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Monthly Archives: December 2016

The New Housing Bubble

By | | Housing, News commentary, Useful Data
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Because the past few years have seen the slowest recovery from a recession on record, the Federal Reserve Bank has been keeping interest rates low and in fact cutting them to almost zero. But this has raised concerns among leading bankers that the low rates are producing another asset bubble, including another housing bubble.

The above graph shows the home price index for several metropolitan areas calculated by the Federal Housing Finance Agency using the Case-Shiller method. (The official Case-Shiller Index published by Standard & Poors doesn’t include as many metropolitan areas as the FHFA index.) It shows that, not only are housing prices rising again, in some urban areas–on the chart, Honolulu, San Francisco-Oakland, San Jose, and Seattle–already have prices much greater than they were at the peak of the 2006 bubble. It seems likely that these prices are going to crash again soon.

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Portland Falls to Number 2

By | | City planning, Housing
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Portland housing prices have been rising faster than in any other major city in the nation, but the latest data show that the city has fallen to number 2 in that measure. Seattle housing prices rose by an annualized 11.0 percent in September, while Portland prices rose by “just” 10.9 percent. No other major city saw prices rise as fast as 10 percent.

Seattle prices are rising so fast that the city is selling every available vacant lot that it has, even though some would rather those lots be turned to parks. Seattle developers are renting studio apartments for $750 a month that are so small–just 130 square feet–that there is no room for a bathroom door.

Portland’s housing market is so tight that 17 acres is considered a large parcel. Naturally, the owners are planning to put multi-family housing on it at 70 units per acre. The largest available parcel in Portland suburb Lake Oswego is a mere 4.5 acres that will be developed at 48 units per acre.

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Fake News Stories Undermine Our Economy

By | | News commentary
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Democrats complain that fake news stories from web sites linked to Russia undermined the electoral process. The Antiplanner has been concerned with a related issue for some time, which is fake news stories inspired by Russia that undermine our economy. Here are a few of those stories that I hope Democrats will disavow.

Fake News Item #1: Urban sprawl is paving over all of our farms–This is an old one that has been used to justify central planning similar to that done in the Soviet Union. According to the U.S. Department of Agriculture, the contiguous 48 states have 900 million acres of agricultural land, of which we use only about 40 percent for growing crops. The acres used for crop production have been declining, not because they are getting paved over, but because per-acre yields of most crops are growing faster than our population.

Meanwhile, the department also says that just 84 million acres have been urbanized. This is a little less than the Census Bureau’s estimate of 106 million acres, but either way, as the Department of Agriculture says, urbanization is “not considered a threat to the Nation’s food production.”

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Can Trump Stimulate a New Suburban Boom?

By | | Regional planning
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President-elect Trump has “the opportunity to preside over a Great Wave of suburbanization and give another generation the opportunity to unlock the modern version of the American Dream,” says Walter Russell Mead in The American Interest magazine. Mead is a professor of foreign affairs at Bard College. While the Antiplanner appreciates Mead’s ambition, he greatly underestimates the barriers to such a vision.

Mead inaccurately claims that American suburbanization took place in two waves: one between World War II and the 1960s (which he associates with Eisenhower) and the second in the 1980s through the early 2000s (which he associates with Reagan). Since both of the previous waves, he says, were led by Republican presidents, its natural for Trump to lead a third wave.

In fact, suburbanization began in the 1840s and hardly slowed down at any time since then. Mead’s first wave saw a large amount of working-class suburbanization, but even that began in the 1920s. In any case, much of that wave took place under Truman, not Eisenhower, and contrary to popular belief, Eisenhower’s Interstate Highway System had almost nothing to do with it.

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It’s Infrastructure, So It Must Be Worthwhile

By | | News commentary
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The city of Port Angeles, Washington spent $107,516 putting up wind turbines in a new city park. The turbines will power 31 lights in the park. This will save the taxpayers of Port Angeles a whopping $41.58 per month. At that rate, it will take 216 years for it to pay off (at zero interest rate).

That’s before subtracting operating costs, though no one yet knows how much it will cost to operate them. The city is in a dispute with the manufacturer, so it will be another month or so before they turn them on.

The ridiculous benefit-cost ratio is unimportant, says one city councilor, because the purpose of the turbines wasn’t to generate electricity, it was “to educate folks about wind power.” That’s quite an education they are getting. “I wouldn’t have voted for it knowing it was that little” electricity, the councilor added. Isn’t it her job to ask questions like that?
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Secretary Carson

By | | Housing
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Ben Carson has accepted Donald Trump’s nomination as Secretary of Housing & Urban Development, leading to all sorts of personal attacks and dire predictions for the future of cities under his leadership. The main point of contention is Carson’s belief that the federal government should not get involved in most local issues, which ought to be supported by the fact that many federal urban programs have had disastrous results, particularly for blacks.

The Antiplanner’s friend, Samuel Staley, has some “early thoughts” on what Carson might do as secretary. Most of them sound good to me and I hope they aren’t wishful thinking.

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Suburbs Still the Dominant American Lifestyle

By | | Regional planning
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How many cities and regions are basing their land-use and transportation plans on the notion that most Millennials want to live in dense cities? Officials in those areas should read a new report from the Urban Land Institute. Among other things, the report says that three-quarters of Millennials in the nation’s 50 largest metropolitan areas live in the suburbs.

That’s not much less than the 79 percent of everyone in those metro areas who live in the suburbs. Moreover, 76 percent of minorities live in the suburbs, again not much different from the overall average. The Urban Land Institute has a history of promoting smart growth and other urban planning fads, so these conclusions aren’t based on any hidden agendas.

Most of the ULI report is spent dividing suburbs into one of five categories: high-end, middle-class, “economically challenged,” “greenfield lifestyle,” and “greenfield value.” Greenfield lifestyle refers to master-planned communities that include parks and other amenities while greenfield value tend to be ordinary subdivisions with fewer amenities. This kind of classification may be useful to realtors, but if urban planners attempt to use it, perhaps to “fix” the economically challenged areas, the result is likely to be a disaster.

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Is Congestion Deliberate?

By | | City planning, Transportation
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According to the Texas Transportation Institute, the costs of congestion have quadrupled since 1982. The Antiplanner has often argued that cities have deliberately allowed congestion to increase in the erroneous belief that more congestion would lead people to stop driving and start riding transit or use other modes of travel. However, the evidence for this is merely anecdotal; it’s hard to imagine city officials admitting even in private memos that congestion was their goal.

An article in last Friday’s New York Post, however, makes the case that congestion is deliberate. “City officials have intentionally ground Midtown to a halt with the hidden purpose of making drivers so miserable that they leave their cars at home and turn to mass transit or bicycles,” reports the newspaper that was founded by Alexander Hamilton. The article specifically blames “today’s gridlock” on the “Bloomberg and de Blasio administrations.”

Sensational news, perhaps, but not necessarily persuasive. The article attributes this information to “high-level sources,” later saying it comes from “a former top NYPD official.” While the article offered specific examples of ways the city has increased congestion, including the conversion of auto lanes to bicycle lanes and restrictions on the ability of drivers to make turns at many intersections, it offers no documentation that these things were done specifically to make auto drivers miserable.

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Hyperloop None

By | | Transportation
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When Elon Musk first proposed the hyperloop–a transportation tube between Los Angeles and San Francisco–the Antiplanner panned the idea saying that it would cost a lot more than Musk claimed, that passengers would be reluctant to be accelerated to high speeds in a windowless capsule, and that a point-to-point technology wouldn’t be able to compete with the door-to-door convenience of the automobile. Recently, New York magazine has published an article confirming the first point and possibly the second.

In “A Kink in the Hyperloop,” writer Benjamin Wallace recounts efforts by venture capitalists to put together a company called Hyperloop One that would build and operate the hyperloop. Most of the article deals with personal frictions between the various players, but a telling statement near the end of the article blows up the entire idea: “The projected cost-per-mile has gone from 6 percent to 60 percent of that of California High Speed Rail.”

Musk’s original cost projection for a San Francisco-to-Los Angeles line was $7.5 billion. If costs have increased ten times, the current projection must be $75 billion.

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Not All Infrastructure Is Created Equal

By | | News commentary, Transportation
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An op-ed in the New York Daily News argues that Trump’s infrastructure plan “will result in wasteful spending and do little to fix crumbling facilities or promote economic growth” unless it is properly targeted, and the best way to target is to spend only on infrastructure that can be built and maintained with user fees.

The country should also avoid building new infrastructure that will soon be obsolete. For example, Bay Area Rapid Transit (BART) spent nearly half a billion dollars building the Airport Connector, a 3.2-mile elevated cable-car line to the Oakland Airport. BART expected to cover operating costs by charging people $6 to travel between the airport and the nearest BART station. Instead, it is losing money, and they are blaming Uber and Lyft. It was a dumb idea even if they did recover operating costs, but new technologies have made it even dumber still.

The Trump Administration needs to learn the Antiplanner’s Law of Transportation Infrastructure: Any transportation technology that requires new infrastructure is doomed to failure because it will be unable to compete against technologies using existing infrastructure such as the nation’s hundreds of commercial airports and millions of miles of highways.