Two years and two days ago–on October 15th, 2014–we launched City Observatory, a data-driven voice on what makes for successful cities.  Since then, we’ve weighed in daily on a whole series of policies issues set in and around urban spaces. So today, we’re taking a few moments to celebrate our birthday, reflect back on the past year, and plot a course forward.

Many happy returns! (Flickr: Daniel Nelson)
City Observatory turns 2. Many happy returns! (Flickr: Daniel Nelson)

Its a tremendously encouraging time to be working in cities.   After decades of disinvestment and the out-migration of people and jobs, cities, particularly city centers, are on the comeback.  With each passing day, the evidence that cities are leading our nation’s economy becomes more compelling: City home values are rising much faster than in their surrounding suburbs, an indicator we call the “Dow of Cities.” City center job growth is outpacing that in the suburbs for the first time in decades, and the expansion of large metro economies is driving the national economic expansion. More investment is flowing into downtown areas.  As we’ve chronicled, more people, particularly well-educated young adults, are increasingly choosing to live in close-in urban neighborhoods.

The return to urban living has the potential to help create a healthier planet, as people drive less and use less energy to maintain relatively smaller urban homes. It can help make people healthier, too, by allowing them to walk more, and reducing their exposure to one of the greatest causes of death and serious injury in the country: car crashes. Finally, overwhelming evidence shows that bringing people with social capital and middle-class incomes back into urban neighborhoods that had lacked those things for years creates more social equity and economic mobility.

While we’re fundamentally optimistic about cities, and we see them as essential to tackling many of the nation’s most pressing problems, we also recognize that cities are the epicenter of some serious challenges.

The immediate effect of this recent surge of interest, investment and migration is a shortage of cities.  More people now want to live in great urban neighborhoods than ever before. And the demand for urban living has grown far more rapidly than the supply of great urban places. Unfortunately, too many policies made it difficult to build additional housing in the most desirable neighborhoods. This mismatch is accentuated by the  temporal imbalance between fast-changing demand and slow-changing supply and has manifested itself in the form of higher rents and real estate values in urban centers. While higher rents are an important indicator of a turnaround–and the market signal that will help alleviate this shortage–higher rents pose major problems for many urban residents, particularly low income households.

In our view, the solution to this affordability problem will come from increasing housing supply and from building more great urban neighborhoods.  This is a matter of supply and demand:  as long as the demand exceeds the supply, prices (and rents) will go up.  But its also a matter of arithmetic:  If more people want to live in a neighborhood than their are houses to hold them, then some people who would like to live their will end up living somewhere else. And given the penurious nature of our housing support for the poor, it means low income households will be those disproportionately disadvantaged.

The movement back to the cities is an unparalleled opportunity to tackle one of the most persistent and destructive problems confronting our nation, the growth of economic segregation. We know that as bad as it is to be poor, it’s worse to have to live in a neighborhood where a large fraction of your neighbors are also poor: concentrated poverty amplifies all of the negative effects of poverty and it results in a permanently limited lifetime opportunities. Our work, and that of our colleagues at the Brookings Institution shows that despite all of the focus on an urban renaissance, neighborhoods of concentrated poverty are actually growing, and they are still disproportionately in urban centers.

Too often, unfortunately, discussions of cities get framed as a zero-sum game:  If we make the city or neighborhood better for some group or person, we’re somehow making it worse for everyone else. Many resist any change, for fear that they will end up worse off.

The challenge in our view is to look for ways to turn the revitalization of our cities into a win-win experience for all.  How do we leverage the growth and investment in cities in a way that promotes and expands their cultural, economic, and racial/ethnic diversity?  How do we build cities for everyone? There are promising efforts in many cities, as exemplified by the YIMBY–“Yes in my back yard“–movement that is growing, and which now has friends in very high places. In Seattle that city’s HALA “Housing Affordability and Livability Agenda”  has inspired some provocative conversations that are reshaping the contours of the city’s political scene. Environmental, social justice and housing affordability advocates in Portland have started a “Portland for Everyone” organization to advocate for more supply.

These efforts are hopeful signs that we can take the energy and momentum that is building in favor of urban living, and use that force to help propel efforts to build more diverse and inclusive communities. In our third year, City Observatory will focus on the challenge of building cities for everyone. We hope you’ll join jus.