Category Archives: Housing

2nd Quarter Home Price Indices

Someone just paid $1.1 million for a tear-down/fixer-upper in Mountain View, California. That’s not really news, as prices in Silicon Valley have been increasingly outrageous. What’s news is that they bought the house with the provisos that the existing owner will get to live there for seven years; the buyer didn’t get to see the interior of the home; and the buyer is required to make improvements before closing on the home. As the San Francisco Chronicle says, the new owner probably figures it will take seven years to get the permits to rebuild the house anyway.

The problem for the buyer is that the same forces that have made housing prices rise in Silicon Valley–namely the urban-growth boundaries adopted by San Mateo and Santa Clara counties–have also made prices more volatile. In other words, what goes up will come down. As shown in the chart above, San Jose prices today are already higher than they were at the peak of the 2006 housing bubble, indicating that another bubble is likely to deflate fairly soon. Continue reading

Share

Ending Economic Apartheid

Thanks to its greenbelt and slow-growth policies, Boulder, Colorado is the nation’s most-expensive and least-affordable housing market of any city not in a coastal state. As a result, as noted in an op-ed in The Hill, the number of black residents in Boulder declined by 30 percent between 2010 and 2016, leaving less than 1.6 percent of the city with African-American ancestry.

Closer to my home, the Bend Bulletin argues that the state of Oregon “works against affordable housing by, among other things. . . artificially increas[ing] the price of land through its urban growth boundary system.” Although cities are required to maintain an inventory of developable land within their growth boundaries, the paper notes that permission to expand their boundaries takes years.

The Oregon legislature effectively admitted that this is a problem last year when it passed a law allowing two cities to develop land on up to 50 acres of land outside of their growth boundaries. But can anyone seriously believe that adding 100 acres of new housing will make housing more affordable in Oregon? Continue reading

Share

Black Population Trends

Between 2015 and 2016, the total population of the San Francisco-Oakland urban area grew by 13,773 people, but the black population shrank by 5,839, suggesting that Bay Area land-use policies continue to push low-income people out of the region by making housing unaffordable. The Austin urban area, to its shame, saw a decline of 4,439 blacks despite a total population growth of 25,316.

Race is a complicated issue, made more complicated by the increasing (and healthy) mixture of races. According to the 2016 American Community Survey, the number of Americans who are “white alone” declined by 296,061 in 2016, while the number who identify themselves as “two or more races” grew by 445,000; some of the decline of the former and growth of the latter is probably because people are more willing to self-identify as being of mixed races.

In the past, I’ve used blacks as a bellwether of housing affordability problems because black per capita incomes have consistently been about 60 percent of whites’. I’ve previously used “black alone,” but this year that produced some odd results: both white alone and black alone populations declined in sixteen different states. For example, California’s total population grew by 105,000, but its white-alone population shrank by 404,000 while its black-alone population shrank by nearly 12,000. It seems likely that most of the changes in white-alone and black-alone numbers are due to redefinitions, not migrations. Continue reading

Share

Housing Affordability in 2015

Today the Antiplanner continues reviewing 2016 American Community Survey data by looking at housing affordability, a common measure of which is median house prices divided by median family incomes, or value-to-income ratio. Median family incomes are in ACS table B19113, while median home prices are in table B25077.

To save you time, I’ve downloaded these tables, pasted the value and income data into one table, and calculated the ratio for the nation, states, counties, cities, and urban areas. For comparison, I have the same data for 2015, 2010, and 2006. As noted yesterday, only some counties, cities, and urban areas are used each year and the list varies from year to year so the rows are not identical each year. The states don’t vary from year to year, so I’ve also provided a spreadsheet comparing value-to-income ratios for the nation and each state for all four years.

All of the numbers, by the way, are actually for the previous year, as the surveys asked people how much they earned and how much their homes were worth the year before the survey. So the number shown as the 2016 value-to-income ratio is actually the ratio in 2015, etc. That means the data are a couple of years behind the current state of housing affordability. Zillow shows that prices in some areas have dramatically increased in the last couple of years to the point where many Silicon Valley homes are selling for 50 percent above their asking prices. Continue reading

Share

Bringing Soviet Planning to New York City

New York City Mayor Bill de Blasio wants to bring the same policies that worked so well in the Soviet Union, and more recently in Venezuela, to New York City. “If I had my druthers, the city government would determine every single plot of land, how development would proceed,” he says. “And there would be very stringent requirements around income levels and rents.”

As shown in the urban planning classic, The Ideal Communist City, soviet planners also believed they were smart enough to know how every single plot of land in their cities should be used. The cities built on their planning principles were appallingly ugly and unlivable. They were environmentally sustainable only so long as communism kept people too poor to afford cars and larger homes.

If de Blasio believes in this planning system so much, why doesn’t he implement it in New York City? The biggest obstacle, he says, is “the way our legal system is structured to favor private property.” He blames housing affordability problems on greedy developers who only build for millionaires. Continue reading

Share

HUD Backs Off on Housing Mandate

In a case with national ramifications, the Department of Housing & Urban Development (HUD) has effectively given up on its efforts to impose high-density housing on low-density suburbs in the name of racial integration. HUD had ordered Westchester County, New York, to build low-income housing in response to claims that county zoning led to segregated housing.

This was widely seen as the model for HUD’s affirmatively furthering fair housing rule, which requires local governments that have received federal housing funds to review local housing patterns with the de facto assumption that, if the community is not perfectly integrated, whatever segregation exists must be due to local zoning rules making housing less affordable.

In response to HUD’s order, Westchester County had submitted an analysis finding that, while the county was not perfectly integrated, local zoning was not the cause. The Obama administration had rejected this analysis, but the current administration accepted a new analysis that “essentially the same” as the rejected one. Continue reading

Share

Making the Problem Worse

Oregon is responding to its housing affordability crisis by doing all the wrong things. The crisis is due to a shortage in supply which in turn is due to urban-growth boundaries.

So the legislature legalized inclusionary zoning ordinances and Portland passed one. Such ordinances require developers to provide a certain percent of the homes they build to low-income people at below-market rates. In response, developers are building fewer homes, exacerbating the supply problem. City officials “hope the slowdown is temporary,” but that hasn’t proven to be the case in other cities that passed inclusionary zoning ordinances.

Now the state legislature is considering a bill to provide $5 million to help first-time home buyers make down payments on homes. This will have the effect of increasing demand, which will only drive up prices even more. Continue reading

Share

“Something Is Wrong & It’s Holding Us Back”

“The United States of America is truly an exceptional country,” says controversial JPMorgan Chase CEO Jamie Dimon, “but it is clear that something is wrong — and it’s holding us back.” Dimon’s annual letter to shareholders identifies some of the things that are wrong and suggests ways to fix them.

Dimon is controversial simply because he headed one of the nation’s leading banks at the time of the 2008 mortgage crisis, yet to the Antiplanner he was one of the heroes of that crisis. The mortgage bond market was invented by JPMorgan, but when Dimon became CEO he recognized the market wasn’t viable and ordered the bank to stop trading such bonds. When Bear Stearns and Washington Mutual went broke because of their heavy involvement in such bonds, it could have precipitated a major financial crisis, and Dimon agreed to take over those banks to avoid that crisis

Such takeovers are the standard way the U.S. government has dealt with failing banks, and they are not a gift to the banks doing the takeovers. The banks agree to accept the defunct banks’ assets and (much larger) liabilities in order to keep the monetary system going as well as to save the Federal Deposit Insurance Corporation billions of dollars it would have to spend paying off insured depositers.

Continue reading

Share

Property Bubbles Down Under?

In an eerie echo of statements made before the collapse of American housing bubbles in 2006, leading Australian bankers claim that Australia is not suffering a housing bubble. Yet prices are unsustainably high and a collapse is inevitable, though when it will happen may be unpredictable.

Median home prices in Sydney are AU$795,000 (US$606,000). More Sydney suburbs have median prices over AU$2 million than under AU$600,000.

America’s 2008 financial crisis didn’t lead Australian housing prices to fall. In fact, prices in Sydney have grown 106 percent and in Melbourne 88 percent since then. Ominously, however, prices in Melbourne, which are nearly as great as in Sydney, are falling for the first time in four years.

Continue reading

Share

Portland Housing Stupidity Grows

Here’s an incredibly stupid idea to deal with Portland’s housing affordability problems: Multnomah County proposes to build tiny houses in people’s backyard. The people will get to keep the houses on the condition that they allow homeless people to live in them for five years.

That’s supposed to be an incentive. For five years, you have to share your yard with a homeless person who may be suffering from a variety of problems, after which you get to keep whatever is left of the tiny home. But as one Portland neighborhood activist points out, what homeless people need is healthcare and social work, not to be warehoused in someone else’s backyard.

I suspect homeowners are going to be wary of this offer because they will have little control who lives in their yard. Not only would the homeowners be required to maintain the tiny houses while the homeless person or people lived in them, Portland is making it increasing difficult for landlords to evict unwanted tenants.

Continue reading

Share