What City Observatory did this week
1. Homeownership: A failed wealth creation strategy. Its an article of faith that owning a home is the most reliable route to wealth building in the US. But this hasn’t been true over the past decade, and its especially problematic for low income households and minorities. The housing market is structured so that they buy at the wrong time, in the wrong place, pay a higher price and face far greater risk.
2. Homeownership can worsen inequality. Policies that promote homeownership have worked far better for the wealthy than the poor, with the result that wealth inequality related to housing has actually grown in the past decade. Low income households experienced greater value declines and more frequent foreclosures; higher income households continue to experience gains in home equity, with the result that the top twenty percent of households had, on average 9 times as much home equity as the typical household in 2010, up from a five-fold difference in 1990.
3. Housing can’t be a good investment and affordable. There’s a fundamental contradiction between the two pillars of US housing policy. In order to be a good investment, it has to increase steadily in value over time. But rising home values are synonymous with diminished affordability. Until we confront this contradiction squarely, we’ll have real difficulty making progress on either front.
4. Changes. We bid adieu and bon chance to our colleague Daniel Hertz, who’s taken a new position with a public policy think tank in Chicago. His thoughtful analysis and clear voice have defined City Observatory, and we’re delighted that he’s agreed to continue to provide monthly contributions. Thanks, Daniel!
The week’s must reads
1. Car-sharing reduces traffic. Susan Shaheen and her research team at the University of California Berkeley used fleet data and surveys of users of Daimler’s Car2Go car-sharing service. They estimate that each additional vehicle in the ride-sharing fleet leads to 9 to 11 fewer cars on the road, and greenhouse gas emissions per user decline substantially. Users report selling existing cars, or avoiding buying cars, and can utilize car-sharing on an as-needed basis to supplement transit, biking and walking. This is strong evidence that “transportation as a service” will be more efficient than our current model of having each household own one or more cars.
2. Making the buses run on time in NYC. For the past several years, bus ridership in New York City has been dwindling, even as subways have become increasingly crowded. The Transit Center released a detailed report–“Turnaround: making recommendations on how to get buses moving faster, including re-designing and straightening routes, electronic payment, all-door boarding, and dedicated lanes. It’s a list of ideas that could be applied in nearly all cities. Conspicuous by its absence is one other idea: charging private vehicles using the public roadway in peak hours to reduce traffic and speed buses.
3. Demographic Headwinds for Job & Housing Growth? A new report from John Burns Real Estate, a consultancy, predicts much slower job growth in the years ahead, due to lower growth in the working age (20-64) population. They forecast that this group, which grew 1.0 to 1.5 percent per year in the past decade, will grow at less than 0.5 percent annually through 2024. The result: labor shortages and likely subdued demand for housing. Some provocative data here.
1. Segregation and the Financial Crisis. NYU’s Furman Institute has posted another one of its series of well-structured discussions of key urban policy topics. This one explores an essay by Jacob Faber which suggests that the size of the housing market collapse was shaped heavily by segregation. In reply, Steve Ross acknowledges the key role of segregation in shaping housing market outcomes, but argues the decline was much more broad based.
2. Public Support for Road Finance Alternatives. Everyone, it seems, wants more and better roads, but no one actually wants to pay for them is the short summary of Indiana University’s Denvil Duncan’s paper exploring survey evidence on support for road finance alternatives. Of five considered options, none gets majority support; higher gas taxes (favored by 29%) or tolls (34%) are the least unpopular. Raising the income tax is the least favored. The title of this paper “Searching for a Tolerable Tax,” gives away the game; the full paper is available (paywall) from the Public Finance Review.
3. How Housing Market Fluctuations Affect Young Households. In hot housing markets, high prices keep younger households in the rental market, and also seem to lead to lower rates of marriage and child-bearing, according to research from economists Luc Laeven and Alexander Popov. They look at across market variations in home prices in the US, and conclude that housing booms tend to disadvantage young households, while benefiting older homeowning households.
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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