No doubt a lot of people think I am some kind of nut for promoting Houston’s land-use and transportation policies. But I am not the only nut to do so.
Another writer who finds Houston attractive is Joel Kotkin, who has written several books about cities and urban areas. Kotkin is no free-marketeer, but based on his assessment of Houston, he is proposing a new paradigm that he calls “opportunity urbanism.” His recent report of that name contrasts this idea with Richard Florida’s “creative class” policies.
According to the creative class idea, says Kotkin, “the fate of urban areas depends largely on the area’s ability to attract the wealthiest individuals, the people with the highest skills, and those who can perform the most rarefied economic functions. . . . To remain vibrant, cities must lure the so-called ‘creative class’ of skilled workers with urban amenities, social attitudes, and cultural offerings.”
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Kotkin calls this an “elite strategy” that ignores the actual history of urban areas around the world. The world’s leading urban areas grew not by attracting a wealthy elite but by building a middle class. By giving people opportunities to build wealth, urban areas like Houston, Dallas-Ft. Worth, and Phoenix are following this example.
Page 39 of Kotkin’s report has a chart showing that Phoenix, Houston, and Dallas-Ft. Worth have seen population growth in all income levels. Regions like Denver, Portland, San Francisco, and Seattle have seen growth in the upper incomes but have lost low-income populations because their higher housing prices have pushed people out. Meanwhile, Boston, Miami, and Washington have seen population growth in lower and higher income strata, but were hollowed out by a loss of middle-class numbers.
While I like Kotkin’s ideas, I have to wonder if cities really have to make a choice between attracting creative people and providing opportunities for everyone else. Do creative people really need urban-growth boundaries, unaffordable housing, and expensive light-rail transit to keep them happy? Or is it possible to design cities that are affordable and uncongested and at the same time have the amenities that are attractive to the “bohemians and gays” that Richard Florida says are found in creative-class cities?
The Antiplanner probably meets the definition of “bohemian” that Florida has in mind. As a telecommuter, I can live anywhere I want, so I choose to live in places I enjoy. That lets out Houston because of the lack of mountains, but it also lets out Portland and the other cities that have followed Florida’s advice because of the traffic congestion, unaffordable housing, and increasingly restrictive regulation that limits entrepreneurship. Would it be so horrible for a city in the West to open itself to the growth of a strong middle class?
Why is Houston’s air quality so bad?
D4P asked:
Why is Houston’s air quality so bad?”
To a large degree it is because for 4 generations now we Houstonians, along with our eastern neighbors in Port Arthur and Beaumont, have been host to the world’s largest concentration of petrochemical refineries, which produce and refine a substantial amount of the oil that Americans consume. And yes, we Houstonians do have debates about our air quality.
As I told the Antiplanner and other who were on my bus during the ADC conference tour (where I acted as one of the two tour guides), the real estate marketplace has taken notice of the pollution externality. The refineries and the Houston Ship Channel are on the east side of the City. However, for decades now, Houstonians have been sprawling out south, north and west, away from the plants. Property values are lower the nearer you are to the refineries.
We Houstonians have put up with this, in comparison to people in California, who have decided that they want environmentalism. In turn, Californians get blackouts and expensive power. Jobs in energy intensive industries like automobile plants and data centers end up going out of state.
I’d like to contribute more to this blog and answer some of the items that have come up over the past few days, but we are very busy down here right now making money and trying to accomodate all of the newcomers from the east and west coasts who have been run off by the cost of housing. I personally know about 10 people from the West coast who have moved here because of that.
Property values are lower the nearer you are to the refineries.
It’s a takings! Oh wait: Antiplanners only care when government does something to reduce property values. The private sector can do no wrong.
trying to accomodate all of the newcomers from the east and west coasts who have been run off by the cost of housing
And then your housing will become more expensive because of the newcomers, and residents will start lamenting the costs of growth (e.g. pollution, congestion, environmental damage, etc.) and Houston will implement some kind of growth controls, and people will find the next undiscovered town to move to instead. Oh: and Antiplanners will blame the growth controls for housing cost increases in Houston.
Randal states:
Would it be so horrible for a city in the West to open itself to the growth of a strong middle class?
I used to live in Sacto, which was once this way, then human nature happened, as D4P describes:
And then your housing will become more expensive because of the newcomers, and residents will start lamenting the costs of growth (e.g. pollution, congestion, environmental damage, etc.) and Houston will implement some kind of growth controls, and people will find the next undiscovered town to move to instead. Oh: and Antiplanners will blame the growth controls for housing cost increases in Houston.
I cain’t state this no bettah.
Welcome to the real world, lads. This is what happens.
DS
D4P makes the claim of a takings without basis. Those less expensive homes could have been built after the refineries were already there. Such a decision to build close to jobs but with some other disadvantages would make these areas attractive to new homeowners and younger workers. It could be the private sector doing right.
Houston may know better than to fall into the trap of heavily controlled growth and development. By simply observing the failures of such systems on the west coast Houston can learn through others mistakes. The future our public sector friends are seeing may not happen at all.
“The private sector can do no wrong.â€Â
STRAWMAN!
“your housing will become more expensive because of the newcomers,…blah blahâ€Â
Houston data seems to, if not contradict this pattern, show that the relationship between growth and whining is not fixed or linear. It is also not proven that growth controls actually achieve any lasting solution to the “costs of growthâ€Â. The Houston data does suggest a lasting solution to the cost of government planning.
I suggest that such whining about “costs of growth†is a symptom of increased wealth. Growth controls are an attempt to control the growth of wealth and prosperity. Planning is just a policy tool used by the already-wealthy to maintain income disparity.
“The Houston data does suggest a lasting solution to the cost of government planning.”
Has anybody else noticed that Houston actually has a planning department, which administers land use control? They have a budget too! That’s right… Houston has planning that is paid for by tax dollars. To say that what has happened in Houston has happened without significant government planning is flat out WRONG!
Weather it is good planning or bad planning is another question, but if you call yourself an Antiplanner, is there such a thing as “good planning?â€Â
Property rights are just a policy tool used by the already-wealthy to maintain income disparity.
Growth in it self isn’t bad, but it depends on the context. Like how much land in a area will not be developed and kept as parkland(Henry David Thoreau spoke of this in the 1850’s). The other aspect is how you intend to feed the growth, big expensive freeways or low cost transit.
The Houston data does suggest a [“]lasting[“] solution to the cost of government planning.
Yes – the results of this particular localized type of gummint plannin’* are the solution of spending far more time in your car than you would in any other large city – contributing to Houston being the fattest city in the U.S.
Or maybe the high-BMI people Tiebout sort to Houston. Yeah – surely that’s it.
DS
* Yes, Houston has th’ land-use regalayshun, despite the earnest attempts here to ignore that fact
Whilst reading Antiplanner’s posts on house pricing and urban growth boundaries, I’ve had one of those nasty little thoughts.
The proposal is to relax the growth boundaries on places like Portland, so that house prices fall.
Outcome 1 – house prices go up or stay the same – the approach has failed.
Outcome 2 – house prices go down, leaving people in negative equity.
I don’t know how outcome 2 would be handled. It’s one thing when a ‘natural cycle’ can be blamed, but what authority would get away with doing it deliberately?
Houston also has an very high amount of street miles per 1000 persons (6.0 – US average cities .1M = 3.9, US average overall (~450 MSAs) = 5.4).
Another “lasting” solution to this particular way of gummint plannin’ is the amount of subsidy that goes to maintaining the auto-centric transportation network.
These subsidies are paid out of the General Fund (GF) and include:
Property taxes account for 40.3% of GF revenue – yes, all property owners subsidize this work, even if they don’t use it. Imagine the poor with no car, subsidizing the rich.
Sales taxes account for 23.8% of GF revenue – yes, folks who may not live in Houston subsidize the roadways for the citizenry.
So in order to maintain this type of form-based land regulation, subsidies are needed to the tune of $89M in FY07). Huh.
Note: this subsidy does not include ameliorating the environmental effects of mobile source emissions – NOx, SOx, PMx, O3, other VOCs that contribute to respiratory ailments and are contributory to the cost to the Houston area ~ $3B/annum. Costs of eutrophication, the extra impervious and its contribution to the UHI are not calculated in this figure.
DS
Are you implying, Francis, that a small-minority group may want to deliberately devalue a large pool of home prices? Why on earth would a group want to trash the majority’s main economic investment?
Is this some sort of income redistribution? Some sort of ‘eat the rich’ scheme?
Or simply just a poorly thought-through consequence of a policy proposal?
DS
Are you implying, Francis, that a small-minority group may want to deliberately devalue a large pool of home prices? Why on earth would a group want to trash the majority’s main economic investment?
No worries. Existing homeowners whose homes were devalued could then just sue the government under takings legislation. Everyone wins!
“Property rights are just a policy tool used by the already-wealthy to maintain income disparity.” –D4P
Good to see you’re against the Constitution.
Francis King —> Interesting thought. How do we go about changing things to a new paradigm with making things worse. I’m not sure how big of a deal that would be. It seems like a lot of the problems with foreclosure that can be found concentrated in neighborhoods today are either in brand new neighborhoods or in old neighborhoods that 10 years ago most people wouldn’t have thought about once in terms of buying. If that’s the case I’m not sure how big of a deal loosening up the urban growth boundaries would be even if it did cause a drop versus a lack of a rise.
Once housing prices become tremendously inflated in an area it does pose a difficult problem. Many people will have huge mortgages taken out to purchase homes in the area. If prices fall, many of these people will suffer large losses through no fault of their own and when some of these mortgages default it will have a negative on the banking system. There is certainly no easy solution. However, this does not mean the high prices are a good thing. They limit growth, penalize the young and the less well off, and prevent those who engaged is less well paid, but in many cases still important, professions from making a decent life.
I don’t see an easy solution for areas like San Jose. I do see, however, a dire warning to those who want to artificially limit housing supplies and choices elsewhere.
“Why on earth would a group want to trash the majority’s main economic investment?â€Â
Another strawman of economic thinking…
It is only an investment if: you plan to leave the area for an unregulated area (if you have a choice and can still find an unregulated area) and never come back or if you are a real estate investor riding the wave of regulation induced inflation.
It is a suicidal investment if you ever want to stay in the area and buy a new house or if any of your descendants plan to stay in the area.
——
â€ÂI don’t know how outcome 2 would be handled. It’s one thing when a ‘natural cycle’ can be blamed, but what authority would get away with doing it deliberately? “
This seems like a perverse understanding of what is natural. Is housing price inflation brought by regulation natural? Or is it protectionism against the influx of outsiders?
This is akin to the logic of: “We should not look for new oil reserves or alternative energy sources because we may hurt the profits of OPEC nationsâ€Â.
And then your housing will become more expensive because of the newcomers, and residents will start lamenting the costs of growth (e.g. pollution, congestion, environmental damage, etc.) and Houston will implement some kind of growth controls, and people will find the next undiscovered town to move to instead. Oh: and Antiplanners will blame the growth controls for housing cost increases in Houston.
You forgot an additional element…
When real estate investors who made money riding the regulation wave in other cities, such as San Jose, catch drift of the fact that Houstonians are about to regulate themselvbes into a captive market, they will start picking up significant holdings into Houston’s real estate; which, in turn, will intensify housing inflation.
So, by all means, if anybody catches drift that Houstonians are approaching the point of regulating themselves into housing inflation, please post. When it comes to the correlation between housing prices and regulation some of us actually put our money where our mouth is.
I do see, however, a dire warning to those who want to artificially limit housing supplies and choices elsewhere.
Builder has an excellent point in his first para., one with which I agree. In fact, most in my profession agree, despite the vigorous efforts of some here to wish it wasn’t so. Nonetheless,
But in the case of CA, the tradeoff of wanting fewer people (not housing choices per se) – with the danger of the result being higher prices – was made for the preservation of open space (which people bought on the market), provision of parks, maintenance of quality of life, reduction in growth to reduce expenditures in water acquisition/treatment/polluted runoff, lowering of rate of reduction in air quality, congestion, etc. Remember those bumper stickers ‘welcome to California, now go home’? in the 80s? Lots of problems associated with prodigious growth in an arid state. Look at the impending water problems this year. Much more easily solved with ~10M fewer people. The growth didn’t pay for itself. Too many people in a resource-constricted state.
Decisions are not made discretely and a whole host of factors go into cause and effect choices in complex systems (my point yesterday, which had repeated attempts at simplification or reduction lobbed at it).
Simplistic solutions for action in complex systems should be approached with caution, as IME they are reduced too far and fail to account for many factors. Ironically, this is often Randal’s point about planning in complex systems, except when it isn’t and he drops this argument to support something he is trying to sell.
DS
So, by all means, if anybody catches drift that Houstonians are approaching the point of regulating themselves into housing inflation, please post.
Ah.
So the current level of regulation and subsidy in Houston is OK, because it hasn’t raised prices enough to make some grumpy.
What level of regulation must it be to cause agitation, one wonders? Houston regulation OK, effete and elite places with copious amenities, not OK?
DS
When they start restricting what is most sought after, single family residences. That would be my investor trigger.
effete and elite places with copious amenities, not OK?
Ironically (or perhaps not), many of the Antiplanners around here appear to live in such places, which coincidentally (or perhaps not) have relatively strong land use planning programs.
…and that is why they complain. Because they want to move to better homes and they cannot and look to the future housing arrangements of their children with apprehension.
No. In case you wonder about me, I do not live in a highly regulated area. But even if I did, I hold enough real estate to be well hedged againsr regulation. At this point I’m more than regulation neutral. Additional regulation at this point just keeps increasing my net worth.
“ Ironically (or perhaps not), many of the Antiplanners around here appear to live in such places, which coincidentally (or perhaps not) have relatively strong land use planning programs.â€Â
I’ve noticed this here in Austin. All the staunch libertarian, wealthy, antiplanner, developer types liven in the most heavily regulated neighborhoods (by municipality or home owner association). Why is this? Even O’Toole lives in Portland (the city where planners go when the die). Can it be that their faith in the market is not so strong? God forbid one of their neighbors exercises their property rights and park their car in the front yard, or puts up a basketball hoop in the driveway. That would just ruin the stagnant characterless feel of the suburban house farm.
When they start restricting what is most sought after, single family residences. That would be my investor trigger.
Now.
Changing demographics will make this only 25% of demand by 2050.
As we see now, in San Jose and the Bay Area, it is very hard to change existing housing stock built during the high-growth years there (part of the consequence causing so much angst on this site recently) – that is, the market redevelops housing stock only after the structure distorts the land price, and there is a cost added with teardown (tacked back on sale price – a proximate cause of gentrification, BTW, along with others seeking amenities*, driving up Ricardian rents)**.
Similarly, building all SFD now will distort the market in the same period in the future. Hence the push for SFA, multifam, etc, as the built environment endures, and redevelops at only ~2%/yr.
DS
* Standard text in the UrbEcon literature. Failing to understand this concept is important on this site, in allocating inadequate policy responses.
** San Francisco is known as one of America’s loveliest citiesâ€â€a city with a wealth of natural beauty, a mild climate, unusually elegant neighborhoods, an array of fine restaurants, and a world-class arts and entertainment community. Given the inherent attractiveness of the city, it is hardly coincidental that San Francisco has the highest housing cost of any major city in the continental United States. As Sherwin Rosen (1979) pointed out some two decades ago, in equilibrium people who live in particularly attractive cities must “pay†in the form of higher property rental prices and also possibly lower wages [the case in Seattle – D]; valued amenities are capitalized into the hedonic rent and wage gradient. [emphases added]
“ Ironically (or perhaps not), many of the Antiplanners around here appear to live in such places, which coincidentally (or perhaps not) have relatively strong land use planning programs.â€Â
Where the heck could I live that isn’t while having a decent career as a software engineer?
Where the heck could I live that isn’t while having a decent career as a software engineer?
Apparently Houston
Where the heck could I live that isn’t while having a decent career as a software engineer?
Houston!
Where the heck could I live that isn’t while having a decent career as a software engineer?
Right.
Places that want to attract knowledge workers need to have copious amenities, as Richard Florida states but Randal doesn’t want to admit to.
The result is my bolded footnote above in 25 (the way the world works).
The Front Range has mountains but no water, so the rents near DTC are higher than Houston but lower than places with both (LAX in ’70s, Bay Area in 80s-90s, PDX, SEA now; in TX they tried with DFW in 80s-90s, Austin – proximity of Unis helps).
That’s how it works. Thanx prk for the example on the ground.
DS
Where the heck could I live that isn’t while having a decent career as a software engineer?
Regulation (land use in this case) correlates positively with the eliticism carried into an area by college educated people.
“Regulation (land use in this case) correlates positively with the eliticism carried into an area by college educated people.”
I guess that makes free marketers uneducated? Or was that just an inflated rhetoric quip?
Ettinger,
Based on you comments in #18, one could assume that there is a positive correlation between elitism and those who oppose regulation.
Or was that just an inflated rhetoric quip?
The only ideological coloring I gave to the phrase was the choice of the word “eliticismâ€Â. The rest of the statement, that is, “the positive correlation between higher education and regulation†was simply an observation I made while living in the Bay Area. I do not know what to make of it. It was simply an observation.
#32 I do not understand. I see little correlation between college education and making money in real estate. I have the vague impression that college graduates are usually busier doing more productive work. Some of the most successful real estate investors I know started by owning and working in liquor stores, gas stations and laundrymats – but I do not mean that as a general statement.
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Houston: Come for the Obesity, Stay for the Asthma
“Places that want to attract knowledge workers need to have copious amenities, as Richard Florida states but Randal doesn’t want to admit to.”
Note that I didn’t say “I moved to Denver because of all the wonderful museums they have” or “I moved to Denver because they have .4 more Thai restraunts per capita than over mountain west cities” or “I moved to Denver because I’ve been to the theater once in the last 5 years and they have more theaters than…” Nope, it was about having mountains and being able to have a decent choice in jobs. If it was about “copious amenities” I never would’ve left Minneapolis.
The natural environment is an amenity. 300 days of sun is an amenity. But apparently all you do is go to work and go home, and you’re too bored to read a dictionary.
DS
Dan, most of the people on this blog don’t give a shit about any thing or the world around them and might as well jump off a bridge.
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