Friday, July 28, 2006
Do moderate-income families have a future in cities such as San Francisco? With median housing prices around $800,000 and an enormous population of well-paid childless adults, San Francisco is seeing its school enrollment dwindle. How can the city retain and continue to attract moderate-income families? San Francisco has decided to spend millions on rent subsidies for such families and has imposed moderate-cost-unit set-asides for new developments. Here's a story on NPR.
Forgive me if I am skeptical of the chances for real success for such land use plans. Subsidies can only do a little against the mighty current of market forces, while set-asides probably won't get much built in a city that was in effect "filled out" decades ago -- the city's population is about the same as it was 50 years ago. The only land use plan that could successfully provide for truly large numbers of moderate-cost housing would be to demolish huge stretches of single-family houses and replace them with multi-families structures. Absent this, moderate-income residents of the Bay area will simply have to put up with living elsewhere (San Francisco holds only about one-ninth of the Bay area's total population). Land use laws should foster multi-family housing and good public transportation in the suburbs, before currently-less-fashionable suburbs such as South San Francisco, Hayward, and Richmond price out moderate-income families as well.
Thursday, July 27, 2006
I'm an advocate of changing our land use laws and increasing funding to support public transportation - especially for dedicated bus lanes, which seem to be the most efficient way of spurring greater use of transit. But it's also simple realism to recognize that in today's metro areas most people don't want to use public transportation and won't do so even if pushed by changed policies. The oft-heard assertion that Americans are "fed up with traffic" doesn't mean that they'd willing give up their auto rides for long walks to the transit stops, waits for a bus or train, and then another long walk to their destination, especially in a nation in which low-density suburbia has been policy for decades. Is this viewpoint simply a spoiled American one? Here's a similarly skeptical opinion from Toronto's Globe and Mail.
Wednesday, July 26, 2006
The great housing price boom of the past 10 years, at least on the coasts, appears to be over; reports are that prices are finally stabilizing. Why the boom? Was it a "bubble"? One factor that certainly fed the fire was simple speculation -- investors bought up existing houses in the expectation that prices would continue to rise sharply for a while. This sort of expectation, of course, can lead to a "bubble" that is fine with speculators if they sell before the bubble bursts (or, in the sticky-upward housing price market, "deflates like a heavy balloon" might be a better metaphor). Such speculation-fueled price rises made it tougher for lower-income Americans to buy in the past decade. Many economists defend the general idea of speculation, of course, pointing out that the profit-sniffing sense in speculation leads the economy to devote more resources, wisely, to whatever is being invested in. We should applaud anyone smart enough to have invested in fledgling Microsoft in 1982 or in Google in 1999 because their speculation helped create services that benefited American life.
But do the benefits of speculation still hold for the housing market? A problem is that the housing world is about as far from a free market as we get in the United States; rising housing prices don't simply lead to a boom in construction, as simple economics would predict. This is because new construction is one of the most regulated aspects of the American economy; it is tied up by zoning, environmental limits, anti-sprawl plans, and myriad other factors. In fact, new construction has not skyrocketed in the nation over the past 10 years, in large part because of these legal limits. Indeed, these limits act as after-burners to a price boom when speculation does occur. So what benefit did the economy get out of the speculation-driven price boom? Probably nothing. And yet speculators that bought in 2000 and sold this year made an enormous profit (in part attributable to the legal restrictions). Accordingly, house-buying speculative profits may form the best case for a windfall profits tax.
Monday, July 24, 2006
Montana, perhaps the quintessential "open range" state, is seeing its land use change as tourism, recreation, and retirement are replacing ranching, mining, and wheat as the bases of the economy. While many Montanans complain about unchecked growth, the truth is subtler. In reality, Montana's population has not grown as quickly as that of the nation as a whole; the state went from two to one representative in Congress after the 1990 Census. But in a state where limited water and extensive federal land ownership restrain new developments, many Montanans find that good land is scarce, especially in the more scenic mountain areas in the west. The stereotype is that Hollywood moguls and other California millionaires are buying up all the good land for summer ranchettes. A possible solution? How about the idea of MAXIMUM lot sizes? This might curb the ranchettes from gobbling so much of the good private land. Wouldn't maximum lot sizes violate the right of property owners to make a reasonable return on their land? Not if some of the land were kept as agricultural.
Sunday, July 23, 2006
Concern over global climate change is moving out from the world of environmental alarmism and into the mainstream, says author Michael Grunwald in an essay here. Grunwald asserts that the public is slowly accepting the need for change, citing Wal-Mart's commitment to limiting carbon emissions by cutting down on truck idling, Governor Schwarzenegger's commitment to slashing pollution, and the growing popularity of hybrid cars in a world of high gas prices. But he slides past the Achilles heel of the notion that cutting carbon makes economic sense, through his statement that a climate-conscious policy would "discourage sprawling subdivisions, instead promoting high-density neighborhoods that would reduce distances for commutes, as well as smaller homes that would require less energy to heat and cool." It will take a lot more than Al Gore's movie and high fuel bills to convince most Americans of the personal benefit of such a land use policy.