Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Thursday, May 05, 2016

Housing roundup

Been sick, and many interesting articles on various elements of housing have been piling up in the interim.

London.  London is one of the strongest economies in the world and the strongest regional economy in the UK.  This has tremendous impact on the local housing market.

Comparable to New York City, a decent railroad commuting network has reduced a bit of pressure on the market by providing farther out access as a form of railroad-enabled sprawl.

London continues to invest in the expansion of this network through initiatives such as the creation of the London Overground system as a way to better position and market commuter rail services and the London Crossrail project, which will improve and expand east-west railroad service to expand high quality long distance railroad.  The project will expand London commuter rail capacity by 10%.

The UK had a great track record in housing production on the part of local governments that has been demonized and diminished since the Thatcher Governments, and has been further diminished by the Conservative governments in power now.

Like in the US, the private sector isn't set up well to build housing for the less well off.  The Guardian argues ("Housing in crisis: council homes were the answer in 1950. They still are -- The only way to redress the shortfall in the number of UK homes is a huge programme of public building") that the case for local government constructed housing "council housing" is no less relevant today and the most likely "fix."

But this fix would require a complete reversal on the part of the government in charge and is therefore unlikely.

Super-gentrification.  The Economist writes about rising housing prices in global cities ("Global house prices: Hot in the city - Valuations in globalised cities are rising much faster than in their hinterlands").

What Loretta Lees called super-gentrification when writing about the impact of hyper-incomes within the NYC-based financial industry and the driving up of housing prices in the most exclusive areas of "the city" turns out to be a more widespread phenomenon in "many cities" where the most successful global cities are seeing an extranormal increase in residential housing prices as these places capture a greater percentage of economic activity within their home nations and attract investment from overseas.
Summary. This paper is an empirical examination of the process of ‘super-gentrification’ in the Brooklyn Heights neighbourhood of New York City. This intensified regentrification is happening in a few select areas of global cities like London and New York that have become the focus of intense investment and conspicuous consumption by a new generation of super-rich ‘financifiers’ fed by fortunes from the global finance and corporate service industries. This latest resurgence of gentrification can be distinguished from previous rounds of revitalisation and poses important questions about the historical continuity of current manifestations of gentrification with previous generations of neighbourhood change.
Image from Montgomery Community Media.

We don't want the times to be a changing: Suburban development in the 21st Century and Montgomery's County.  Even in the best of circumstances, change is difficult.

Suburbs face significant challenges as the 20th century postwar suburban land use planning paradigm of automobile-enabled connectivity is displaced by the reduced economic circumstances imposed by a now more fully globalized economy.  Counties need to concentrate economic activity and add population to better utilize limited resources, especially as the infrastructure built in the boom times has aged and is due for replacement or rehabilitation.

The Washington area is leading the way for some of this as districts in Montgomery County, Maryland (White Flint) and Fairfax County, Virginia (Tysons) are densifying and reorganizing their land use functions to re/create mixed use districts and enable transit and sustainable mobility, in part to maintain their ability to attract younger demographics to their otherwise aging communities ("Why Some Suburbs Are Trying to Be More Like Cities," Wall Street Journal).  Fairfax is seeing a "re-sorting" of economic activity from comparatively disconnected places to the county's transit line corridors.

This London Underground poster promoting suburban living with high quality transport linkages juxtaposes the image of a crowded London with the open suburbs.   The concept of densifying the suburbs calls into question deconcentration as one of the foundations of what the suburbs mean.

But despite Montgomery County being a leader in this with the White Flint district and its support of the Purple Line light rail line in part as a land use intensification program, the county is experiencing opposition to densification proposals in already denser Bethesda ("There's a new group opposing a more urban Bethesda," GGW) and the Westbard district ("In Montgomery's Westbard, anger and resentment" and "Montgomery Council approves disputed plan for development in Westbard," Washington Post).

Even the most successful counties have to change with the conditions in the metropolitan commercial, retail, and residential landscape.

While planners understand this, not all elected officials are on board, and most often citizens do not.

Houston: annexation is essential to the city's "success."  An article ("Five Cities That Are Leading the Way in Urban Innovation") in the Wall Street Journal special section on "The Future of Cities" uses Houston as an example of success in maintaining relative affordability in housing because of "lack of zoning", when I think that has little to do with, especially since "zoning" is applied indirectly in many cases through restrictive covenants on certain types of uses.

Houston's major success comes from being the center of the oil and natural gas sector.  Of course, the state of that industry today demonstrates that a resource-dependent economy is cyclical, rising and falling with the value of the resource.

Houston's ability to keep land and housing costs low comes not from a lack of zoning, but from an aggressive expansion and land annexation policy ("Annexations in Houston Or How we grew to 667 square miles in 175 years," City of Houston: "Century of annexations grows city's land area to one of the largest in U.S.," Houston Business Journal).  For example, New York City is 305 square miles and has 8.4 million residents, while Houston is 667 square miles with 2.2 million residents.  Even into the 1990s, much of this extended area was not built up.

For the most part, existing already built up cities are surrounded by incorporated communities that are resistant to annexation and don't offer much in the way of net revenue increase.

Houston was able to grow its municipal boundaries during the nation's major period of growth in the 20th century while most other cities were constrained.

When you have lots of empty land, it's comparatively easy to expand your stock of lower cost housing.  And oil industry crashes every so often--regionally significant economic depressions--keep pushing down the price of housing in a structurally significant manner also.

Jane Jacobs privileging the rich?  It's the 100th anniversary of Jane Jacobs' birth and as a result there has been renewed attention.  One piece ("Happy 100th birthday Jane Jacobs: It's time to stop deifying you," Slate) argues that her recommendations for city life are dated and only benefit well off whites.

I think that's a pretty narrow analysis.

Jane Jacobs wrote about why a particular set of urban design characteristics associated with cities built before the automobile were important and worth preserving, and that the alternatives proposed--what we call "urban renewal"--would destroy what made those districts of the city worthwhile and successful.

It's fair to say that time has proved that she was correct.  It's pretty much a truism that urban renewal--making over city districts into superblocks and towers--hasn't worked very well in terms of long term place value as many of these districts are being reconstructed because they haven't been sustainable.

But in terms of these places, what Christopher Leinberger calls "Walkable Urban Places" or "WalkUPs" being exclusive communities of the well off, it's more the case that the social, economic, and organizational conditions that typified urban economies up to 1960 have changed significantly in ways that Jane Jacobs, and many others, were unable to anticipate.

While the urban design principles have remained the same, the levers that manipulate them--finance, real estate development, the organization of retail sector--have been reorganized from operating on a local scale to one that is regional, national, and depending on the market, international in scope.  All the changes have privileged capital at the expense of community and individuality.

Already built up places possessing the characteristics Jane Jacobs wrote about were and are in short supply.  As demand for those places increases, the price goes up.

And yes, the solution was to build more "nice places" based on the urban design principles that Jane Jacobs identified as neighborhood- and place-affirming, not unlike how "New Urbanism" movement began doing so, starting in the 1980s.

The market economy makes nice places for people who can pay a lot of money for them.  The market economy doesn't focus on meeting social objectives and spreading social, community, and organizational capital around.

It's the job of government to step in when the market economy isn't working, in this case, producing housing generally and creating attractive places to live for the less well off and the impoverished.

Because in the US (and UK) especially, the neoliberal philosophy of a market-driven economy and society has demonized government and diminished the ability and authority of government to be a player in the housing market, furthering the disconnection of the impoverished.

That's not the fault of Jane Jacobs.

Nor is it Jacobs' fault that housing policies, at least in the US, have focused more on "housing production" and less on the "creation of quality communities" that include a significant amount of social housing.  Until recently, many HUD policies forbade the inclusion of mixed use elements in public housing communities, and certainly not incubator type facilities that could be used to assist people in creating businesses (such as a community kitchen to support food-based businesses).

Atlanta suburbs and the persistent lag in housing values in African-American dominated communities: how much does urban design and place value matter?  An apt point in the piece on Jane Jacobs is that the planning profession hasn't been very good at dealing with equity planning.  I agree, and one of these years I'll finally write the monograph I've been promising on the topic, which is relevant to the following.

The Washington Post has a long piece ("The nation's housing recovery is leaving blacks behind") on the long term impact of the 2008 recession/depression on the housing market in the Atlanta suburbs, finding that housing values in African-American dominated areas lag systematically from white areas.  Prince George's County, Maryland has the same issue.

While there is no question that racism has dominated the US housing market for generations and it impacts housing values structurally and systemically, in some posts last year on the structurally depressed housing values in Prince George's County, I argued that a goodly part of the difference in long term value likely had to do with the failure to simultaneously develop "place value" along with "housing value" when developing new housing areas--there's a difference between a subdivision and a neighborhood or a community.

Then, I said there were "five components of housing value"*:

1.  House value: comprised of the characteristics of the house matched with the housing preferences of buyers/consumer market segments.

2.  Neighborhood place value: neighborhood characteristics including public safety, schools, civic assets, access to a neighborhood commercial district, the overall charm and quality of the built environment especially its urban design elements, neighborhood civil society and community building, etc.  (One way to measure this would be the WalkScore of a community, which measures the proximity of retail and civic amenities.)

3.  Neighborhood location value: proximity to key activity centers and other destinations, employment centers, proximity to Downtown, etc.  (Walk Score is a measure.)

4.  Neighborhood mobility value: access to and presence of transportation infrastructure including walking, biking, transit, parking, the road network, car sharing vehicles, etc.  Another way to measure this is in terms of automobility dependency.  (Transit Score, Walk Score, and Bike Score are measures.  TransitScreen is a product that displays availability of sustainable mobility resources.)

This TransitScreen-based display is in Silver Spring, Maryland, but could be easily delivered by being geocoded to screens of all sorts (computers, smartphones, displays in office buildings and retail centers, at bus stops) at the neighborhood scale.

5.  Community place value: the overall characteristics of a city/town/suburb including quality of governance, overall quality of schools, public safety, town centers, cultural and civic assets, community involvement, etc. and the place of the neighborhood/subdivision within it.

* Note: now I would say there are six values.  Value #1 should get separated into the "use value of the house as a house" and the "exchange value of the house as a lot that is rebuildable".  That helps address the issue of teardowns, upsizing ("As high-dollar houses crowd onto tiny lots, teardown fever is sickening neighborhoods across Nashville," Nashville Scene) and other types of rebuilding.

My sense is that in many of these Atlanta-area communities, like in Prince George's, new housing districts weren't built within a wider framework of civic and community amenities.  This is in part a failure of planning in that housing was built instead of more complete communities, and housing alone is less resilient than communities when it comes to dealing with exogeneous shocks to the system.

It's tied to persistent racism in the economy, but also a separate issue.

Technically, Leinberger's research defines "walkable urban places" only if they are regionally serving.  I'd argue that framework needs to be extended somewhat.

Before I'm willing to give that much credence to the Post article, I'd like to see this data mapped to urban design and community characteristics outlined in the "WalkUPs" literature.  Professor Leinberger's research group has already studied Atlanta, with the proviso that the data set be extended to include "non-regionally significant communities."

Commuting costs as an element of housing affordability.  It's not news that housing is the #1 household cost and transportation is the #2 household cost, and the cost of the two combined should be considered when choosing a residential location--that higher housing costs can be offset by cheaper transportation costs, etc.

In the US, the Center for Neighborhood Technology has been the leader in communicating this, promoting special mortgage products (the Location Efficient Mortgage) and the Housing+Transportation Affordability Index.

Initiatives in Canada focused on creating similar understandings and calculators are discussed in the Toronto Globe & Mail article "Why commuting costs can make the ’burbs more expensive than living downtown."

Getting back to Atlanta, it would be interesting to look at the Washington Post data in the context of both the WalkUPs literature and the Housing+Transportation Affordability Index.  If transportation affordability is low, I'd aver that contributes to the long term depression in housing value, even though as a rule sustainable mobility is less valued in the Atlanta metropolitan area, compared to more traditional transit-centric communities like Boston, Philadelphia, New York City, much of New Jersey, Washington, Chicago, San Francisco, etc.

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At 9:28 AM, Anonymous charlie said...

Sometime around 1973, we made a collective decision in the US that we were going to (sotto-trump voice) have the biggest, nicest houses in the world.

And we did it! Our houses are huge and with stainless steel appliances and private bathrooms for everyone.

Of course we had to go into huge amount of debt to do that,but that's ok. Debt is fungible.

Collectively, of course Canada went another route. NO question that Vancouver, Edmonton, Calgary, Toronto and Montreal and very nice cities and urban areas.

I've often thought the mismatch is that our federal system of funding really is designed to benefit small cities and their suburbs. Think San Antonia, or Grand Rapids, or Colorado Springs. Rather than focusing on our top 15 cities.

Much harder to create "Walkups" at that scale. And much harder to balance the density there.

I'm trying to think of a example of where you can build Walkups at prices middle class Americans feel comfortable at. We used to -- it was called Brooklyn and the Bronx, but you can see why moving to Long Island was tempting as well.

At 10:13 AM, Blogger Richard Layman said...

well, that gets back to the "Petro States of America" argument. As long as the US is a major oil producer, its policies are set to preference oil consumption, which suburbanization does.

The problem now comes from a completely changed economic paradigm. The US's growth and success came from being a very large country blessed with natural resources and no substantive aggressors on its borders.

We're not that way anymore, and we can't afford to maintain that way of life. Johnny come latelies to it (Af-Am subdivisions in PGC or Greater Atlanta e.g.) are the least well positioned to maintain value in terms of exogeneous changes in conditions. It's not so much about race.

Two things (which you know already). First, we're no longer a semi-closed economy. The US is still dominant, but part of a global economy and large companies aren't place-bounded in the way they were 100 years ago before fully integrated transportation, logistics, and (now digital) communication systems.

Meaning that Indian call centers can take away jobs, etc. But also that traditional production is organized on a global, not national, basis. No way could all the jobs that had existed before stay in the US as the economy became organized globally (e.g., Caterpillar produces machines overseas not just in the US).

Hence the decline of US factory jobs. It doesn't matter what people like Trump say, those jobs are gone.

Second, manufacturing is so much more capital intensive now that it doesn't generate near the same level of employment.

Whereas plants used to employ many thousands of people, now the numbers are in the hundreds.

E.g., that point I made that in the re-creation of Hostess after its bankruptcy:

- before bankruptcy, 14 plants. After bankruptcy 5 plants.
- but then they sold one plant, and closed another one, leaving 3 plants out of the original 14
- a $20 million equipment and process upgrade in one plant means that plant now produces 70% of what had been produced by the 14 pre-bankruptcy plants.
- but with 500 workers instead of 7200 workers
- and grossly, tweaks to the chemical makeup of the products means they can stay on the shelf in the warehouse for up to 65 days, vastly reducing product discard (remember the old Hostess resale stores for old goods? I think for a time there was one in Florida Market, but it might have been Entenmans).

At 9:38 AM, Anonymous charlie said...

Well I was thinking more of post Breton Woods financial conditions rather than the oil-state argument.*

(Although I'll grant you that a large part of the difference between Canadian cities and ours is just the price of gasoline, and Canada is far more of a petro-state than us)

Post Breton woods, we started having enormous amounts of money to invest. Started to increase debt (both government and household) and increase unemployment.

Because in 1970 and in 1980 we didn't have a productive may to invest that money -- and it went into housing.

Or as I alluded to above -- luxury housing -- to the extent by the 1990s we have the nicest housing in the world, and it only blew up from there.

(I was at a friends million dollar townhouse in Arlington, and noted the bathrooms and finishes were not up to modern standards -- place was built in 1995)

And of course the DC area benefitted tremendously from government debt and that expansion.

(Saw a great quote form the former mayor of Curitabo that if you want sustainability, slice off two zeros. Lots of puff pastry around here to slice)

Sadly the only national level discussion coming here is from Trump and his trade gap issues. The problem is easy to solve (Mandatory 35% tax on treasury bill payments) but it obviously chaotic.

I guess that is the problem with the capital budgeting issue. Accepting is a powerful force -- things do balance. But at these sub-national and local levels it looks as if you can NOT balance them for a long time.

* and the 30 year mortgage, which isn't a good vehicle for condo and multi-unit ownership, as the useful life of a condo is far shorter than a house as costs rise.

At 10:39 AM, Blogger Richard Layman said...

As I have said many times, I'm not so good at macroeconomics, but I get the gist.

wrt your Bretton Woods argument, similarly I've said the reason that mortgage rates had/have been so low is that in fact the economy "was bad" generally, so monies/investment went into housing, and as you've pointed out many times, sloshing funds meant people bought bigger not smarter.

e.g., your point about "sustainability and two zeroes" I think of urban transport not being dependent on automobility as an element of that kind of sustainability, and smaller houses (rowhouses, etc.).

OTOH, there is plenty of overhousing in the city too. Two person households with massive houses. Even us, we have about 1000 s.f. on our main floor, and could expand significantly upstairs and downstairs if we had the need.

And your point about 30 year mortgage product and condos is very insightful. It's the flip side of a point I've made for about 11 years, that the flip side of mixed use commercial districts and multiunit owned housing is that if the facade sucks, you're stuck with it forever, because residents aren't likely to approve a special assessment for reskinning, unless it is required because of physical issues (this came up in NYC recently with a particular 1960s development).

I guess though you could apply the Toronto Tower Renewal program to this issue going forward.

But anyway, yes, the mortgage products should probably be subtly different. And while I don't favor it for personal reasons, it seems like the Canadian method for mortgages probably makes more sense, allowing for repricing the value of money every five years, which might encourage more locally-owned portfolio investment in mortgages. E.g., the problem with Fannie Mae is that while it aids liquidity, it disconnects (or it did before changes in underwriting rules) responsibility for maintaining economically viable housing submarkets, instead it was just about generating sales/mortgages and selling them off.

... and that gets to the point about quality materials. I got into a debate on a GGW thread about this, where the person disagreed with me about the better quality of older homes such as my 1929 bungalow. For the most part, I think it appeals to me more than new construction, unless out of the Sarah Susanka "Not so big house" movement, you can afford the best materials, basically a craftsman style for 21st century.


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