Friday, January 29th, 2010

Midwest Miscellany

We have something La Jolla doesn’t have. It’s called ‘diversity of weather.’ But we have to be able to compete with those places. We don’t have the Pacific Ocean, we don’t have the Rocky Mountains. So we have to work harder on our cultural amenities and in our built environment to make it beautiful – and to make it a place where people want to choose, to spend their lives, raise their families, and retire….Many of the initiatives and projects we have implemented are not the norm for the state of Indiana, and it takes courage to move forward with conviction, knowing that it is in the best long term interests of our city.” – Carmel, Indiana Mayor Jim Brainard, 2009 State of the City Address

Discover what over 2,000 people already know by following me on Twitter. Every day I send info on many of the most important and interesting urban developments in America and the world, with select diversions to media, art, and current events. It’s a great way to keep up to date and expand your horizons. Don’t miss out.

Top Stories

1. Joel Kotkin @ WSJ: The Kids Will Be Alright.

2. Megan Cottrell: Eviction Is to Black Women What Incarceration Is to Black Men.

3. NYT: In Dayton, the Emptiness Echoes Where NCR Used to Be

High Speed Rail Grants Announced

The federal government announced the winners in the $8 billion high speed rail grant program. The Infrastructurist has the details, but major winners include:

  • California: $2.25B
  • Florida: $1.25B
  • Illinois: $1.1B
  • Ohio: $400M

Here’s a map:

The Transport Politic has additional coverage.

I think this shows the challenge we’ll have moving the needle. The feds basically peanut butter spread the money. Given the modest amounts involved to start with, don’t look for game changers anytime soon.

Related: Richard Longworth’s Derailing the Midwest and Thanks for Nothing.

The Surbanization of Poverty

The Brookings Institution recently released a major study on the increasing suburbanization of poverty. While poverty is often associated with the inner city, and we indeed see poverty concentrations there, the suburbs are actually home to 1.5 million more poor people than cities.

Here’s a national map of change in suburban poverty levels:

There is a huge amount of information in this study, including detailed profiles of the top 100 metro areas, so it is one to check out if you have an interest in poverty data.

Small Business Vitality

Bizjournals.com/portfolio.com took a look at small business vitality. They computed an index score for 100 largest metros. Click through for the full list, or here is how key Midwest cities scored:

  • #8 – Des Moines: 27.62
  • #18 – Madison: 16.12
  • #38 – Kansas City: 5.14
  • #39 – Minneapolis-St. Paul: 3.61
  • #48 – Indianapolis: -0.77
  • #52 – Columbus: -2.35
  • #57 – St. Louis: -3.81
  • #71 – Pittsburgh: -7.83
  • #72 – Chicago: -8.83
  • #76 – Louisville: -12.01
  • #83 – Cincinnati: -15.30
  • #94 – Cleveland: -27.42
  • #96 – Milwaukee: -29.74
  • #100 – Detroit: -53.96

People Prefer the Suburbs

I think any realistic strategy around cities has to start with the recognition that people predominantly live in suburban areas and in fact like living there. I realize many of you would disagree with this, but as I promised when I started the blog, I’ve got to call ‘em like I see ‘em regardless of whether or not it is popular. There may be subsidies to the suburbs. There may be all sorts of reasons why people choose and prefer them, but they still seem to do it.

The Columbus Dispatch carried an article called “Sprawl Has Spread Deep Into Our Minds” that addresses this matter, citing the work of Ohio State urban planning professor Hazel Morrow-Jones:

Hazel Morrow-Jones has spent much of a lifetime trying to answer a simple question: Why do we live where we live?

The question might be simple, but the answer isn’t — hence the decades of research.

Do we choose a home because it’s close to work or has a pleasing design? Because it’s in a safe neighborhood or a good school district? Near family or close to where we grew up?

The question isn’t merely academic. Finding the answer is vital to keeping our cities and older suburbs healthy, or else residents will push farther and farther away from the central city.

As a professor of city and regional planning at Ohio State University, Morrow-Jones knows the possible answers are endless. She also knows that buying a home is an extremely emotional and individual decision, and that no single study will explain every choice.

Despite the daunting possibilities, some broad conclusions can be drawn from Morrow-Jones’ 30-some years of researching the topic, and they present huge challenges for urban planners.

The short version: People like new and big homes far from the central city.

Not all truths are pleasant to hear. I think we should understand and evaluate this research. If we want to really realize the potential of our urban cores, we need to understand where people are coming from, and figure out how to craft a re-imagining of the good life in an urban context that appeals to a material segment of the public. (This article is also indicative of the lure of greenfield economics, where people move to shed legacy costs. Tackling that problem would also help enormously).

World and National Roundup

City Mayors: Cities have to develop into successful brands

The Guardian: Berlin is poor but sexy, and oozes creative wealth

WSJ:E-Yikes! Electric Bikes Terrorize the Streets of China

Neal Pearce: No End in Sight to State’s Fiscal Agony

WSJ: The US Needs an Infrastructure Bank

Urban Omnibus: The Public Works

Fast Company: Why You Should Start a Company in New York.

Mass Transit Mag: Bay Area Trains, Buses Face Declines in Ridership and Revenues – “After enduring the most brutal year in the history of Bay Area public transit systems, train and bus operators are barreling down a track toward bankruptcy.”

SF Chronicle: Market St. changes as city evolves (via @OtisWhite)

The Advocate published a ranking of the top 15 gayest cities in America. Interestingly, three of the top five are in the Midwest: Iowa City (#3), Bloomington, IN (#4), Madison, WI (#5). College towns, obviously, but still, there are plenty of those all around the country.

Lastly, here’s a link to a presentation in Akron by economist Joe Cortright. Cortright is the person who did a lot of the research behind the CEO’s for Cities “talent dividend” and other items. He talks about the importance of talent and civic distinctiveness. It’s an hour long piece, so definitely not for everybody, but if you are interested in such things, it is worth checking out.

Amazing Cycling Infrastructure

Broken Sidewalk pointed me at this great idea for cycling infrastructure from Copenhagenize. The picture says it all:

Copenhagenize also posted a video about a super-cool automated bicycle parking facility developed by a Japanese company. Click the previous link if the video doesn’t display.

The Equal States

Fake is the New Real created an interesting map redrawing US state boundaries to make them equal in population.

More Midwest

Chicago
Transit for World Class Metropolises: Can Chicago Compete? (GOTO2040)
Fewer conventions are choosing Chicago (WSJ)

Cincinnati
Phase 1a of the Banks to rise quickly (UrbanCincy)

Detroit
Detroit: Open for Business (Hour Detroit) – Interview with Mayor Bing, via @urbanbydesign
Designing a better Detroit (Time)
High Class (Hour Detroit)
Blueprint America: Beyond the Motor City (PBS) – Preview of a forthcoming program

Indianapolis
Hotels spark expansion of downtown skywalk system (IBJ) – Features Your Truly

Kansas City
Missouri Transportation Alliance is looking for ways to run road improvements (KC Star)
Jackson County Sues Kansas City Over TIF (KC Star)

Louisville
Tarc rolls out another bus music video (Broken Sidewalk)

St. Louis
St. Louis demolished 8,000 buildings in the 2000’s (Dotage St. Louis) – Wow

Post-Script

Talk about a public transit fan. This woman had a map of the Chicago L system tattooed on her foot (via George Ritzlin Antique Maps and Prints).

Anybody want to step up and identify themselves?

33 Comments
Topics: Transportation

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33 Responses to “Midwest Miscellany”

  1. Jim Russell says:

    Glad you posted the Dispatch article about sprawl. School quality being a weak predictor came as a big shock to me. All the studies I read as a graduate student made the opposite claim. However, the difference might be in research methods. I never read any that used a qualitative approach.

    The observations about new, bigger homes attracting migrants resonates in terms of my knowledge of the local real estate market. I live in an old (1900) farmhouse about 10 blocks from the city core. I have to be careful about my investment in the property. The price ceiling for old homes creates a diminishing returns problem. There is a threshold that when crossed tends to push prospective buyers into the new home market.

  2. cdc guy says:

    Columbus has interesting characteristics, in that it has enclave inner suburbs (pre WW2 streetcar suburbs) with what we today consider “urbanist” features as well as independent and well-regarded school systems. Those towns are surrounded by a ring of city annexation (what in other cities would be “first-ring” suburbs) that now extends into almost all adjacent counties, surrounded by former exurbs in those “donut” counties.

    I’m not sure that its lessons in this specific realm are completely transferable to other cities because of this annexation patterns.

    Columbus’ pattern is fairly uncommon among sprawling Midwestern cities. Most are hemmed in by a tight ring of first-ring ‘burbs. MSP now has three rings. Indianapolis absorbed its first-ring burbs in the 70s, but can’t annex any more, and in most places now has two more layers of outer suburbs; the county seats of the ring counties (former exurbs) are now the second-ring suburbs. Chicago is similarly landlocked and has multiple suburban rings.

    In general, in those places the “best” suburban schools are in the “big house” suburbs and aren’t affordable by all who might choose them. So maybe “best schools for the money” is a better composite predictor. In Indianapolis, Fishers or Westfield or Washington Twp. would substitute for the adjacent Carmel school district.

    IOW, I’m asserting that for all but the top end of the economic spectrum, housing cost (including payment, insurance, and taxes) does probably play the biggest part…but there is still a school hurdle that is very important to parents.

  3. the urban politician says:

    I have come to the conclusion that suburban life will be the choice for about 90+% of Americans in perpetuity.

    Cities are really competing with eachother for the remaining 10%, of which half basically want to be in Manhattan. Of the half who want to be in Manhattan, half can’t afford Manhattan and live in Brooklyn, Queens, the Bronx, or Jersey itself. The rest say “screw New York” and live elsewhere.

    Thus, American cities are competing for about 7.5% of the nation’s population, according to my highly nonscientific and very anecdotal opinion. :)

  4. Jim Russell says:

    I’m not sure that its lessons in this specific realm are completely transferable to other cities because of this annexation patterns.

    That’s an important point I hadn’t considered. Qualitative approaches are well-suited to case studies, but are almost impossible to scale. Just the same, it might inspire other cities to do their own surveys.

  5. Jim Russell says:

    Sorry. I was trying to quote cdc guy in that first sentence of my comment.

  6. Alon Levy says:

    TUP: actual surveys of Americans find that 25-50% would like to live in walkable, transit-oriented areas (link).

    And while I’m sure 5% of the US population does want to live in Manhattan, the current amount of space in Manhattan is for a little more than 0.5% of the population. It’s easy to overestimate how big Manhattan is. Before I moved to New York, I thought that Manhattan had twice the population it has, and that it was the most populous city borough (it’s the third most populous).

  7. west town ed says:

    I read the NY Times every day so I had read with much interest the article about NCR leaving Dayton, Ohio. I lived there, employed at first a civilian then an Air Force officer at Wright-Patterson AFB from 1962 until the end of 1967 when I moved to Chicago.

    Those were, perhaps, the golden years of that city. The big Air Force base provided thousands of well-paying jobs as did various GM divisions located there and, of course, the Cash, NCR. Downtown was dominated by the big Rike’s department store and lesser merchants, banks and by smart restaurants (or so we considered them then) and even a gay bar or two.

    NCR was producing their own computers and moving into “smart” cash registers so they were hiring smart people to produce them. The GM plants were hiring those with technical skills but only high school education. Wright-Pat hired both, the technically and managerial skilled as well as those less-skilled but vital to their mission.

    Almost all of them are gone now, eroded over time by the both stupid and wise decisions made by corporate and government executives, national priorities and the changing American demographics.

    I moved to Chicago the day after Christmas in 1967 and have witnessed the same dynamics only in slow motion. The stockyards were gone by then but most of the great industrial base was still here. Then, US Steel’s South Works was closed down, the department stores that made State Street the “great street” closed down, the hundreds of smaller scale manufacturers who produced the thousands of products that Ward’s and Sears catalog operations required closed down.

    Chicago has managed to survive and remain relative wealthy perverting in their own way the original Wall Street model which was founded to raise capital by gambling on the ability of the same to do so. The future’s exchanges in Chicago no longer serve their original purpose of reducing risk but now resemble nothing so much as a Las Vegas casino. As in a casino, some people make a lot of money, most lose.

    In the meantime, the country collapses in a heap because we now produce only highly-leveraged financial products which the rest of the world are now realizing are pure poison.

  8. DaveOf Richmond says:

    The Brookings report on suburban poverty has a small flaw in it I think, that affects at least some of the metro areas – they decided to include as “primary cities” only those that appear in the MSA name, and then only those with 100k or more population. Thus the Albany NY metro lists only Albany as the primary city, but really this should include Schenectady and Troy – both are old industrial cities which don’t resemble suburbs in any appreciable way. So the report lists 20k living in poverty in the city, and 65k living in poverty in the “suburbs”. I lived in that area for 13 years and I think I can fairly confidently suggest that a good chunk, if not the majority, of that 65k live in Schenectady and Troy.

    There are numerous other examples of this kind of thing (Chicago includes Naperville as a primary city but not Gary or Hammond, IN; Allentown does not include Bethlehem as a city; Philly does not include Camden; KC appears to only include KC Missouri, not Kansas, etc).

    The report uses the same geographic criteria for 2000 and 2008, so I believe the report is valid in its general conclusion. But the census bureau lists what they consider central cities for each MSA (as of 2002 anyway), and these often include several more cities than those listed in the MSA name (and in the case of Chicago, does not include Naperville). I think if Brookings had used that as a criteria for defining city and suburb, we’d have a clearer picture of the issue, particularly when looking at some of the individual metro numbers.

  9. clever-title says:

    Refarding that electoral map. Wouldn’t it just be easier to allocate electors by Congressional district? The statewide winner gets 2 electors, and the winner of each district gets 1.

  10. AmericanDirt says:

    Who knows what the 2010 Census will reveal, but at this point the geographic center of the US population is in Missouri, and, based on the revised electorate map, is just about the only state that does not deviate from its actual political boundaries. (I guess Washington state would be the other.)

  11. Wad says:

    As to professor Morrow-Jones’ 30+ years of research, 2007-08 may be the years that Turned the World Upside-down.

    I wouldn’t go as far as to say that the bursting of the housing bubble means suburbia has entered a death spiral. I think the Jane Jacobs rule will hold for suburbs just as they do for cities: It all comes down to the people, and any land use effects are secondary.

    In recent years, younger generations have found ways to make cities interesting again. So they are once again places to be — not just the free-range gulags for the suburban out-groups. Plus, people who desire to be in cities are more likely to “tend to their gardens,” metaphorically in the form of building social capital and getting involved in civic matters rather than lawns. (Though, lately, tending to gardens has become literal even in the most concretized urban areas.)

    Also, there’s been an odd reaction away from the ideal of joining the democracy of the landed gentry. Isn’t the desire to acquire property innate? Lately, some are beginning to question it.

    For a lot of others, it was a tidal wave of reality setting in. The real estate bubble, and its pop, has likely chilled greenfield development for at least a generation. The 2000s produced an overcapitalization within the housing sector and builders were pressed to put that hot-hot-hot capital into action that there is a glut of property on the market — not to mention a stock of housing that was so haphazardly built it is of poor quality. This is going to dampen our economy for years to come.

    Besides housing supply and demand, there’s another economic issue that’s hanging over the heads of all American workers. A great deal of workers now know the pain of unemployment and wealth destruction, especially from those who thought that it couldn’t happen to them. One key aspect is them thinking whether the American Dream is all worth it. A home mortgage is the longest of long-term commitments; the debt payments are designed to draw on your most productive years as a worker. Few Americans are certain of what the next 30 days holds — they sure aren’t prepared to guess what the next 30 years will bring.

    PS – I don’t know whether this is Freudian, but the words reCaptcha asked for me to ender were “serve development.” How awesome is that? :>

  12. Alon Levy says:

    Wouldn’t it just be easier to allocate electors by Congressional district? The statewide winner gets 2 electors, and the winner of each district gets 1.

    No, it would still give a Wyoming voter much more power than a California voter. Worse, it would make Presidential elections subject to gerrymandering. The swing state phenomenon is pretty bad, but the swing district phenomenon would be even worse, especially when those district boundaries would be drawn by state legislatures.

  13. the urban politician says:

    Aaron, I really don’t understand why you bother posting Joel Kotkin articles.

    He is incredibly biased against cities. Not that I don’t get his whole premise: cities are not the places they used to be, the future of human civilization is in its suburbs, as evidenced by the living choices people make, thus instead of trying to discourage this phenomenon we should celebrate it.

    Yeah, yeah, I get it–that is his premise, article after article, in one way, shape, or form. That is what he has hung his hat upon. He really has failed to grow or develop his ideology–it’s the same set of ideas repeatedly regurgitated in different forms.

    But what do his ideas have to do with people like us, who like and celebrate cities? His ideas are great for the majority of humans who could care less and happily live in the shapeless mish-mash that is suburbia, but for those of us who prefer our urban places as urban, defined, and inspiring to behold, we really have little to learn from him.

    Point being–Kotkin has made up his mind to shun our world while refusing to acknowledge any of the shortcomings of his own, thus I can’t imagine him being a source of intellectual relevance worth reading around here.

    But hey, it’s your blog..

  14. tup, did you read the Koktin article? The word suburb doesn’t even appear in it. It’s an optimistic take on the future of America based on strong demographic growth, immigration, our successful multi-ethnic society, and entrepreneurship and dynamism. Even if you don’t agree with his take in its entirety, I’d be surprised if you find the piece objectionable.

  15. clever-title says:

    No, it would still give a Wyoming voter much more power than a California voter. Worse, it would make Presidential elections subject to gerrymandering. The swing state phenomenon is pretty bad, but the swing district phenomenon would be even worse, especially when those district boundaries would be drawn by state legislatures.

    I think the only way to equalize the power of all voters, then, would be to eliminate the electoral college althogether, and just use direct elections. Of course, that introduces a whole new set of problems.

  16. cdc guy says:

    Wad and TUP, clearly some number between 7.5% and 50% of people want to live in central cities. Clearly a larger number does not, and in the US we seem to have this thing about majorities being accommodated most of the time.

    A writer is not “anti-city” if s/he recognizes that fact, which is made up of millions of individual choices.

    The wisdom of the hive: If one accepts that modern update to the “invisible hand” economic theory, then one must accept the outcome.

    Fighting cars and suburbs is fruitless. Advocacy for cities based on ignorance of, neglect of, or outright hostility to suburbs, exurbs, and small town/rural concerns is going nowhere in every state legislature in the US…and that’s where transportation infrastructure spending and development-law priorities are mostly set.

    The most useful advocacy for cities is in choosing the right battles, the ones over public safety and education. Getting rid of the crime and schools arguments would increase the universe of possible city-dwellers.

  17. the urban politician says:

    cdc guy,

    Reread my post. You completely failed to respond to anything I was saying by….miles. I take it you started typing your post 1/3 the way through reading mine?

  18. cdc guy says:

    TUP:

    I underscored your point (lots of people choose suburbs) and added my own converse argument: urban policy and urban policy advocacy and urban re-growth can’t be accomplished without looking at why people reject cities.

    Kotkin and Ed Glaeser are writers that urban advocates need to read and understand. Clearly some suburban leaders have been reading Jane Jacobs.

  19. Alon Levy says:

    Glaeser isn’t really in the same boat as Kotkin. First, he has about ten times as much expertise. Second, he’s not really pro-suburban; he’s a Northeast booster, who vacillates between megaproject-oriented Bloomberg-style urbanism and highway-oriented Moses-style urbanism. And third, he’s actually read Jacobs – much of his research is about putting what Jacobs said in The Economy of Cities on firm modern macroeconomic footing.

  20. JG says:

    Kotkin’s current WSJ piece is not awful – a little bland. But he continues to operate on an intelectual level consistent with a global warming or evolution denier. Start with a popular, easy ideology and select facts to support it, with little scrutiny of your own conclusions. If he was respectable and objective, he would work in the reverse order – using all available facts. Though he may stumble into interesting insights from time-to-time, the work remains unreliable and subpar for reasons mentioned.

  21. Wad says:

    CDC guy, you’ve misread my statement about the rise in cities.

    Again, I am not pronouncing or advocating an end to suburbs.

    I am saying we can’t assume that the next 50, 10 or even 5 years will be like the last identical periods. It’s not advocacy. It’s a cultural and economic shift we are going to have to work with.

    These issues go far beyond urban or suburban form.

  22. the urban politician says:

    CDC,

    There is no “reading and understanding” Kotkin for urbanites. Kotkin has thoroughly rejected urbanism. His premise is that “cities, by their very nature, are designed to fail” in the modern world.

    There is no learning from that stance. Instead, build on what already works and let the majority of people who wish to live in the suburbs enjoy their shapeless, sprawled out world.

  23. cdc guy says:

    Wad, I reacted largely to this: “…there’s been an odd reaction away from the ideal of joining the democracy of the landed gentry. Isn’t the desire to acquire property innate? Lately, some are beginning to question it.” and “The real estate bubble, and its pop, has likely chilled greenfield development for at least a generation.”

    There is no cultural shift away from homeownership, away from building new suburbs, or back to central cities.

    There is a deep-V recession, which is ending.

    Clearly things can’t and won’t be like the last 5 or 10 years…which were an anomaly, a bubble. But they did not change fundamentals.

  24. cdc guy says:

    TUP, Kotkin’s WSJ article was more about the demographic bulge and the need to create jobs for (my) kids who are Millenials. He’s dead-on, and we ignore his point at our peril. There was nothing anti-urban or pro-suburban in it.

    No matter how little I might like whatever else anyone says, when they hit an essential truth, I’m on it.

    I would take Kotkin’s points and apply some of Aaron’s wisdom in suggesting that we find ways to create non-tech jobs in urban settings. See “The New Industrial City”.

  25. Alon Levy says:

    Most of the article’s badness was the general American boosterism: America is great because it had high birth rates, America is great because it has immigration, blah blah blah. None of his claims stands up to much scrutiny.

    For example, while most developed countries in Southern and Eastern Europe and East Asia have very low birth rates, the countries of Western and Northern Europe do not. The difference in fertility rate between the US and France is entirely made up of teen births, as the US has the highest teen birth rate in the developed world, by a large margin. I don’t think that’s something to be proud of.

    On immigration, the US is generally more tolerant than Europe and Asia, but this has declined since 9/11. Americans discovered they outperform Europe precisely when they stopped outperforming. Nowadays there are twice as many Chinese students in Europe as in the US, and US nativists are busy criminalizing Hispanics, especially in the Southwest.

    It’s not a deep-V recession. It’s a U recession, with a jobless recovery. GDP has been growing for 8 months now without any increase in employment, unlike in pre-1990s recessions.

  26. Wad says:

    CDC guy wrote:

    There is no cultural shift away from homeownership, away from building new suburbs, or back to central cities.

    No, as in none? So any gains to America’s largest cities using population data, or any patterns of gentrification, are nonexistent or statistical anomalies? These are statistically revealed patterns.

    My quote does not imply that a cultural shift is a pendulum swing away from suburbanization. Don’t overreact.

    As for building new suburbs, it’s going to be a timeline that’s somewhat less than never but definitely more than any election cycle. The bubble produced an unprecedented amount of housing and commercial structures in a short time, and there’s just so much inactive property.

    These properties are premised on being filled according to bubble-era lending standards. The problems, though, is that it’s not happening. Even with generous tax advantages to encourage home ownership, borrowers are insecure about their financial positions to enter into a financial commitment as long as a home loan.

    Even for borrowers who feel financially secure, a lot of them are still on the sidelines because they worry about “catching a falling knife,” meaning there’s a sentiment that prices will continue to fall. Why? The glut of additional housing on the market.

    This is going to take a very long time to sort itself out.

    There is a deep-V recession, which is ending.

    Not for housing it isn’t.

    The only place the recession has “ended” is Wall Street. Equities prices have rebounded from a bottom last March. Asset prices are again spreading broadly from real economic gains, which just means the movement is speculator-driven.

    Clearly things can’t and won’t be like the last 5 or 10 years … which were an anomaly, a bubble. But they did not change fundamentals.

    And what would those fundamentals be?

    The fundamentals of homes as an asset are dreadful. First, the popping of the bubble has destroyed wealth. Second, the picture is especially bleak if you plot the logarithmic values of houses. IOW, it’s easier to lose money than to make it back.

    If you bought a home at $200,000, and its market value dropped 20% in a single year, that would mean a loss of $40,000. The home would be priced at $160,000.

    Now, to get back to even, the home price would need to rise to $40,000. That $40,000, though, is one-fourth of $160,000. So a home price would have to rise 25% in order to cancel out that 20% loss and put you back at 0.

    But while you are waiting to realize a gain or loss, remember that a house has carrying costs. There are property taxes, of course. Cutting taxes is a cheap and effective way to buy voter loyalty, but there’s a good chance that these property taxes pay for civic goods that translate into higher property values in the long run. Cutting property taxes may mean cutting a school, park, or other service budget that would have boosted values. That means a tax cut could property values even further. That’s not what homeowners want now.

    Then there are other carrying costs associated with the house as well. Homeowners want lights, heating, air conditioning, water — not to mention keeping these things in working order. These are standard operating costs of a home and can’t be shirked.

    And these are just for the homes that are owner-occupied!

    Don’t forget that these homes must compete with a huge crop of inactive properties.

    So, what about those fundamentals of housing again? Real estate is a terrible value proposition right now, so home ownership can no longer guarantee adding to net worth. Then there are the carrying costs of a home that don’t make the losses any less affordable. So there will be the temptation that if there’s nothing homeowners can do about the market costs of homes, they’ll minimize the tax costs at the risk of further depressing values. Then your community has just eaten its seed corn.

  27. cdc guy says:

    I don’t know where you’re going to find your numbers, Wad.

    Central cities are not growing any faster than their suburbs. (Aaron has pointed this out over and over and over. It’s true in Chicago, true in Indianapolis, true throughout the Midwest.)

    And jobs are decentralizing out of the urban core, almost everywhere in the top 100 metros. Brookings did that study.
    It means that jobs are moving toward people…in the suburbs.

    Housing, over the past 3-5 years in limited areas, has been a poor value proposition. Over my entire adult lifetime (30 years) it has been a relatively good value proposition.

    Everywhere other than the sand states and hot metros, where there was no bubble, there was not a huge decline in value. For a longer-tenured owner, it was a burp, a loss of paper value, a temporary reduction in their capital gain. (As long as the longer-tenured owner wasn’t pulling money out of home equity to finance cars, vacations, and 55-inch TVs.) For a long-term owner, the “housing crisis” didn’t affect the intrinsic value of an already-owned home as a place to live. It didn’t change the fundamentals.

    Sure some 24-year-olds may have to wait until they save a down payment…but again, this is not a sea change. It is a reversion to a norm that got way out of whack in the 33:1 leverage years of securitized subprime loans.

  28. Alon Levy says:

    The job decentralization study doesn’t show decentralization. It shows a combination of decentralization, moving lower-value jobs to the suburbs while concentrating high-value ones in the central cities, and expanding the CBD.

    If you instead classify job centers as primary downtowns, secondary downtowns, edge cities, or edgeless cities, then there’s no long-term trend for decentralization. The primary downtowns lost ground in the 1980s and gained it back in the 1990s.

    If you look at earnings flows rather than job numbers, then primary downtowns are as strong as ever, while suburbs are still commuter towns with few exceptions; for example, Orange County, California has more jobs than bedrooms, but the people commuting out of the county make more money than the people commuting into it, representing a net earning inflow. Most suburban counties with net outflows represent once-independent metro areas that were subsequently merged into larger metro areas, such as San Jose and Newark.

  29. Alon, I’d be shocked if more than a handful of CBD’s showed what you suggest. No doubt, high value activities concentrated in Manhattan, the Loop, downtown Boston, and maybe central DC. I suspect you’d find almost no CBDs beyond that which added jobs, or even earnings.

    Even Chicago itself in its Central Area Action Plan only estimates average annual job growth of 3,500 per year between 2008 and 2002. This is 0.6% per year. (The high growth scenario is 5,000 jobs per year). And to get this requires downtown to increase its share of white collar office based employment materially. And keep in mind, this is even an expansive definition of the CBD. So unless by “expanding the CBD” you mean geographically expanding not job growth expanding, I don’t agree with you.

    On the earnings side, what you are describing is the narrowing of the economic base. I agree with the phenomenon, but I’m not sure trading income for jobs is always a good thing. The best CBD stat in that model is employment of one, with the one being Warren Buffet. Transit ridership depends on jobs count, not earnings total in any case.

    But beyond the handful of CBD’s I mentioned, I’d again be surprised if even total earnings were positive for most CBD’s. I’ll admit to not having the data, since pulling it is painful at the micro level, but I don’t see anything to suggest that the likes of Indy, Cincy, etc. are increasing earnings share in their CBD. They just don’t have the concentrations of finance jobs and export driven high end services.

  30. Alon Levy says:

    Yes, by CBD expansion I mean geographic expansion.

    The data can be found on the BEA website. Inflow = amount of money brought in by residents commuting to other counties; outflow = amount of money taken out by employees commuting from other counties; residential adjustment = inflow minus outflow. Residential adjustments for all CBD counties are strongly negative, and have been getting more negative with time. For example, Marion County’s adjustment was -3.9 billion dollars in 1990, but -10.8 billion in 2007, a real growth of 75%.

    Job counts for CBD counties have been increasing, too, but I can’t find data except for years ending in a 0, so it’s out of date. But central city counties in the US added jobs even in the 1970s, when many of those counties lost substantial population.

    In both cases, especially job count, some edge city counties have been growing faster. But it’s not universal. Suburban counties almost always have a strong positive adjustment, and usually are also net job donors. The counties with the most extensive edge city development, such as Fairfax, Virginia and Oakland, Michigan have weak negative balances, and had positive balances until recently.

    The job decentralization is a real issue for transit, but there are transit-oriented edge cities in the world – e.g. La Defense; in addition, Arlington converted itself from auto-oriented to transit-oriented. The trick is to build the city with a walkable grid and serve it with a subway in multiple directions.

  31. cdc guy says:

    Alon, if you assume that well-paying jobs stayed in the county, all the outflow stat definitely tells you is that more people at the high end moved out of Marion County 1990-2007 instead of commuting within it.

    Not coincidentally that period tracks almost exactly the full build-out of northern Marion County and the subsequent explosive growth of Hamilton County, Indianapolis’ wealthy and high-income northern suburban county.

    My interpretation of the stat: the relative residential share of high-income residents of the region shifted, not necessarily the concentration of high-income jobs in Marion County. Put another way, the people with options moved to suburbs with bigger, newer houses and better schools.

    However, over that time, companies that used to be downtown (and newcomers) put their offices in outlying office parks just inside the county limits…but nonetheless 10 miles from the CBD and increasingly dispersed. (I don’t have it handy, but seem to recall that the Brookings study looked at job share within the CBD and in 3, 5, and 10 mile rings out and found dispersion. I would have to see their citations to understand whether they used census-tract or county-level data.)

    In short, I think the “residential adjustment” measures two separate phenomena jointly but lets the suburbanization of high-income families overwhelm the decentralization of jobs.

  32. Alon Levy says:

    Yes, the trend is clearly toward suburbanization of residences, especially for high-income people. The reason I’m bringing it up is that despite the common belief, the suburbs remain predominantly bedroom communities. The upshot for transit is that it’s really good at serving CBD commuters; even in Los Angeles, transit has nearly a 50% mode share for CBD commuters. It’s only when you want to serve non-CBD destinations and retail that you have to build a coordinated, well-connected transit system.

    We’ll know more about actual job dispersal when the Census Bureau releases 2010 data.

  33. Tomtakt says:

    People very rarely have preferences strong enough to overcome their innate search for the best deal going. In the case of suburbia, some people might actually have such a strong preference, since the ideas associated with it have been so adeptly ingrained into our cultural psyche in the U.S. However, that still means nothing for the majority of people. Humans are opportunists, and they will quickly discard preferences for a decision they perceive to have a lower opportunity cost. For housing, I would say it usually comes down to spacious, and new. We could easily build tons and tons of spacious and new infill housing–but the economics are skewed to prevent it.

    But the bottom line is that \people prefer the suburbs\ is as true as \Europeans prefer SUVs\. If the opportunity costs were right (such as the road infrastructure in Europe could easily accomodate larger cars and gas was much cheaper), the latter statement would probably seem equivalently \true.\

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