Community planning, capitalism, and housing/real estate development

 October is National Community Planning Month.

==========

Population growth increases housing demand.  Single family housing zoning makes it difficult to meet that demand.  ArchDaily has an article, "When the American Dream Became the Urban Planning Nightmare," about how most cities are zoned for single family housing, which uses land grossly and how this contributes to significant price appreciation because of the mismatch between housing demand and supply in the face of significant population increases since the time when most cities were built.

In 1930, the US population was 123,000,000.

Today, the US population is about 328,000,000.

Attempts to upzone housing.  The New Yorker also has an article about planning, "The Plight of the Urban Planner," suggesting that the planning profession has an opportunity to "right itself" if it can be successful in addressing and correcting "the housing.problem."

I wish it were so easy.

In developed places, so long as single family housing remains the dominant type, not much can change.  In such places, multiunit housing is being added, but usually only in areas currently zoned commercial and/or in transit stations catchment areas.

But most often, the housing that is being built is not dense enough relative to today's and future demand.  

This 3 story apartment building in Salt Lake has retail on most of the first floor.  It's in a district of single family housing, but in the neighborhood commercial district and is served by transit and is close to downtown.

Relative to housing demand and the need to support the commercial district and transit, the building should be five stories, and more residents would support all these objectives.

But if 1-2 parking spaces needs to be provided for each unit, because few people travel on foot, by bike, or transit, it quickly becomes uneconomic to build more densely as the provision of parking becomes increasingly expensive if it has to be constructed underground.

So housing demand remains greater than supply, and prices continue to rise.

More population reduces automobile dependence, supports transit, walkable neighborhoods, and locally serving commercial districts.  And lack of enough concentrated population (we don't have to call it density) is the primary reason it's difficult to build walkable communities and/or walkable neighborhood serving retail districts as well as successful transit. Without population density not dependent on the car, transit, walkability, and retail can't reach critical mass.

OTOH, since most households don't have a lot of wealth, real estate appreciation is one of the only ways to build the household wealth portfolio, so many residents are fine with constrictions on housing supply.

Even if they argue in favor of affordable and/or access to lower priced housing, so long as it is built somewhere else.

Housing policy as an illustration of economic illiteracy.  I joke that politics is about doing everything possible to ward off the recognition of how economics works--constrained supply raises prices.  Or not charging enough or at all for something (e.g., parking, pollutant discharges, etc.) increases its consumption.

Elected officials understand how more housing provides greater revenues to cities, and at least over many decades, contributes to housing price stabilization.  

But it is the rare politician that is willing to explain this to residents fighting change, not because they are "against housing" but because they want to "preserve neighborhood character."

Is this the fault of planners?  It's not fair to blame planners for this.  Planners are caught in what in social psychology is called boundary spanning, having to satisfy different interests (developers, public finance, elected officials, residents) usually with conflicting goals and objectives.

1300 Block of Rhode Island Avenue, Washington, DC.

Mixed housing types.  Before 1940, it wasn't uncommon for neighborhoods to be a mix of housing types, with small and medium apartment buildings alongside a range of sizes of single family housing, including carriage or alley housing, duplexes, and courtyard housing.

It seems that changing the zoning to allow for a greater diversity of housing types would be a simple change.  That's what Minneapolis has done, and Seattle has done this in some areas too.  And the State of Oregon.

Incremental change won't change much.  But change incrementally will take decades to have much impact, and by increasing the value of the land today, because of the increase in development rights, won't miraculously lead to less expensive housing.

215 Boylston Avenue East, Seattle. 17 studios were built on this 2,700 s.f. lot.

In Seattle what's happening is different, the demolition of single family houses and the insertion of smaller apartment/condominum buildings, usually with modern architectural styles at odds with the architectural designs that were dominant when the neighborhood was first built.  

It's a much more significant change, a rezoning from single family housing to multiunit housing.

Building more intensely by transit.  The New Yorker article starts by discussing a different policy, the attempt in California to make it easier to build more densely in areas served by transit.  The initiative failed, as a coalition came together of landed residents who fought wanting to keep neighborhoods unchanged and "anti-gentrifiers" who saw the initiative as "rewarding avaricious developers" rather than resulting in the production of more housing.

Real estate developers: it's their fault, right?  It goes on to discuss a range of books about planning and the role of real estate development in shaping cities and driving what urban planning does.

While the author mentions the classic books Death and Life of Great American Cities and The Power Broker, rather than mention Urban Fortunes: Towards a Political Economy of Place, which outlines what the authors call the Growth Machine and how city political and economic elites are united on a pro-[real estate] intensification agenda because city revenues are dependent on property taxes, it cites the more recent Capital City by Sam Stein.  From the article:

But Stein’s special aim is not just to show how real estate controls everything, which, if you were halfway paying attention during the financial crisis—rooted as it was in the predations of housing markets—you already know. His principal point is that the power of the real-estate state flows from the dynamic between development and the profession of city planning. Planners are usually thought of as bureaucrats, though sometimes they take on the aspect of legend: Baron Georges-Eugène Haussmann, who tamed rebellious Paris into wide avenues that couldn’t be barricaded; imperious Robert Moses, who pummelled New York with expressways. Stein’s planners are at once lesser and greater than these. Though they may look like mousy cubicle denizens—determining the right sort of window treatment for a historic house, or calculating the Area Median Income for a smattering of affordable units in a luxury building—they’re more influential than they appear. Planners, he writes, “are tasked with the contradictory goals of inflating real estate values while safeguarding residents’ best interests.” The position is an inherently uncomfortable one. But planning holds out the promise that the future is, at least in part, knowable. Explicit in Stein’s narrative is the idea that a different, more democratic kind of planning might lead us to more democratic kinds of cities.

I haven't yet read that book, but I doubt it is as dispassionate about this dialectic around local public finance and how it exists within capitalism.  

The original Growth Machine journal article, which was expanded into the book, is here:

< -- "City as a Growth Machine: Toward a Political Economy of Place," American Journal of Sociology, 1976

Public finance and property tax revenues.  Municipal finance is dependent on a successful real estate market (and as blogreader EE says, "developers are like sharks, who if they stop moving, die; Developers have to keep building, just like sharks keep swimming").

-- "The real lesson from Flint, Michigan is about municipal finance," 2016

In the US form of capitalism, the "state" plays a minimal role in housing production.  Sure planning is important.  But in the US form of capitalism, the state is not the primary constructor of housing it is dependent on the private sector.  Although the state aids the production of lower cost housing through inputs such as free or low cost land, density bonuses, and financing.

In a profit focused system, real estate developers will build housing for more expensive segments of the market, because it is more profitable. That shouldn't be surprising.

Vienna and Singapore and Helsinki.  By contrast, in Vienna, while the city is no longer the primary constructor of housing as it was 100 years ago, it still plans and directs the construction of housing, guided by the principle of housing as a social right, rather than as a mechanism for building household wealth.  (Typically, property taxes are quite low in Europe and not the primary source of local government revenue.)

-- "Learning from Vienna and Vienna's Social Housing Model," 2013

-- ""How Vienna Cracked the Case of Housing Affordability"," The Tyee

Note that Singapore's housing model has some elements from Vienna, but also allows owner-tenants to benefit from housing price appreciation.

-- "Why Singapore Has One of the Highest Home Ownership Rates," Bloomberg

Helsinki and other cities aren't active constructors of housing, but when they do planning, from the outset they divvy up redevelopment sites as a mix of for profit and social housing tenure forms, where certain sites are given to social housing organizations to develop as 100% affordable housing.

The US form of affordable housing production.  By contrast, the focus of "affordable housing" policy in the US is a small proportion of units--usually 10% or less--being included within for profit housing developments. (This is called inclusionary zoning.) This mixes income levels within a development a bit, but doesn't produce significant numbers of low cost units.

It's not an unholy alliance so much as the reality if you don't have community development mechanisms (organizations, financing, land) dedicated to achieving non-market related goals.

Note that there is a separate social housing sector, but it tends to operate in weaker real estate markets.  In high value markets, federal, state and local housing policy defaults to the market, and provides some inducements for the production of a modicum of units through inclusionary zoning.

Planners didn't create capitalism.  But they have to deal with how it is effected in the United States. But yes, lots of policy elements--segregation of housing choice options and financing, allowable density, homogeneous zoning, the dominance of single family housing zones, alongside significant growth in the US population, capital markets, a land use policy centered around automobility--contribute to the state we're in today.

Planners can offer policy responses, but at the end of the day, the decisions are made by others.

-- "Planning the Capitalist City," pages 18-24, Richard Foglesong