It’s naive to assume that existing housing stock sprang to life magically

(We’re pleased to reprise this classic essay from Daniel Kay Hertz, long-time contributor to City Observatory, and now author of the newly released Battle of Lincoln Park: Urban Renewal and Gentrification in Chicago).

A while back, a columnist in Seattle Magazine, Knute Berger, expressed his discontent with modern housing development. As Berger sees it, today’s homebuilding pales in comparison to the virtues of early 20th century bungalow development:

In a rapidly growing city where the haves have more and the have-nots are being squeezed out, the bungalows offer a lesson we ought to relearn. They recall a city figuring out a way to house its people affordably, without excess. To me, they reflect a lack of materialism, housing built not for profit, but for living in. They reflect a modest approach to life, one steeped in a conservation ethic—don’t use more than you need. Seattle culture needs to find a way to get back to those values, and create a built environment that reflects it.

This is one of the more eloquent expressions of something you might call the “immaculate conception theory” of neighborhood development. This narrative is common all around the country, in communities of many ages—from colonial Boston to postwar Minneapolis—and sets powerful background assumptions about what affordable, friendly neighborhoods can and should look like that inform many of our debates about housing. These assumptions mostly revolve around the idea that older housing was built the right way: ethically, modestly, with an eye to community rather than profit. These older values, in turn, highlight the faults of modern buildings: gaudy and wasteful, disruptive to existing communities, and motivated only by money.

Old building: virtuous. New building: villainous.

The problem with the immaculate conception theory is that, like parents swearing that they would never have behaved the way their kids do, it is conveniently forgetful about what actually happened in the past. Taking, just as an example, the kind of housing that Berger romanticizes—the early 20th century bungalow boom—a closer look reveals that it was defined not by mass affordability, efficiency, and respect for traditional communities, but something very nearly the opposite.

To begin with, many of the arbiters of taste at the Seattle Magazines of the bungalow era believed those new bungalow neighborhoods “ruined” the character of the places they were built, just as new apartment buildings are maligned today. They even had a snappy put-down for it: “bungalow disease.” “Tradition has broken down,” wrote the British planner Thomas Sharp, describing a proliferation of bungalows on both sides of the Atlantic, and “taste is utterly debased…. The old trees and hedgerows…have given place to concrete posts and avenues of telegraph poles, to hoardings and enamel advertising signs.” Closer to Berger’s home, Architectural Record reviewed Seattle’s building boom in 1912 and, in an otherwise positive article, pronounced the quality of its new homes “disappointing.”

Critics accused new bungalow neighborhoods not just of being ugly, but of ripping apart the social fabric of the city. One writer argued that in new neighborhoods full of many separate houses, “each building is treated in isolation, nothing binds it to the next one,” and as a result they lacked an “essential” “togetherness.” Another pointed out that the rise of bungalow neighborhoods coincided with the rise of decentralized business districts, as these sprawling areas—bungalows took up much more space per person than either the more modest single family homes or apartment buildings that had come before—encouraged outlying commercial development and car ownership.

 

Which brings us to our next point: Far from being based on an ethic of efficiency and conservation, early 1900s bungalows represented a dramatic leap to neighborhoods that required higher energy consumption than ever before. This was true, first of all, because bungalows tended to be much larger than existing homes. While Berger marvels that one 1910 bungalow was just 1,600 square feet, the average home size at the time was closer to 1,000 square feet—making the 60 percent larger home look like a veritable McMansion. In addition, many of these new single-family-home neighborhoods, which were built much further from job centers and at much lower densities than older communities, were enabled by the boom in energy-consuming automobiles, and encouraged their use. By the 1920s, one in every two American families had a car—a figure that was much higher in bungalow neighborhoods—and public transit began losing many of its customers to driving. In the same decade, suburban population growth outpaced that of cities for the first time ever.

Finally, the idea that bungalows represented a housing type that was affordable and open to all—and an ethic that valued community instead of money—simply doesn’t describe actual American cities in the 1910s or 20s. Home prices in the 1920s were rising rapidly, leading many people to talk about a housing crisis in terms not so terribly different from today’s. But as Gail Radford describes in her book Modern Housing for America, bungalows weren’t holding the line on cheap homes: in many cases, they represented the luxury housing of their day. Bungalows were so much more expensive than the more modest homes that had preceded them that while the overall cost of living increased by about a factor of two between the 1890s and 1920s, the cost of an entry-level home had increased by a factor of five and a half. Even before the economic crash of 1929, there was a growing foreclosure crisis, strongly suggesting that “housing costs were simply too high in relation to incomes for many families.”

Moreover, the bungalow era coincided with the development of zoning codes—codes that were essential, in fact, to preserving many bungalow neighborhoods’ all-single-family character. The people who advocated for these zoning codes did so by explicitly arguing that they were needed to protect the property values of homeowners and other landowners. In other words, the denizens of the early 20th century cared so much about their houses as a financial investment that they invented an entire new regulatory infrastructure to ensure that they wouldn’t lose their value.

And of course, “not losing their value” was very closely tied to excluding any kinds of people who might threaten the neighborhood’s desirability. It’s impossible to talk about the development of urban American neighborhoods in the early 20th century without acknowledging that this was the period in which modern residential racial segregation emerged—a system of exclusion enforced by covenants, zoning, and violence carried out by the residents of all kinds of neighborhoods. This isn’t some separate issue from how those who were excluding, rather than excluded, built their homes and communities: it’s an integral part of the story, without which those bungalow neighborhoods may have looked quite different.

 

Why have we forgotten all of this? Partly because all the people in these stories are gone. We can’t see the developers laying roads and streetcar tracks to open up huge new areas for subdivisions; we can’t see the disproportionately wealthy people who were able to buy homes in a pre-FHA era when required down payments routinely hit 50 percent. We can’t talk to the people who remember, and miss, what existed in these places before bungalows. All that’s left are the buildings, which over the years have lost their sheen of newness, often becoming more affordable in the process, and allowing us to imagine our own stories about where they came from.

The point here is not that bungalows are “bad.” Given what has happened in the intervening century, a return to bungalow-scale living would be a huge win for sustainability and efficient living in the many postwar suburbs and neighborhoods where homes have ballooned to much larger sizes, and development has become much more sprawling. In many urban communities, bungalows today represent a prized architectural tradition, and a form of single-family home that fits neatly into the kind of mixed urban neighborhood—along with small apartment buildings and local shopping districts—that we have long since made illegal.

But there are important lessons to be learned by looking at what the bungalow era actually looked like, rather than our romantic imagination of it.

One is that everything old was once new, and new things often provoke a backlash. We ought to be humble in believing that our opinions represent some timeless, objective truth, looking backwards or forwards. The same bungalows that seem to us quaint and charming were tacky and soulless to many of the people watching them be built; it seems more than possible that the new apartment buildings we vilify today will be thought of sentimentally by future generations who know them only as an important part of their city since they were born.

A second lesson is that American cities have an impressive history of growing to accommodate new arrivals. Berger leaves out of his column, as is frequently left out in “immaculate conception” stories, that the bungalow era was also the fastest period of urbanization in American history: Between 1900 and 1930, Seattle’s population grew more than fourfold, from 80,000 to over 360,000—a rate of growth approached or exceeded by many other American cities at the time. In the process, millions of rural Americans and immigrants were given the opportunity to live in newly industrializing cities where wages and quality of life were dramatically higher. Today, most of our cities have shut the door on that kind of growth. (Seattle’s growth rate today, while much higher than many other central cities, pales in comparison to the bungalow era Berger wishes we would return to.) As a result, our doors are no longer open to as many people, from this country and others, who would like to make better lives by moving to places where job openings and quality of life are high.

Finally, the bungalow era suggests that building new market-rate housing that’s affordable to working-class and low-income people in urban areas is hard, especially if that housing takes the form of single-family homes. And it’s worse today: while the bungalow builders had the advantage of lots of open land relatively close to center cities, today, that “frontier” has closed. And we’re well aware of the costs—environmental, social, and financial—of continuing to push all of our growth out further and further onto the fringe.

An old Seattle neighborhood with both bungalows and small apartment buildings—which were and are much more affordable and energy efficient.

Rather, the deeply affordable and decent homes of the bungalow era were largely in multifamily buildings. It’s curious that, though more than four in ten of the homes built in the 1920s were in apartment buildings, that kind of construction—and those kinds of people—are entirely absent from Berger’s romantic musings about the time. But they were a crucial source of urban accommodations for people of modest incomes. As the Sightline Institute has pointed out, rooming houses and other small, multifamily homes made up a huge proportion of the affordable housing stock in cities around the country in the early 20th century. Unfortunately, a combination of regulations and market conditions has virtually eliminated that stock in most places. If we want to go return to something the 1910s and 20s got right, bringing back modestly-sized homes in multifamily buildings is a good place to start.

The past does have lessons for us—we’ve made a point of championing the now-“illegal neighborhoods” that American cities built up through the bungalow era. But we have to look at it as it really was, and not through rose-colored glasses, if we want to get them right.

A while back, a columnist in Seattle Magazine, Knute Berger, expressed his discontent with modern housing development. As Berger sees it, today’s homebuilding pales in comparison to the virtues of early 20th century bungalow development:

In a rapidly growing city where the haves have more and the have-nots are being squeezed out, the bungalows offer a lesson we ought to relearn. They recall a city figuring out a way to house its people affordably, without excess. To me, they reflect a lack of materialism, housing built not for profit, but for living in. They reflect a modest approach to life, one steeped in a conservation ethic—don’t use more than you need. Seattle culture needs to find a way to get back to those values, and create a built environment that reflects it.

This is one of the more eloquent expressions of something you might call the “immaculate conception theory” of neighborhood development. This narrative is common all around the country, in communities of many ages—from colonial Boston to postwar Minneapolis—and sets powerful background assumptions about what affordable, friendly neighborhoods can and should look like that inform many of our debates about housing. These assumptions mostly revolve around the idea that older housing was built the right way: ethically, modestly, with an eye to community rather than profit. These older values, in turn, highlight the faults of modern buildings: gaudy and wasteful, disruptive to existing communities, and motivated only by money.

Old building: virtuous. New building: villainous.

The problem with the immaculate conception theory is that, like parents swearing that they would never have behaved the way their kids do, it is conveniently forgetful about what actually happened in the past. Taking, just as an example, the kind of housing that Berger romanticizes—the early 20th century bungalow boom—a closer look reveals that it was defined not by mass affordability, efficiency, and respect for traditional communities, but something very nearly the opposite.

To begin with, many of the arbiters of taste at the Seattle Magazines of the bungalow era believed those new bungalow neighborhoods “ruined” the character of the places they were built, just as new apartment buildings are maligned today. They even had a snappy put-down for it: “bungalow disease.” “Tradition has broken down,” wrote the British planner Thomas Sharp, describing a proliferation of bungalows on both sides of the Atlantic, and “taste is utterly debased…. The old trees and hedgerows…have given place to concrete posts and avenues of telegraph poles, to hoardings and enamel advertising signs.” Closer to Berger’s home, Architectural Record reviewed Seattle’s building boom in 1912 and, in an otherwise positive article, pronounced the quality of its new homes “disappointing.”

Critics accused new bungalow neighborhoods not just of being ugly, but of ripping apart the social fabric of the city. One writer argued that in new neighborhoods full of many separate houses, “each building is treated in isolation, nothing binds it to the next one,” and as a result they lacked an “essential” “togetherness.” Another pointed out that the rise of bungalow neighborhoods coincided with the rise of decentralized business districts, as these sprawling areas—bungalows took up much more space per person than either the more modest single family homes or apartment buildings that had come before—encouraged outlying commercial development and car ownership.

 

Which brings us to our next point: Far from being based on an ethic of efficiency and conservation, early 1900s bungalows represented a dramatic leap to neighborhoods that required higher energy consumption than ever before. This was true, first of all, because bungalows tended to be much larger than existing homes. While Berger marvels that one 1910 bungalow was just 1,600 square feet, the average home size at the time was closer to 1,000 square feet—making the 60 percent larger home look like a veritable McMansion. In addition, many of these new single-family-home neighborhoods, which were built much further from job centers and at much lower densities than older communities, were enabled by the boom in energy-consuming automobiles, and encouraged their use. By the 1920s, one in every two American families had a car—a figure that was much higher in bungalow neighborhoods—and public transit began losing many of its customers to driving. In the same decade, suburban population growth outpaced that of cities for the first time ever.

Finally, the idea that bungalows represented a housing type that was affordable and open to all—and an ethic that valued community instead of money—simply doesn’t describe actual American cities in the 1910s or 20s. Home prices in the 1920s were rising rapidly, leading many people to talk about a housing crisis in terms not so terribly different from today’s. But as Gail Radford describes in her book Modern Housing for America, bungalows weren’t holding the line on cheap homes: in many cases, they represented the luxury housing of their day. Bungalows were so much more expensive than the more modest homes that had preceded them that while the overall cost of living increased by about a factor of two between the 1890s and 1920s, the cost of an entry-level home had increased by a factor of five and a half. Even before the economic crash of 1929, there was a growing foreclosure crisis, strongly suggesting that “housing costs were simply too high in relation to incomes for many families.”

Moreover, the bungalow era coincided with the development of zoning codes—codes that were essential, in fact, to preserving many bungalow neighborhoods’ all-single-family character. The people who advocated for these zoning codes did so by explicitly arguing that they were needed to protect the property values of homeowners and other landowners. In other words, the denizens of the early 20th century cared so much about their houses as a financial investment that they invented an entire new regulatory infrastructure to ensure that they wouldn’t lose their value.

And of course, “not losing their value” was very closely tied to excluding any kinds of people who might threaten the neighborhood’s desirability. It’s impossible to talk about the development of urban American neighborhoods in the early 20th century without acknowledging that this was the period in which modern residential racial segregation emerged—a system of exclusion enforced by covenants, zoning, and violence carried out by the residents of all kinds of neighborhoods. This isn’t some separate issue from how those who were excluding, rather than excluded, built their homes and communities: it’s an integral part of the story, without which those bungalow neighborhoods may have looked quite different.

 

Why have we forgotten all of this? Partly because all the people in these stories are gone. We can’t see the developers laying roads and streetcar tracks to open up huge new areas for subdivisions; we can’t see the disproportionately wealthy people who were able to buy homes in a pre-FHA era when required down payments routinely hit 50 percent. We can’t talk to the people who remember, and miss, what existed in these places before bungalows. All that’s left are the buildings, which over the years have lost their sheen of newness, often becoming more affordable in the process, and allowing us to imagine our own stories about where they came from.

The point here is not that bungalows are “bad.” Given what has happened in the intervening century, a return to bungalow-scale living would be a huge win for sustainability and efficient living in the many postwar suburbs and neighborhoods where homes have ballooned to much larger sizes, and development has become much more sprawling. In many urban communities, bungalows today represent a prized architectural tradition, and a form of single-family home that fits neatly into the kind of mixed urban neighborhood—along with small apartment buildings and local shopping districts—that we have long since made illegal.

But there are important lessons to be learned by looking at what the bungalow era actually looked like, rather than our romantic imagination of it.

One is that everything old was once new, and new things often provoke a backlash. We ought to be humble in believing that our opinions represent some timeless, objective truth, looking backwards or forwards. The same bungalows that seem to us quaint and charming were tacky and soulless to many of the people watching them be built; it seems more than possible that the new apartment buildings we vilify today will be thought of sentimentally by future generations who know them only as an important part of their city since they were born.

A second lesson is that American cities have an impressive history of growing to accommodate new arrivals. Berger leaves out of his column, as is frequently left out in “immaculate conception” stories, that the bungalow era was also the fastest period of urbanization in American history: Between 1900 and 1930, Seattle’s population grew more than fourfold, from 80,000 to over 360,000—a rate of growth approached or exceeded by many other American cities at the time. In the process, millions of rural Americans and immigrants were given the opportunity to live in newly industrializing cities where wages and quality of life were dramatically higher. Today, most of our cities have shut the door on that kind of growth. (Seattle’s growth rate today, while much higher than many other central cities, pales in comparison to the bungalow era Berger wishes we would return to.) As a result, our doors are no longer open to as many people, from this country and others, who would like to make better lives by moving to places where job openings and quality of life are high.

Finally, the bungalow era suggests that building new market-rate housing that’s affordable to working-class and low-income people in urban areas is hard, especially if that housing takes the form of single-family homes. And it’s worse today: while the bungalow builders had the advantage of lots of open land relatively close to center cities, today, that “frontier” has closed. And we’re well aware of the costs—environmental, social, and financial—of continuing to push all of our growth out further and further onto the fringe.

An old Seattle neighborhood with both bungalows and small apartment buildings—which were and are much more affordable and energy efficient.

Rather, the deeply affordable and decent homes of the bungalow era were largely in multifamily buildings. It’s curious that, though more than four in ten of the homes built in the 1920s were in apartment buildings, that kind of construction—and those kinds of people—are entirely absent from Berger’s romantic musings about the time. But they were a crucial source of urban accommodations for people of modest incomes. As the Sightline Institute has pointed out, rooming houses and other small, multifamily homes made up a huge proportion of the affordable housing stock in cities around the country in the early 20th century. Unfortunately, a combination of regulations and market conditions has virtually eliminated that stock in most places. If we want to go return to something the 1910s and 20s got right, bringing back modestly-sized homes in multifamily buildings is a good place to start.

The past does have lessons for us—we’ve made a point of championing the now-“illegal neighborhoods” that American cities built up through the bungalow era. But we have to look at it as it really was, and not through rose-colored glasses, if we want to get them right.

In the middle of The Invention of Brownstone Brooklyn—a book published in 2011, but no less relevant today—Suleiman Osman turns the tables on the people who have long been the heroes of urbanist lore.

Speaking of the insurgent middle-class professionals who, starting in the 1950s and 60s, began to organize to stop to the massive urban renewal projects of Robert Moses and others, Osman says: “Perhaps the anti-Moses movement deserves an inverted version of the charge thrown at modern planners. If Brooklyn’s new white-collar professionals loved people, they hated the public.”

What does it mean to hate the public? And how could the people who stood up to clearance for highways be villains?

Brownstone Brooklyn tells the story of the first generation of gentrifiers in the rowhouse neighborhoods across the East River from Lower Manhattan. For Osman, it is an essentially countercultural movement. The “brownstoners” struck out for Brooklyn because the Upper East Side and Greenwich Village were getting too expensive, sure. But they also rejected those places—and the people who lived there—as part of a corrupt modern society, caught up in a deracinated, atomized culture increasingly dominated by the impersonal global market. Brooklyn was a place where you could live an authentic life in a “real neighborhood”: one deeply connected to local history (even if, as Osman writes, much of that history had to be rediscovered or simply made up), and where commerce meant a corner bodega owned by a family on the next street instead of a national chain.

But though some brownstoners may have claimed a kind of grassroots populism, from the very beginning they had a tense relationship with the working class Italians and Puerto Ricans they encountered in Brooklyn Heights and Park Slope. On the one hand, their presence created the kind of “diversity” and “authentic” characters that made Brooklyn different from Manhattan to begin with.

On the other, brownstoners’ project of neighborhood renewal often meant restoring townhomes that had been broken up into boarding houses to their original single-family conditions, evicting several low-income households in the process. Many of the people who thought of themselves as refugees from the harsh real estate market of Manhattan may have been anguished to realize they were landlords and villains in Brooklyn. But the fact that their movement was commonly referred to as “unslumming” shows that a kind of economic restructuring was integral, not incidental, to the project.

Moreover, the move from Greenwich Village to Boerum Hill was an escape from larger market forces only in a very incomplete way. After all, most of the new arrivals still commuted back to white collar jobs in Manhattan; a 1971 survey of brownstone owners found they were 99 percent white, 60 percent held graduate degrees, and 98.7 percent had earnings in the top fifth of New York City households. As they brought their purchasing power to Brooklyn, they more deeply implicated their neighbors in the very markets they had supposedly been trying to flee. And in some cases—as in their long campaign to convince skittish banks to make loans to support the purchase and rehabbing of “obsolete” 19th century townhomes—they explicitly lobbied to bring to bear the massive power of Manhattan capital to transform their new neighborhoods.

At this point, brownstoning might have reevaluated what kind of movement it was. As this process pushed the frontier of “authenticity” (and affordability) further south, they might have realized that “modernity” was not something that could be left on the other side of the East River; that their idyllic urban villages were in fact sites of increasing competition for housing and cultural expression.

Instead, in Osman’s telling—and in passages that will ring true to many observers of local politics today—the movement doubled down on a politics of authenticity and local purity. Sometimes this politics had a progressive gloss, as when they opposed the mass displacement of locals for urban renewal clearance. But that reading became harder to sustain when they opposed large middle- and low-income housing developments in an area with rapidly increasing housing prices, or when they lobbied against school desegregation. The common thread here is a commitment to local control as a way of preserving cultural distance, and local authenticity, from mass society—as represented by both freeways and public housing.

And this is where, finally, we get to what it means to love people but hate the public. Brownstoning was a movement that romanticized the participants in Jane Jacobs’ “street ballet,” but which was committed to holding the city as a whole at arm’s length. Ironically—and unfortunately—this way of relating to urban life is the progenitor of much of contemporary gentrification and anti-gentrification thinking. When Osman quotes the very same people speaking of their roles both as “frontiersmen” transforming “wild,” “undiscovered” Brooklyn and as defenders of these wilds from the rapacious, homogenizing forces of capitalism and government-led development, he could just as easily be capturing Crown Heights in 2016 as Brooklyn Heights in 1959.

That is, the people who are most invested in building their ideal environment—which almost always means reshaping an existing community to new specifications—are also the most sensitive to new forces whose influence threatens their own. That’s not just an observation about gentrification: it also applies to the family that bulldozes a farm to build a dream home on the edge of the city, only to complain bitterly when someone else ruins their pastoral view when they bulldoze the next farm over. But it certainly applies to the people who invented Brownstone Brooklyn, “reclaiming” a very particular (and often ahistorical) historical identity, and then just a few years later fought furiously to retain their particular interpretation of the neighborhood against the next wave of newcomers. Maybe debates about gentrification feel so circular and unproductive because what presents as two opposing sides is in fact a snake’s head and its tail.

There are two mistakes holding each other up here. The first is defining “urbanism” primarily as a countercultural project, which inevitably means rejecting any number of “incompatible” cultures and the people who identify with them. In some cases, this looks like brownstoners telling their working class neighbors that the longstanding practice of modifying their homes had to end in deference to professional class ideas about historic preservation. At other times, it looks like a 1970s anti-Burger King campaign that alternated left critiques of mass consumer culture with warnings about people who eat fast food being “purse-snatchers, muggers, and criminals.”

The second, related mistake is retreating to neighborhood-level politics, rather than broader political movements to reshape the city. Osman argues convincingly that the brownstone movement, in both its pro- and anti-gentrification forms, contributed to the breakup of the New Deal coalition, as much of the “new middle class” decided that unions and working class political machines were part of the establishment against which they were rebelling.

Of course, many of their critiques—and those of the unlikely sometimes-allies they found in radical black and Puerto Rican political organizations—were correct and necessary. Modernist planning really was profoundly indifferent to the “collateral damage” of its great public works, and the New Deal coalition really was profoundly influenced by racism.

But the new localist order they helped to create didn’t shed these problems. By closing down boarding houses and preventing the construction of new housing, both market and subsidized, the brownstoners’ “renewal” ultimately created neighborhoods nearly as homogenous as if they had been swept clean by Robert Moses’ bulldozers. (In fact, those modernist campuses are now some of the more demographically diverse parts of New York’s wealthy areas. The Cadman Plaza development, which was furiously fought by new Brooklyn Heights residents in the 1960s, sits in a Census tract that is 64 percent white; across the street, a Census tract with pristinely preserved brownstones is 82 percent white.) And in reinforcing the local power of those increasingly homogenous communities, they created durable coalitions against change, whether in the form of new housing or school integration.

The question Brownstone Brooklyn raises is whether this movement might have taken a different path. Could they have joined an urbanist movement whose first principles were not about a personal search for authenticity, but rather a commitment to a common well-being—the kind of housing, schools, public spaces, and access to regional amenities that anyone might need to build their own version of the good life? Could they have helped to transform Moses-era New Dealism to be democratically accountable without giving up on powerful citywide policy tools—ones capable of reshaping, rather than reinforcing, massive inter-neighborhood inequality?

Most importantly: Can it be done today?

You might not think it, but New York City has a below-market affordable housing infrastructure that most other cities can only dream of. As one of the only major American cities not to tear down large amounts of its legacy public housing, it has nearly 180,000 units. Many more are in other below-market housing programs. And then, of course, there’s the city’s rent control and rent stabilization policies. In all, just 38.9 percent of New York City’s rental housing is entirely priced by the market.

But overwhelming demand—and the relatively slow pace of market-rate construction, at least up until recently—means that there’s still a massive housing shortage at almost every price range. The bidding war over scarce homes has led to situations like that of Chelsea, in Manhattan, where 29 percent of homes are in public housing or another income-restricted program, creating some space for low-income households—but market-rate units are so expensive that they price out all but the wealthy. And when below-market units do open up, the crush of applications makes affordable housing seem more like a lottery prize than a social safety net.

 

Under former mayor Michael Bloomberg, the city attempted to address the crisis in a number of ways. A series of rezonings created corridors in which developers could add more housing to address the shortage. But studies have shown that overall, downzones (reducing allowed density) actually outnumbered upzones (increasing allowed density) under the Bloomberg Administration. In those years, the city also created a “voluntary inclusionary housing” law, giving developers density bonuses in exchange for below-market units. But that program produced a relative handful of actual housing—just a few thousand units through the end of last year in a city of eight and a half million.

Current mayor Bill de Blasio was elected in 2013 on a platform of reducing the gap between New York’s rich and poor, including addressing spiraling housing costs. Soon after, his administration released an ambitious ten-year housing plan, which laid out a sprawling agenda to reform everything from zoning to finance to preservation, leading to the preservation of 120,000 below market rate units, the construction of 80,000 more, as well as the construction of thousands more market rate homes. Many of the plan’s key points were combined into two pieces of legislation: Mandatory Inclusionary Housing (MIH) and Zoning for Quality and Affordability (ZQA).

MIH aimed to remedy what many saw as a fatal flaw of Bloomberg’s voluntary inclusionary zoning scheme: namely, the voluntary part. It proposed that in all newly upzoned districts, developers would be required to set aside a certain proportion of their units at below-market rates. Exactly how many, and at what prices, would be determined by the City Council. MIH proposed a menu of three choices, ranging from 25-30 percent of units and 60-120 percent of area median income; the idea was that the Council would pick the level most appropriate for the neighborhood being upzoned.

ZQA included a raft of tweaks to the zoning code: harder to explain that MIH, but probably more consequential. Among the changes:

• Parking requirements near the subway would be dramatically reduced, allowing more buildable area to be used as housing for people, rather than being required to be set aside for storage of cars, and reducing the cost of development—a big deal particularly for affordable developers
• Increases of one to three stories in maximum building height for certain senior and low-income housing developments
• Adjustments to “contextual” zoning requirements and other regulations aimed at improving the built environment

When MIH and ZQA were released in early 2015, some applauded, but many came out in opposition. Preservationists opposed ZQA’s lifting of height limits by up to 15 feet in “contextual districts”; some affordability advocates argued that MIH’s affordability wasn’t deep enough, and, in some cases, that allowing more market-rate construction, even if tied to subsidized units, would necessarily further gentrification; and in other cases, objections included the time-honored fear of increased competition for “free” on-street parking as a result of ZQA’s parking requirement reductions.

These concerns and others led the vast majority of Community Boards—local advisory bodies to City Council members—to reject the proposals last fall. The votes were widely reported as a major setback for the mayor, though de Blasio remained defiant.

In fact, just a few months later, the City Council overwhelming approved both measures largely intact. Partly, this may reflect that political actors expected the Community Boards, whose local constituencies tend to reflect the same skepticism of development and change as other local bodies around the country, to be critical of any plans like MIH and ZQA. Also important is that de Blasio, whose approval rating climbed above 50 percent early this year, has a working majority aligned with him in the Council that may have been unwilling to torpedo one of his signature policy initiatives.

 

But his office also brought a strong array of interests to organize and testify in favor of the reforms in front of the City Council in February, even as other advocates argued that the plan didn’t go far enough. Groups urging passage included architects, business groups, the senior organization AARP, affordable housing developers, and several large labor unions, among others.

The Council did make a few tweaks to the initial proposals before passing them. Most notably, in response to concerns about the depth of affordability in MIH, it added a fourth menu option, with 20 percent of units at 40 percent of Area Median Income, and tweaked the third to drop average AMI to 115 percent, with portions required to be at 70 percent and 90 percent. Some of ZQA’s height bonuses were scaled back, and the “transit zones” of the city in which parking reductions would apply were also shrunk somewhat.

How much of an impact will these reforms have? It’s unclear. MIH, in particular, applies only to parcels that the City Council votes to upzone in the future. Several neighborhood rezonings are on the docket, but each presents a politically fraught vote that can be contested, although advocates hope that the menu of affordability options created by MIH will smooth the negotiations process.  One of the first such up-zoning cases–a proposal to add 175 affordable housing units to a proposed apartment building in Manhattan’s Inwood neighborhood was shot down when a local City Councilor–who had voted for Di Blasio’s MIH plan–came out in opposition to the project.

Even if all of the upzones pass, however, most of the city will remain outside the requirements of MIH. Moreover, in some of these neighborhoods, such the low-income Brooklyn community of East New York, it’s not clear that large-scale market-rate construction projects that would trigger MIH requirements are yet financially viable. In addition, the expiration of a state program known as 421a (which provides a property tax exemption for affordable units) may threaten the effectiveness of MIH.

For these and other reasons—including issues that apply to inclusionary zoning strategies generally—MIH is not likely to create a large proportion of the affordable units in the de Blasio administration’s housing plan. In fact, last year, the city’s Association for Neighborhood and Housing Development, which supported the plan, estimated that the original version of the plan might produce 13,800 affordable units, out of the 80,000 new units, and 200,000 new and preserved, envisioned by the Housing New York plan over the next ten years.

ZQA, in contrast, does not require any future action by the Council. It may lead to thousands of new affordable units in several ways, including allowing affordable developers to build more units on parking lots that are no longer required; allowing affordable developers to build more densely; and making affordability incentives for market-rate developers more attractive by better aligning allowed building envelopes with floor area bonuses. Unlike MIH, however, there is no guarantee that the affordable units produced by ZQA will be part of mixed-income projects, or mixed-income neighborhoods, that encourage economic integration.

For observers outside New York, there are several lessons in all of this. Perhaps a major one is that there may be low-hanging fruit in zoning reforms, such as those passed in ZQA, that don’t get immediate recognition as affordability policies like inclusionary zoning does.

Another is that perhaps because of this difference in perception, ZQA-type zoning reforms may be easier to pass in a package with more traditional affordability policies like IZ. The decision to propose and vote on ZQA and MIH together, even though they were separate bills, appears to have been driven by exactly this political calculation.

For larger cities with neighborhoods in many different economic conditions, it will also be interesting to see whether New York’s approach—essentially passing an enabling law that creates a menu of inclusionary zoning requirements for future application—does indeed reduce bargaining costs for future upzonings.

But it’s also important to keep in mind that these represent just part of de Blasio’s larger housing plan. Getting to the headline numbers of 200,000 affordable units created or preserved will depend heavily on other parts of the plan—perhaps most notably a commitment to doubling capital funds for affordable housing, at over $8 billion over ten years. How many other cities have the political appetite, or financial ability, to create that level of funding, even adjusted for New York’s size?

Moreover, though de Blasio’s plan is among the most ambitious in the country, 80,000 new affordable homes, and 120,000 preserved, won’t solve New York’s housing crisis. Even the nation’s largest city is heavily dependent on policies outside of its direct control, from federal subsidies for programs like Housing Choice Vouchers and LIHTC, to state programs like 421a, to the zoning decisions of suburban municipalities who play a major role in the housing shortage that has pushed up market prices across the metropolitan area.

In some ways, New York City has set an example for other American cities by bringing together a coalition of affordability advocates, developers, and labor interests to support zoning changes to increase the supply of low-income and market-rate housing, as well as double the spending devoted to low-income housing. But it also demonstrates the limits of municipalities’ power to address housing issues. For reasons of both resources and coordination, the battle for fair, plentiful, and affordable housing has to be taken far beyond City Hall.

Generally, parking is thought of as a transportation and urban design issue, involving tradeoffs between easing access to a place by car while potentially imposing greater social costs by discouraging other modes and, sometimes, degrading the pedestrian environment and spreading out neighborhoods and entire cities. There’s no shortage of parking craters nominated to compete in Streetsblog’s annual “Parking Madness” competition.

But increasingly, parking is also understood as a housing issue—in particular, because of the near-ubiquitous laws that require new housing developments to include off-street parking. Particularly in denser projects where that parking will be in a garage rather than a surface lot, those spaces can be quite costly. A report from the Chicago-based Center for Neighborhood Technology found that per-stall estimates run up to the tens of thousands of dollars—and given that many municipalities require one parking space per unit, or even one per bedroom, that means that a significant portion of the cost of new housing is often not about space for people, but for cars.

 

For obvious reasons, critics have linked that fact with rising home prices in many of the country’s most sought-after urban cores in making the case that parking minimums are an enemy of housing affordability. Seattle’s Sightline Institute estimates that parking requirements add about $200 a month to the cost of rental apartments–whether or not their tenants have cars.

It’s important to note that in many of these overheated markets, reducing the costs of parking in new buildings is unlikely to translate into a one-to-one reduction in the price of new housing. After all, the essence of the affordability crisis is that a shortage of supply has allowed prices to be bid up and disconnected from the cost of providing housing.

But parking costs help constrict supply and have important effects in other ways. For one thing, most Americans don’t live in one of the major American cities with severe housing shortages, and in those places parking requirements directly drive up housing prices. But even in a place like Los Angeles or Washington, DC, parking requirements can be a serious problem, taking up space that might otherwise go to more housing to ease the supply crunch. And parking minimums are especially pernicious for affordable housing developers. They reduce the number of below-market homes that can be built by increasing per-unit costs for nonprofit builders already scrambling to put together financing for their projects—ironically, for tenants who are even less likely to actually own cars.

Fortunately, awareness of the high cost of “free” parking, in the form of requirements is beginning to percolate into policy. In Portland, these sorts of issues are coming up at public meetings where local officials are considering changes to the city’s parking rules. As reported by BikePortland, affordability advocates convinced the City Council to pull a proposed ordinance that would have required parking garages in some large transit-oriented housing projects. Significantly, the higher parking requirements were opposed by local tenants advocacy groups, who made the connection to housing affordability.  In Chicago, testimony from CNT and others about the high cost of parking requirements helped convince aldermen earlier this year to expand that city’s transit-oriented development zone—within which parking minimums fall by half or more—from a quarter mile to a half mile around rail stations.

Of course, municipal leaders will still feel the need to respond to constituent complaints that street parking is too scarce. But there are many more options than simply building more parking garages. After all, as Mike Andersen of BikePortland has pointed out, without a reason to prefer parking in garages, most people will continue to look for street parking as a first option—meaning that more garages are unlikely to solve the street parking issue.

What else might work? One possibility: tradeable, priced permits. Portland, in fact, is considering just such a plan, which would allow residential communities to create parking permits and sell them, calibrating the number and price to avoid competition and overuse of the available space. Perhaps even better—again, echoing Andersen—would be to make the permits tradeable, so that their prices could fluctuate based on changing demand. Essentially, this would be recreating the price-variable parking meter model we’ve written about earlier, in which prices change dynamically to ensure about 85% occupancy—enough that lots of people are actually using the space, but with enough vacancy to ensure that it’s not too hard to find a spot. And as Donald Shoup has recommended, providing discounted purchase prices for neighborhood residents can help address equity concerns.

The CNT report also mentions a number of other possibilities, including parking districts that treat spaces as a community resource, allowing, say, off-street parking behind a movie theater to be used as residential parking during off-peak hours, rather than insisting that every individual use have enough dedicated parking for its own peak period. Municipalities can also give credits for developers that encourage other modes of transportation, for example reducing parking minimums if developers provide tenants with transit passes, bike parking, or carsharing spaces.

It’s clear, though, that current parking requirements are causing more problems than they’re solving. Introducing better pricing, more flexible use, and encouraging other modes are likely to create benefits to both transportation and housing issues.

One of the chief arguments in favor of the suburbs is simply that that is where millions and millions of people actually live. If so many Americans live in suburbs, this must be proof that they actually prefer suburban locations to urban ones. The counterargument, of course, is that people can only choose from among the options presented to them. And the options for most people are not evenly split between cities and suburbs, for a variety of reasons, including the subsidization of highways and parking, school policies, and the continuing legacies of racism, redlining, and segregation. One of the biggest reasons, of course, is restrictive zoning, which prohibits the construction of new urban neighborhoods all over the country.

But does zoning really act as a constraint on more compact, urban housing? Sure, some skeptics might say, it appears that local zoning laws prohibit denser housing and walkable retail districts. But in fact, city governments pass such strict laws because that’s what their constituents want. Especially within a metropolitan region with many different suburban municipalities, these governments are essentially competing for residents and businesses. If there were real demand for denser, walkable neighborhoods, wouldn’t some municipalities figure out that they could attract those people by allowing that type of development?

A 2005 study by Jonathan Levine—and explored further in Levine’s 2006 book, Zoned Out—seeks to answer this question. Are local governments just responding to “market” demand in ensuring that new development is low-density and auto-oriented? Or is there really pent-up demand for more urban neighborhoods that can’t be satisfied because of zoning?

 

Levine looks for the answer in two contrasting metropolitan areas: Boston and Atlanta. Boston, as a much older region, has a relatively higher number of dense, walkable neighborhoods, while in Atlanta, which mostly boomed after World War Two, urban neighborhoods are much more scarce. Levine hypothesizes that if dense housing is adequately supplied to match people’s preferences, you should find a pretty good match between the kinds of places people say they’d like to live, and the kinds of places they actually do live. But if zoning really creates a “shortage of cities,” then the greater the shortfall of urban neighborhoods, the worse the matchup between stated preferences and actual living arrangements.

This is an important wrinkle to the “revealed preference” arguments of many defenders of the suburban status quo. Recent Census population figures sparked what were only the latest of a long line of scuffles over whether, or to what extent, the “back to the city” movement is real. But if Levine’s argument is correct, measuring demand for urban areas simply by how many people end up living there is flawed, because some people who would like to live in more compact neighborhoods can’t do so because there aren’t enough to go around.

To begin his analysis, Levine classified neighborhoods in both the Boston and Atlanta metro areas according to their level of “urban-ness” on a five-point scale, with “A” neighborhoods being the densest and most urban, and “E” being the most sprawling and exurban. Levine and his researchers then conducted a survey of residents in each of the zones, asking about their housing preferences and satisfaction with their current housing situation.

In Boston, about 40 percent of respondents said they preferred denser, more pedestrian-friendly neighborhoods, while in Atlanta, just under 30 percent of respondents did so. (Auto-oriented neighborhoods were preferred by 29 percent of people in Boston and 41 percent of people in Atlanta, with remaining respondents neutral.)

And how well did these preferences match actual behavior? Well, in Boston—where neighborhoods in the three most urban categories made up over half of all housing—83 percent of people with strong preferences for urban neighborhoods lived in one of these three urban zones. In Atlanta—where the same top three urban categories make up barely over 10 percent of all housing—just 48 percent of people with strong preferences for urban neighborhoods lived in an urban zone.

In fact, all down the line, people whose stated preferences were more urban were much more likely to actually live in an urban neighborhood in the Boston area than in the Atlanta area—suggesting that in Atlanta something might be preventing them from satisfying their preferences. At the same time, people who expressed preferences for the most auto-oriented neighborhoods were able to satisfy that demand the vast majority of the time in both regions—about 95 percent of those in Atlanta, and 80-90 percent of those in Boston. More rigorous tests prove that this difference is statistically significant.

This seems like strong evidence that there is a “shortage of cities” in Atlanta. Why, otherwise, would there be such a gap between the number of people who satisfy their preferences for urban neighborhoods in the Boston and Atlanta metro areas—and much smaller gaps between people who can satisfy their preferences for more car-oriented areas?

If this is correct, it helps explain a other issues we see. If urban neighborhoods are undersupplied compared to demand for them, we would expect to see urban housing go to the people willing to outbid other households, increasing prices relative to auto-oriented neighborhoods, which are more plentiful. In a place like Atlanta, lots of urban housing would have to be built before this bidding war could be ended, returning prices to a “normal” market level.

It’s also notable that this kind of “shortage of cities” can occur even where there is no overall housing shortage. Atlanta, for example, is not a particularly high-cost region, but it has mostly added new housing on the suburban periphery. So while there’s no bidding war for housing in the metropolitan area as a whole, there is a bidding war for more urban housing, making walkable neighborhoods more expensive than they would have to be. Boston is almost the opposite: walkable neighborhoods appear to be less undersupplied relative to auto-oriented neighborhoods, but the region as a whole has very expensive housing, suggesting that the total supply of housing is too low. Boston could help bring down housing prices by building any housing at all—auto-oriented or more walkable. (Though walkable housing would have lower total location costs.)

Levine’s study ought to be known by anyone who works in urban planning or housing. It’s one of the strongest pieces of evidence that “revealed preferences”—the choices that people actually make about where to live—actually reveal the limited choices that people are given as a result of restrictive land use laws.

What if we could make parking spaces in high-demand areas more widely available, while also making better use of under-used parking spaces elsewhere?

Think of it as Uber’s “surge pricing,” but for parking. (Though it elicits some grumbles from a consumer perspective, we think surge pricing can make lots of sense: it encourages more efficient choices by riders, and brings out more drivers when they’re most in demand).  

 

One of the arenas that “smart city” proponents are most excited about is managing the supply of public parking spaces using dynamic prices. In prior decades, cities had very limited options with respect to pricing: they might be able to vary prices by time of day and neighborhood, but they had limited information and resources to really tailor prices to demand, and couldn’t respond to unusual events or changes.

But new technology allows cities to respond to real-time demand, raising prices where there are no available spots to encourage turnover and make sure that people who really need to park have a space to do so, and lowering prices on blocks with lots of extra capacity to encourage more use of the public resource. On both ends, by better reflecting the real value of public parking spots, cities can more efficiently use one of their most precious resources: space.

What New Haven, and San Francisco and other cities are doing is working to operationalize the insights from Don Shoup’s masterwork, The High Cost of Free Parking. One of Shoup’s precepts is that the price of on-street parking ought to be set at a level where there are about one or two free parking spaces on every block (or about 85 percent occupancy). This assures that there are always spaces available for those who want them (and are willing to pay) and cuts down on “cruising” to find free spaces. Since the value of parking varies significantly by time of day, and from block to block, ideally rates ought to change according to those variables as well. But common practice is to charge the same price almost everywhere in the city, and to change prices by time only very crudely. These policies do precious little to reflect demand, and therefore assure adequate supply.

That said, this is one of those instances where getting the right answer depends on asking the right questions. In this case, “What should the price of parking be here?” shouldn’t be allowed to entirely eclipse the bigger question: “What is the best use of this public space?”

 

In some ways, in fact, the rich new data on parking demand and dynamic prices might help cities decide that larger question. If, for example, parking on one street remains under-utilized even when prices are pushed down below a certain level, maybe that space would be better used in some other way: space for street vending carts, or additional sidewalk, or green space, or a bike or bus lane.

But even where prices are high, other uses might beat out the value created by parking. On a downtown street with lots of pedestrian traffic, would a food cart or newsstand owner be willing to pay more for the right to a prime location than potential parkers? Would the benefits to public safety of extra sidewalk space or a bike lane outweigh the revenue of the parking meters? What about creating a bus lane that eliminates a bottleneck for thousands of riders a day, dramatically increasing the road’s efficiency, by getting rid of 20 or 100 parking spaces?

In other words, dedicating public space for one use always incurs the opportunity cost of not using it for something else, and our decisions about what to dedicate public space to ought to take those opportunity costs into account. Pricing parking acknowledges and values these tradeoffs in a straightforward way.

But that’s not all that’s missing here. Proponents of “smart parking” say that one of their goals is to increase the usage of “underutilized” parking spaces. Often, that may mean increasing the total amount of driving. But, of course, driving incurs all sorts of extra social costs: pollution, wear and tear on public roads, injuries and deaths from crashes. When calibrating the appropriate price of parking on public space, should cities take those costs into account?

What if we could make parking spaces in high-demand areas more widely available, while also making better use of under-used parking spaces elsewhere?

Think of it as Uber’s “surge pricing,” but for parking. (Though it elicits some grumbles from a consumer perspective, we think surge pricing can make lots of sense: it encourages more efficient choices by riders, and brings out more drivers when they’re most in demand).  

 

One of the arenas that “smart city” proponents are most excited about is managing the supply of public parking spaces using dynamic prices. In prior decades, cities had very limited options with respect to pricing: they might be able to vary prices by time of day and neighborhood, but they had limited information and resources to really tailor prices to demand, and couldn’t respond to unusual events or changes.

But new technology allows cities to respond to real-time demand, raising prices where there are no available spots to encourage turnover and make sure that people who really need to park have a space to do so, and lowering prices on blocks with lots of extra capacity to encourage more use of the public resource. On both ends, by better reflecting the real value of public parking spots, cities can more efficiently use one of their most precious resources: space.

What New Haven, and San Francisco and other cities are doing is working to operationalize the insights from Don Shoup’s masterwork, The High Cost of Free Parking. One of Shoup’s precepts is that the price of on-street parking ought to be set at a level where there are about one or two free parking spaces on every block (or about 85 percent occupancy). This assures that there are always spaces available for those who want them (and are willing to pay) and cuts down on “cruising” to find free spaces. Since the value of parking varies significantly by time of day, and from block to block, ideally rates ought to change according to those variables as well. But common practice is to charge the same price almost everywhere in the city, and to change prices by time only very crudely. These policies do precious little to reflect demand, and therefore assure adequate supply.

That said, this is one of those instances where getting the right answer depends on asking the right questions. In this case, “What should the price of parking be here?” shouldn’t be allowed to entirely eclipse the bigger question: “What is the best use of this public space?”

 

In some ways, in fact, the rich new data on parking demand and dynamic prices might help cities decide that larger question. If, for example, parking on one street remains under-utilized even when prices are pushed down below a certain level, maybe that space would be better used in some other way: space for street vending carts, or additional sidewalk, or green space, or a bike or bus lane.

But even where prices are high, other uses might beat out the value created by parking. On a downtown street with lots of pedestrian traffic, would a food cart or newsstand owner be willing to pay more for the right to a prime location than potential parkers? Would the benefits to public safety of extra sidewalk space or a bike lane outweigh the revenue of the parking meters? What about creating a bus lane that eliminates a bottleneck for thousands of riders a day, dramatically increasing the road’s efficiency, by getting rid of 20 or 100 parking spaces?

In other words, dedicating public space for one use always incurs the opportunity cost of not using it for something else, and our decisions about what to dedicate public space to ought to take those opportunity costs into account. Pricing parking acknowledges and values these tradeoffs in a straightforward way.

But that’s not all that’s missing here. Proponents of “smart parking” say that one of their goals is to increase the usage of “underutilized” parking spaces. Often, that may mean increasing the total amount of driving. But, of course, driving incurs all sorts of extra social costs: pollution, wear and tear on public roads, injuries and deaths from crashes. When calibrating the appropriate price of parking on public space, should cities take those costs into account?

In the first installment of this two-part series, we investigated what each of the major party platforms had to say about a crucial urban policy issue: housing. This time, we’re taking a look at another major concern for American cities: transportation. (It’s also definitely worthwhile to read what other people have written on the subject, including at The Transport Politic, Streetsblog, and the Washington Post.)

It is easy to sum up the space transportation takes up in the Democratic platform: not much. In fact, while housing only gets four paragraphs under its own heading in the 39-page document, “transportation” doesn’t have its own section at all. Rather, the handful of mentions mostly appear under “Infrastructure,” and include promises to:

…make the most ambitious investment in American infrastructure since President Eisenhower created the interstate highway system…put[ting] Americans to work updating and expanding our roads, bridges, public transit, airports, and passenger and freight rail lines.

And that’s about it.

 

Certainly American public transit could use more and better infrastructure in many places—but the failure to mention improving service funding at all shows a classic misunderstanding, or simple lack of care to understand, of what actually makes for valuable, and useful, public transportation. Moreover, without significant changes to, say, how we judge road performance, or orienting transportation dollars to improve accessibility rather than simply mobility, a massive new infrastructure public works program might make for a good jobs program, but  expensive highway widening projects come at the cost of greater sprawl, decreased long-term accessibility, especially for the low-income, locking in more greenhouse gas emissions, and worsening the public health crisis of vehicle crashes.

The only other detail in the Democratic platform is an infrastructure bank, which we’ve written about before.

But if the Democratic platform skimps on substance, the substance of the Republican platform is more or less openly hostile to urban transportation. After praising a government program that changed the shape of Americans’ lives more than almost any other in the twentieth century—Eisenhower’s highway system—the platform goes on to condemn the “social engineering” of “an exclusively urban vision of dense housing and government transit.” (About 80 percent of the spending in the transportation bill President Obama signed last December goes to roads.) The platform condemns the use of Highway Trust Fund money for “bike-share programs, sidewalks, recreational trails, landscaping, and historical renovations,” and proposes phasing out entirely federal support for public transit.

Both of these platforms are deeply disappointing on urban transit. If it’s perhaps unsurprising that the Republican Party—which has been all but moribund in the vast majority of America’s urban neighborhoods, particularly in large cities, for decades—would be hostile to urban transportation, it’s more surprising that the Democrats—a large amount of whose base resides in cities like New York, Chicago, Los Angeles, and so on—would phone it in on this issue.

Platforms, of course, are not themselves legislation. But as we mentioned in writing about housing policy, evidence does suggest that policies that make it into official platforms have a better shot of making it into legislated policy in the future. Making real urban transportation reforms an acknowledged, specific part of a major party’s platform (at this juncture, almost certainly the Democrats’) isn’t a meaningless exercise. Nor is it something that ought only to appeal to people who read Planetizen, the Overhead Wire, CityLab (or City Observatory): improving car-free access to jobs, schools, and stores within urban areas is an essential part of a more just, environmentally sustainable, and prosperous America. It’s a shame for that conversation not to be happening at the most high-profile political conventions.

Urban policy conversations are largely focused on local policy, though we at City Observatory have occasionally argued that more attention ought to be paid to state and federal policy.

We haven’t had much to say about the presidential candidates themselves this year, but one exercise that’s worth paying a bit of attention to is the writing of each major party’s official policy platforms. These are documents without any legislative power, of course—but they do indicate the state of the public debate within each of the major parties. Moreover, as FiveThirtyEight argues, there’s evidence that what gets put in the platform predicts real policy tomorrow.

So today, we’ll look at what the platforms say about housing. Later, we’ll focus on transportation.

Both the Republican and Democratic platforms focus on homeownership in their (brief) forays into housing. “Homeownership expands personal liberty, builds communities, and helps Americans create wealth,” says the Republican platform; the Democratic one has no such paean but makes increasing access to homeownership the subject of one of its four paragraphs on housing. (Regular readers will know we are skeptical.)

Perhaps predictably, the Republican platform calls for “scal[ing] back the federal role in the housing market,” although there are few details about exactly what this means. It appears to be targeted mainly at programs meant to expand credit to low-income households to buy homes, which the platform blames for the housing crisis of the 2000s. (Many economists do not agree.) They also mention ending Federal Housing Administration mortgage support for “high-income individuals” and ending requirements for federally-insured banks to “satisfy lending quotas to specific groups,” presumably a reference to the Community Reinvestment Act, which is meant to counteract the effects of years of “redlining” by guaranteeing credit access to communities with large numbers of black, Latino, and low-income residents.

 

The Democratic platform’s section on housing is much shorter even than the Republicans’. About half of it is dedicated to improving housing affordability; it promises to “substantially increase funding” for the National Housing Trust Fund, and “provide more federal resources to the people struggling most with affordable housing,” though the mechanism is vague. (In case you guys are looking for one, you could try our automatic tax credit idea!) Vouchers, public housing, and anti-homelessness programs are mentioned in the most perfunctory possible way, with promises of more funding.

Perhaps the most interesting, and surprising, issue is zoning. The Republican platform is the only one to explicitly use the word—a change from 2012, when it did not appear. “The current Administration is trying to seize control of the zoning process through its Affirmatively Furthering Fair Housing regulation,” it says. “It threatens to undermine zoning laws in order to socially engineer every community in the country.” This is disappointing inasmuch as some conservatives have argued that the generally anti-regulation party might be an ally in the fight against sprawl-inducing, segregation-promoting local development rules. But it’s also unsurprising inasmuch as many local Republican officials and writers have been enthusiastic defenders of the hyper-regulation of property rights when it comes to urban space.

Meanwhile, the Democratic platform doesn’t include the word “zoning,” but it does say that the party will attempt to “eas[e] local barriers to building new affordable rental housing developments in areas of economic opportunity.” Given the Democratic administration’s ongoing fight with Westchester County, New York, that seems like a clear reference to battling low-density zoning regulations that make below-market housing difficult or impossible to construct in certain areas—and a recognition of the importance of economic integration to opportunity. But it appears to leave out the growing consensus among researchers from across the political spectrum that building market-rate housing is also a key part of any affordability strategy.

Platforms are ultimately political documents, and this year, that’s especially the case as it relates to housing policies. While we’d like to believe that the platforms would clearly spell out the differences between the two parties, and give voters a clear choice of direction. The 2008 campaign, in part, hinged on different approaches to health care reform and helped provide President Obama with a mandate that led to the enactment of the Affordable Care Act. The smaller bore and more muted discussions presented here don’t suggest that either party has much interest in making the election hinge on housing issues, or in building a strong public consensus for bold policy action in this area.  

When we talk about gentrification, we often focus on housing. But another major concern is the effects of rising prices on retail—both because of what it means about the accessibility of goods and services for local residents, and because of questions of “community character.”

The Philadelphia Federal Reserve Bank’s recent symposium on gentrification included a paper from Rachel Meltzer of The New School on just this subject. Meltzer begins by indicating two ways that gentrification might affect small businesses: changing the kinds of goods and services that local residents demand, and changing the cost of doing business, making some lower-margin businesses no longer profitable.

Meltzer then explores data from New York City between 1990 and 2011 to look at how small business retention rates vary between neighborhoods that are gentrifying, and those that aren’t. The overall results, perhaps counterintuitively, show virtually no difference. In fact, the percentage of small businesses that leave their storefront and are replaced by another business—the kind of scenario you’d expect to see in a gentrifying neighborhood, with (say) bodegas getting replaced by artisanal coffee shops—is very slightly higher in non-gentrifying neighborhoods than in gentrifying ones.

 

The essential fact here is that local storefront businesses have a high rate of turnover generally. So while there are lots of examples of businesses going out of existence in gentrifying neighborhoods, there are lots of examples in other kinds of neighborhoods as well.

At a closer-to-the-ground level, looking at differences in business retention between Census tracts in the same neighborhoods, Meltzer does find some distinctions: Businesses are less likely to leave without a replacement—that is, create a vacancy—but somewhat more likely to leave with a replacement in gentrifying areas.

The takeaway is not necessarily that business displacement never happens in gentrifying neighborhoods—plenty of people in high-cost cities can cite a favorite old business that relocated or disappeared because of rising lease costs.

Rather, the results of this study on retail displacement are strikingly similar in some ways to the results of studies about residential displacement: while there are certainly examples of it happening, systematic studies that compare gentrifying and non-gentrifying neighborhoods repeatedly fail to find that there’s significantly less displacement in non-gentrifying neighborhoods. And just as rising apartment rents may sometimes be offset by an increased willingness to pay because of better neighborhood amenities, rising retail lease prices might be offset by more and higher-income customers who are willing to pay more or buy more high-margin products. More customers with more disposable income translates into higher sales, which can enable businesses to still profit while paying a higher rent. On the other side, just as non-gentrifying low-income neighborhoods usually see a kind of “displacement,” with rapidly declining populations as people leave for areas with stronger neighborhood amenities, local businesses in these neighborhoods may also struggle to remain in a place with a declining customer base. In these struggling neighborhoods, low or stagnant incomes mean relatively lower sales for local merchants, making it hard for them to be profitable, even if rents are low.

In other words, with business displacement as with residential displacement, the reality of gentrification appears to be much more complicated than prevailing narratives. It is not clear that gentrification leads to higher levels of small business turnover.

Last April, I wrote my first ever post for City Observatory, which unfortunately began with a David Foster Wallace quote. But it was up and up from there. Over the last year-plus here, City Observatory has given me an incredible platform to explore urban issues in public, combining intellectual rigor with a variety of subject matter and willingness to embrace heterodoxy that I’m not sure is matched anywhere else.

Fortunately, I will get to keep writing for City Observatory. But after this week, it will be in the capacity of a once-a-month columnist, rather than a full-time Fellow. (And of course, I’ll still be tweeting at @danielkayhertz and writing occasionally at danielkayhertz.com.) Though I’m fascinated by national (and even international) urban issues, I’ve always been a myopic homer at heart, and I have taken an opportunity to work on policy in my hometown of Chicago at the Center for Tax and Budget Accountability.

I’m incredibly proud of the work we’ve done at City Observatory, and very grateful to Joe Cortright for providing the leadership that made it possible, and giving me the opportunity to be a part of it. In the less than two years since its founding, City Observatory has become a staple of the urban policy conversation, getting nominated as one of Planetizen’s top websites (“every single post is required reading”), and routinely showing up in mainstream news stories about important urban issues, both in local media and top-flight national outlets like The Atlantic, Bloomberg, and the Washington Post.

There’s a growing understanding of the ways in which urban policy are at the core of many of America’s greatest challenges, especially issues of economic inequality, opportunity, and climate change. City Observatory plays a crucial role in investigating and explaining both these challenges and possible solutions. I’m excited, both as a contributor and reader, to see how it grows over the next two years and beyond.

Recently, we made the case that promoting homeownership as an investment strategy is a risky proposition. No financial advisor would recommend going into debt in order to put such a massive part of your savings in any other single financial instrument—and one that, as we learned just a few years ago, carries a great deal of risk.

Even worse, that risk isn’t random: It falls most heavily on low-income, black, and Hispanic buyers, who are given worse mortgage terms, and whose neighborhoods are systematically more likely to see low or even falling home values, with devastating effects on the racial wealth gap.

But let’s put all that aside for a moment. What if housing were a low-risk, can’t-miss bet for growing your personal wealth? What would that world look like?

Well, in order for your home to offer you a real profit, its price would need to increase faster than the rate of inflation. Let’s pick something decent, but not too crazy—say, annual increases of 2.5 percent, taking inflation into account. So if you bought a home for $200,000 and sold it ten years later, you’d be looking at a healthy profit of just over $56,000.

Sound good? Well, what if I told you that such a city existed? What if I told you it was in a beautiful natural setting, with hills and views of the ocean? And a booming economy? And lots of organic produce?

 

Maybe you’ve guessed by now: The wonderland of ever-increasing housing prices is San Francisco. When researcher Eric Fischer went back to construct a database of rental prices there, he found that rents had been growing by about 2.5 percent, net of inflation, for about 60 years. And this Zillow data suggests that San Francisco owner-occupied home prices have been growing by just over 2.5 percent since 1980 as well.

Like I said, over ten years, that gives you a profit of just over 25 percent. But compound interest is an amazing thing, and the longer this consistent wealth-building goes on, the more out of hand housing prices get. In 1980, Zillow’s home price index for San Francisco home prices was about $310,000 (in 2015 dollars). By 2015, after 35 years of averaging 2.5 percent growth, home prices were over $750,000.

 

Now, if all you cared about were wealth building, this would be fantastic news. The system works! (Although actually even this rosy scenario is missing some wrinkles: San Francisco real estate prices did suffer enormously, if briefly, during the late-2000s crash, and if you bought in the mid-2000s and had to sell in, say, 2010, you would have taken a massive loss.)

But this sort of wealth building is predicated on a never-ending stream of new people who are willing and able to pay current home owners increasingly absurd amounts of money for their homes. It is, in other words, a massive up-front transfer of wealth from younger people to older people, on the implicit promise that when those young people become old, there will be new young people willing to give them even more money. And of course, as prices rise, the only young people able to buy into this ponzi scheme are quite well-to-do themselves. And because we’re not talking about stocks, but homes, “buying into this ponzi scheme” means “able to live in San Francisco.”

In other words, possibly the only thing worse than a world in which homeownership doesn’t work as a wealth-building tool is a world in which it does work as a wealth-building tool.

This also means that the two stated pillars of American housing policy—homeownership as wealth-building and housing affordability—are fundamentally at odds. Mostly, American housing policy resolves this contradiction by quietly deciding that it really doesn’t care that much about affordability after all. While funds for low-income subsidized housing languish, much larger pots of money are set aside for promoting homeownership through subsidies like the mortgage interest deduction and capital gains exemption, most of which goes to upper-middle- or upper-class households.

But even markets with large amounts of affordable housing demonstrate the contradiction. Since at least the second half of the 20th century, the vast majority of actually affordable housing has been created via “filtering”: that is, the falling relative prices of market-rate housing as it ages, or its neighborhood loses social status, often as a result of racial changes. Low-income affordability, where it does exist, is predicated on large portions of the housing market acting as terrible investments.

And to the extent that low-income people do find a subsidized, price-fixed housing unit to live in, that means that they won’t be building any wealth, even as their richer, market-housing-dwelling neighbors do, increasing wealth inequality.

Even the community land trust, which seems to be a way of squaring the wealth-building/affordability circle, ultimately fails. Community land trusts typically provide subsidized or reduced price ownership opportunities to initial buyers, and assure longer term affordability by limiting the resale price of the home. In other words, CLT-financed homes remain affordable only because they restrict how much wealth building the initial owners are allowed to capture. The result is that CLT-financed homes only attract those who couldn’t otherwise purchase a home—which means that the lower-income people in CLTs will be building wealth more slowly than higher-income people in market-rate housing, a fundamentally inequality-increasing situation.

We say we want housing to be cheap and we want home ownership to be a great financial investment. Until we realize that these two objectives are mutually exclusive, we’ll continue to be frustrated by failed and oftentimes counterproductive housing policies.

A fundamental contradiction lies beneath most of our housing policy debates

At City Observatory, we’ve frequently made the case that promoting homeownership as an investment strategy is a risky proposition. No financial advisor would recommend going into debt in order to put such a massive part of your savings in any other single financial instrument—and one that, as we learned just a few years ago, carries a great deal of risk.

Even worse, that risk isn’t random: It falls most heavily on low-income, black, and Hispanic buyers, who are given worse mortgage terms, and whose neighborhoods are systematically more likely to see low or even falling home values, with devastating effects on the racial wealth gap.

But let’s put all that aside for a moment. What if housing were a low-risk, can’t-miss bet for growing your personal wealth? What would that world look like?

Well, in order for your home to offer you a real profit, its price would need to increase faster than the rate of inflation. Let’s pick something decent, but not too crazy—say, annual increases of 2.5 percent, taking inflation into account. So if you bought a home for $200,000 and sold it ten years later, you’d be looking at a healthy profit of just over $56,000.

Sound good? Well, what if I told you that such a city existed? What if I told you it was in a beautiful natural setting, with hills and views of the ocean? And a booming economy? And lots of organic produce?

Maybe you’ve guessed by now: The wonderland of ever-increasing housing prices is San Francisco. When researcher Eric Fischer went back to construct a database of rental prices there, he found that rents had been growing by about 2.5 percent, net of inflation, for about 60 years. And this Zillow data suggests that San Francisco owner-occupied home prices have been growing by just over 2.5 percent since 1980 as well.

Like I said, over ten years, that gives you a profit of just over 25 percent. But compound interest is an amazing thing, and the longer this consistent wealth-building goes on, the more out of hand housing prices get. In 1980, Zillow’s home price index for San Francisco home prices was about $310,000 (in 2015 dollars). By 2015, after 35 years of averaging 2.5 percent growth, home prices were over $750,000.

 

Now, if all you cared about were wealth building, this would be fantastic news. The system works! (Although actually even this rosy scenario is missing some wrinkles: San Francisco real estate prices did suffer enormously, if briefly, during the late-2000s crash, and if you bought in the mid-2000s and had to sell in, say, 2010, you would have taken a massive loss.)

But this sort of wealth building is predicated on a never-ending stream of new people who are willing and able to pay current home owners increasingly absurd amounts of money for their homes. It is, in other words, a massive up-front transfer of wealth from younger people to older people, on the implicit promise that when those young people become old, there will be new young people willing to give them even more money. And of course, as prices rise, the only young people able to buy into this ponzi scheme are quite well-to-do themselves. And because we’re not talking about stocks, but homes, “buying into this ponzi scheme” means “able to live in San Francisco.”

In other words, possibly the only thing worse than a world in which homeownership doesn’t work as a wealth-building tool is a world in which it does work as a wealth-building tool.

This also means that the two stated pillars of American housing policy—homeownership as wealth-building and housing affordability—are fundamentally at odds. Mostly, American housing policy resolves this contradiction by quietly deciding that it really doesn’t care that much about affordability after all. While funds for low-income subsidized housing languish, much larger pots of money are set aside for promoting homeownership through subsidies like the mortgage interest deduction and capital gains exemption, most of which goes to upper-middle- or upper-class households.

But even markets with large amounts of affordable housing demonstrate the contradiction. Since at least the second half of the 20th century, the vast majority of actually affordable housing has been created via “filtering”: that is, the falling relative prices of market-rate housing as it ages, or its neighborhood loses social status, often as a result of racial changes. Low-income affordability, where it does exist, is predicated on large portions of the housing market acting as terrible investments.

And to the extent that low-income people do find a subsidized, price-fixed housing unit to live in, that means that they won’t be building any wealth, even as their richer, market-housing-dwelling neighbors do, increasing wealth inequality.

Even the community land trust, which seems to be a way of squaring the wealth-building/affordability circle, ultimately fails. Community land trusts typically provide subsidized or reduced price ownership opportunities to initial buyers, and assure longer term affordability by limiting the resale price of the home. In other words, CLT-financed homes remain affordable only because they restrict how much wealth building the initial owners are allowed to capture. The result is that CLT-financed homes only attract those who couldn’t otherwise purchase a home—which means that the lower-income people in CLTs will be building wealth more slowly than higher-income people in market-rate housing, a fundamentally inequality-increasing situation.

We say we want housing to be cheap and we want home ownership to be a great financial investment. Until we realize that these two objectives are mutually exclusive, we’ll continue to be frustrated by failed and oftentimes counterproductive housing policies.

Editors note: This City Observatory commentary was authored by Daniel Kay Hertz.  The version published on October 26 contained an incorrect reference to the author.  We regret the error.

Affordable housing is an issue rife with statistics: median rents, median housing costs, percentage of people who are “housing cost burdened,” and so on. Previously, we’ve written about some of the issues with many of these statistics, including the untrustworthiness of most “median rent” reports and which rent statistics are more trustworthy.

But another issue—which we touched on earlier—deserves more sustained attention: median housing costs are a really incomplete way to understand housing prices. This is especially true if what you really care about is affordability for lower-income households. After all, low-income households are unlikely to be buying mid-priced housing, even in an affordable market. What you really ought to be looking at, then, is housing that is relatively low-priced.

If this doesn’t make sense yet, imagine a town with three families and three houses. Two families are high-income, and one is low-income. In this situation, for the low-income family, it probably doesn’t matter whether the two more expensive homes cost $300,000 or $1,000,000—because they’re going to be getting the cheapest home regardless. What matters is how much that home costs. But the “median housing cost” won’t tell us anything about that.

There’s far less public data about non-median housing prices, but the Census does offer data on 25th percentile home values—that is, homes that are cheaper than 75 percent of all the housing stock in a given area. And that data is illustrative of some of the issues that measuring affordability with downmarket housing can demonstrate.

Take two suburbs in the Chicago metropolitan area, Frankfort and Oak Park. Frankfort is a newer town on the very southern fringe of the region. Predominantly new development—over 70 percent of homes were built since 2000—the housing stock is quite homogenous, with 95 percent of units single-family homes, and 94 percent owner-occupied.

 

Oak Park, by contrast, lies on the western border of the city limits. With much of its development dating back to before the advent of zoning, it has a much more heterogenous housing stock, mixing large and small single family homes, as well as a large multifamily stock that ranges from a handful of downtown midrises to four-story apartment blocks to three-flats.

These towns have virtually identical median housing values, according to the 2014 five-year American Community Survey: $348,600 in Frankfort, and $354,400 in Oak Park. If the medians were all we looked at, we’d conclude that these two places were about equally affordable for low-income people, with Oak Park possibly being slightly worse.

But the 25th percentile prices tell a very different story. In Frankfort, with its limited range of types of housing, that figure is $269,500. But in Oak Park, where the median home value is slightly higher than Frankfort’s, the 25th percentile home is nearly $50,000 lower: $222,100.

That means a typical low-cost housing unit in Frankfort costs over 20 percent more than a typical low-cost unit in Oak Park. That’s a significant difference—it would increase the income level needed to stay under the (flawed) commonly used “cost burdened” threshold by 20 percent as well.

 

It’s also probably not a coincidence that Frankfort and Oak Park have very different income demographics. Just 16 percent of Frankfort households earn less than $50,000 a year, compared to 41 percent in the Chicago metropolitan area as a whole; in Oak Park, that number is 33 percent, much closer to the regional average. In other words, there seems to be a straight line from Oak Park’s relatively more diverse housing stock; to more diverse housing prices, as reflected by its lower 25th percentile home price; to more income-diverse residents.

This underscores an issue that we’ve repeatedly emphasized: contemporary zoning codes that widely separate different types of land uses and housing effectively make it illegal  to build neighborhoods that have a wide range of housing types and price points. The kinds of neighborhoods that freely mix large and small houses, apartments, and nearby shops are illegal in most places and and those that do exist are the anachronistic legacy of the pre-zoning era.

Of course, median housing prices still matter, if for no other reason than the shortfall in housing in many major cities has made finding affordable housing difficult for mid-income households as well as low-income ones. And if a place has very high median housing costs, it’s likely that there will be problems further down the scale as well. But to really understand a city’s or neighborhood’s housing cost profile, we do need to go beyond the median, to see what relatively down-market housing looks like. As the examples of Frankfort and Oak Park, Illinois, demonstrate, even places with the same median housing costs can differ significantly at the lower end.

How do I find data on the 25th percentile rent? These data are gathered as part of the American Community Survey.  To get reliable neighborhoood level data, you’ll want to use the Census Bureau’s pooled, five-year estimates; the latest data are from 2010-14.  You’ll want to go to American Fact Finder, and visit Table B25057, “Lower Contract Rent Quartile, Universe: Renter-occupied housing units paying cash rent  more information 2010-2014 American Community Survey 5-Year Estimates.” A table of 25th percentile rents for metropolitan areas is available here.

Affordable housing is an issue rife with statistics: median rents, median housing costs, percentage of people who are “housing cost burdened,” and so on. Previously, we’ve written about some of the issues with many of these statistics, including the untrustworthiness of most “median rent” reports and which rent statistics are more trustworthy.

But another issue—which we touched on last year—deserves more sustained attention: median housing costs are a really incomplete way to understand housing prices. This is especially true if what you really care about is affordability for lower-income households. After all, low-income households are unlikely to be buying mid-priced housing, even in an affordable market. What you really ought to be looking at, then, is housing that is relatively low-priced.

If this doesn’t make sense yet, imagine a town with three families and three houses. Two families are high-income, and one is low-income. In this situation, for the low-income family, it probably doesn’t matter whether the two more expensive homes cost $300,000 or $1,000,000—because they’re going to be getting the cheapest home regardless. What matters is how much that home costs. But the “median housing cost” won’t tell us anything about that.

There’s far less public data about non-median housing prices, but the Census does offer data on 25th percentile home values—that is, homes that are cheaper than 75 percent of all the housing stock in a given area. And that data is illustrative of some of the issues that measuring affordability with downmarket housing can demonstrate.

Take two suburbs in the Chicago metropolitan area, Frankfort and Oak Park. Frankfort is a newer town on the very southern fringe of the region. Predominantly new development—over 70 percent of homes were built since 2000—the housing stock is quite homogenous, with 95 percent of units single-family homes, and 94 percent owner-occupied.

 

Oak Park, by contrast, lies on the western border of the city limits. With much of its development dating back to before the advent of zoning, it has a much more heterogenous housing stock, mixing large and small single family homes, as well as a large multifamily stock that ranges from a handful of downtown midrises to four-story apartment blocks to three-flats.

These towns have virtually identical median housing values, according to the 2014 five-year American Community Survey: $348,600 in Frankfort, and $354,400 in Oak Park. If the medians were all we looked at, we’d conclude that these two places were about equally affordable for low-income people, with Oak Park possibly being slightly worse.

But the 25th percentile prices tell a very different story. In Frankfort, with its limited range of types of housing, that figure is $269,500. But in Oak Park, where the median home value is slightly higher than Frankfort’s, the 25th percentile home is nearly $50,000 lower: $222,100.

That means a typical low-cost housing unit in Frankfort costs over 20 percent more than a typical low-cost unit in Oak Park. That’s a significant difference—it would increase the income level needed to stay under the (flawed) commonly used “cost burdened” threshold by 20 percent as well.

 

It’s also probably not a coincidence that Frankfort and Oak Park have very different income demographics. Just 16 percent of Frankfort households earn less than $50,000 a year, compared to 41 percent in the Chicago metropolitan area as a whole; in Oak Park, that number is 33 percent, much closer to the regional average. In other words, there seems to be a straight line from Oak Park’s relatively more diverse housing stock; to more diverse housing prices, as reflected by its lower 25th percentile home price; to more income-diverse residents.

This underscores an issue that we’ve repeatedly emphasized: contemporary zoning codes that widely separate different types of land uses and housing effectively make it illegal  to build neighborhoods that have a wide range of housing types and price points. The kinds of neighborhoods that freely mix large and small houses, apartments, and nearby shops are illegal in most places and and those that do exist are the anachronistic legacy of the pre-zoning era.

Of course, median housing prices still matter, if for no other reason than the shortfall in housing in many major cities has made finding affordable housing difficult for mid-income households as well as low-income ones. And if a place has very high median housing costs, it’s likely that there will be problems further down the scale as well. But to really understand a city’s or neighborhood’s housing cost profile, we do need to go beyond the median, to see what relatively down-market housing looks like. As the examples of Frankfort and Oak Park, Illinois, demonstrate, even places with the same median housing costs can differ significantly at the lower end.

How do I find data on the 25th percentile rent? These data are gathered as part of the American Community Survey.  To get reliable neighborhoood level data, you’ll want to use the Census Bureau’s pooled, five-year estimates; the latest data are from 2010-14.  You’ll want to go to American Fact Finder, and visit Table B25057, “Lower Contract Rent Quartile, Universe: Renter-occupied housing units paying cash rent  more information 2010-2014 American Community Survey 5-Year Estimates.” A table of 25th percentile rents for metropolitan areas is available here.

What City Observatory did this week

1. How safe will the autonomous cars of the future be? The first-ever fatal collision involving a Tesla running on autopilot mode has prompted a debate on that subject. On the one hand, hand-wringing over an uncertain threat may seem somewhat out of place given the normalization of the over 30,000 real people who die on the roads every year in America. On the other, assurances that self-driving cars will surely be a massive improvement are so far still just theoretical: Until this new technology has logged far more miles, on far more types of roadways—and especially urban streets with lots of intersections, crosswalks, jaywalking, and potential obstacles—we shouldn’t take for granted that it offers a solution to the problem of road safety.

2. The elevator pitch for “value capture” makes a lot of sense: Public transit creates value, so why shouldn’t some of that value be funneled back into transit agencies to pay for expansion and maintenance? But as Chicago has landed on the verge of creating one of the largest value capture programs in US history, there are also reasons for pause. Politically, value capture is more fragile than funding campaigns that require building a coalition explicitly in favor of using tax revenue for funding, like LA’s Measure R; logistically, value capture seems to benefit capital construction more than ongoing operations, which in many cases are the more crucial aspect for valuable transit service.

3. What is the future of urban transportation? For many, especially those in the tech community, the answer is autonomous vehicles. But one such advocate wrote in the Wall Street Journal that autonomous vehicles won’t operate at their peak efficiency without serious public policy concessions, including designating certain streets off-limits to all other types of vehicles. This inadvertently reveals what much discussion of the inevitability of self-driving cars elides, which is that public regulation fundamentally shapes evolution and adoption of technology as well as the choices that private individuals make about their transportation. We should not be suckered into the idea that an optimal future transportation system will simply emerge from the private marketplace.

4. In Westchester County, just north of New York City, the results of a seven-year of litigation over fair housing are getting mixed reviews from activists. The Justice Department accused local governments of using various policies, including low-density single-family zoning, to promote racial segregation, but the county government has been openly critical of the case and resistant to some of its recommendations. Evaluating this legal strategy versus state-based legislative tactics—like Oregon requiring minimum amounts of multi-family housing zoning, or Massachusetts allowing developers to sue to overturn low-density zoning in particularly unaffordable municipalities—is important for the future of anti-segregation work.

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The week’s must reads

1. In the New Yorker, Kelefa Sanneh reviews a new book about “ghetto” segregation as a lens on current debates about gentrification. Connecting the long history of segregation in America to the relatively shorter history of integration as “gentrification” complicates a lot of the questions about what kind of demographics would hold in a “just” neighborhood. Sanneh also refers to some of the academic literature by writers like Lance Freeman who find that residents of gentrifying neighborhoods often have more conflicted feelings about the process than sometimes assumed. One of the main effects of gentrification, Sanneh concludes, may be that by bring different groups in into closer contact, gentrification makes it harder to ignore inequalities that have been around for a long time.

2. What happens to neighborhoods with housing built for families as their residents age? That’s a challenge investigated by South Carolina’s The Herald, which notes that the proportion of suburban residents 65 and older has doubled since 1950. The problems are numerous, including housing stock dominated by multi-story single-family homes difficult or expensive to retrofit for people with difficulty climbing stairs, and bad public transit access that means limited mobility for people who can’t drive.

3. Interpreting ongoing academic research for a non-academic audience poses serious challenges. In a Twitter essay, FiveThirtyEight’s Ben Casselman reflects on some of those challenges—and on potential best practices—in the wake of an article in the New York Times that highlighted a working paper on police shootings that some argued was less definitive than the Times’ reporting suggested. One takeaway: To the extent possible, it’s better to summarize the entire body of literature on a subject than to present a single paper without that context.

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New knowledge

1. The Center on Budget and Policy Priorities has released a new “Chart Book” on the effects of rental assistance programs. The treasure trove of data includes who gets rental assistance (mostly adults with children and the elderly), their effect on homelessness (assistance reduces it), food insecurity (also reduced), and even domestic violence (also reduced). It also shows that when families use rental assistance to live in low-poverty neighborhoods, the benefits are even greater.

2. A new study by Neil Metz and Mariya Burdina of the University of Central Oklahoma suggests that increasing income inequality between adjacent neighborhoods is associated with higher rates of property crime. Importantly, however, increasing levels of income inequality within a neighborhood do not predict higher rates of property crime. At least at first glance, this is evidence thatspatial inequality—that is, income segregation—is associated with greater crime levels.

3. The Transit Center has released a new edition of transit rider surveys. Among the findings: nearly three-quarters of regular transit users walk to their stations, and even occasional riders (once a month) walk more often than they drive. Another interesting finding: Despite the emphasis on transit as a commuting tool, The Transit Center finds that most riders fall into one of two buckets: “Occasional” users who generally don’t use transit to get to work, or “All-purpose” users who commute by transit because they use transit for all sorts of trips. Those who use it mainly for regular commutes make up a relatively small proportion of those who use transit in cities around the country.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Westchester County, the mostly wealthy suburbs just north of New York City, is at the epicenter of one of the nation’s leading court battles over housing segregation.

Last week, the New York Times reported that seven years since the Justice Department accused many of the county’s municipalities of using exclusionary zoning laws and other policies to encourage segregation, the progress made is less than many advocates had hoped for.

 

Racial segregation in Westchester County, as in the New York metropolitan area in general, remains extreme. In a report submitted to the court system, CUNY professor Andrew Beveridge wrote that the “dissimilarity index” between whites and blacks, which represents the percentage of people who would have to move to have perfect integration, is 73. While the county as a whole has a fairly diverse population, less than five percent of Census tracts in the county have both black and white populations that are representative of the overall population of the county.

Moreover, the towns in Westchester County with extremely low black populations are also towns with extremely restrictive zoning laws. Of the 25 municipalities whose black populations are under three percent (versus 16 percent countywide), 21 ban apartments on at least 95 percent of their residential land—and 11 mandate single-family homes on at least 99 percent of their residential land.

And even when they allow multi-family buildings, these towns use zoning as a tool of segregation. Of these 25 towns, professor Beveridge found that 23 had black populations heavily concentrated in small areas where apartments were allowed, separate from the more common, white-dominated, single-family home zones.

Of course, zoning on its own can’t solve the problem. But as Beveridge argues, it’s hard to see how Westchester County could meaningfully allow more racial and economic integration without addressing zoning. That’s both because market-rate multifamily housing tends to be much more affordable than single-family housing built at the same time, and below-market housing in places with high land costs is only financially feasible to build as multi-family housing. Fixing exclusionary planning laws, then, may not be sufficient, but it is necessary.

But most of these municipalities, along with Westchester County executive Robert Astorino, have been defiant. Though they claim they are on pace to create the required 750 below-market housing units (out of more than 340,000 units across the county), fair housing advocates say that many of those are themselves segregated from higher-income neighborhoods.

These results are disappointing, given that the Westchester case may be among the most high-profile legal interventions against segregated housing since an earlier generation of litigation that included the Mount Laurel case in New Jersey. One lesson, perhaps, is that if segregated white and affluent local governments have the tools to enact exclusionary housing policies, they will generally use them—and find other ways to resist court mandates.

Rather, anti-segregation advocates may need to find ways to legislatively curtail the power of exclusionary communities. As we’ve argued before, this is most likely to happen at the state level, because state officials have to answer both to highly privileged, exclusionary communities as well as their less-privileged constituents who may want access to those communities. And in fact, places where states have more power in development policy are less segregated than those with more local power.

These approaches might include measures that disallow regulatory barriers to new housing that don’t serve an important social or environmental safeguard, as with California Governor Jerry Brown’s recent proposals; or they may directly mandate that all municipalities allow a minimum amount of multifamily housing, as in Oregon; or they may allow the state to override local zoning in places with severe affordability issues, as in Massachusetts. But Westchester County—as with the rest of New York state, and the country as a whole—has much farther to come in breaking down public policies that produce and perpetuate segregation.

The Week Observed recently celebrated its first birthday! At the end of June 2015, we sent our first roundup of the most important urbanist news to about 700 people; since then, we’ve faithfully published a new issue every Friday, and we’re proud that today’s message will reach over 1,600 subscribers in every part of the country and beyond, from City Hall planners to university researchers to neighborhood organizers.

Whether you’ve been with us since the beginning or just signed up this week, thanks for being a part of this community!

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What City Observatory did this week

1. Each year, Harvard’s Joint Center on Housing Studies publishes a huge “State of the Nation’s Housing” report. Some of it ought not to be a surprise, especially if you’ve been reading City Observatory: Rents continue to outpace incomes, thanks in part to a zoning-induced shortage in many parts of the country; single-family home production is up, but remains far, far below its pre-recession peak, and the occasional reports about the return of “McMansions” are really a statistical glitch: Large new single-family home construction is drastically below its 2006 peak, but moderate-sized single-family home construction is doing even worse. But JCHS’s report is odd in how it manages to compartmentalize housing-related spending: It laments that federal housing subsidies are “dwindling,” but the truth is that total outlays have climbed by tens of billions of dollars—in the form of money given to mostly wealthy homeowners. If we’re going to be serious about finding funds for the kinds of subsidies that will tackle affordability problems, we can’t just ignore that spending.

2. Ask a random person on the street why public transit is good, and they’ll probably be able to name at least three things: It’s environmentally friendly; it’s a cheap option for the poor; and new transit might provide a boost to economic development. But Uber Pool appears to be encroaching on all of those points: Theoretically, electric, autonomous carpool vehicles could emit fewer emissions per passenger; a new Uber pilot in Boston would give monthly passes for less money per ride than public transit; and Uber has sold itself to more than one city on the grounds that it provides a big economic boost. So is there any reason left to use transit? Yes: space efficiency. Even packed carpool vehicles will take up drastically more space per person than trains or buses, making travel impractical or impossible in many dense, walkable areas. This advantage of transit needs to become a part of the broad debate as services like Uber Pool become more common.

3. Blogs like Copenhagenize have helped transform many American cities’ attitudes towards biking in the last decade. What would it mean to make a similar transformation with respect to the workhorse of urban transit: city buses? In this post, we call for American cities to Londonize: commit to common-sense, comprehensive, and mostly low-cost policies that make getting around without a car convenient and reliable. Some of the pillars of London’s excellent bus service, which serves more people than the famous Tube, and nearly half as much as every bus service in the United States put together: Frequent service (no more than 12 minute gaps); simple routes and wayfinding; and prioritizing speed with bus lanes and all-door boarding.

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The week’s must reads

1. When we suggested that housing vouchers could be made universal to those whose income qualifies, just like food stamps, we were hardly the first to make such a proposal. Now, Jake Blumgart at Slate has picked up the argument, drawing on data on evictions and the broader problem of housing affordability to make the case that housing vouchers—which currently reach just 17 percent of low-income households—ought to be for everyone. Blumgart also gets into some of the weeds of implementation, like the small-area Fair Market Rent pilot that attempts to make vouchers usable even in high-cost neighborhoods.

2. The US Department of Transportation is planning to overhaul the way it measures traffic congestion—a shift with big implications for the evaluation of future transportation projects. We’ve written that the measures fail on several fronts: Measuring travel by vehicle, not by people, and not taking into account the length of trips in addition to travel speed. Now Transportation for America, which has its own critical take on the proposed rules, is asking people to contact USDOT to comment on its shortfalls, and holding a seminar on the 13th to discuss what a better congestion measure might look like. If you’re interested in better transportation policy for your city, this is a cause you should be concerned with.

3. Many urbanists are highly concerned about road safety. At The Transportist,David Levinson argues that police violence at traffic stops ought to be included in that category. In the wake of another police shooting of a black man during a traffic stop for a broken tail light, Levinson points out that fear of this sort of arbitrary violence during traffic enforcement is a serious issue, especially for people of color, and should be taken into account when urbanists think about how to enforce traffic safety laws. (Similarly, for urbanist advocates of food trucks, street vending, and quasi-legal entrepreneurship like Airbnb and Uber, Emily Badger points out that two high-profile victims of police violence were initially stopped for illegal street vending.)

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New knowledge

1. America is aging—but not in the same way all over the country. Governing has put together a report on the shrinkage of the prime working-age population by county, highlighting where demographics are squeezing an important source of economic vitality and tax fiscal health for many cities.

2. The materials that make up a city’s built environment contribute significantly to a neighborhood’s character. Now, Kate Rabinowitz has made a map that shows the building materials of every building in Washington, DC. (Hat tip to Greater Greater Washington.) In this city, the overwhelming majority of buildings are made of brick—but you can see little pockets of other materials, mostly on the outskirts.

3. At The Transport Politic, Yonah Freemark has another entry into the ongoing conversation about whether, and how, population growth is changing in urban areas. He has two main contributions: the first is to show how populations have changed within the footprint of built-up areas in 1960. That reveals that many “fast-growing” cities have grown almost exclusively thanks to annexations and outward growth, rather than infill, with 1960-era neighborhoods losing population. The other is to measure population change both in a broad core—three miles from City Hall, the same measure we’ve used—as well as in a smaller core, 1.5 miles from City Hall.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Late last month, the Illinois General Assembly passed legislation allowing what may become one of the largest transit value capture measures in the US.

“Value capture” is a transit funding mechanism based on the idea that public transit creates broad social benefits—from more housing demand to swifter commerce in newly accessible shopping districts—and ought to be able to monetize some of those benefits to cover a portion of its construction and operation costs. It takes various forms, from special taxing districts to the direct ownership, development, and selling of transit-adjacent land by transit agencies.

In the case of Illinois, the new law authorizes the city of Chicago and a few inner-ring suburbs to create “tax increment financing” (or “TIF”) districts around four prospective transit projects, including the reconstruction of two heavy rail lines, a rail extension, and improvements to a major commuter rail hub. Essentially, regular property tax revenue within these districts would be capped at current levels, and if property values grow above those levels, the extra revenue would be directed into special funds for these transit projects. Because the projects pass through many neighborhoods where residential and commercial demand has been growing very rapidly, and would last for up to 35 years, they may end up contributing hundreds of millions of dollars, if not more, to these funds.

 

In the context of a chronically underfunded system that, like many around the country, has a long maintenance backlog and hasn’t had a major expansion for a generation, these funds are a lifeline. But there are also some tradeoffs to consider.

For one, at a conceptual level, the link between increased property values along these lines and the transit services themselves is murky. As with most value capture in the United States, the additional revenue won’t be based on some sophisticated econometric model meant to capture exactly how much extra value was created by transit: it will just assume that all new value is a result of the transit lines—or perhaps even the additional value of the rehabbed lines over their in-need-of-maintenance state. While evidence certainly suggests that rapid transit contributes to growing property values, many neighborhoods in central Chicago outside of rapid transit sheds have been growing in value as well, suggesting that there is a general trend towards the center city that goes beyond just transit access. And in some other cities, a general shortage of housing has been pushing up real estate values across entire metropolitan areas, making the connection even murkier.

Perhaps this is a philosophical splitting of hairs. But if transit advocates justify new revenue by making the standard value capture argument and it doesn’t hold up, expect opponents to exploit that gap.

There is another political issue with this type of value capture as well. Because of the way property taxes work, TIF districts sometimes function as de facto tax increases: municipalities are allowed to collect a given amount of revenue, and so if a TIF district siphons off some money in one neighborhood, the city will simply make up for it by taking more everywhere else.

Again, this isn’t necessarily a problem: it’s perfectly defensible to support raising taxes to support public transit. But if it’s not sold to the public that way, then voters may understandably feel cheated, and be less likely to support such measures in the future. The famous Measure R sales tax referendum in Los Angeles required building a political coalition in favor of explicitly raising taxes to pay for transit. TIF districts may not enjoy any such coalition. Indeed, a Measure R-style campaign to raise taxes in Chicago’s Cook County for transit has so far failed to take off. That leaves this sort of value capture policy potentially vulnerable to backlash.

 

On a more nitty-gritty level, value capture generally requires increasing real estate values. But what about neighborhoods where real estate values are stagnant or falling? One of the approved projects in Chicago is an extension of the Red Line on the far South Side, where home prices have struggled to rebound since the economic crash. The law gets around this problem by appearing to allow the transfer of money collected in the North Side Red Line district to the South Side—but that just exacerbates the already-strained “value capture” justification, and allows residents of the North Side to complain that money they thought would be returned to their communities is instead being used twenty miles or more away.

But if these sorts of transfers aren’t allowed—or aren’t available—then value capture has little to offer most working-class or high-poverty neighborhoods, which are often in the greatest need of both economic development and low-cost transportation options.

Finally, the Chicago value capture bill appears to be entirely focused on building new infrastructure, rather than supporting service—more frequent buses or trains, for example. This isn’t a necessary part of all value capture policies, but their structures often encourage it. More frequent service generally makes sense as a policy enacted across an entire system—if not on every line, then on a selection of lines that span many parts of a city—but value capture tends to be focused on particular neighborhoods or lines. TIF districts almost always have a pre-established limited lifespan, and relying on a revenue source that will one day disappear for ongoing expenses like operations makes little sense. Indeed, virtually all of the value capture examples provided by the American Public Transportation Association involve capital construction, not operations. That means value capture is unlikely to help reverse the ongoing deterioration of bus service and ridership.

Value capture has helped pay for significant new transit projects in cities across the country, and the bill in Illinois provide funding for undoubtedly necessary maintenance and rehabilitation that has no other obvious funding sources. But there are political and substantive issues to work through before embracing it as the answer to transit funding problems more generally.

One of the first “urbanist” blogs I found was Copenhagenize. It’s a brilliantly simple name that carries its argument in a single word: Here is a place, Copenhagen, that does something right, so let’s be more like them.

The thing Copenhagenize has in mind is biking. From particular styles of bike lanes, to more general street design, safety management, and so on, Copenhagenize uses real-life examples not to show what a really bike-friendly city might look like on a planning mockup, but what it actually looks like in the world today. It’s not a bulletproof approach, of course—critiques range from standard “but Boston/Dallas/Overland Park is different” objections to calls to hold up non-European cities as urban exemplars—but when your task is to convince people to change to something that’s new to them, you need to have a clear and positive vision of how your changes might function, and an attractive real-life city that has implemented them well is as good as you can get. More than one city planner has been converted to the bike infrastructure gospel on a trip to northern Europe.

But other forms of urban transportation haven’t been as fortunate. People come back from New York, Paris, or Tokyo and marvel about their subways, but heavy rail is far too expensive and logistically impractical for the vast majority of American cities to consider as a major form of transit. Other people return with photos of street-running trams in Europe or Portland, but the record of the new generation of streetcars has been decidedly mixed—and, again, they’re too expensive to really serve more than a few lines in most places. Visitors to Mexico City or Bogotá might be convinced of the utility of Bus Rapid Transit—but, once more, only as an approach for a few flagship lines, and even then few US cities seem interested in pursuing the full-on BRT treatment adopted widely in Latin America.

What we need instead is a model that can be applied broadly to entire transit systems, like the bike infrastructure highlighted by Copenhagenize, in metropolises and small cities.

Allow me to humbly suggest: Londonize.

Really, any number of cities could fit the bill in terms of smart, high-quality routine bus service, and I don’t make any claim that London is necessarily the best. But London is a city everyone is (at least vaguely) familiar with, and—perhaps more auspiciously—it has those iconic double-decker buses that are a worldwide symbol of friendly public transportation.

 

Moreover, though the Tube might get more glamorous press, London’s bus service really is impressively massive: It carries roughly 2.3 billion passengers per year—much more than the Tube (1.3 billion), close to the New York City subway (2.8 billion), and nearly half as much as every bus service in America combined (5.1 billion), while serving a population roughly 1/35 as large.

So London has buses that are iconically attractive and manage to be useful enough to garner millions of rides per day—without massive, or massively expensive, infrastructure projects. What are the basic building blocks of its success? If Denver or Cincinnati wanted to Londonize, what might they do?

Transport for London (TfL) itself identifies four pillars of its service:

Frequency. TfL says that if it can run buses at least every 12 minutes all day, people will think of that line as “show up and go” service—convenient enough to just turn up at a stop without having to go through the hassle of consulting (and the psychological leap of trusting) a schedule. That makes them much more likely to depend on the bus. Wherever possible, then, 12 minutes is the minimum standard frequency for bus lines. Some American cities have started to reflect this principle in “frequent networks,” which come at least every 12 to 15 minutes—but just like a handful of marquee protected bike lanes don’t add up to much if most streets are bike-hostile, a loose network of “show up and go” bus lines aren’t worth much if most routes remain very infrequent. That’s especially true in networks that rely on transfers for much of their reach.

Reliability. If you say a bus comes every 12 minutes, they should come every 12 minutes—not two every 24 minutes. Bus bunching, and the long gaps between buses that result, is a problem that plagues many systems, but it’s not unsolvable. Technologies like transit-signal priority, which holds green lights and shortens red lights to speed buses, as well as bus-only lanes (about which more in a minute) and good dispatch management, can help maximize reliability.

Simplicity. The bus system should be easy for new and experienced users to ride. At a macro level, this means designing routes that are intuitive and as straightforward as practical. At a micro level, it can mean good signage at the actual bus stops—ranging from metal signs that show where a route goes, how often it comes, and where you might transfer to other services, to electronic signs that can show bus arrival time estimates, real-time notifications about delays or other service changes, and other information. London has more than 2,500 of these boards all around the city, and some US systems like Chicago and Boston have begun to install similar boards as well.

 

 

Comprehensiveness. TfL’s service standards suggest that Londoners ought to be no more than 400 meters, or about a five minute walk, from a bus stop—and in fact about 90 percent of residents are that close or closer. Low population densities in American cities might make that goal impractical, but the principle that people are supposed to be able to walk from their origin to a bus stop and from another bus stop to their destination does mean that extremely wide spacing between lines simply won’t make for a practical network. (See Jarrett Walker for a discussion of the tradeoffs between coverage and ridership.) In sparsely-populated areas where a denser network wouldn’t work, it might make sense to look into subsidies for taxis or rideshare services to solve first/last mile problems.

To these four principles, I would add three more:

Speed. To make buses a time-efficient way of getting around, they need to come frequently and reliably, but they also need not to crawl along once you’re on board. One way to avoid that, especially in cities with traffic congestion problems, is bus lanes—sections of the road that cars and trucks aren’t allowed to travel in. Because of their incredible space-efficiency, buses are able to move many times more people through a single lane than private vehicles, without creating congestion—as long as those private vehicles aren’t allowed to get in their way. For that reason, London has created nearly 200 miles of bus lanes.

Another common problem, especially on high-ridership routes, is the amount of time buses sit waiting for each new passenger to pay their fare. But many London buses have a fare card reader at each door, allowing for much faster boarding than the standard single fare reader at the front door. In the US, San Francisco has also begun implementing this form of “all-door boarding.”

Land Use. Of course, if you’re a regular reader of City Observatory, you know that transportation isn’t just about transportation—it’s also about land use. By American standards, London is an exceptionally compact, walkable city. That means that it’s easier to make sure everyone’s within a five minute walk of a bus stop; easier to ensure that destinations are near a stop; and likelier that trips will be relatively short, which suit a frequent-stop service like most bus lines. But while most American cities won’t be hitting London-level density any time soon, that just means they have lots of room for improvement. “Transit-oriented development” has become a well-known buzzword in the planning world, but research shows that TOD works in places that only have bus service, as well as near rail stations.

And finally: Road Pricing. London put in place a system of a congestion charge for its central area in 2003. It charges private cars 11.50 pounds (roughly $15) per day to travel in the cordoned area between 7am and 6 pm. This simultaneously reduces car traffic, and provides a source of funds to help subsidize transit improvements. In 2015, the charge generated more than 170 million pounds of net revenue to support the transit system. Reducing car traffic helps buses move faster, benefiting a majority of London commuters, and speeding all traffic through the center.  

In large part because of the movement that websites like Copenhagenize have helped push forward, over the last decade or so American cities have made incredible strides in making cycling a safe, viable, attractive option for getting around. It’s time to take the same approach with the most broadly accessible transit mode: the city bus.

For most Americans, public transit basically has three virtues. The first two cater to liberal sensibilities: it’s environmentally friendly, and because it’s cheap, it’s effectively a sort of transportation safety net for the poor. On top of those feel-good benefits, there’s a “business” case, which is that public transit is good for economic development.

These three virtues are broadly understood—or at least, understood as standard arguments in favor of transit, even if not everyone finds them convincing—by most people, even those who couldn’t get into the weeds about dedicated lanes for streetcars or all-door fare payment. They are accessible to average voters and local elected officials alike.

But as city centers are changed by both demographic shifts and technological innovation, it seems increasingly necessary to add a fourth virtue to the broad public debate over urban transportation: Public transit is space-efficient.

But the knock on transit is that it’s slow.  Or slower than a private car.  And the results of a recent race in Chicago shows that transit is considerably slower than UberPool, Uber’s carpool like ride sharing service. The race was results were confirmed by a study from DePaul University’s Chaddick Institute for Metropolitan Development, which found that Uber Pool was significantly faster than Chicago’s public rail and bus system for most trips. While Uber Pool also cost more, its price was significantly below that of regular Uber service—and even further below the cost of traditional taxis. The implication of the head-to-head comparison is that, for a significant number of people, switching some proportion of the CTA’s 1.7 million daily trips to Uber Pool might be worth it.

And even Uber Pool’s cost disadvantage over public transit might disappear if a new pilot program in Boston catches on. This month, Uber announced that it would introduce monthly Uber Pool passes—like transit passes—for just $2 per ride, or less than the MBTA’s $2.25 fare. While these temporary low fares are no doubt a money-losing loss leader, if UberPool fares are anywhere close to the price of public transit it would seem like we’re probably looking at a massive shift from public transit to these sorts of ride-hailing services. And wouldn’t that be a good thing, if it’s both faster and nearly as cheap?

But here’s where the importance space-efficiency comes in. When one person switches from the bus to Uber, two things happen. One is that they get a faster trip almost by definition: A vehicle that makes many stops (the bus) is going to be slower than a vehicle that makes few or no stops (the Uber) unless the bus has some other advantage, like transit lanes that allow it to avoid traffic congestion. And the vast majority of American bus lines are given no such benefit.

The second thing is that they switch from a very space-efficient vehicle, where they probably take up only a few square feet on the road, to a very space-inefficient vehicle, where they take up many, many times more.

(Yes, the above image isn’t totally fair—Uber and autonomous vehicles could theoretically reduce the space needed for parking by quite a bit, and potentially services like Uber Pool could shrink the space it takes up on the road as well. But regardless, there’s no doubt that while traveling, Uber and autonomous vehicles consume space much more like private vehicles than like public transit, pedestrians, or bikes.)

When one person makes that switch, it doesn’t affect traffic very much. But if many people were to make that switch, particularly on streets that carry a decent number of public transit passengers, the implications are quite serious. Even in an Uber Pool, riders will be increasing the road space they take on manyfold—and thereby radically decreasing the number of people who can use the road at a time. In other words, they will be creating serious traffic congestion.

In many cases, there’s just no plausible way to physically move everyone who currently uses a road if bus riders were to switch to Uber-like services. On Lake Shore Drive in Chicago, roughly a quarter of all the people on the road at rush hour are on public buses, and travel speeds already regularly fall well below the speed limit. Were a large proportion of those bus riders to switch to Uber, they may very well see their own travel times become longer, as they suffer from the congestion that they have helped to create. Uber makes it possible for one person, or even many people, to take a faster trip; but if we were all to take Uber, we’d all have even slower trips.

Crucially, though, no matter how slow traffic gets, Uber will almost always be faster than street-running, mixed-traffic transit services, meaning no one will have an incentive to fix the problem by switching back to the bus. This is an issue that can only be resolved by public policy: Re-prioritizing space-efficient transportation by, for example, creating bus lanes.

The broader point here is that the kind of dense, pedestrian-friendly neighborhoods that are increasingly in demand can’t function without very space-efficient forms of transportation. For very dense areas, like central business districts, that’s often because you literally can’t fit all the people traveling to and from them on roads in cars. In lower-density residential neighborhoods and commercial corridors, travel congestion may be less of a barrier, but parking becomes the pinch point: if everyone arrives by car, the amount of parking required would end up leveling half the neighborhood. (Recall the parking requirements in downtown Kalamazoo, which call for parking lots so big that they wouldn’t fit on their parcels, even without any actual building.)

If this virtue of public transit (and, of course, walking and biking) is understood, then calls for there to be “enough” parking, or to “solve” the congestion problem in popular, dense neighborhoods, stop making any sense: allowing everyone to arrive by car is just physically incompatible with those types of communities.

What City Observatory did this week

1. Last week’s big news was Brexit: the vote by the United Kingdom to leave the European Union. What does that have to do with urban policy on our side of the Atlantic? Well, it turns out that just as urban density predicts voting behavior in America, with denser neighborhoods strongly trending more liberal, the Brexit vote was also highly correlated with urban population patterns: the higher a district’s residential density, the higher the “Remain” vote.

2. A common knock on more compact metro areas is that the cost of living is higher—in particular, the cost of housing. But while it’s true that our policy-induced “shortage of cities” has led to higher housing prices than necessary in many sought-after urban communities, many analyses miss a big part of the cost-of-living picture: transportation costs. Using our own “sprawl tax” estimates of the extra time and money costs of longer commutes in more spread-out metropolitan areas, we show that places with higher housing costs tend also to have lower transportation costs.

3. We’ve previously argued that the difference in housing price growth in urban cores and suburban peripheries can act as a sort of “Dow of cities,” indicating shifting patterns of demand for different kinds of neighborhoods. Now we haveanother such indication that the demand for inner-city neighborhoods is increasing: new housing price data based on repeat-sales models by Zip code for cities across the country confirms that central city property values are growing faster than those on the periphery—especially in larger metro areas.

4. What are the next steps for the urbanist movement? At the “Act Urban” convening in Philadelphia last week, hosted by Gehl Institute, our own Joe Cortright spoke on three challenges for the civic commons moving forward: transitioning from “micro” to “macro” interventions in public spaces; understanding and responding to the market demand for space in urban centers, and its relationship to vibrant public spaces; and adopting metrics that can help drive policy around more than just vehicular traffic.

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The week’s must reads

1. Two interesting pieces of Uber news this week: First, Bloomberg‘s Justin Fox looks at the ease with which Uber competitors are challenging the ride-hailing company’s dominance abroad, and notes that the idiosyncratic, city-by-city markets for its services leaves it vulnerable to competition in ways that other companies that depend on network effects to dominate their sectors aren’t. Meanwhile, Uber announced that it would be launching a trial monthly subscription service for just $2 per ride in Boston—an almost public transit-like service package.

2. The Chicago Sun-Times covers the results of perhaps the country’s greatest experiment in public housing reform, the Chicago Housing Authority’s Plan for Transformation. While the teardown of midcentury public housing towers have broken up some of the intentionally concentrated pockets of poverty, providing former residents with vouchers that gives them more of a choice of neighborhoods has not yet to as much desegregation as some proponents originally imagined.

3. Google’s Sidewalk Labs is attempting to leverage the technology company’s tools to improve urban life. The Guardian unearthed some of the documents developed for Columbus’ “Smart City” proposal that include a role for Google technology in transit, parking, and related payments, raising suspicions about the company’s objectives. At CityLab, Laura Bliss countered that there’s nothing nefarious in Google’s approach. In a column at Fast Company, the Labs’ CEO Daniel Doctoroffsheds some light on what they think of as their major problems to solve: understanding travel demand; managing parking supply; supplementing traditional fixed-route transit with ride-hailing services; and more. While many of these ideas hold some promise, we hope that all sides moving forward will keep in mind some of the pitfalls of treating cities simply as engines to be optimized—and that broader social or political questions are sometimes as or more important than technological innovations.

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New knowledge

1. At the Washington Post, Emily Badger reviews even more research on the growing demand for inner-city living, but the results are more nuanced than you might think. While there has been a clear pattern of people with greater means moving to city center over the last few decades, these centers remain, on average, populated by people of lower socioeconomic status than residents of outlying suburbs. Badger also digs into the urban demographics of the 1880s to suggest some of the inherent advantages of more central living that may explain some of today’s shifting preferences.

2. There’s a treasure trove of gentrification-related research from this research symposium held by the Philadelphia Federal Reserve (mentioned in the Post story), ranging from whether falling crime triggers more in-moving of higher-income households (it appears so) to the effect of gentrification on small businesses (on average, there is no evidence of “business displacement,” though effects may vary by neighborhood). If you work on gentrification-related issues, this would be a good page to bookmark.

3. New York City has released new data on the performance of their “Select Bus Service” lines, which are given a basket of improvements designed to improve speed and reliability at a relatively low cost. On the Nostrand SBS in Brooklyn, travel times have fallen 15 to 31 percent. A breakdown of the improvement shows significant gains from bus-only lanes, with the amount of time spent stuck in traffic declining by 40 percent—but even bigger gains from “proof of purchase” fare payment, which allows buses to avoid long lines of people paying when the bus arrives by installing prepayment kiosks at stations.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

For advocates of less restrictive building regulations, especially in high-cost cities where more homes might help bring down housing prices and create more equitable, diverse neighborhoods, state governments often seem like the best bet. At a local level, for reasons we’ve explained before, the politics are incredibly difficult—not least because local elected officials represent nearly all the people who will see the potential downsides of new development, but not the people who stand to benefit by moving into the area once new housing exists. It’s not an accident that places where states have more power over development policy tend to be less segregated.

Still, it’s not as if states around the country are jumping at the opportunity to revolutionize urban development. So two measures that are moving forward in California and Massachusetts—two of the classic “shortage of cities” states—are worth an optimistic look.

 

In California, Governor Jerry Brown has proposed changes to the California Environmental Quality Act to make it easier to build affordable housing. CEQA mandates an extra layer of local review and discretion over development proposals—a kind of mini-environmental impact statement—even if those proposals meet all existing local zoning requirements. In effect, CEQA eliminates the kind of “as-of-right” development that exists nearly everywhere else in the country, and allows project opponents to tie up routine projects that otherwise meet local zoning codes in months or years of additional review.

Brown’s proposal would exempt projects from CEQA if they 1) meet existing local zoning rules and 2) include a low-income housing set-aside as part of the proposal. Local governments would retain discretion in the form of their zoning codes, but would lose the additional layer of CEQA for projects that include substantial low-income housing. The reaction from many local politicians and residents, predictably, has not been positive, and negotiations in the state legislature are likely to continue for months.

Meanwhile, this month the state Senate of Massachusetts passed a different bill that, in some ways, is bolder: rather than leaving zoning entirely up to local governments, as Brown’s bill does, the Massachusetts proposal would allow accessory dwelling units, or backyard cottages, on the same lots as single-family homes without requiring a special permit, mandate that local governments zone some of their area for multi-family buildings at a minimum zoned density of 15 housing units per acre (or 9,600 per square mile) in urban areas.

 

While much of the housing debate nationally has focused on local policies like inclusionary zoning, which tends to produce token numbers of below-market units, or community land trusts, which have proven very difficult to scale up, these sorts of state-level policies were a major battleground in the last generation of housing battles in the fair housing fights of the late 1960s and 70s. Massachusetts, in fact, helped lead the charge with the so called “anti-snob” bill, passed in 1969, which allowed a state board to override local zoning codes if it determined that less than 10 percent of the homes in that municipality were affordable to moderate-income households. Studies have suggested that the law, called 40B, has produced a significant proportion of the low-income housing in Massachusetts in the last several decades without a negative impact on market prices. Another major state fight, called Mount Laurel, began in the New Jersey court system in the 1970s, and similarly attempted to mandate the construction of affordable housing in high-cost municipalities, regardless of their local zoning. Those rulings remain embattled, however.

The battle to establish strong state policies and guidelines that will facilitate more housing supply at the local level promises to be a long one. As the experience of Somerville, Massachusetts, shows, the constraints on development have grown by the steady accretion of individually well-intended by cumulatively stifling measures. Even jurisdictions that nominally allow affordable units like granny flats, impose so many other conditions on their construction that they simply become uneconomical. Granola Shotgun relates the story of how the cost of permits, sewer connection fees, and off-street parking requirements effectively amount to a poison pill that makes it impossible to actually build technically permissible accessory dwelling units.  

Still, state-level policies that both encourage or require the construction of below-market housing while potentially increasing production of market housing as well, helping slow the growth of market prices, potentially carry a much greater impact for affordability than local policies like inclusionary zoning. Advocates in other states may want to look to what’s happening in California and Massachusetts now—as well as to the previous generation of affordable housing fights—for breakthroughs beyond the current round of local fights.

We got quite a bit of interest on our post last week about how the Boston suburb of Somerville, Massachusetts had written itself a zoning code that would have prevented the construction of virtually the entire city of 80,000 people if it had been adopted at its founding. According to Somerville’s own planning department, just 22 residential buildings in the entire municipality met its zoned density standards—and if you added parking restrictions, it’s likely those last 22 would be illegal, too.

The post purposely steered clear of any sort of real economic or political analysis, focusing on the sort of gut-check question about whether building standards that declare entire neighborhoods illegal—neighborhoods that, by all appearances, are attractive and appreciated by their residents—make any sense.

 

But it’s worth underscoring that this is more than just a funny legal “whoops,” the land use equivalent of those old laws about not whistling on Sundays. These sorts of nonsensical land use rules both have serious consequences and are the results of predictable political dynamics—which have, predictably, led to them being adopted in various forms throughout the country. In other words, though we’re using Somerville as our example here, it’s far from an outlier among American cities.

Even semi-regular readers of City Observatory will know that, particularly in a high-demand region like Boston, overwhelming evidence suggests that regulations that restrict new housing (as Somerville’s do, since required density is set below what already exists) tend to increase prices. To be fair, today the city’s planners recognize this, and are planning large amounts of new housing around an extension of Boston’s Green Line. But according to the Census, before the last year or two, there was an extraordinary drought of new construction in Somerville, with barely 100 new homes built since the turn of the century, contributing to a regionwide shortage. Meanwhile, Zillow puts the median price of a home there at well north of half a million dollars.

And the problem isn’t just housing, per se. It’s a shortage of exactly the kinds of communities that Somerville represents, and that its zoning code outlaws: relatively dense, walkable, transit-accessible neighborhoods. Research by Jonathan Levine and many others have both established that demand for these sorts of neighborhoods outstrips their supply, and that the result, too often, is higher prices, more economic segregation, and less opportunity for lower-income people. And this process, writ large, manifests itself as what we’ve called the “shortage of cities”: the growing demand for living in great urban spaces is far outstripping the limited supply, with the result that nationwide, city center home values are rising much faster than in suburbs.

So how do we end up with these sorts of rules? Well, in an earlier post we’ve covered one version of zoning history. But there also seem to be two dynamics here worth highlighting. The first is adopting rules that sound good in the abstract, but that don’t take into account various real-world tradeoffs. An excellent example of that is actually this story about developing a building in downtown Kalamazoo, Michigan’s, where the required amount of parking would take up more room than actually exists on a downtown parcel—even before you’ve built a building. You can easily imagine the thought process here: People are worried about parking, so who could object to requiring that every new building have its own parking spaces? Until you see that, in practice, that means replacing a continuous, attractive streetwall with parking lots that take up as much, or more, space than the actual building. Or, returning to Somerville, who would object to open space? Until you realize that the setbacks and open space requirements you’ve written don’t reflect the community that already exists—and, in fact, would require smaller, more widely-spaced buildings, probably reducing the number of people who live in your neighborhood, and therefore the number of local stores that could be supported, and how often the local bus could come, and raising the price of housing, and so on.

 

The other big issue is that these rules are generally written at a very local level, and so don’t reflect the interests of people who are affected by these decisions, but live elsewhere. It’s completely understandable that a resident of a moderately dense street would be somewhat concerned that more housing might cause some additional traffic, or make parking a bit harder, or make the neighborhood just a bit louder, and so on. Those concerns ought to get a hearing. But they also ought to be weighed against the desires of other people to be able to live in the area—especially when the area is a community that offers good access to jobs, public education, and other amenities that allow people to build comfortable lives. When housing decisions are only made locally, the former set of voices get input, but the latter don’t. No wonder, then, that places where state governments exert more influence on development policy tend to be less segregated.

The key point is there’s a systematic bias here: those concerned with the negative effects of new development are well-represented in the planning and development approval processes.  Those who might benefit from the positive effects aren’t. Over time this tilt results in the steady accretion of zoning and parking requirements, setbacks and height limits that while individually plausible are cumulatively stifling.

That means we end up with a profound disconnect between the kinds of neighborhoods we legislate for and the kinds of neighborhoods we actually want. Planning that actually takes into account the full picture of what these sorts of requirements mean for new development—and the full range of people who are affected by these decisions—could lead to more high-quality, diverse, and opportunity-rich communities.

What City Observatory did this week

1. Urban housing is a massive asset. How massive? Well, a comparison to the valuation of our nation’s biggest corporations shows it’s no comparison at all—housing in major cities has them beat, often handily: housing in America’s 50 largest metropolitan areas is worth about $22 trillion, versus $8.8 trillion for the nation’s 50 largest corporations. It’s a good reminder of just how massive the US housing sector is.

2. Tech clusters are widely credited with breathing economic life into the Bay Area, Seattle, the Triangle region in North Carolina, and other metropolitan areas around the country. But that has led many local political leaders to look for ways to create their own tech clusters—often biotech—from scratch. Unfortunately, the track record of these efforts is poor, and promises of new biotech clusters saving struggling cities often don’t add up to much more than 21st century snake oil, with the politicians claiming credit and leaving office before it’s clear that their economic development plans are bust.

3. Last week, we wrote about how the city of Somerville, MA has adopted zoning laws that would have prevented all but 22 of the actually existing residential buildings in the suburb of 80,000 people from being built. This week, we look atsome of the ways we get to situations like that: often, a slow trickle of new rules that sound good in the abstract, or might have worked somewhere else, that add up to nonsense when actually applied in a given place. Another example: Kalamazoo requires more parking than actually fits on a downtown parcel—even before you can build a building.

4. Research suggests that places where states are more involved in housing development laws tend to be less segregated than places with more powerful local control. Now, two states with major housing affordability problems are taking steps to rein in overly restrictive local governments: California by allowing housing proposals that include low-income units and meet local zoning to bypass an additional level of environmental review; and Massachusetts by requiring municipalities to allow some amount of multi-family housing, as well as accessory dwelling units, or backyard cottages. The hope is that allowing more, and more cost-effective, housing will ease some of the shortage that has pushed up prices.

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The week’s must reads

1. The USDOT announced the winner of its $50 million Smart City Challenge, and it was (drum roll) Columbus, Ohio. The city’s proposal focused on connecting low-income neighborhoods to job centers with public transit; the nitty-gritty ranged from logistical fixes like creating a single fare payment system across multiple kinds of transportation, to more futuristic-sounding programs like a fleet of self-driving cars.

2. While new streetcars in Atlanta and Washington, DC, have come under fire for paltry ridership, a new two-mile system in Kansas City is seeing surprisingly high numbers, including over 10,000 riders on weekend days. (That’s particularly impressive given Kansas City’s extremely low overall levels of transit use compared to DC, or even Atlanta.) It’s too early to say whether these figures can keep up, but if Kansas City’s relative success persists, it may be worth investigating what makes its line different from other short pilot streetcars.

3. Is a future with cheap self-driving cars a future of even vaster, even more auto-dominated suburbs? That’s the idea behind this Wall Street Journal piece by Christopher Mims (paywalled; here’s a brief summary by Gawker), which posits that if the cost of driving is dramatically reduced—both in money terms, because renting a self-driving car just for when you need it is cheaper than owning and maintaining it yourself; and in psychological terms, because self-driving cars will allow you to read, work, or nap as if you were on a train—then people will put up with much longer commutes, and create demand for housing even farther from jobs, stores, and other people.

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New knowledge

1. At a London School of Economics blog, Naji Makarem writes that one of the reasons for the divergence of the economic fortunes of San Francisco and Los Angeles since 1980 doesn’t have to do with traditional understandings of individual human capital, but social networks. The idea is that more fragmented, fractured social networks reduce the spreading, exchange, and refinement of ideas, and hold back innovation and productivity.

2. Harvard’s Joint Center for Housing Studies has released its “State of the Nation’s Housing 2016” report. Among the major findings: new household formation has finally reached expected levels for the first time since the recession, a good sign for the economy, and housing production increased by 11 percent over the previous year. Single-family starts, while up, remain far below historic levels, while multi-family housing starts are at a 27-year high. The national homeownership rate continued to decline and now stands at 63.7 percent, near a 48-year low. Home prices continue to rise, but nationally are still 20 percent below their inflation-adjusted peak, and more than 4 million households are still underwater on their homes. Meanwhile, the apartment vacancy rate is at its lowest rate since 1985, pushing prices up faster than inflation.

3. Does an increase in households using housing vouchers increase crime in neighborhoods? Leah Hendey, George Galster, Susan Popkin, and Chris Hayes find that the answer is mostly not, in a new paper that looks at changes in Chicago neighborhoods. There’s no association with higher rates of violent crime; in high-poverty neighborhoods, or areas that exceed a certain threshold of voucher-holding households, there is an associated increase in property crimes.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

What City Observatory did this week

1. In previous installments of our “Sprawl Tax” series, we’ve calculated the billions of dollars that longer distances between homes and workplaces cost American commuters, and shown that US workers pay more for transportation, and spend more time getting to and from their jobs, than peers in other rich countries. This week, we dove into how sprawl affects our quality of life, showing that self-reported satisfaction with local transportation systems is negatively correlated with longer commutes—but actually weakly positively correlated with “traffic congestion” as measured by the Texas Transportation Institute.

2. What happens when cities change? At a gathering of the Congress for New Urbanism in Detroit, the Kresge Foundation’s Carol Coletta argued that cities need to embrace the ever-changing urban environment—even as they work to make sure that transforming job and housing markets offer opportunity to everyone. While rising housing prices are a key issue in many places, deepening poverty is a much more common issue—and one that needs to change.

3. Somerville, Massachusetts is a town of nearly 80,000 people. Recently, its planning department issued a report revealing that its zoning code would outlaw all but 22 of its residential buildings from being built again as they exist today. While discussions about land use law and housing economics can get wonky and laden with seemingly obscure details, these big-picture facts need to be kept in mind: When regulations say that over 99 percent of a pleasant, diverse, and thriving city is “nonconforming,” the issue is with the rules, and not the buildings.

4. A few weeks ago, we wrote about the ways that Houston manages to write sprawling, car-dependent development into its laws without a formal zoning code. This week, we look at the other side: What Houston’s more lax rules allow that other cities’ don’t. The story is more recent than you might think, but still worth telling: Since 1999, Houston has become one of the only cities in the country to allow wholesale redevelopment of single-family home neighborhoods to “missing middle” type density, largely in the form of townhomes.

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The week’s must reads

1. For many housing reform advocates, the politics of local government seem too stacked against efforts to reduce the growth of housing prices—a suspicion confirmed by a paper by Lens and Monkkonen that found greater state-level involvement in planning is associated with lower levels of residential segregation. Now, the state of Massachusetts (which already has one of the nation’s marquee state interventions, the “anti-snob zoning law”) is taking a further step, with the state senate approving a bill that would aim to increase housing production in a state with high housing prices by requiring local governments to designate an area where developers can build multifamily housing as of right, and allow “accessory dwelling units,” or backyard cottages. The bill faces steep local resistance, however.

2. For 33 years, St. Louis city and county have had a program to transfer public school students between them, with the goal of fostering integration between the disproportionately black city and disproportionately white county. Now, the governing board that manages those transfers is considering ending the program. These sorts of programs are rare in major metropolitan areas, despite extensive evidence about the benefits of racial integration—and economic integration, which is much more difficult without the former in a region where, like most of the country, racial identity and economic outcomes are correlated. The St. Louis Post-Dispatch lays out the case for continuing the program.

3. Access Magazine, from the University of California Transportation Center, gives a great primer on what’s wrong with parking requirements. From the more-than-inexact science of determining how many spaces every bar, hardware store, and barbershop needs, to the high cost paid to build and maintain each space, and the effects on people, especially low-income people. It’s a rigorous introduction to one of the more important reform efforts in modern urban planning.

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New knowledge

1. Since 1979, power plants have been a bigger contributor to carbon dioxide production in America than transportation. But as reported in Vox, the University of Chicago’s Sam Ori, the amount of CO2 produced by power plants has fallen so sharply over the last decade or so—while production by transportation has continued to rise after dropping during the Great Recession. Today, for the first time in over a generation, transportation is the leading cause of climate emissions in America. In light of that, the potential for urban form to reduce transportation emissions becomes even more important.

2. Smart Growth America has released “Foot Traffic Ahead 2016,” their latest analysis of “walkable urban places,” or WalkUPs. They find continuing price premiums for these places over less-walkable places: 90 percent for office, 71 percent for retail, and 66 percent for multi-family rental residences. They also find that based on spending for housing and transportation for a somewhat below-average-earning household, these areas offer better social equity than car-dependent neighborhoods.

3. In the Washington Post, Columbia professor Lance Freeman takes on “five myths about gentrification.” He tries to complicate widespread ideas about a simple and direct relationship between gentrification and reductions in crime, displacement, and race, among other things. In the context of media coverage that frequently asserts the very connections that Freeman says evidence doesn’t support, this is an important corrective.

A little while ago, in a post called “Sprawl beyond zoning,” we argued that even though Houston doesn’t technically have a zoning code, it still regulates the built environment in lots of ways that make it difficult or impossible to safely or conveniently get around without a car.

But we also promised to get into the ways that Houston’s lack of an official zoning code actually does allow for more flexibility, and densification, than the vast majority of American cities.

Or at least, it does now. In fact, much of the story of Houston’s densification begins with reforms adopted in 1999. Prior to that date, residential lots could be no smaller than 5,000 square feet: not such an extreme requirement in a country where plenty of suburbs demand, say, a quarter acre or more (nearly 11,000 square feet), but still big enough that, combined with wide roads and sprawling, parking-heavy commercial developments, real walkable density wasn’t quite possible. (Chicago’s Bungalow Belt neighborhoods, which maybe skirt the lower threshold of “walkability” with single family homes, are built on lots that are generally 3,250 square feet.)

But just before the turn of the millennium, Houston decided that within its inner belt highway, residential lots could be as small as 1,400 square feet. (Of course, leave it to Houston to define even a radical pro-urban reform with reference to an expressway.) That decision set of an explosion of “townhouse” type developments in inner neighborhoods, adding significant amounts of housing while retaining, generally, the basic form of a single-family home.

A handy diagram from this slideshow from Barbara Tennant shows what this looked like from the perspective of a city block:

And here’s a bit of what this looks like on the ground, via Google Streetview, with these two midcentury suburban homes in 2007…

 

…becoming four townhomes in the same amount of space by 2014.

 

It’s important to note that this change isn’t just special because, in most American neighborhoods, the original density of those two midcentury homes would be legally preserved in perpetuity—allowing, perhaps, larger single-family homes to be built on the same lots, but not more of them. It’s also special because of how it represents a more gradual, almost contextual ratcheting-up of density.

In most other cities, as we’ve covered, politics and the regulatory costs of building housing conspire to make almost all new development either of the density-neutral (or -negative) single-family home variety, or very large multifamily buildings. That’s because if you’re going to go through the process of getting a zoning variance, battling neighborhood opposition, and so on, there needs to be a big payoff on the other end—and building a three-unit building probably isn’t going to cut it. That means when cities do add density, they generally do it with buildings that are often quite a bit larger than their surroundings. Whether or not that’s objectively a problem is up for debate—but clearly, for many people, it is. But by making “missing middle” density legal to build as of right (at least in certain neighborhoods), Houston has seemingly attracted a lot more of it.

Of course, Tennant’s slideshow makes the point that Houston’s flexibility allows for some rather odd-looking buildings…

…but a lot of these new townhomes range from inoffensive to downright attractive, even by the snobbish standards of urbanists who prefer older, pre-World War Two cities.

These are human-scaled, street-focused developments built at a density that makes walking possible, even pleasant, minus the bayou weather. If you wanted to see what a genuine, 21st-century American urban neighborhood looked like, you probably couldn’t do much better.

Perhaps the greatest endorsement of the change was that it has not only been preserved, but expanded: In 2013, Houston eliminated the inside-the-beltway/outside-the-beltway distinction, and now the entire city has the denser, “townhouse” type regulations in residential areas.

But in the long run, the test of Houston’s exceptional policies will be to determine whether inner-city housing prices remain relatively low compared to other large American cities. For most of its history, most of Houston’s famously elastic housing supply has come from the same place as other Sunbelt metropolises that do have zoning: sprawl on the suburban periphery. In fact, studies comparing the development regimes of Houston with its zoned cousin, Dallas, found little to no difference.

But as far as I can tell, no studies have looked at the effects of Houston’s central city development since the adoption of townhouse regulations in 1999. An important research project in the coming years will be to see if Houston’s willingness to allow more housing—and especially missing middle housing—in the center of a growing metropolitan area can reduce the growth of housing prices and keep neighborhoods more diverse and affordable than they would otherwise be.

Zoning is complicated. It’s complicated on its own, with even small towns having dozens of pages of regulations and acronyms and often-inscrutable diagrams; and it’s complicated as a policy issue, with economists and lawyers and researchers bandying about regression lines and all sorts of claims about the micro and macro effects of growth rates and whatever.

This post will not get into any of that.

Rather, this post will ask a very simple, first-order question that absolutely anyone, regardless of expertise or math skills, can answer just by pondering their own hearts and minds for a minute. This is, in other words, a gut-check moment, if you’ll excuse the mixing of anatomical metaphors.

The question is: Should zoning rule out virtually all of the kinds of buildings that already exist in your city or neighborhood? In other words, imagine taking a walk around the block where your home is. All those buildings you see: Are they so terrible that you’d like to pass a law making it illegal to build them again?

This may seem like a silly question. After all, local officials and neighborhood groups often rely on regulation to “preserve community character.” Isn’t the point to encourage the kinds of buildings that already exist?

But—especially in places that were largely built up before World War Two—that is often not what building regulations do. Take, for example, Somerville, Massachusetts, an inner-ish ring suburb of Boston. Somerville is the kind of in-between density that you’ll often hear people praise: compact enough to walk to stores and friends’ houses, but with virtually no buildings over four floors, lots of trees and yards, and a mix of small apartment buildings and single-family homes.

 

 

But recently, the Somerville planning office released a report in which they confided that, in a city of nearly 80,000 people, there are exactly 22 residential buildings that meet the city’s zoning code. Every single other home is too dense to be legal: Either it takes up too much of the lot, or it has too many homes, or it’s too tall, or it’s not set far back enough from the street, and so on. (Note that this calculation actually doesn’t include parking requirements, which might very well do away with those last 22 conforming buildings.)

 

Is Somerville really such a dark, dystopian place that the entire city ought to declare itself illegal?

No. Although my question above really is an open one—I don’t know where you live, and maybe your neighborhood really is that awful—my guess is that for the vast majority of people, the discovery that your city had declared your home and all your neighbors’ homes too deviant to be legally allowed would come as something of an unpleasant surprise. It might also make you think that, at some sort of fundamental, does-two-plus-two-equal-four level, something had gone wrong with the way your city regulates buildings.

And I think that, for most of you, that impulse would be correct. And while Somerville may be an extreme case, chances are pretty good that if you live in an area where most buildings are at least 60 or 70 years old, your situation is not entirely different. Only a few weeks ago, the New York Times discovered that fully 40 percent of all the buildings in Manhattan would be illegal to build today. Last year, we published a Portlander musing on how all the things he loved about his long-established urban neighborhood—its density, diverse mix of uses and housing types, and buildings built up to the sidewalk—were the things even that city had subsequently declared illegal. And near where I live, in Chicago, it’s quite common to find entire blocks that have been apartments since at least the 1920s, where the city has declared that the only “compatible” kind of building is single-family homes. “Compatible” with what?

 

Don’t worry: City Observatory will get back into the econometric weeds soon, probably in our next post. But it is valuable, from time to time, to step back and gawk at the big picture of contemporary land use law, which has taken its mandate to protect people from dangerous or noxious buildings and ended up declaring that the neighborhoods where tens of millions of people live—neighborhoods that, if surveys and housing prices are to be believed, many people consider pleasant and desirable—are themselves dangerous and noxious. There is something wrong here that you don’t need an economics or planning degree to understand.

This post appeared originally on City Observatory in June, 2016.

This is the text of a speech delivered in Detroit last week at the Congress for New Urbanism conference by Carol Coletta, a senior fellow at the Kresge Foundation’s American Cities Practice.

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Could there be a more apt place to observe “The Transforming City” than Detroit?

On behalf of Rip Rapson and my colleagues at the Kresge Foundation, welcome to Detroit. If you travel to Detroit regularly, as I have over the past 15 years, you see that Detroit changes quickly.

The speed of change here sometimes takes your breath away.

How many of you have walked the Detroit Riverfront or ridden the Dequindre Cut?

Visited the expanding Eastern Market?

Seen the Q Line construction on Woodward?

Eaten a meal at Selden Standard or Wright & Company, one of those meals so special that it deserves its own social media channel?

Walked the streets of downtown or Midtown and discovered Great Lakes Coffee, City Bird, or the El-Moore Lodge?

Or met Claire Nelson at the Urban Consulate, or any one of Detroit’s arts and civic innovators responsible for some of the most exciting urban work in the country?

This is the Detroit you can see right outside this theatre.

But there is another Detroit, one that is harder to see. It’s the Detroit that feels threatened by the pace of change in the city, suspicious of newcomers eager to be part of the change, and wondering when their loyalty to Detroit will be rewarded.

Such feelings are not unique to Detroit. Every morning my Google Alerts brings a new batch of headlines from around the country detailing the gentrification battles.

Because “new urbanism” is the butt of some of this criticism, I want to spend the next few minutes unpacking the myths and the realities of gentrification and what those of us who care about great places can do about it.

First, let me share some numbers.

In 1970, about eleven hundred urban Census tracts were classified as high poverty.

By 2010—40 years later—the number of high poverty Census tracts in urban America had increased from 1100 to more than 3,000. (3165)

The number of people living in those high poverty Census tracts had increased from 5 million to almost 11 million. And the number of poor people in high poverty Census tracts had increased from 2 million to more than 4 million.

So over a 40-year period, the number of high poverty Census tracts in America’s core cities had tripled, their population had doubled, and the number of poor people in those neighborhoods had doubled.

Given that record, I’ll bet a lot of people are hoping for a little gentrification– if gentrification means new investment, new housing, new shops without displacement.

The idea that places might benefit from gentrification runs against the popular narrative. But here’s the really startling fact: only 105 of the eleven hundred Census tracts that were high poverty in 1970 had rebounded to below poverty status by 2010. That’s only ten percent! Over 40 years!

A similar study of Philadelphia by Pew found almost exactly the same result in that city’s neighborhoods. There, ten times as many poor neighborhoods (164) experienced real declines in income as experienced gentrification since 2000.

It is the lack of gentrification that we rarely count and never see. The deterioration happens too slowly for us to notice. But it doesn’t mean the deterioration isn’t devastating. In fact, the high poverty neighborhoods of 1970 lost 40 percent of their population in 40 years.

You could make the case that poor people are displaced from poor neighborhoods because of their poor schools, their lack of jobs, their more chaotic public spaces, their lack of opportunity.

Understand, this is not the fault of the people who live there. This is a public policy failure.

But… when a combination of government intervention, philanthropic support, community development, and market forces combine to change a place as quickly as Detroit—even when that change means new residents, new jobs, and new places to live—it also rightfully generates concern.

See, we are conflicted about change. Many of us wish we could fix place in time.

But neighborhoods do change. You know that. You change them. And when change results in mixed income neighborhoods—in other words, when we achieve investment without displacement — it’s good for everybody.

The research on this is quite clear: The ability of people to improve their economic status from one generation to the next is strongly correlated with mixed-income neighborhoods.

Many of the public policy interventions to achieve economically integrated neighborhoods have supported poor people moving to wealthier neighborhoods. But that is an expensive, slow political slog that is hard to scale.

But what if we flipped that script? What if… we could lure people with financial options about where they live to disinvested neighborhoods—resulting in the kinds of places that enable opportunity?

And what if we also made a special effort to insure that the people remaining in low-income neighborhoods—people without options about where they live—what if an extra effort were made to insure they benefited from new people and new investment in their neighborhoods?

The research tells us that mixed-income neighborhoods benefit poor people naturally. But can we double down to accelerate those benefits?

Think of it this way: Can we get gentrification with broadly-shared benefits.

I think so. But it’s not easy. Remember: Only 10 percent of high poverty neighborhoods “gentrified” over the past 40 years. And today we have triple the number of high poverty neighborhoods than we had 40 years ago.

Clearly, mixed income neighborhoods won’t happen if we don’t work at it.

So how can we do that?

First, let’s acknowledge that, for the first time in 50 years, the market is moving in our favor. People (and jobs) are moving to cities. We need to see that as the opportunity it is to get mixed-income neighborhoods and not fear good, thoughtful development.

That means we can’t let NIMBYs win the day. The same people who complain about high prices also complain when developers show up to build more supply. We have to make the connection between supply and demand for the protesters and the press.

But attention must be paid to creating more mixed income housing. Our success on this has been mixed, and I’m struck by the comparison on methods used in NYC and in Portland, Oregon’s Pearl District to create more affordable housing in mixed income settings.

As City Observatory reported today, The City of New York, one of the nation’s hottest housing markets, has had inclusionary zoning for the past 10 years. And over that time, the city has produced an average of 280 units per year for a total of 2800 units.

 

In contrast, Portland took a very different approach. Portland used additional property tax revenue from construction in one neighborhood to subsidize affordable housing. Using just a third of such revenues from The Pearl District (along with Low Income Housing Tax Credits), Portland has built more than 2300 units of affordable housing—almost as many units as the much larger New York.

Portland’s Pearl District is an example of a desirable neighborhood. The cost of desirable neighborhoods goes up. And it is the fear of rising costs, new investment, (and sometimes a changing demographics) that spawned the “just green enough” movement.

Think about that: Disinvested neighborhoods lack access to parks and quality public space. But wait! Let’s not make it too nice for fear it will attract new investment. That’s craziness born out of legitimate frustration when prices start going up.

The fact that buyers and renters are willing to pay more for quality neighborhoods means we need to build more of them, not fewer of them.

How do we do that at scale?

When Paul Krugman or—the American electorate willing—the next president calls for new investments in infrastructure to stimulate the economy, will we be ready with a plan that defines infrastructure as something more than roads and bridges?

Why can’t “infrastructure” include new and redesigned parks and libraries, neighborhood community and cultural centers, trails and gardens—a reimagined civic commons? That’s the defining line I want to hear from our next president. I want so many desirable neighborhoods that people will have good choices at all price points.

The way we live today is changing so fast. We are decoupling and recoupling. We have mothers raising kids alone, and people delaying childbearing—some forever—who want to help. We are sharing jobs, cars and homes. We are retiring later and living longer. And our lives, increasingly, are lived in public.

We need to ready our cities for these changes. We need to figure out how to revalue what exists and give new life to the material, the buildings, the neighborhoods, the cities and the people we too often discard and write off.

Equity does not sit in opposition to a thriving, appealing city. It is central to it.

This is the work of CNU. This is your work. And that’s why I’m happy to be with you here in Detroit to celebrate and learn alongside you this week. Thank you for inviting me.

Zoning is complicated. It’s complicated on its own, with even small towns having dozens of pages of regulations and acronyms and often-inscrutable diagrams; and it’s complicated as a policy issue, with economists and lawyers and researchers bandying about regression lines and all sorts of claims about the micro and macro effects of growth rates and whatever.

This post will not get into any of that.

Rather, this post will ask a very simple, first-order question that absolutely anyone, regardless of expertise or math skills, can answer just by pondering their own hearts and minds for a minute. This is, in other words, a gut-check moment, if you’ll excuse the mixing of anatomical metaphors.

The question is: Should zoning rule out virtually all of the kinds of buildings that already exist in your city or neighborhood? In other words, imagine taking a walk around the block where your home is. All those buildings you see: Are they so terrible that you’d like to pass a law making it illegal to build them again?

This may seem like a silly question. After all, local officials and neighborhood groups often rely on regulation to “preserve community character.” Isn’t the point to encourage the kinds of buildings that already exist?

But—especially in places that were largely built up before World War Two—that is often not what building regulations do. Take, for example, Somerville, Massachusetts, an inner-ish ring suburb of Boston. Somerville is the kind of in-between density that you’ll often hear people praise: compact enough to walk to stores and friends’ houses, but with virtually no buildings over four floors, lots of trees and yards, and a mix of small apartment buildings and single-family homes.

 

 

But recently, the Somerville planning office released a report in which they confided that, in a city of nearly 80,000 people, there are exactly 22 residential buildings that meet the city’s zoning code. Every single other home is too dense to be legal: Either it takes up too much of the lot, or it has too many homes, or it’s too tall, or it’s not set far back enough from the street, and so on. (Note that this calculation actually doesn’t include parking requirements, which might very well do away with those last 22 conforming buildings.)

 

Is Somerville really such a dark, dystopian place that the entire city ought to declare itself illegal?

No. Although my question above really is an open one—I don’t know where you live, and maybe your neighborhood really is that awful—my guess is that for the vast majority of people, the discovery that your city had declared your home and all your neighbors’ homes too deviant to be legally allowed would come as something of an unpleasant surprise. It might also make you think that, at some sort of fundamental, does-two-plus-two-equal-four level, something had gone wrong with the way your city regulates buildings.

And I think that, for most of you, that impulse would be correct. And while Somerville may be an extreme case, chances are pretty good that if you live in an area where most buildings are at least 60 or 70 years old, your situation is not entirely different. Only a few weeks ago, the New York Times discovered that fully 40 percent of all the buildings in Manhattan would be illegal to build today. Last year, we published a Portlander musing on how all the things he loved about his long-established urban neighborhood—its density, diverse mix of uses and housing types, and buildings built up to the sidewalk—were the things even that city had subsequently declared illegal. And near where I live, in Chicago, it’s quite common to find entire blocks that have been apartments since at least the 1920s, where the city has declared that the only “compatible” kind of building is single-family homes. “Compatible” with what?

 

Don’t worry: City Observatory will get back into the econometric weeds soon, probably in our next post. But it is valuable, from time to time, to step back and gawk at the big picture of contemporary land use law, which has taken its mandate to protect people from dangerous or noxious buildings and ended up declaring that the neighborhoods where tens of millions of people live—neighborhoods that, if surveys and housing prices are to be believed, many people consider pleasant and desirable—are themselves dangerous and noxious. There is something wrong here that you don’t need an economics or planning degree to understand.

What City Observatory did this week

1. Last week, we introduced the “Sprawl Tax”: the time and money American commuters spend just because their cities are more spread out than they might be. This week, we compare American sprawl to that of our international peers, and it’s not pretty. On average, in 17 European countries plus Canada, households spend 12.8 percent of their income on transportation; in the US, it’s 18 percent. Commuters in those countries spend, on average, about 39 minutes commuting roundtrip per day; the average American spends 51 minutes. We can do better.

2. Inclusionary zoning seems like a win-win, but…: Communities with new development get some affordable housing, and taxpayers don’t have to spend a dime. But as with most cases of free lunch, there’s less here than meets the eye: A meta-analysis of the literature on inclusionary zoning doesn’t find much evidence that one of the main fears about IZ, that it will significantly drive up market prices. But that seems to be because the scale of IZ programs is so small, delivering a relatively pittance of units: 280 per year in New York City, for example, a city of more than 8 million people. Solutions that actually deliver housing on the scale of the need are almost certain to require actual public resources.

3. How many carless workers are there, really? Often, we hear statistics about workers with “access to a car.” But that really just means that someone in their household has a car. If there are three adults and one vehicle, all of them nominally have “access,” but it’s likely that only one can really drive to work. So while, for example, 97.4 percent of all workers in the San Diego metro area have “access” to a car, more than one in ten lives in a household where there are more workers than cars. That’s a distinction worth making.

The week’s must reads

1. At City Observatory, we write a lot about economic segregation and the ways that disadvantaged neighborhoods reduce opportunity for the people who live in them. ButVox might have done us one better: instead of just writing about that, they drew about it, in a piece entitled “How living in a poor neighborhood changes everything about your life.” In an epic piece that combines cartoons and text, Alvin Chang breaks down the latest research about what we know about how segregation acts as a barrier to the American dream, how our cities came to be so segregated to begin with, and what we might do about it.

2. Nikole Hannah-Jones has become perhaps the nation’s foremost journalist on issues of segregation and education. In The New York Times Magazine, she writes an intensely personal and informative essay about her own struggles with choosing whether to send her child to a segregated New York City school—and what happened when the city decided to try to integrate that school with a nearby, much whiter school. For those of you who listened toher two-part report on school segregation in suburban St. Louis for This American Life (and if you haven’t, you should), the fallout is alarmingly similar to a similar situation there.

3. When it comes to transit, the difference between a line on the map and service you can depend on is vast. TransitCenter, using data compiled by the Center for Neighborhood Technology, measured how many people in various cities live close to any kind of transit service, and then how many live close (within half a mile) of high-frequency transit service: a bus or train that comes at least every 15 minutes. Those things turn out to be very different, in many cases: take a look at Detroit and Dallas on the chart below.

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New knowledge

1. Sand Hill Road, the famous Silicon Valley venture capital district, is prototypical postwar suburbia. But new research from Richard Florida and Karen King finds that those important investments are happening more and more in urban areas. Today, more than half of all venture capital deals happen in urban neighborhoods, as defined by ZIP codes with more than 2,200 households per square mile. In top venture capital ZIP codes, the average bike-walk-transit commute share is nearly 26 percent, three times higher than the national average. Because venture investments are a leading indicator of future business growth, this is another data point signaling the growing economic importance of cities.

2. Pick two of three: Affordable housing, quality of life, and economic strength. That’s the message of Josh Lehner at the Oregon Office of Economic Analysis, who uses a set of metrics to place the nation’s 100 largest metropolitan areas on a Venn diagram of those three desirable policy outcomes. Just eight metro areas—mostly in the Great Plains—rank in the top half of all three categories. None are in the top 20 in all three. One takeaway: while metros that score well in economic strength and quality of life and build lots of housing do better on affordability than those that don’t build much housing, they still face affordability issues. There’s room to improve on construction, but making sure our below-market housing policies are actually working is also important. (See our post on inclusionary zoning above for more.)

3. We know that America is more urban—or perhaps metropolitan is the better word—than it has ever been. But Hamilton Lombard at the University of Virginia’s StatChat shows that it’s especially larger metropolitan areas that are coming to dominate the residential locations of Americans. In fact, all of the growth in the proportion of people living in metropolitan areas over the last 65 years has come from the growth of people living in metropolitan areas with over a million people. Now, that’s not just because people are all moving to New York or Houston or another huge city—many smaller metropolitan areas have grown to surpass the one million mark themselves. Still, by 2015, nearly six in ten Americans lived in such an area, versus less than three in ten in 1950.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

One of the first posts I ever wrote for City Observatory was called “Undercounting the transit constituency,” and it made a simple point: We dramatically undercount the number of people who depend on public transit to get around.

While we usually talk about transit use in terms of the number of people who ride a bus or train to get to work, most trips aren’t commutes—in fact, all trips aren’t commutes if you’re retired or a full-time student. And so if you count the number of people who use transit for any kind of trip, you get a much bigger number than if you just look at commutes.

 

But even when it comes to workers, we often overstate the ubiquity of cars. One common way to measure car access, for example, is the percentage of workers with “access to a car.” In practice, “access” just means that someone in your household owns a vehicle.

But that kind of “access” doesn’t always mean much. For example, for several years I lived in a household with three working adults, one of whom owned a car. By the standard measure, all three of us had “access.” But in reality, only one of us could actually use it to commute. Moreover, even the one of us who drove to work really depended, in a meaningful sense, on public transit: if the other two of us hadn’t been able to get to work, get paid, and contribute our share of the rent, the one driver would still be in deep trouble. In other words, a household with at least one worker who doesn’t drive is a household that probably depends on some kind of non-car transportation.

How many workers live in such a household? Fortunately, the American Community Survey makes it easy to tell, by breaking down the number of cars in a household by the number of workers in that household. Here, then, is a chart with the proportion of workers without “access,” as well as the proportion of workers in households that have fewer cars than workers:

 

In most cases, these numbers are quite different. In the DC metro area, less than six percent of workers live in zero-car households—that is, “lack access to a car.” But three times as many—nearly one in five—live in a household with fewer cars than workers. In San Diego, “access” is nearly universal: just 2.6 percent of workers live in zero-car households. But more than one in ten live in fewer-cars-than-workers households.

And again, these numbers underestimate the number of people who live in households that rely on some kind of non-driving transportation. They don’t count households where each worker has a car, but a retiree, stay-at-home parent, or full-time student, for example.

But even leaving that aside, these numbers help make a better case on how your city’s workforce depends on non-car transportation.

What City Observatory did this week

1. In real life, somehow, Google patented sticky cars so that when their autonomous vehicles hit pedestrians, they won’t get thrown into the air, but will rather be pinned to the vehicle’s hood. In the spirit of helpfulness, we have diagrammed some other solutions Google might want to investigate, including pedestrian airbags that would inflate upon impact. Or, more seriously, we might want to consider how to build cities and prioritize human safety such that all vehicles, including autonomous ones, don’t hit pedestrians at dangerous speeds (or at all) to begin with.

2. A new report from the Urban Institute shows that Washington, DC public schools’ test scores are rising. Even more, the rising scores are much greater than what the changing demographics of the city might predict by themselves. Given the literature on the positive effects of racial and economic integration on education, one possibility is that we are seeing some dividends from the growing middle class presence in the District. More research at the school level is needed to parse whether this is in fact happening.

3. You’ve heard of “congestion costs”—the economic drag of snarled traffic and longer driving times. But what about the costs of land use patterns and transportation policies that require people to live farther from work and use cars to begin with? To help answer that question, we’re introducing the “Sprawl Tax.” In the first post in the series, we calculate that the average commuter in America’s 50 largest metro areas pays nearly $1,400 a year in time and money as a result of urban sprawl—ranging from just $166 in New Orleans to nearly $3,300 in Atlanta.

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The week’s must reads

1. Governing looks at what will happen to suburbia in a world where housing demand and jobs are increasingly drawn to cities. Columnist Will Fulton reports on a panel of suburban developers talking about the market case for relatively dense, urban-like master planned communities with apartments and townhomes. But there’s a difference between an urban appearance and urban functionality: Even to the extent these types of developments are allowed outside of cities, will they just be isolated pockets of “drive-to-walk” urbanism?

2. Why are “complete streets” and “traffic calming” a big deal? ProPublica helps make the case with an interactive tool that shows your chance of surviving an impact with a car as a pedestrian at various vehicle speeds. At 20 mph, an average of seven percent of collisions will be fatal; at 40 mph, that number climbs to 45%.

3. There continues to be a lot of excitement about the ways that new technologies might help us solve longstanding urban issues—and not without some justification. But in an interview at Civic Hall, longtime Chicago “civic tech” leader Daniel X. O’Neil lays out why he thinks the movement has failed to deliver on its promises. Rather than developer-led hack nights or hackathons, O’Neil makes the case for bringing people with technological expertise to civic meetings and organizations that already exist, beginning with what they’re working on, and figuring out how to help. One example: the Smart Chicago “Documenters” program, which sends people to record and document public meetings for those who can’t be there.

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New knowledge

1. At Planetizen, Todd Litman digs into a claim by New Geography writer Fanis Grammenos that data show that more compact neighborhoods are more expensive in terms of housing and transportation costs than more low-density areas. But Litman points out that the study conflates rental costs with the cost of mortgages—some of which may be based on loans taken out years or decades ago, reflecting outdated prices very different from those a contemporary buyer would be facing. Moreover, judging on a regional level misses that most of the difference between compact and non-compact living depends on neighborhood-level characteristics.

2. We have a new indication that transit is an important component of economic development. A study by Dagney Faulk and Michael Hicks of Ball State University finds a correlation between the existence and extent of fixed-route bus systems in counties in Illinois, Indiana, Michigan, Ohio, Pennsylvania, and Wisconsin and employee turnover rates: the more extensive the bus system, the less turnover. And that, they point out, has economic consequences for both workers and businesses, who save money on finding and training new employees.

3. This paper isn’t new, but it’s new to us, and fun and revealing: Leah Brooks of McGill University and Byron Lutz of the Federal Reserve find that dense development in LA is clustered around long-gone streetcar lines. But that’s not mostly because the city built so much housing when the streetcar lines still existed: It’s because neighborhoods near streetcars became zoned for high-density development, and remained zoned that way after the streetcars disappeared, while other areas remained zoned for low-density development.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

If you read the news, you’ve probably seen reports about “congestion costs”: how much American commuters pay, in money and time, when they’re stuck in traffic. It’s fair to say that we’ve got some issues with many of these reports—but they’re popular nonetheless, perhaps because they help quantify a frustration that so many people can relate to.

That got us thinking: What if we could quantify some of these same issues from a city-friendly angle—measuring not the cost of congestion, which suggests that the solution is to build highways until every car is free on its own field of asphalt (a solution, by the way, that we know doesn’t work), but the cost of sprawl: of patterns of building that make people travel longer because their home, work, and other destinations are so physically far from each other?

So this week, we present the “Sprawl Tax”: what it is, how much it costs us, and what we can do about it. We found that the in time and money, American commuters have to pay a sprawl tax of over $107 billion dollars a year in the 50 largest metropolitan areas—nearly $1,400 for the average commuter. That includes the costs of the 3.9 billion additional hours American commuters spend traveling to and from work per year, or about 50 hours per worker.

 

The method

But first, how did we get those numbers?

To figure out a metropolitan area’s sprawl tax, we began with statistics on the average commute length, in miles, as calculated by the Brookings Institution for their 2015 report, “The growing distance between people and jobs in metropolitan America.”

Our next task was to estimate how much shorter daily commutes might be if metropolitan areas were less sprawling. We know that commute distances vary by metropolitan size (more populous areas tend to have longer average commutes), so we stratified our metropolitan areas into groups for the purposes of estimating how much shorter commutes might be if the regions were more compact. We assigned each metropolitan area a “benchmark” commuting distance based on its population: six miles for areas with 2.5 million or fewer people, and 7.5 miles for areas with more than 2.5 million people. These levels were chosen to ensure that each metropolitan area’s benchmark was within 0.5 miles of the real average commuting distance of another metropolitan area with similar or larger population—that is, a region with a similar population but less sprawl. Both benchmark levels are below those of the metropolitan areas in their category with the shortest average commute to reflect the reality that even the most “compact” American urban regions contain a large amount of sprawl.

The difference between the real average commute length in each metropolitan area and its benchmark became its “excess commuting distance.” We then multiplied this distance by 58.1 cents, the AAA’s estimated cost per mile for a mid-range sedan. Doubling the result gives the total sprawl tax per worker, per day, including both journey to and return from work. Multiplying by the number of workers according to the 2014 one-year American Community Survey figures gives the total sprawl tax per day for the metropolitan area. Finally, multiplying that number by 261 workdays per year gives the total annual sprawl tax for the metropolitan area.

How it adds up

Adding together the sprawl tax for each of the largest 50 metropolitan areas gives $48.5 billion dollars per year—or nearly $630 for every commuter annually. The financial aspect of the sprawl tax varies from $34.7 million in New Orleans to $4.7 billion in Dallas. In per commuter terms, the region with the biggest sprawl tax is Atlanta, where sprawl costs the average commuter more than $1,600 a year. The city with the smallest per capita sprawl tax is New Orleans, at just $60.66 per commuter per year.

But these figures reflect just the out-of-pocket costs of owning and using cars. What if you take time into account? After all, the longer trips forced on commuter by sprawling cities cost money, but they also cost time. Using a similar methodology, we calculated an “excess travel time” index, applying average travel speed for each metropolitan area to its benchmark commute distance, as opposed to its actual commute distance.

The result? In the 50 largest metro areas, sprawl costs commuters 3.9 billion hours per year, or more than 50 hours per year per commuter. That means sprawl makes the average commuter spend over two entire days per year traveling to and from work unnecessarily. The worst offender? Atlanta, where the average commuter loses 112 hours per year, or over four and a half days. In the metro area that performs best, New Orleans, commuters lose just over seven hours per year.

Sprawl tax versus congestion costs

Of course, this is almost by definition an underestimate, since it only counts journeys to work. But most travel is not to or from work, and so adding trips to other destinations—schools, grocery stores, doctor’s offices, and so on—would add significantly to the total. Nor does the sprawl tax measure the other real costs of longer commuters: more pollution, worse physical and mental health outcomes, and the medical and human costs of car crashes.

 

But even so, the sprawl tax rivals common estimates of congestion costs. To make the sprawl tax more comparable to estimates of congestion costs, which measure time lost in money, we converted our own time costs to dollars. At $15 an hour, that adds up to $58.7 billion. Add that to direct monetary costs ($48.5 billion), and you get $107.2 billion in total sprawl tax in the 50 largest metropolitan areas.

In contrast, INRIX estimated the congestion costs in all metropolitan areas at $124 billion in 2013. Given that only about half of all Americans live in the 50 largest metro areas, it seems likely that if the sprawl tax were calculated for the entire country, it would reach or exceed INRIX’s congestion cost estimate—even though it counts only a small fraction of the total costs of sprawl.

In other words, urban sprawl, and the longer commutes it makes necessary, is a major source of financial and time costs for American workers—and everyone else who has to travel in our sprawling metropolitan areas.

But it’s also a major drag on quality of life. Next, we’ll tackle that side of the sprawl tax.

At first blush, it’s a bit confusing: Why, in a region that desperately needs more affordable housing, would there be so much opposition to a proposed law that would make it easier to build affordable housing?

The proposal in question was offered up last week by California Governor Jerry Brown as part of the state’s budget. It would streamline the approval process for new residential buildings with at least 20 percent affordable units (or 10 percent near transit) that already meet existing zoning by exempting them from an additional layer of environmental review, called CEQA, or the California Environmental Quality Act.

 

In essence, this is a kind of inclusionary zoning measure—something that many Bay Area affordable housing groups have historically supported—that promises regulatory advantages in exchange for below-market units. But unlike many inclusionary zoning laws, which allow developers to build taller or denser, Gov. Brown’s proposal would cede not one extra inch of height or additional apartment over what local cities have already designated.

Okay, so what’s the problem again? Well, virtually everywhere else in the country, if a developer wants to build something that matches their lot’s existing zoning, they can do so “as of right”: that is, as long as some local administrative body certifies that the plans actually meet zoning requirements, they get a construction permit.

But in California, developers can be required to go through the extra step of preparing a CEQA impact study. Essentially, that gives local bodies the ability to slow or block developments—even if they meet all existing zoning requirements.

A study late last year found that this layer of environmental review can add years to projects that would be routine in other parts of the country, and may well exacerbate urban sprawl, and its attendant environmental effects, because four out of five CEQA-related lawsuits focus on infill development. That gets to another central problem with CEQA as an environmental law: because it only considers impacts at the location of the proposed development, it can’t weigh the full tradeoffs of blocking housing construction in one location and thereby pushing it to another location where it may do even more environmental harm.

In other words, CEQA appears to be as much a special tool for obstructing development that meets local zoning requirements—or extracting more concessions from the developer—as a means of protecting the environment. It institutionalizes local discretion over development to an even greater extent than zoning.

Gov. Brown’s proposal, then, would reduce local discretion, acknowledging the statewide need for more housing, and especially relatively low-cost housing. While that may be good for California’s housing problems, it removes some of the negotiating power local authorities and organizations currently wield—hence, perhaps, their opposition.

This tension between local and regional or statewide power over development should be familiar. As we’ve written, when decisions are made at a local level, very place-specific costs like blocked views, competition for on-street parking, or “undesirable” neighbors are given high priority, while broader benefits to housing affordability, transportation access, and economic opportunity are often given short shrift. Not surprisingly, research has found that places where states exercise more power over development decisions have better housing outcomes, in the form of less segregation, than places where power is held more locally.

The battle in California reflects this dynamic. Local groups are put in the position of opposing a measure to speed the construction of affordable housing because it institutionalizes a broader kind of cost-benefit analysis, removing local discretion over every single project. (Of course, local governments still have the power to downzone, if they believe that the zoning they have already decided on is unacceptable, and the state law would not override that decision.) It’s also another data point suggesting that solutions to our “shortage of cities,” and resulting housing crunch, might be most likely to come from states, rather than city governments.

What City Observatory did this week

1. Last month, we released the Storefront Index, a report that catalogued the nation’s retail clusters and provided a window into the spatial organization of an important part of Jane Jacobs’ famous “sidewalk ballet.” This week, we lifted the curtain a bit to explain how we built the index, hoping to give others who might wish to repeat or modify our methodology for their own research purposes a head start.

2. The growing economic strength of city centers is one of the most important facts of life in American urban policy today. This week, we updated our previous report, “Surging City Center Job Growth,” with three years of additional data that was unavailable when it was written. Our findings: although outlying areas have improved their standing since the depths of the recession, the pace of job sprawl has declined considerably in this economic expansion compared to the previous one.

3. We’re not the only ones finding strength in urban cores. Two other recent studies, in addition to our own, point to the same conclusion. The Washington think tank the Economic Innovation Group found that just 20 counties—all large urban counties—accounted for fully half of the country’s new business formationbetween 2010 and 2014. They also accounted for a disproportionate share of all new jobs. That’s a reversal from previous decades, when relatively smaller counties grew faster than larger ones. In addition, the Brookings Institution finds that urban core cities have continued to close the gap in their population growth rates with outlying parts of metropolitan areas.

4. A new affordable housing proposal in California is shedding light on some of the dynamics of housing politics in that state. Governor Jerry Brown has floated allowing developments that contain at least 20 percent below-market units and meet existing local zoning requirements to bypass an additional, only-in-California level of local discretion, called CEQA. But local governments and even some affordable housing advocates have come out against this fast-tracking of affordable units, because it reduces the bargaining power of local interests. That lines up with previous research that we’ve highlighted showing that regions where states exert more control of the development process are less segregated than places with more local control.

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The week’s must reads

1. The share of new people in the rapidly growing Houston metropolitan area in the city proper has increased from just 12 percent from 2000 to 2010 to 28 percent from 2010 to 2015, according to Rice University’s Urban Edge blog. Of course, the city of Houston includes everything from burgeoning 21st century urban townhouse and apartment flat neighborhoods to classic late 20th century suburbia, so it won’t be clear exactly where these new residents are going until we have better tract-level data. But as Houston Tomorrow points out, there are payoffs even just to more centrally-located sprawl: the average person in the Houston metro area drives nearly 23,000 miles per year, as opposed to just over 19,000 in the city proper. In denser inner neighborhoods, that drops to 14,000 miles.

2. More from Texas: At D Magazine, Patrick Kennedy uses our Storefront Index to correlate downtown destination density with parking prices. Not surprisingly, the more downtown storefronts, the higher parking prices are. Kennedy finds similar patterns for job and residential density. Does that mean places with lots of people, jobs, and stores need more parking? Kennedy says no—it means that their land is valuable, and reserving lots of it for car storage doesn’t make sense.

3. A while ago, we highlighted an Orlando suburb that became the first municipality in the country to subsidize ride-hailing apps, like Uber, as a kind of transit service. Now, a much larger city, Philadelphia, has announced a limited-time partnership with Uber to solve the “first and last mile problem,” with discounts of 40 percent for trips to and from several regional rail stations. If the pilot is successful, it could be extended and expanded. This may be another sign that predictions from Yale Law professor David Schleicher about the inherent incentives of local governments to promote ride-hailing services as a public good were prescient.

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New knowledge

1. The Seattle-based Frontier Group released a report this week, “A New Way Forward,” on the possibilities of a zero-carbon transportation system. It would rely on electric vehicles powered by renewable energy; more urban patterns of growth that allow for more trips to be taken without powered vehicles; more reliance on public transit; better pricing of transportation options to reflect their real social costs; and a suite of other measures.

2. School test scores in Washington, DC are up. Kristin Blagg and Matthew Chingos at the Urban Institute ask whether that’s just a consequence of changing demographics, or if there seems to have been genuine improvement. The answer: demographics can’t explain all of the test score improvements. Because their analysis only looks at district-wide changes, it’s less clear if the improvements might be tied to the benefits of integrated schools, or whether even schools that have remained racially and economically segregated have seen gains as well.

3. A new paper from Karen Chapple and Miriam Zuk at UC–Berkeley looks at the relationship between housing production—both market-rate and below-market—and low-income displacement in the Bay Area. They find that both types of housing are associated with reduced displacement, with below-market housing having roughly twice the per-unit effect as market housing. They also find that both kinds of housing appear only to work as anti-displacement measures at relatively larger geographies, which they suggest is a result of the incredibly intense housing pressures at smaller, block-group-sized neighborhood levels. While the authors position the paper as a counterpoint to an earlier report from the CA Legislative Analyst’s Office that emphasized the importance of market construction, Zuk and Chapple do reaffirm the importance of more market housing as part of the solution to the Bay Area’s housing problems. One issue: their models only manage to explain less than 20 percent of all the variation in displacement, suggesting other major unobserved factors that need to be sought out in future research.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

As recently as the years 2002 to 2007, outlying urban neighborhoods and suburbs experienced much faster job growth than urban cores. But as a February 2015 City Observatory report, “Surging City Center Job Growth,” documented, that pattern reversed from 2007 to 2011, with urban cores overtaking more peripheral areas and maintaining positive job growth through those recession years. Since that report, however, the Census’ Longitudinal Employer-Household Dynamics database has released three more years’ worth of jobs figures, allowing up to update these trends for 2012, 2013, and 2014.

Using the same methodology as the 2015 report on the 51 largest metropolitan areas, we find that the relatively increased strength of city centers (which we define as areas within three miles of the central business district, or CBD) has held well into the post-recession recovery. While cores are now growing more slowly than the peripheries, the gap has narrowed substantially compared with the last economic cycle—a notable shift after decades of consistent job sprawl.

 

From 2002 to 2007, average annual job growth in urban cores was 0.26 percent, and 1.09 percent in peripheral, non-core areas. (These numbers differ slightly from those in the original report because of revisions from LEHD itself, as well as a data quality screen we implemented, which is explained at the bottom of this post. After applying the data screen, we based our findings on 19 of the 51 largest metropolitan areas. Numbers from all 51 MSAs are included at the end of this post.) From 2007 to 2011, this pattern reversed, with average annual  job growth of 0.49 percent in urban cores and just 0.10 percent in peripheries. And from 2011 to 2014, while annual employment growth in non-core areas rebounded from the depths of the recession to 2.04 percent, it also improved in city centers, growing to 1.97 percent.

In other words, while city centers lagged metropolitan peripheries in average annual job growth by 0.83 percentage points from 2002 to 2007, from 2007 to 2014, urban cores have actually grown 0.19 percentage points faster than peripheries. And although peripheries have grown slightly faster since 2011, urban cores remain in a much stronger position than they found themselves in during the previous economic expansion. The persistence of this pattern suggests that the dramatic decline in job sprawl we found from 2007 to 2011 was not simply a temporary result of the recession, but is enduring through the current economic recovery.

One of the biggest challenges in the perennial discussions of city versus suburb job growth is how to define the core and the periphery, and where to get accurate date.  In this post we describe why we think the three mile radius measure is a better indicator of the health of metropolitan cores, particularly for comparisons.  We also discuss the strengths and limitations of data available to measure core employment.  Despite the improvements in the geographical detail of data sets, there are still important limits.

These findings have major implications for American cities. We believe the evidence suggests the decline of job sprawl is a positive development, for at least three reasons.

First, many of the nation’s leading economists now agree that dense, walkable employment centers lead to improved productivity and economic growth. When firms cluster geographically such that the cost of travel between them is reduced, they are able to share resources such as physical infrastructure, labor pools, information, and technological or organizational innovation. According to research by Harvard professor Ed Glaeser, per capita productivity increases by four percent as population density increases by 50 percent—a difference roughly equivalent to the gap between Dallas (at about 3,600 people per square mile) and San Jose (at about 5,600).

Second, when people and jobs relocate to urban centers, they reduce carbon emissions in at least two ways. The first is by replacing some car trips with more emissions-efficient modes, like public transit or carpooling, or with zero-emissions modes, like walking or biking. As we have noted at City Observatory, jobs in central cities, which tend to be public transit hubs, make it more likely that even workers who live in outlying suburbs will use transit. In addition, even when commuters continue to drive, they are likely to drive fewer miles when jobs are located in central areas, reducing their emissions.

Finally, by allowing commuters to use less costly forms of transportation—public transit, walking, or biking—the movement of jobs to central cities can be a significant boon to social equity. Low-income workers are particularly sensitive to the high costs of car ownership and use, and researchers such as those at the Center for Neighborhood Technology have shown substantial differences in average transportation costs between denser, closer-in neighborhoods and more outlying communities. In many cases, the option of not using a car is worth several thousand dollars a year, a crucial increase in disposable income for many households.

 

But policymakers cannot trust that this trend will simply continue on its own, or that it will not pose challenges that will need to be addressed. In many places, the growth of demand for living and working in city centers has outstripped the growth of actual room for people to live and work in urban environments. This may be a result of some combination of a slowness of market actors to respond to demand; physical constraints on the growth of living and working space; or regulatory constraints on that growth.

This dynamic has produced a shortage of cities—demand for real estate in these central cities exceeds supply, driving up prices, excluding those who cannot afford them, and slowing the growth of these in-demand urban cores. Addressing this shortage, and making sure that residents outside the core have high-quality access to employment there with sustainable, low-cost transportation like public transit, biking, and walking, is key to leveraging this trend for maximum benefit in American cities.

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How to measure the “core”?

While this report uses a three-mile radius around a city’s central business district as a proxy for “city center,” there are other ways to aggregate employment data at the sub-metropolitan level. One such method is to use counties, for which data is updated more regularly than the LEHD database our method relies on.

A recent example of this type of county analysis was published by former Trulia chief economist Jed Kolko in January 2016. Kolko’s data shows that while counties at the center of large metropolitan areas have seen job growth since 2007, they are outpaced by suburban counties in the same regions—although central counties have improved the most compared to patterns observed in 2000-2007, and appear to be continuing that acceleration. He further argues that to the extent that employment growth in these urban counties does appear to be gaining steam, it’s too early to tell whether that trend is cyclical or more long-term.

This analysis provides another useful perspective, but as we’ve pointed out, it also has limitations. In many instances, county-level data are too geographically coarse to detect shifts in growth patterns within metropolitan areas. Central counties seldom correspond to the central city of a metropolitan area, and even more rarely to what locals would understand as the “urban core.”  In many cases, central counties include substantial suburban job centers: Microsoft’s suburban campus in Redmond, Washington, is in Seattle’s King County, for example, and the suburban office parks around O’Hare Airport are part of Chicago’s Cook County. Moreover, county sizes vary substantially from region to region.

Even so, Kolko’s county-level data shows that—consistent with the data reported here—central areas’ job growth performance has improved in 2007-15, compared to the economic expansion of 2001-07. It also shows that job growth is accelerating faster in urban counties than in suburban counties in large metropolitan areas.

A key question raised by Kolko is whether the relative improvement in job growth in urban cores is a temporary cyclical change—one which will disappear as the economy normalizes—or a long-term structural shift in the relative fortunes of central and peripheral locations. While we may not have a definitive answer for several years, both the data presented here and Kolko’s county-level data suggest the answer is the latter. Far from being a temporary artifact of the recession, the improvement of urban cores is continuing into the current economic expansion.

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Methodology and data notes

The data for this report are drawn from the Census Bureau’s Local Employment and Housing Dynamics program which combines administrative data to estimate employment levels by street address for workers and employers. Compiling these data is a complicated process and hinges on the consistency with which administrative records are compiled.  In the course of looking at employment data for 2012-2014 from LEHD, we discovered a number of instances of year-to-year job changes in both core and non-core areas that were so large as to raise questions about the reliability of the data. In some cases, there were periods of one to two years in which data for a particular geography exhibited a major departure from its historical pattern and then subsequently reverted to values close to the previous baseline.

For example, Detroit’s core is reported to have 140,507 jobs in 2002, but only 115,318 in 2003, and then 130,076 in 2004. Salt Lake City’s core displayed an even more curious pattern. In 2008, it reported 123,859 jobs; that fell to 110,649 in 2009. While a ten percent drop seems extreme, it did coincide with the Great Recession—but subsequent years are harder to explain. In 2010, reported employment increased again to 120,521; then fell to 104,823 in 2011; then grew again to 114,323 in 2012. These examples are not atypical for the metropolitan areas that failed our data quality screen.

These metropolitan areas are also typical of those with data anomalies in another way. Because LEHD breaks down employment by sector, we can determine that nearly all of the net job changes in the cores of Detroit and Salt Lake City occurred in “Educational Services.” (In Detroit, for example, LEHD reports the number of such jobs as 27,784 in 2002; 7,212 in 2003; and 27,797 in 2004.) Both of these cities have large universities within their cores.

These problems may be inherent in utilizing disparate sets of administrative records to establish workplace and residence locations. LEHD data are based on personal and business tax records which were not primarily designed for the purposes to which they are currently being adapted. In particular, it seems possible that year-to-year changes in these records at large organizations with multiple office sites switch between associating subsets of employees between the central office and some sort of satellite office. In most cases, large changes in one category—educational workers in the core, for example—are offset by changes in the other direction in another category—educational workers in the periphery. This hypothesis is also supported by the tendency for these changes to fall in the educational sector, or other categories—such as “Health Care and Social Assistance” and “Administration and Support”—likely to be part of large organizations. Our hypothesis, then, is that these administrative record changes, which do not necessarily reflect any actual physical rearrangement in the real world, are behind the odd data patterns we see.

Administrative data like that used to construct the LEHD database are not primarily intended to serve as a resource for time-series analysis. The Census Bureau constructs its estimates of data each year separately, so changes in reporting locations or disaggregations from year to year can alter results. As the Census Bureau warns: “The LEHD program produces each year of LODES independently, so there may be time series inconsistencies due to updates and methodological changes that can complicate longitudinal inferences.”

Validating all of the LEHD data is far beyond our resources. Instead, we chose to create a data quality screen focusing only on employment totals at levels of geography that might meaningfully affect our final analysis. The screen flagged metropolitan areas with large one-year changes in total employment: greater than eight percent in either direction in core areas, and greater than five percent in either direction in non-core areas. (The cutoffs differ because of the larger variance in growth figures for cores.) Metropolitan areas with such changes were excluded, unless the changes a) were consistent with multi-year trends, or b) were large declines during the Great Recession. As in our earlier report, we excluded the category of public administration from all totals. Federal employment was added to the LEHD program only after 2010, making later year data in this category non-comparable with earlier year data.

The Census’ LEHD program represents an invaluable source of data for social science research on any number of subjects: economic development, commute patterns, social networks, and many others. It has already been widely used for urban policy research, including by Elizabeth Kneebone and Natalie Holmes at the Brookings Institution (Kneebone & Holmes, 2015); researchers at the Federal Reserve Bank of Cleveland (Hartley et al., 2015), and others (Meltzer & Ghorbani, 2015). We are enormously grateful to the program for doing the work of compiling this information. However, we do want to flag these issues as a potential area of improvement, and suggest that other researchers using LEHD data should keep them in mind while performing their analysis.

Included	Excluded—failed data quality screen	Excluded—incomplete data
Atlanta, GA	Austin, TX	Boston, MA
Baltimore, MD	Buffalo, NY	Phoenix, AZ
Birmingham, AL	Charlotte, NC	Washington, DC
Cincinnati, OH	Chicago, IL
Cleveland, OH	Columbus, OH
Denver, CO	Dallas, TX
Hartford, CT	Detroit, MI
Houston, TX	Indianapolis, IN
Kansas City, MO	Jacksonville, FL
Las Vegas, NV	Los Angeles, CA
Louisville, KY	Memphis, TN
Nashville, TN	Miami, FL
New York City, NY	Milwaukee, WI
Pittsburgh, PA	Minneapolis, MN
Portland, OR	New Orleans, LA
Rochester, NY	Norfolk, VA
San Antonio, TX	Oklahoma City, OK
San Diego, CA	Orlando, FL
San Francisco, CA	Philadelphia, PA
	Providence, RI
	Raleigh, NC
	Richmond, VA
	Sacramento, CA
	Salt Lake City, UT
	San Jose, CA
	Seattle, WA
	St. Louis, MO
	Tampa, FL

To test whether our data screen biased the overall results, we also tabulated aggregate data with no exclusions. Although the totals differ somewhat, the trends are broadly similar: average annual employment growth in urban cores is 0.00 percent from 2002 to 2007, 0.42 percent from 2007 to 2011, 1.60 percent from 2011 to 2014, and 0.92 percent from 2007 to 2014. Average annual employment growth in non-core areas is 1.23 percent from 2002 to 2007, -0.10 percent from 2007 to 2011, 2.01 percent from 2011 to 2014, and 0.81 percent from 2007 to 2014.

What City Observatory did this week

1. What’s the relationship between urban sprawl, income segregation, and economic opportunity? A recent study by Reid Ewing and colleagues at the University of Utah used an innovative new measure of sprawl to correlate with economic outcomes of low-income children, and found a strong positiveassociation between compactness—that is, un-sprawl—and more economic mobility. A doubling of the “compactness index”—roughly the difference between Nashville and St. Louis—was linked to a 41 percent increase in the likelihood of a child born to the bottom fifth of the income distribution reaching the top fifth as an adult.

2. How did San Francisco’s housing market get so crazy? For many, the answer begins with the tech boom of the last decade. But new research by Eric Fischer shows that rental prices there have been steadily increasing at about 2.5 percent faster than inflation for about 60 years. What happened 60 years ago? San Francisco ran out of easily buildable open land. Unwilling to allow for major redevelopment, that means that they’ve been “building up” their housing shortage since the 1950s. Fischer also finds that you can predict housing prices with startling accuracy using just three variables: wages, employment, and housing stock. In his model, what would it take to get prices back down to a reasonable level? Either drop half the city’s jobs, cut wages by nearly half, or build 200,000 new homes—in a city that permitted just over 3,600 last year.

3. Nationally, it appears that rental supply may be catching up to demand. So says market analyst REIS, which finds that apartment vacancy rates have ticked up recently for the first time in years. Does that mean the end of price growth? Perhaps—but of course, apartments aren’t rented in a national market, and there’s no evidence of rising vacancy or a supply-demand match in places like San Francisco, New York, or most other cities making headlines for their housing prices. That said, even on that front there is some good news: the Boston Globehas reported that rents there are growing at the slowest rate in five years as a burst of new apartments came online last year, and another 5,000 are slated for this year.

4. While things might be starting to look better in Boston, over the last several years, there has been a clear pattern of faster rent growth in larger, urban citieswith strong economies. And while these cities’ rents are pulling away from the rest of the country—the top nine metro areas saw rent growth of over 12 percent between 2008 and 2015, compared to just over two percent in the bottom half of the hundred largest metros—high-end units within these metros are also pulling away from the rest of the market. These nuances are important for policymakers and advocates in trying to grapple with housing affordability.

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The week’s must reads

1. A common refrain from housing advocates on the land use law side is that the best bet for better housing policy is to look at state governments, since local governments generally focus on the local costs of housing development, like congestion or negative effects on housing prices, rather than the broader regional benefits. Now, California Governor Jerry Brown is taking up the challenge,proposing new rules to force local governments to speed housing development proposals that meet existing zoning and contain at least 20 percent below-market units on site. A handful of other states, like Massachusetts, already have state-level override policies for local housing permits.

2. Another common housing advocate wish: Allowing “accessory dwelling units” or “granny flats,” backyard cottages that add housing without dramatically changing the face of a neighborhood. That’s exactly what Durango, Colorado has done, as described in CityLab. In fact, the city had already had ADUs, built before zoning—but they had been illegal for decades. Now the city is legalizing them again, perhaps bringing hundreds of new housing units online (and above board) without a single new building. It’s a tactic that many cities should be able to copy—especially older ones that, like Durango, already contain many ADU-type buildings constructed before modern zoning codes.

3. You’re in a driverless car, approaching a tunnel. A child steps into the road, and there’s no time to stop. Is your car programmed to continue ahead, killing the child, or swerve into the wall, saving the child but killing you? That’s one question. Another question is: Why is the car going fast enough to kill either of you? At n+1, Daniel Albert examines “the ethics of cars,” both in the future world of self-driving automobiles, as well as in our own era of human-driven ones.

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New knowledge

1. A new GAO study has alarming numbers on racial and economic segregation of schools. Between 2001 and 2014, the proportion of all American schools with student bodies that were both at least 75 percent Black and Hispanic and 75 percent low-income grew from nine to 16 percent. In 2001, 14.2 percent of American students attended high-poverty schools; in 2014, more than 25 percent did. These figures reflect, in part, broader trends about growing economic segregation and the concentration of poverty in housing and neighborhoods as well as schools.

2. Many people are familiar with the unfortunate history—and, in many ways, present—of affordable housing being used to keep low-income people, and people of color, concentrated in certain neighborhoods, and out of others. But the University of Minnesota Law School’s Institute on Metropolitan Opportunity released a report this week that identified a different kind of below-market-housing-driven segregation: high-end affordable housing, often pitched as artists’ housing, that serves nearly exclusively white tenants in higher-end neighborhoods. These units often cost far more to build, and so receive more subsidies per unit, than other kinds of affordable housing.

3. The Urban Institute looks at a kind of “missing middle” housing whose production has fallen off since the housing bust of the last decade: two-to-four-unit residential buildings. They identify one of the problems as changing financing standards that have reduced risk tolerance for these types of buildings, perhaps below the levels tolerated for single-family homes. Given that these small multifamily buildings make up a significant proportion of moderate-cost housing in many metropolitan areas, addressing this sudden decline in production may be important.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Every once in a while, someone writes something that makes a murky, complicated, frustrating issue seem crystal clear.

This post by Eric Fischer is one of those. Doing yeoman’s work, Fischer transcribed decades’ worth of San Francisco housing prices and other data. Among his findings:

• Though we talk about the Bay Area’s housing crisis as if it were a recent phenomenon, Fischer finds that housing prices have been appreciating at a steady 6.6 percent pace for the last 60 years. In real terms—that is, adjusting for inflation—they’ve been appreciating at about 2.5 percent annually. That doesn’t sound like much, but when it happens for 60 years in a row, it means that housing prices have quadrupled, after inflation, since 1956.
• We know that housing prices are the result of exceedingly complex market and regulatory systems. But Fischer shows that variations in price over the last four decades can be predicted pretty well using just three variables: employment growth, wage growth, and housing construction.

Both of these have obvious follow-up questions—which Fischer asks and (mostly) answers.

First, if San Francisco’s housing crisis actually started 60 years ago, what triggered it? Well, the housing construction cycle that ended in 1954 was the last in which the city had large tracts of greenfield land. After that, housing could really only be added at scale with infill—but by then, zoning had already been enacted to make that much more difficult. In other words, because it has been unwilling to allow large-scale redevelopment, San Francisco has been steadily under-building basically since it ran out of open land.

 

Second, if you can mostly predict housing prices with just three variables, how much influence does each have? Of course, correlation is not causation, and as Fischer admits, small tweaks to the model could produce notably different results—so these should be treated as broad trends, not precise measurements. But in Fischer’s model, a one percent increase in employment is associated with a 0.95 percent increase in rents; a one percent increase in wages is associated with a 1.74 percent increase in rents; and a one percent increase in the housing stock is associated with a 1.70 percent decrease in rents.

If we treat those as roughly accurate, that suggests that to return to 1981-era prices, when inflation-adjusted rents were about two-thirds lower, employment would have to fall by 51 percent, or wages would have to fall by 44 percent, or the housing stock would have to grow by 53 percent.

Michael Anderson of Bike Portland took a look at these numbers and despaired. And he’s not wrong: clearly losing half of all the jobs in San Francisco, or cutting everyone’s income in half, would be disastrous; and building 200,000 new units of housing in a city that permitted just over 3,600 last year seems more than a little out of reach. (And of course, every year that employment or wages rise, that needed housing number goes up, too.)

But Anderson also points out that even if there were no regulatory constraints on building housing, development would surely grind to a halt way before prices could fall down to semi-reasonable levels, as developers realized they could no longer count on the rental revenue they had based their loans on.

 

In fact, this brings up a point that is often elided when we talk about places, like San Francisco, where prices have gotten totally out of control: A rapid “correction” to those prices would, in many ways, be an economic crisis. Nearly every homeowner would find themselves tens or hundreds of thousands of dollars underwater on their home, probably causing a massive region-wide foreclosure crisis; renters would also be affected, as their landlords would also be underwater or even bankrupt, many stuck with mortgages based on valuations that anticipated rents three or four times higher than their new, more reasonable levels.

In America, no democratically elected government could ever propose, let alone enact, a policy with these consequences. Rather, San Francisco’s best hope is to build enough to prevent more price increases above inflation, and maybe even keep price appreciation below inflation, so that over the coming decades prices can float down to a more reasonable level without ruining every property owner in the city—and, in the meanwhile, produce as much non-market housing as possible. (Universal housing vouchers or housing tax credits would help.)

Fischer’s work, then, might best serve as a warning to other cities: housing crises, driven in part by supply shortfalls, build up over decades—and once they’ve been going on that long, the path back down the mountain is perilous and slow.

WASHINGTON, DC – Citing safety concerns, today Secretary of Transportation Anthony Foxx announced he was contemplating the closure of roads to all private vehicles in nearly every city in the country until he could assure the nation’s drivers that they would be safe behind the wheel.

The announcement comes on the heels of comments by Secretary Foxx that the Department of Transportation may shut down the Washington Metro heavy rail system because of ongoing safety issues.

Since 2009, 14 Metro riders and employees have died in collisions, derailings, and other incidents. On an annual basis, that translates to about 0.48 fatalities per 100,000 weekday riders.*

However, Secretary Foxx noted that this is exceeded by the fatality rate of car crashes in every single American metropolitan area for which data was compiled in a recent report from the National Highway Traffic Safety Administration.

In San Francisco, 3.75 people died in automobile crashes per 100,000 residents in 2014, a rate 7.8 times higher than the fatality rate on Metro. In Raleigh, NC, the automobile crash fatality rate was 7.50 per 100,000, or about 15.6 times higher than the fatality rate on Metro. And in Dallas, the automobile crash fatality rate was 12.02 per 100,000, or about 25.0 times higher than the fatality rate on Metro.

A partial list of other cities in which Secretary Foxx is threatening to shut down automobile traffic includes:

Each year, more than 30,000 Americans die in automobile crashes, at a rate higher than nearly every other industrialized nation, even accounting for higher vehicle miles traveled rates.

“This carnage is unacceptable,” the Secretary said. “Until we can assure America’s drivers and pedestrians that they are no more likely to die on the road than they are on the most dysfunctional heavy rail system in the country—a feat that, in many cities, will require a 90 to 95 percent reduction in road fatalities—I cannot in good conscience allow a single motor vehicle to menace our cities.”

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*Methodology and sourcing: Road fatality rates are taken from the National Highway Traffic Safety Administration. WMATA Metro fatality rates are from news reports on fatalities since 2009; the denominator is half of the average weekday ridership from the most recent APTA ridership report, from Q4 of 2015. (We divided total ridership in half to estimate the total number of individual riders taking two trips per day.) This is designed to create a relatively high fatality rate for WMATA—making a relatively small denominator, of only the number of people who use WMATA on a daily basis—compared to the road crash fatality rate, which uses a relatively large denominator, the total number of people living in a metropolitan area.

What City Observatory did this week

1. A new study from Stanford Business School claims that society reaps the greatest benefits from low-income housing when that housing is built in the lowest-income neighborhoods—as opposed to integrating it within higher-income neighborhoods. But there are a number of caveats and concerns we have with the study. For one, it looks at a very specific form of low-income housing, LIHTC, with income targets 50 percent or more greater than the median income in the neighborhoods where the Stanford study finds benefits. Second, the “costs” to higher-income neighborhoods appear to mostly be the result of discrimination—which we wouldn’t give much weight in policymaking. And finally, the benefits to integration go far beyond what was measured by the study.

2. One of those benefits of integration: It can create its own positive feedback loops that reduce the tendency to re-segregation. Research from the University of Minnesota’s Institute on Metropolitan Opportunity shows that in metropolitan areas with regional school desegregation initiatives, mixed-race neighborhoods are much less likely to re-segregate than in areas without school desegregation initiatives. In other words, if white households aren’t as able to find segregated schools, they’re less likely to want segregated neighborhoods, and less likely to take part in destructive cycles of flight and reconcentration. Intentional housing desegregation—by, in part, putting low-income housing in higher-income neighborhoods that lack it—might be able to pull the same trick.

3. On Tuesday, Secretary of Transportation Anthony Foxx announced that he was considering shutting down the Washington, DC Metro because of safety concerns. On Wednesday, Foxx announced that, having reviewed the numbers, it turns out that road fatality rates in virtually every metropolitan area in the country exceed fatality rates on Metro—in many cases, by factors of 25 or more—and the USDOT would look into shutting down all roads to private motor vehicles until he could guarantee drivers and pedestrians that they would be as safe on a typical American street as they are on the most dysfunctional heavy rail system in country. Unfortunately, that appears to be unrealistic—most cities would need to reduce road fatalities by 90 to 95 percent—so motor traffic may be kept out of American cities indefinitely.

4. Last week, we explored four different ways of measuring income segregation, and the implications of each one for broad-based economic opportunity. This week, we take a look at how each kind of income segregation has changed, both over the long term and just the last few years. In both cases, the answer is: it’s up. But there are some important nuances: since 2007, nearly the entire rise in income segregation appears to come from increased sorting among people in the “middle,” between the 10th and 90th percentile of income, according to researchers Kendra Bischoff and Sean Reardon. We also created an interactive tool for you to look up how income segregation has changed in your region since 1970.

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The week’s must reads

1. The nation’s most successful public transit system, the New York City Subway, has old, often less-than-attractive stations, crowded trains, plain plastic seats, spotty cell service, and none of the frills that civic leaders often claim are necessary to get people—especially middle-class people—out of their cars. So why do people use it? Because it’s fast, convenient, and reliable. At The Transport Politic, Yonah Freemark uses the example of the NYC Subway to commend Boston’s plan to save a rail extension by cutting costs on everything that won’t affect the qualities that riders actually care about: the frequency, speed, or reliability of service. It’s a great case study for anyone thinking about how to prioritize transit change in their city.

2. Many people believe that the purpose of zoning is to preserve neighborhood character. But Seattle’s The Urbanist blog points out that there are actually hundreds, if not thousands, of multi-family buildings in that city’s “single-family” zones—that is, places where multi-family buildings have been outlawed as “incompatible.” How can that be? These apartments and condo buildings were mostly constructed before the advent of zoning turned many already-existing communities into “illegal neighborhoods.” Many of these neighborhoods—especially closer to downtown—are among the city’s most popular, reaffirming yet again that the lack of housing diversity that zoning codes often prescribe is neither necessary nor desirable.

3. In a similar vein, modern American cities often take for granted that businesses and residences need to be kept apart. But CityLab highlights a blog that captures ghosts of Washington, DC’s mixed-use past: old storefronts that have been converted to residential buildings because they ran afoul of zoning laws that found them “incompatible.”

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New knowledge

1. The Century Foundation has released a new report laying out principles for national transportation policy. The paper identifies four key challenges, from a lack of a national vision to structural problems with the political system, and proposes four major changes to transportation policy. They include: federal funds should take care of capital maintenance needs before supporting new construction; policy should focus on moving people and goods rather than cars and trucks; a renewed focus on performance management; and use an increased gas tax, vehicle miles traveled tax, congestion pricing, or other transportation-related sources to fund transportation programs.

2. While American urbanists often think of European cities as the kind of walking, biking, and transit paradises we might strive to emulate, in fact, many European cities have made significant progress in the last several decades to become more accessible to non-car travel themselves. A new study investigates these changes in Munich, Berlin, Hamburg, Vienna, and Zurich, showing how coordinated strategies of land use and transportation policy have significantly decreased car travel. The tactics will sound familiar: Parking management, dense mixed-use development, and high-quality transit and biking infrastructure.

3. The consulting firm Urban Spatial and Allan Mallach of the Center for Community Progress have published a massive trove of visualizations of neighborhood change in cities across the country. Among the indicators captured: residents with college degrees, median income, and housing prices. They also look at indicators that correlate with neighborhood change, and say they’re looking to build a predictive model of change.

The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Is it better to build affordable housing in low income neighborhoods, or higher income neighborhoods?

A recent study has run the numbers, and argues that social welfare is optimized by putting affordable housing in very poor neighborhoods, rather than wealthier (and especially whiter) ones.

Authored by Rebecca Diamond and Timothy McQuade of the Stanford School of Business, the study really has two major conclusions. First, building affordable housing in very low-income neighborhoods creates major benefits for the surrounding area. Second, there are major social costs to placing affordable housing developments in higher-income neighborhoods, though they calculate that these costs are outweighed by the income benefits to the affordable housing residents.

While there are some valuable findings here, as you might imagine, we have a few issues.

For one, the kind of affordable housing the study looks at is targeted to people with incomes that are 50 percent or more higher than is typical in low-income neighborhoods. The paper looks at developments funded by the Low Income Housing Tax Credit, or LIHTC. LIHTC buildings generally target households making 60 percent of Area Median Income; the study’s authors estimate that in their sample, that averages about $40,000. By contrast, median income in the low-income neighborhoods they find benefit the most from new LIHTC buildings top out at about $26,000. And since $26,000 is the high end, most of these neighborhoods are actually poorer than that.

In other words, they’re talking about neighborhoods so poor that building low-income housing increases the community’s average income. That makes their finding that LIHTC projects increase housing prices by about 6 percent within 0.1 miles (yes, you read that right—more on the geographic range of the effects later) much less surprising. It also means that the finding is less about “affordable housing” per se and more specific to LIHTC, or other subsidies with similar income targets. It’s questionable whether the same results would hold for other kinds of subsidized housing targeted to lower-income households.

Second, it’s worth taking a second to underline exactly what the “costs” of LIHTC buildings are to higher-income neighborhoods. Diamond and McQuade find that LIHTC buildings don’t increase crime. And yet they also find that the average homeowner in such a neighborhood would pay nearly $4,000 to avoid having to live within 0.1 miles of a LIHTC building. But note that we said “homeowner”: renters appear to have no such preference. Even more curiously, this aversion to low-income housing only appears in higher-income neighborhoods with low Black and Latino populations.

What would create such a pattern? The authors have an idea. “If local residents have preferences over the demographics of their neighbors,” they write, “new in-migrants could make the neighborhood more or less desirable.” This may be the world’s politest way of saying “mostly white homeowners appear to be discriminating against Blacks, Latinos, and/or poor people.”

Now, that’s not necessarily a surprise: it confirms many years of research about how racism and the perception of the presence of lower-income people affect housing markets. But it raises a question that anyone in housing policy or urban planning needs to be able to answer: are preferences of advantaged groups for segregation—segregation that we know is harmful for lower-income people and people of color—just another legitimate interest that we need to weigh against the interests others might have in desegregation? As it happens, the authors estimated the gains of integration, and found that they outweighed the costs. But there’s no reason the numbers had to work out that way. If the model’s results had shown that the benefits of segregation to mostly white, mostly higher-income homeowners were greater than the costs to disproportionately Black and Latino lower-income households, would that mean they would have come out in favor of segregation?

Finally, the way the authors do try to quantify the benefits of integration is extremely limited. Their estimates are based on Raj Chetty et al’s findings about the increase in average lifetime earnings for low-income households in higher-income neighborhoods. Of course, we’re big fans of Chetty’s work, and we’ve cited it ourselves extensively. But it’s a huge mistake not to include other potential benefits in a cost-benefit analysis. Other studies, for example, have shown major improvements in mental health; you might also expect better educational outcomes, which arguably have value beyond simply their contribution to future income. There’s also the reduced likelihood of crime victimization; potentially shorter commutes; and so on. None of these are weighed in when the authors conclude that the benefits of building LIHTC in high-income areas are exceeded by the benefits of building in the very low-income neighborhoods we talked about earlier.

So what should we take away from all of this?

1. Building LIHTC units in very poor neighborhoods may, in fact, be a kind of place-based development strategy with some payoffs, as reflected by rising home prices. But it’s not clear how far it goes as a broad strategy for revitalizing these neighborhoods. For one thing, the strongest gains are in a very small area—just 0.1 miles from the project—with quickly declining improvements beyond that. Moreover, just as their estimates of the benefits of integration are limited, so are their estimates of the costs of segregation. While they do find that LIHTC projects help lower crime, it’s not clear whether there are improvements on other indicators that residents are likely to care about beyond home prices: schools, local retail options, and so on.
2. Are all preferences made equal? We can use home prices to quantify the preferences of homeowners—but that doesn’t mean we should weigh every kind of preference in the same way. It turns out that for many people, the presence of people of color or lower-income people is enough to cause them to value their homes less. Evaluating policy options always involves value judgments, and econometric models—while often helpful—are not a substitute.
3. When we do use econometric models, we need to be aware of what’s being left out. This, in fact, is part of our value judgments, whether we’re aware of it or not. Do we value better mental health for low-income people? Do we value education beyond its income effects? Do we value giving people the option to live somewhere they otherwise couldn’t? If none of those are in the model, then we are effectively answering “no.”
4. Leaving integration up to local governments is unlikely to be successful. This is a point we’ve made before, citing research by Michael Lens and Paavo Monkkonen that showed that metropolitan areas with more local power in development decisions are more segregated than ones where states play a bigger role. This study underlines that while many people in all sorts of neighborhoods value diversity and integration, some do not, and they are willing to pay thousands of dollars to avoid having low-income neighbors. (This may also be about the kind of “prisoner’s dilemma” of who might get “stuck with more than their fair share” of low-income housing. In fact, research suggests that when integration is widespread, the dynamics of neighborhood change are altered in ways that reduce the incentive for self-segregation fo the advantaged.) When those preferences are combined with hyper-local power over what kinds of housing gets built where, it’s inevitable that many jurisdictions and neighborhoods will create regulatory barriers to low-income people living in their communities: in other words, exclusionary zoning.

A new study has run the numbers, and has concluded that social welfare is optimized by putting affordable housing in very poor neighborhoods, rather than wealthier (and especially whiter) ones.

Authored by Rebecca Diamond and Timothy McQuade of the Stanford School of Business, the study really has two major conclusions. First, building affordable housing in very low-income neighborhoods creates major benefits for the surrounding area. Second, there are major social costs to placing affordable housing developments in higher-income neighborhoods, though they calculate that these costs are outweighed by the income benefits to the affordable housing residents.

While there are some valuable findings here, as you might imagine, we have a few issues.

For one, the kind of affordable housing the study looks at is targeted to people with incomes that are 50 percent or more higher than is typical in low-income neighborhoods. The paper looks at developments funded by the Low Income Housing Tax Credit, or LIHTC. LIHTC buildings generally target households making 60 percent of Area Median Income; the study’s authors estimate that in their sample, that averages about $40,000. By contrast, median income in the low-income neighborhoods they find benefit the most from new LIHTC buildings top out at about $26,000. And since $26,000 is the high end, most of these neighborhoods are actually poorer than that.

In other words, they’re talking about neighborhoods so poor that building low-income housing increases the community’s average income. That makes their finding that LIHTC projects increase housing prices by about 6 percent within 0.1 miles (yes, you read that right—more on the geographic range of the effects later) much less surprising. It also means that the finding is less about “affordable housing” per se and more specific to LIHTC, or other subsidies with similar income targets. It’s questionable whether the same results would hold for other kinds of subsidized housing targeted to lower-income households.

Second, it’s worth taking a second to underline exactly what the “costs” of LIHTC buildings are to higher-income neighborhoods. Diamond and McQuade find that LIHTC buildings don’t increase crime. And yet they also find that the average homeowner in such a neighborhood would pay nearly $4,000 to avoid having to live within 0.1 miles of a LIHTC building. But note that we said “homeowner”: renters appear to have no such preference. Even more curiously, this aversion to low-income housing only appears in higher-income neighborhoods with low Black and Latino populations.

What would create such a pattern? The authors have an idea. “If local residents have preferences over the demographics of their neighbors,” they write, “new in-migrants could make the neighborhood more or less desirable.” This may be the world’s politest way of saying “mostly white homeowners appear to be discriminating against Blacks, Latinos, and/or poor people.”

Now, that’s not necessarily a surprise: it confirms many years of research about how racism and the perception of the presence of lower-income people affect housing markets. But it raises a question that anyone in housing policy or urban planning needs to be able to answer: are preferences of advantaged groups for segregation—segregation that we know is harmful for lower-income people and people of color—just another legitimate interest that we need to weigh against the interests others might have in desegregation? As it happens, the authors estimated the gains of integration, and found that they outweighed the costs. But there’s no reason the numbers had to work out that way. If the model’s results had shown that the benefits of segregation to mostly white, mostly higher-income homeowners were greater than the costs to disproportionately Black and Latino lower-income households, would that mean they would have come out in favor of segregation?

Finally, the way the authors do try to quantify the benefits of integration is extremely limited. Their estimates are based on Raj Chetty et al’s findings about the increase in average lifetime earnings for low-income households in higher-income neighborhoods. Of course, we’re big fans of Chetty’s work, and we’ve cited it ourselves extensively. But it’s a huge mistake not to include other potential benefits in a cost-benefit analysis. Other studies, for example, have shown major improvements in mental health; you might also expect better educational outcomes, which arguably have value beyond simply their contribution to future income. There’s also the reduced likelihood of crime victimization; potentially shorter commutes; and so on. None of these are weighed in when the authors conclude that the benefits of building LIHTC in high-income areas are exceeded by the benefits of building in the very low-income neighborhoods we talked about earlier.

So what should we take away from all of this?

1. Building LIHTC units in very poor neighborhoods may, in fact, be a kind of place-based development strategy with some payoffs, as reflected by rising home prices. But it’s not clear how far it goes as a broad strategy for revitalizing these neighborhoods. For one thing, the strongest gains are in a very small area—just 0.1 miles from the project—with quickly declining improvements beyond that. Moreover, just as their estimates of the benefits of integration are limited, so are their estimates of the costs of segregation. While they do find that LIHTC projects help lower crime, it’s not clear whether there are improvements on other indicators that residents are likely to care about beyond home prices: schools, local retail options, and so on.
2. Are all preferences made equal? We can use home prices to quantify the preferences of homeowners—but that doesn’t mean we should weigh every kind of preference in the same way. It turns out that for many people, the presence of people of color or lower-income people is enough to cause them to value their homes less. Evaluating policy options always involves value judgments, and econometric models—while often helpful—are not a substitute.
3. When we do use econometric models, we need to be aware of what’s being left out. This, in fact, is part of our value judgments, whether we’re aware of it or not. Do we value better mental health for low-income people? Do we value education beyond its income effects? Do we value giving people the option to live somewhere they otherwise couldn’t? If none of those are in the model, then we are effectively answering “no.”
4. Leaving integration up to local governments is unlikely to be successful. This is a point we’ve made before, most recently, perhaps, in citing research by Michael Lens and Paavo Monkkonen that showed that metropolitan areas with more local power in development decisions are more segregated than ones where states play a bigger role. This study underlines that while many people in all sorts of neighborhoods value diversity and integration, some do not, and they are willing to pay thousands of dollars to avoid having low-income neighbors. (This may also be about the kind of “prisoner’s dilemma” of who might get “stuck with more than their fair share” of low-income housing. In fact, research suggests that when integration is widespread, the dynamics of neighborhood change are altered in ways that reduce the incentive for self-segregation fo the advantaged.) When those preferences are combined with hyper-local power over what kinds of housing gets built where, it’s inevitable that many jurisdictions and neighborhoods will create regulatory barriers to low-income people living in their communities: in other words, exclusionary zoning.

What City Observatory did this week

1. At City Observatory, we’re interested in hard numbers—but we’re also interested in the human community and public spaces that cities can create. As we did in April with “Lost in Place,” on Monday we introduced an easy-to-share infographic of our report “Less in Common.” It summarizes many of the facts found in that report, including that the proportion of Americans interacting with their neighbors has declined by a third since 1970, and recreational activities like swimming have been radically privatized. Take a look—and because all City Observatory work is licensed under Creative Commons, you’re free to reuse the graphic in your own presentations or reports with attribution.

2. We often talk about “economic segregation” as if it were one issue—but in reality, that’s a catch-all term for all sorts of separate but related problems. Going off of work by Sean Reardon and Kendra Bischoff, we begin breaking down the concept by explaining some measures of segregation at the extremes: the percentage of families living in high-income or low-income neighborhoods. These measures are particularly relevant if you’re concerned about the effects of resource-hoarding wealthy neighborhoods, on the one hand, and opportunity-starved low-income neighborhoods on the other. But by breaking out these as separate ideas, we can see that some cities have issues with wealthy and low-income neighborhoods in roughly equal proportion, while in others, low-income neighborhoods are a much bigger problem.

3. Having introduced ways to understand and measure the segregation of the high- and low-income, we turn to the H index, a way of measuring income segregation along the entire spectrum, and distinguishing between segregation itself and inequality—different but related issues that may call for different policy approaches. While the High + Low scores suggest that New Orleans is much more segregated than Cincinnati, for example, the H index suggests the issue is actually that New Orleans is much more unequal.

4. One of the best parts of our work at City Observatory is seeing how people across the country apply our findings to their own cities and needs. We did a brief overview of the ways that people reacted and responded to our Storefront Index—from questions about whether businesses in skyways can have the same street-livening effects as traditional storefronts, to examining the inequality of retail and amenity density, to musing about how the Storefront Index could be a tool for planners to identify retail districts that need “room to grow” in the form of more commercial zoning. Let us know if you have your own uses, comments, or questions!

The week’s must reads

1. How do we know how to design the streets near your home, job, or school? Traffic studies, of course! But co.exist breaks down how those studies are themselves designed to almost always end up concluding that every street needs to be wider, faster, and less pedestrian-friendly. That, in turn, encourages more people to drive—so that the next traffic study finds roads need to be even more optimized for traffic, at the cost of safe, pleasant places to walk, bike, take transit, or just hang out.

2. NPR’s Planet Money podcast takes a look at Housing Choice Vouchers, one of the main forms of housing assistance to low-income households in the US. They end up asking some questions we’ve raised ourselves: Why do we make housing assistance a lottery, with many more qualifying households than available assistance, when other important kinds of help—like SNAP, or food stamps—are available to anyone with income below a certain level?

3. At Bloomberg, economist Noah Smith says that major American avenues to “extensive” economic growth, like globalization and the internet, have largely played out their potential for increasing productivity. The next round of US economic growth, he argues, will have to be “intensive”: “getting more output for a given unit of input.” And one way to do that is by urbanizing more. Research suggests that more densely settled metropolitan areas, all else equal, are more economically productive.

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New knowledge

1. At City Observatory, we’ve been critical of the mortgage interest tax deduction, which effectively creates billions of dollars in subsidies that largely to go upper-income households. A new paper by Hal Martin of the Cleveland Federal Reserve and Andrew Hanson of Marquette University attempts to measure the effect on housing markets of different kinds of reforms to the MID. They find getting rid of the deduction would cause prices to fall as much as 13.5 percent in Washington, DC and as little as 3.5 percent in Miami. In contrast, swapping out the deduction for a 15 percent refundable credit—which could both reduce subsidies to upper-income households and make more assistance available to lower- and middle-income ones—would tend to increase housing prices—up to 12.1 percent in the Miami metropolitan area.

2. At CityLab, Richard Florida reviews two new studies on the growing economic strength of central cities. The first, by Daniel Hartley of the Chicago Federal Reserve, finds that neighborhoods closer to downtown—but not in downtown—saw faster job growth from 2009-11 than from 2002-2009, outpacing neighborhoods farther out on the periphery. (These results echo our findings in “Surging City Center Job Growth.”) Another, from the Initiative for a Competitive Inner City, finds that cities with stronger industry clusters saw more rapid job growth in those clusters from 2003-2011, underscoring the advantages of agglomeration.

3. Housing assistance can be a lifeline to low-income families, but does it offer benefits beyond immediate housing relief? A paper from the St. Louis Federal Reserve finds that, at least in some cases, the answer is yes: For every year that girls and women between the ages of 13 and 18 live in public housing, adult earnings increase by 9 percent; for each year that their families received housing vouchers, their adult earnings increase by 6 percent. Boys and men, on the other hand, see no such effects.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

For us at City Observatory, one of the most interesting (and fun) parts of our work comes after we’ve finished a Commentary or Report, and we get to watch others react and respond to its findings and arguments. “The Storefront Index,” the report on urban customer-facing business clusters that we released last month, is a great example.

At the Washington Post, Emily Badger focused on what the report had to say about cities as “centers of consumption,” and how a wide diversity of amenities and choices—from different types of clothes to niche bookstores and restaurants that cater both to immigrants from a particular country, province, or even city, as well as interested eaters from everywhere else—are key to the appeal of large urban areas. Badger also noted that the report could help show inequities in urban amenities, pointing out how spare businesses appeared in the Anacostia section of Washington, DC, compared to the rest of the metropolitan core.

 

PlanPhilly, in turn, underscored the importance of zoning laws in shaping urban retail districts, arguing that the Storefront maps help “uncover where commercial corridors ‘want’ to expand, and where land use could be more supportive of this.”

Streets.mn wondered what sort of effect Minneapolis’ famous (or infamous) skyways have on the relationship between “storefront” businesses and urban vitality. If a shop or restaurant is in a skyway, and inaccessible from the street, does that take away from a city’s public life—from Jacobs’ “sidewalk ballet”?

 

And Clevescene.com saw the Storefront Index as evidence of Cleveland’s “downtown business boom.”

For many local outlets, the report was a chance to reflect on their city’s relative standing in terms of urban core retail outlets, whether that was good news (as in Portland, DC, and LA), or not so good news (as in Detroit and Orlando). And Houston’s Swamplot blog eschewed inter-city comparisons to look at which parts of their region were light on storefronts.

All in all, we’re pleased that so many people found the Storefront Index a useful and revealing tool for understanding their cities—and that many are already taking steps towards using it not just for diagnostics, but for its policy implications, from expanding commercial zoning in high-demand districts to questioning the importance of businesses on the street, and not separated in private spaces like skyways.

Have another reaction? Questions? Conclusions? Let us know.

What City Observatory did this week

1. This week, we were proud to release City Observatory’s latest report: The Storefront Index. The Storefront Index maps and tallies every “storefront” business in the 51 largest US metropolitan areas, showing where clusters of customer-facing retailers create vibrant, flourishing neighborhood and regional commercial districts. The analysis highlights the importance of this kind of amenity in building healthy neighborhoods and cities, and is a valuable tool for community advocates, planners, businesspeople, and map geeks alike. Click here to find an interactive map for your city.

2. To illustrate the connection between storefronts and the street-level vitality of public spaces, we went off of a February Washingtonian article by Greater Greater Washington contributor Dan Reed about two adjacent public parks in central DC. One, Farragut Square, is usually full of people, while the other, Franklin Square, often lies mostly empty, just a few blocks away. Reed suggests in his article that one reason is the larger number of retail outlets on Farragut Square, which draw people through and around the park, some of whom also stop and enjoy the scenery on a park bench or patch of grass. The Storefront Index allows you to easily see this difference, confirming a quick on-the-ground impression, and offering a tool for identifying other likely “hot” and “cold” public spaces.

3. Although the current Storefront Index is based off a point-in-time database of businesses, we hope to expand this to allow stakeholders and researchers to see how neighborhood commercial districts have changed over time. To demonstrate the power of this possibility, we performed a historical analysis on one corridor, Alberta St. in Portland, OR. The Index shows dramatic growth of storefronts in the area between 1997 and 2014; further data from the Census shows that total jobs in the area has increased from under 800 to nearly 2,500 between 2002 and 2014.

4. Are Millennials back into buying cars? Some recent report have claimed so—but, as with homebuying, a closer look shows that young adults today remain much less likely to take out auto loans or have driver’s licenses than previous generations at at the same age. In fact, every age group up to 50 has driver’s licenses at a lower rate than a few decades ago; for those aged 25-29, the license rate has declined from over 95 percent to 85 percent since 1983. Again, while counter-intuitive takes on Millennials’ urban living habits might make good clickbait—and ring sonorously in the ears of real estate agents and car companies—the fact is that today’s young adults really are significantly less likely to own homes or have a driver’s license than previous generations.

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The week’s must reads

1. We tend to focus on local policymakers, but it’s worth listening to this interview with Obama HUD Secretary, and former San Antonio mayor, Julián Castro at theNew Yorker—what does the White House think are the major challenges for urban policy? How does it propose to deal with them? “I couldn’t think of any American city that has dealt well with that issue of gentrification and displacement. People in the neighborhoods want some of those amenities and some investment…and then you reach a tipping point where people can’t afford to live in that neighborhood…. The inconclusive part of this is there hasn’t been enough research on what happens to the residents who are displaced. Do we know definitively that on net the impact is negative?”

2. While progressive slogans have focused on “the one percent,” Thomas Edsall at the New York Times says that more attention should be paid to the top twenty percent of earners. Going off of new research on economic segregation from Kendra Bischoff and Sean Reardon, he argues that the geographic separation of the “truly advantaged” has profound effects on opportunity and politics. Edsall says this kind of segregation is especially dangerous when it puts the economic self-interest of egalitarian-minded wealthy people at odds with their professed values.

3. What is the intersection of urban planning and gender? A conference in Detroit looked to investigate that question, as reported in the Huffington Post. Speakers argued that in many cases, women interact with cities differently—for example, placing a higher priority on safety in public places, or having different trip patterns, as a result of having disproportionate responsibility for things like child care. With women underrepresented in urban leadership positions (less than 20 percent of US mayors are women), there has been an increase in organizing to broaden understanding of these issues.

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New knowledge

1. Bloomberg entered every ZIP code in America into Amazon’s new same-day delivery service to map where the company is and isn’t offering the product—andthe resulting maps show some disturbing racial patterns. Even if, as seems plausible, these results came from a race-neutral algorithm, they demonstrate the dangerous power of racial and economic segregation: by sorting demographics with greater purchasing power into certain neighborhoods, they make it more likely that ostensibly race-blind policies will actually perpetuate discrimination. Some patterns seem particularly egregious, as with Boston’s predominantly black Roxbury neighborhoods, which is excluded from same day service despite being completely surrounded by neighborhoods that are included.

2. Previously, we’ve covered ways in which neighborhoods and segregation can affect the educational outcomes of children. But a study led by Laura Tach at Cornell University finds that neighborhoods have effects on the educational progress of adults, too. Recipients of affordable housing support in Philadelphia were randomly assigned to homes in various neighborhoods and, as a part of the program, were required to enroll in secondary education. People assigned to homes in block groups with higher levels of poverty and violence made less progress in getting college credits than those assigned to wealthier and safer areas.

3. As covered in CityLab, a new study looks at how, when, and why transit services affect property values. The meta-study of 60 earlier papers finds that the connection between new public transit lines or stations and increased property values isn’t as automatic as sometimes claimed. A number of factors help determine the impact, including the extent to which the new service actually improves access to the region’s jobs and amenities; the ease of other transport options, including traffic congestion and parking prices; and the land use around stations, with denser, mixed-use development and public spaces increasing values. This adds to the growing body of evidence that concentrated poverty amplifies the negative effects of poverty across generations.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

What City Observatory did this week

1. When we measure segregation, we almost always use Census numbers that reflect where people live—ie, where their homes are. But people don’t spend all day in their homes, so a team of researchers used Twitter data from Louisville, KY to figure out where they spend their days. The results are a fascinating look at the asymmetry of segregation and neighborhood isolation: while residents of the lower-income, predominantly black West End ranged all over the city, residents of the wealthier, whiter side of town nearly entirely avoided the West End.

2. This week, the USDOT is releasing its new road performance metrics. While they may seem like the kind of wonkish details that only an engineer could love, anyone who cares about the livability and accessibility of their communities ought to be paying close attention, since the performance measures that state and local governments have to hit will help determine whether our roads are amenable to walking, biking, and transit service, or force nearly everyone into cars. Unfortunately, the new standards fail on several counts, including relying on a measure of congestion that rewards building empty roads and discounts the benefits of shorter commutes. The rules also represent a major missed opportunity to address climate change. Another option would have been to build measures that focus on reducing total driving and commute times, and take into account transit travel time.

3. Marijuana policy is sometimes dismissed as a novelty issue. Butdecriminalization and legalization actually have serious implications for urban policy for several reasons, from tax revenue, to economic development and industry clustering, to cultural signaling and Tiebout sorting, to spatially biased policing with implications for equity and economic mobility. Drug policy is one arena where state and local governments could use their positions as policy laboratories to find a better balance.

4. This week, City Observatory released a new, easy-to-share infographic that summarizes research by ourselves and others on neighborhood change. The big takeaways: over the last 40 years, neighborhoods with poverty rates over twice the national average have been much more likely to remain poor and lose significant population than they have been to gentrify. Along with our report, “Lost in Place,”which has interactive maps and tools to show how your city has changed since 1970, we hope this infographic will be useful for communicating the data on neighborhood change.

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The week’s must reads

1. “NIMBY,” or “Not In My Backyard,” is a well-known epithet against people who agree that some kind of development—apartments, or schools, or shops—should gosomewhere, but not in their neighborhood. But now the New York Times covers the rise of self-described YIMBYs: people organizing and advocating for more housing development, in their backyards and elsewhere. The piece profiles Sonja Trauss of the San Francisco Bay Area Renters Federation, who has become one of the national leaders of the movement. If there’s going to be the political will to address America’s “shortage of cities,” people like Trauss may play a major role in building it.

2. We’ve been advocates of more big-picture reimaginings of federal housing policy—and this week, we’re joined by Demos’ Matt Breunig, commenting on an essay inDemocracy Journal by Peter Dreier that suggests creating an entitlement housing allowance through the Earned Income Tax Credit. Breunig, on the other hand, points out that a yearly lump sum may not be the best way of distributing benefits for a cost that renters face monthly. See our pieces about this sort of low-income housing entitlement with vouchers or tax credits.

3. This week, San Francisco became the first US city to require that all new housing in buildings that are 10 or fewer stories include solar panels. Unfortunately, as Vox explains, this is a much less effective anti-greenhouse emissions policy than just allowing more housing to begin with. Because people in dense, transit- and walking-friendly cities like San Francisco are much more efficient in their energy usage, increasing the number of people who live in them has major environmental dividends. Vox estimates that the carbon benefits of the solar panel mandate is about a third of the carbon benefits of allowing 10,000 units of new housing in the city.

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New knowledge

1. Children do worse on academic tests if there has been a homicide in their neighborhood within the last week. Building on that finding, NYU sociologist Patrick Sharkey has found a strong link between counties with high levels of violent crime and lower levels of economic mobility, even holding other factors constant. The effects are sensitive enough that children growing up in a place during periods of relatively low crime did better as adults than children who grew up in the same places during periods of higher crime. This study adds an important piece to our understanding of how place affects the long-term outcomes of its residents.

2. The Chicago-based Center for Neighborhood Technology has released perhapsthe most comprehensive, easy-to-use transit database yet. Called “AllTransit,” it combines original analysis of transit access and quality with well-organized aggregation of existing data on ridership, service, and demographics. The tool is designed for use by policymakers and advocates to see where transit is and isn’t working—and how it may be creating opportunity, or failing to do so, for different people in different parts of a region. Anyone trying to understand the landscape of sustainable transportation in the US should check it out.

3. Are American cities no longer eating up as many acres of farmland as they used to? That’s the question posed by Issi Romem at buildzoom. Romem finds that the number of square miles consumed by new urban (or perhaps “suburban” is the better term) developments has stayed remarkably steady over the last several decades. But that evenness hides major variations at the metropolitan level: while some regions, like Atlanta, are growing in physical area even more rapidly, others, like the Bay Area, have seen growth come nearly to a halt. There’s a lot to unpack here, from the physical growth that far outstrips population growth in places like Cleveland or Atlanta, to the unfortunate reality that most US cities that add enough housing to keep prices low do so by adding low-density subdivisions on the urban fringe. (It’s also worth noting that this analysis ignores the higher transportation costs associated with that kind of sprawling development.) It’s important to recognize that almost no US city have land use plans that facilitate density where it’s most demanded. If we allow for more density and “missing middle” housing, we wouldn’t need to choose between “expansive” and “expensive” cities.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

In the last several years, marijuana legalization has gone from a fringe issue treated as a joke or third rail to a mainstream, enacted policy in parts of the country. Broadly, the change seems to be driven by growing recognition of the general failure and costs of the drug war; growing understanding and acceptance of the medical uses of marijuana; and generational culture change.

In 2012, Colorado and Washington became the first states to fully legalize marijuana for all purposes for adults over age 21; in 2014, Alaska and Oregon followed. A number of cities, including Washington, DC, and New York City, have decriminalized cannabis, giving out tickets rather than arresting offenders.

Metropolitan area-level survey data from the US Substance Abuse and Mental Health Services Administration, collected between 2005 and 2010, before any of the full legalization measures passed, suggests that it’s no accident that these are the regions that are leading on the issue. Seattle, Portland, and Denver were all among the metropolitan areas with the greatest reported use of marijuana in the last year, ranging from 13.9 percent in Seattle to 16.5 percent in Denver. (No Alaska metropolitan area was included in the survey.) By contrast, the national average was 10.7 percent.

 

California, home to the city with the highest reported use—San Francisco, at 17 percent—hasn’t fully legalized marijuana, but it has legalized it for medical purposes, with rather lax standards for receiving a prescription. Meanwhile, the metro areas with the lowest reported use tend to be in the Plains or Southeast (with the notable exceptions of Atlanta and Nashville), with Houston registering the lowest rate of marijuana use, at 7.9 percent.

At City Observatory, we generally focus on issues of urban planning, housing, and transportation, but there are a number of reasons for policymakers and stakeholders to treat marijuana legalization as more than a novelty.

Perhaps the most appealing for the straightedge lawmaker is simply cash. In the last fiscal year, Colorado collected nearly $70 million in tax revenue from marijuana sales—versus just $42 million from alcohol sales. Next door, the Grand Canyon Institute has estimated that a similar measure could collect $62 million a year in tax revenue for Arizona. Nor is the benefit limited to the public sector; far from it—the medical marijuana industry in California is now selling $2.7 billion a year. In fact, there’s already evidence that early-adopter states are creating path dependencies that may anchor a potentially massive industry in their jurisdictions. Companies that developed industry-specific knowledge and skills in Colorado, for example, are now in prime position to capitalize on states that legalized marijuana later.

There is also a kind of Tiebout sorting issue to think about. State and local policies like marijuana legalization can serve as signals about a place’s values and cultural profile for potential migrants and businesses, even those who aren’t most directly affected by the policy itself. The most recent example is the law passed in North Carolina that, among other things, required transgender residents to use bathrooms according to the gender on their birth certificate. The law set off such an intense backlash, including threats of economic boycotts, that the state’s governor began trying to soften some of its provisions less than a month after its passage. Indiana’s “Religious Freedom Restoration Act,” which permitted discrimination by private businesses on the grounds of sexual orientation, cost the state at least $60 million in convention business alone. With businesses increasingly chasing high-value employees, state and local officials may want to watch to see if marijuana legalization has any effect on the location choices of this cohort of the “young and restless,” or others. (Of course, part of Tiebout sorting is that people have different preferences—so perhaps this is an argument against legalization for places looking to attract or retain more socially conservative, or older, residents.)

Finally, the connection between the war on drugs and economic opportunity has been well explored by researchers and advocates. People who are arrested, even for nonviolent drug possession offenses, find themselves at a severe disadvantage in future employment searches. Moreover, studies have shown that arrests for drug possession are concentrated in low-income neighborhoods, and neighborhoods whose residents are primarily people of color, even when drug use is no higher in these communities than elsewhere. In other words, drug arrests act as a drag on opportunity with a strong economic, social, and spatial bias—with direct implications for those who are concerned about the intersection of urban geography and inequality.

Obviously, we’re still a long way from figuring out the ideal drug policy—but there’s an increasing consensus that the status quo isn’t it. Marijuana is one front on which cities’ and states’ often-heralded, sometimes-overblown status as policy laboratories could bear real fruit.

What City Observatory did this week

1. More than half of commuters to jobs in classically suburban DuPage County, outside Chicago, say they’d like to walk, bike, or take transit—but nearly 90 percent of them drive anyway. What’s going on? A closer look finds that decades of avowedly auto-centric planning has led to a situation in which nearly all housing and employment growth has been directed to highways, and prohibited near one of the county’s 26 rail stations. As a result, not driving is usually time-consuming, uncomfortable, and dangerous, so even people who would rather not get in their car every day are forced to do so.

2. We’ve sounded this alarm before, but if you’ve read an article about how rents in your city have changed dramatically in just a month or two, it may have been bogus. Another round of pieces about apartment listing service Abodo’s “rent reports” ignore obvious absurdities, including the fact that Abodo claims rents in Portland, OR, grew 14 percent in February in a single month, and then declined seven percent the very next month. These “reports” are in fact just averages of the listing companies’ databases, which are heavily skewed to higher-end apartments and make no effort to correct for random noise in availabilities from month to month. Readers should ignore them, and reporters should know better than to quote them.

3. Place matters for your economic opportunities—and also for your life expectancy. A new study from Raj Chetty et al, whose previous groundbreaking research linked local conditions to intergenerational economic mobility, finds correlations between life expectancy, especially for the low income, and a range of local variables. It ties longer life to greater population density, higher home values, more immigrants, more local government spending, and more college graduates—all indicators of high-quality urban spaces. These findings are exploratory, and don’t yet control for other factors, but point towards further research into how where we live affects our life chances.

4. The growth of upwardly mobile college graduates in many urban centers around the country has led, in some cases, to an overcorrection of the old conventional wisdom: after decades in which cities were synonyms for neighborhoods with disproportionate numbers of lower-income people, people of color, and immigrants, cities are increasingly associated with people who are wealthier and whiter. But it’s important not to confuse the direction of change with actual levels: as a new Pew study underscores, whites and people with higher incomes remainunder-represented in cities and urban behaviors like public transit ridership. It’s important to keep that in mind when evaluating the equity impacts of urban policy.

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The week’s must reads

1. America’s GDP is more than 13 percent below where it could be if not for the exclusionary effects of high housing prices in our most productive cities. The Economist considers what might be done to remedy that, and rounds up policy ideas like TILTs (essentially impact fees paid directly to neighbors of new development), moving development decisions from hyper-local neighborhoods (where everyone wants new development “somewhere else”) to the broader city, where neighborhoods can negotiate over their fair share; or even state or federal override of exclusionary, anti-density local laws.

2. Despite its reputation as a world-class melting pot, New York is by some measures one of the most segregated cities in the US. The New York Times considers what that means for Mayor Bill de Blasio’s big housing reforms, including a policy—already the subject of a lawsuit—that gives preference for low-income inclusionary zoning units to local residents, which critics say perpetuates segregation in neighborhoods with a large majority of white residents.

3. Eighty percent of the energy in every gallon of gas is wasted. More than 50,000 Americans die prematurely every year because of vehicle pollution, and more than 3,000 die every month from traffic accidents. The average car owner pays $12,544 a year in loan payments, gas, insurance, and maintenance—for a machine that sits idle 92 percent of the time. Cars and trucks are responsible for more than 80 percent of transportation-related greenhouse gas emissions, playing a key role in global climate change. At The Atlantic, Edward Humes argues these and other issues make our reliance on cars insane.

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New knowledge

1. Housing policy has been implicated in everything from climate change to intergenerational mobility to longevity, and now an Urban Institute paper links it to school attendance. Surveying the research literature, as well as doing their own analysis, they find that housing conditions like high levels of lead, as well as housing instability and frequent moving, were highly correlated with chronic absenteeism among students, which in turn is correlated with poor academic outcomes. Concentrated poverty, and its associated problems, are also implicated.

2. They paved over paradise, but they didn’t stop there. New satellite imagery shows how much hard pavement has been added to the DC metro area at Greater Greater Washington. GGW‘s David Alpert points out that more hardscape isn’t always a bad thing—sometimes, it means more density in places that desperately need it, especially in a rapidly growing city. But much of the new pavement represents parking lots and roads far away from the homes and jobs of the central city.

3. A bill has been introduced in Illinois to tax drivers per mile driven—but even if you live elsewhere, this primer from Chicago’s Metropolitan Planning Council is worth reading for a rundown of why and how such a tax might work. A big issue for the state is that the growing vehicle fuel efficiency means declining revenue, without any corresponding decline in infrastructure needs. The plan would offer a few options to drivers, including flat fees and GPS trackers that would precisely measure travel distances. Potentially, these trackers could be used to price congestion, charging more for driving at peak times and locations, and helping to keep roads relatively open. Social equity issues, as well as administration costs, are also challenges. (Oregon already has a pilot VMT tax program—read more here.)

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

In cities, you’ll sometimes hear people talk about a “daytime population”: not how many people live in a place, but how many gather there regularly during their waking hours. So while 1.6 million people may actually live in Manhattan, there are nearly twice that many people on the island during a given workday.

Most studies on segregation deal with what you might call the “nighttime population,” or actual locations of residence. And of course, that kind of segregation has been shown to have significant negative effects. But it’s also in large part a matter of convenience: the Census means that we have detailed data on where people live. It’s harder to get data on where they happen to spend their time when they’re not at home.

But a fascinating study asks whether, and how, waking mobility affects patterns of segregation. The authors—Taylor Shelton, Ate Poorthuis, and Matthew Zook—used geotagged Twitter and Foursquare data in Louisville, KY to determine whether users likely lived in that city’s West End (predominantly black) or East End (predominantly white). Then they mapped the ratio of the number of tweets by East End residents to the number of tweets by West End residents all across the city.

 

The results are striking: While the West End is visible as a block of nearly solid purple, indicating virtually no tweets from East End residents, Louisville’s East End appears as various splotches of orange, grey, and purple—indicating a much greater mix of East and West End residents.

The implication is that West End residents, who are mostly black, are much more likely to cross boundaries of segregation than East End residents, who are mostly white. In part, that may be a matter of necessity, as the wealthier East End has more jobs, stores and services.

But it also fits in a pattern of racial stigma and avoidance described by other studies as well. What’s ironic here is that while racial segregation is often described as a limitation on the movement of the disadvantaged population—and in many important ways, from health outcomes to employment, it is—in terms of physical mobility, it turns out that the driver of the West End’s isolation isn’t that West Enders never leave, but that East Enders never visit.

 

That dovetails with research by Ed Glaeser, who suggests that since around 1970, the persistence of “nighttime” residential segregation has been driven primarily by whites’ decisions to avoid neighborhoods that have a significant black population, and to leave their own neighborhoods when blacks move in. It also resonates with research from Robert Sampson, who found a significant stigma attached to predominantly black neighborhoods, and Maria Krysan, who found that while blacks’ knowledge about predominantly white neighborhoods in Chicago depended on their distance and economic class, whites were much more likely to describe themselves as knowing nothing about black neighborhoods, regardless of other factors.

Shelton, Poorthuis, and Zook did find that a few specific activities could draw East End residents west: a cluster appeared near the Churchill Downs racetrack during horse racing season, but then disappeared when the season ended. In other words, while this is a hopeful sign that some kinds of activities clearly generate geographic crossover, these kinds of visits appeared to be to few or limited to have any wider spillover effects in increasing even daytime integration elsewhere in the West End.

That suggests the remedy for this kind of separation will have to go deeper than just an occasional event that draws people from around the city for a few hours. But this paper helps underscore that when we think about segregation, we need to think about more than just where people sleep at night.

For most of the 20th century, cities and their accoutrements were associated with immigrants, people of color, and relative economic deprivation. The very phrase “inner city” became a synonym of “poor,” and in certain contexts “urban” itself became a word that referred to people of color, especially black people.

The “great inversion” has challenged that narrative in recent years, as increasing numbers of disproportionately white, upwardly mobile college graduates have moved to downtowns and inner cities around the country. In fact, in analyzing recent Census data, Jed Kolko found evidence that white college graduates were among the only demographics becoming more urban in their living arrangements.

 

This is all very valuable research—and captures a real phenomenon that has both promise and peril for American cities and suburbs. But there’s a danger in overcorrecting here. (For example, Matt Yglesias’ headline at Vox—“America’s urban renaissance is only for the rich”—sort of skirts that line.) Specifically, while the direction of change is that cities are becoming relatively wealthier and whiter, the actual levels of these populations mean that in most cities, residents are still disproportionately lower-income, foreign-born, and black or brown.

The danger in overcorrecting the conventional wisdom is that we discount the ways in which cities offer important lifelines to people with fewer resources or who are historically disadvantaged. A good example is public transit, and the vastly lower transportation costs that people who live in places with viable transit systems (and the ability to walk or bike for many trips) can enjoy, freeing up household budgets for other necessities. If we imagine that the typical transit rider is a white creative class worker in Brooklyn or the North Side of Chicago, we might discount that redistributive, progressive effect of transit service, and decline to pursue it as a policy goal.

But a recent Pew survey hits home just how far we have to go before the prototypically urban experience of riding the bus or subway becomes a disproportionately white, upper-income phenomenon. Pew asked respondents how often they used public transportation, and published the results with various demographic breakdowns.

 

The results clearly show that public transit use in America remains disproportionately not the province of whites or upper-income people. Just seven percent of whites—compared to 23 percent of black people and 15 percent of Hispanics—reported using transit at least once a week. A quarter of immigrants took public transit weekly, as opposed to just nine percent of native-born Americans. And those with incomes under $30,000 a year were by far the most likely to be regular riders (15 percent), compared with those making between $30,000 and $75,000 (eight percent) or more (10 percent).

While change makes headlines, actual levels matter too. Cities are, in fact, becoming wealthier and whiter; suburbs are becoming more economically and ethnically diverse. But at least so far, the effect has been to diversify both, rather than lead to a total demographic flip. Cities and “urban lifestyles,” including the use of public transit, are very far from actually being disproportionately wealthy and white, despite the impression you might get in parts of New York or San Francisco.

More than half of workers in DuPage County, outside Chicago, say they’d like to get to work without a car. But nearly 90 percent of them drive anyway. What’s going on?

First, a little context.

Your city probably has a DuPage County—if not by name, by profile. Beginning about 15 miles due west of Chicago’s Loop, DuPage boomed in the last several decades of the 20th century, filling the spaces in between 19th century railroad suburbs with low-density subdivisions and office parks, and growing from just 150,000 people in 1950 to nearly a million in 2010. Today, it’s home to a disproportionately affluent slice of the region (median household income is $80,000, as compared to just over $60,000 for the metro area), as well as some of the Chicago region’s largest employment centers outside of downtown, including Fortune 500 companies like Ace Hardware and (for the moment, anyway) McDonald’s.

 

In other words, DuPage County is more or less a poster child for affluent, “successful” postwar sprawl. That said, its relative economic position to Chicago’s core has been declining recently, as a result both of the growing job base and high-income population of the center city and the growing ethnic and economic diversity of DuPage itself. Thus the poll of DuPage workers, commissioned by the county’s economic development arm, to see what the county might do to attract and keep jobs from fleeing to downtown Chicago or elsewhere.

So why don’t people who say they’d like to take transit actually do it?

It’s not that DuPage doesn’t have transit services. It’s actually pretty transit-rich for suburban America: three Metra commuter rail lines, with 26 stations, pass through the county; a handful of bus lines also criss-cross the area.

 

But for those transit services to be useful for commuting, they have to actually go where people are going—their homes and jobs. And a closer look shows that they don’t.

Back in 1950, development in DuPage County was focused around the commuter rail lines. If you lived in DuPage, you probably lived within a relatively short distance of rail transit—which gave you access not just to the city, but to every other community on your line.

 

Since then, however, planners and developers assumed that virtually everyone would use a car to get around, and so the overwhelming majority of the hundreds of thousands of jobs and homes that DuPage County has added in the last several decades have been built too far from rail stations to be accessible. Instead, they’ve been focused along highways and wide arterials built with little to no consideration of transit, walking, or biking.

We can see the effects easily in maps. A population density map of DuPage County shows that there’s no strong correlation between where people live and where Metra stations (the white circles) are.

 

But as we’ve discussed before, destination density is perhaps an even more important factor in determining how someone gets to work. Unfortunately, a heatmap of DuPage County jobs looks even worse in terms of rail access:

 

Nor does the bus network help that much. For one thing, the spread-out nature of development means that no one bus line can have easy access to many homes or businesses either—and even someone who steps out of a bus relatively close to their destination has to navigate roads and parking lots that aren’t designed for walking. Partly as a result, the buses simply don’t come that often: at best, every 15 minutes at rush hour, which may be on the edge of acceptability for show-up-and-go service in the afternoon or late in the evening, but is a burden for someone who really needs to be on time for a job. Other buses come much less frequently, even at rush hour.

This is where you wait for the bus in the jobs-rich I-88 corridor in DuPage.

So someone who wanted to commute to their job in DuPage County by transit would discover 26 rail stations which are probably within walking distance of neither their home nor their job, and a network of buses that aren’t much better, most of which come too infrequently to be reliable for very time-sensitive trips like a commute, and which require getting to and from stops that are located on roads that are hostile or dangerous for walking.

In other words, the decisions of planners and developers over the last several decades have created a land use pattern that essentially locks in transportation choices for all future residents, who are now stuck commuting in ways they say they’d rather not. And DuPage, like other car-dependent suburbs around the country, may be losing some of its economic base as a result.

One response to this, of course, is that for most of the 20th century, car-dependent development is what people wanted. If people wanted to live or work near transit stations, then developers would have built homes and offices there. Which: maybe! But if that’s the case, then it’s odd that basically every municipality in DuPage County has taken the step of legally restricting developers from doing so. Nearly every suburb prohibits apartments, offices, and most other space-efficient commercial uses outside a radius of just two or three blocks from their train station. And even within that radius, density is restricted and discouraged with parking requirements and other rules.

 

And, of course, over the decades, the federal, state, and local governments have invested billions of dollars in highways and road widening, without which most of the development of the last half-century would have been impossible. The size and nature of the public investment prompted a complementary set of private investments that was utterly, and in some ways irrevocably, dependent on auto travel. In fact, nearly the only people who do commute to work by public transit in DuPage are the ones living near Metra stations.

 

The point is not that, absent these policies, there would have been no new subdivisions far from transit. Nor is it that the right outcome would be for every Metra station to be a little mini-Loop.

Rather, these policies exist on a spectrum—a sliding scale of how many people and jobs will be within walking distance of high-quality transit, on streets amenable to traveling on outside of a car—and we happen to have chosen one extreme, with the result that 90 percent of people drive to work. Including, at a minimum, four out of five people who say they’d prefer not to.

The problem with that isn’t just that some of those urban Millennials aren’t enjoying their preferred lifestyle. It’s that hundreds of thousands of people—including people of modest means—are forced to pay thousands of dollars more in transportation costs every year. And that people who really can’t drive, because they can’t pay for the costs of owning a car, or because they’re too young or old or have some physical disability, are shut out of full participation in society, or forced to waste hours of their days on inefficient transit.

These outcomes, as a result of changing land use patterns, take decades to unfold, and neither DuPage nor the rest of the Chicago region—which looks pretty similar, outside downtown—is going to slide the scale back towards a more balanced transportation system immediately. But lots of little decisions add up.

What City Observatory did this week

1. Even in a relatively dense city like Chicago, large amounts of off-street parking goes unused daily. A new report from the Center for Neighborhood Technology documents the over-supply of residential parking, and lays the blame on municipal parking requirements that force developers to build parking lots or garages even when they don’t believe their tenants need them. With a single stall of parking costing up to $37,000, this is especially burdensome for affordable housing developers, whose buyers are especially unlikely to even own a car, but it can also add to market-rate prices, and encourage car ownership by forcing everyone to pay for parking whether they drive or not.

2. The argument that misguided zoning laws are behind many of our urban problems—from housing shortages and rising rents to low-density, car-dependent sprawl—is no longer such a fringe argument. But it’s worth digging into the other kinds of urban policies that lead to environmentally and socially unsustainable neighborhoods. A useful place to do that is Houston, which has created some picture-perfect sprawl without a formal zoning code. In some cases, that’s because they’ve replicated some zoning staples, like parking requirements, outside a zoning code per se. But there are also issues like street widths and block lengths that create an inherently pedestrian-hostile environment, and encourage car-dependent neighborhoods.

3. Millennials are buying more homes as they get older—but at every age, they’re buying fewer homes than previous generations. We get into the difference between lifecycle and generational change, and why the fact that people are more likely to buy a home at 35 than 25 doesn’t mean that today’s 35-year-olds are as likely to buy a home as 35-year-olds ten or fifteen years ago. In fact, homebuying is down among virtually every age cohort except those over 70, with profound consequences for the housing market.

4. A recent challenge to hackers to use public data to reimagine Staten Island, NY’s bus network demonstrates both the promise and the limitations of data-driven urban planning. At City Observatory, we obviously believe in the power of data—and grassroots-led action—to improve our communities and cities. But we also need to be aware of what data doesn’t tell us: in this case, how much of the trip patterns being analyzed are a result of the existing structure of the bus system; what might happen in a more radical reimagining of Staten Island’s transportation landscape; and how hidden priorities and assumptions draw borders around our plans.

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The week’s must reads

1. Last summer, the Supreme Court’s opinion upholding “disparate impact” claims under the Fair Housing Act made front page headlines; last month, one of the first such cases since the opinion was handed down against Yuma, Arizona. At CityLab,Kriston Capps writes about how a court deemed that city’s zoning laws discriminatory—in particular, the rejection of a developer’s request to reduce minimum lot sizes for his development from 8,000 square feet to 6,000 amidst racially charged rhetoric from nearby homeowners. Yuma is far from the only city to engage in large-lot zoning; this is a decision that potentially implicates many other municipalities.

2. At first glance, this isn’t a story with much relevance to the US: Toronto isplanning to loosen commercial use requirements in its postwar suburban apartment towers. Of course, the vast majority of US metro areas don’t have many suburban towers—but the basic idea applies anyway. Just like the Canadian highrises, US suburbs are held back economically by large single-use districts, where residents are unable to walk to neighborhood retail or everyday services, or start home businesses to bring in some income with low overhead.

3. Massachusetts has taken a major step towards more inclusionary housing policy, with a state legislator introducing a bill that would require every municipality to zone some of its land for multifamily residential buildings. As Vox‘s Matthew Yglesias writes, such a law would put Massachusetts in a small collection of North American governments, including Washington state, Oregon, and the province of Ontario, that force cities to allow some amount of denser, urban housing. Such a policy not only creates room for more housing infill without pushing sprawl further into the countryside, but can help integrate exclusionary neighborhoods.

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New knowledge

1. The face of American debt is increasingly a young graduate with student loans—or perhaps a family who bought their first home during the real estate bubble of the last decade and is still underwater. But a new report from the New York Federal Reserve suggests that the age cohort with the fastest-growing debt loads is over 50, increasing roughly 60 percent between 2003 and 2015. (Some, but not most, of that increase is a result of population growth.) In the wake of the Great Recession, credit standards have tightened, and (with the exception of student loans) younger people are borrowing less. Conversely, older adults are carrying greater debt into their retirement years—perhaps reflecting the lingering effects of the housing bust.

2. Income segregation is one of the most important indicators for cities because of its established link to intergenerational economic mobility. Using the latest American Community Survey, Sean Riordan of Stanford and Kendra Bischoff of Cornell find that neighborhood-level income segregation—which their previous research showed had been growing substantially from the 1980s through 2007—continued to grow from 2007 to 2012. The changes varied by metropolitan area, and, not surprisingly, were strongly correlated with changes in income inequality. The growth of income segregation also appears to be picking up steam: after growing by 4.5 percentage points on a per-decade basis from 1970 to 2007, it grew at a 6.4 percentage point per decade pace from 2007 to 2012. Unlike previous studies that have emphasized the “secession of the rich,” Riordan and Bischoff find that the growth of income segregation from 2007 to 2012 was driven largely by increased sorting among working- and middle-class households, rather than the very wealthy or very poor.

3. Another study, this one in The Lancet, finds that urban neighborhoods are good for your health. Comparing behavior across several cities, from Baltimore to Bogotá, researchers found the residents of more urban neighborhoods walked an average of 90 minutes more per week than residents of more car-dependent communities. Indicators of more physical activity included residential density, a greater number of intersections, public transit, and mixed land use patterns.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Another column from Paul Krugman today on the ways that US-style zoning laws are detrimental to economic opportunity is a pleasant reminder that the role of building regulations in broader questions of inequality is no longer such a fringe issue. Particularly in places with the greatest “shortage of cities”—where the gap between available housing and the demand for it is greatest, and prices are, as a result, most out of whack—the basic idea that zoning is one of the main drivers of that shortage is increasingly well understood, even if not everyone agrees with it.

But while these regressive, environmentally and socially unsustainable regulations often get reduced to “zoning,” there’s a lot more going on in American cities than that. Take, for example, Houston, which is famous (in its way) for being the only major US city without comprehensive zoning. It’s a frequent comeback for those who claim that zoning and regulation is behind American urban sprawl: If that’s so, then how do you explain Houston, which combines a lack of zoning with picture-perfect urban sprawl?

 

The answer is illuminating in two directions. First, Houston is a case study in how non-zoning regulations can produce sprawl. But it also shows how Houston’s lack of traditional zoning really does open up some windows that don’t exist in other places—and what the consequences are in practice. This post will focus on the first direction; we’ll dive into the second in a later post.

You might divide Houston’s non-zoning regulations into two buckets. The first are regulations that essentially reproduce zoning without the name. These have been covered well by a number of people, including Michael Lewyn in 2005, Chris Berry in 2001, and more recently, Zillow’s Sklyar Olsen. (There’s also a good amount of discussion in William Fischel’s Zoning Rules!) A big one is that neighborhoods can establish private covenants that regulate building density, form, and use—and the city of Houston will sue to enforce them, rather than requiring private individuals who are party to the covenant to sue. Essentially, Houston enforces private zoning codes with public money and resources.

Houston also directly regulates the built environment in ways that most cities do within a zoning code. Up until 1998, the city mandated that homes be built on lots no smaller than 5,000 square feet—well over the minimums that predominate in older, denser cities. (Since then, the city has relaxed the minimum lot area requirements in some places, with consequences that are worth exploring in another post.) Similarly, minimum parking regulations are a staple of American zoning; Houston’s are no different even if they appear outside a comprehensive zoning code. One-bedroom apartments must have 1.33 parking spaces available; single family homes must have two. In a special case of backwardness, bars must have ten parking spaces for every thousand square feet of floor area. As elsewhere, the result of all of this is to a) create a built environment in which surface parking lots are common, pushing buildings farther apart and making walking both more burdensome and less pleasant; and b) force tenants and customers to effectively pre-pay for the major costs of car use, making the price difference between driving and not much smaller, and inducing more people to drive.

More interesting for our purposes here, however, are regulations beyond the scope of normal “zoning”—that is, the use and form of buildings. These regulations aren’t necessarily unusual, but they go beyond the question of directly regulating buildings, to regulating the spaces in between. For example, street widths: Houston’s planning department suggests that major arterials ought to be at least 100 feet wide, a size that makes crossing anywhere but at a signalized intersection virtually impossible, and generally precludes a pedestrian-oriented street that is safe and pleasant to walk along. On these streets, intersections are also supposed to be no less than 600 feet apart, roughly twice the length recommended for a high-quality pedestrian environment—and especially harmful when it’s dangerous to cross the street without a traffic light.

Especially when combined with parking requirements, the effect of these non-zoning regulations is to create streets that look like this:

 

For reasons of both comfort and practicality, this is not a street that very many people will choose to interact with outside of a car. The sidewalks are wedged between fast-moving cars and parking lots; to get to any of the businesses that line the street, a pedestrian will have to navigate spaces designed for cars, which is unpleasant, time-consuming, and dangerous. Because the city code requires plentiful off-street parking, because the street width has been optimized for car travel, and because private covenants generally enforce the separation of commercial and residential areas, the distance between these shops and most people’s homes is likely to be too far to walk anyway. And because transit use generally involves some walking from a stop to your final destination, it will be greatly discouraged as well.

Given a transportation environment that has discouraged all non-car modes, developers will end up building housing far from jobs and amenities, assuming that their buyers will drive. In this way, auto-oriented arterials function in a similar way to highways: they reduce the costs (financial, time, and otherwise) of driving, increase the costs of other modes, and encourage sprawl.

That creates both environmental and social unsustainability, pushing people to rely on emissions-heavy, and personally expensive, transportation. As work from the Center for Neighborhood Technology has shown, people who live in more car-dependent neighborhoods can pay significantly more for transportation, often to the point that it crowds out other necessities. Even where housing is affordable, then, the total location costs of that housing, including transportation, might not be. And people who cannot drive at all—either because they cannot afford to own a car, or because they are not physically able—are left to rely on public transit that is almost necessarily impractical, because of the physical layout of streets.

While zoning is the most common land use tool, and while it is fairly characterized as being a big contributor to sprawling development patterns throughout the country, it’s only one example of the kind of regulation that leads to sprawl. Houston’s combination of parking requirements, prescribed street widths, and the public enforcement of private covenants accomplishes the same sprawling results. So while these sorts of street regulations don’t directly enforce the kind of low-density housing that we criticize zoning for, they do strongly encourage it. They deserve a place in our conversations about housing accessibility, and access to opportunity, in Houston and beyond.

What City Observatory did this week

1. Have we reached “peak Millennial”? One researchers argues that because new births peaked in 1990, today’s 26-year-olds represent the high water mark of a youth-led urban renaissance. But a closer look shows that’s not the case: the US Census predicts that we have a number of years until we’ve reached the top of the youth wave, demographically—and foresees a plateau, rather than a peak. Moreover, it appears that the preference among young adults for city living is increasing, which could boost their urban numbers even without a demographic swell.

2. Growing up in a mixed-income neighborhood can have serious benefits for children when they reach their adult years—and a new study reveals how previous research has actually understated those effects. A new paper shows that previous studies on the “Moving to Opportunity” experiment that gave public housing residents vouchers to move to lower-poverty neighborhoods had a hidden bias that suggested the benefits of moving were smaller than they really were. The real takeaway, though, is not about “mobility” programs per se, but about the importance of economic integration in general—as other research that measured the opposite dynamic, the growth of middle- or upper-income households near existing public housing, has shown.

3. Fact: College students in Detroit are more likely to stick around town after graduation than their peers in Austin, Texas. Does that mean the Motor City is winning the fight against “brain drain,” and Austin’s boom isn’t all it’s cracked up to be? Not really. It turns out that these differences have more to do with the kinds of higher education institutions in each city than the cities themselves. In some places, universities effectively function as export industries, producing far more graduates than their region can absorb, and shipping them all over the state, country, or even world. By looking at the numbers a different way—new local grads produced per capita—we can get a better handle on the “brain drain” story.

4. What would a well-functioning housing voucher program look like? In some places, tensions over the higher rents some housing authorities are willing to pay to try to improve vouchers’ pro-integration power have provoked a backlash. But differentiating rents by local markets may be key to using vouchers to create more mixed-income communities. They also highlight the importance of committing serious funding behind housing affordability efforts.

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The week’s must reads

1. Who’s moving to cities, and who isn’t? The release of new 2015 county population figures has set off another round of demographic analysis about the changing profile of urban America. For two perspectives, check out Jed Kolko, who argues that the urban renaissance has been demographically limited; and Tony Dutzik, who says that the urban/suburban divide matters less than what demographic and lifestyle trends mean for resource and energy consumption—and sustainability. Look for our thoughts next week.

2. You often hear it in arguments against bike or bus lanes: If they’re so important, why do they look empty? David Levinson helpfully answers that question with some simple math and geometry. It turns out that even equally utilized car and bike lanes will leave the car lanes looking much busier—simply because each car takes up much more space than a bike (or, per person, than a bus!). On a typical block, a bike lane with one cyclist is getting about as much throughput given the space it takes up as a car lane with eight vehicles.

3. A new report from the Urban Institute uses a unique combination of data from credit reporting agencies and the American Community Survey to assess the credit situation of the nation’s renters and homeowners. The report, by UI’s Wei Li and Laurie Goodman, and entitled “Comparing Credit Profiles of American Renters and Owners,” clearly shows the impact of the housing bust on the credit standing of rental households. They report that 19 million current renters used to be homeowners, and that about a quarter of these lost their homes to foreclosure; the bulk of foreclosed former homeowners are between 36 and 55. The outlook going forward isn’t at all favorable: by their count, some 64 million renters have credit scores below 650, which is generally the threshold for qualifying for mortgage financing.

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New knowledge

1. When do we have too much parking? A new report from Chicago’s Center for Neighborhood Technology says the answer is “now.” Sending teams out to parking garages in residential buildings built to the city’s legal requirements, CNT found utilization rates of just one parked car for every three apartments—and even less for buildings near rapid transit stations. Why does that matter? Building parking costs money and takes up space, which could be used to add more housing without taking up any more space. Ironically, for below-market housing, parking requirements can be especially onerous, even though their low-income tenants are less likely to even own a car.

2. What determines if someone moves to a big city? A new paper suggests that a big part of the answer is self-confidence. In part because highly skilled people are most able to take advantage of the wage premiums of cities, people who rate their own abilities highly are disproportionately likely to move to large urban areas. Unfortunately, that also means that high-ability people without that self-confidence are less likely to move. That gives those with the confidence to move early a boost in their careers, even over relatively more skilled people who didn’t move, or moved later in their lives. For more, see CityLab.

3. As economic segregation becomes a larger problem, a new report from Brookings (also covered in CityLab) shows that concentrated poverty is at higher levels than before the recession. The number of people living in high-poverty neighborhoods has increased by over five million, to about 14 million in 2010-2014 American Community Survey figures. Sun Belt and Great Lakes metropolitan areas were hardest hit, the Brookings figures show. And while concentrated poverty grew faster in percentage terms in the suburbs, overall levels of concentrated poverty remain much higher in city centers, with 25.5 percent of low-income people living in high-poverty neighborhoods there versus 7.1 percent in suburbs. These figures underline the importance of actively pursuing economic integration policies.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

There’s not enough parking in Chicago: it’s an article of faith among many drivers, and has been a key assumption in many of the city’s planning efforts. But a new report from the Chicago-based Center for Neighborhood Technology finds that one of those efforts, mandatory off-street parking requirements for residential buildings, is causing an over-supply of parking, with serious consequences for affordability and transportation.

 

Repeating a methodology used by CNT in Seattle’s King County, Washington, San Francisco, and Washington, DC, researchers went into parking garages attached to residential buildings in the middle of the night, when most people should be home and parking use should be highest. (Full disclosure: I interned for CNT last year, and contributed to the literature review for the report.) They found that, on average, only half the required parking spots in the typical building were actually occupied. Overall, zoning required two parking places per three units, but the survey revealed there was just one parking spot in use for every three units; the city’s zoning law requires one spot per unit for most new buildings.

This oversupply varied by the kind of units and location of the building. Expectedly, units near rapid transit stations used fewer parking spaces—though, crucially, the same was true of units near high-quality bus service, as defined by average frequencies of no more than 15 minutes. Perhaps less expectedly, buildings with larger, family-sized units actually had a greater oversupply of parking than buildings with studios and one-bedroom units. The family-sized buildings used an average of 0.54 parking spaces per unit—but supplied 0.85 spaces.

 

While 0.31 empty parking spaces per unit may not sound like a big deal, it is. One reason is simply cost: each stall in a parking garage can cost up to $37,000 to build. Even surface parking spaces can cost up to $4,200—and require extra land, or impose significant opportunity costs by reducing the number of housing units than can fit on a parcel. That’s a problem for market-rate developments, where parking has been found to add 10 percent to prices in San Francisco.

But it can be an even bigger burden for affordable housing developers, who need to delicately balance different funding sources to make up the gap between the cost of building and the below-market prices they charge. The tens of thousands of additional financing dollars per unit that parking requirements can impose can kill or drastically scale back a project. That’s all the more ironic, since low-income residents are even less likely to own a car. In fact, even in market-rate developments, forcing every tenant to effectively pay for the construction and maintenance of off-street parking requires people who don’t own cars—who are disproportionately low-income, the elderly, and people with disabilities—to subsidize those who do.

But the presence of off-street parking also affects behavior. As we’ve written before, getting the price right matters when it comes to transportation; by making everyone pay up front for off-street parking whether they use it or not, parking requirements makes the effective difference in cost between parking and not parking a car at your home zero. As a result, more people own cars than would if paying was actually connected to use. In fact, residents of neighborhoods with parking minimums are 28 percent more likely to drive to work, imposing costs in terms of congestion, public safety, and carbon emissions on the rest of society.

The report closes with a “policy toolkit” for municipalities to reform their parking requirements. They include simple fixes, like just lowering the requirements, or even establishing parking maximums—but also other approaches, like shared parking districts that allow different uses with different peak times to share the same parking supply, or credits for carshare spaces, transit accessibility, or other factors that are likely to reduce the need for parking. Anyone looking for a blueprint to reform their city’s parking policies to improve affordability and accessible transit ought to take a look.

Earlier this month, a report in Chicago pointed to some of the tensions implicit in a desegregation-oriented federal affordable housing program.

The Sun-Times, with that city’s Better Government Association, published a “watchdogs” feature on housing choice vouchers. The big news: while some voucher holders pay relatively large proportions of their rents, others pay much less, or nothing, for apartments that cost much, much more—sometimes well over what an employed, working-class family could afford.

These findings aren’t necessarily scandalous: different voucher holders living in very different neighborhoods and paying different amounts of money is how the system is designed to work. But it’s a good excuse to take a closer look at a program that serves over five million people in 2.2 million households, but whose details remain muddy to many people.

Housing choice vouchers, previously known as Section 8, were created by Congress in 1974 as a response to perceived failures in the traditional public housing program, whose modernist towers had been tarnished with poor construction and maintenance, extreme economic and racial segregation, and high crime rates. (Notably, however, some academics have challenged this narrative of failure—for one example, look to Nicholas Bloom’s Public Housing that Worked.)

 

The idea was that rather than living in government-owned buildings, low-income people would receive rental subsidies to live in privately-owned buildings of their selection. That way, they could—in theory—choose where to live, and break the patterns of segregation that public housing projects had often reinforced. For the architects of the program, then, the news that some voucher holders were living in wealthy downtown neighborhoods while others lived in more modest communities would have been exactly what they hoped for.

And what about paying different amounts? Well, what vouchers are worth depends on two things: how much rent is, and how much income the voucher holder has. In general, voucher holders pay 30 percent of their income towards rent, and the voucher picks up the difference between that and the total cost of their apartment up to a HUD prescribed maximum limit, calculated to reflect the price of a modest apartment in the local market. So if you make $1,000 a month, and your rent is $1,000, you pay $300 and the voucher will cover the other $700. If you make $500 a month and your rent is $1,200, you pay $150 and the voucher covers $1,050. Because the point is to help low-income people expand their housing choices while requiring them to pay according to their financial ability, different people receiving very different amounts of money for their voucher is pretty much built into the DNA of the program.

But there is a wrinkle. Vouchers are only supposed to allow their recipients to live in “reasonable” apartments, and so each year HUD calculates a “fair market rent” (or FMR) figure for each metropolitan area, which is supposed to roughly approximate the cost of a slightly below-average apartment in the region. Vouchers will only cover rents up to this FMR.

But FMR essentially averages rents across what can be vast geographic, social, and economic distances, including far-flung suburbs, tony downtown districts, and very poor neighborhoods. As a result, the final number might be too low to afford many neighborhoods with good access to jobs, high-performing schools, and other amenities—the very places that vouchers are supposed to allow low-income people to live.

One strategy for getting around this problem has been “exception rents.” Several public housing authorities, under a little-appreciated demonstration program called Moving to Work, have received permission to give vouchers for apartments with rents above FMR. In some cases, the limit is 120 percent of FMR; in others, 150 percent. Chicago appears to be an outlier in having granted permission for payments going up to 300 percent of FMR, leading to situations in which a handful of voucher recipients could afford to live in extremely high-end new buildings—though the Chicago Housing Authority has announced that it is phasing out those rents and lowering the limit to 150 percent of FMR over the next few years.

While reporting on these “exception rents” has led to hand-wringing about how well voucher recipients “deserve” to live, the policy is responding to a serious problem: namely, the failure of vouchers to actually challenge the patterns of segregation they were meant to dismantle. (We would also point out that, if the question is about “fairness” of housing subsidies, the entire voucher program is smaller than tax giveaways to relatively affluent homeowners.) Voucher recipients do live in neighborhoods that are somewhat less racially segregated, and have lower levels of poverty, and better access to some resources than residents of traditional public housing projects, but the differences are far more modest than proponents might have hoped.

Part of the problem, surely, is discrimination against voucher holders—which is perfectly legal in most places, and rampant even where it’s illegal. Another issue is transportation costs, which can make some suburban, car-dependent locations unaffordable even if the housing costs themselves are not. Another issue may simply be that voucher recipients have social support networks in their current neighborhoods that they can’t afford to give up by moving away. But as important as these other issues may be, to the extent that HUD’s “fair market rents” are simply too low to reach many neighborhoods, that’s clearly a barrier.

Besides “exception rents,” HUD is also testing a new strategy for getting around this problem: “small-area FMRs.” Essentially, instead of calculating fair market rents for entire metropolitan areas, they’ll be determined by ZIP code. So in Chicago’s south suburb of Thornton, vouchers would only cover 78 percent of FMR, or $830 for a two-bedroom apartment. In the wealthier West Loop neighborhood, vouchers would cover about 148 percent of FMR, or $1,560 for a two-bedroom apartment.

But even here, “small area” FMRs would be capped at 150 percent of the regional average, even if local rents are far higher. So in north suburban Lincolnwood, vouchers will cover no more than $1,590 for a two-bedroom apartment—even though HUD’s own figures suggest that local rents are nearly $500 higher.

Of course, some would argue that vouchers don’t need to make every neighborhood available. Much of the outrage generated by the Sun-Times/BGA piece revolved around the idea that some living conditions are too good for people receiving vouchers.

Ironically, though, what counts for some people as “abuse” of the federal voucher program is exactly what one of the most popular local affordable housing policies is all about. Inclusionary zoning is premised on the idea that new, often luxury buildings should be setting aside some units for low-income people. The difference isn’t the kind of units that low-income people get to live in—it’s whether there’s any direct cost to taxpayers.

But as we’ve written before, there’s no getting around it: below-market housing is necessary, and it costs money. When it comes to other major social priorities, like food stamps, public schools, or Medicaid, most people realize that the only way to fund the necessary programs is with broad-based taxes: “impact fees” on grocery stores or doctors just don’t cut it.

But when it comes to housing, we too often expect that if developers are just squeezed a little more, we’ll have all the low-cost housing we need. It’s not true. As it is, funding is so sparse that only a quarter of households that qualify for low-income housing assistance receive it; meanwhile, voters are happy to approve much larger subsidies for middle- and upper-class homeowners. Figuring out how to make vouchers as the poverty- and segregation-fighting tools they were intended to be, in as financially efficient a way as possible, is an important goal. But whatever the answer is, it will require us to decide we care enough about affordable housing to pay for it.

What City Observatory did this week

1. When supply catches up to demand, rents go down. While stories about crazy housing markets tend to focus on big, coastal metropolitan areas, it turns out there’s a lot to learn from looking at Williston, ND. That sleepy town began to boom thanks to oil, and its housing market responded the way markets respond to rapidly growing demand: prices spiked. But in Williston, housing supply could also respond, and the number of building permits increased by nearly 1,200 percent between 2009 and 2012. Thanks to a combination of growing supply and falling demand as a result of the fall of oil prices, rents have also dropped dramatically. The lesson is that supply and demand matter—but also that there is a structural lag in supply. Demand can change much more quickly, and until supply can catch up, it will push prices upwards.

2. It’s time for a “big short” in parking. In the popular movie “The Big Short,” investors who predicted the bursting of the housing bubble made a killing by betting against rising housing prices. We think there’s a case to be made that we should be “shorting” investments in parking garages: between changing preferences for urban, car-lite living and the implications of widespread self-driving cars, demand for parking may crash in the near future. That would leave many cities with outstanding bonds backed by parking revenue in a pickle.

3. It’s time for a “big short” in parking. In the popular movie “The Big Short,” investors who predicted the bursting of the housing bubble made a killing by betting against rising housing prices. We think there’s a case to be made that we should be “shorting” investments in parking garages: between changing preferences for urban, car-lite living and the implications of widespread self-driving cars, demand for parking may crash in the near future. That would leave many cities with outstanding bonds backed by parking revenue in a pickle.

4. A field guide to median rent statistics. We’ve written before that journalists and readers should be extremely wary of apartment listing companies claiming to know what median rents are in different cities or neighborhoods. Very often, companies just publish statistics based on their own listings, as a way of generating PR, and not recognizing the strong, if inadvertent, biases in such an approach. As a result, much of what’s published on the web varies wildly, both in terms of rent levels, and how much (or even in what direction) rents are moving.

5. Here’s your definitive field guide to median rent statistics. We break down several of the most common sources for median rent statistics, explaining how they’re created, what they’re good for, and what they aren’t. We end with three questions you can ask as a journalist or a reader when you come across someone claiming to have median rent information: Where is your data from? Is this just an average of your listings? And why is your data different from others’?

6. The beat goes on: More misleading congestion rankings from TomTom. This week, TomTom released another update of its rankings of cities’ traffic congestion, based on readings from the navigation devices it sells to drivers. But, as we’ve pointed out, this data can be deeply misleading. To begin with, there’s the fact that it ignores differences in commute trip lengths between cities, so that Portland can have a higher congestion index than Houston, even though Portland’s more compact development means that people there have shorter (in terms of both time and geography) commutes. But at least, this time, TomTom admits in its report that policymakers shouldn’t expect they can build themselves out of congestion, however it’s measured.

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The week’s must reads

1. Let us now praise “low-quality” housing: At Market Urbanism, Emily Washington argues that many of the types of market-rate housing that used to house low-income people without the need for subsidies, like single-room occupancy hotels, have been legislated out of existence. While we disagree that those kinds of housing would ever eliminate the need for subsidies, it’s true that they could dramatically expand the supply of low-cost homes. For another iteration of this argument, see Alan Durning at Slate.

2. “The Baltimore riot of April 27, 2015, started with a shutdown of public transportation,” Alec Macgillis begins his deep dive into how disinvestment in public transit in the Baltimore area has helped define that region’s inequality. It’s a story whose outlines may be well known, but which Macgillis tells in richer detail than you’ll see almost anywhere else. A plan for a three-line subway system for the city was announced at nearly the same time as the plan for the DC Metro—but while Washington has built out an extensive system, Baltimore has only completed a single line.

3. Should urban rail stations have park-and-ride lots? In Seattle, Sound Transit is considering a plan to build 18,000 parking spaces near transit stations—at a cost of nearly a billion dollars. (This might be a good time to remind everyone thatparking garages are incredibly expensive—whether or not you ever see their cost in parking fees.) Seattle’s The Urbanist blog makes a strong case that even if some parking is necessary, public transit dollars should not be spent on large amounts of parking in dense neighborhoods. Housing and other destinations should be built near transit, allowing people to use it without driving; parking lots, where necessary, can be some distance away, with shuttles where demand makes that reasonable.

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New knowledge

1. Public input is crucial for good, equitable, democratic planning. But traditional community meetings are not necessarily the best way to get public input.Planetizen’s new series, the Fiasco Files, takes “failed” public meetings and tries to wrest some lessons from them. Up first, Dave Biggs recounts one organized disruption of a meeting he helped lead, and some of the takeaways: multiple paths for comments (including online); clear established rules for communication; and some anonymous input that allows people to vote without being intimidated by louder members of the audience.

2. This week, the Census released its 2015 county-level population estimates. AtCityLab, Jed Kolko breaks down his analysis of the winners and losers, arguing that the new numbers suggest that long-term trends, including growing population in low-density Sun Belt metro areas, are reasserting themselves as the recovery to the Great Recession continues. We wrote our own post about using county-level population figures to infer trends in urban cores, of course—which we think is trying to fit a square peg in a round hole.

3. News you can use: If you want intelligent birds, go to the city. Researchers from Montreal’s McGill University have concluded that urban birds are smarter than their country bumpkin cousins. The city birds were better at problem-solving tasks, including opening drawers to get food—and were healthier, with stronger immunity systems to boot. Urban humans who have had to deal with overly clever or insistent pigeons might not see this as a benefit, however.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Even the most casual consumer of urban news can’t avoid reading articles about whether rents in their city are up, or down, and how they compare to other cities around their country. Unfortunately, the vast majority of these rent estimates are completely made up.

As we’ve written, the proliferation of these rent stories seems to be driven by a growing number of online real estate startups, who have figured out that they can get free publicity by using their listings to create “median rent reports.” The problem is that, for a number of reasons, even the most comprehensive listing agency will be missing a lot: many apartments aren’t officially listed anywhere, renting by word of mouth or a simple sign hanging on a front gate. Moreover, most of these sites are targeting younger, higher-income renters, which might go some way to explaining why they have hundreds or thousands of listings in some neighborhoods, and only a small handful in others. And even beyond that, the fact that apartments listed above market price will tend to stay unrented longer, while relatively cheaper apartments will get quickly snatched up, will bias any simple average upwards.

 

For both journalists and news consumers, then, we’ve put together a short field guide for rent statistics: who makes them, and the advantages or disadvantages of each.

HUD Fair Market Rents

How it’s made: HUD creates “fair market rent” estimates for metropolitan areas in order to determine how much money Housing Choice Vouchers can be worth in each region. The estimates are for rental units at the 40th percentile of price—that is, cheaper than 60 percent of all units—by number of bedrooms, for the entire metro area. The formula is complicated, but involves taking the most recent American Community Survey 5-year estimate, and then adjusting it based on the most recent ACS 1-year estimate for recent movers, a local inflation measure, and forecasted national rent trends.

Advantages: Theoretically, the ACS samples that Fair Market Rents are based on really do contain the entire universe of apartments (with one caveat—see below), removing the problem of units that are never listed. The estimates are also designed to estimate the median price of a newly rented unit, as opposed to all units—which include a number with longstanding tenants who are probably paying less than those who recently moved—like American Community Survey figures.

Disadvantages: ACS numbers come out with quite a bit of lag, so the 2016 Fair Market Rent calculations are based on ACS figures collected no later than 2013—and the 5-year estimate began collection in 2009. The adjustments are meant to make up for that gap, but obviously that introduces quite a bit of room for error. It also makes FMR unhelpful for trying to track up-to-the-minute trends. For a long time, FMRs were also only made at the metropolitan area level, so neighborhood-to-neighborhood comparisons were impossible. More recently, that has changed—see the next entry. Also, FMR is calculated in a way that is designed to filter out subsidized units, which pushes its figures up a bit. Finally, it can’t tell you about relatively low-cost or high-cost housing.

Can answer: What are the most expensive metropolitan areas to begin a new lease in?

Can’t answer: What are the most expensive neighborhoods in my city? Which metropolitan areas have seen the fastest rent growth in the last year?

HUD Small Area Fair Market Rents

How it’s made: HUD began calculating sub-metropolitan area rent estimates in order to make it easier for voucher holders to move into “opportunity areas,” where market prices were too far above the regional median for vouchers to be usable. The “small areas” are ZIP codes, whose Fair Market Rents are otherwise calculated in a similar way as the metro area estimates.

Advantages: Like regular FMRs, coverage of non-listed apartments and an attempt to measure the cost of beginning a lease now, as opposed to including longtime leaseholders. And, obviously, the ability to compare neighborhood-to-neighborhood prices.

Disadvantages: The same time-lag issues as regular Fair Market Rent calculations. Also, as you go to smaller levels of geography, ACS margins of error become much larger. HUD considers an estimate “reliable” if its margin of error is less than half of the value of the estimate itself—that is, if the ACS says a ZIP code’s median rent for one-bedroom apartments is $1,000, HUD considers that “reliable” if the margin of error is less than $500—and while margins of error are much lower than that in most urban neighborhoods, caution is advised. Detecting small differences between neighborhoods, or from one year to the next, isn’t really possible. Still can’t tell you about relatively low-cost or high-cost housing.

Can answer: Broadly speaking, what are the most expensive ZIP codes in my metropolitan area, and how do they compare with the most expensive ZIP codes in another metropolitan area?

Can’t answer: Is the median apartment in this ZIP code $20 more or less expensive than the median apartment in that ZIP code? What does the typical low-income person pay in this ZIP code?

American Community Survey

How it’s made: The Census’ American Community Survey replaced the long-form decennial questionnaire, and surveys US residents every year on a variety of issues, including rent. The responses are rolled up into three main products: 1-year estimates, 3-year estimates, and 5-year estimates. The 3- and 5-year estimates are necessary to increase sample sizes, and create more reasonable margins of error, for smaller geographic areas.

Advantages: Like Fair Market Rents, the ACS theoretically gets around the problem of unlisted apartments. Perhaps most valuably, it publishes more than just median figures, allowing you to compare estimates at, say, the 25th percentile, which gives more of an insight into what lower-income people might be paying. Using IPUMS, you can also cross-reference ACS data to find median rents by particular demographics. Also, because the Census has been using similar data for a number of years, you can do some historical analysis.

Disadvantages: The ACS has quite a time lag—at the moment, the most recent data released is from 2014—and if you’re interested in smaller levels of geography, like neighborhoods or even smaller suburbs, you probably need to use multiyear estimates that include survey responses from over five years ago. Also, because the estimates include all renters, they may be biased downwards compared to the rents facing someone looking to begin a lease.

Can answer: Roughly, how do rents for low-cost apartments compare from one city, or one neighborhood, to the next? How has the geography of high-rent apartments changed over the last 10 or 20 years?

Can’t answer: How much did rents increase in my neighborhood, or my city, last year? What is the median rental price facing people on the rental market today?

Zillow

How it’s made: Zillow’s rental estimates are based on their own listings, but crucially, they also add their own proprietary modeling that adjusts for the changing mix of listings available at any given time.

Advantages: Unlike FMR or the ACS, Zillow’s numbers are based off of nearly real-time data on rental listings, allowing for much more timely estimates. The modeling also introduces a necessary corrective to straight averages from available listings, which can vary wildly based on what happens to be available at any given time. Especially in larger markets, Zillow also makes available lots of breakdowns of the data, including by metro area, ZIP code, number of bedrooms, and “market tier,” allowing you to compare relatively low- or high-cost apartments in different areas. You can download the entire national dataset as a CSV file.

Disadvantages: Because Zillow’s figures are based on listings, they are missing any unlisted units, which will probably tend to bias Zillow’s estimates upwards. Rental estimates are also only available going back to about 2010 in most areas.

Can answer: Roughly speaking, how have rents changed over the last year in my city compared to another city? What are the most expensive parts of my city? How has that changed in the last few years?

Can’t answer: What is the long-term trend in rents in my city? What is the exact median rent for my neighborhood or city?

Most apartment listings services (Zumper, Abodo, etc.)

How it’s made: Many of these services appear to simply use the median rent from their own listings without any adjustments. We say “appear to” because the descriptions of the methodologies that they use to generate their rents are typically quite sketchy, and simply make very vague references to their database listings.

Advantages: Avoid the guesswork that comes with modeling.

Disadvantages: Suffers from all of the biases and problems of raw listings, including a tendency to dramatically over-sample higher-end neighborhoods and apartments because of selection and survivorship biases (see the top of this post for more), and a vulnerability to random changes in the composition of available apartments from one time period to the next.  

Can answer: What is the median price of apartments currently listed by this company?

Can’t answer: Anything else.

Market analysis firms (Yardi Matrix, Rainmaker Insights, CoStar, etc.)

Unlike apartment listings services, whose main product is the ability to search for particular apartments, market analysis firms specialize in giving big-picture snapshots of the real estate market to businesses. Perhaps because their livelihood is their data analysis, they are somewhat less forthcoming about their proprietary methodologies on their websites (and most of their actual data is behind a paywall), and so there isn’t as much we can say about them. We have reached out to several to ask about their methodologies, and if we receive responses, we will update this post with them.

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Three questions to ask

Obviously this isn’t a comprehensive list of all the people who might try to tell you what median rents are. But if you’re a journalist (or an enterprising reader), and somebody is trying to tell you that they have rental figures, here are three questions to ask:

1. Where did the data come from? The answer will generally be either surveys or listings. Surveys have margins of error, which can get quite large, especially for smaller geographic areas; they should be willing to tell you what they are, and how big the samples are. If it’s listings, they should be able to tell you how they dealt with all the biases we’ve talked about that are inherent to listings.
2. If it’s listing data, is this just an average of all your listings? If the answer is yes, you can safely ignore any “median rent” claims. If not, they should be able to explain how they deal with under-representation of low-rent, unlisted apartments; survivorship bias that over-representation of high-rent apartments that take a long time to lease; and noise in the basket of apartments that happen to be available at any given time.
3. Why are your numbers different from other sites’? This is the bottom line: Given that there are many different rental figures, they should have a good answer for why theirs are the most accurate. And “we have the most listings” is not a good answer, any more than the most accurate poll is the one with the most respondents. Quality—including ways to address all the pitfalls we’ve brought up in this post—matters more than quantity.

You’re on your couch, streaming the latest episode of Broad City on your Mac laptop, just like a good millennial. But all of a sudden, your wifi connection goes bad, and the screen goes all pixelated. Instead of Abbi and Ilana at an art gallery, all you can see is big blocks of seemingly random color—you know it’s based on what the screen is supposed to look like, but at such a coarse level that it doesn’t actually contain any of the information you’re interested in.

 

County-level data—at least for some purposes—is a bit like your pixellated screen. Since the Census released its 2015 county-level population estimates last night, we’ve seen a number of analysts try to deduce from them information that they just don’t contain: whether the trend of urban living’s growing popularity is continuing, slowing, or reversing.

To understand why counties aren’t a useful measure for this question, take a look at the following charts, which were put together by Luke Juday at the University of Virginia. They show how demographics have changed in a number of metropolitan areas based on distance from the central business district. But rather than being based on arbitrary, coarse political boundaries—counties or even municipalities—they’re based on Census tracts, which allows for a much finer-grained analysis.

As you can see, there’s a clear trend of growing demand for inner-city living, as represented in this case by growing population density. In many cases, there’s also a counter-trend of decline between that booming inner city and healthier outer suburbs. Using this methodology, those trends are clear as day.

But if you used counties, you would likely be able to detect neither the booming inner cities nor the declining second ring. Why? Because in many cases, both the booming core and the declining second ring are in the same counties.

Look at Charlotte, for example. There’s a clear boom in its central city (here depicted by growing income levels) followed by a trough at about five miles out from its CBD. But Mecklenburg County, where Charlotte is located, contains neighborhoods that are 10, 15, even close to 20 miles from its CBD—meaning both the peak and the trough are averaged out in its county numbers.

Or take Memphis, TN. It also has a peak-trough pattern (this chart shows college graduates, but the income chart is very similar) that goes about five miles out from its CBD. But Shelby County, where Memphis is located, goes for up to 28 miles from downtown Memphis. Again, county-level numbers combine two diametrically opposed trends into one number that accurately reflects neither.

 

Finally, look at this map of population growth in Chicago in the 2000s. No one could look at this map and conclude that central Chicago wasn’t booming—and that much of the rest of the city was really hurting. But you can erase both of these facts by adding them together. (Not to mention that all of Chicago would be added to the rest of suburban Cook County in the county-level statistics.)

 

And Charlotte, Chicago, and Memphis are hardly atypical. Phoenix is centered in Maricopa County, which encompasses wide swaths of suburbs, as does Seattle’s King County, and Austin’s Travis County. True, some counties correspond more closely to the urban core: New York County corresponds to the Manhattan, but that’s the exception, rather than the rule. On top of that, counties vary wildly in size, with substantially larger geographies in the West compared to the East.  

There are things that county-level data is good for, of course. It can tell us what population growth is for metropolitan areas as a whole, for example, which is a good indicator of regional health.

But claims about the growing economic and demographic strength of urban centers have always been about just that—urban centers. Those centers—and the weakening inner-ring suburbs around them—simply don’t correspond geographically to counties.

Fortunately, we have tract-level data from before 2015, and we can use it to test our actual hypotheses. Juday’s work is an excellent example of that. We will also eventually have tract-level data for 2015, and then we can do the same with those updated numbers.

But in the meanwhile, we shouldn’t let our hammer make us think every question is a nail. There are a lot of interesting things to learn in the new county population numbers—but the question of urban growth, or inner-ring decline, simply isn’t one of them.

How much does a one-bedroom apartment cost in Chicago, my hometown? A quick Google search comes up with an article claiming that median rent is $1,970, according to the real estate company Zumper.

But wait—according to real estate company Trulia, the median rent in Chicago was just $1,400 in January 2016, and that includes apartments with two or more bedrooms.

 

And the real estate company Zillow reported that the median rent was $1,647 just a few months ago.

And HUD says that “Fair Market Rent” in the Chicago metro area was just $922 for a one-bedroom apartment in 2015.

Not only can these different sources not agree on how much a “typical” apartment costs, they give very different pictures of how much (and in what direction) prices are changing. For example, Abodo claims that Boston is one of the cities where rents increased the most in February 2016—5 percent month over month. (By the way, that’s an increase of nearly 80 percent a year, which is by itself a red flag that something might be up with these numbers.) But in the same month, Zumper says that rents in Boston fell by 2.1 percent.

 

 

What’s going on?

Over the last few years, there’s been an ever-growing number of articles and lists of the most expensive rental cities in the county, the most expensive neighborhoods, and which cities are seeing their rents climb the fastest—and even where rents might be starting to fall. But what are presented as clear, objective findings are in fact coming from many different sources, most of which disagree with each other substantially. And while many sources are just fine for their original intended purpose—being a place to sift through real estate listings—they’re not so good as a statistical research database.

How, then, can journalists and readers know which sources to trust, for which questions, in what areas?

The first step is to acknowledge that none of these sources have the definitive, “correct” answer. All of them involve some guesswork and data that’s limited, biased, or somewhat out of date—and often all three. The advent of online listing agencies with massive databases has brought us the mixed blessing that is big data. While it’s a simple matter to query your big database and compute the median value of rental listings, there are a lot of reasons why every organization’s particular collection of listings is an incomplete and statistically biased sample.  Unlike home purchases, landlords don’t have to report their rent figures to to any public agency, so collecting broad, representative data on rents can be extremely challenging. As we wrote back in November:

For a number of reasons, just taking the average of all the listings you can find is likely to produce extremely skewed results, with numbers much higher than true average home prices. For one, many apartments, especially on the lower end of the market, aren’t necessarily listed in places that are easy to find—or at all. Instead, landlords find tenants with a sign on a fence or streetlight pole, local (and not necessarily English-language) newspapers, or just word of mouth. On top of that, if you have two homes of similar quality but even slightly different prices, you would expect the cheaper one to rent or sell more quickly. As a result, it would spend less time listed than the more expensive home; any given sample of listings, then, would tend to over-represent those more expensive, harder-to-rent homes. (If this doesn’t make sense, read the “visitors to the mall” example here, explaining a similar statistical problem with attempts to measure prison recidivism.)

But that doesn’t mean you have to throw up your hands in rental-data nihilism. There are important differences in the reliability of rental price statistics from different sources—and, just as crucially, different sources are best for different questions.

Tomorrow, we’ll publish a sort of field guide to rental statistics, meant to help both journalists getting a barrage of press releases, as well as readers trying to wade through the swamp of contradictory rental figures that are published on a regular basis.

What City Observatory did this week

1. Finding nuance in the housing supply arguments. A new article from Rick Jacobus at Shelterforce helps resolve some of the tensions in the growing debate about whether and how housing supply is behind the affordability crisis—and the answer hinges on understanding how demand and supply can change at local and regional levels. But zooming out also allows us to explain our skepticism some of the claims about new luxury housing creating its own high-end demand where it wouldn’t otherwise exist.

2. Super long commutes: a non-big, non-growing, non-problem. A slew of articles have told readers that “mega commuters”—people who travel at least 90 minutes in each direction—are a growing, and troubling, indicator of problems with our transportation systems. But in fact, the number of these extreme commutes have not been growing, and make up less than three percent of all commuters. Moreover, many of these commuters may actually be doing something more akin to telecommuting than actually physically going into the office each day.

3. Like Uber, but for redistribution. Last year, two researchers suggested that cities might soon begin subsidizing Uber trips—and this month, an Orlando suburb became the first municipality to make good on that prediction. What’s in it for cities? The authors argue that Uber can produce “public goods” by intensifying the agglomeration benefits that cities exist for to begin with—and improve efficiency by using a smaller number of vehicles (and parking spaces) more intensively. But there are also questions, like whether subsidizing trips is the most cost-effective way to reach those goals, and the fact that Uber cars face the same problems of geometry as regular cars—in short, they take up way more space per person than buses or trains—and so can’t help, and may even hurt, road congestion.

4. Why the new Inrix Traffic Scorecard deserves a “D.” We’ve criticized Inrix and the Texas Transportation Institute’s traffic reports before; unfortunately, a new report—issued by Inrix without TTI—takes several steps back even from that low bar. The new “traffic scorecard” is stripped of context from previous years, and it’s not clear if this report’s numbers are comparable to past statistics, making trends impossible to discern. Inrix has some amazing data, with great potential for analysis—but it needs to be open, consistent and transparent if it’s going to help us better understand and address our transportation problems.

The week’s must reads

1. In some good news, Baltimore County and the US Department of Housing and Urban Development have come to an agreement to help reduce segregation in that region. It took half a decade to negotiate, but the deal, which was spurred by a legal complaint from the NAACP and local groups, will result in more low-income family housing being constructed in primarily white, high-income areas in the county. The complaint indicated that these places were using their federal low-income housing money disproportionately for age-restricted buildings that tended to house elderly white residents.

2. The Bay Area transit agency BART’s Twitter account got real this week, tweeting in the wake of an electrical malfunction that “much of our system has reached the end of its useful life.” Vox suggests that this problem is bigger than just BART, pointing to the DC Metro’s decision to shut down entirely for 29 hours to take care of potentially fatal equipment problems and a 2010 FTA study that found that 26 percent of the country’s rail mass transit was in “poor or marginal” condition.

3. We’re a little late on this, but if you missed it, you owe it to yourself (and maybe your grandkids) to read it: The New Yorker goes deep on how global warming is flooding Miami—not in 2100, or 2050, but today. Though the Army Corps of Engineers predicts sea levels could rise five feet in the next century, waters are already inundating Miami Beach with such frequency and severity that the city has spent $100 million in mitigation. As one of the world’s most vulnerable urban areas to climate change-related flooding, the region is on the front lines of figuring out what can be done for coastal cities in the coming years.

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New knowledge

1. What’s the effect of technology on mode choice decisions? A report from University of Minnesota professor Yingling Fan uses data from the American Time Use Survey to identify behaviors that might be done during commutes as self-driving car technology improves and becomes more common. One big takeaway is that if the “cost” of travel time is reduced because more activities can be undertaken during a trip, people may take many more, and longer, trips.

2. Though it has so far produced few headlines, in some areas, financial firms are creating securities backed by the rental income of large bundles of single-family homes. The Federal Reserve Bank of San Francisco scrutinizes the geography of these homes, and find that they largely, though not perfectly, map those neighborhoods that were hardest hit by the foreclosure crisis. They also raise the question of the relationship to these securitized rental homes and access for Section 8 voucher holders, and the effect of securitization on the broader market, including non-securitized homes. They conclude that available data is insufficient for understanding the impact of this trend on US cities, and much further research and transparency is needed.

3. Demolition of vacant properties has become a common tactic for cities that have seen significant depopulation of some of their neighborhoods. A study from researchers at Harvard and the Federal Reserve Board of Governors looks at these teardowns in three cities—Cleveland, Chicago, and Denver—and measures outcomes like crime and rehab investments. They find that demolitions were associated with a small but statistically significant reduction in local property crimes (burglaries and thefts), but found no impact for rehabilitation projects. Their data suggest the reductions were highly localized (within 250 feet of the demolished property), and may be temporary.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

In a January 2015 paper, the Yale Law professor David Schleicher and Yale Law student Daniel Rauch published a paper on how local governments might regulate “sharing economy” companies, such as Uber, in the future.

Among their more startling predictions, perhaps, was that the very cities that have been battling to regulate startups like Uber—which have been accused of ignoring laws requiring their competitors to, for example, license their drivers or ensure a certain proportion of their fleet is accessible to people with physical disabilities—would soon spend public money subsidizing Uber trips.

Why would they do such a thing?

Well, we might ask the Orlando suburb of Altamonte Springs, which this month became the first US city to fulfill Schleicher and Rauch’s predictions by announcing that it would begin subsidizing Uber trips within its borders. The city will cover 25 percent of the cost of trips that begin or end at the city’s SunRail commuter station, and 20 percent of other trips. The idea is to make help solve the “first/last mile problem” with the rail station, since there are few homes, jobs, or stores close enough to the station to make walking reasonable, and even the city admits that bus service is too spare to be relied on.

 

The Yale paper makes the case that there are good economic reasons for this kind of subsidy. In particular, they argue that low-cost Uber trips might create a “public goods” surplus by, among other things, allowing residents to make trips—and potentially buy more goods and services, or reach more jobs, or even just visit more people—that they otherwise wouldn’t be able to, ultimately improving on the “agglomeration effects” that are the economic basis of city living to begin with. Subsidizing ride-hailing services might also have a decongesting effect, by allowing a smaller number of vehicles to be used more intensively, and reducing the need for each household to keep one or more cars sitting idle for 23 hours a day. That would also reduce the need for homes, stores, and offices to hold large amounts of land for peak-use parking capacity, which also sits idle outside of work hours, or on low-shopping days.

Finally, they point out that there is a strong redistributive angle to this: Uber as a sort of public transportation. While the Altamonte Springs policy is not explicitly aimed at redistribution, it might conceivably be disproportionately used by lower-income people with limited car access. Other cities might attempt to target their subsidies more carefully, either by directly subsidizing trips for people below a certain income threshold—think of the reduced-fare transit cards that many agencies provide for low-income riders—or by simply requiring that ride-hailing companies provide a certain amount of reduced-fare rides in exchange for permission to operate. Think of it as inclusionary Uber.

But if this is going to become a broader trend, there are still a lot of questions to resolve.

One is simply cost. One of the biggest expenses in public transit is the cost of paying the driver or operator of the train—and if the ratio of drivers to passengers is essentially one to one, that cost skyrockets. The Fortune article about Altamonte Springs’ policy quotes an economist who predicts that the policy will “blow [the city’s] budget out of the water.” And a federal program that does something similar—a Medicaid policy that reimburses “non-emergency transportation” for patients who lack other options to reach a doctor—costs $3 billion a year to cover 3.6 million Americans, or roughly $833 per person, most of whom are presumably not taking subsidy-eligible trips as often as, say, commuters to the SunRail station. According to the GAO, nationally, the average cost of providing a paratransit trip is $29. Meanwhile, the total cost per bus ride in the Orlando area is about $4.07. (Of course, in its first year, SunRail itself apparently cost about $38 per trip, which raises its own set of questions about the cost-effectiveness of commuter rail lines in very low-density metropolitan areas.)

Another is access. Particularly if subsidized ride-hailing services are considered a redistributive measure, it matters if they are only usable by people with smartphones and credit cards—things a substantial portion of low-income people still don’t have.

Third, there’s the question of ownership. Some “sharing” services, most notably bike share systems, are owned by cities or transit agencies themselves. If a local government decides to use ridesharing as a part of its public transportation system, does it make sense to contract that out to a private company—or create “inclusionary” exactions requirements for those companies—or run its own system? For that matter, to what extent does subsidizing rideshare companies like Uber simply replace paratransit, and is that a trade worth making?

Finally, there’s the issue of geometry, as Jarrett Walker might say. Orlando—and certainly its suburbs—have been built and regulated in such a way that traditional transit services, like fixed-route buses or trains, are extremely hard to operate, precisely because population, job, and commercial densities are so low that there aren’t enough places to walk to around any given transit stop. In that scenario, subsidizing low- or single-occupancy vehicle trips might make sense. But it will still be the case that a person in a car will take up vastly more room than a person on a bus or train. Ridesharing may help decongest urban areas in the sense of reducing the total number of vehicles, or reducing the amount of land dedicated to parking. But it won’t allow more people to use the same amount of roadspace more efficiently—and in fact, if lower prices encourage people to switch from public transit to ridesharing, it might make congestion worse.

 

Ironically, by making it easier to live in far-flung locations, these subsidies might end up tilting the scale on people’s housing decisions, pushing people further out into the suburbs and ultimately making urban transportation more difficult and costly. As Reid Ewing and his colleagues have shown, some public housing that has low rents has high levels of embedded transportation costs due to the remoteness of workplaces and daily destinations, meaning that on the whole, it’s actually less affordable for the families living there than more central locations with somewhat higher rents.

While there has been a lot of discussion about how ride-hailing services like Uber and Lyft—and, combined with them, driverless vehicles—might affect American cities. But the truth is that the answer depends, just as it does with regular old owner-driven cars, on how cities decide to regulate the built environment, the vehicles themselves, and the prices of using public rights of way. As we begin what might be a wave of new kinds of regulation aimed at subsidizing the use of ridesharing services, it’s important that we ask what we hope to accomplish, and what the best way to do it might be.

On the one hand, over the last few years, the growing debate about the root causes of affordable housing crises in high-income, coastal American cities has been robust, passionate, and often nuanced. On the other, there have been precious few “breakthrough” moments, and the rhetoric today often looks pretty similar to what it was a few years ago: one side (including City Observatory) arguing that the basic issue is too little housing; another arguing that new housing is itself the cause of higher prices.

Which is why a new essay by Rick Jacobus at Shelterforce was so refreshing. Writing at an outlet that has published writers who are critical of new market-rate construction, Jacobus’ headline reads: “Why we must build,” but its subheading suggests an unusually nuanced position: “We can’t build our way out of the housing crisis…but we won’t get out without building.”

That sort of “necessary but insufficient” position isn’t new—it’s the one we’ve taken on multiple occasions, for example—but it’s still surprisingly rare, and Jacobus does a particularly good job of articulating it.

More market-rate housing: Necessary but insufficient

The basic idea is this: at a macro scale, the interplay of supply and demand is the biggest influence on average housing prices. Addressing the fact that the median home in the San Francisco metro area costs nearly $800,000 is all about building more housing; the reason Phoenix or Houston can see huge population booms while keeping prices under control (median price in Phoenix: just over $200,000) isn’t that landlords and developers there are so humanitarian, it’s that building more housing is easy, and so the overwhelming competition for housing that drives up prices in the Bay Area just doesn’t exist.

But while more housing can reduce the price of the median home, the median home isn’t all that matters. People at the low end of the US income scale simply don’t make enough money nearly anywhere, and never have, to afford decent market-rate housing—the cost of maintenance, and certainly of construction, keeps a price floor well above what someone living at the poverty line can pay. Direct housing assistance, then, will be necessary—and substantially more of it than we currently provide. Importantly, though, the effectiveness of that assistance depends on having a reasonable “baseline” market price, or else public budgets end up drowning in the massive gaps between what low-income (or even moderate-income) people can pay, and what housing actually costs. Just ask San Francisco, where a historic $300 million affordable housing bond issue is purchasing precious little actual affordable housing.

Geographic scale matters

Jacobus also addresses another important nuance: the question of scale. Again, at a regional level, more housing unambiguously reduces housing prices: we know that not just because we believe in Econ 101, but because all the real-world evidence suggests that’s the case.

But at a neighborhood scale, things are a bit more muddled. New luxury housing might signal to high-income residents that a neighborhood they previously wouldn’t have considered living in is safe, or hip, and increase demand by more than it increases supply. It might bring in high-end retailers that wouldn’t have previously considered the neighborhood, similarly attracting more wealthy residents. Even Stephen Smith, a staunch defender of the idea that more housing is key to solving the affordable housing crisis and writer for the website Market Urbanism, has written about these contradictory dynamics.

That said, we are skeptical about the extent to which this theoretical problem is actually a real-world issue in cities with major housing problems. Why? Well, look at how high-income neighborhoods have spread across the North Side of Chicago over the last several decades, bringing high rents with them:

For the last 40 years, gentrification has followed a very predictable pattern: demand rises in one neighborhood until prices begin to cause people who might have moved to there to move to the next neighborhood over, getting as close to the amenities and jobs in the high-rent neighborhood as they can. As more and more people decide they want to live in central city communities with high-quality amenities, that process repeats over and over, expanding the high-rent zone not in fits and jumps, but continuously out from its center.

As a result, the idea that some neighborhoods might be “saved” from the interest of high-income people if only developers wouldn’t signal the value of the neighborhood by building luxury housing seems far-fetched. By zooming out a bit, we can see that the geography of demand is determined by proximity to the amenities of the high-income zone; not building new housing right next to the edge of the zone isn’t going to convince anyone that they don’t want to live there, and even the most pristine new luxury apartment far away from the zone isn’t going to bring a bunch of people clamoring to pay top dollar.

The temporal mismatch is worse at the neighborhood level

But even if new housing isn’t going to provoke more demand that wouldn’t have shown up anyway, there’s another neighborhood-level problem that Jacobus identifies. Namely, housing demand can change much, much faster, and more dramatically, than housing supply. This is actually true at the regional level as well: an economic boom like the one the Bay Area has experienced can bring in many more jobseekers, much more quickly, than developers can respond with housing, simply because the development process in large, built-up cities is slow, and can take several years to respond to shifts.

But it’s much worse at the neighborhood level. Changes in neighborhood reputation, driven by the sort of spillover process I described above, can take place extremely rapidly—and once they do, an area that previously had nearly no demand from higher-income residents can see interest from a huge proportion of the region’s population that wants to be in the high-amenity urban core.

At the same time, adding housing in a particular neighborhood can be more challenging than adding it at the regional level. For one thing, if we’re talking about the urban core, there’s no suburban greenfield fringe to build on. And in most high-rent cities, even low-rent neighborhoods have few empty lots to build on. Neighborhood politics, obviously, also make building more housing very challenging.

The massive swings in very local demand mean that adding supply might have little effect in that immediate neighborhood, even as it lowers prices in the region more broadly, or allows filtering to take place closer to the urban core than it would otherwise. Here, then, is another “necessary but not sufficient” point: cities need to build more housing to keep regional prices reasonable, and to come as close as possible to meeting the demand for living in high-amenity urban cores. But in the neighborhoods with the greatest demand in the American cities with the greatest demand—New York, San Francisco, Chicago, and a handful of others—it’s likely that demand is simply too high for any realistic amount of new construction to bring market prices down to, say, Phoenix-like levels.

So what?

One takeaway is that there’s an intersection of policy and politics here: the problem of geographic scale matters not just as a matter of technocratic interest to planners, but because it means that local activists who care not about median regional prices, but whether they and their neighbors will be able to afford their particular neighborhood in a few years, may have less reason to support more housing supply there—even though that would be by far the best outcome for affordability in the region as a whole. That means it’s even more important for planners and housing advocates to have something to offer them.

The challenge is that any realistic solution will require dramatically increasing the resources we devote to housing assistance. While we’ve pointed out that we could probably pay for housing vouchers (or a refundable tax credit) to every qualifying household just by getting rid of the mortgage interest tax deduction for people making over $100,000, that would require federal action that simply isn’t forthcoming from the current Congress. And at the local level, the focus on inclusionary zoning and impact fees has both fed on and promoted the fantasy that all we need to do to solve the affordable housing crisis is squeeze developers hard enough. In reality, only a broadly-funded commitment to funding housing assistance has any shot at reaching the required scale. And even that won’t have the needed effect unless we build enough market-rate housing to get prices down and reduce the per-unit cost of subsidies.

Last week, we published an interactive tool for exploring how commuting has changed by different age groups over the last decade or so. One of the big takeaways was that even among younger people, there’s been only miniscule shifts away from driving, or towards transit and biking, despite the huge surge of youth to more urban locations.

As we wrote, a big issue is that transportation choices depend on transportation options—and in most neighborhoods in America, those options lean heavily towards cars. Distances are too far, and roads are too dangerous, for biking or walking; and transit services are often unreliable or are themselves located beyond walking distances from the jobs or homes people are trying to get to.

But by separating this data out by metropolitan area, we can see some more movement, especially in places that do have a stock of pre-zoning “illegal neighborhoods” and solid public transit, where the growing number of downtown jobs and growing population, especially of young people, has increased the number of people who want—and, importantly, can—use non-car means of transportation to commute.

So while nationally, the proportion of young people driving has dropped by only one or two percentage points, in the San Francisco metro area, the share of 16-to-24-year-olds who drove to work fell from 71.0 percent in 2006 to 64.8 percent in 2014.

 

And while driving declines were fairly consistent across age groups in San Francisco, in many places, the urban generation gap is very apparent. In the Chicago region, the share of young people driving to work decreased from 78.1 percent to 74.3 percent, even as it held steady among people 45 to 54.

 

The Minneapolis-St. Paul region also saw very different trendlines by age, with younger people reducing driving, even as older workers saw little to no change:

 

On the other hand, some metro areas aren’t looking so good in any age group. For example, here’s Houston:

 

You can play around with the numbers below, looking at mode shifts by age in the 25 largest metropolitan areas. As before, we have allowed the scales to change depending on the inputs you select to make it as easy as possible to see trends—note, though, that the scales can change dramatically from one metropolitan area to another.

 

What City Observatory did this week

1. Muddling income inequality and economic segregation. What does it mean to be a prosperous city? What does it mean to be a city with high economic inequality? These questions can be difficult because they apply statistics we’re used to using at a national level to municipalities or neighborhoods—and that context makes all the difference. At a local level, indicators of great prosperity, like very high income levels, often means that a city or suburb has simply managed to push out the poor. And indicators of inequality that are unambiguously bad at a national level may actually be good at a local level, because they suggest a measure of integration. As journalists increasingly bring the important questions of economic opportunity and inequality to local contexts, it’s crucial to understand those differences.

2. How we shut the door on housing. Among policy analysts and urban observers, there’s growing recognition that major shortages of housing in high-job-growth cities are behind skyrocketing housing prices. But there’s less understanding of how we got to this point. In a new paper, the Dartmouth professor William Fischel, long a leading scholar on the subject, brings out data suggesting that concern about housing prices suddenly spiked in the early 1970s—around the very same time as zoning laws became much more restrictive about new housing construction. He speculates that a period of high inflation, combined with broader homeownership and tax laws that gave preferences to homes as financial vehicles over other investments, increased demands from homeowners for assurance that their greatest assets wouldn’t lose their value.

3. How should cities approach economic development? A new report from the Brookings Institution is a must-read primer for local officials and stakeholders interested in state or local economic development. We add a few caveats and notes of our own, including the centrality of talented, highly educated young people; the importance of providing the kind of high-quality urban spaces that attract those young people; how strategy is about choosing what not to do, and why the federal government has a crucial role to play, even in state and local success.

4. How is driving mode share changing in your city? Last week, we published a tool for exploring how commuting patterns have changed in the US since 2006 by age cohort. We pointed out that despite the real movement of young people to urban centers, the national changes in commutes by cars, transit, and other modes of transportation have been surprisingly small, because of how dependent those choices are on a slow-changing built environment. This week, we published another tool that breaks down changes in driving by age for the 25 largest metropolitan areas—which shows the importance of having those options. Especially in regions with walkable urban cores and higher-quality transit systems, the shift away from driving is more pronounced, and generally even more so among younger cohorts.

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The week’s must reads

1. Much has been written about whether, and how, ride-hailing services like Uber and Lyft will affect public transportation. This month, an Orlando suburbs will become the first city in the country to actually attempt to use Uber as a substitute for some public transit trips, subsidizing 20 to 25 percent of the cost of the on-demand service. While officials say they hope that the subsidies will solve some residents’ “first and last mile problems” getting to SunRail commuter train stations, they will also subsidize trips that do not intersect with transit. The Fortune article also quotes an economist concerned that the subsidies may encourage more trips, and end up costing more than the municipality of 43,000 can afford.

2. At Shelterforce, Rick Jacobus has written one of the more nuanced interpretations of the “to build or not to build”debates on housing affordability. He argues that blocking the construction of luxury housing, which has become a prime tactic of anti-gentrification activists across the country, can’t solve the problem—but that allowing more housing isn’t the whole answer, either. Jacobus also makes an important distinction between the ability of more housing supply to produce “filtered” affordable housing at the regional level, as opposed to in a particular hot neighborhood. He also makes some points we would take issue with, including on rent control. Look for a longer City Observatory response to Jacobus’ post soon.

3. Journalists Deborah and James Fallows of The Atlantic talk about their travels around the US, and how many of the “forgotten” cities they visited are thriving, far from the coastal hubs that get the lion’s share of media attention. They highlight the importance of having a distinctive downtown, even in smaller towns: “To a surprising degree,” James Fallows says in his interview with PBS, “just the identity of a place…depends on having a downtown with restaurants and with not just a shopping mall. It was amazing to go see how many parts of the country are attracting really ambitious, really well-educated, really first-rate people who think that the best arena for their ambitions and their whole life prospect is someplace where they can do work of the very first tier, but also have some effect on the local community.”

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New knowledge

1. New York University’s Furman Center has released a new study, the “National Affordable Rental Housing Report.” Looking at the 11 largest metropolitan areas in the US, the report finds a growing renter population in both central cities and the suburbs, with a majority of central city residents renting in each of the regions except for Houston and Philadelphia. Increasingly, renters are living in single-family homes, in addition to multifamily buildings. And a “considerable” gap between supply and demand has pushed down vacancy rates and contributed to the affordability crisis.

2. “The Case for Age-Friendly Communities” is a new report from Grantmakers in Aging and researchers at Portland State University and Boston College, explaining what urban design and policy can do to create neighborhoods where you can both “grow up and grow old.” That’s an increasingly important challenge given the interest both in retaining and attracting families with children to urban neighborhoods, as well as accommodating America’s growing elderly population. The paper underscores the importance of accessible transportation, including public transit; a variety of affordable housing types; and access to public and inclusive social events.

3. The real estate company RedFin gave the public a peek at a new “Opportunity Index” tool this week. The Index computes the number of jobs paying at least $40,000 a year that are accessible to any given neighborhood within a 30 minute bike, walk, or transit commute, and displays the results on a heatmap reminiscent of David Levinson’s maps at the University of Minnesota. (Levinson’s, however, just track transit commutes, and don’t have an income screen.) While the full interactive tool has yet to be released, the screenshots are worth checking out.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Note: Tomorrow, NYU’s Furman Center will hold a seminar with Dartmouth professor William Fischel on his new paper,”The Rise of the Homevoters: How OPEC and Earth Day Created Growth-Control Zoning that Derailed the Growth Machine.” This post contains some of our reactions to the paper.

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There’s increasing recognition that laws preventing the construction of new housing in high-demand neighborhoods—”the new exclusionary zoning” (a phrase coined in this excellent paper by John Mangin)—is a problem, driving up housing prices across entire metropolitan areas and increasing segregation. Less talked about is where these regulations came from.

Last November, we wrote about one influential theory on that count, from Dartmouth professor William Fischel. His 2015 book, Zoning Rules!, suggested that the big shift to broadly exclusionary zoning happened in the 1970s, and that there were five big culprits:

1. Highways that greatly increased housing demand in suburban communities
2. The Civil Rights Movement, which threatened to integrate previously segregated areas
3. The granting of more powerful legal standing to opponents of development
4. The creation of more complicated development processes with multiple veto points
5. The rapid growth of housing prices in 1970s, combined with a period of high inflation

In a new paper, Fischel again addresses how, and why, American cities became so much more restrictive on housing growth in the 1970s. The broad outlines are the same: Rapid inflation in the beginning of the decade, combined with tax policies that favored housing investments over other financial vehicles like the stock market (think the mortgage interest tax deduction and capital gains exemption) made homeowners start thinking of their homes as “growth stocks” rather than stable investments. Those expectations drove homeowners to more aggressively pursue policies that would protect their investments, including preventing new developments that might drive down prices either by creating disamenities like traffic or noise, or simply creating more competing sellers.

A Google Ngram of mentions of “housing prices” in American books shows how quickly housing values became an issue at this time:

…and how talk of “growth controls,” “downzoning,” and “farmland preservation”—all ways to reduce housing construction and inflate prices—took off at exactly the same time:

He also expands on some of the regional aspects of “the new exclusionary zoning,” as this shift has been called. Notably, large metropolitan areas on the East and West coasts have seen the most dramatic move to building restrictions. These changes have resulted in drastically different regional housing prices; while the difference in real estate values between, say, metropolitan Atlanta and metropolitan San Francisco was relatively small prior to the 1970s, it has since widened substantially. Perhaps more strikingly, even non-coastal areas that have seen huge increases in jobs and population over that period—say, Phoenix or Houston—have kept housing prices relatively low. And while natural barriers to construction have often been cited as a reason for low housing production and high prices in coastal cities, Fischel points out that there are many interior cities with similar barriers: Washington, DC, for example, is not meaningfully more hemmed in by the Potomac than Chicago is by Lake Michigan, or than St. Louis is by the Mississippi.

Rather, Fischel points to institutional factors. Metropolitan areas in the Northeast are generally made up of many geographically small municipalities, which allows homeowners to heavily influence the local bodies that make zoning decisions. Sunbelt local governments, by contrast, are generally much larger, making hyper-local anti-development politics harder to organize. (Previously, we’ve covered the evidence that more fragmented governments tend to be more restrictive on development. Finally, although the West Coast generally lacks the Northeast’s extreme jurisdictional fragmentation, Fischel argues that ballot referenda still allow homeowners to directly exert their influence. Another factor is the prisoner’s dilemma:  if some local jurisdictions effectively put in place growth controls, other jurisdictions have strong incentives to implement their own growth controls to avoid becoming a “dumping ground” for unwanted residents or land uses.  

And yet, evidence also suggests that housing price growth itself leads homeowners to demand more restrictive housing laws. And while the Northeast and West Coast are not the only regions to see rapid population and employment growth, they have seen the fastest growth in high-paying jobs that require high levels of education, attracting the sort of workers with the ability to bid up prices. “This suggests,” Fischel concludes, “that if economic shifts occur that make Chicago and St. Louis the favorite destinations of high-skilled, college-educated workers, the cities of the Midwest will become the centers of growth controls and rising housing prices.”

As before, the big takeaway is that restrictive zoning is not an accident, nor a policy imposed by top-down planners, but something that is demanded by voters—particularly homeowners—who are, at least in part, responding to their own financial incentives. Any plan to reform zoning needs to address those voters and their interests. That’s why the path to more plentiful and cheaper housing may begin with measures that aim to reduce the weight homeowners put in their homes as financial investments, including rolling back the mortgage interest tax deduction and treating capital gains on housing like other capital gains for tax purposes.

What City Observatory did this week

1. Cities can’t solve all our problems. Like other people who think and work about cities and urban issues, we’re often focused on how ground-level changes can make cities better—things neighborhood groups or local government can do. But though local actors are important, we can’t lose sight of the fact that cities don’t exist in a vacuum—they very much depend on state and federal policy for everything from the condition of the macro economy to climate change. We’re fast reaching the point where if they are to succeed, cities need to federal government to step up.

2. Explore national transportation change trends by age group. As we’ve written before, even with the move of young  highly-educated people and jobs to cities, moving the needle on transportation use is incredibly hard, because it depends in large part on the slowly-changing built environment. In this post, we built an interactive tool to look at exactly how much transportation behavior has changed (at least in commutes) by age over the last decade or so. In a future post, we’ll break it down by metropolitan area—where the news is a bit rosier.

3. The problem with how we measure housing affordability. By far the most common benchmark for whether housing is “affordable” is whether a household spends more than 30 percent of its income in rent or mortgage payments. But there are some problems: 30 percent is a very different burden for someone on a very low income compared to higher incomes; it doesn’t include other location-based costs, like transportation; and it doesn’t take into account what people get for that housing: a substandard apartment in a neighborhood with few amenities, or a better unit with access to good jobs and amenities?

4. CBO on highway finance: The price is wrong. A new report from the Congressional Budget Office confirms something we’ve known for a while: drivers don’t pay the full price of their use of roads, and as a result, drive much more than if they weren’t being shielded from the true costs of driving. Other financial arrangements that took into account the costs of congestion and maintenance—not to mention environmental and human costs—might lead to more efficient use of our car transportation system. The report also warns that the stimulative impact of new highways appears to be waning.

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The week’s must reads

1. We’ve expressed reservations about inclusionary zoning as an affordable housing strategy for a variety of reasons, including its effect on the market and its limited scale. At streets.mn, University of Minnesota Professor Evan Roberts offers a cogent synthesis the skepticism, breaking his arguments into four parts: 1) IZ puts all the funding burden for affordable housing on a very small number of people—developers and purchasers of new housing; 2) IZ makes the financing of affordable housing opaque; 3) IZ is a passive response to the problem of affordability that makes no affirmative commitment to provide a certain amount of housing; 4) and IZ discourages new market-rate housing.

2. Donald Shoup’s The High Cost of Free Parking is one of the most influential urban policy books of the last ten years, forcefully arguing that city residents suffer for the sake of plentiful, ostensibly free parking supply. In the Washington Post, he updates his arguments about how parking requirements hurt the poor by driving up housing construction costs. He points out that a single parking space can cost $24,000—several times the median net household worth among Hispanics ($7,700) and black Americans ($6,300). Forcing all residents, whether or not they own a car, to help subsidize required parking spaces at their homes, businesses, and shops is an unnecessary burden. It’s counterintuitive, but free is a bad price if you’re concerned about the poor.

3. The New Yorker covers the growing number of “micro-unit” apartment developments in its hometown, interviewing Brookings’ Alan Berube and the Furman Center’s Ingrid Gould Ellen. While these newly-built homes aren’t affordable to lower-income renters—something that shouldn’t be a surprise, as we’ve written—they do help meet the growing demand for housing for single-person households, including young people and the elderly, making for more flexible neighborhoods that allow people to “age in place” and allow larger units to filter to younger families.

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New knowledge

1. The debate over streetcars often focuses on their perceived shortcomings, including whether their added expense is worth the limited time and capacity savings over bus routes, or their usefulness as instigators of infill development. A newly published study from two Florida State researchers looks at the issue from another perspective: whether, and how, the kinds of people who ride streetcars are different from people who ride light rail, another popular form of rail that tends to run in its own right-of-way, as opposed to on the same roadbed as cars, like streetcars. They find that ridership sources are different for each type: light rail tends to attract more “utilitarian” riders going to, for example, jobs, while streetcars appear to attract riders motivated by “tourism and special activity” centers.

2. Though transportation conversations often pit different modes against one another—”bicyclists” and “drivers” and “bus riders” and so on—most people depend on multiple modes over the course of a typical week, if not a typical day. A new survey of BART riders in the San Francisco Bay Area has a lot of interesting information, but perhaps the most interesting is the breakdown of how people arrive to BART stations: over a third walk, about 6 percent bike, a little under a tenth take the bus, and just under 40 percent either drive themselves or get dropped off. It’s a good reminder that most transportation environments depend on the interplay of multiple modes.

3. Governments make sure to measure how many people use major pieces of road infrastructure, like highways, and transit agencies are able to release detailed ridership information, but we hear far less often about “walkership” (feel free to insert your own made-up word there). But new sensors installed in Chicago’s Loop have an estimate for us: over the course of the last week of February, more than 1.61 million trips were taken on foot on a 4,000-ft. stretch of State Street. While we don’t think of walking as “mass transportation,” that represents 230,000 trips per day—more than all but one of Chicago’s eight heavy rail lines.

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This week, The Direct Transfer, Jeff Wood’s daily roundup of all the urbanism news that’s fit to print—from Brookings Institution reports to updates about local zoning and transportation debates—went to a “premium” model, worth $15 a month or $150 a year for the full daily email. We’ve always seen The Week Observed as a complement, rather than a competitor, to The Direct Transfer—a digest from a particular perspective, rather than a comprehensive link rundown—this newsletter offers great value for money if you need to stay on top of the country’s urbanist news.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

This is the first in a three-part series on the flawed way that we measure housing affordability. This post looks at exactly what’s wrong with one of the most common ways we determine what “affordable” means. The second part looks at an alternative measure, and the third examines the particular challenges of understanding “affordability” for owner-occupied homes.

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Given how much time media outlets, policy shops, and community groups have spent talking about America’s affordable housing crisis over the last few years, you might think that we’ve at least settled on a pretty good way to define what housing affordability actually is. After all, how can we talk about solving a problem if we don’t have a reliable way of determining who’s suffering, and where, and why?

Unfortunately, you’d be wrong.

As an illustration, picture yourself as an employee of a local supermarket, making $1,500 a month. You live with a friend in an outlying neighborhood, and your share of rent is $400, plus $300 a month for car expenses. After all that, you have $800 a month left over – which dwindles pretty quickly between child care, groceries, and prescriptions. When you get sick or your car breaks down, you can’t avoid racking up some credit card debt.

 

Across town, a man who works as a VP in marketing makes $8,000 a month. He pays $3,000 in rent for a brand new loft apartment near downtown. Because he can walk to work and takes public transit most other places, he buys a monthly pass for $100 and doesn’t own a car. After those costs, he’s got $4,900 to spend every month, which buys lots of nice meals out and international vacations while leaving room for healthy retirement savings.

You’re having trouble making rent, and the marketing VP can make their payments easily. But according to our most common standard of housing affordability, it’s the VP who’s rent-burdened, and you’re doing fine.

That’s because those standards rely on a simple ratio: if you pay more than 30% of your income in housing costs, your housing is unaffordable. If you don’t, it’s not. And the supermarket worker pays just 27% ($400 of $1,500), while the marketing VP pays 38% ($3,000 of $8,000).

The supermarket/VP story is an extreme example, but it demonstrates several of the fundamental problems with the 30% threshold as a measure of housing affordability.

1. Equity. Most obviously, it doesn’t take into account that, depending on how much money you start with, leaving 70% of your income for all non-housing expenses may be plenty – or not nearly enough. Affluent people have the luxury of deciding whether to spend relatively large proportions of their incomes to buy housing in a better location, or with particular amenities, without sacrificing other necessities like food or clothing. Low-income people generally don’t. In that way, comparisons between people with different earnings can turn out misleading or unfair, as in the example above.

 

But it can also fail in analyzing the burden of housing costs on people with similar incomes. Not everyone, after all, has the same non-housing obligations: for a healthy, childless twentysomething, a salary of $40,000 might easily cover housing, food, insurance, and other necessities. But someone who has to do much more non-housing spending – because of a chronic medical condition, say, or children with special needs – might struggle on the same income.

2. Other location-based costs. On top of that, there’s increasing recognition that housing choices are closely tied to other costs, which need to be considered part of the package. In other words, the cost of housing is less relevant than the total cost of a location. By far the most important of these other costs is transportation. While housing closer to the center of a metropolitan area is often more expensive, it also requires less driving – and often no driving at all, thanks to public transit – which saves a lot of money. According to Harvard’s Joint Center for Housing Studies, low-income people who manage to spend less than 30% of their income on housing actually end up paying $100 a month more on getting around, which eats into their savings, and sometimes erases them entirely.

Some organizations, like Chicago’s Center for Neighborhood Technology, have tried to take this into account. CNT’s H+T Index shows the total housing and transportation costs for various locations, set against a combined affordability standard of 45% of income. That’s a major step forward – but using a ratio like 45% still has all the other problems of the 30% ratio we’ve already covered.

3. Quality of housing. The 30% threshold can’t tell us anything about what a given household is getting for their money. Few of us would say that affordable housing needs are met by homes that are low in cost but lacking in basic modern amenities like heating or indoor plumbing. While those problems are now relatively rare in major metropolitan areas, many cities have a stock of affordable housing that is predominantly located in neighborhoods with high crime rates, failing schools, few options for fresh food, or other major quality of life issues. Do that housing satisfy our need for affordability?

 

This is an especially important question if we care about housing for its effects on opportunity and mobility. As recent research from Raj Chetty has reinforced, the kind of neighborhood you live in can dramatically change your prospects for living a comfortable middle-class life. It seems odd, in light of those findings, to measure housing access without taking into account whether that access includes communities that offer a shot at economic stability in addition to cheap rent.

In conclusion, the way that we currently measure housing affordability – a simple 30% ratio of cost to income – is simply inadequate to the task. It fails to give us an equitable picture of who is in need and who isn’t; fails to consider the total cost of a location, missing housing-dependent payments, like transportation, that can add a significant burden to low-income households; and fails to consider questions of housing and neighborhood quality that exert significant influences on the life chances of the people who live there.

(Why, then, do we use it? This Bloomberg piece from last year, also pointing out the 30% ratio’s flaws, is probably correct that its durability has to do with simplicity.)

Tomorrow, we’ll look at an alternative way to measure housing affordability that addresses some of these problems.

In some ways, the urban renaissance of the last decade or two has been quite dramatic. Downtown or downtown-adjacent neighborhoods in cities around the country have seen rapid investments, demographic change, and growth in amenities and jobs. Even mayors in places with a reputation for car dependence, like Nashville and Indianapolis, are pushing for big investments in urban public transit.

Because many of those who work in urban planning live in or near these walkable, transit-served neighborhoods, it may be easy to imagine that their changes are representative of the overall pace of transition to a more urban-centric nation. But as we and others have discussed before, in at least one way—transportation—change has actually been excruciatingly slow at the national level.

According to the American Community Survey, from 2006 to 2014, the proportion of people using a car to get to work declined—from 86.72 percent to 85.70 percent. Even among young people, the shift seems underwhelming: from 85.00 percent to 83.94 percent. (Though, as we stressed last week, these Census data only cover journey-to-work trips and tend to overstate the extent to which households rely exclusively on cars for their transportation needs.)

The changes for transit, biking, and walking are, obviously, similarly small. Transit mode share increased from 4.83 percent to 5.21 percent; among those 20 to 24, the increase was 5.53 to 6.35 percent. The overall share of walking commutes actually fell.

In fact, we’ve built a little tool to let people explore these data in an interactive way, selecting mode type and age ranges to see how things have changed, and haven’t, over the last almost-decade. The tool displays the same data in two ways: first, as a graph, and then as a simple table, for those who find that easier to read. (On the graph, yes, we have allowed the y-axis to begin at numbers larger than zero—in large part because the changes are so small that a chart that began at zero would be unintelligible. We will trust our readers to be sophisticated enough at reading graphs to understand.)

 

So what’s going on here? Well, as we wrote about just last week, the single greatest determinant of people’s transportation choices isn’t what mode they think is the coolest—or even whether there’s a train or bus station nearby, though that obviously helps. The most important factor is their city’s land use pattern: are there things close by to walk to? Is the city compact enough—and pedestrian-friendly enough—that there’s an fast, safe, and pleasant way to get from a transit stop to their place of employment? When you step out of a train station, do you see this:

 

…or this:

 

 

This kind of built environment doesn’t change nearly as fast as attitudes—or as quickly as jobs can relocate from suburban office parks to downtown lofts. But it does change, and it’s why we insisted last week that thinking about “the future of urban transportation” in terms of apps and hacks, rather than fundamental urban design, is a huge mistake.

There is more encouraging news, however: if you drill down to mode shifts by metropolitan area, the changes are much more pronounced, especially among younger people. In a follow-up post, we’ll let you see exactly how much has changed in your city.

By far the most common way to measure transit use is “commute mode share,” or the percentage of workers who use transit to get to their job. For the most part, this is a measure of convenience: it’s the most direct way the Census asks about transportation, which means it’s the easiest way to get consistent data from any city or metropolitan area in the country.

But it also has a lot of problems. For one, the vast majority of trips—about 84 percent—aren’t simple home-to-work commutes. And it’s not just that people who work also go to the grocery store, restaurants, or friends’ homes. Lots of people don’t work at all, and those people—largely students, the elderly, or people with disabilities – are disproportionately likely to use transit for all or almost all of their trips. Finally, plenty of people who do work might drive three or four days a week and take transit the other one or two. But since the Census only asks about what they do most of the time, they’ll show up as “drivers.” All of these things will tend to undercount a place’s reliance on public transit.

 

A handful of people have proposed their own measures to try to correct for some of these problems. One of the best came from Reuben Fischer-Baum at FiveThirtyEight, who ranked American cities based on annual transit trips per capita. That has the advantage of counting all trips, whether they’re work-related or not. It can’t, however, tell you much about the distribution of use across people: maybe a place scores highly because ten percent of people use transit a lot, or 40 percent of people use transit occasionally.

In the spirit of this work, City Observatory would like to offer our own measures of transit use, based on data from the Census’ American Housing Survey. (The 2013 AHS includes just 25 metropolitan areas, which is why many larger cities are left out of our list below.) And these measures suggest that, indeed, commuting mode share dramatically understates Americans’ reliance on transit.

The first, more restrictive measure is the percentage of households that report using transit to get to school or work “sometimes, most of the time, or always” (leaving out people who reported “once in a while” or “never”). The second, broader measure is the percentage of households that report using transit for any purpose.

These measures have two big advantages over commute share. First, like Nate Silver’s index, they include a broader sample of trip destinations than just work. Second—just as importantly—they recognize that transportation decisions are usually made at the household level, not individual. Consider a couple who both work outside the home. That is, if a man takes the bus to work, then his wife or husband also depends on that transit service, even if they usually drive. After all, if the bus stops running, they’re going to have to figure out a way to carpool, or even buy another car—a major logistical or financial burden for many families. The same is true for parents of children who take transit to school, or adult children who live with elderly parents who rely on transit to get to social services or other activities.

That means that these figures better demonstrate the number of people with a direct stake in transit service, whether or not they themselves ride it on a regular basis. (Of course, lots of people who “have a stake” in transit are still left out, including people who would like to use transit but can’t because the service isn’t good enough, or people who drive but benefit from reduced congestion because of transit, or employers whose employees wouldn’t be able to show up for work without transit.)

And that matters because the people who make decisions about transit investments—politicians—look at how many of their constituents benefit from a given service as a major component of whether they benefit politically from supporting it.

And if they’re just looking at commute share, they’re looking at too few people. Even transit-rich metropolitan Boston doesn’t look so great by that metric: only 12 percent of workers there usually take transit to their jobs. But 29 percent of households include someone who regularly takes transit to school or work, and fully 56 percent of households use transit for at least some of their trips. In sprawling Houston, just 2 percent of workers commute with transit – but more than twice that proportion of households use transit for work or school, and more than one in ten households use transit for some of their trips. That’s still not great, but it’s much more significant than the minuscule commute numbers. It also suggests that even in one of the most transit-hostile regions of the country, a remarkable number of people find public transit useful for certain trips, forming a toehold for better service to produce even more ridership.

 

Of course, critics of these measures will point out that using households rather than individuals will make the proportion of car use increase, too, since a large number of households use both transit and private automobiles. But that’s really the point: people’s transportation behavior is much more diverse and flexible than the simple commute numbers suggest, and we ought to be giving as many people as possible as many choices as possible so they can determine what makes the most sense for a given trip.

In the end, the fact that transit use is broader than we think is evidence of its usefulness, and evidence that where service is adequate, many people will recognize that usefulness. But the case for better transit service goes beyond that. It’s about connecting people with opportunities in an affordable, efficient way, whether that’s a job or a cultural event. It’s about giving people the freedom to access what their own city has to offer. Everyone ought to have that choice.

What City Observatory did this week

1. Another round on the Washington Post‘s housing roundtable. On Friday, we took part in a roundtable at the Washington Post‘s Wonkblog on what it would take to solve the housing affordability crises in places like San Francisco. On Monday, we followed up on some of the ideas of our fellow roundtablers, highlighting the surprising number of agreements before narrowing in on the biggest dispute: what is the role of market-rate housing construction, especially high-end construction? We argue that the role of housing filtering—of high-end construction taking pressure off of low-price housing—is a key and underappreciated part of the affordability picture.

2. Undercounting the transit constituency. The most common way we talk about how many people use public transit—or biking or walking—is “commute mode share,” or the percentage of commuters who take a particular form of transportation to work. But more than four out of five trips aren’t commutes—not just for workers who also have to pick up their kids from school and go grocery shopping, but for students, retirees, and other non-workers whose lives don’t include any commutes at all. Those are people who are disproportionately likely to use transit, and so commute mode share will tend to overstate a place’s car reliance. In the Philadelphia metro area, for example, only about 10 percent of people commute to work on transit—but 21 percent of households use it to get to school or work, and 42 percent of households use transit for some purpose.

3. What I learned playing SimCity. The education of a City Observatory writer included lots and lots of SimCity. But a return to city-building video games also revealed a whole host of built-in assumptions about how cities and urban planning work: from mandatory US-style zoning to the invisibility of parking and the total absence of neighborhoods and politics. It turns out there’s a lot you can learn about modern urban planning’s blind spots and biases from a game.

4. Designed to fail. A recent New York Times article covered the work of a design team hired by Ford to reimagine the future of urban transportation. But they missed an insight that, ironically, they had already acted on: although the designers tested Chicago’s transportation system by going to a restaurant four miles away, their downtown offices were located within a quick walk of dozens of restaurants. The design of neighborhoods matters just as much as the details of its public transit or a ride-hailing app when it comes to connecting people to the amenities and resources that they need.

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The week’s must reads

1. The National Committee on Uniform Traffic Control Devices has one of the most snooze-inducing names imaginable—but that doesn’t mean it’s not important, as it helps set guidelines for what streets look like from coast to coast. And asStreetsblog USA reports, NCUCTCD is responding to changes on the ground, like green paint for bike lanes and innovative, multimodal-friendly traffic signals, by adopting national standards that will help spread those progressive changes to other cities, and encourage local leaders to embrace consistency from place to place.

2. Marisa Novara at Chicago’s Metropolitan Planning Council writes about the challenges of housing policy in a city where some neighborhoods are heating up, but overall population isn’t increasing—a situation that many cities in the Midwest and Northeast find themselves in. She makes the important point that on-the-ground changes people see in their neighborhoods, like rising home prices, need to be thought of as the outcomes of many different interacting factors, including changing demand, transportation networks, and housing supply—rather than as acause by themselves. Novara also points out that while below-market subsidized housing is important, no realistic amount of funding will produce enough for that to be a solution on its own: market prices also need to be kept under control.

3. As the presidential primaries heat up, Gabrielle Gurley at The American Prospect takes a look at the infrastructure plans of the Democratic candidates, Hillary Clinton and Bernie Sanders. The topline numbers: Clinton proposes $275 billion over five years (compared to Obama’s $500 billion proposal in 2015), while Sanders goes for $1 trillion. But neither of those figures seems likely to get by Congress. Both candidates also includes a national infrastructure bank (which we’ve been skeptical of). Gurley ultimately concludes that there’s little to be excited about.

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New knowledge

1. How affordable is affordable housing? Affordability is a function not just of rents, but of the embedded costs of transportation attributable to a house’s location. As reported by the Dallas Morning News, a new study by Shima Hamidi of the University of Texas – Arlington and Reid Ewing of the University of Utah shows that by failing to take into account transportation costs, the total location costs of HUD-funded affordable housing are beyond what low-income households can afford. In particular, homes in sprawling areas are likely to require transportation spending that is more than 15 percent of total household income, the threshold above which transportation costs are considered “unaffordable.”

2. CityLab‘s Eric Jaffe has an excellent writeup of a paper looking at why, exactly, American cities have seen an influx of young, highly educated people since 2000. The study, by Victor Couture of UC – Berkeley and Jessie Handbury of the University of Pennsylvania, tests various hypotheses about the location-choice decisions of college graduates between 25 and 44. They find that a desire to be close to sought-after amenities, like restaurants, bars, gyms, and retail stores, provides the strongest explanation. Interestingly, proximity to jobs was a relatively minor factor, as people with jobs in the suburbs were not much less likely to choose a downtown home than those with center city jobs.

3. A new report from SSTI tracks venture capital funding by metropolitan area for 2015. The topline findings shouldn’t be surprising: the San Francisco area got the most funding, with $21 billion, or about $4,500 per person; the San Jose region was next, with $3,200 in VC funding per resident. Columbus, Ohio and Tampa, Florida posted the most rapid growth, with total VC funding increasing by over 80 percent.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Like most city lovers of a certain age, I spent many hours as a kid playing SimCity. For readers who are tragically uninitiated, SimCity is one of the iconic computer games of the 1990s, though new versions have been released as recently as 2013. Playing as mayor (or, really, dictator, but more on that later), you shepherded the growth of a city from its very first streets to towering skyscrapers—assuming you weren’t wiped out by tornados, fires, or aliens. By making thousands and thousands of people plan commercial, industrial, and residential districts for their virtual towns, the creators of SimCity have probably done more than anyone in the history of the world to introduce basic principles of zoning to the public.

 

Recently, I started playing a successor to SimCity, Cities: Skylines (or CS, as I’ll call it). CS is very much like SimCity, with some added details (at least compared to the last version I played) and much better graphics. But unlike when I was ten, I can also appreciate that CS, like SimCity, has a whole host of assumptions about how cities work, and how urban governance works, built into the gameplay—assumptions that are both frustrating as a player and fascinating as someone who spends a lot of time thinking about real urban planning and governance. While all games that simulate real life are of course drastically simplified, the way that they’re simplified often speaks to the actual worldview of the people who design and play them. With that in mind, here are some notes on what a video game can teach us about the biases and blind spots of real-life urban planning in the US:

• You must zone—and use single-use zoning. With the exception of some Sunbelt cities, nearly every urban core in America took shape in an era before zoning. As we’ve written, brownstone Brooklyn, Wicker Park in Chicago, Cooper-Young in Memphis, and any number of pre-WWII neighborhoods across the country—not to mention iconic cities in other parts of the world—could only have been built without modern American zoning, with its density limits, parking requirements, and separation of shops and homes. But in CS, no one can build anything on a plot of land until you’ve given it a zone: Residential, Commercial, Industrial, or Office, and specified high- or low-density. It’s striking that zoning is so baked into our assumptions about how urban development works that leaving something unzoned is just not possible—let alone creating mixed-use zoning, form-based zoning, or other kinds of development regulations like those used in Europe.

 

• You must give cars primacy on the street. One of the most important tools real-life planners have is designing public space, including streets. The tradeoff between pedestrian spaces, bike lanes, and lanes for motorized traffic—and within motorized traffic, between private vehicles and public transportation—has a profound effect on neighborhood character, development patterns, and how people choose to get around. But in CS, that decision has been made for you—and as with zoning, the assumption is that all streets will follow the mid-to-late-20th-century US norm, which is dedicating as much space as possible for the use of private vehicles. Pedestrian-only and pedestrian-dominated streets, transitways, or simple bus lanes are all impossible, even though, again, many real-life neighborhoods around the world would be very, very different without them.

• Parking doesn’t exist. This is an interesting one: whereas the last two issues bake in assumptions based on 20th century US practices, when it comes to one of the defining features of modern urban land use in America—parking—CS simply pretends it doesn’t exist. Why would it do that, when the game takes so much care to have a sophisticated transportation model, with individual workers who have to get to jobs, creating traffic jams, or using specific bus or train stops? Here’s one theory: no one actually wants a city full of parking lots and multi-story garages. Put simply, accommodating the actual demand for parking that your little citizens generate would be a bummer, because half of the buzzing streetscapes or idyllic suburbs you created would be erased for parking lots. This is, in fact, what we have done in real life, and it is a bummer. But CS might have forced players to look at parking as a part of the transportation system—and to recognize that the attractive, non-parking-lot-based neighborhoods in which many people wish to live their lives are incompatible with massive car use. Instead, it just pretends that all the costs associated with car storage don’t exist—a form of denial that is still strong more than ten years after the publication of The High Cost of Free Parking.

• It’s all about the built environment. CS presents cities as a kind of dynamic puzzle, a system with inputs and outputs that can be optimized towards whatever goal you might have for them. But in real life, cities are mostly about people, and the relationships between them. Interestingly, though in many ways the game locks in an incredibly specific time and place—America in the second half of the 20th century, more or less—many of the defining features of that era are entirely absent. There are no poor neighborhoods in CS; race doesn’t exist, so there are no segregated black or white or Asian or Latino neighborhoods, either. In fact, community does not exist in any form. Every person cares only about their individual inputs and outputs: finding a job, having a means of transportation to the job, and so on. But for many real people, community is what cities are all about. Moreover, a central tension in urban governance is reconciling the design of the built environment with the goals of the people and communities who live in it. It’s disappointing that at least one version of the planners’ fantasy resolves that tension by simply imagining people and community out of the equation.

• There are no politics. It would take a special kind of weirdo (like me) to play a game where you have to negotiate funding for major infrastructure projects with representatives from your state’s DOT, and get a community organization’s approval for every new apartment building. But those politics are, in fact, central to how cities get built today. In CS, you don’t really answer to anybody, which, obviously, is part of the fun—but it also represents a particular fantasy that has dogged urban planning since its beginning: namely, the myth of planning as engineering, a quasi-scientific exercise in tweaking traffic flows and directing people and jobs to the optimal locations to achieve a unified vision. In real life, every decision that gets made has a coalition of interested parties behind it. Understanding those interests, and the government institutions through which they’re channeled, is as important to understanding urban planning as a traffic model or supply and demand curve.

 

Even though it’s just a computer game, Cities: Skylines has a lot to teach us about the unstated premises of our urban planning conversations, and demonstrates how those premises profoundly shape what our cities can look like. When we assume the necessity of a given way of regulating cities, assume away the messiness of people and their relationships, assume away politics, and ignore major costs, we miss an awful lot of what urban planning debates should be.

Last Friday, we took part in a roundtable at the Washington Post’s Wonkblog on affordable housing. The conversation focused on a long-running debate about how best to address the affordability crisis in cities like San Francisco, and was sparked in particular by the new California Legislative Analyst’s Office report that found neighborhoods in the Bay Area with more market-rate housing construction were less likely to experience displacement of low-income residents.

Because there were several participants, space was limited. And although we’re generally familiar with the arguments, we didn’t get to see other contributors’ pieces before they were published. So we’d like to take the opportunity to respond to a few ideas here.

 

One big takeaway is that there’s much more overlap in the arguments than you might think. For example, Alex Karner of Georgia Tech’s planning school and Chris Benner of UC – Santa Cruz, who take a skeptical position with regards to the LAO study, agree that we need more housing supply: “The LAO report is correct that there is a housing shortage across California,” they say. And when they write:

We need innovative policies that move beyond the limited existing [affordable housing] programs. The most promising…would provide direct subsidies to create permanently affordable housing…. The question is whether we have the political will to overcome local opposition to new development and to change policies, like the mortgage interest tax deduction, that currently do more to subsidize middle- and high-income homeowners than struggling low-income renters.

…they sound very similar to what we’ve written at City Observatory, where we’ve criticized the limited scope of existing affordable housing programs, advocated for innovative new programs to give direct housing subsidies to the low-income, talked about the political difficulties of local development politics, and argued for cutting the wasteful and regressive mortgage interest tax deduction.

So where’s the rub? That comes with our differing views on whether new market-rate housing construction can help even if that housing is targeted at high-income households. For Karner and Benner—and Dan Immergluck, also of Georgia Tech’s planning school—the answer is no. “To be sure, more supply is needed,” Karner and Benner write, “but unless it is targeted to those who need it most, it will only help wealthier residents.” Moreover, they add, high-income housing is already well supplied.

Our view is that this makes a fundamental mistake by implying that some housing is inherently “high-end” and other housing is inherently “low-end.” In fact, nearly all “low-end” housing is just high-end housing that became cheaper as it aged—in wonk terms, it “filtered down.” In the same way, gentrifying neighborhoods don’t become expensive because all of their “low-end” buildings are torn down and replaced with new “high-end” buildings: in San Francisco, like Brooklyn, Chicago, and other US cities, the vast majority of people in gentrified neighborhoods live in homes that have been around for decades, a century, or more.

Rather, these older homes become expensive because wealthier people become willing to pay more for them. Sometimes, that’s because landlords do major renovations; but other times, it’s simply because the area has become more desirable as a result of job growth or just the growing demand for urban living, and those are the only places in the neighborhood to live. When a landlord finds that she has many people bidding for her apartments, she will tend to rent to whoever can pay the most—increasing the rent until lower-income people drop out of the running. Adding more housing to the neighborhood, even if it’s expensive, will divert some of those high-income people from bidding on older apartments—which means less competition between high- and low-income people for the same homes, and fewer old buildings that “filter up” to become more expensive.

 

Immergluck directly addresses this “filtering” problem. He admits that it is a major source of “naturally occurring” (or market rate) affordable housing, but goes on to say that the process simply doesn’t work in neighborhoods experiencing rapid gentrification, “because land values and rents rise as the neighborhoods become more desirable and developers bid up land values.”

Of course, we think it’s crucial make the why and how of rents being bid up: generally, it’s because the number of people wishing to live in a neighborhood grows faster than the number of places to live, and the latter is largely a result of legal restrictions on the kinds and number of homes that can be built.

Even so, there’s some agreement here, too. Some markets may be so far out of whack that it may be impossible to restore affordability—but they’re exceptional. It is certainly true that in the hottest urban neighborhoods, where the number of people who would like to move in is truly massive—think central San Francisco, or lower Manhattan—it would be very difficult to build enough market-rate housing to avoid so much competition for housing that low-end apartments “filter up” to become more expensive.

But for one, most cities and most neighborhoods are not like central San Francisco or lower Manhattan, and don’t have such overwhelming demand. And second, as Immergluck concedes, filtering can still work more broadly, “in the metropolitan context.” That’s crucial, as an increasing number of metropolitan areas don’t just have some unaffordable neighborhoods—the entire region is unaffordable, pushing lower-income people to other, lower-cost parts of the country. Arresting that trend, which has been called “the new exclusionary zoning,” is hugely important to creating equitable cities, and it can’t be done without building more housing. Thanks to filtering, that’s true even if, as will probably be the case, most of that new housing is built at the higher end of the market.

Next week, we’ll be releasing our latest City Report, which maps the location of consumer-facing businesses around the nation to provide a new, quantitative measure of a city’s street-level vitality—one facet of Jane Jacobs’ famed “sidewalk ballet.” Look for the full report, as well as detailed maps and breakdowns for each of the 51 largest US metropolitan areas, on our website.

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What City Observatory did this week

1. More driving means more dying. Traffic-related deaths increased more than 11 percent over the first nine months of 2015. The cause isn’t hard to detect: cheap gas prices and a recovering economy have more people driving, and just as traffic deaths fell when driving fell in the late 2000s, they’re rising as Americans drive more. While some organizations try to blame the increase on driver behavior—on cell phones, for example, which is hard to square with the declines in traffic deaths from 2006 to 2014—the reality is that our transportation system is designed in a way that nearly guarantees huge human costs.

2. With highways, be careful what you wish for. A new plan to widen I-55 in Chicago is based on a commonly-held idea: more highways means less traffic. But a Google-assisted trip to cities with double or even triple the highway capacity per capita of Chicago reveals that even places like Atlanta or Houston that have gone to extreme lengths to avoid traffic congestion, spending billions of dollars to push highways through neighborhoods, still have lots of traffic congestion. The problem is that cars take up a lot of space—too much space for them to always be an efficient way to get around big cities.

3. Urban myth busting: New rental housing and median-income households. It’s a common argument: new high-end housing is a cause of our housing crisis. But it doesn’t fit the evidence. In fact, new housing has historically been too expensive for low- or moderate-income households—just as new cars (average price today: $34,000) are. Most housing becomes affordable the same way that cars do: it ages, and the relatively affluent owners move on to newer, trendier offerings. But in places where there is little new housing but strong demand, that process has been interrupted, leading the affluent to hold onto their old housing, keeping its prices high.

4. Costly misses on convention centers. University of Texas – San Antonio professor Heywood Sanders writes a guest post on the problem of systemically over-optimistic projections about the utilization and positive economic benefits of new publicly funded convention centers. Focusing on a new proposal in Austin, Sanders shows that the new projection mimics one made two decades ago, even though the first fell woefully short of reality: while it projected nearly 100 trade shows a year, the center hosted just 40 in 2013.

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The week’s must reads

1. We often use economic arguments and studies to inveigh against the problems created by cities’ minimum parking requirements. But sometimes it’s best to just look at a single example on the ground. That’s what the blog Urban Cincy does, highlighting how the redevelopment of a historic building in that city’s Over the Rhine neighborhood is threatened by parking requirements that did not exist when it was built. While developers have found a 175-space lot a few blocks from the building, it’s not clear whether the city will give a variance to allow those spaces to be used for the building’s requirement. As you can see below in the image from Urban Cincy, the building and its streetscape would clearly be improved by a giant parking lot.

2. At CityLab, Amanda Kolson Hurley has written a three–part series on the amazing demographic changes in the Minneapolis-St. Paul suburbs—changes that reflect, and perhaps predict, broader shifts around the country. Hurley shows how once-90 percent white suburbs have significantly diversified, with immigrants from Asia, Africa, and Latin America, as well as people of color moving out from the central Twin Cities. But as they have diversified, they are also facing increasing problems of poverty and resegregation in the suburbs. Hurley dives deep into the debate over exactly how much establishing diverse, stable, opportunity-rich suburbs depends on battling racial segregation.

3. At Planetizen, Joshua Drucker raises concerns about economic impact statements in a piece that makes good joint reading with our own guest post about convention center projections. Drucker points out that economic impact statements often depend on the assumption that previous trends can continue indefinitely, ignoring issues like capacity constraints that may make that untrue. He argues that while economic impact studies are important, both practitioners and community members need to be educated about their shortcomings and take steps to minimize them, including ending false claims of precision, using multiple methods, and building different scenarios.

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New knowledge

1. At CityLab, Richard Florida covers a new study from Trulia on the continued rise of renting. The proportion of American households that rent their housing has continued to rise during the recovery from the recession, reaching 41.1 percent in 2014, compared to 36.1 percent in 2006. The rise has been especially pronounced among younger people, with 71.6 percent of 18-to-34-year-olds renting in 2014, up from 62.5 percent in 2006. While some of the increase may be due to economic issues, even high-income households are seeing a rapid increase in renting.

2. How many people actually use those huge parking lots in front of so many suburban—and many urban—retail stores? Jennifer Evans-Cowley of The Ohio State University led a team that used aerial imagery to measure parking use around the Columbus, Ohio metropolitan area. It probably won’t shock you to hear that Evans-Cowley’s team found massive underuse everywhere they looked: on average, parking lots were just 28 percent occupied (or nearly 300 percent oversupply), with the highest utilization rate being 69 percent (or about 45 percent oversupply). Meanwhile, the massive, largely empty parking lots—which may be required by local zoning codes—force buildings to be more spread out, making it more difficult for people to walk or use transit to run errands.

3. CityLab covers a new study from Elliot Anenberg of the Federal Reserve and Edward Kung of UCLA on how food trucks decide where to set up shop. The researchers underline the importance of mobile technology in connecting consumers with food trucks, and the ways that these mobile shops can benefit from consumers’ preference for variety in their food. Interestingly, New York City is a major outlier in having relatively few online searches for food truck locations—perhaps, as CityLab‘s Richard Florida speculates, because the city’s dense land use patterns mean there are so many options within a short walking distance that searching is unnecessary. (Surprisingly, Portland Oregon—which has one of the nation’s largest concentrations of free-standing food vendors—ranks very low on the “food trucks” Google Search list, possibly because in Portland they are called “food carts.”)

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Today’s guest post comes from our colleague Heywood Sanders, Professor at the University of Texas San Antonio, and author of Convention Center Follies.

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Lots of people make guesses about the future. So do cities. And cities often employ “expert” consultants, who presumably have a wealth of knowledge and expertise to inform their guesses, and provide more accurate and precise forecasts of the future.

But those forecasts don’t always prove accurate and effective. And consultants may be prone to telling city leaders what they’d prefer to hear, sometimes leading to dire consequences for the cities and their residents.

One cautionary tale took place in Austin, Texas. In the mid-1990s, Austin was considering expanding its convention center, so it hired a consultant, Charles H. Johnson, to make two separate reports forecasting the effects of such a project. Both studies depicted a glowing future if the convention center expansion was built: double the convention events, double the attendance, double the hotel room nights. The city, presumably at least partly thanks to these figures, went ahead with it.

 

Almost two decades later, the city wants to do it again—but their own analysis shows that Austin has yet to see all the predicted benefits from the first round of expansions.

This year, Austin has once again contracted with Johnson to make a recommendation about building an even bigger convention center. Not surprisingly, the 2015 report is rosy about the expansion. But it also provides actual attendance figures for the first round of expansions, allowing us to compare Johnson’s projections from the 1990s with what has actually happened.

The comparison is not flattering. Where the 1990s reports forecast 98 annual conventions and trade shows, the center just managed to land 40 in 2013. Johnson had also forecast that expansion would more than double attendance figures, from 150,000 to 329,00. But the expanded Austin center housed 186,675 convention and trade show attendees in 2013, the most recent year in the new report. Hotel room nights likewise fell far short of projections.

On top of that, it turns out that not only does history repeat, but so do dubious projections of the future. The 2015 report suggests that in “Year 8” of the newly proposed convention center expansion, there will be 311,000 hotel room nights—roughly what the 1990s analysis projected for the first round of expansion.

Nor is Austin the only city to find itself in this position. Johnson himself also worked on a report for a proposed Boston convention center, suggesting that it would produce 794,000 hotel room nights by 2012. While the center that eventually was built was somewhat smaller than the one Johnson analyzed (at 516,000 rather than 600,000 square feet), it generated only a fraction of the business: just under 265,000 hotel room nights in 2014. And Dallas Magazine detailed some of the projections and accounting shenanigans surrounding that city’s convention expansions earlier this year.

You might think that someone in Austin—perhaps the Austin Convention Center director, the city manager and staff, or the city’s mayor and council—would bother to check on the track record of convention center projections, and those of Johnson in particular, before commissioning a study. You might ask how Johnson came up with his projection for the currently proposed expansion. And you might wonder how an “expert” consultant gets to be considered “expert.”

There is clearly a danger of “selection bias” going on here.  The municipalities that commission economic impact studies and forecasts are looking for a justification to build these facilities. Typically they are sponsored by convention and visitor bureaus, or other special purpose entities with a strong vested interest. They choose the consultants to conduct the studies. Confronted with a choice of consultants who invariably produce high numbers and go forward recommendations and other consultants who are more pessimistic and cautious, it’s likely that those commissioning the studies will choose the more optimistic firms. Over time, this will weed out the pessimists, and only optimists will be left. This theory has some support in academic research.

When cities commission feasibility studies, and especially when the results of those studies will guide the use of millions of dollars of public money, there ought to be some reason to believe that those reports will be accurate. Part of that is looking at the track record of similar studies by the same authors and using the same methodology. Cities and voters should be able to evaluate the people being hired both for their reliability—how close their projections are to observed outcomes—and their bias, or whether their projections consistently over- or under-shoot actual results.

Without some assurance of reasonable accuracy on these fronts, it’s hard to know why cities should continue to base major economic development investment decisions on these often faulty studies.

What City Observatory did this week

1. More evidence on the “Dow of cities.” We’ve argued before that evidence of shifting demand for urban real estate can be read as a sort of “stock” in cities—and that cities’ stock has been rising. A new report from Zillow underscores this trend. It finds that for the first time, the average urban home is worth more than the average suburban home—a major reversal of decades’ worth of demand for more suburban living. On a square foot basis, urban homes have been ahead for some time, and now enjoy a 25 percent price premium compared to suburban homes, and the gap is widening.

2. Why the first-time homebuyer is an endangered species. The percentage of all homebuyers who are purchasing their first home is at a historic low—30 percent. We look at a number of economic and demographic factors that are behind this trend, including lower incomes, more debt, and higher home prices. While homeownership isn’t going away, it is experiencing “gerontrification,” as a larger and larger percentage of homeowners are in late middle age or older.

3. Report: Market-rate housing construction is a weapon against displacement. For years, a large body of research has shown that regions that build more housing have lower home prices. But now, a report from the California Legislative Analyst’s Office has directly linked market-rate housing construction with lower rates of displacement. The study, which looks at neighborhoods in the San Francisco Bay Area, finds that those with “high” levels of housing construction had a 26 percent chance of experiencing displacement, while those with “low” levels of construction had a 46 percent chance. Importantly, inclusionary zoning policies played little if any role in reducing displacement—the effect was nearly the same in areas without such policies.

4. Inclusionary zoning has a scale problem. While much of the debate over local policies to promote affordable housing has focused on inclusionary zoning—the practice of requiring market-rate developers to sell or rent some proportion of their units at below-market prices—a look at the record of such policies in addressing major affordable housing shortages suggests that they are working at simply too small a scale to be really effective. This isn’t a matter of tweaking existing laws, but a basic shortcoming in the approach. The most successful IZ policy in the country, in Montgomery County, MD, has produced 14,000 units in nearly 40 years, a quantity only possible because it has nearly doubled in population over the same period—and even then, by its own count, at least 78,000 households remain burdened by housing costs. More ambitious approaches to solving our affordability problems are needed.

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The week’s must reads

1. In Texas, state legislators have effectively given themselves the power to single-handedly veto affordable housing projects in their districts. A feature by the Texas Observer examines how this system ends up segregating low-income housing into already low-income neighborhoods, exacerbating economic and racial segregation, and limiting low income Texans’ access to jobs and high-quality public resources. Although the focus is on state policy, the practice of giving vetos to individual state legislators, and its exclusionary consequences, reflects what we know about giving power over development only to local decision-makers.

2. President Obama has released his ambitious, $98 billion 2017 Department of Transportation budget proposal. At CityLab, Eric Jaffe covers many of its ambitious provisions: a doubling of public transit funding, to nearly $20 billion; more than doubling funding for the popular TIGER grant program; and $7 billion for high-speed rail. Beyond dollar figures, the budget would empower metropolitan planning organizations by passing funds directly to them, rather than through more highway-favorable state DOTs. It would also add a $10 a barrel tax on oil, raising revenue and pricing in some of the social costs of that polluting energy source. Oh yeah: and it’s all dead on arrival at the Republican-controlled Congress. But for an argument that it matters anyway, check out Robert Puentes and Joseph Kane at Brookings.

3. For decades, official policy in most US cities has been to dedicate large parts of the public way for private car storage, an effective subsidy to drivers and blow to other uses, both transportation-related as well as social, commercial, or artistic. Justin Fox of Bloomberg View takes a look at a rising backlash to that practice, with urban leaders taking a page from Donald Shoup’s groundbreaking The High Price of Free Parking and charging car owners for their use of valuable public land. He also notes the decline of another kind of automobile land use subsidy: the practice of requiring new buildings to include off-street parking spaces.

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New knowledge

1. According to a new report from the Center for Budget and Policy Priorities,many state job creation programs are misguided. While many such policies are targeted at luring firms from other states, or lowering corporate taxes across the board, CBPP argues that more than 80 percent of job growth is actually driven by companies already within a state, and by startups and other small companies with little taxable income. In fact, while startups created nearly 3 million jobs per year from 1990 to 2009, businesses older than a year shed as many jobs as they created.

2. Research suggests that diversity and immigration can increase innovation and entrepreneurship. But a new study from Abigail Cooke of the University of Buffalo and Thomas Kemeny of the University of Southampton suggests that those benefits depend on “inclusive” institutions (like voluntary business and civic organizations, “third places,” and pro-immigrant ordinances) that help connect immigrants to the economy. In some cases, cities with fewer inclusive institutions see no statistically significant benefits from immigrant diversity, even as other cities with such institutions see strong economic benefits.

3. Housing Choice Vouchers (aka Section 8) provide low-income renters with a wider set of housing and neighborhood choice than conventional public housing—a feature that earns praise from affordable housing advocates (and from us at City Observatory). At The American Prospect, Jake Blumgart examines some of the barriers voucher holders still face in the Philadelphia region, and finds that they are numerous: from outright discrimination to a lack of guidance for voucher holders unfamiliar with many parts of the region. As a result, less than four percent of all vouchers were used in neighborhoods of “maximum opportunity,” and the program has done much less to mitigate patterns of segregation than many had hoped.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

I live in Chicago. In Chicago, like pretty much everywhere, people complain about traffic. Almost every day, our roads and highways get congested at rush hour, leaving people crawling along supposedly high-speed corridors, wasting time, money, and gas. This is what it looks like on a typical Monday at 5:35 pm:

 

Obviously, no one is happy about this. So some people argue that we ought to build more highways. If the problem is that there are too many cars for the number of highway lanes, then surely building more highway lanes will improve the situation! In fact, just recently our governor announced that he was planning on adding at least one lane in each direction on I-55, which runs southwest out of the Loop.

It turns out that it’s true that Chicago has relatively few highways: by one measure, fewer than any other major metropolitan area, with just 0.33 highway lane-miles per 1,000 people. So let’s go on a Google-assisted fact-finding mission to some other cities with more highways to see if they’ve solved their traffic problems. Here’s Boston, which, at 0.62 highway lane-miles per 1,000 people, has almost double the highway capacity of Chicago:

 

Hm. That still looks pretty bad. Maybe the issue, though, is Boston’s famously narrow streets in its dense central city. (After all, people also blame Chicago’s congestion on too many people packed into too little space.) So here’s Atlanta, which has a similar number of highway lane-miles per 1,000 people (0.56), but is way less dense and has way bigger surface streets:

 

No dice. Okay, let’s go for even more highways. Remember, at this point we’ve nearly doubled Chicago’s highway capacity, spending many tens of billions of dollars, declaring eminent domain on hundreds of thousands of homes and businesses, and tearing apart dozens of neighborhoods. But what if we nearly tripled Chicago’s highway capacity? Houston has 0.82 highway miles per 1,000 residents, massive surface streets, and very few high-density areas like Boston or Chicago. Here’s what their rush hour looks like:

 

Obviously, this is not exactly a scientific study. Fortunately, however, other people have done those, and they find something similar: more road capacity does not necessarily mean less congestion. If a wider highway makes traffic flow faster, then some number of people who had been using other methods of transportation, or just making fewer trips, will start driving on the highway—adding more cars until traffic gets so bad that they stop. Over the longer term, additional highway capacity encourages developers to build ever farther into the suburban periphery, advertising the transportation benefits of being right next to a big highway that can bring you into the metropolitan area. The people who buy homes out there are then locked into driving longer and longer distances to get to work, go shopping, and meet people, each of which ends up increasing traffic congestion. That’s a big reason why people in Houston drive, on average, 12.2 miles to work, as compared to 10 in Chicago—even though Houston’s metropolitan area has almost a third fewer people than Chicago’s.

The problem, fundamentally, is one of space: cars take up a huge amount of physical space per person, compared with other kinds of transportation. In smaller cities, you might be able to accommodate them without total gridlock, at the cost of downtowns that are mostly parking lots, and streets that are unsafe for children or the elderly to cross. But as metropolitan areas grow, it simply becomes impossible to create enough space for cars. Even cities that have grown up almost entirely in the automobile era, and have catered to it in about as extreme a way as you can imagine, suffer from daily traffic jams.

 

When you’re sitting in traffic congestion, it’s natural to wish it away, and to imagine that with just a little more space, you could whisk yourself along at higher speeds. But if that’s the vision, it’s worth checking on other cities that have done just that. And it turns out that almost all of them, even ones that have double or nearly triple the highway capacity of a place like Chicago, still have the same problems. Maybe it’s time to look for different solutions.

We’ve known for a long time that housing shortages are a major driver of high housing prices—and that, as a result, places that prevent new construction also tend to have big affordability problems.

But now, for the first time that we’re aware of, researchers have taken the next step to showing directly that places like that prevent new construction end up inducing more displacement of their low-income residents.

That finding comes from California’s Legislative Analyst’s Office, which just released a new report on the state’s ever-growing affordability crisis. Using a broad definition of displacement—any decline of a neighborhood’s low-income population relative to its total population—the LAO shows that, even controlling for other demographic factors, Bay Area communities with the greatest expansion of market-rate housing also see the least low-income displacement.

The effect is strong: changing from a low-construction neighborhood to a high-construction neighborhood was associated with a decline in the probability of displacement from 46 percent to 26 percent.

And crucially, the LAO researchers found that this effect was independent of inclusionary housing programs. That is, new construction reduced displacement not because it included low-income set-aside units, but because it helped keep market prices lower. In fact, the presence or lack of an inclusionary housing policy had a much, much smaller effect on displacement than the amount of market-rate housing construction.

That’s the headline, but there’s much more to see in the report. It covers the challenges to expanding many of the state’s low-income housing assistance, and demonstrates the importance of filtering to creating “naturally occurring” affordable housing—and how zoning restrictions hamper that process. It bears close reading for anyone invested in creating affordable communities.

Over the last few months, we’ve outlined a number of policy ideas that address the problem of housing affordability by dramatically expanding the number of people receiving some sort of housing assistance. (Low-income people, that is. We think the number of affluent people receiving housing assistance is already pretty high.)

• We suggested taxing the growth in residential property values. Not only might that provide a disincentive to speculation that drives up market prices, but just a one percent tax would have raised $1.6 billion in the Bay Area in 2013 alone—more than five times San Francisco’s historic, but one-time, bond issue for affordable housing under Proposition A.
• We argued for making Housing Choice Vouchers an entitlement. At the moment, less than a quarter of households that qualify for low-income housing assistance actually receive any, because Congress simply doesn’t appropriate enough money. But we could pay for housing vouchers for every single qualifying person just by dropping one kind of housing subsidy—the mortgage interest tax deduction—for people making over $100,000 a year. Actually, that’s not quite true: we’d still have more than $10 billion left over to increase the value of the deduction for the middle class.
• We suggested that, perhaps even better than expanding Housing Choice Vouchers, we could make low-income housing assistance just as easy and automatic as we make upper-income housing assistance. We could put it in the tax code, by creating a refundable housing voucher tax credit.

None of these policies is on the brink of passing in Congress, or any state capitol or city hall. But they’re worth talking about both as a vision for what an equitable housing policy of the future might look like—and also as a contrast to the failure of scale of today’s marquee housing policies.

Local housing subsidies are woefully out of scale with the problem of affordability

As we noted above, less than a quarter of those who qualify for direct federal low-income housing subsidies get them. But when it comes to housing assistance, that’s the good news. Local housing policies—which, for obvious reasons of political scale, are often the focus of neighborhood activists, researchers, and planners—are in even worse shape.

Take inclusionary zoning, or IZ. Details vary from place to place, but typically, IZ requires housing developers to sell or rent some proportion of their units below market rate. In exchange, the city often allows the developer to build more densely than otherwise allowed, as a way of defraying some of the cost of the below-market units. And sometimes the developers have the option of paying a fee into an affordable housing fund, rather than building the units themselves.

Politically, the appeal of IZ is clear. First and foremost, it’s a way of financing housing that doesn’t require raising property or sales taxes. Second, it creates another hurdle for development, which is almost always a popular move in homevoter regimes. And it has great symbolic value: because of the high cost of construction, new buildings are often the most expensive housing in a neighborhood. Including below-market units in new luxury buildings can be a statement about the value of economic integration.

Unfortunately, IZ is more powerful as a symbol than as a way of helping people. A chart published in a New York City Planning Department report last fall makes this point rather eloquently on its own.

There’s a lot going on here, but the most important lines are “Total Unit Production” and “Total In-Lieu Fees Collected.” Washington, DC, for example, created 80 units of affordable housing and collected no money in fees between 2006 and mid-2014. In the DC metropolitan area, 46 percent of renters are burdened by their housing costs. Even allowing for some differences in the District itself (and our quibbles with the 30 percent ratio used to get that number), it’s clear that it would be generous to refer to 80 units of affordable housing—roughly 10 per year—as “token.”

And while DC is a particularly egregious example, the other cities are hardly exemplars themselves. San Francisco looks relatively impressive at 1,560 units—until you realize that’s under 140 units per year in a city of over 800,000 people where median home prices are well above what even upper-middle-class, let alone low-income, households can afford. (Indeed, San Francisco’s “affordable” units go to families of four making as much as $91,700.) Nor do the city’s in-lieu fees make up much of a difference: about $5 million a year, which, according to numbers from Kim-Mai Cutler, might buy about 20 units.

The most successful inclusionary zoning program relied on extremely rapid population growth

Arguably the most successful inclusionary zoning program is in Montgomery County, Maryland, outside DC. Montgomery County’s IZ program, the first in the country, has created over 14,000 affordable units since 1974, or more than 350 a year. But while that’s relatively impressive, it’s hardly met the need: according to the County itself, there are at least 78,000 households that are still cost-burdened. Moreover, Montgomery County’s relative success has been predicated on truly massive population growth, nearly doubling from 564,000 to over a million people from 1974 to 2013. Without that kind of growth, the County would be unable to produce as many IZ units—and, indeed, as population growth has slowed, so has the number of new units. While Montgomery County produced an average of 441 units per year from 1976 to 1999, from 2000 to 2013, it has averaged just 245. Cities that are unable or unwilling to accommodate very rapid market-rate housing construction won’t be able to replicate these results—which still haven’t come close to solving the problem.

 

 

None of this is necessarily an argument against inclusionary zoning on its own: local activists may reasonably conclude that this is the best that can be done at the moment. They may similarly decide that the tradeoff of slightly higher market prices is worth creating units at prices below what could otherwise be reached. (Though advocates frequently bristle at the suggestion that inclusionary zoning drives up the price of non-subsidized housing, evidence seems to suggest that it does, at least in markets with high demand and relatively restricted supply—that is, the sorts of markets where IZ is likely to be implemented. And, in fact, when IZ policies are being promoted to local homeowners, advocates sometimes pivot to arguing that affordable housing will be good for property values—in other words, it will make housing more expensive.)

We need to think bigger than inclusionary zoning

But there is no way to argue that inclusionary zoning is coming close to meeting the demand for below-market housing—or, importantly, that it will ever be able to do so. A hundred and forty units per year in San Francisco is not off by ten percent, or fifty percent, or even just one order of magnitude. Moreover, any dramatic expansion of IZ would also involve increasing the amount of private housing development by a similar amount, since IZ depends on piggybacking off of market-rate development—something that would be politically unthinkable in almost any jurisdiction.

In short, IZ needs to be reframed as not a centerpiece, but a minor part of an affordable housing agenda that actually serves everyone who needs help. Advocates need to push government to act on the scale of the problem, and one of the first steps is acknowledging out loud how far we have to go. At a local level, perhaps that can be done with a housing capital gains tax dedicated to funding affordable housing. At a federal level—and it seems more than likely that only the federal government has access to the resources to fully close the gap between the low-income housing assistance we need and what we currently have—expanding Housing Choice Vouchers, LIHTC, or creating something like the housing voucher tax credit could make a big difference. And, of course, broadly affordable housing requires reasonable market prices, too—which requires easing some of the regulations that prevent new housing for new residents and artificially inflate housing costs. Note the findings released just yesterday by the California Legislative Analyst’s Office, which found a much stronger connection between market-rate construction and reduced displacement than inclusionary housing policies.

Again, the point is not that inclusionary zoning is the enemy of affordable housing. It’s that it’s not that great a friend. The fact that IZ may be on the edge of what is politically possible today should not blind us to the fact that the cities and neighborhoods we envision require vastly more ambition.

A few months ago, we offered a proposal to dramatically increase funding for affordable housing and put a damper on real estate speculation: tax housing capital gains. While San Francisco’s voter-approved Proposition A will produce a one-time infusion of $310 million for below-market housing, and that city’s inclusionary zoning ordinance has produced just about $30 million per year in in-lieu fees, a barely-there one percent tax on the total increase in value of residential property in the Bay Area would have given local governments $1.6 billion in 2013. (Update: We should clarify that there is already a federal residential capital gains tax, but its revenues aren’t targeted at affordable housing, and it exempts the first $250,000 of gains entirely. As we suggested in the first piece we wrote about this, we have in mind something more locally administered and directly targeted at affordability. We’re also fine with exempting some “normal” amount of returns, but a quarter million dollar profit goes beyond “normal” appreciation.)

Now, that idea has received some backup from across the Atlantic. As reported in The Guardian, Britain’s National Institute of Economic and Social Research, or NIESR, released a paper arguing that a capital gains tax on housing would be one of the best tools to tamp down on an overheated real estate market.

 

NIESR focuses less on the potential for such a tax to generate funds to subsidize affordable housing than on its potential to even the playing field between housing and other kinds of investments, since the UK, like the US, gives strong tax preferences to residential property owners. That, in turn, would make residential real estate speculation less attractive, slowing rapid increases in property values and, hopefully, making housing market crashes less disruptive as well. In the American context, reducing tax incentives to buy housing might also balance the scales a bit more between renters and homevoters, easing the political imperative for local governments to pursue development policies that maximize homeowners’ investment returns.

The NIESR paper also makes a strong case that a real estate capital gains tax would be a boon for intergenerational equity. Rising real home prices are pretty much a straightforward transfer of wealth to older generations (who own homes) from the younger generations (who must pay, either through mortgages or rent) to purchase them. As in the United States, homeownership in the UK has not only been declining markedly, it has been experiencing “gerontrification”: as older people hold onto homes whose value has increased dramatically, homeownership among young people has crashed, as the combination of higher home prices and a weak economy mean that fewer and fewer of them have the means to purchase real estate.

Moreover, also like in the US, housing is an ever-larger proportion of overall wealth in the UK, and therefore a major driver of wealth inequality. Residential and nonprofit real estate now represents nearly 60 percent of all wealth in Great Britain. And as MIT graduate student Matthew Rognlie has shown, virtually all of the increase in the ratio of capital gains to wage income over the last several decades—the prime macroeconomic driver of wealth inequality—has come from housing.

The point of all this, as ever, is not that homeownership is bad, or that homeowners should be punished. The NIESR paper echoed us in advocating that a real estate capital gains tax be charged only when a home is sold, so that people on low or fixed incomes whose homes appreciate in value rapidly aren’t caught without enough cash to pay. They also agreed that homeowners could have some amount of price appreciation exempted from the tax as a “normal” return. But when demand for housing in a particular neighborhood or city skyrockets, there’s no reason that current homeowners should reap all of the benefit at the expense of people who would like to buy but can’t because prices are too high. A real estate capital gains tax would not only dampen market price increases, but would represent a sea change in the amount of money available for below-market housing in high-demand areas. It should be on the agenda for anyone who’s worried about inequality and affordable housing.

What City Observatory did this week

1. Don’t demonize driving—just stop subsidizing it. City Observatory likes to make data-driven arguments—but the rhetorical frameworks we use to explain the data matter, too. Here, we take a minute to try to reframe the urbanist argument about the role of cars in a “good” city. While advocates’ rhetoric sometimes makes it sound like cars are inherently bad, we think the issue is really that an over-reliance on cars is bad. Refocusing the problem in that way doesn’t just make for a much more politically palatable argument, given that most people will be keeping at least one car for the foreseeable future—it also makes the policy issue clearer, by focusing on how we subsidize car ownership in ways that encourage overuse and dangerous use.

2. Who’s afraid of affordable housing? The acrimonious debate over housing policy in San Francisco breaks down into two main groups: one that wants to ease regulations on new housing construction, and another that wants to encourage only below-market housing construction. So it’s odd that a proposed ordinance to ease regulations on 100 percent below-market housing ran into major opposition. But that opposition highlights, yet again, the ways that giving a development veto to local groups can serve to make housing less affordable—even when those same local groups are publicly committed to improving affordability.

3. Bursting Portland’s urban growth boundary won’t make housing more affordable. The Oregon Legislature is considering a package of bills that would trade a repeal of the state’s ban on inclusionary zoning for opening up the city’s urban growth boundary to new suburban development. But that’s a deal that affordable housing advocates should turn down: based on the experiences of other American cities, inclusionary zoning is likely to produce only token numbers of affordable units, compared to tax-backed programs Portland already runs—or other measures it could take (see the post below). Meanwhile, opening up the urban growth boundary would be unlikely to relieve much pressure on the market of housing in the central city, where the major affordability issues exist.

4. More support for a real estate capital gains tax. A British think tank makes the case for taxing windfall gains to residential property values—one that dovetails very nicely with the argument we made previously that Bay Area governments, and other local governments seeing rapid housing price growth, ought to tax the growth in residential property values and use the money for affordable housing. Just a one percent tax could have raised $1.6 billion in the Bay Area in 2013, orders of magnitude above the value captured by San Francisco’s inclusionary zoning ordinance.

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The week’s must reads

1. In recent years, policy gridlock at the federal level has led to talk of new leadership from mayors and other local urban leaders. But in City Limits, Judi Kende of Enterprise Community Partners makes the case that cities simply can’t solve the challenges they face without federal help. Many of her points echo arguments we’ve made as well—including that a lack of funding means only 23 percent of low-income households eligible for housing subsidies actually receive help—though while we’ve focused on demand-side solutions like vouchers, Kende suggests expanding affordable housing supply through programs like the Low Income Housing Tax Credit. Either would involve massively more resources than are currently marshalled by marquee local initiatives like inclusionary zoning—resources that only the federal government has access to.

2. Last week, we linked to an LA Times article about that city’s struggles with public transit ridership. This week, a number of writers pushed back on the idea that LA transit is seeing any such sustained decline. Transit consultant Jarrett Walker points out that while ridership is down since 2006, it’s up since 2005—and way up since 2004. In other words, ridership data is noisy, and the overall trendline is unclear. Transit Center says that if there is a post-Recession ridership drop, declining bus service—not a lack of demand—is to blame.

3. Though we often talk about the consequences of transit infrastructure on urban equity and quality of life, the ongoing lead poisoning crisis in Flint, Michigan, is a reminder that other parts of the built environment are just as crucial. And in case you thought this story doesn’t affect people who live outside Michigan, Vox dug through numbers from Pennsylvania and found that 18 of 20 cities in that state have lead exposure rates greater than Flint’s. While Flint’s issues are about lead water pipes, Pennsylvania’s are largely about lead-based paint in older buildings. But in both cases, these are stories about significant health effects of the urban built environment—something that ought to concern urbanists.

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New knowledge

1. It’s another story for the “Dow of cities” file: Consumer Affairs reports on a new Zillow study showing that the value of urban housing continues to grow faster than that of suburban housing. (They also cite some of our work as background.) In fact, in some metropolitan areas—including Boston, Washington, DC, and San Francisco—the average urban home is now worth more than the average suburban home, reversing a decades-long pattern. The change is even more dramatic when adjusted for home size. That’s just another piece of evidence of the long-term shift of demand towards urban centers.

2. We talk about income inequality and wealth inequality, but what about housing price inequality? A new paper from David Albouy of the University of Illinois and Mike Zabek of the University of Michigan tracks this kind of inequality from 1930 to 2010. They find that home price inequality declined through the middle of the 20th century, before beginning to climb again in the 1970s and 80s, reaching roughly 1930s levels by 2010. The changes are explained not by the quality of housing itself, but by the value of land—that is, the value of the location of housing. They write that their findings suggest that “regulatory and geographic constraints on housing supply,” like zoning, “may play a role” in housing inequality within cities.

3. A new report from New York’s Regional Plan Association takes aim at “the unintended consequences of housing finance.” The RPA argues that federal loan programs make financing mixed-use, multi-family urban infill projects more difficult than suburban-type single-use single-family homes, exacerbating the shortage of housing in the sorts of walkable urban neighborhoods that are increasingly in demand. They suggest easing regulations on, for example, the proportion of buildings’ square footage that is allowed to be used for commercial or other non-residential purposes, as the current cap rules out most multifamily buildings with ground floor retail under five stories.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Update: As reported by the San Francisco Chronicle, the SF Board of Supervisors has passed the ordinance in question.

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As bitter as the housing debate in the San Francisco Bay Area gets sometimes, no one disagrees that the region is facing a crisis of high costs. It’s just that some people believe the crisis can’t be resolved without easing some of the zoning regulations that make it more difficult to build new housing, exacerbating a severe shortage; and others believe that market-priced units will never help, placing all their hopes on building more below-market housing.

So surely a proposal to ease regulations on 100 percent below-market housing developments would sail through to victory, right?

Except it isn’t. As the Chronicle reported, the Planning Commission deadlocked on a proposed ordinance that would remove a lengthy regulatory hurdle, the “conditional use permit,” that’s required even for developments that meet existing zoning and face no community opposition. It can add months, or even a year, to all-below-market projects, slowing down production and adding significant costs to the developers. And all a “conditional use permit” requires is showing that the project is “necessary and desirable,” which one would think would apply to basically any below-market development in San Francisco.

 

So what’s the issue? Some of it appears to be local political grudges. But the proposal is also laying bare some of the inherent political tensions of local governance—even among self-described progressives. In short, neighbors are simply unwilling to give up any power to control what happens in their neighborhoods, even if it means fast-tracking 100 percent below-market housing that they admit their communities desperately need. The Chronicle quotes one Commissioner saying that the proposal was trying to “take away the public’s right to comment”—even though neighbors could call for a discretionary review if they happened to object to a project. But it seems that any reduction in the leverage Commissioners and neighbors hold over developers—even developers of all-below-market housing—is perceived as a threat. They’re not going to say no to the construction of more affordable housing, the argument apparently goes, but they’d like to maintain every possible option to do so if they change their minds.

And perhaps part of it is that some San Franciscans who have been opposing development on affordability grounds, when faced with the prospect of affordable development, have realized that they’re just against any development at all.

For those of us who don’t live in San Francisco, this anecdote serves mainly as another example of the problem of placing overwhelming power over urban policy, including development policy, at a very local level. Even where the need for below-market housing is overwhelming—and where residents self-identify as very progressive and pro-affordability—the immediate neighbors of development of almost any type tend to oppose it. And at the very least, they’re unwilling to give up their veto, even if that ultimately means that less affordable housing will be built. It’s not a coincidence that a study out of UCLA, released just over a month ago, found that municipalities with more onerous building permit processes—like, say, the conditional use permit—were associated with more segregation of the low-income.

The Commissioner who introduced the ordinance is now placing it on the ballot for a referendum. Hopefully, asking voters citywide to weigh in will allow them to place their values—and the region’s clear need for more housing, especially below-market—above maintaining maximum hyper-local power. We’ll see.

What City Observatory did this week

1. The market cap of cities. What’s the value of a city? We’ve taken a stab at answering that question—at least, the value of a city’s housing. Using a measure called market capitalization, or “market cap” in financial parlance, we can compare the economic weight of cities with major companies. Turns out San Francisco’s housing is worth more than three times as much as Microsoft, and all the housing in Columbus, Ohio is worth about as much as Bank of America. These comparisons may seem weird, but they do reflect real demand and value, and are a reminder of just how massively valuable our housing really is.

2. What is an “unequal” city? Higher levels of national economic inequality are bad. Higher levels of metropolitan area inequality are bad. So what about at the city or neighborhood level? Well, then it gets complicated. Given any level of metropolitan inequality, for some smaller part of that region to be less “unequal,” it would have to exclude some group of people: a neighborhood without rich people, or a municipality without anyone in poverty. But there’s a name for sorting people geographically according to their income: segregation. And segregation actually leads to worse economic mobility for the low-income. Ironically, then, fighting inequality at the local level means creating integrated neighborhoods that register higher levels of “inequality.”

3. Land use and transportation infrastructure: Two sides of a coin. When new highways are quickly filled up with cars, erasing any gains in the fight against congestion, those who want to continue building more and bigger roads sometimes point out that population growth along the highway interpret this as showing that things would have been even worse if it hadn’t been built. But this treats land use and transportation as if they are totally independent of each other—and they very much aren’t. Adding highway capacity out to the suburbs will encourage people to build more houses there; spending those same resources on improving more space-efficient transportation, like buses or trains, in the central city will encourage more development in the central city. That symbiotic relationship can’t be ignored.

4. In some cities, the construction boom is starting to pay off. After a long period of consistently fast rent growth, prices are flat or falling in Seattle, Denver, and Washington, DC, thanks in large part to an apartment construction boom in those cities. In fact, it’s a national phenomenon—the rate of rent growth has fallen by half in response to a 20 percent surge in apartment construction in 2015. Though the historical evidence connecting housing supply and prices is very strong, we had yet to see a housing boom correct price growth during this cycle—but now that evidence is arriving.

The week’s must reads

1. Nearly half of all states—23, to be exact—restrict the use of gas tax revenue for sustainable transportation projects, including transit, bike lanes, and sidewalks. AtStreetsblog, Angie Schmitt reports that dispiriting fact—but also that Colorado recently voted to reverse their own such restriction. That move, Schmitt argues, is one of “five things states can do to bring transportation out of the stone age.” The others: base project funding on clearly articulated goals; adopt more flexible street design standards; use transportation demand management; and give more resources to local governments.

2. We’ve written before about the power of smart transit investments—ones that create fast, reliable service that goes where people need to go, regardless of whether it’s by train or bus. Los Angeles may be seeing the results of the flip side of those policies, however, according to a blockbuster piece by Laura Nelson and Dan Weikel in the LA Times. As they report, the region is seeing dramatic decreases in public transit ridership in the midst of multi-billion-dollar investments in new rail lines. One possible culprit: significant cuts to bus service, which carries most riders in the region. Though it’s not mentioned in the article, the continued growth of parking supply—in part because of legal requirements—is also likely a factor.

3. In the least-in-demand neighborhoods of Baltimore, high-quality rowhomes might sell for just $50,000—but the cost of rehabbing an abandoned home can reach $100,000. Faced with those economics, Baltimore has joined the list of cities that see the demolition of vacant homes as a blight-fighting tool. But is such a plan actually in the long-term interest of the city? At Greater Greater Washington, a panel of writers and planners go back and forth on the virtues of demolition—and what might bring housing demand back to the city.

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New knowledge

1. Via CityLab, Reid Ewing and colleagues at the University of Utah have used data from Raj Chetty’s Equality of Opportunity project to measure the effects of urban sprawl on intergenerational economic mobility. They find that upward mobility is significantly stronger in metropolitan areas that are less sprawling. As a region’s “compactness index” doubles, the chances of a child in the bottom quintile’s moving into the top quintile increase from 8 percent to 11.2 percent. Given that “perfect mobility” would be 20 percent, that’s a very meaningful effect.

2. The relationship between a piece of land’s “accessibility”—how quickly someone can get from there to valuable jobs and amenities—and its price is well known: better accessibility means more expensive land. But what’s less well known is howchanges in accessibility on a given piece of land affect its price. Michael Iacono and David Levinson of the University of Minnesota look into the issue, and find that there’s less of an effect than you might think, both for automobile and transit access. They argue that’s likely because American cities tend to have mature transportation networks, and so most new projects will only slightly change the accessibility calculus. For us, the takeaway is that a city’s most accessible areas today are likely to be its most accessible areas for some time to come—so if you want to increase the number of people in accessible locations, it may be most efficient to increase density there.

3. The Brookings Institution released a new Metro Monitor report on the economic status of America’s major metropolitan areas, breaking down progress on “Growth,” “Prosperity,” and “Inclusion.” There are some interesting regional patterns, such as how Texas cities score very high on “Growth” and “Prosperity” (which include metrics like total jobs and average wages) but more poorly on “Inclusion” (which includes metrics like median wages and the employment-population ratio).

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

In the wake of our posts on the Katy Freeway in Houston, and US PIRG’s report on the country’s biggest highway construction boondoggles, we’ve heard one kind of pushback over and over. Sure, defenders of highway expansion admit, things are just as congested after reconstruction as before. But, hey, that’s a sign of success, because the suburban areas the highways serve saw a huge population boom! If it hadn’t been for the expansion, things would obviously be even worse.

We’ve heard this enough that we thought it merited one more short commentary on its own.

In short, these critics are forgetting that population growth doesn’t happen independently of transportation infrastructure—it’s profoundly shaped by it. In fact, research dating back at least to the 1950s has found over and over that highway construction in the urban periphery is associated with more housing construction there—and the depopulation or urban neighborhoods. It’s the land use side of induced demand: part of the way that highways fill themselves up with cars is by creating demand for housing near them.

 

In the absence of added highway capacity to the suburbs, more of that population growth likely would have been directed to more central locations—especially in a region, like Houston, with relatively lax restrictions on construction. That, in turn, would have reduced driving demand further out on the Katy.

It also would have helped reduce Houston’s dubious distinction the region with one of the longest average commutes in the country, at about 12 miles. Added density—not necessarily in the form of scary highrises, but human-scaled “missing middle” duplexes, townhomes, and small apartment buildings—would help free the region from the financially and environmentally unsustainable treadmill of expanding its automobile infrastructure, and support neighborhood retail districts, schools whose students can walk to class, and viable public transit service.

Of course, none of this is really specific to Houston. While many people talk about the relationship between transportation demand and transportation infrastructure as, so to speak, a one-way street (“more people are living way out in the exurbs, so we need to build more highways there”), the truth is that transportation infrastructure shapes its own demand as much as it is shaped by demand. More highways encourage low-density, auto-oriented development that then requires more automobile infrastructure; streets built for walking, biking, and transit encourage the kind of development that will take advantage of those ways of getting around (assuming, that is, that such development is legal), and create demand for more of them.

The difference is that high-capacity automobile infrastructure, on a per-person basis, is incredibly space-inefficient, expensive to both taxpayers and users, highly polluting, and dangerous. Not only do drivers not come close to paying the costs of building and maintaining highways, car-dependent development patterns impose huge social costs on the rest of us. Walking, biking, and transit infrastructure* generally do not.

* The one exception being that much rail infrastructure, in particular heavy rail subways, is very expensive in North America.

To some observers, planners’ promises that more housing supply will push down prices don’t seem to be working. In recent years, rents have jumped substantially, and it doesn’t seem like market forces are working to ameliorate this trend. Although the historical evidence linking faster housing construction growth and slower housing price growth is quite strong, it can often be difficult to convince people who don’t spend lots of time with regression printouts—that is, most people—of the relationship.

But there is good news on that front: rents in Seattle, Denver, and Washington, DC appear to be easing significantly. In what a local business paper describes as an “alarming deterioration”—though renters probably have different words for it—the average Seattle rent fell by $59 in the last quarter of 2015, following a long period of rapid increases. Not coincidentally, vacancies also increased by a full percentage point. The Puget Sound Business Journal reports that landlords have reason to worry that things aren’t going to get any “better” for them: another 21,600 units of housing under construction should hold down rent growth into the coming year, too.

It’s the same story in Denver. After a surge of new construction, vacancy rates shot up from 5 to 6.8 percent in the fourth quarter of 2015. As a result, median rents—which had grown by nearly $250 a month from the first to the third quarter of the year—fell by $7 in the last quarter.

 

And in Washington, DC, real estate firm Yardi Matrix says that rent increases have been held in check for the past year by the large number of new apartments coming online—and expects the same pattern to hold for 2016.

In fact, this is a national story. Overall apartment construction, which has struggled to keep up with the growing demand for rental units, surged by over 20 percent in 2015—and rent growth slowed to 3.3 percent in December, and is projected by Zillow to fall to 1.1 percent by the end of 2016.

 

The examples of Seattle and Denver ought to be a model for other cities seeing a surge of central-city housing demand. There is an alternative to the never-ending upward prices of regions like the San Francisco Bay Area, and it involves allowing housing supply to meet demand.

A key issue here is what you might call the “temporal mismatch” between demand and supply.  Demand can change very quickly for a variety of reasons: growth in the local economy, popularity of a particular neighborhood, the unattractiveness or unaffordability of homeownership, demographic changes, and so on. But supply changes slowly, because it takes time for developers to recognize that demand has changed—and then it takes time to design, permit, and build new capacity. This is especially true in places with restrictive land use laws. But when supply eventually responds—as it has in several of these markets—rent increases moderate, and in some cases rents even decline.  

There are some other important lessons if you dig into the numbers a bit. As the Denver Post points out, the vast majority of new construction in that city, as elsewhere, has been at the high end of the market. As a result, vacancy rates are highest in more expensive neighborhoods. In part, this is just the nature of new construction: it generally costs much more money to build new than to maintain an older building, and so new construction will target relatively higher price points. In addition, the long buildup of higher-end demand in central cities gave developers a strong incentive to build to that market. As higher-end demand is better met and rents stabilize or fall, it may become more profitable for developers to target slightly less affluent parts of the market.

But this also shows the importance of allowing, and encouraging, low-construction-cost “missing middle” housing over broad swaths of a city. That’s the kind of development that’s most likely to be able to meet the housing needs of moderate-income households, without a subsidy—if not right away, then after it has downfiltered a bit.

But already, the power of increasing housing supply to halt rapidly rising rents is playing out in real time in cities across the country. That’s something to celebrate.

What City Observatory did this week

1. Which federal agency has a big role to play in housing affordability? The answer might surprise you. The Federal Reserve has announced a plan to increase the interest rates it charges banks, putting the brakes on the economy in an attempt to hold back inflation. But it turns out that if you subtract housing, the Consumer Price Index is actually going down. People worried about inflation, then, should really be worried about the price of housing. Fortunately, the Fed could conceivably do something about that: by targeting its purchases of securities to construction loans and mortgages in multifamily housing, it could keep down interest rates in the housing sector and encourage more supply, helping to hold down the growth of rents.

2. For highway advocates, it’s about the journey, not the destination. Our earlier piece about the folly that was the expansion of the Katy Freeway in Houston got some pushback: If the government widened road, and congestion is even worse than before, doesn’t that mean that the road is really popular, and the project was a success? In short: no. When drivers don’t see the costs of their decision to drive—in the form of pollution, more deaths and injuries from crashes, more inefficient land use, and the extra congestion they impose on everyone else—more highways just mean more driving, and more costs. Moreover, if congestion is both a reason for expanding highways and a sign that such an expansion has been a success, then there will be no end to the highway-building—which is maybe the point.

3. Are jobs really returning to the city? We’ve long argued that the economic center of gravity of US metropolitan areas is shifting towards urban cores. Jed Kolko, formerly of Trulia, takes issue with that conclusion, however, and argues that the evidence for such a shift is much more ambiguous. We lay out exactly why we disagree: The shift appears to transcend economic cycles, is picking up steam in the most recent data, and the data that appears ambiguous to Kolko is based on county-level numbers that include both urban cores and far-away suburbs—a good reason for ambiguity if the goal is to understand how job growth is different in those two types of built environments.

4. Why not make housing assistance to the low-income as easy as assistance to the high-income? Recently, we argued that if we’re serious about addressing affordability, Housing Choice Vouchers could be made universal, available to everyone whose income qualifies them—as opposed to the current situation, in which limited funding means roughly three out of four people who qualify don’t get assistance. But there are problems with that plan, including the fact that in many places, finding landlords who accept vouchers can be difficult. So here’s another idea: A refundable housing tax credit. That both avoids the problem of landlord compliance, and helps model low-income subsidies on the things that make high-income subsidies—like the mortgage interest tax deduction—so popular: they’re easy, automatic, and universal.

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The week’s must reads

1. Streetsblog NYC‘s Charles Komanoff savages a New York City report on the traffic impacts of new for-hire vehicles, like Uber or Lyft. As Streetsblog points out, the study isn’t actually based on the copious data available on such services, as well as regular taxis; instead, it’s based on interpolating “hypothetical 2010 and 2020 traffic estimates.” Those estimates conflict with other estimates made by outlets like the New York Times. And even the presentation of data seems designed to be opaque, as evidenced in the chart that Streetsblog highlighted below.

2. Next City published a feature on a topic that’s been dear to our hearts: “missing middle” housing, and its role in providing a diversity of human-scaled housing options to help create and maintain diverse neighborhoods. From townhomes to lowrise apartments, “missing middle” housing provides a way to gently add density that supports transit and walkable community shopping districts, as well as smaller units that are more affordable or accessible to lower-income people, singles, and the elderly.

3. On the heels of our stories about Houston’s Katy Freeway, US PIRG has released a study on the worst “highway boondoggles”: huge and expensive infrastructure projects that failed to succeed even on their own terms, reducing traffic congestion. In addition to the Katy, US PIRG’s list includes I-405 in LA, which was expanded at a cost of over $1 billion without reducing travel times, and US 101 in Silicon Valley. They cover well-established research about induced demand and the futility of fighting congestion with more and bigger roads, and point out the disjunction between the resources we spend on adding road capacity while skimping on maintenance for roads that already exist.

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New knowledge

1. Researchers from Harvard and UC-Davis found a connection between air pollution and violent crime in Chicago by correlating incidents of crime on either side of major highways by which way the wind was blowing that day. They find that downwind areas—the ones receiving more highway-related pollution—saw 2.2 percent more violent crimes. While that may be a small (but statistically significant) effect, they’re also measuring small differences in pollution, suggesting that larger, more consistently elevated levels of pollution may have more substantial effects.

2. Via Streetsblog Chicago, the Center for Neighborhood Technology released areport and accompanying website on off-street parking in Washington, DC. CNT researchers looked at parking utilization at over 120 buildings to create a statistical model of where off-street parking—which, as in other cities, is generally required by DC’s zoning regulations—is most underused. On average, they found, parking is overbuilt by about 40 percent, representing a massive transfer of resources to subsidize car use. You can also see a similar site CNT made for Seattle.

3. A new study out of the University of Minnesota’s Institute on Metropolitan Opportunity finds that while there are some areas of the Twin Cities experiencing declining affordability and reductions in poverty, they’re in parts of town with already above-average incomes and housing prices. In contrast, lower-income areas that are often described in local media as gentrifying are mostly exhibiting “signs of decline,” including falling average incomes. Rather than gentrification, the study concludes that “a much greater danger is a growing gap between struggling and prosperous neighborhoods.”

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Earlier this month, we argued that Housing Choice Vouchers, also known as Section 8 vouchers, ought to be provided to every household with a qualifying income. The limited funding for vouchers today leaves millions of people—over three-quarters of those who qualify—without help when official public policy has declared that they need it. We also pointed out that we could pay for the entire voucher expansion—and dramatically increase housing assistance to middle-income homeowners—simply by ending one kind of housing subsidy, the mortgage interest tax deduction, to households making over $100,000 a year.

 

But there are a number of tactical issues with this plan. For one, there’s the part where the federal government—the same one that has not been in a hurry to spend much money on social services for quite a while—decides to create a new entitlement worth tens of billions of dollars. More prosaically, there’s also the problem of finding landlords who actually accept vouchers. In most of the country, it’s perfectly legal not to, leading to situations where people wait years to get off the voucher waiting list, only to discover that they can’t actually find a place to use the voucher once they have it. And even where Section 8 discrimination has been outlawed, enforcement is, to put it lightly, lax.

But don’t worry, there’s another solution: refundable tax credits. In case you forgot, credits represent money that comes straight off your tax bill, while deductions (as in, the mortgage interest one) reduce the amount of your income that’s taxed. And a refundable tax credit means that if you owe less money in taxes than the credit is worth, the government actually writes you a check for the difference. Surprisingly enough, one of the most notable refundable tax credits—the Earned Income Tax Credit, or EITC, which basically supplements the income of low-income workers—enjoys ideologically broad support, from Milton Friedman to Bernie Sanders.

So what would our housing tax credit look like? Possibly, a lot like the EITC and Housing Choice Vouchers smushed together. Tenants would report their income and rent to the IRS as they did their taxes; those whose income fell below 50 percent of their area’s median income would qualify for refundable tax credits that made up the difference between 30 percent of their income and whatever their rent was, up to some predetermined fair market rent.

Of course, if we wanted to to take this opportunity to improve on the way vouchers currently work, we could do that, too. That might look like tweaking the “area” used to determine “Fair Market Rents,” moving perhaps from metropolitan regions to ZIP codes, or other smaller units that would allow vouchers to be more useful in higher-income, higher-opportunity neighborhoods; or acknowledging that the 30 percent ratio for housing costs doesn’t make sense for everyone; or whatever else.

One complication is that tenants would have to somehow verify their rents. But that wouldn’t have to be too hard—a copy of the lease, or some signed IRS-specific form, ought to be enough. It would, in any case, almost certainly be less of a hassle from the landlord’s perspective than participating in Section 8.

And the advantages are pretty big. For one, although money spent through tax preferences is every bit as real as money spent through programs like Section 8, tax credits are much easier to sell politically: They can, not untruthfully, be described as tax cuts, rather than new spending, even though functionally they are almost identical. Second, perhaps even more importantly, a refundable housing tax credit would require much less cooperation on the part of landlords. In fact, the rent verification system could be designed in such a way that landlords would never need to know up front whether their tenants intended to use the housing tax credit, any more than they currently know whether their tenants use the EITC. In that way, any apartment charging Fair Market Rent or less would be usable by housing tax credit recipients, vastly expanding housing options for low-income renters.

 

Lastly, a refundable housing tax credit should theoretically cost about as much as a straightforward voucher expansion, which the Congressional Budget Office pegged at $41 billion a year over ten years. And really, if you take away one thing from these posts, it’s that figure. While $41 billion isn’t overwhelming compared to the size of the federal budget—or even compared to what we already spend on housing subsidies to people who arguably don’t need them—its effects would dwarf the marquee affordable housing initiatives coming out of places like New York City and San Francisco. While local efforts to relieve the housing cost burdens of low-income residents are laudable, the scale of the problem in very high-demand regions is simply beyond the budgets of cities to deal with.

If we’re serious about closing the gap between market rents and what low-income people can afford, we have to be serious about the scale of the resources that need to be brought to bear. (We also need to be serious about making sure that gap isn’t larger than it needs to be by combating exclusionary zoning that’s designed to push market prices higher.) Making housing assistance an entitlement through either vouchers or a tax credit doesn’t have to be the only way we do it, but any other solution will have to be of a similar size.

The current voucher program is small-scale, stigmatized, and more complicated than it needs to be. It doesn’t reach all those in need, many landlords simply refuse to participate, and both tenants and landlords have to deal with a bureaucratic system to receive benefits. In contrast, the housing benefits we give to the middle-class and wealthy are large, normalized, and automatic: anyone who itemizes their income tax deductions receives the mortgage interest tax deduction. Maybe we should take advantage of the less burdensome way we dispense housing assistance to those who don’t really need it, and use the same method to provide housing assistance to all of those who really do.

You may be surprised to hear that condos, all else equal, are more expensive than houses. You should be, because it’s not true. But that didn’t deter Joel Kotkin, the one-man cottage industry of curious urban criticism, from claiming so from his perch at Chapman University. As SF Weekly dutifully reported, Kotkin and his colleagues have released a report that claims multifamily buildings—at least those over four stories or so—can’t be cheaper than single-family homes, because “higher density construction is far more expensive to build.”

As far as it goes, that’s a fair enough claim. Taller, bigger buildings need more elaborate foundations, bigger work crews, and expensive features like elevators, which all drive up the cost of construction per square foot.

And if we constructed buildings floating out in space, that might make condos more expensive. But down here on Earth, buildings are built on land. And land costs money.

 

And especially in high-demand housing markets, it’s land costs that make single-family homes so expensive. That’s because single-family homes have to absorb all of the price of the land they sit on in their own prices. If you build multiple homes on the same piece of land, then each of the homes only has to absorb a fraction of the land’s price.

That doesn’t just help to explain the difference in price between houses and condos. It helps explain the difference in price between single-family homes in different places.

 

 

The first photo above is a house in San Francisco. It costs $899,000. The photo below it is of a house in Detroit. It costs $26,000. If you were to simply look at the structures—that is, if these buildings were floating out in space—then these prices would make no sense. But the San Francisco home is not that expensive because the building itself is so amazing, nor is the Detroit house so cheap because the building is so terrible. Rather, each reflects the demand for their locations: that is, the price of the land they sit on.

Land costs are also part of why yearning for the old days of moderate-cost bungalows is unproductive. A century ago, in most cities, it was possible to find relatively cheap land within commuting distance of downtown—partly because the invention of streetcars had just radically expanded the definition of “commuting distance”—so if you could build a house cheaply, you might end up with a relatively low-cost home. But as cities grow, and especially as their metropolitan economies grow, there’s more and more people competing for a fixed amount of land within easy commuting distance of job centers. As a result, the price of easily accessible locations—that is, land—increases substantially. At that point, it doesn’t really matter so much if you can build a home very cheaply, because the cost of the land it sits on will ensure that the total price of construction will be very high.

(Of course, in San Francisco, the supply of land for multi-family housing is further artificially constrained by zoning regulations. Because most of the city is zoned for very low-density use, the relatively few sites on which one is allowed to build new apartments or condominiums is very scarce and therefore very expensive.  Further constricting the number of places where multi-family housing could be built in San Francisco—as Kotkin suggests—would drive up the price of all housing, single family and multifamily, newly built or existing, even higher.

There are basically two ways to resolve this problem: Find cheaper land—that is, build out on the suburban periphery, pushing sprawl further away from the city center—or divide the cost of the land by more than one home.

What City Observatory did this week

1. Bending the carbon curve in the wrong direction. After years in which Americans were driving less, cheap gas is helping to push those numbers back up—erasing a full sixth of the progress we had made against transportation-related greenhouse gas emissions. Unfortunately, we can’t expect that this backsliding will entirely disappear if and when gas prices go back up, either, as Americans are buying less fuel-efficient cars that will continue to be on the road for years to come.

2. Pulling it all together. We write a lot at City Observatory—nearly a post every weekday. We thought the new year was a good opportunity to pull back and ask what all this adds up to—in other words, what have we learned? We put together an outline of our work under four big headings: The growing economic importance of city centers; The shortage of cities; The need to rethink transportation policy; and The challenge of segregation, integration, and neighborhood change.

3. Why can’t cheaply-built houses be an affordability solution in expensive cities? Noted urban skeptic Joel Kotkin and his colleagues at Chapman University recently released a report arguing that, because per-unit construction costs rise rapidly in buildings above four or five stories, the real route to affordable housing must be through smaller single-family homes. We rejoin that this would only be true if homes weren’t built on land. But where land is involved, it is also a cost—and it explains why low-cost single-family homes in very expensive cities are basically an impossibility.

4. The many faces of exclusionary zoning. A new study, which we flagged in last week’s The Week Observed, looks at the relationship between particular kinds of land use regulation and economic segregation. They confirm that there is a connection, though they raise some questions about exactly what the mechanism is for the exclusion of the poor: traditional low-density zoning or arduous approval processes. (We argue both are almost certainly at play.) They also confirm something like the “prisoner’s dilemma of local planning” issue: the more land use is locally controlled, and the less state-level involvement, the worse the segregation.

The week’s must reads

1. The Knight Foundation has announced the 158 finalists for its Knight Cities Challenge, a competition to fund ideas that “help Knight cities to attract and retain talent, expand economic opportunity, and create and strengthen a culture of civic engagement. The finalists include turning neighborhood free libraries into wifi hotspots, creating “urban glens” in vacant lots, and “permit corps”: connecting city residents with student navigators of city regulations and codes.

2. For all the talk of growing suburban poverty, urban centers are still much poorer than the metropolitan periphery. But for those people who do find themselves in car-dependent suburbs with very low incomes, the consequences are serious. The Washington Post has a piece on what it’s like trying simply to live, apply for jobs, and work in a place where the cost of participating in society is the thousands of dollars needed to buy a car, insure it, maintain it, and keep it fueled. It’s a reminder that transit and walkable communities aren’t just environmentally friendly and (often) more pleasant: they’re crucial for low-income people, people with disabilities, or the elderly, who can’t or don’t drive.

3. We don’t generally include stories in The Week Observed as examples of whatnot to do, but this was so egregious we’re making an exception. Wake County, North Carolina’s Triangle Business Journal covers a proposed bus rapid transit project in that region—and then declares that “It’s a system that only works if [planning director] Maloney and team can get executives out of their BMWs and into the bus terminals.” To do that, they need “shiny, newer” buses that “look and feel different from what they perceive [transit] to be right now.” Allow us to say: pish posh, and wrong on both counts. A transit system can be highly successful without necessarily attracting the very wealthiest people; and plenty of transit systems have attracted executives, not with fancier buses but with service that rivals cars for travel time and reliability. No one ever added an hour to their commute each way because the bus got shinier.

New knowledge

1. CityLab flags a new neighborhood change study from Elizabeth Delmelle at the University of North Carolina at Charlotte. Delmelle looks at LA and Chicago in 1970, assigning every Census tract to one of five neighborhood typologies, and then checking back again in 2010 to see whether, and how, they’ve changed. The results dovetail in many ways with our own work, including Lost in Place, in that the study finds that “struggling” areas were much more likely to remain low-income than to transition up in a way that might be considered gentrification.

2. It can be hard explaining to non-urbanists why adding more parking is a bad thing. But Eric Jaffe at CityLab reports on a new study that provides a very good answer: because it causes people to drive more to use up the available parking. Researchers from the State Smart Transportation Initiative and the University of Connecticut provide the strongest evidence yet that lots of parking and lots of driving aren’t just related—the relationship is actually causal. Take, for example, the two charts below: the first one shows how increased parking supply predicts increased driving; the second tries to see how increased driving predicts increased parking supply. As you can see, the first correlation is much stronger than the second.

3. A new poll from Time Magazine looks at the true size of the “gig economy.”They find that 45 million people, or about 22 percent of the working age US population, have offered some kind of “gig” service—from driving, to handyman fixes, to food delivery, and so on. These Americans are also disproportionately male, non-white, young, and urban. About a third of those 45 million people rely on gigs for over 40 percent of their income. Time points out that the implications of these findings aren’t totally clear: while workers in this sector may enjoy more independence or schedule flexibility, they also lack many of the protections and benefits of full-time workers.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

What exactly is the relationship between land use regulations and economic segregation? Previous research has shown that places with more restrictive land use regulations have higher housing costs and are more segregated by race, but now a new study from UCLA aims to give more detailed answers.

The paper, by Michael Lens and Paavo Monkkonen, differs from previous research on the subject in that it doesn’t use a proxy for land use regulations, like observed density or government fragmentation, or an index that sums all the many different components of these regulations. Instead, Lens and Monkkonen test many different kinds of regulation to get a better sense of the “specific pathways through which land use regulations affect income segregation.”

 

To briefly summarize their analysis, Lens and Monkkonen make four important findings.

1. Density restrictions—think minimum lot sizes—are associated with more segregation of the rich, though not the poor;
2. More difficult building approval processes are associated with segregation of the poor.
3. More fragmented local governments are associated with high overall levels of segregation.
4. Greater state-level involvement in land use planning is associated with lower overall levels of segregation..

For us, there are at least two big takeaways. Though the authors claim their findings cast doubt on the widely believed connection between low-density zoning and segregation of the poor—the classic “exclusionary zoning” problem—we think it suggests something else. After all, exclusionary zoning works by preventing the construction of housing that might be more affordable to middle- or low-income people, like smaller houses or apartment buildings. Whether that’s done up front by explicitly banning those types of buildings (ie, low-density zoning) or more surreptitiously through an arduous approval process, the result—and the mechanism of exclusion—is the same.

So the issue is less that low-density zoning doesn’t matter for the segregation of the poor, and more that there are many different regulatory tools local governments can employ to get to exclusionary land use. If the way communities block low-income-friendly development is by smothering it in red tape, rather than openly disallowing it, it’s important to understand the distinction to combat it—but equally important to understand that the end result is the same.

We’re also concerned that the author’s methodology doesn’t capture the either-or nature of exclusionary zoning—that is, a community can use either low-density zoning or an onerous approval process to keep out the kinds of housing it doesn’t want. Because cities with very onerous approval processes may feel they are sufficiently protected against the poor without low-density zoning, they may not use it. As a result, the researchers would see a weaker relationship between low-density zoning and segregation, even though a real relationship does exist.

Second, the findings about the effects of the scale at which decisions are made—more hyper-local decision-making associated with more segregation, and more state-level involvement associated with less—confirm once more the important role of politics and democratic structures in the extent to which land use laws become harmful.

Although they often seem to have only a local interest, housing and transportation policies affect entire metropolitan regions, and sometimes beyond. Though it may seem that only the people near a proposed rail station, for example, should have a large say about whether and how it gets built, that rail station also means access—or not—to the people, resources, and jobs in the neighborhood for residents in many other communities. Similarly, the decision of whether to build more housing—particularly lower-cost housing—concerns not just the people who live near the proposed construction site, but everyone who might want to move into such a home—again, especially when moving there would provide access to valuable resources like high-performing schools or jobs. The finding that state policies help minimize the segregating effects of some kinds of land use regulation suggests that broader geographic units can help overcome some of the prisoner’s dilemma problems that plague hyperlocal decision-making.

Finally, we should note that while the authors claim that these findings suggest the economic desegregation would most easily be accomplished by introducing low-income housing into high-income neighborhoods, rather than vice versa, that seems to be a separate issue not directly addressed by their valuable work here—something the authors acknowledged in an email exchange.

There’s a tendency, in land use policy as elsewhere, to view land use regulation through a simple lens: “regulation” is either good or bad. But the Lens/Monkkonen paper helps illustrate that “regulation” is not a single thing, but made up of many distinct parts that can be applied by many different institutions. Excessive restrictions on density clearly aggravate economic segregation, but the extent to which they do so is strongly influenced by the scale at which they’re determined.

This week, Planetizen named City Observatory one of its 10 best urban websites of 2015, adding that “every single post is essential reading.” We’re extremely grateful for the recognition, and are excited about continuing our work into 2016! (Check out the other great websites Planetizen highlighted at the link, too!)

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What City Observatory did this week

1. Make housing vouchers an entitlement—we can afford it. Unlike food stamps, which are available to everyone whose income qualifies them, there are 20 million Americans who qualify for direct federal housing assistance but don’t get it, largely because there simply isn’t enough funding. A new CBO report shows that we could give a housing voucher to every eligible family for about $41 billion a year—far less than the amount we spend subsidizing housing to households earning more than $100,000 through the mortgage interest tax deduction.

2. Houston has something to teach you about public transit. In 2015, Houston made two big transit moves: opening two new light rail lines and completely reorganizing its bus network to offer more reliable and useful lines. As of November, the most recent data available, the light rail lines had 185,000 rides—and the bus system had added 199,000. That’s all the more remarkable because the light rail extensions cost $1.4 billion and took the better part of a decade; the bus reorganization cost a tiny fraction of that to plan, is budget-neutral going forward, and took about a year to put in place. But this isn’t a bus v. rail story. So what is it?

3. The economic strength of American cities in four charts. American cities are increasingly central to the nation’s economy. How do we know? There’s a lot of evidence, but we pick out four big indicators: rising real estate values (“the Dow of cities”); the rent gradient; the walkability premium; and job growth. Below is a chart showing how the rent gradient—that is, the change in housing prices as you move from city centers to more outlying areas—has become dramatically steeper from 1980 to today, indicating increasing demand for inner-city housing.

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The week’s must reads

1. Why don’t American cities build more public transit infrastructure? Part of the answer is that we get less bang for our buck than any other country in the world—and it’s not even close. John Ricco at Greater Greater Washington digs into the numbers a bit and runs through some of the theories about what makes American rail projects so expensive, from land acquisition costs to over-engineering. Below is a chart by Ricco, showing the per-kilometer cost of building subways in wealthy countries; the red bars are American projects.

2. Every year, Yonah Freemark at The Transport Politic previews the coming year’s transit projects. In 2016, American cities will see 245 miles of new fixed-guideway systems—more than triple the mileage of 2015. Also, be sure to check out Freemark’s “Transit Explorer” page, with interactive maps of all the new projects in his database.

3. CityLab makes a list of the urbanist terms it hopes are left in 2015. There are some obvious ones—”Uber for [x]”—and a few tweaks at the culture of trendy urban neighborhoods, and their love of everything “artisanal.” But there are some serious entries too: We found ourselves agreeing that the “tale of two cities” cliche often obscures more in conversations about inequality than it illuminates, hiding the many different kinds of people and neighborhoods represented by the terms “rich” and “poor” in every city. Another highlight: Time to end “wider roads = less traffic.”

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New knowledge

1. A paper from Michael Lens and Paavo Monkkonen of UCLA adds to evidence thatland use regulations contribute to urban segregation. Lens and Monkkonen find a direct link between restrictive land use policies and higher levels of income segregation—in particular, the isolation of high-income households. In addition, more involvement in land use planning by states is associated with less segregation, and more fragmentation of land use planning by smaller municipalities is associated with more segregation—more evidence that shrinking the pool of people with a say in housing policy leads to more exclusionary policies.

2. Tony Dutzik of the Frontier Group analyzes newly released data on how much Americans are driving. In short: more. Vehicle miles traveled per capita increased by 0.5 percent in 2014 for the first time in a decade, and total VMT has nearly reached its all-time high from 2007. In slightly more encouraging news, the FTA’s numbers represent a downward revision from the first estimates, suggesting we might be able to expect a similar downward change to the initial 2015 numbers. But as we’ve written, as long as gas remains historically cheap, we should expect an increase in driving.

3. Evidence from Europe of the importance of neighborhood stigma: Researchers from Université-Paris Est and the Université de Bourgogne look at nearly 3,000 job applications for positions as cooks or waiters in the Paris area, and compare response rates to the residential location reported by the applicants. They find that holding other factors constant, “a good address can triple the chances of being invited to a job interview.”

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

We could extend housing vouchers to every very-low-income household—and expand housing support to the middle class, too — if we were willing to take away just one of the big housing subsidies to people making over $100,000 a year.

But let’s back up.

Previously, we’ve made the case that the SNAP program, or food stamps, is a pretty good template for thinking about how to reform the way we do housing assistance. SNAP is available to everyone below a certain income threshold; if you apply and you qualify, you get money to buy food.

Housing is very different. There are a million different housing assistance programs, but all of them are quite limited in scope: if you apply and you qualify, you are simply one of many such people fighting over a much smaller number of vouchers or set-aside affordable units. In some cases, this makes housing assistance more like a lottery game than a social service, as when nearly 2,600 people applied for just 18 homes in San Francisco, 58,000 people applied for 105 homes in New York, or nearly 300,000 people were placed on the waitlist for a Chicago Housing Authority unit. Nationwide, about 20 million people qualify for housing assistance but don’t receive it.

 

But how much would food-stampifying housing policy cost? Surely an unreasonable, pie-in-the-sky amount, right?

Well, fortunately for us, the Congressional Budget Office has already done the legwork to figure it out. In a study published in September, the CBO gamed out a large number of possible directions to take housing policy: bigger, smaller, budget-neutral tweaks, transfers from one program to another, and so on.

One of the options it analyzed was expanding the Housing Choice Voucher (also known as Section 8) program to everyone who qualifies—which, at the moment, is anyone whose income is below 50 percent of “AMI,” or the median income in their area. (In most metro areas, that puts the upper limit for a family of four at between $25,000 and $35,000). The CBO estimated such a policy would cost about $41 billion a year over the next ten years. A more modest approach, targeted to only the extremely low-income—those making less than 30 percent of their area’s median income—would cost about $29 billion a year.

That’s nothing to sneeze at. We already spend about $18 billion a year on Housing Choice Vouchers, so all told, an everyone-who-qualifies voucher program would cost $59 billion a year over the next ten years.

But it turns out there’s another housing program that’s already much bigger than that: the home mortgage interest tax deduction, which cost taxpayers $68 billion in 2014.

What do we get for the mortgage interest tax deduction? Not much, according to the best research available. The goal, ostensibly, is to promote homeownership. Whether or not that’s a good idea in itself—we’ve had our doubts—the fact is that the mortgage interest deduction isn’t actually effective at promoting homeownership. Why not? A big reason is that the vast, vast majority of its expenditures go to high-income households: after all, you only get it if you itemize your deductions, and you get more money for having a more expensive house. That means most of the money is going to people who would have plenty of resources to buy a home without the deduction. Instead, the evidence seems to suggest that one of the main effects of the deduction is to encourage wealthy people to buy bigger houses.

In contrast, when you give low-income people housing subsidies, they spend their extra money on things like better food, healthcare, and education—which directly improve their quality of life and help bring them out of poverty.

As of 2012, 77 percent of the money we spent on the mortgage interest deduction went to households making over $100,000 a year, an income that would make you richer than four out of five Americans. It also happens that 77 percent of $68 billion, the total value of the mortgage interest tax deduction, is about $52 billion: in other words, enough to give a housing voucher to every single household that needed it, with about $10 billion to spare.

Such a surplus would even allow the federal government to increase the value of the mortgage interest tax deduction for people making under $100,000 a year—people for whom extra cash is much more likely to be the difference between buying a home and not. In fact, redirecting all the money left over after giving all qualifying households vouchers would allow us to increase the value of the mortgage interest deduction for people making less than $100,000 by more than 60 percent. (We’re far from the only people thinking about reforming the mortgage interest deduction, by the way. Representative Keith Ellison of Minnesota has submitted a bill that would convert the deduction into a 15 percent tax credit, available to people who don’t itemize their deductions, and reduce the maximum amount of home value that can be deducted from $1 million to $500,000. His bill would not redirect any money to Housing Choice Vouchers, however.)

Making this work for the broad majority of middle-class homeowners is also important, because the mortgage interest tax deduction is a super popular policy; as much as 90 percent of the electorate supports continuing it. Whether or not it’s the best use of housing policy dollars, getting rid of the deduction entirely is a nonstarter.

But why should it be impossible to give up housing subsidies for the richest fifth of the country in exchange for more homeownership support for the middle class and a guarantee of housing support for all very-low-income people?

Now, importantly, this would not mean the end of our housing problems. In many places, housing vouchers are only moderately useful in combating racial and economic segregation, both because landlords are able (legally or illegally) to discriminate against voucher holders, and because they won’t cover rents in extremely high-cost neighborhoods. Segregation would continue to put low-income people and people of color at disadvantages in terms of access to public resources and economic mobility.

 

And in places with extreme housing shortages, prices have surpassed what even moderate-income and middle-class households can afford. While voucher eligibility cuts off at 50 percent of “area median income,” San Francisco recently announced it was building housing for people at 150 percent of AMI, or over $150,000 a year; Bill de Blasio’s big affordable housing program in New York City contains a large number of set-aside units for people making 120 percent of AMI, or about $90,000 a year there.

In these places—and similarly exclusionary neighborhoods and suburbs across the country—the need to pay for housing subsidies to the poor, the working class, and the middle and upper-middle class overwhelms any realistic funding source. More construction is needed to get prices down to a point where subsidies to lower-income people are sufficient, and middle-income households are able to afford housing largely on their own.

But despite these shortcomings, it’s hard to overstate just what a revolution in housing policy entitlement vouchers would be. Affordable housing is a national challenge, but in recent years, it has largely been up to local governments to tinker around the edges of overwhelming need—and even the most ambitious local governments simply don’t have the resources to do much more than tinker around the edges. San Francisco’s massive Proposition A, which voters approved in November, will bond $310 million for affordable housing—its own proponents decided their initial goal, $500 million, would strain the ability of the city to service the debt—which will likely result in less than a thousand net new units of affordable housing. In Chicago, the signature affordable housing policy of the last few years is supposed to create just 1,000 units of affordable housing, even as 300,000 people are on the waitlist for a public unit. In Austin, a community land trust was able to make national news while creating three affordable homes, with 25 more in the pipeline.

Local efforts to to provide housing relief to those who need it are necessary and important. But only the federal government has the resources to address the full scale of the issue. In fact, there is already at least one federal housing program that could be scaled up to take a massive bite out of the housing problem, relieving one of the most terrifying and dangerous consequences of poverty. We could pay for it simply by deciding that households that make more than $100,000, people whose income is above 80 percent of the country’s, don’t need housing subsidies. What kind of government turns down that deal?

Houston doesn’t have much of a reputation for public transit, although about 300,000 rides are taken on trains and buses in the region every weekday. Recently, though, the local transit agency, Metro, has been making some big moves.

First, the agency worked with transit consultant Jarrett Walker and a local team led by TEI to completely reimagine its bus network. Rather than a predominantly radial system, where most routes headed towards downtown, the new network relies on a grid of bus lines that come frequently enough for people to use for transfers. As a result, the bus system now helps people reach more varied destinations all over the metro area, not just those downtown—which is crucial in a region as decentralized as Houston’s. It also recognizes that in many cases, a smaller number of more frequent, show-up-and-go lines is superior to a larger number of routes that show up only once an hour, or not at all at off-peak times. Notably, the reorganization, which took effect in August, was designed to be budget-neutral.

 

 

Second, in May, Metro opened two new light rail services: the Green and Purple lines. Together, they run for almost 10 miles south and west of downtown, built at a cost of about $1.4 billion over six years. The rail lines are supposed to improve reliability and comfort over the older bus service, and catalyze economic redevelopment in the neighborhoods through which they pass.

 

How have Houstonians reacted to these projects?

Though bus ridership dipped briefly after the reorganization as riders learned their way around, by November, ridership had not only regained its previous levels but exceeded them by four percent. Walker, the consultant largely responsible for the redesign, estimates that ridership might increase by as much as 20 percent over two years. It’s obviously unclear whether that will happen, but a four percent jump over just two months is a pretty good start.

The Green and Purple lines, in contrast, are off to a slow start. In November, the most recent data available, they were averaging fewer than 7,000 rides per weekday combined. By contrast, the city’s first light rail line, the Red Line, carried almost 55,000 rides.

In fact, it turns out that the total monthly ridership of the Green and Purple lines combined is less than the growth in bus rides since the implementation of the new service pattern: about 185,000 rides on the light rail lines in November, compared with an increase of 199,000 rides on the bus network.

That’s pretty incredible, considering that the former cost $1.4 billion to plan and build over the better part of a decade, and the latter was designed and implemented in just a year for a tiny fraction of the cost—and is budget-neutral going forward, as opposed to the added operations cost of running the light rail lines.

It would be easy to take too much from this. In many cases, new light rail lines have in fact attracted significant ridership: Houston’s own Red Line, for example, or the Green Line in Minneapolis-St. Paul, which opened in 2014 and is already beating forecasts with over 40,000 rides a day. Where already high-ridership bus lines need added capacity or cities are looking to dramatically add density to the urban fabric, requiring high-capacity transit service, rail can and does play an essential role.

 

But as Jarrett Walker has argued, the real issue with transit is less about mode—bus or rail or ferry or helicopter—and more about service. Does the vehicle, whatever it is, come frequently and reliably so that you can show up to a stop and be sure you’ll be able to board soon? And does it actually provide a way to get to your destination in a reasonable amount of time? If yes, people will ride, whether the wheels are rubber or steel. If no, they won’t.

Nor is Houston’s experience exceptional. Last year, we found a national trend of better bus ridership where local transit agencies were improving service—and declines where service was deteriorating.

Ironically, in its article about the opening of the Green and Purple lines, the Houston Chronicle quoted a man who was excited about the trains because, he said, “You can’t trust the bus.” But it turns out that’s not a permanent condition. If you make the bus more trustworthy, riders will come. Resource-starved cities looking for ways to improve their bread-and-butter transit services, connecting residents to the people, jobs, and amenities they need, would do well to look at what’s happened in Houston.

Here are Daniel Kay Hertz’s five favorite posts of 2015:

5. Undercounting the transit constituency

When we only look at the number of people who commute on transit, we’re missing others—especially students and the retired—who rely on transit for other reasons.

 

4. A modest proposal: treat affordable housing more like food stamps

Comparing two well-known government assistance programs sheds some light on what’s wrong with affordable housing policy.

3. When it comes to transit use, destination density matters more than where you live

We usually think of the typical transit rider as living in a dense neighborhood. But really, it’s more about where they’re going than where they live.

2. Zoning in everything—even the education gap

Housing policy is at the bottom of many of the nation’s economic and social problems, even where it seems unlikely. In this piece, I sketch out how zoning laws exacerbate the racial education gap.

1. A $1.6 billion proposal

A story of “ethical landlording” isn’t as ethical as it seems. But it points the way to a better possibility: a housing capital gains tax to fund affordability.

12. Let’s talk about neighborhood stigma

In the last year or two, there has been a resurgence of awareness and debate about the big, structural issues facing America’s persistently poor neighborhoods. But one part of the equation has largely been left out: stigma. A large body of research has shown that stigma and reputation, above and beyond other factors, can have serious negative consequences for urban neighborhoods—and that it falls most harshly against majority black neighborhoods.

11. Urban residents aren’t abandoning buses; buses are abandoning them

A series of articles came out this summer about the decline in bus ridership, positioning rail as the urban transit mode of choice going forward. But a closer look at the numbers show that where bus service has held steady or grown, so has ridership—the problem is that bus service has been cut in cities all around the country. Nor do those cuts seem to be predicted by falling ridership beforehand.

 

10. What’s really going on in gentrifying neighborhoods?

The common narrative about gentrifying neighborhoods is that demographics change—towards wealthier, and usually whiter, residents—largely because older residents are pushed out by rising prices. But a study from the Philadelphia Federal Reserve confirms most previous research in finding that the real driver of change is who’s moving in—not who’s leaving. Despite the conventional wisdom, the researchers find little evidence of widespread displacement.

9. Reducing congestion: Katy didn’t.

The American Highway Users Alliance touted the widening of the Katy Freeway in Houston as a “success story” in the fight against congestion. There’s only one problem: congestion got worse after the project. Oops.

8. Great neighborhoods don’t have to be illegal—they’re not elsewhere.

Our second-most-read post this year was all about “illegal neighborhoods”—but in this post, we point out that in many other countries, walkable communities with a diversity of housing options are still perfectly legal. Going off of Sonia Hirt’s excellent new book, Zoned in the USA, we take a quick tour of how zoning works in other countries. Hint: “low density residential” doesn’t have to outlaw neighborhood corner stores or lowrise apartment buildings.

7. The high price of cheap gas.

Gas prices have fallen precipitously, which almost everyone takes to be good news. But there’s a dark side, too: As prices have fallen, driving has increased—and with it, greenhouse gas emissions, traffic congestion, and injuries and deaths caused by car crashes. The lesson: pricing has a big effect on driving and its negative consequences. We don’t have to wait for gas to get more expensive, however—raising the gas tax, or levying congestion or parking charges, could have the same effect and raise revenue for transportation service and maintenance.

6. Why aren’t we talking about Marietta, Georgia?

While stories about displacement in gentrifying neighborhoods abound, more direct, egregious examples of displacement in suburban areas are often left behind. We focused on one particularly galling example of an Atlanta suburb using eminent domain to demolish an apartment complex predominantly occupied by lower-income people of color, to be replaced with a commercial development.

5. Our old planning rules of thumb are “all thumbs.”

Wider roads are safer roads. We should be concerned about having “enough” parking. Land uses generate a fixed number of vehicle trips. These old rules of thumb are deeply flawed, and have led to unsustainable, expensive, and environmentally dangerous urban planning. It’s time for some new rules of thumb.

4. Homevoters v. the growth machine.

There are two big theories about who controls urban development. One says it’s a coalition of business interests and developers, who push past zoning regulations with ease; the other says it’s homeowners, who are able to quash most development they fear might negatively affect their property values. A new study from NYU takes a look at Bloomberg-era New York City—which ought to be as favorable a territory for developers as exists in the US—and finds evidence instead that homeowners dominate even there. White neighborhoods, areas near high-testing schools, and places with high population growth are all more likely to be downzoned (have allowed density reduced) than upzoned (have allowed density increased).

3. Truthiness in gentrification reporting.

This Fall, a series of studies came out suggesting that many of the most-feared impacts of gentrification were much less of a big deal than widely thought. One paper by the Philadelphia Fed found little evidence for displacement in gentrifying neighborhoods in that city; another in New York found that residents of public housing in gentrifying neighborhoods benefited, with higher incomes and better schools.

2. My illegal neighborhood.

Our guest writer, Robert Liberty, takes a look around his Portland neighborhood and realizes that almost everything he likes about it has been made illegal. There’s the buildings without parking lots; the homes, shops, and jobs at light industrial sites all within walking distance of each other; the apartments and single family homes side by side; the street narrow enough to cross easily and discourage speeding cars. Why are these things illegal again?

1. The immaculate conception theory of your neighborhood’s origins.

Newsflash: everyone hated your home when it was new, too. While a debate over allowing apartments in single-family home neighborhoods prompted an appeal to the inherent goodness of early 20th century bungalows, it turns out that romanticizing past eras of homebuilding is dangerous business. But there are lessons to learn from our urbanist forefathers and -mothers, like the good that can come out of allowing a city to grow, and allowing many kinds of homes for different kinds of people.

Back in July, we published a three–part series about what exactly it means for housing to be affordable. Our basic argument was that the most standard measurement—whether your housing costs are more or less than 30 percent of your income—is inadequate to the task, for several reasons:

• First, it doesn’t allow for lower-income people to need a larger percentage of their income for other necessities, or for people of the same income levels to have different financial obligations, like children or medical expenses;
• Second, it leaves out other location-based costs, like transportation;
• And finally, it doesn’t account for the quality of housing or the surrounding community.

Instead of the 30 percent threshold, we endorsed something called the “residual income” approach. That method suggests that you determine what a household needs to spend on all non-location-based (that is, housing and transportation) necessities, and then whatever’s left is “affordable.”

But what’s the difference in the real world? Well, an astute reader, Josh Lehner, put together a table that compares the ratio of rent to income and the residual of income left over after rent for each ZIP code in Oregon. Here’s what that looks like:

As you can see, there’s a clear relationship between the two measures: as the ratio increases, the residual mostly decreases, which in each case suggests that housing is less affordable. (Note that this chart doesn’t include transportation-based costs. Ideally, of course, it would—but for the purposes of this illustration, it’s not crucial.)

But despite that general pattern, there’s an enormous amount of wiggle room. If you look just above and below the line that separates ZIP codes where median income is below 30% of median rent from those where it is above, you see some of the starkest contrasts.

ZIP code 97630 (rural Lakeview Oregon), for example, is just below the threshold of affordability, with the rent-income ratio at 29.2 percent. But the median household in that area makes only $23,500 a year; at the median rent, they would have just $16,636 left over to spend on everything else: food, clothing, medical care, child care, and so on. For many households, that’s likely not enough.

Meanwhile, ZIP code 97002 (Aurora, a small farming town within commuting distance of Portland and Salem) is just above the threshold of affordability, with a rent-income ratio of 31.8 percent. In this community, median household income is $47,173, and the after-rent residual income is $32,173—a much more comfortable cushion. Yet the most common measurement of housing affordability would declare the median resident of ZIP code 97002 “rent burdened,” and the median resident of ZIP code 97630 not “rent burdened.”

Obviously, this is a very simplistic exercise that’s missing quite a bit—including many of the considerations we included in our original series. But even the simple act of plotting rent cost ratios against residuals adds an important dimension (if you’ll excuse the graph pun) to our understanding of what housing affordability actually means: we can see, not with theoretical arguments but real-life data, that simply knowing whether a rent cost ratio is above or below 30 percent leaves out a lot of other very important information.

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This post was originally published on September 3rd, 2015.

What City Observatory did this week

1. The Katy isn’t ready for its closeup. When the Texas Department of Transportation tried to sell the public on its Katy Freeway expansion project, part of the story was that it would ease congestion. We covered how that worked out last week. (Not well, is the answer.) Another part involved renderings of the final product. Amazingly, given that they’re depicting a 23-lane superhighway, there are almost as many people and trees in their renderings as cars. Using distorted images of major, disruptive infrastructure projects is a time-honored tradition—but one that ought to end.

2. About that “consensus” on zoning. Earlier this month, in the Washington Post, the economist Ilya Somin argued that we’re reaching a cross-ideological consensus that strict zoning is doing more harm than good in American cities by driving up housing prices and promoting sprawl. But look beyond the community of national policy wonks—by, say, going to a neighborhood development meeting—and it looks like there’s something like a consensus in the other direction. The political path forward on zoning reform is going to be more complicated than that, but we’ve got a few ideas.

3. Who’s really rent-burdened? In light of all the recent discussions of rising rents, we reprise a post from earlier this year, showing that by far the most commonly used metric of housing affordability—the 30 percent ratio of housing costs to income—misses a lot of other important factors. A big one is how much income a household has left over after paying housing costs for other necessities; others include the cost of transportation inherent a home’s location—less if it’s transit-accessible, more if it’s not. Getting a better handle on what affordability really means, and who is most affected, is crucial for moving towards solutions.

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The week’s must reads

1. In almost every city in the country, new buildings are required to provide off-street parking—and lots of it. Those parking requirements end up encouraging sprawl by creating large surface parking lots, making homes and businesses more expensive thanks to costly-to-build garages, and subsidizing car ownership and driving. On top of that, most parking requirements are based on one-size-fits-all estimates of how much traffic a given building will generate—and those estimates are usually far too high. (See Strong Towns’ “Black Friday parking” campaign.) Fortunately, a growing number of cities are recognizing those issues, and are reducing, or even eliminating entirely, their requirements. Next City reports on a Strong Towns effort to track all those efforts across the country.

2. Good Jobs First, whose reports on economic development subsidies we’ve covered in The Week Observed before, has a new tool that allows you to look up business subsidies by company, subsidy value, level of government, and more. Previously, they’ve shown that many states give the vast majority of their general-purpose economic development subsidies—as much as 96 percent—to large companies, which they argue shortchanges smaller businesses that provide the most benefit to local communities.

3. A new lawsuit from a coalition of civil rights groups in Maryland argues that that state’s governor, Larry Hogan, violated the Civil Rights Act when he canceled a planned rail line in favor of more spending on roads and highways. As Emily Badger writes at the Washington Post, the group alleges that the move was a transfer of resources that will disproportionately harm black residents, who are more likely to rely on public transit. Transportation policy has a long history of being a focus in civil rights, from highway displacement to the Montgomery bus boycott, but this lawsuit aims to reinvigorate that connection at a time when civil rights issues in housing and policing are gaining a higher national profile.

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New knowledge

1. We’re a little late on this, but Zillow’s November report has a glimmer of good news for the rental housing market: price increases are significantly slower than in 2014, possibly as a result of the steady increase in new apartments being completed. Interestingly, single family rents are growing faster than multifamily rents. Also notably, for-sale housing price growth is picking up steam.

2. What’s the connection between slavery and present-day economic inequality and innovation? A study from the Washington Center for Equitable Growth tackles this perhaps unexpected question, and argues that the particular kind of inequality fostered in many Southern states during and after the period of slavery has left an institutional legacy lasting to the present day. They write that slave societies developed fewer advanced educational institutions, focusing instead on low-cost, low-skill labor for economic development. In part as a result, they have under-developed institutions and business cultures for promoting innovation and knowledge-based industries. A key bit of evidence: patent rates in the 19th century were much lower in the South—and remain much lower today.

3. Who lives near rail? A new Census report looks at the Washington, DC area, andhow demographics near rapid transit stations have changed over the last several years. It finds that young adults and people with high levels of education are particularly likely to live near rail stations—yet another piece of evidence confirming the growing demand for urban, transit-accessible neighborhoods, especially among the “Young and Restless.” As long as neighborhoods with great transit remain in short supply, we can expect them to command premium prices that put them beyond the reach of many households.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

Is there a “cross-ideological consensus” on zoning reform?

Writing in the Washington Post earlier this month, economist Ilya Somin made such a claim. Libertarians, he wrote, have opposed the strict laws that prescribe expensive, exclusionary, low-density homes in most neighborhoods across the country for some time; but now, as noted lefty economist Paul Krugman’s recent column and a speech given by the chair of President Obama’s Council of Economic Advisers show, liberals are joining the zoning reform camp.

 

Suffice it to say that while we’re happy to see this issue get press in the Post, much of this argument seems misguided. For one, people have been making arguably left-of-center, egalitarian arguments against zoning since at least the 1920s; and the most sustained attack on exclusionary zoning in American history occurred in the 1960s and 70s as an outgrowth of the Civil Rights Movement, hardly a bastion of libertarianism.

More importantly, though, anyone who thinks there is a “consensus” about the damage caused by too-strict zoning ought to attend the next community development meeting in their neighborhood. While there may appear to be a policy consensus among national-level policy wonks, things look very different on the ground, including the ground on which zoning policy is actually made. Arguably, something very close to a consensus has existed on zoning for quite some time—at least since the 1970s—and it’s not that it’s too strict. It’s that it’s doing a great job, and if anything needs to be stricter.

Nor is this really an “ideological” issue. Rather, it’s a financial one: homeowners dominate local development politics in large part because their homes make up such a large proportion of their total wealth that any decline in property values could devastate them. (Or, conversely, cut into huge capital gains, if they are lucky enough to own property in, say, San Francisco’s Mission neighborhood.) As a result, they’re extremely wary of any change to their surroundings that might reduce their property values—and zoning gives them the legal ability to stop those changes.

So even to the extent that there’s a consensus about the damage of zoning among policy wonks, part of that consensus is also that zoning is incredibly difficult to change, because the interest local homeowners have in preserving it is so powerful.

The inherent power of that interest is apparent even where zoning isn’t. At Better! Cities and Towns, Ben Brown takes a look at zoning-free Houston, and sees just as much catering to private interests as Somin sees in zoning codes. Though that city has no comprehensive zoning, a patchwork network of deed restrictions, historic districts, and other regulations—lobbied for heavily by homeowners and other people with interests in protecting property values—pretty much have the same effect. In fact, in a 2001 paper, Chris Berry found that Houston’s non-zoning land use system was just as exclusionary as Dallas’ more classic exclusionary zoning.

 

But the solution obviously can’t be an end run around democratic planning. Though it may now be causing problems of its own, the revolt against top-down urban policy in the 1960s and 70s was reacting to real and devastating projects, from highways to urban renewal clearance, that booted hundreds of thousands of people from their homes—and those people were usually people of color, immigrants, low-income, or otherwise vulnerable. It’s hard to imagine how removing democratic protections against such abuses would result in much more progressive outcomes today. (In fact, some municipalities are continuing good old fashioned urban renewal clearance projects anyway.)

Rather, the path to zoning reform probably has two branches. First, make property values a less pressing issue for homeowners. We’ve covered some of William Fischel’s proposals along those lines, including reforming preferential tax policies like the mortgage interest deduction and capital gains exemptions that make housing a particularly valuable investment.

Second, make the democratic process truly democratic by allowing input from everyone significantly affected by a policy—which means making some housing decisions at a citywide, regional, or even state level, rather than neighborhood by neighborhood. While it may seem like a purely local issue whether or not an apartment building goes up on your block, we know now very well that it’s not. The sum of many decisions to block such construction makes neighborhoods, cities, and even entire regions much more expensive than they need to be, both in terms of housing costs and transportation costs as a result of sprawl.

When housing decisions are made hyper-locally, the only interests taken into account are those of nearby residents, who may have worries about their property values, the visual “character” of the neighborhood, or even more directly exclusionary concerns about the type of people who will leave near them. It also creates a sort of “prisoner’s dilemma” in which no neighborhood wants to be stuck with “undesirable,” or costly, land uses. But when decisions are made at a broader geographic level, the people who stand to gain from new housing—renters and potential buyers who want more housing options, businesses that might gain more customers, and people thinking about how more density might support the regional transit system—also get to have a voice. Scholars of zoning and segregation have argued that more local fragmentation in decisionmaking is a crucial part of using land use laws to impede integration.

Finally, zoning reform is a necessary, but not sufficient, part of a comprehensive housing plan—and including the other parts may be an important piece of assembling the political coalition for more equitable cities, bringing in more traditional affordable housing advocates and neighborhood activists. As Jamaal Green writes at Rooflines, changing land use laws to allow more housing, and more varied kinds of housing, can do a lot: slow the growth of regional housing prices; encourage integration by creating more affordable mixes of housing in high-demand neighborhoods; reduce transportation costs by allowing people to walk to some destinations and more effectively use transit; and so on. But while it’s a crucial part of making more equitable and sustainable cities, it doesn’t address every problem. Direct housing support, either through vouchers, public housing, or both, will always be necessary for people who can’t afford private housing even in efficient markets; tenant protections are needed to prevent landlord abuse, whether through illegal evictions in high-priced communities or neglect in low-demand areas; and expanded public transit is needed to efficiently and affordably connect people in all communities to jobs and services. Making zoning changes a clear part of this broader agenda is important to building broad support.

At a hyper-local level, there is no consensus that zoning needs to be made more flexible to allow more, and more varied, housing. That’s not an accident: it’s because hyper-local democracy includes people who may be adversely affected by more housing, but not most of the people who would benefit. But we do believe that most people want their cities to be affordable, diverse, and sustainable. Making housing plans at a broader level might allow people to act on those principles, rather than on their local fears—and, just as importantly, give those who stand to benefit from less exclusionary policies a democratic voice in the process.

What City Observatory did this week

1. Don’t bank on it. Hillary Clinton, as part of her campaign for President, has proposed a National Infrastructure Bank to help local governments pay for crucial infrastructure maintenance and upgrades. But it’s not so clear that such a bank is the answer to America’s infrastructure problems. Rather, the bank would likely face a number of issues, including simply displacing other sources of borrowing for projects that would have been funded anyway and leaving localities without any additional revenues with which to pay loans back. But the fundamental issue is that America’s infrastructure problem has little to do with the ability to borrow capital, and more to do with mixed up priorities and the lack of revenue with which to repay borrowing and maintain existing infrastructure.

2. Homevoters v. the growth machine. There are two big theories about who controls urban development. One suggests it’s a coalition of business interests who run roughshod over regulations like zoning; the other is that a democratic group of homeowners uses zoning effectively to block development that might hurt their property values. A new study out of NYU tries to answer the question of which is right—and comes down firmly on the homevoter side. That’s the most plausible explanation, they say, for why neighborhoods near good schools, or with growing populations, actually see many more downzonings—or reductions in allowed density—even though developers and business interests would surely like to add more housing there.

3. Reducing congestion: Katy didn’t. Several years ago, Houston spent $2.8 billion to expand capacity on its Katy Freeway, making it—at 23 lanes—one of the widest in the world. Afterwards, the American Highway Users Alliance cited the Katy widening as a victory against congestion. But it turns out that in the years since then, travel times have actually increased dramatically—as any urbanist familiar with “induced demand” could have told them from the beginning.

4. Where did all the small apartment buildings go? We’ve written about the“missing middle” before: the fact that American cities build lots of single family homes and some large apartment buildings, but few of the smaller, lowrise apartment buildings that make up important parts of many walkable urban and suburban neighborhoods. Using data from the Census, we show that hasn’t always been the case: as late as the early 1980s, apartment buildings with fewer than 10 units made up nearly half of all new multifamily units. That’s now down to about seven percent.

The week’s must reads

1. At Planetizen, Todd Litman writes about what the Paris climate talks mean for urban planning. He connects the heavy influence of land use patterns and transportation systems on a city’s carbon emissions with the broader goals of reduced global temperature increases. He also links to a study he carried out earlier this year with powerful evidence of the link between smart urban policy and environmental benefits.

2. For cities like Detroit, where abundant vacant homes create public safety hazards and unsightly conditions in many neighborhoods, demolition has become a major anti-blight strategy. Reuters takes a look at Detroit’s post-bankruptcy plan to demolish 80,000 homes—and the question of exactly how much such a plan should cost. Beyond that issue, though, demolitions appear to be showing progress on at least some fronts: the city credits them with a massive decrease in arsons, and an independent report suggested that home prices near demolitions increased by an average of 4.2 percent.

3. At City Observatory, we’ve been proponents of pricing road use to make drivers internalize the external costs of their travel, including added congestion, environmental damage, and deaths and injuries from accidents. Governing looks at a growing trend of cities getting revenue from public rights of way. Most exciting is San Francisco’s parking initiative, which uses demand-dynamic pricing to regulate the number of parked cars and the length of time they stay in the style of Donald Shoup.

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New knowledge

1. At the Brookings Institution, William Julius Wilson describes how economic segregation, layered on top of racial segregation, has put low-income black Americans at an extreme risk of being victimized by violent crime. The gap between higher-income and lower-income African Americans has grown especially rapidly since the 1970s.

2. The mortgage interest tax deduction: it’s a highly skewed policy that gives the biggest benefits to very wealthy homeowners and provides nothing to all to those who rent, or who don’t earn enough to itemize their deductions. Dylan Matthews at Vox is the latest to assail the tax deduction, showing that simple, common-sense reforms—including capping the home value that’s eligible for the deduction at $500,000, and turning the entire program into a 15 percent credit so it can be accessed by people who don’t itemize deductions—would make a huge difference in making the policy more progressive. (See the Tax Policy Center’s report that informed much of Matthews’ article here.)

3. The American Institute of Architects has released new survey data about what builders believe people are asking for in 2015. Notably, reinvestment in developed, walkable areas continues to gain ground: 65 percent more of the surveyed firms said infill development is gaining popularity than losing; 55 percent more said proximity to public transit is gaining popularity; and 48 percent more said walkable neighborhoods are gaining popularity. (Hat tip to Streetsblog USA.)

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org, dkhertz@cityobservatory.org, or on Twitter at @cityobs.

It’s election day, everyone.  If you haven’t voted, please do so. In honor of the election, today we’re please to reprise one of Daniel Kay Hertz’s essays on urban politics.  Daniel has just released his new book, The Battle of Lincoln Park: Urban Renewal and Gentrification in Chicago.

There are two big theories about who controls the pace of development in American cities and suburbs.

One is the “growth machine.” In this telling, developed by academics like Harvey Molotch in the 1970s, urban elected officials and zoning boards are highly influenced by coalitions of business and civic leaders interested mainly in economic growth and maximizing the price of the land they own.

 

The other, developed later by the economist William Fischel, is the “homevoter hypothesis.” Fischel argues that real power—at least in the small to moderately-sized municipalities in which the majority of Americans live—is held by homeowners, who are also interested primarily in maximizing the value of their property: their homes.

 

These two theories closely track two of the major camps in the debate about what’s wrong with American housing policy. If you believe in the growth machine, either because you’re a reader of Molotch or it just happens to coincide with your general worldview, you’ll probably believe that US cities suffer from too much development, pushed on an unwilling populace by a profit-driven elite for whom zoning and planning is an inconvenience at most.

If you’re in the homevoter camp, conversely, you’re likely to think that the problem is too little development, as NIMBY homeowners scare local elected officials into blocking any housing development that might compromise their property values—either simply by increasing the housing stock, and thus the number of “competing” sellers, or by introducing “undesirable” kinds of people or buildings.

As you can see, there’s quite a bit riding on which of these theories is right—or, more realistically, in what proportions, where, and in which ways, each is right and wrong. One suggests that development laws ought to be made more restrictive; the other that they ought to be less. One suggests that there may already be a broad democratic coalition in favor of a rational housing market, but that coalition is frustrated by a smaller number of more powerful interests; the other suggests that the broad democratic coalition of homeowners, at least at a hyper-local level, is getting exactly what it wants when home values spiral upwards.

A study published last year from Vicki Been, Josiah Madar, and Simon McDonnell of NYU took a crack at pitting these theories against each other to see which did a better job of explaining zoning changes in New York City from 2003 to 2009, under former mayor Michael Bloomberg.

 

As the authors themselves admit, their choice of place and time give the growth machine position a leg up: even Fischel, who coined the “homevoter” name, suggests that his theory probably applies best to smaller municipalities, without the huge business interests of major cities. It’s also most likely to matter in places where most people own their own homes—and New York City has one of the lowest homeownership rates in the country, with just 36 percent of homes being owner-occupied. Finally, the billionaire businessman Michael Bloomberg is, at least superficially, as good an avatar of the “growth machine” coalition as one can imagine.

To distinguish between the two theories, the study compared “upzones” (a zoning change that increases allowed density) and “downzones” (a zoning change that reduces allowed density) with several factors:

• First, land close to infrastructure and services, like rail stations and high-performing schools. If the growth machine theory is correct, these places should see more upzones, as developers try to take advantage of these valuable locations. If the homevoter theory is correct, these places might see more downzones, as homeowners try to protect the value of their property against other, competing homes.

• Second, market growth and rising home prices. The growth machine theory would suggest places with rising prices would also see more upzones.

• Neighborhood demographics. Growth machine theory might suggest that demographics associated with high real estate values, like wealthier and whiter neighborhoods, would see more upzones. Homevoter theory would say those places would see more downzones, as more powerful homeowners are more able to enact their anti-development orientation.

• Homeownership rates and voter turnout. Both high homeownership rates and turnout would result in more downzones, according to homevoter theory.

So what did the results looks like?

• Interestingly, proximity to high-quality infrastructure and services made land more likely to be changed in both directions—that is, land far from high-quality infrastructure and services was more likely to remain in its original zoning category. But in almost every case, proximity was especially likely to lead to more downzones. For example, parcels in high-performing school districts were 43 percent more likely than the typical parcel to be upzoned—but 392 percent more likely to be downzoned.

• Correlations with market growth were weaker—but they suggested that growing markets were associated with downzoning. Parcels in neighborhoods seeing rapid population growth were 41 percent more likely to be downzoned, for example. Parcels in neighborhoods seeing rapid home value increases were about 20 percent less likely to be upzoned, although they were also 27 percent less likely to be downzoned.

• Downzoning was very strongly correlated with whiter neighborhoods: parcels in Census tracts that were over 80 percent white were more than seven times more likely to be downzoned than parcels in tracts that were less than 20 percent white.

• Parcels in tracts with high homeownership rates were 43 percent more likely to be downzoned, and 25 percent less likely to be upzoned. Parcels in districts with high voter turnout were 230 percent more likely to be downzoned, and 53 percent less likely to be upzoned.

So what does this tell us? Well, in every case where the evidence clearly points to one theory or the other, the winner is the homevoter hypothesis. Homes near high-performing schools—sources of great value to which Fischel says homeowners pay particular attention—were overwhelmingly more likely to have their maximum density reduced, rather than increased, as developers and business interests would surely prefer. Neighborhoods with rising demand, similarly, tended to see more anti-development zoning, to the extent that a growing population tended to lead the government of New York City to allow fewer homes to be built. Very white neighborhoods were particularly likely to see density caps lowered. And homeownership and voter turnout rates had exactly the results expected by the homevoter theory. (Although the voter turnout results could, arguably, also be seen as compatible with the growth machine.)

These outcomes are all the more stunning because of where and when they took place: New York City under Michael Bloomberg, which, again, is one of the very last settings you would expect to find “homevoters” in charge of development.

Of course, none of this means that big landowners, businesses, and developers aren’t also trying to influence the development process in their favor, and sometimes succeeding. Perhaps the most fascinating results of the study actually suggest a somewhat more complex dynamic: if land near parks and high-performing schools are more likely to be both upzoned and downzoned, then you can imagine a story in which these amenities lead to increased competition between the growth machine and homevoters. According to this report, homevoters appear to win the vast majority of the time—but developers also score a few victories, getting more upzones than are granted (or, perhaps, requested) in less valuable territory.

As we wrote in our review of William Fischel’s new book, Zoning Rules!, and contra Ilya Somin’s argument about a growing pro-zoning-reform consensus, these findings also suggest that those who would like to moderate home price increases through smarter development policy may have a daunting political hill to climb. More about that in an upcoming post.

There are two big theories about who controls the pace of development in American cities and suburbs.

One is the “growth machine.” In this telling, developed by academics like Harvey Molotch in the 1970s, urban elected officials and zoning boards are highly influenced by coalitions of business and civic leaders interested mainly in economic growth and maximizing the price of the land they own.

 

The other, developed later by the economist William Fischel, is the “homevoter hypothesis.” Fischel argues that real power—at least in the small to moderately-sized municipalities in which the majority of Americans live—is held by homeowners, who are also interested primarily in maximizing the value of their property: their homes.

 

These two theories closely track two of the major camps in the debate about what’s wrong with American housing policy. If you believe in the growth machine, either because you’re a reader of Molotch or it just happens to coincide with your general worldview, you’ll probably believe that US cities suffer from too much development, pushed on an unwilling populace by a profit-driven elite for whom zoning and planning is an inconvenience at most.

If you’re in the homevoter camp, conversely, you’re likely to think that the problem is too little development, as NIMBY homeowners scare local elected officials into blocking any housing development that might compromise their property values—either simply by increasing the housing stock, and thus the number of “competing” sellers, or by introducing “undesirable” kinds of people or buildings.

As you can see, there’s quite a bit riding on which of these theories is right—or, more realistically, in what proportions, where, and in which ways, each is right and wrong. One suggests that development laws ought to be made more restrictive; the other that they ought to be less. One suggests that there may already be a broad democratic coalition in favor of a rational housing market, but that coalition is frustrated by a smaller number of more powerful interests; the other suggests that the broad democratic coalition of homeowners, at least at a hyper-local level, is getting exactly what it wants when home values spiral upwards.

A study published last year from Vicki Been, Josiah Madar, and Simon McDonnell of NYU took a crack at pitting these theories against each other to see which did a better job of explaining zoning changes in New York City from 2003 to 2009, under former mayor Michael Bloomberg.

 

As the authors themselves admit, their choice of place and time give the growth machine position a leg up: even Fischel, who coined the “homevoter” name, suggests that his theory probably applies best to smaller municipalities, without the huge business interests of major cities. It’s also most likely to matter in places where most people own their own homes—and New York City has one of the lowest homeownership rates in the country, with just 36 percent of homes being owner-occupied. Finally, the billionaire businessman Michael Bloomberg is, at least superficially, as good an avatar of the “growth machine” coalition as one can imagine.

To distinguish between the two theories, the study compared “upzones” (a zoning change that increases allowed density) and “downzones” (a zoning change that reduces allowed density) with several factors:

• First, land close to infrastructure and services, like rail stations and high-performing schools. If the growth machine theory is correct, these places should see more upzones, as developers try to take advantage of these valuable locations. If the homevoter theory is correct, these places might see more downzones, as homeowners try to protect the value of their property against other, competing homes.

• Second, market growth and rising home prices. The growth machine theory would suggest places with rising prices would also see more upzones.

• Neighborhood demographics. Growth machine theory might suggest that demographics associated with high real estate values, like wealthier and whiter neighborhoods, would see more upzones. Homevoter theory would say those places would see more downzones, as more powerful homeowners are more able to enact their anti-development orientation.

• Homeownership rates and voter turnout. Both high homeownership rates and turnout would result in more downzones, according to homevoter theory.

So what did the results looks like?

• Interestingly, proximity to high-quality infrastructure and services made land more likely to be changed in both directions—that is, land far from high-quality infrastructure and services was more likely to remain in its original zoning category. But in almost every case, proximity was especially likely to lead to more downzones. For example, parcels in high-performing school districts were 43 percent more likely than the typical parcel to be upzoned—but 392 percent more likely to be downzoned.

• Correlations with market growth were weaker—but they suggested that growing markets were associated with downzoning. Parcels in neighborhoods seeing rapid population growth were 41 percent more likely to be downzoned, for example. Parcels in neighborhoods seeing rapid home value increases were about 20 percent less likely to be upzoned, although they were also 27 percent less likely to be downzoned.

• Downzoning was very strongly correlated with whiter neighborhoods: parcels in Census tracts that were over 80 percent white were more than seven times more likely to be downzoned than parcels in tracts that were less than 20 percent white.

• Parcels in tracts with high homeownership rates were 43 percent more likely to be downzoned, and 25 percent less likely to be upzoned. Parcels in districts with high voter turnout were 230 percent more likely to be downzoned, and 53 percent less likely to be upzoned.

So what does this tell us? Well, in every case where the evidence clearly points to one theory or the other, the winner is the homevoter hypothesis. Homes near high-performing schools—sources of great value to which Fischel says homeowners pay particular attention—were overwhelmingly more likely to have their maximum density reduced, rather than increased, as developers and business interests would surely prefer. Neighborhoods with rising demand, similarly, tended to see more anti-development zoning, to the extent that a growing population tended to lead the government of New York City to allow fewer homes to be built. Very white neighborhoods were particularly likely to see density caps lowered. And homeownership and voter turnout rates had exactly the results expected by the homevoter theory. (Although the voter turnout results could, arguably, also be seen as compatible with the growth machine.)

These outcomes are all the more stunning because of where and when they took place: New York City under Michael Bloomberg, which, again, is one of the very last settings you would expect to find “homevoters” in charge of development.

Of course, none of this means that big landowners, businesses, and developers aren’t also trying to influence the development process in their favor, and sometimes succeeding. Perhaps the most fascinating results of the study actually suggest a somewhat more complex dynamic: if land near parks and high-performing schools are more likely to be both upzoned and downzoned, then you can imagine a story in which these amenities lead to increased competition between the growth machine and homevoters. According to this report, homevoters appear to win the vast majority of the time—but developers also score a few victories, getting more upzones than are granted (or, perhaps, requested) in less valuable territory.

As we wrote in our review of William Fischel’s new book, Zoning Rules!, and contra Ilya Somin’s argument about a growing pro-zoning-reform consensus, these findings also suggest that those who would like to moderate home price increases through smarter development policy may have a daunting political hill to climb. More about that in an upcoming post.

Back in August, we wrote about the phenomenon of the “missing middle”: the fact that today’s urban (and suburban) development tends to take the form of either single-family homes or very large apartment buildings, but not so much in the middle.

And that’s a problem! Small apartment buildings perform a vital function in classic “illegal neighborhoods,” creating a stock of market-rate housing that is generally cheaper than houses, as well as adding crucial density to support walkable neighborhood commercial districts and transit, all at a lowrise scale that many people think “fits” with single family homes. After all, from triple deckers in New England, to two-flats in Chicago, to small apartment buildings in cities of all sizes all across the country, most popular older neighborhoods already include a large stock of these structures.

 

In our first post on the subject, we dug up statistics about the “missing middle” in metro areas around the country, using statistics from the last decade to show that extremely few homes are built in buildings that hold between two and four units.

  But data from another Census report, the “2014 Characteristics of New Housing,” breaks down construction into more categories—and goes back all the way to 1972. Which allows us to see that the missing middle hasn’t always been missing.

In fact, back in 1972, nearly a third of all multifamily homes were constructed in buildings with two to nine units—a typical size for lowrise apartment buildings. Significantly fewer, about a fifth, were built in very large structures with over 50 units. Small apartments peaked in 1981, with 46 percent of all new multifamily units.

Since then, though, they’ve fallen off a cliff.

In 2014, just seven percent of new multifamily homes were in buildings with fewer than 10 units. But nearly half—48 percent—were in buildings with 50 units or more.

Don’t get us wrong. There’s nothing wrong with big residential buildings. They’re necessary, in fact, for creating very high density areas in and around central business districts, and in large or high-cost cities’ urban cores, where space is at a premium.

But most urban neighborhoods don’t need 50-unit buildings, and it’s hard to imagine overcoming the opposition to such development in currently lowrise communities. And while the reaction to Seattle’s HALA proposal suggests that even small apartments are going to be unwelcome in many single-family neighborhoods, there are plenty of neighborhoods that are already mixed, where adding housing two, five, eight units at a time could help keep up with demand and create a broader diversity of housing options. That’s important both for price diversity, and to make room for people to “age in place,” downsizing from large homes they can’t take care of any more without having to leave their neighborhood. If the only options are large apartment buildings or single family homes, that seems like a recipe for political polarization and continued economic segregation.

What’s behind this shift? A huge amount of it, most likely, is about zoning. As building regulations tightened in the 70s and afterwards, American cities are increasingly divided into two types of development areas: urban cores where very large projects are allowed, and everywhere else, which is generally reserved for single family homes. There may also be a financing component, as getting bank loans for smaller projects may increasingly be a challenge. It’s probably also an indication that the number of sites where multi-family developments are so scarce—and therefore expensive—that it’s simply uneconomical to develop them for anything smaller than a 50 unit building.

But either way, as we wrote back in August, American cities can’t meet their housing challenges, or create liveable, walkable neighborhoods, with just two settings—single family homes and huge apartment buildings. It’s time to find the missing middle.

 

What City Observatory did this week

1. A $1.6 billion proposal. A film school teacher in San Francisco had some people talking about “ethical landlording” as a solution to the problem of too-high real estate prices. But substituting the private whims of land owners for prices as a way to determine who wins access to scarce housing isn’t necessarily an improvement. We have a different idea: tax capital gains on housing. In 2013 alone, SF area residential property increased in value by $159 billion. A tax that collected just one percent of that value could create a public funding stream for a significant amount of affordable housing.

2. Pulling a FAST one. Congress has finally agreed on a five-year transportation bill—but it’s hardly cause for celebration. With the so-called “FAST Act,” the federal government has officially severed the connection between the gas tax and funding for the Highway Trust Fund, acknowledging what has long been true: drivers don’t pay for the cost of using public roads. But rather than using that acknowledgement to expose drivers to more of the costs of their driving, the FAST Act commits a kind of bank robbery, raiding the Federal Reserve’s cash, an irresponsible one-time budget stopgap that leaves the question of long-term financing still unresolved.

3. Climate concerns steamrolled by FAST Act and cheap gas. Even as the UN hosts major climate change talks in Paris, our national transportation policy is pushing us in the wrong direction. With gas prices lower than they’ve been in years, it should be a good time for a small increase in the gas tax and other measures that make drivers internalize some of the costs they impose on society by driving—like greenhouse gas emissions. But the new FAST Act takes no such actions. In the meanwhile, cheap gas is already leading Americans to buy less fuel efficient cars, which will remain on the road for a generation, releasing 140 metric tons more carbon than if gas prices hadn’t fallen.

4. Cities have reason to be wary of Fed moves. After years of keeping interest rates low to stimulate the economy, the Federal Reserve is planning to raise them substantially over the coming years. While Fed rate changes may seem distant to the issues of urban neighborhoods, city leaders and residents should be concerned. For one, low interest rates have encouraged the construction of multifamily buildings that have added people and vitality to many inner-city neighborhoods. But more broadly, if the Fed’s rate hike slows the broader national economy, that slowdown will be felt on the ground in the economic health of cities and neighborhoods across the country.

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The week’s must reads

1. It can be very challenging to explain to most people why they would benefit from less parking in their neighborhood, or where they go shopping—after all, most people only think about it when they’re frustrated that they can’t find a spot. But now, you can just direct them to this minute-long video from the City of Ottawa. As part of its campaign to reduce its parking requirements, the City made a video to help its citizens understand why they should want that—and it’s one of the best quick explanations for non-planners that we’ve seen.

2. So you want transit-oriented development in your community, but you don’t have any rail lines. Good news! It probably doesn’t matter. Via Streetsblog California, Daniel Chatman of the University of California, Berkeley writes that it’s not proximity to rail transit that seems to have the biggest impact on reducing residents’ driving. Instead, reducing parking requirements, providing high-quality bus transit, and creating shopping and service destinations within walking distance of housing seem to be the most important factors. As Chatman points out, that’s a good thing: rail transit is scarce and expensive to build, but it turns out you don’t need it to get many of the benefits associated with it.

3. Angie Schmitt writes up a new report arguing that suburban office parks are in trouble. The real estate firm Newmark, Grubb, Knight and Frank looked at markets in five major US cities and found that a key issue is that offices in more traditional urban areas have access to a larger number of amenities, which more isolated suburban offices need to pay to replicate inside their own campuses. They estimate that 14 to 22 percent of suburban office space is obsolete. Proximity to transit is also important: offices more than a quarter-mile away from a new light rail line in Denver had vacancy rates nine percent higher than those within a quarter mile.

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New knowledge

1. Racial segregation continues its slow decline in American metropolitan areas, even as it remains at very high levels. William Frey at the Brookings Institution has parsed 2010-14 American Community Survey data to update our understanding of residential racial separation. Notably, some of the most segregated regions in the country saw the largest declines: in Chicago, for example, the average black resident’s surrounding neighborhood was 72.2 percent black in 2000, but 64.4 percent black in the 2010-14 ACS data. Overall, 45 of 52 metropolitan areas registered decreases.

2. In Los Angeles County, a full 14 percent of all land is used for automobile parking. In much of the county, there are more than 11,000 parking spaces per square mile. In many cases, those spaces were built as a result of legal requirements to provide off-street parking—a mandate for more sprawling development, and an implicit subsidy to drivers, who receive “free” parking whose cost is hidden in the higher cost of real estate or goods and services. A team of researchers have investigated how parking requirements have dramatically added to LA’s parking supply since 1950, with excellent graphics. Surprisingly few cities have a comprehensive inventory of parking supply, making this a model of the kind of information that would enable better-informed discussions of parking policy.

3. From Norway, new research adds to the evidence of social benefits from taxing housing. In addition to generating revenue (that could be used, as we propose above, for directly creating affordable housing), taxes on residential real estate can moderate demand for housing by removing its preferential tax status as a financial investment. That, in turn, can lower prices. This study suggests that taxing housing like any other capital asset would (in Norway) reduce housing prices by as much as 18 percent. While the exact numbers would obviously be different in the US—and certainly vary from place to place within the US—the basic dynamics are the same.

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The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

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