Urban Issues

The West Faces a New Type of Housing Crisis

Joel Kotkin — Thu, 24 Oct 2024 20:28:38 -0400

Throughout the West, particularly the Anglosphere, housing costs are ravaging the middle class. Homeownership, long the key to social mobility, is on the decline, particularly among younger generations and minorities. According to the Organization for Economic Cooperation and Development, house prices in high-income countries have been rising “three times faster than household median income over the last two decades,” causing the standard of living “to stagnate or decline.”

Unlike previous housing crises, this one is not primarily caused by mass displacements due to wars or natural disasters or population growth. This is largely a self-inflicted wound brought about by planners and a political class that has skewed land markets and obstructed the middle-class hope for home ownership.

Voters are aware of what is happening. In May, housing ranked second only to inflation in a Gallup survey of Americans’ financial worries. In a Harvard poll of eighteen- to twenty-nine-year-olds this year, housing ranked as the third-most important issue overall, after inflation and healthcare. In California almost 70 percent of residents consider housing costs a major concern while in Britain, housing ranked well ahead of defense, security, poverty and crime as a top priority for voters.

At the Democratic National Convention in August, Barack Obama claimed that “Kamala understands” what is needed to restore housing affordability. Vice President Harris has become strongly identified with the developer-funded YIMBY movement — short for “yes, in my backyard” — which often assigns responsibility for housing shortages to local governments that try to limit development. This encourages an ever-louder call, embraced by Harris, to nationalize housing policy, something that has won over some usually less-than-statist market conservatives.

In reality, Harris’s proposals include policies that have already failed or will make things worse. She has emphasized $25,000 tax breaks for new homeowners, which most economists see as likely to boost home prices. She has embraced regulatory policies that the 2020 Economic Report of the President found caused “a house price premium resulting from excessive housing regulation” of 100 percent in the Los Angeles and San Diego metros, and 150 percent in the San Francisco Bay Area.

As with nearly every other policy position in 2024, Harris is a newfound convert to YIMBYism. As California attorney general from 2011 to 2017, Harris, a strict adherent of California’s climate policies, worked to limit building on the suburban fringe, which has helped stymie production over the past two decades. Due largely to such restrictions, California now suffers the country’s second-lowest homeownership rate, and has experienced an extraordinary rise in housing prices that has driven prices well beyond the capacity of most residents: one recent study found that the median family in San Jose or San Francisco would need 125 years (150 in Los Angeles) to collect a down payment; in Atlanta or Houston the figure is twelve years.

Similar issues have surfaced in other Anglosphere countries, such as the United Kingdom, Canada and Australia. In the UK, the homeownership rate has plunged below 1985 rates. The Labour Party speaks of building on parts of greenbelts (which cover more land than all of the nation’s urban zones), but public pressure, and the powerful green lobby, could force them to hold back and return to a density-oriented strategy. New prime minister Keir Starmer’s team certainly should pursue the party’s expansive strategy: under current policies, projections show that nearly five million households will live in unaffordable housing by 2030.

Apologists for Britain’s housing shortage often blame the country’s relative lack of land — although less than 9 percent is actually urbanized. This excuse has even less purchase in huge countries like Canada (where 3 percent of land is urbanized); and Australia (less than 0.25 percent urbanized), where housing prices have risen four times faster than wages.

The Australian situation shows how regulatory restraints can affect even a country with historically high levels of homeownership. Australia’s rate of homeownership for people twenty-five to thirty-four dropped from more than 60 percent in 1981 to only 45 percent in 2016. The proportion of owner-occupied housing has dropped by 10 percent in the last twenty-five years. Economist Saul Eslake suggests that the 2021 homeownership rate among Australians in their mid-twenties to mid-thirties will be lower than in the 1947 census.

A similar decline has occurred in Canada — houses in cities like Vancouver and Toronto are now among the world’s most expensive, indeed more pricey than those in far more densely populated places like Los Angeles, New York or London. It’s occurring in the US as well, where, according to Census Bureau data, the rate of homeownership was 45.4 percent for Generation X, but dropped to 37 percent for millennials.

At the root of the housing crisis are policies designed to keep people from moving to the periphery — where they cannot be so easily dragooned into “living smaller, living closer.” This approach dates back to Britain’s 1947 Town and Country Planning Act, which backed the notion of restricting suburban and exurban growth. By the early 1970s, British planner Peter Hall suggested that the “speculative” value of land with planning permission in the UK was five to ten times higher than that of land without planning permission.

Read the rest of this piece at Spectator.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

How the City of Angels Went to Hell

Joel Kotkin — Sun, 20 Oct 2024 20:28:08 -0400

A journey through Los Angeles, the adopted home of Vice President Kamala Harris, offers a masterclass in urban dysfunction. As you drive through the streets of the southside, and along Central Avenue, the historic main street of black LA, now mostly Hispanic, the ambience is increasingly reminiscent of Mexico City or Mumbai: broken pavements; battered buildings; outdoor swap meets; food stalls serving customers much as one would see in the developing world.

Democrats, particularly in deep blue California and even bluer cities like Los Angeles, can clearly win elections. But what they can’t do is govern effectively. Virtually every Democratic city in the land is now in decline. Crime, especially of the violent variety, is rising. That’s shadowed by continued out-migration to less dense, more conservative areas, a trend that’s seeing the country’s biggest cities lose out economically.

But if signs of progressive failure are clear from New York to San Francisco, it’s Los Angeles where I feel it most keenly. I’ve lived here since 1975. Back then, the idea that this diamond in the sands could tarnish was unimaginable. But it has. Once a middle-class haven with a broad industrial base, LA now suffers the highest poverty rates in the state, and among the worst in the country. Dovetailed by failing schools and parks, and an exodus of residents and businesses, long-term prospects of this great American city look bleak — a future that could yet be translated right across the country.

Beyond making life miserable for residents and visitors alike, the chaos on the southside has clear demographic consequences. When I arrived, almost 50 years ago, LA was the undisputed king of urban growth in America. From a population of barely 100,000 in 1900, the city grew to nearly four million. Now, though, the trend has reversed. Today, the city and county of Los Angeles, together home to 10 million people, has fewer residents than in 2010. Even worse, the state department of finance now projects that the county’s population will drop by over one million by 2060.

This is not an exodus, as some assert, of the poor, nor of blubbering Trumpistas. Rather, many emigres now come from the city’s once-vibrant, multi-racial middle class. According to an analysis of IRS data, many are middle-income families in their childbearing years. LA is also losing the minorities and foreign-born residents who for decades sustained the city’s economic and demographic vitality. These days, African-Americans and Latinos instead flock to places like Houston or Miami in search of opportunity. “We are becoming more dystopian,” says John Heath, a lawyer and south LA native. “We can’t house people affordably and only build luxury, and there’s no place for a middle class.”

There’s a vicious circle here. As ambitious Angelinos leave, so too do the jobs that might have induced them to stay. That’s clear enough in entertainment, the city’s signature industry and a key funder of progressive politicians such as Harris. Consider Disney’s fabled Pixar studio, with production moving to other states or overseas. The once-promising space industry is in danger of being kneecapped too: just look at the departure of SpaceX.

Read the rest of this piece at UnHerd.

Photo: Russ Loar via Flickr under CC 2.0 License.

Moving Away from Density to Less Dense Detached Housing Areas

Wendell Cox — Wed, 16 Oct 2024 20:28:08 -0400

Further evidence of the continued dispersion of the US population is revealed by an examination of net domestic migration data and types of residences according to the American Community Survey, compared to the annual Census Bureau population estimates from 2020 through 2023.

Despite efforts of urban planners to outlaw single family zoning (detached houses) in some areas and pack families into cramped apartments, demographic date suggests people who move head to counties with more detached housing, not less.

The counties gaining net domestic in-migration had a population weighted average detached housing rate of 69.2%. The counties that had net domestic out-migration had an average detached housing rate of 45.6%. The counties to which people moved had an average detached housing rate 52.6% higher than the counties from which people moved (Figure 1). This is yet another general indication of the increasing suburbanization and exurbanization of the nation. Suburban, exurban and rural areas tend to have higher percentages of detached housing, while urban core locations tend to have large multifamily, especially apartment shares.

The Census Bureau net domestic migration data, indicates that 4.9 million people moved across county borders over the past three years. This means that as a result, the population of the counties with net domestic migration gains increased 9.8 million relative to the counties that lost net domestic migrants. (Figure 2)

Background

In the United States, net domestic migration is reported at the county level each year. A single net figure (“ins” minus “outs”) is provided for each of the more than 3,100 counties. This article compares the single-family (detached) occupied housing share in the counties with positive net domestic migration to the counties that lost net domestic migrants.

Detached housing accounts for 61.4% of residences (per the American Community Survey 2018-2023), and are most common in suburban, exurban and rural areas where population densities are below those of high-density urban cores.

There were 15 states in which the in-migration county detached housing share exceeds that of outmigration counties by the largest margin (Figure 3). This is notable even in highly urbanized, blue states.,Moving New Yorkers are attracted to counties that have an average 256% higher share of detached housing. Movers from Pennsylvania, Idaho and New Jersey were destined to states with a100% or more detached housing share, Movers from Massachusetts, Virginia, Hawaii, Illinois, Rhode Island, Wisconsin, Maryland and Florida have been destined to areas with 50% to 100% greater detached housing share as. Alaska, California and Vermont rounded out the top 15, each above a 40% gain in detached housing share.

There were three states in which the opposite trend was shown, where movers new counties had a lower share of detached housing than where they moved from (Figure 4). These included North Dakota, South Dakota and Iowa. Even so, South Dakota and Iowa had a detached share of housing higher than the national average (61.4%), but below the former residence counties. North Dakota, however, had a lower detached housing share than the national rate. The overall trend remains: people are more likely to move to areas where single family homes predominate.

The table below provides data for the major metropolitan areas.

Similar Research

Other recently released research indicates that internal migration favors counties with lower urban population densities.

Americans Accelerate Move Away From Density showed that among all of the nation’s more than 3,100 counties and county equivalents, those that received net domestic migration between 2020 and 2023, urban densities were 82% lower (1,776 per square mile) than the counties from which there was a net domestic migration loss (9,920 per square mile).

More on the Flight from Density: Within Major Metropolitan Areas found a similar trend between 2020 and 2023 within major metropolitan areas. Counties within major metropolitan areas that gaining net domestic migrants had an average urban density 81% below (2,147 per square mile) that of major metro counties with net domestic migration losses (11,486 per square mile).

What This Means

At the fundamental level, this simply indicates that the trend toward suburbanization has only deepened. The United States has been suburbanizing for a century or more, with significant acceleration occurring following World War II. As the data above indicates, further acceleration has occurred over the last three years.

Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He is a Senior Fellow with the Frontier Centre for Public Policy in Winnipeg and a member of the Advisory Board of the Center for Demographics and Policy at Chapman University in Orange, California. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey and author of Demographia World Urban Areas.

Mayor Tom Bradley appointed him to three terms on the Los Angeles County Transportation Commission (1977-1985) and Speaker of the House Newt Gingrich appointed him to the Amtrak Reform Council, to complete the unexpired term of New Jersey Governor Christine Todd Whitman (1999-2002). He is author of War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life and Toward More Prosperous Cities: A Framing Essay on Urban Areas, Transport, Planning and the Dimensions of Sustainability.

Photo: The Villages, Florida in the fastest growing CBSA (metropolitan and micropolitan areas) in the nation out of more than 900, between 2020 and 2023 (over 16%). Source: Wikimedia under CC 4.0 License.

Table 1 (Back to reference)

Net Domestic Migration: Gaining & Losing Counties 2023
State/DC	In	Out	Ins Divided by Outs	Rank
Alabama	69.7%	67.8%	2.8%	42
Alaska	82.7%	57.2%	44.7%	13
Arizona	66.7%	61.0%	9.3%	34
Arkansas	71.8%	69.9%	2.7%	44
California	73.0%	51.0%	43.1%	14
Colorado	72.9%	53.1%	37.4%	17
Connecticut	65.2%	56.2%	16.0%	30
Delaware	64.4%
District of Columbia		11.5%
Florida	62.7%	41.5%	50.9%	12
Georgia	76.8%	58.8%	30.6%	18
Hawaii	77.3%	46.5%	66.5%	7
Idaho	75.7%	36.7%	106.1%	3
Illinois	76.4%	47.9%	59.3%	8
Indiana	77.9%	62.9%	23.8%	22
Iowa	70.9%	72.5%	-2.1%	45
Kansas	79.0%	66.1%	19.6%	25
Kentucky	71.8%	62.9%	14.1%	32
Louisiana	72.3%	63.0%	14.8%	31
Maine	70.7%
Maryland	66.1%	43.6%	51.7%	11
Massachusetts	65.9%	35.6%	85.1%	5
Michigan	79.4%	67.6%	17.5%	28
Minnesota	76.8%	55.4%	38.6%	16
Mississippi	73.6%	67.4%	9.3%	35
Missouri	74.0%	60.5%	22.3%	23
Montana	71.7%	69.4%	3.4%	40
Nebraska	79.0%	69.8%	13.2%	33
Nevada	60.6%	58.0%	4.5%	38
New Hampshire	67.0%
New Jersey	71.5%	35.1%	103.4%	4
New Mexico	69.5%	67.0%	3.7%	39
New York	64.4%	18.1%	255.9%	1
North Carolina	69.4%	64.6%	7.5%	36
North Dakota	46.0%	54.5%	-15.6%	47
Ohio	76.0%	60.1%	26.6%	20
Oklahoma	76.7%	73.2%	4.9%	37
Oregon	70.0%	55.8%	25.6%	21
Pennsylvania	65.4%	27.8%	135.6%	2
Rhode Island	71.4%	46.6%	53.2%	9
South Carolina	64.2%	62.4%	2.8%	43
South Dakota	64.5%	70.7%	-8.7%	46
Tennessee	72.0%	60.3%	19.4%	26
Texas	71.3%	59.1%	20.6%	24
Utah	71.9%	61.4%	17.1%	29
Vermont	73.1%	51.2%	42.7%	15
Virginia	78.0%	44.9%	73.8%	6
Washington	69.7%	54.8%	27.0%	19
West Virginia	72.0%	69.8%	3.2%	41
Wisconsin	75.7%	49.8%	52.0%	10
Wyoming	72.5%	61.1%	18.8%	27
All Counties	69.6%	45.6%	52.6%
Derived from ACS data.

Faster, Better, More: How to House Australia

Thu, 10 Oct 2024 14:48:19 -0400

This paper, by property expert Ross Elliott, explores the reasons behind our current housing shortages and identifies a range of policy measures which have contributed to – rather than alleviated – the magnitude of the current housing ‘crisis.’

To download the full paper click here.

It also proposes alternatives to the policy settings which could significantly improve both the volume and affordability of basic housing.

The paper does not touch on the provision of social housing: this is a government responsibility and is not something that can be delivered in volume by the market. Generally there have been inadequate initiatives to involve the private sector in public housing development.

Failures by governments to provide adequate social housing, or to better manage the existing social housing stock, are exacerbating the housing ‘crisis’ but this paper is focussed on the delivery of new market housing where greater volumes and real gains in affordability are possible.

Key findings

Worsening housing affordability owes itself to a series of policy decisions around population growth, land use, taxes and regulation. These decisions by Federal, State and Local Governments were mainly made around the late 1990s/early 2000s – also the point at which affordability began to deteriorate and housing shortages began to appear.
Since 2000, Australia has gone from a median house costing 4 to 5 times a household income, to now nearly 10 times. Australia is now amongst the least affordable markets in the world.
Rapid population growth via Federal Government immigration policy is a key driver of housing demand. Recent decisions to rapidly increase population growth have exacerbated an already failing regulatory and land use policy environment which is unresponsive to demand.
Taxes, as they apply to new housing (including the GST), now amount to roughly one third the cost of a new house or apartment.
Limited outer suburban growth in favour of higher urban densities – described by the RBA as ‘the zoning effect’ – also adds substantially to the cost of housing.
The preferred urban model of higher densities within a constrained boundary has been the de facto planning model for three decades. However, higher densities are proving to take longer and cost a good deal more than the detached house alternative. It is now virtually impossible to deliver a new two bed unit for less than $1.3 million in the Brisbane region. Increasing the supply of the more expensive housing product will not improve affordability.
The introduction of upfront “per dwelling” housing levies (also known as developer levies) has immediately flowed through to higher prices for the new dwelling buyer.
Planning regulations have expanded exponentially, adding to costs and time. The 1990 Planning Act was 120 pages in length. It, including related provisions and referred acts and provisions, now numbers in the thousands. This has not delivered any perceived improvements in planning.
Building code changes – such as recent National Construction Code amendments – have also added significantly to new house costs while all existing households – irrespective of how energy inefficient or disability unfriendly – are exempt. These additional costs levied on new housing only are both unfair and ineffective.
There has also been a widely reported escalation in housing construction costs. Poor productivity and excessive union wage demands have mostly affected the higher density housing market though there are flow-through effects in the cottage building sector which has to compete in the same market for trades.
It is theoretically possible to reduce the costs of a new house by $120,000 and a new home unit by $160,000 by taking a series of relatively simple measures, not including benefits that would flow to lower costs via simplified regulatory processes.
The current ‘crisis’ is not something that happened to us. We did this to ourselves via policy decisions outlined in this report.

Key recommendations

Population growth must be slowed to a pace that regulatory and supply side industries (development and construction) can accommodate. This is a Federal Government responsibility.
A new compact between all levels of Government – each of which ‘clips the ticket’ on housing in their own way – is essential for meaningful reform to the new housing market.
Policy makers and regulators are advised to focus on means to improve the volume and lower the cost of new housing – detached and attached. Attempts to moderate or adjust the entire housing market via incentives or regulatory tweaks are a distraction.
Alternatives to the upfront charging of infrastructure associated with new housing projects need investigation. Successful alternatives such as MUDs (Municipal Utility Districts) or related instruments warrant a try, even if just a pilot project.
Unnecessary and largely ineffective building codes which penalise the new housing sector only, but which exempt all established housing, should be reversed.
The supply of land for outward suburban expansion around major cities is deliberately restricted via urban growth boundaries. A quarter century of evidence tells us these have a detrimental effect on the competitive market for land for housing. They should be relaxed to encourage greater competition and downward pressure on englobo land prices.
The preferred model of urban consolidation via infill housing must be re-evaluated in the context of consumer preference, in addition to the real challenges of identifying sites, obtaining approvals, and construction costs. As the preferred model of urban development, it is taking longer and costing us more.

Read or download the full report here

Ross Elliott is a leading industry practitioner with over 35 years' experience in property and urban development across a number of industry sectors. He has held senior roles with the Property Council of Australia as Executive Director, National Chief Operating Officer, and National Executive Director of the Residential Development Council. Ross has been a frequent writer and guest speaker on urban development themes both in Australia and the US. In 2018 he published a piece on Australia in a global study of suburban development by the MIT Center for Advanced Urbanism (Cambridge, Mass.) Ross is also founding director of suburban issues think tank Suburban Futures.

Image: report cover

Canada Total Fertility Rate (TFR) Drops to 1.26, BC to 1.00

Wendell Cox — Tue, 08 Oct 2024 20:28:08 -0400

Statistics Canada, Canada’s government statistical agency, has announced that the nation’s Total Fertility Rate dropped to 1.26 in 2023. This is a reduction from 1.33 in 2022.

Statistics Canada supplies this definition for the TFR: “Total fertility rate is an estimate of the average number of live births a woman can be expected to have in her reproductive life if she experienced, at each age, the fertility rates observed in a given year.Like many Western and East Asian countries Canada's rate has been generally declining for over 15 years and reached a new low in 2023 of 1.26 children per woman. This decline from 2022 to 2023 mostly reflects an increase in the number of women of childbearing age in 2023, as the number of births was similar in both years.”

According to Statistics Canada: “Canada has now joined the group of "lowest-low" fertility countries, including South Korea, Spain, Italy and Japan, with 1.3 children per woman or less. In comparison, the total fertility rate for the United States was 1.62 per woman in 2023.”

Yue Qian, an associate professor in the University of B.C.’s sociology department, said the skyrocketing cost of living is clearly a factor in declining birthrates here and across Canada.”

“There is research showing that fertility rates are closely related to housing,” said Qian, with birthrates higher in cities with more available and more affordable homes.

Provincial and Territorial TFRs

The Statistics Canada release included TFRs for the second level governments, the 10 provinces and three territories.

Nunavut, a largely impoverished and lightly populated territory that was separated from the Northwest Territories in 1999, is the only second level jurisdiction in Canada with a TFR above the population rate (2.1 births per woman), at 2.48. Nunavut is very sparsely populated, with 37,000 residents in the 2021 census. The land area of Nunavut is over 800,000 square miles, about the same size of the states of Alaska and California combined. The northernmost point is on Ellesmere Island, less than 500 miles from the North Pole.

All of the other 12 Canadian jurisdictions have total fertility rates less than that of Nunavut. The provinces have the next highest TFRs. Saskatchewan has a TFR of 1.63, while neighboring Manitoba has a TFR of 1.52. The Northwest Territories has a TFR of 1.39, closely followed by Quebec.Maritime province New Brunswick has a TFR below the national rate (1.26), at 1.24.

Ontario, despite being a focus on recent immigration, has a TFR of 1.22 and has a very high cost of living, as the location of the second worst housing affordability crisis in the nation. The Toronto census metropolitan area had a median multiple (median house price divided by median household income) of 9.3 in 2023, more than double the 2005 figure, according to the Demographia International Housing Affordability report.

Prince Edward Island has a TFR of 1.16, followed by Newfoundland and Labrador at 1.08, Nova Scotia at 1.05 and Yukon at 1.01.

British Columbia, another major immigrant hub is also home to Canada’s worst housing crisis and a cost of living crisis, has the lowest TFR at 1.00. This is one of the lowest fertility rates in the world. If British Columbia were a country, it would have a TFR ranked 5th lowest in the world, behind Hong Kong, South Korea, Palau and Puerto Rico, according to World Bank data.

Canada, like most nations, is faced with a strongly declining Total Fertility Rate. This will be challenging for public officials at all levels of government to deal with, and there has been little success around the world in reversing TFRs that have become so low. That it is happening in a land rich, immigrant-friendly country like Canada demonstrates how deep-seated the fertility trends are in virtually all relatively prosperous countries.

Photo: Vancouver, largest city in British Columbia, which if it were a country would have the 5th lowest TFR in the world, by author.

I'm Not an Urbanist. I'm an Urban Sociologist.

Pete Saunders — Fri, 04 Oct 2024 20:28:08 -0400

I’ve written a lot about how growing up in Detroit was instrumental in my desire to improve and revitalize cities. Watching a city being hollowed out and disgraced in the ‘70s and ‘80s can have that impact. Yet, ever since I can remember I’ve always felt slightly out of step with the people most interested in improving cities. I think I now understand why.

I’m not an urbanist. I’m an urban sociologist. I believe cities are first and foremost social creations, not economic ones, and I ascribe city changes, positive and negative, to the social infrastructure that establishes the city itself. I think this differentiates me from the urbanist contingent.

Here’s how I arrived at this.

As a teen, I thought Detroit’s problem was violent crime and the aggressive police response. It was, and still is, a major factor. However, I began to view crime as something that wasn’t the cause of the city’s decline, but a symptom. Intuitively I realized that aggressively attacking crime, treating the symptom, might lead to a better city, but it was no guarantee.

Like conventional wisdom at the time, I thought Detroit was being failed by an auto industry that was falling behind foreign automakers. The city needed a rejuvenated auto industry that could once again excel and dominate the auto market, at a minimum, or perhaps a new, more diversified economy that would deemphasize auto dominance. But that didn’t happen either.

I also saw Detroit as a city that lacked visual appeal. People were leaving, in my mind, because it wasn’t a beautiful city. The city was becoming disposable. I thought a city that became more attractive would bring more people; an incredible skyline, great open spaces, colorful neighborhoods would naturally attract newcomers. But when the city did things to improve the look of commercial districts, it hardly moved the needle.

I saw Detroit as a city that needed the right governmental policies to incentivize revitalization. However, it’s clear that the federal government and all 50 states were incentivizing the suburban explosion through highway extensions, infrastructure improvements, and financing policies that favored homeownership. It was working for those who could afford it, and that wasn’t changing, either.

But I’ve come to the realization that what fueled Detroit’s decline was none of those things, at least singly or directly. Crime? New York City’s crime began falling under the Koch and Dinkins administrations, before Rudy Giuliani’s law-and-order campaign brought him into office. Economy? It took quite a while, but eventually the Big Three automakers were able to close the quality gaps that plagued them for decades. Unfortunately, the Big Three still ceded their mid-century dominance over foreign automakers as the auto-buying public had widely expanded options. Automation played a big role in closing the quality gap, but came at the expense of tens of thousands of auto worker jobs.

Read the rest of this piece at The Corner Side Yard.

Pete Saunders is a writer and researcher whose work focuses on urbanism and public policy. Pete has been the editor/publisher of the Corner Side Yard, an urbanist blog, since 2012. Pete is also an urban affairs contributor to Forbes Magazine's online platform. Pete's writings have been published widely in traditional and internet media outlets, including the feature article in the December 2018 issue of Planning Magazine. Pete has more than twenty years' experience in planning, economic development, and community development, with stops in the public, private and non-profit sectors. He lives in Chicago.

Photo: L Walck, via Flickr under CC 2.0 License

Kamalafornia Über Alles

Joel Kotkin — Thu, 03 Oct 2024 20:28:08 -0400

For the last century, no state more epitomized the ideals of upward mobility and technological and cultural innovation than California. Once on the distant fringe of America, the Golden State has emerged as an economic powerhouse, with a gross domestic product larger than those of all but four nation states. As its economic influence swelled, California became a central locus of US political power. Its political clout arose first in the Nixon-Reagan era and later in the form of the progressive California elite—the likes of Nancy Pelosi, Adam Schiff, George Clooney, and the tech oligarchs—who have now expelled “Scranton Joe” in favor of one of their own, Vice President Kamala Harris, at the summit of Democratic power.

Yet given the partisan fixations of most mainstream media, few look at the Kamalafornian reality. Since 2000, this state of unmatched attractions has managed to lose a net 3.5 million domestic residents. Critically, it ranks toward the bottom among US states in drawing newcomers, who have always been the critical fuel for its economy. Many of those leaving, according to an analysis of IRS data, are middle-income families in their childbearing years; many are college graduates. Forget Harris’s youthful “vibe”: The state, according to data from the Census Bureau’s American Community Survey, is aging 50 percent more rapidly than the nation—gradually ditching the surfboard for the walker.

When Biden was elected in 2020, an overjoyed Los Angeles Times gushed that his goal was to turn America into California. This reflected the reality that the progressive power center lies not in New York, now only the fourth most populous state, or even in the wider Northeast, but in California. With all its problems, the Golden State has a far bigger economy and wields far greater technological influence.

California’s wealth nurtured the careers of both Gov. Gavin Newsom and Harris, who pulled key support from elite Golden State lawyers, tech oligarchs, progressive inheritors, Hollywood, and public-employee unions. Harris, as Dan Walters has noted, was anointed by the same San Francisco-based cabal forged by the onetime assemblyman and redistricting guru John Burton. It’s a tight-knit bunch that includes Pelosi, Newsom, and Willie Brown, among others. Many of these people are linked by personal ties, funding, and political alliance; Harris’s emergence also came courtesy of an affair with a key cabal figure, the much older, highly gifted Brown, a former California Assembly speaker and San Francisco mayor.

The cabal operates in large part with funds derived from Silicon Valley and Hollywood. Newsom, lavishly sponsored by the Getty Oil heirs, was largely seen as the cabal’s most likely political standard-bearer. But history, in the form of South Carolina’s James Clyburn and the acquiescent Biden, broke in Harris’s favor. In the current race, Harris, not surprisingly, is crushing Trump on the fundraising front.

Of course, Harris’s pitch includes a self-portrait as a middle-class kid with a blended ethnic heritage, Jamaican and Indian. But despite having a Marxian economist for a father, she is no class warrior or socialist, as the delusional right continues to insist. Instead, she reflects the worldview of California’s ultra-rich elites: executives at the Apples and the Googles and the big studio directors. It shouldn’t come as a surprise that Harris’s successful debate performance last month was coached by a top Google attorney, who is litigating antitrust business in front of her own administration.

Read the rest of this piece at Compact Mag.

Photo: via Gavin Newsom on X.

Chicago's Household And Income Growth Comes With A Good Deal Of Black Flight

Pete Saunders — Tue, 01 Oct 2024 20:28:08 -0400

Sometimes you try to put a positive gloss on a situation, but the underlying concerns that cause the need for such spin come back to bite you.

Earlier this week I wrote an upbeat piece on Chicago that discussed two meaningful changes that demonstrate real growth occurring in the Windy City. I noted that last year Chicago reached its highest number of occupied dwelling units at 1.18 million, surpassing its previous high of 1.16 million in 1960. Total occupied households had fallen to 1.03 million in 1990 before steadily increasing in numbers since. Chicago has continued to lose population despite the household growth, however, due to declining household size.

I also noted that Chicago’s new residents were bringing higher incomes to the city, particularly in comparison to its suburban and exurban areas. Between 2010 and 2020 Chicago’s total household income grew by 21 percent, nearly doubling its suburban household income growth (11 percent). Exurban areas saw a huge 154 percent increase in household income, but its far smaller size (only 12 percent of the households in the metro area, compared to 32 percent and 56 percent in the city and suburbs, respectively) means it has a diluted impact.

Anyway, I said all that to make the point that Chicago is transitioning to becoming an economically stronger city, despite its population loss. To me that’s a positive that rarely gets recognized. But I failed to mention the social and political implications of this transition, and two Corner Side Yard subscribers brought this up in the comments.

Subscriber Matt (@gypsy67) noted that the “ (Chicago Mayor) Brandon (Johnson) political coalition is a rearguard movement of those who feel they are losing from these changes, working class blacks in Chicago itself.”

Chicago is losing population principally for one reason – its Black population is fleeing. Since 2000, Chicago’s lost nearly a third of its Black residents, falling from 1.05 million in 2000 to just 729,000 in 2023.

Read the rest of this piece at The Corner Side Yard.

Photo: Ken Lund, via Flickr under CC 2.0 License

Austin Builds Apartments and Single-Family Houses, Prices Fall

Wendell Cox — Sun, 29 Sep 2024 20:28:58 -0400

Just a quick note on an encouraging article by James Rodriguez of Business Insider. Rodriguez reports a significant reduction in house prices in Austin, Texas, due to building a large number of single-family homes and apartments. I was unable to discern whether the article dealt with the Austin market (the metropolitan area) or the city (which is a housing submarket). Nor could I tell if his insightful comparison to San Francisco was the housing market (metro) or the city submarket. So, I checked the Census Bureau recent metro data on building permits for 2021 through August of 2024.

In total, there were around 160,000 building permits over the period in metro Austin, of which approximately 80,000 were single family (detached). Most of the other 80,000 were apartments. By comparison, metro San Francisco had about 36,000 building permits over the same period, of which 13,000 were single family houses, and the balance of 23,000 were largely apartments.

Rodriguez mused: “I'd already moved out of Texas by that point, but I worried from afar that my hometown would meet the same fate as San Francisco, the poster child of the housing shortage and all its associated woes. I feared that Austin would become known as a playground for the rich, a city where displacement and mind-boggling home prices marred the natural beauty that once made it such a draw. In my hand-wringing, though, I'd overlooked one crucial detail: Texas is better at building homes than almost anywhere else in the country.”

Bingo!

There are differences between Austin (and Texas) and San Francisco that, if not changed will continue to make it possible to build in Austin (and Texas) and nearly impossible in San Francisco (and California). Unincorporated county territory in Texas is unzoned. That means that, barring environmental difficulties, developers and builders can build. By contrast, in the San Francisco metro, and virtually all of California, draconian state and local regulations make it very difficult to build on greenfield sites, where land prices would be much lower if the market were permitted to operate.

The result is that in Austin, builders can pencil out single family developments, on which they can make commercial returns and house families and other households. It means, in California, and especially the four coastal major metros (Los Angeles, San Francisco, San Diego and San Jose), when the penciling out is done, the house is far too expensive for middle class buyers, and to make them affordable would make it impossible for a commercial return to be made. The difference in price, by the way, is principally in the cost of finished land (land with infrastructure for building), not construction costs.

It is no surprise that hundreds of thousands of people are moving away from California to more affordable areas, such as Texas, Florida, Arizona, Oklahoma and Alabama (yes, Oklahoma and Alabama) and manage to solve the housing crisis on their own.

Photo: “Arriving: suburbia. Departed: airport.” A former airfield in Austin, Texas is being redeveloped into a multi-use community with both single and multi-family housing. By Matthew Rutledge via Flickr under CC 2.0 License.

Immigration Has Benefits and Drawbacks

Joel Kotkin — Fri, 27 Sep 2024 20:28:58 -0400

Overall, immigration has both positive and negative effects, something rarely acknowledged by advocates on either side. An intelligent approach would try to minimize the negatives, for example by keeping out immigrants with ties to radical anti-Western groups or who lack employable skills, while looking to attract newcomers with the right skills, work ethic, and entrepreneurial gifts.

The most compelling argument for mass migration lies in demographic trends, particularly in high-income countries. Globally, total population growth in 2021 was the smallest in a half century. Sixty-one countries are expected to see population declines of at least 1 percent by 2050. The world’s population is due to peak sometime later this century. Populations are expected to halve by 2100 in more than 20 countries, including Spain, Portugal, and Japan. The decline in fertility rates is an almost universal phenomenon as countries become more economically developed. Fertility rates will remain above replacement in Sub-Saharan Africa at least in the near future, meaning that its population and its share of the global population will likely continue to grow.

Low fertility rates mean a shrinking workforce. In the U.S., workforce growth has slowed to about one-third the level of 1970 and seems destined to fall even further. This decline harms public finances by wrecking the assumptions under which old-age benefit programs were designed. It also accounts for a significant portion of the concomitant decline in average economic growth compared with earlier decades.

Innovators, Entrepreneurs — and Servants

John Maynard Keynes warned that “chaining up of the one devil [of overpopulation] may, if we are careless, only serve to loose another still fiercer and more intractable.” Historically, rising populations and the young workforce they imply drove economic growth and innovation, as was clearly the case during Europe’s early modern heyday as well as in the great economic expansion of the U.S. Similarly, East Asia in the first decades of this century benefited from an enormous “youth bulge” of younger workers at a time when overall fertility rates had begun to decline.

In countries of net immigration such as the U.S., immigrants are critical to labor-force growth. They account for roughly 18 percent of the U.S. workforce, up from 15 percent in 2006. Newcomers and their offspring are more likely to be entrepreneurial risk-takers. Latinos, for example, now account for upwards of 80 percent of all new business in the U.S., starting at a rate three times the national average. Similarly the Asian-American share of all U.S. business has more than doubled since 2000. Foreign-born workers, overwhelmingly from Asia, make up a remarkable three-quarters of all of Silicon Valley’s tech workforce.

Immigrants make up 20 percent or more of the workforce in industries such as construction, transportation, agriculture, and leisure and hospitality. The demand for labor in these fields seems likely to continue for now, although, it could be reduced through developments in artificial intelligence and robotics.

A Smarter Approach to Immigration

In the short run, at the very least, most Western and East Asian countries will need more workers to sustain growth. But this does not necessarily mean that more is always better. Countries, including the U.S., may need immigrants but only in ways congruent with the national economic interest and political stability. Control of the border, and a thought-through, properly enforced immigration policy, is a foundation for this.

Read the rest of this piece at National Review.

Photo: Historic immigration processing center at Ellis Island, NYC via Picryl, in Public Domain.