Posted by Jonathan J. Miller -Monday, May 8, 2006, 12:02 AM
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Source: Curbed
In The Stalwart, one of my daily must-reads, the post When Property Development Is Outlawed, Only Outlaws Will Develop Property [The Stalwart], talks future development in the aftermath of the Greenpoint, Brooklyn fire [Curbed] that destroyed a bunch of property but could have actually killed many if the wind was in a different direction.
I remember seeing a similar slogan on a billboard as a teenager, on a bike trip through Wyoming: The west wasn’t won with a registered gun. When guns are outlawed, only outlaws will have guns.
These warehouses had been abandoned for some time, and surely the red-tape in getting approval from various board was taking years. Not to mention, there’s a claque of preservationists here who want to keep every abandoned building, truckyard, and empty factory as some sort of memorial to the past.
The trade-off here is that the difficulty in development, provides a large up front risk and cost. What does the difficulty in the development process do to housing costs? It makes them much more expensive. No wonder the only thing that can be built in Manhattan without significant government intervention is luxury housing (although incentives still remain).
Posted by Jonathan J. Miller -Friday, April 28, 2006, 12:01 AM
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In Bill Virgin’s column How to rein in housing prices? It’s simple [SeattlePI], he draws a comparison between keeping gas prices down and housing prices.
The first reaction to gasoline prices over $3 per gallon to many is to control prices, yet that limits expenditures on new drilling and refining ventures. With the reduced affordability of housing, the author speculates tongue in cheek what would happen if housing prices were controlled.
If gouging the motorist is wrong, so is gouging the prospective home buyer — or so this line of thinking goes. The solution is simple. Make it a crime to sell your house for more than you bought it.
How else do we stop the exodus of the middle class from new urban areas, sprawl and longer commute times?
Sarcasm aside, neither gasoline nor housing prices lend themselves to easy fixes or palatable remedies. Gasoline is going to be more volatile and, on average, more expensive as worldwide demand for petroleum grows and supplies tighten — unless you’re willing to allow drilling anywhere, set prices for every step in exploration, production, refining and marketing, or take everyone’s car away.
With smart growth initiatives, new urbanism, zoning and other restrictions the very things that make certain areas more appealing to buyers, are constricting supply and development of new housing, a solution to affordability has to be underneath another stone that needs to be “un-turned.” Its hard to believe that current property owners, who are sitting on a windfall of homequity gains, would be willing to give that up to sell their homes for what they paid for it.
And by the way, aren’t we in a free market system?
Posted by Jonathan J. Miller -Monday, April 17, 2006, 7:34 AM
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Planetizen deserves a hat tip for pointing me to the article Can Architecture Help Housing? [Businessweek/Metropolis Magazine] with the subtitle: The ideological catfights over housing threaten to marginalize all of architecture. Could the parties agree for the greater good?
Architects and urban planners have not been known to get along. With the latest housing boom, this gap, IMHO has not narrowed much. Architects have gained the attention of developers who have sought out Starchitects as developers seek to differentiate their building from the competition. New urbanists and other urban planners tend to be more macro in their orientation. Detractors call New Urbanism plop architecture or public housing for the rich.
With the devastation the has leveled a significant portion of the gulf, observers wonder if architects and urban planners can get past the nit-picking that has traditionally characterized their relationship.
The Businessweek piece wonders whether this next generation of architects and urban planners can do better than those in prior generations.
Now that architects are taking shots at one another over housing, can we do better than we did in the last century, which gave us sprawl for the middle class and Cabrini-Green for the poorest of the poor? Can we close the great divide between fetishistic formalism and social responsibility? Or are we doomed to a world in which architecture’s leading practitioners use their work merely to comment on social tumult rather than actually trying to do something about it?
This will be put to the test in the Gulf region as large swaths of it requires rebuilding. Its unrealistic to assume New Orleans can be reproduced exactly as it was before, yet at the same time, is at risk to lose its identity.
Posted by Jonathan J. Miller -Monday, April 10, 2006, 12:01 AM
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A reconstruction of the growth of Baltimore,
Maryland, over the last 200 years. The U.S.
Geological Survey used historical records as
well as Landsat satellite data to create this
sequence.
There are lot of elements that are affected by sprawl – unchecked and unplanned gowth. I would have thought that more solutions would be made apparent as funding filled cities coffers from tax revenues. Here are a collection of relatively random thoughts about urban sprawl and how it impacts housing:
NASA
In an unusually large planned suburb that will take 50 years to build [boxtank] in near the Great Salt Lake…
which will stretch over 20 miles and accomodate 162,800 homes and 500,000 people in a string of walkable communities that will take over 50 years to build. The development lies on the largest privately owned tract of land (144 square miles) in the United States that is near a major metropolis. The owner of the land, Kennecott Utah Copper Corp., created Kennecott Land to oversee the development of the surplus mining land it owned along the Oquirrh mountains into a string of communities emphasizing sustainable development practices.
See the full CNN story
Managing sprawl is difficult as multiple municipalities are impacted. Leadership and an agreeable strategy for all sides are seldom clear. In fact, with all the discussion about sprawl, I find straightforward solutions rare because each situation is unique and it takes immense planning, vision and funding.
Now that the housing boom is essentially over (unprecedented growth in housing development and prices), I think urban planning advocates missed a great opportunity.
_Previous related posts_
Thomas Jefferson: The Founding Father Of Sprawl? [Matrix]
Sprawled In The Suburbs, There Is Hope For The New-Urbanist [Matrix]
Creative Brain Drain Weakens Long Term Urban Revitalization [Matrix]
Development Is Goin’ Down…town [Matrix]
Posted by Jonathan J. Miller -Friday, March 31, 2006, 12:01 AM
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A hat tip to [Calculated Risk] for pointing me to this post on [Economist's View] that discusses Shiller’s long-term views on the current housing boom and presents much of his recent paper Long-Term Perspectives on the Current Boom in Home Prices.
Robert Shiller looks at over 100 years of data and asks the question every homeowner wants to know: what is the short-term and long-term prognosis for real estate values? The news isn’t reassuring, but luckily risk markets are being developed to help people hedge or buy insurance against the risk that Shiller unveils. His controlled series using housing along a canal is fascinating.
For the free full version of Shiller’s work as a download which requires registration, go here.
Professor Shiller has been calling for crash of housing for the past 5-6 years and he has focused on more pyschological reasons. He is consisent with his point, similar the way the Economist magazine is on this position. Bearish on housing.
Dean Baker, Center for Economic and Policy Researh also has a paper out: The Menace of an Unchecked Housing Bubble
An unprecedented run-up in the stock market propelled the U.S. economy in the late nineties and now an unprecedented run-up in house prices is propelling the current recovery. According to Dean Baker, like the stock bubble, the housing bubble will burst. Eventually, it must. When it does, the economy will be thrown into a severe recession, and tens of millions of homeowners, who never imagined that house prices could fall, likely will face serious hardships.
For the free full version of Baker’s work as a download which requires registration, go here.
I subscribe to me Baker’s email list and find much of the publication very informative as well. He’s bearish on housing too.
UPDATE
To digress a bit:
Although Austin Powers made a case against the Dutch, (wink) here’s one to invoke sympathy. In Lisa Chamberlain’s article Pressing a Claim for Dutch History [NYT] she discusses the eminent domain taking of land by the Metropolitan Transit Authority from the Collegiate Church Corporation which has owned it for 282 years.
The controversies covering eminent domain takings appear to be on the rise as government authorities have more lattitude than ever before. More to come.
Posted by Jonathan J. Miller -Tuesday, March 21, 2006, 11:58 PM
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Source: WSJ
Residents of Fort Lauderdale Florida work to change the image of the city after peaking at 350,000 spring break college tourists. This summer 10,000 to 15,000 students are expected to visit [Orlando Sentinel]. This is a rare example of a municipality with too much of a good thing, deciding to go after something better. Residents fought the old ways and one because the old Ft Lauderdale was one of fights, trash and congestion, limiting more affluent development. The city has repositioned itself as a high-end tourist destination [WSJ].
In Maura Webber Sadovi’s always well-done BLUEPRINT column she talks about the resurgence of the city with extensive new development, both residential and commercial [WSJ]
Source: WSJ
The size of the bets on the Fort Lauderdale residential market suggests investors are serious. About 4,671 new condominiums were completed last year, with about as many scheduled to come on the market this year, says Gleb Nechayev, senior economist with Torto Wheaton Research. Investors also purchased about 15,000 apartment units to convert into condominiums last year, the fourth-highest volume among the country’s major markets, according to Real Capital Analytics Inc.
However, like other Florida markets, I’d be worried about rising inventory.
So much for the Candy Store lounge…
Posted by Jonathan J. Miller -Wednesday, March 15, 2006, 1:02 AM
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In the LA Times Seeing Factories as Essential Parts, the tag line reads The shape of modern American cities may be changing as urban planners weigh the conflicting merits of housing versus industry.
In many large urban markets, like Los Angeles and New York, it is getting more and more difficult to consolidate large parcels of land to create more housing. Politicians are all for it because it replaces a tepid tax base with a strong tax base. New York City has upzoned neighborhoods to encourage development, while land in outlying areas of LA are becoming scarce.
When is enough, enough? I have heard the joke in the NYC said on more than one occasion that its only a matter of time that Manhattan will become one big condo development.
At the same time, restricting supply will push housing prices even further.
Local governments are beginning to take steps to protect industry as residential developers eye industrial land for housing:
Long Beach – Adopted a strategy in January for protecting jobs and creating business that discourages conversion of industrial property to residential or commercial uses. Formal policies are expected in a year.
New York City – Just wrapped up public comment on boundaries for a series of “industrial business zones” proposed by Mayor Michael Bloomberg last year. The Industrial Business Zone Boundary Commission could be convened by the end of the month to decide on the boundaries.
San Diego – Has mapped the city’s industrial areas and drafted a plan to protect prime industrial land. The City Council’s land use and housing committee began hearing testimony on the draft, and the Planning Commission will address it later this month.
San Francisco – Last month began a series of community meetings to discuss its Eastern Neighborhoods plan, proposed zoning changes to balance industrial land protection and residential development in the South of Market, Mission, Potrero Hill and Waterfront districts. The Planning Commission eventually will weigh in on potential zoning changes.
San Jose – Changed the general plan on 4,000 acres in North San Jose to increase industrial density on part and allow housing on the rest in a compromise to protect manufacturing land and allow necessary residential development. The plan is in limbo after an unfavorable court ruling on March 2. The city now must decide how to proceed.
Santa Monica – Is updating its general plan to find ways to preserve areas for industrial and light manufacturing uses. The new plan should be completed within a year and a half.
Ventura – Recently debated industrial protection as it refigured its general plan. Zoning and economic development details are in the works.
Supply would certainly temper prices in a weakening market, but what happens when industry can’t afford to locate in the very same market the housing market is there to serve (at least partially?) The influx of new housing units can change the texture and characteristics of an area to the point where the reasons for moving there in the first place are lost.
There is a fine line between progress and a solid tax base.
Posted by Jonathan J. Miller -Monday, March 6, 2006, 12:02 AM
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Source: Brownstoner
This weekend, NYT Magazine had an interesting article (I think I spent most of the weekend reading this real estate issue) on the noted Harvard economist Edward L. Glaeser [NYT]. Unlike that of most other housing economists, Glaeser’s recent work on real estate addresses the issues of supply rather than of demand. He is far more interested in the forces shaping land development and residential building in the United States than in the forces shaping buyers’ motivations and actions.
I think that what I call economic geography, such as the layout of a city, its transportation system and its geography has taken a back seat to consumer-based economics, especially during the most recent housing boom.
I first came across the work of Glaeser in “Why is Manhattan So Expensive? Regulation and the Rise in House Prices” [pdf]. [I always have a soft spot for any noted economists who cite my firm in their work -ed]
He is skeptical about arguments citing the lack of land as causing high housing prices and believes that the housing crisis was man-made. Here’s a couple of stat facts:
95% of US land is undeveloped.
if every American were given a house on a quarter acre, so that every family of four had a full acre, that distribution would not use up half the land in Texas.
In other words, its all about zoning and land-use rules.
For example, in Manhattan, 30 years ago, the price of an additional floor was essentially its additional cost. However, over the last 30 years, the average height of a building has actually decreased. …if prices in Manhattan are skyrocketing, you should be building more and more at 50 stories, rather than at 30. Not the reverse…and estimated that one half or more of the value of condominiums in the borough could be thought of as arising from some type of regulatory constraint preventing the construction of new housing.
I think one of the most interesting aspects of his research came from his work with Joseph Gyourko on the relationship between housing and urban poverty. In markets with poor future economic prospects like Detroit, why doesn’t it experience a much faster outflow of population, especially to other areas of the country that are doing better economically? The conclusion was the permanence of housing. In Detroit, the median sales price of a house was $63,600 in 2000 yet the cost to build a new house to replace it would be $80,000. No builder would build new houses because it was not cost effective, so as long as those houses remain standing, the people who seek that price point will remain. This is presented in their paper Urban Decline and Durable Housing [pdf]
Posted by Jonathan J. Miller -Thursday, February 23, 2006, 12:26 AM
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In this Planetizen post the author Leonardo Vazquez postulates:
He told James Madison: “I think our governments will remain virtuous for many centuries as long as they are chiefly agricultural; and this will be as long as there shall be vacant lands in any part of America. When they get plied upon one another in large cities, as in Europe, they will become corrupt as in Europe.”
As a writer, philosopher and leader, Jefferson was able to hard-wire an anti-urban bias into the culture of the United States. Consider the U.S. Constitution. What power does it give to cities and towns? None, nada, zip. In fact, the Constitution doesn’t even mention cities and towns. It does give a lot of power to states. And states get more power — through representatives — by increasing their population.
It’s a formula for urban sprawl and weak cities. States need to grow to get more representatives and more political power. State politicians could try getting more people into urban areas by encouraging compact development. But that would risk giving more electoral power to cities, which Jefferson and his friends and followers (the “Jeffersonians”) thought were corrupt. The result? Encourage people to scatter on large plots of land — of course after removing the Native Americans who happened to be living there at the time.
Its a good article. We have had recent posts on sprawl and new urbanism (bringing town centers to suburban areas). Here’s a good resource that covers sprawl [National Geographic].
Sprawled In The Suburbs, There Is Hope For The New-Urbanist [Matrix]
Creative Brain Drain Weakens Long Term Urban Revitalization [Matrix]
Development Is Goin’ Down…town [Matrix]
Posted by Jonathan J. Miller -Wednesday, February 22, 2006, 12:01 AM
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The front page, above the fold, article States Curbing Right to Seize Private Homes [NYT] talks about the national backlash to the Supreme Court findings in KELO et al. v. CITY OF NEW LONDON et al..
In a rare display of unanimity that cuts across partisan and geographic lines, lawmakers in virtually every statehouse across the country are advancing bills and constitutional amendments to limit use of the government’s power of eminent domain to seize private property for economic development purposes.
Rarely has a Supreme Court ruling created such a universal reaction that was not made up along party lines. The idea that the loss of private property to private development seems to have struck a cord with state and local legislatures and they are passing laws that would disallow many situations that would involve emminent domain. In fact, one of the justices seemed to apologize after the 4-3 decision and said that “We emphasize that nothing in our opinion precludes any state from placing further restrictions on its exercise of the takings power.”
“It’s open season on eminent domain,” said Larry Morandi, a land-use specialist at the National Conference of State Legislatures. “Bills are being pushed by Democrats and Republicans, liberals and conservatives, and they’re passing by huge margins.” Americans see property ownership, and the rights associated with them, as a right of citizenship. This ruling seemed to bypass American sentiment.
Like everything to do with real estate, Americans tend to go from one extreme to the other. More neutral observers expressed concern that state officials, in their zeal to protect homeowners and small businesses, would handcuff local governments that are trying to revitalize dying cities and fill in blighted areas with projects that produce tax revenues and jobs. Many emminent domain situations need to be judged on a case-by-case basis.
USA Today provided a list of strategies that legislatures are taking:
Explicit bans. Some bills would ban the use of eminent domain for economic development. Others would do so indirectly by stating when it can be used and leaving commercial development off the list.
Narrower rules. Many states are considering making it harder for cities to declare a neighborhood “blighted” just for economic development.
Economic penalties. New York and Indiana are among states considering making eminent domain more expensive. The government would have to pay 25% or 50% above market value when it confiscates a property for commercial development.
_Here’s a sample of the action that is taking place to limit takings:_
Eminent-domain bills given a hearing [Baltimore Sun]
Limiting eminent domain [Journal-Advocate - CO]
Rethinking eminent domain: Lawmakers want to curtail the power of local governments [Bradenton Herald - FL]
_Prior Posts In Matrix_
The Kelo Backlash: Now Many Are Rethinking Eminent Domain [Matrix]
Wrecking Ball: Taking Eminent Domain Private [Matrix]
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