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.\

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

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.

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Job counts for CBD counties have been increasing, too, but I can’t find data except for years ending in a 0, so it’s out of date.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.

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.

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.

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.

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.

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.

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”.