What City Observatory did this week

1. Downzoning won’t make housing cheaper. Chuck Marohn of StrongTowns notes that land that’s zoned for apartments generally commands higher prices than nearby land zoned for single family homes. Couldn’t we lower the cost of housing, he asks, by downzoning that multi-family land? The short answer is no: Low density zoning is essentially a requirement that every household by at least a minimum amount of land regardless of how much they want or can afford. Plus: reducing the amount of land available for apartments drives up the price of the remaining multi-family zoned land–which further increases the rents for apartments. If you want to make housing more affordable, you need to upzone, not downzone.

2. Concentrated poverty is still growing. Growing up poor is a burden, but growing up in a neighborhood where your neighbors are also poor amplifies all of the negative effects of poverty. The State of the Nation’s Housing Report, released last week, shows that concentrated poverty is growing. The report focuses on neighborhoods with poverty rates in excess of 40 percent, extreme poverty. The number of such neighborhoods as doubled and the number of poor people living in such neighborhoods has increased from 2.7 million in 2000 to 5.4 million today. And while suburban poverty has increased, its still the case that 60 percent of the extreme poverty neighborhoods are located in the densest third of all urban neighborhoods.

3. Rent inflation is abating. For most of the past five years, rents have been increasing around the country. In the face of calls for rent control and mandatory inclusionary housing requirements, economists have counseled patience, arguing that eventually, the growth in housing supply would catch up with growing demand, and slow the pace of rent increases. That finally seems to have happened. In the past year, the rate of rental price inflation fell in 48 of the nation’s 50 largest housing markets; rents actually declined in 20 markets, including hotspots such as San Francisco and New York. Further increases in supply in the coming year could ease the nation’s apartment affordability problems further.

4. You can’t judge housing affordability without considering transportation costs. The most common way of computing housing affordability is simply to ask whether a household’s rent or mortgage payments exceed 30 percent of its income. There are many problems with this simplistic test, and one of them is that low rent housing in inaccessible locations may impose much more in additional transportation costs than it saves in rent. If a household needs an extra car to drive for all of its daily needs, it can end up spending a lot more than if it pays a higher fraction of its income to rent in a better location. Data from the newly released State of the Nation’s Housing report confirms that households that spend a larger fraction of their income on housing end up spending considerably less on transportation–confirming this tradeoff between housing costs and transportation savings. Rather than look at housing in isolation, we should talk about affordable living, including transportation costs.

Must read

1. Grabar on city leadership and climate change.  Slate’s Henry Grabar has been knocking it out of the park lately.  His latest missive challenges the widely held belief that mayors and cities can step up and take the mantle of leadership now that the Trump Administration has pulled the US out of the Paris Climate Accord. “Lefty Cities Say They Want to Fight Climate Change but Won’t Take the Most Obvious Step to Do It.” It’s one thing to scold national leaders and make bold pronouncements, but cities that don’t allow new housing and higher density in the face of strong demand, and which waffle on making cars pay their own way, aren’t really serious about climate change. Grabar points to strident Berkeley city leaders, who condemn Trump, but have blocked new housing in their city, forcing demand elsewhere, and producing longer commutes and more pollution.

2. Berkeley Housing Op-Ed. And speaking of Berkeley, City Councilor Lori Droste has reached out to some of California’s resident experts on housing policy and co-authored an Op-Ed calling for the city to allow more market rate housing, and to carefully assess whether proposed inclusionary housing requirements and higher “linkage fees”–surcharges on new construction to fund affordable housing programs–will discourage additional housing in the city. The Op-ed argues that “Downzoning would be a disastrous step backwards for Berkeley, and will undoubtedly worsen affordability and lead to even more displacement and exclusion.” It also points out that the city’s linkage fees would be the highest in the Bay Area, and could be so high that  “we will drive new housing to other cities and will not likely see any affordable housing–or any housing–in Berkeley for a long time.” Droste is joined in the letter by UCLA’s Michael Lens and Paavo Monkkonen, who specifically argue that downzoning will lead to higher housing costs and more displacement from Berkeley. Also signing the letter is UC Berkeley’ planning professor Karen Chapple and Terner Housing Center Director Carol Galante. Berkeley is fortunate to have so many heavyweights weighing in on their deliberations–but what they have to say applies with equal force to many other cities.

3. Kids in cities:  Lessons from Vancouver.  Brent Toderian discusses the kinds of planning and investments that can make cities more welcoming to families with children. Three keys: encouraging the construction of family-sized units, providing for day-care and schools in denser areas, and designing the public realm so that it works for children as well as adults.

 New ideas

1. Philadelphia’s Middle Neighborhoods. The Reinvestment Fund’s Emily Dowdall has a new report digging into the health and prospects of Philadelphia’s “Middle Neighborhoods.” Middle neighborhoods are identified by average neighborhood income, and have incomes that are between 80 percent and 120 percent of the regional median. The report further classifies these middle neighborhoods by their racial and ethnic composition, and tracks changes in population, income levels and home values in each segment. A plurality of these middle neighborhoods are classified as “mixed race and ethnicity,” meaning no single ethnic group dominates. These mixed middle neighborhoods have added population in the past 15 years; growing about four times faster than all other middle neighborhoods (9 percent vs 2 percent since 2000). While poor and upscale neighborhoods often get most of the policy attention, these middle neighborhoods are often the most racially/ethnically diverse neighborhoods in a city. In Philadelphia middle neighborhoods  home to a majority of the city’s foreign born residents, a key demographic group behind citywide population growth.

2. Tech Cities. Real estate brokers Cushman-Wakefield have a new report out ranking the nation’s metro areas according to their tech prowess.  No surprises here:  Silicon Valley and San Francisco come out top of the list. These rankings are based on an analysis of education levels, venture capital funding, the concentration of jobs in electronics, software and other technology related firms, and measures of entrepreneurship. The underlying data is probably of greater use than the rankings here. But beware, at least one table contains some inaccurate information. On page 17, of their report, metro Denver’s educational attainment rate is ranked number one, based on a reported 55 percent of adults having completed at least a four-year college degree.  But actually, according to Census data (American Community Survey, 2015 One-Year Estimates, Table S-1501), the metro area’s four year college attainment rate is actually 41.8 percent–still high, but not number one.