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.
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.
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.
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.
The Week Observed: May 20, 2016
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.
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.
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.
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.
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