements. It also requires the federal government to study privatizing federal land adjacent to urban areas and to consider the effects of growth controls on the housing market, a move that is expected to liberalize construction in the West. It does not preempt private deed restriction, despite an attempt by urban Democrats to ban it, but does ban cities from giving public incentives for it.

“Ryan’s office released a statement, ‘The Homeowner’s Bill of Rights will prevent power grabs by special interests and by the federal government, and reduce the level of regulation in America’s cities.’ Governor Greg Abbott (R-Texas), who recently proposed a similar law in Texas before Congress federalized the issue, credited Texas’s strong economy to loose zoning, and specifically praised Houston’s lack of zoning as an engine of economic growth.

“On the Democratic side, New York City Mayor Bill de Blasio offered tepid support for the bill, saying that he expected the increased pace of construction to create jobs and affordable housing in the city, but added that the city would maintain its rent stabilization program. New York housing advocates were involved in obtaining necessary bipartisan support for the bill, and the city’s all-Democratic Congressional delegation is planning to vote for it, with the exceptions of Reps. Carolyn Maloney and Joseph Crowley. Crowley said in a statement that ‘the city’s planning laws are a cornerstone of neighborhood protection, and it’s hypocritical that the Republican Party, which claims it supports states’ rights, uses the federal government’s power so blatantly when it suits its needs.’

“In San Francisco, opponents took to the street, protesting in front of the office of Senator Dianne Feinstein, the most prominent Senate Democrat to support HOBOR, with signs saying ‘gentrification = violence’ and ‘the developer’s bill of rights.’ A group of protesters attacked a shuttle bus ready to leave for Silicon Valley; the leaders of the main group of the protesters disclaimed the attack, and blamed agents provocateurs, but added that destruction of property is different from violent crime and that to compare the two is itself a form of violence.

“On the ideological right, reactions are mixed. National Review has written in favor of the bill, while Reason continues to reject it. Joel Kotkin has editorialized that the bill ‘paves the way toward high-rises that Americans continue to reject.’ Tea Party support is split, but largely negative; several groups have vowed to sue, connecting Democratic support with Agenda 21, the UN position paper encouraging more urbanization and restrictions on suburban sprawl. Senator Ted Cruz threatened to filibuster the bill, and openly called for a constitutional challenge. In contrast, Senator Marco Rubio (R-Florida) plans to vote for the bill. In his statement, Rubio pointed to redevelopment in Miami as ‘affordable housing provided by the free market without government subsidies paid by tax money’ and welcomed Democratic support.

“All around the nation, municipalities, business groups, homeowners, landlords, and tenants are preparing for the entry of the bill into force, which is scheduled for this September 1st. New York, San Francisco, Houston, and Chicago have all already written draft planning laws designed to comply with HOBOR restrictions, but city planners are still debating how to adapt to a situation without zoning rules to shape urban growth.

“Several real estate companies are planning new skyscrapers in central business districts of multiple cities. In Washington, The Related Companies is planning a 1,330 foot tall, 4.3 million square foot tower in Farragut. In New York, Harry Macklowe, Forest City Enterprises, and Durst Organization are all expected to race to develop the tallest skyscraper in the city, in the East Midtown area; real estate analysts speaking on background expect towers exceeding 2,000 feet in pinnacle height, to overtake One World Trade Center, but closer to 1,500 feet in roof height.

“Outside city centers, development is slower, but analysts expect it to accelerate in the coming years. Facebook has already announced an expansion of its campus as well as the construction of apartment buildings in its home city of Menlo Park, California, as well as Atherton and Palo Alto, to house its growing workforce. However, when asked if this trend means less demand in San Francisco and less demand for tech shuttles, a senior Facebook human resources manager speaking on condition of anonymity said, ‘Most of our new hires still prefer to live in San Francisco, so we may end up seeing more commuters from the city, at the expense of the East Bay.’

“Ultimately, analysts agree, it is difficult to gauge the long-term effect of HOBOR this early. However, as an early indication that there would be a move to established business districts, stocks of publicly-traded companies involved in purpose-made redevelopment districts, such as the Boston Seaport and New York’s Hudson Yards, are down by an average of 3% since Ryan announced that he had secured support for the bill, whereas those of other major developers have been sharply rising, by 2-15%. But when asked whether they will scale back their plans, officials in Boston have replied negatively, and have even suggested a $2 billion Silver Line expansion to serve the Seaport.”

Link. Chuckle. Supreme Court, Koch brothers, come on.

Pointless subway geekery

 I somehow managed to score 100% on this quiz, which asks you to identify cities by real-scale maps of their heavy rail systems. In my case, I think the information comes from riding enough subways to be able to eliminate possibilities when I did not recognize the city, but who knows? Anyway, it was fun, so here it is.

The Washington Metro was not, sadly, included.

Scooters and another rumination on zoning

 One of the things about owning a home is raking up leaves. It’s actually not un-fun, it’s just that the boy wants to help. That said, when your neighbors succeed in making big piles, they are perfect for getting your new scooter stuck.

I admit, I do like living in a single-family house right around the corner from a Metro station and within walking distance of everything; we own a car, but need it only for my wife to get to work. Other than that and the occasional day trip to Baltimore or Prince George’s County, we never use it, not even for groceries. 

I am aware that my house only exists because of zoning. But I would still gladly vote to abolish that zoning, even though I know that I would run the risk of having somebody build something that would put my house in shadow. It is just the right thing to do.

It also opens the possibility that somebody would come along and make us an amazing offer on our house (my friend Bernard nods here in satisfaction) which is why all the people on the border of downtown Bethesda want the area of high density extended to them. Of course, the people who would then be on the border have shorter time horizons and oppose said extension. Ni modo.

Anyway, there is the answer to your question, NYCMT! How are yours, by the way?

$50,000 homes in Palo Alto?

 Courtesy of Alex Harrowell, here is an interview Larry Page gave to the Financial Times. The interview is full of a lot of blather and show Page’s resolute determination to avoid thinking about the negative consequences of technological unemployment. Most of the interview should make you a little angry, even if you agree with his contention that there is not enough innovation around making cheaper goods and physical services.

But not all of the interview is content-free. At one point, Mr. Page says: “Even more than technology, he puts this down to policy changes needed to make land more readily available for construction. Rather than exceeding $1m, there’s no reason why the median home in Palo Alto, in the heart of Silicon Valley, shouldn’t cost $50,000, he says.”

Alex asks, “Does anyone know what Larry Page means by this?” In comments, Alex adds, rightly, “He’s [Larry Page] confusing incremental and order-of-magnitude changes, which is actually a very un-codery thing to do.” 

That’s true, but Page isn’t being crazy. He’s off-base, likely by a factor of two, but acceptably so for an offhand comment in a general interview. Consider:

Imagine the city allowed as-right floor-area-ratios above ten for the whole city, with no setbacks other than the sidewalk right-of-way and no parking requirements. Multifamily 4-7 story housing in the less-regulated parts of the Sunbelt costs about $150 per square foot. In suburban Miami, basic modular construction (no frills, but in code) can go as low as $100. The reason construction costs are higher in California is not fully understood but much is due to the cost of planning delays — you need to line up financing in order to get a building permit. The more uncertain the planning, the higher the costs. So also imagine that the planning delays were gone.

In Brooklyn in the 1980s the Nehemiah Housing fund put up 1150-square-foot rowhouse for a cost (in 2013 dollars adjusted using the average wage index) of $93,100 ... that’s about $81 per square-foot for a block-long row of small homes. That gets you a small apartment for $50,000; one upstairs and one downstairs. Later houses went up in Brooklyn for about $110 which is the ballpark for the $133 all-in unsubsidized cost for housing that went up in East New York in 2009.

Assuming a cost of $150 gets you a 300-square-foot efficiency for $50,000. (At $81 you get 625.) You could push the cost down to $80 by building to five stories and eliminating elevator requirements. For example, I was a teenager in a 670-square-foot three-bedroom one-bath apartment in a Manhattan walkup. You could build a similar unit pretty cheaply today. It would just happen to be illegal.

Land costs are an issue for Palo Alto and there are overhead costs. Land runs north of $3.9 million per acre, or $90 per square foot.  Google bought land for $75 per square foot. At a floor-area-ratio of five (e.g., five-story buildings covering the entire lot) that’s about $18 per square foot of interior space. And then there’s financing, sales cost, and profit … that will boost costs by 24% above development costs.

The total comes to $80 (construction) + $18 (land) + $23 (overhead) = $119 … or one small 420 square foot efficiency for $50,000. Assumes external staircases and corridors. Not a pretty building, no, but remotely possible. 

Now, I doubt that there’s enough demand to cover downtown Palo Alto with cheap five-story modular walk-ups filled with tiny efficiency apartments. So the claim that average costs in Palo Alto should be $50,000 is silly. But the claim that you should be able to buy an efficiency for $50,000 within a short commute is not. And you could cover Palo Alto with East New York-style rowhouses at a cost of $264,000 per unit for two 800-square foot units, including land. ($207,000 for the 2,321 square-foot lots; $133 per square foot construction for 1,640 square feet of building; 24% overhead.) Not bad. Hell, not bad at double that cost and maybe even doable for $202,000 at $80 construction cost and half the profit margin.

Eventually you can build this:

Which would look like this as you sped past on Highway 101 in your robocar:

That is completely awesome! I would live a couple blocks from that. Wait, I live Friendship Heights in D.C. near the city line with a certain part of Bethesda ... I do live a couple blocks from that! Too bad the local governments keep the development bottled up even where I live. 

Am I wrong? Did I make a math mistake? If not, a cheap Bay Area is possible! Hell, it’s easy. $50,000 efficiencies, here we come!

But I am a pessimist and doubt that it will ever happen. No two-story rowhouses, no five-story buildings. Be prepared for America’s first gilded metro area! 

Brooklyn needs buildings, lots of tall buildings, and Bloomberg was bad for America

For those of you who don’t know, Junior’s is a bakery near the Fulton Mall in downtown Brooklyn. My relatives swear by it, although I don’t quite grok their enthusiasm. Still, it’s pretty good.

And it’s closing, but not for good. Rather, they’re going to build a tall residential building! Yes, it will be a luxury development, but that’s all right: rich people will live there instead of bidding up lower-quality but well-located existing housing. Then the restaurant will reopen on the ground floor.

All good! Well, there’s a fly in the ointment, which is that the city, idiotically, puts in an as-right height cap in that area of 20 stories. Fortunately, in New York nearby properties can sell their unused air rights to allow for buildings to exceed the cap. J.P. Morgan owns a two-story landmarked building nearby and is willing to sell its rights. The end result? The building could go up to 50 floors, which is around the point where high-rises stop being economical and become pure prestige projects.

Excellent!

Only not to these pendejos, who are bad for Brooklyn and bad for America. Brooklyn Magazine is bad.

Gah. Don’t ask me, I tell people I’m from New Jersey these days.

Honestly, though, it isn’t the hipsters. It’s everyone. In 2005, Bloomberg downzoned the part of Brooklyn that Tony Manero would still find familiar. And that came after a 1978 downzoning that already made no sense, insuring only that “white flight” from the declining parts of the city would wind up in the suburbs. It is true that he allowed residential development in industrial areas, but his mayoralty can be blamed for allowing the current housing crisis to develop. Details here.

Still, the mayor was not approving changes in a vacuum. Consider my cousin Ray, who lives in Brooklyn and is not remotely hipsterish. He opposes tall buildings that you can’t possibly see from Midwood, let alone ones in Midwood.

And the madness continues.

More on America’s housing insanity

In 1993, I rented with some friends a large three-bedroom apartment on Whisman Road in Mountain View. We paid $1,690 per month in 2013 dollars. ($1050 nominal.)

For a bit of 1995, I rented a one-bedroom apartment on Treat Avenue in the Mission District of San Francisco. It had its own one-car garage attached. (A very tiny garage, but I could and did park my little 1980 Plymouth Champ in the spot.) I paid $1,220 in 2013 dollars. Four years later, in the summer of 2000, I re-rented the same place for the same nominal price; the real rent had declined to $1,030.

Most miraculously, I also rented a tiny one-bedroom in Mountain View between 1995 and 1998, with occasional sublets. The rent. Hold your breath: $604 in 2013 dollars. Yes, it was terrible (the “kitchen” was only big enough for a mini-fridge) and there was drug-dealing in the cul-de-sac. (Higdon Avenue, if you know the area.) So what? It was cheap.

It may be hard to believe, but back in 1992 you could grab a two-bedroom on Alma Street in Palo Alto for $1,330 in 2013 dollars without needing to search for more than a single day. A housing search consisted of driving around looking for the “for rent” signs and then calling the landlords. This situation briefly changed during the high point of the late-nineties Internet bubble, but appeared to return to normal right after the dot-com bubble burst in early ‘00.

I cannot find what the Treat or Higdon Avenue units rent for now (although both buildings still exist, unchanged from the outside) but the Whisman Road complex is professionally managed and can be found on the Internet. There are currently no three-bedrooms available,but the website states that the floor plan we rented for $1,690 (the Gramercy) now goes for between $3,030 and $3,580. (Two-bedroom flats can be had for $3,060.) That is a real increase somewhere between 1.8 and 2.1 times our old rent.

Think about the housing market in the Bay Area and weep for America. Then get really really really angry at every middle-class homeowner in the damn state of California.

For a well-researched article on how the Bay Area got to its currently surreal point, see this piece.

The article tries to find a bit of relief in the fact that the Bay Area has a great deal of intergenerational income mobility. In San Jose, for example, a child born into the bottom fifth of the income distribution had a 12.9% chance of making it to the top fifth; San Francisco was second with 12.2%. (Mountain View is considered part of San Jose for the purposes of these data.) This puts them in the top five, along with Salt Lake City, Boston, and Pittsburgh.

So how dire can the situation be? Sure, expensive housing is bad, but the Bay Area remains good for poor people.

Only that may be wrong. Consider that the study looks at people born in 1980-82. It then measures their parents’ income in 1996-2000 and their personal income in 2011-12. The problem with using the study dismiss the effect of the recently-created housing shortage is twofold.

First, the Bay Area does not do well in some mysterious unexplained California miracle sort of way. The spatial variation in intergenerational mobility is strongly correlated with : (1) residential segregation, (2) income inequality, (3) school quality, (4) social capital, and (5) family structure. Inasmuch as the current housing insanity affects those five variables, it will alter future intergenerational mobility. High rents, for example, make it harder for poorer people to live in good school districts or partake in the collective social capital of rich areas.

Second, a lot of poor households in the Bay Area owned their homes in 1996-2000. Those homes  increased immensely in value. It is quite possible to believe that the Bay Area overperformed places like Minneapolis and Houston because of that increase in wealth. If that is true, then the Bay Area will fall down in the rankings as home-ownership moves increasingly out of range. (And, presumably, as price increases slow down by pricing out even high-income buyers. Although who knows what the limit of that process actually is?)

In short: (a) The housing crisis really is never-explored territory for much of the United States; and (b) past performance may therefore not predict future results.

The American housing crisis

I am beginning to think that the United States is facing a terrible housing crisis. The fact that we are is pathetic. We know how to build high-density housing in inexpensive ways. But we do not allow it. So places that boom in the northeast and California see little housing growth. But they see price explosions.

We are moving to Washington this summer. Our rent on a two-bedroom apartment (big enough for two adults and two small children) is $2525. When we moved in back in 2009 it was $2300. That is an increase of only 1.9% per year. In real terms, no change.

But the owners want to charge the new tenants $3200 for the same unit. That is an increase of 6.8% per year: well over inflation and a clear indication that something is off the rails in the Boston housing market.

The ultimate problem, of course, is that you simply can’t knock down the short buildings on this block and build more high-rises like the one in the background. It’s ridiculous. We are less than a quarter-mile from a T station; residential buildings here should reach 20, 30, 40 stories. But you can’t build them because, uh, Franklin Street is just so pretty as-is.

WTF? What in the name of God is wrong with Brooklyn? Build Brooklyn here! And for those of you in Brooklyn, go build Manhattan over there. Manhattan is great!

Here is my proposal for a tough tight restrictive zoning code.

1. Adjacent units shall not lose more than two hours of sunlight on the shortest day of the year unless their current occupants so agree.
2. Monthly rents on a third of the units in any new rental buildings shall not exceed 0.003% of the median household income in the municipality per square foot. The price of one-third of any new for-sale units shall not exceed 2.5% of the median household income in the municipality per square foot.
3. New developments must at least double the number of units of any housing structures demolished in their construction.

And we’re done! No parking requirements, no height restrictions, nada. Just the above. And truth be told, I would prefer to replace clause (2) with a tax on luxury units. Calling Bill de Blasio! (Or Muriel Bowser.)

Note that this is an incredibly restrictive code. Just less so than the bullshit we currently have. Historical preservation is stupid, un-American, and contributes to income inequality.

Massively. How much of the increase in income inequality is due to changes in housing costs? I suspect it is large; someone should do the decomposition.

One of the things that is wrong with America is ...

... that people can actually stop the construction of high density apartments in Little Havana in the name of historic preservation.

Preserving “historic residences, including bungalows and small apartment buildings”? In Little Havana?? Are you kidding me?? Words fail. Seriously, folks, if the market wants to tear this crap down and build anything else, especially high-rises, we should let it.

He would agree were he still with us. And that is actually Coral Gables, which would also be well-served by being rebuilt from scratch. The construction bubble in Miami did many things, but destroying stuff worth preserving was not one of them. People, there is no place in this city that would not be improved by plonking a 30-story high rise on top of it. Caray.

Race, roads, or regulation? Canadian and American cities

 When asked why Canadian cities are so built-up compared to American ones, Martin Wisse of the Netherlands suggests, “No white flight.” It’s an appealing answer, given America’s massive urban ghettoes, but it’s almost certainly wrong.

 

Consider the differences between Seattle and Vancouver. For an American city, Seattle is very white and disproportionately childless. The city, however, splatters across the horizon, with few high-rises outside the central business district, while Vancouver is relatively compact and its proliferating residential towers reach to the sky. All this despite geography in Seattle that should encourage density!

The Seattle-Vancouver comparison alone should make you doubt the validity of the “white flight” hypothesis. There are other reasons, however, to reject it. Until 1990 none of Canada’s metropolitan areas declined in population — the country didn’t see shifts in economic geography like what turned cities like Buffalo, Detroit, New Orleans, Flint, Akron, Pittsburgh, Dayton, and Syracuse into what they are today. (The 1990s recession changed that, but the places that shrank tended to small, and located in Atlantic Canada or northern Ontario and Quebec.)

More importantly, white flight can’t explain why the nonblack sections of American cities look rather different from their Canadian counterparts. Nor can white flight (by itself) explain why American suburbs strongly resist residential high-rises, whereas Canadian ones (Montreal excepted) take to them with relative zeal. For example, Chicago’s North Side does not look like Toronto, save for a belt along the lake. Nor does Boston’s central and northern urban area — Back Bay, South End, North End, Southie, Brookline, Allston, Brighton, Cambridge, Somerville, Chelsea, Watertown, Arlington, Belmont, Charlestown, and East Boston — look much like East York or Scarborough. It is true, of course, that the great American ghetto is an American phenomenon, created by America’s strange racial caste system, but racial tensions don’t explain why Houston looks very different from Calgary.

So if isn’t race, then what is it? Another possible culprit is roads. American cities have a lot more freeway-miles per capita than their Canadian counterparts. The logic is not that freeways destroyed the neighborhoods that they cut through. I’m sorry, but speaking as someone who grew up in neighborhoods that had roads driven through or beside them, that argument is just stupid. (Yes, this applies to Toronto.) The plausible logic, rather, is that inner city neighborhoods were always relatively undesirable, but without subsidized freeways it would have harder to leave them for lower-density suburbs.

I am sympathetic to this argument, but I have some doubts. (Not least that my wife and I prefer dense inner city neighborhoods to the suburbs.) It is almost certainly true that American-style sprawl requires massive investment in freeways. Fewer freeways, more density. More density, more high-rises. The problem? If density the key, why does Los Angeles look so different from Toronto despite being denser? The 11.8 million people who live in Los Angeles’s urbanized area (that is, the area defined by the lights visible from space at night, minus fringe areas with a population density below 1,000 people per mile) are packed in at 7,068 per square mile, whereas their 4.6 million Torontonian counterparts live at 6,835 per square mile. Perhaps it is the freeway net that allows Los Angeles to splatter its density more uniformly than Toronto, but that feels ad hoc as an explanation, especially since Toronto’s suburbs are actually very densely-populated compared to Boston, Chicago, or New York.

The other possible explanation is regulation. In this view, roads may have contributed to American sprawl, but zoning is what really keeps it in place. For this view to be correct, Canadian zoning has to be less strict than American zoning. Are Canadian cities more likely to approve density, allow smaller lots and narrower streets, require fewer parking spaces, and permit higher buildings? This is not hard to believe, considering the far greater control that provincial governments exercise over municipalities in Canada, but I do not know the answer.

 

In point of fact, the “roads” and “regulations” hypotheses may be hard to disentangle. If a lack of roads drives up land values (by limiting the effective supply of land), then there will be more political pressure to allow dense development. After all, people need places to live. On the other hand, if it is easy to get out to the burbs (via all those freeways) then there will be less political pressure on inner-city areas to permit taller buildings. Cambridge, for example, saw a high-rise boom in the 1970s, which the city deliberately stepped on. As a result, the Central Square subway stop (where we live) is stupidly surrounded by two-story buildings instead of 20-story towers. Our building was built in the early 1990s, and was effectively capped at five floors. Without Boston’s two ring roads (I-95 aka “Route 128” and I-495), the pressure to build up in places like Cambridge would have been harder to resist.

 

In fact, however, it is possible to disentangle between “roads” and “regulations,” by testing for the effect of zoning changes on land values. Of course, it’s never that easy — endogeneity is always a problem. Ed Glaeser has a paper suggesting that zoning is determinative in shaping American cities in California and the East Coast north of Virginia. He has a particularly-detailed study of Boston that supports the zoning hypothesis: market forces (given the existing road net) would make Greater Boston rather denser were the regulations less restrictive. (Newton would look like Brookline; Brookline would look like Brooklyn; and Boston itself would be filled with high-rise towers.) On the other hand, his same work implies that in most of America it is the road net what produced sprawl, and not race or land-use regulation.

In short, most American cities sprawl because the federal government built roads out to the horizon. The exceptions are along the coasts, where U.S. cities would look more like Canadian ones in the absence of tight zoning laws. The increasing segregation of immigrants appears to be an effect of the above, rather than a cause. Of course, the great American ghetto is a striking and horrible thing, but we would have had them with or without freeways and zoning.

Canadian cities really are different

 I was in Toronto last week. I’ll discuss the reasons in a later post. My wife and I stayed out in the suburbs. Our hotel was in Scarborough, right north of Highway 401.  We spent most of our time (when I wasn’t downtown at the University of Toronto) in the further suburbs of Pickering and Ajax. Most of it could be in the United States.

Downtown Toronto is about as generic as it is possible for a North American downtown to get. This is not news. And some parts of the suburbs, like Ajax (pictured above) look like the more depressing parts of Orange County, California, save for the houses being in a slightly different shade of Caucasian skin tone. But even after saying all that, when my father-in-law said that Toronto really doesn’t feel like America, we knew exactly what he meant.

He meant the high-rises. You see giant towers everywhere, where you wouldn’t expect them to be. We were in a 14-story hotel, for example, across a ten-lane freeway from a sprawling shopping center and not far away from subdivisions like the one above, where every house looked alike. But there were two ginormous 30-plus-story condo towers going up right next door. And there was nothing unique about this. High-rises sprouted in parts of the city where you would be very surprised to see them south of the border. You really need to rent a car and drive around to appreciate the difference; hanging around downtown or taking the subway won’t show it to you.

But I am skeptical of both statistics and personal observation. I won’t relax unless they agree. So I went to the Emporis website, and pulled up statistics on buildings over 35 meters or 12 floors. What do you know?Normalized by population Toronto ranks below the high-rise forests of Honolulu and Vancouver, but looks more like the megalopolis of New York (and the D.C.-Arlington core of Greater Washington) than other mid-sized North American cities. Chicago and Philadelphia don’t come close. 

 

Still, the above chart is misleading, because Toronto proper contains 45% of the metropolitan population. In other cities, like San Francisco or Miami or Seattle, the central city is just a sideshow — an important neighborhood, but not representative of the metropolitan area. Miami-Dade, which I know very very well, has a high-rise core and a couple of clumps elsewhere, but nobody would call the place a high-rise city. Ditto San Francisco — Marin and the East Bay and San Mateo are all low-slung places. So I cut out all the places where the center city holds less than a quarter of the metropolitan population.

 

The result is even more dramatic. Toronto is up there with NYC as an outlier. In fact, all Canadian cities are outliers, even the ones that look like they aren’t. Why? Well, central Ottawa, Edmonton, and Calgary contain respectively 67%, 63%, and 85% of their metropolitan populations. Chicago, Las Vegas, Philly, Houston, and Los Angeles, on the other hand, only contain respectively 30%, 29%, 26%, 38%, and 30% of their metropolitan populations. Their central municipalities are a big part of the metropolis, but the cities as a whole feel a lot more low-slung than the central city figures indicate. Central Calgary and Edmonton, on the other hand, feel like parts of much bigger metropoli than they are when you visit, because they’ve got these big crowded bustling and disorderly urban cores than you don’t associate with North American cities that have only a million or so people in them. 

Canadian cities really are different, and it really is something that you can’t fail to notice without needing to look very hard. The only way you’d fail to notice is if your only exposure to America consisted of Honolulu and New York. Now, that isn’t hard to imagine, but it’s gotta be rare.

But this just raises a question: why do Canadian cities sprout so many more high-rises than their American (or Mexican) counterparts? 

ADDENDUM: Another way to slice the data below the fold.

The great recession

  This weekend, my wife and I made our way up to Fort Lauderdale Executive Airport to grab a helicopter ride above ground zero for the real estate collapse.  It isn't just in marginal neighborhoods, as some observers have suggested.  Spot the foreclosure in this photograph.

In fact, if you look closely, you can spot a second distressed property in the picture. 

Nor is it only individual single-family houses.  South Florida is dotted with what Mexicans used to call “obras negras”:  stopped construction projects left to rot.  And in the South Florida humidity, they will rot:  unsealed foundations will flood and unprotected fixtures will erode.  They are calling them “ghost towers” down here. 

It was a Sunday, but note the lack of construction machinery around the site.

In fact, readers of this blog have already had contact with what became a pair of ghost towers.  Last year, we spotted my brother working on a high-rise located on the border of the Everglades, far out on the urban edge, near nothing but a ginormous shopping mall.  Now it is an infamously distressed complex in which, as far as the local papers can figure, no one lives.

Of course, the recession is also visible at ground level: