Phoenix

Major Metropolitan Commuting Trends: 2000-2010

Wendell Cox — Tue, 25 Oct 2011 01:38:33 -0400

As we indicated in the last article, solo automobile commuting reached an all time record in the United States in 2010, increasing by 7.8 million commuters. At the same time, huge losses were sustained by carpooling, while the largest gain was in working at home, which includes telecommuting. Transit and bicycling also added commuters. This continues many of the basic trends toward more personalized employment access that we have seen since 1960.

Solo Automobile Commuting: Among the nation’s 51 metropolitan areas with more than 1 million population, 38 experienced increases in solo automobile commuting between 2000 and 2010. More than 80% of commuting is by solo automobile in 25 of the 51 largest metropolitan areas, with the highest rates being in Birmingham, Detroit, Cincinnati, Indianapolis and Kansas City. Another 28 metropolitan areas have single automobile commute shares of between 70% and 80%, with Boston, Washington and San Francisco between 60% and 70%. As would be expected, the lowest solo automobile commute share was in New York at 51%.

Car Pools: The national data also showed a nearly 2.4 million loss in carpool use. The losses were pervasive, occurring in all 51 metropolitan areas. Riverside-San Bernardino had the highest carpool market share at just under 15%, while all other major metropolitan areas were below 12%. Car pools have been losing market share for decades.

Work at Home (Includes Telecommuting): In what we have previously labeled as The Decade of the Telecommute, the nation experienced a 1.7 million increase in working at home over the past decade. The market share gains in working at home were as pervasive as the losses in carpooling, with all 51 metropolitan areas registering increases. Austin had the strongest work-at-home market share, at 7.3%, followed by Portland at 6.5%, San Francisco and Denver at 6.2%, Phoenix at 6.0%, with San Diego, Raleigh and Atlanta above 5.5%. Overall, working at home exceeded transit commuting in 37 major metropolitan areas out of 51 in 2010, up from 27 in 2000. Three metropolitan areas had work at home market shares of less than 3%, including Memphis, New Orleans and last place Buffalo.

Transit: As noted before, transit enjoyed its first 10 year gain since journey to work data was first collected by the Census Bureau 50 years ago. Overall, transit added 900,000 daily commuters, roughly half that for telecommuters. Transit's market share increased in 25 of the top 51 metropolitan areas. It is also notable that in a number of the metropolitan areas with the largest expenditures for new rail systems, there were either losses or commuting gains were concentrated in the more flexible bus services.

New York: As so often has been the case, transit was largely a "New York story." More than one half of the new transit commuters were in the New York metropolitan area, more than 450,000 of the 900,000 increase. New York boasts by far the most extensive transit system in the nation, which serves the second largest central business district in the world and by far the nation’s most important. In 2000, New York had a transit work trip market share of 27.4%. By 2010, New York's transit work trip market share had risen to 30.7%, more than double that of any other metropolitan area. More than 70% of the new transit commuters in the New York area were on its subway (Metro), suburban rail and light rail systems.

San Francisco: San Francisco retained its position as the second strongest transit metropolitan area, with a 14.6% work trip market share in 2010. This is up from 13.8% in 2000.

Washington: Washington was the third strongest transit commuting market, with a 14.0% work trip market share in 2010. This modest increase from 13.4% nonetheless produced the second largest ridership increase in the nation, at more than 130,000. This reflects the strength of Washington's job market over the decade. Rail ridership accounted for 53% of this increase, while buses accounted for the other 47%.

Boston and Chicago: Boston passed Chicago to become the fourth strongest transit market, at 11.8% in 2010. This is an increase from 11.2% in 2000. Chicago ranked fifth at 11.2%, a small reduction from the 11.3% in 2000.

Los Angeles: Los Angeles had the third largest increase in transit commuting, adding 60,000 daily transit commuters. Approximately 75% of these new commuters were attracted by the region's extensive bus system as opposed to its very expensive but limited rail system. This increase placed Los Angeles in a virtual tie with Portland, with a work trip market share of 6.2%.

Portland: Portland continued to experience its now 30 year transit market share erosion, despite having added three new light rail lines between 2000 and 2010. Portland's transit work trip market share fell to 6.2% from 6.3% and now trails the work at home and telecommute market share of 6.5%.

Seattle:Seattle added 29,000 new transit commuters for the fourth strongest growth in the nation. Approximately 75% of the new commuters were on the metropolitan area's bus system.

Atlanta: Atlanta, which is home to the third largest postwar Metro system in the nation (MARTA) gained nearly 9000 new transit commuters, all of them on the bus, while losing more than 3000 rail commuters.

Miami:Miami added 16,000 new transit commuters, though more than 90% were attracted to the bus system, rather than the rail services.

Rail and Bus in Texas: Other metropolitan areas with new and expanded rail systems did not fare as well. In Dallas-Fort Worth, the light rail system was more than doubled in length, yet there was a reduction of more than 3000 daily transit commuters. The transit work trip market share in Dallas-Fort Worth dropped from 1.8% to 1.4%, approximately one quarter lower than that of any other major metropolitan area with a new light rail or Metro system. Houston, which built its first light rail line during the period, lost nearly 3000 daily transit commuters, with its transit work trip market share dropping by nearly one-third, from 3.2% to 2.3%. By contrast, the third largest metropolitan area in Texas, San Antonio, lost no commuters from its bus only transit system.

Other New Rail Metropolitan Areas: Other metropolitan areas with new rail systems experienced modest ridership increases, with 60 to 70 percent of the increase on the bus systems in Charlotte, Minneapolis-St. Paul and Phoenix. Salt Lake City experienced a small decline in transit commuting.

Below 1 Percent: Four metropolitan areas had transit work trip market shares of less than 1%, including Indianapolis, Raleigh, Birmingham and last place Oklahoma City, with a market share of 0.4%.

Bicycles: It was also a good decade for bicycle commuting, with the national increase of nearly 250,000. The bicycle commuting market share rose in 45 of the 51 largest metropolitan areas. Portland had the highest bicycle market share at 2.2%, with three other metropolitan areas at 1.5% or above, Sacramento, San Francisco and San Jose. The lowest bicycle commuting market shares were in San Antonio, Cincinnati, Birmingham and Memphis, all at 0.1 percent.

Walking: There was little change in walking among the nations major metropolitan areas. The largest shares were in New York (5.9%) and Boston (5.4%), with the smallest shares in Raleigh (1.1%), Orlando (1.1%) and Birmingham (1.0%).

Drifting Away from Shared Commuting: In some ways, the 2000s were different than previous decades, especially with the reversals in bicycle commuting and transit. However, overall, shared ride commuting (transit and car pools) lost share due to the precipitous decline in car pooling. Longer term share increase trends also continued in single-occupant automobile commuting and working at home. The bottom line: personal employment access (personal mobility plus working at home) continues to carve away at the smallish share still held by shared commuting.

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Data: The 2000 and 2010 commuting market shares by mode are shown in Tables 1 and 2 (2010 metropolitan area boundaries).

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Table 1
Work Trip Market Share: 2000
Metropolitan Areas Over 1,000,000 Population in 2010

Metropolitan Area	Car, Truck or Van: Alone	Car/Van Pool	Transit	Bicycle	Walk	Other	Work at Home (Includes Telecommute)

Atlanta	77.0%	13.7%	3.4%	0.1%	1.3%	1.1%	3.5%
Austin	76.5%	13.7%	2.5%	0.6%	2.1%	1.1%	3.6%
Baltimore	75.5%	11.5%	5.9%	0.2%	2.9%	0.9%	3.2%
Birmingham	83.3%	12.0%	0.7%	0.1%	1.2%	0.7%	2.1%
Boston	71.1%	8.6%	11.2%	0.5%	4.6%	0.8%	3.3%
Buffalo	81.7%	9.4%	3.3%	0.2%	2.7%	0.5%	2.1%
Charlotte	80.7%	12.8%	1.4%	0.1%	1.2%	0.8%	2.9%
Chicago	70.4%	11.0%	11.3%	0.3%	3.1%	1.0%	2.9%
Cincinnati	81.3%	10.1%	2.8%	0.1%	2.3%	0.6%	2.7%
Cleveland	81.3%	8.8%	4.1%	0.2%	2.2%	0.6%	2.7%
Columbus	82.1%	9.7%	2.1%	0.2%	2.3%	0.6%	3.0%
Dallas-Fort Worth	78.7%	13.9%	1.8%	0.1%	1.5%	1.0%	3.0%
Denver	76.0%	11.7%	4.4%	0.4%	2.1%	0.8%	4.6%
Detroit	84.7%	9.2%	1.7%	0.1%	1.4%	0.6%	2.2%
Hartford	82.6%	8.7%	2.8%	0.2%	2.5%	0.6%	2.6%
Houston	77.0%	14.3%	3.2%	0.3%	1.6%	1.1%	2.5%
Indianapolis	82.8%	10.4%	1.3%	0.2%	1.7%	0.7%	3.0%
Jacksonville	80.3%	12.6%	1.3%	0.5%	1.7%	1.4%	2.3%
Kansas City	82.6%	10.6%	1.2%	0.1%	1.4%	0.7%	3.5%
Las Vegas	74.6%	14.7%	4.4%	0.5%	2.3%	1.3%	2.3%
Los Angeles	71.9%	14.6%	5.6%	0.7%	2.7%	1.0%	3.5%
Louisville	81.8%	11.2%	2.0%	0.2%	1.7%	0.7%	2.5%
Memphis	80.7%	13.3%	1.6%	0.1%	1.3%	0.9%	2.2%
Miami-West Palm Beach	77.3%	13.1%	3.2%	0.5%	1.7%	1.2%	3.1%
Milwaukee	79.7%	9.9%	4.2%	0.2%	2.9%	0.6%	2.6%
Minneapolis-St. Paul	78.3%	10.0%	4.4%	0.4%	2.4%	0.6%	3.8%
Nashville	80.5%	13.1%	0.8%	0.1%	1.5%	0.8%	3.2%
New Orleans	72.9%	14.6%	5.4%	0.6%	2.7%	1.3%	2.4%
New York	52.7%	9.3%	27.4%	0.3%	6.0%	1.5%	2.9%
Oklahoma City	81.6%	12.1%	0.5%	0.2%	1.7%	1.0%	2.9%
Orlando	80.6%	12.1%	1.6%	0.4%	1.3%	1.1%	2.9%
Philadelphia	73.1%	10.2%	8.9%	0.3%	3.9%	0.7%	2.9%
Phoenix	74.6%	15.3%	1.9%	0.9%	2.1%	1.4%	3.7%
Pittsburgh	77.5%	9.8%	5.9%	0.1%	3.6%	0.6%	2.5%
Portland	73.1%	11.5%	6.3%	0.8%	2.9%	0.8%	4.6%
Providence	80.7%	10.5%	2.4%	0.2%	3.3%	0.8%	2.2%
Raleigh	80.8%	12.1%	0.9%	0.2%	1.6%	1.0%	3.5%
Richmond	81.7%	10.9%	1.9%	0.2%	1.8%	0.8%	2.7%
Riverside-San Bernardino	73.5%	17.6%	1.6%	0.5%	2.2%	1.2%	3.5%
Rochester	81.7%	9.1%	2.0%	0.2%	3.5%	0.6%	2.9%
Sacramento	75.3%	13.5%	2.7%	1.4%	2.2%	0.9%	4.0%
Salt Lake City	76.0%	13.4%	3.3%	0.5%	2.1%	0.7%	4.0%
San Antonio	76.2%	14.9%	2.7%	0.1%	2.4%	1.2%	2.6%
San Diego	73.9%	13.0%	3.3%	0.6%	3.4%	1.4%	4.4%
San Francisco-Oakland	62.8%	12.7%	13.8%	1.1%	3.9%	1.3%	4.3%
San Jose	77.2%	12.4%	3.4%	1.2%	1.8%	0.9%	3.1%
Seattle	71.6%	12.7%	7.0%	0.6%	3.1%	0.8%	4.2%
St. Louis	82.5%	10.0%	2.2%	0.1%	1.7%	0.6%	2.9%
Tampa-St. Petersburg	79.7%	12.4%	1.3%	0.6%	1.7%	1.2%	3.1%
Virginia Beach-Norfolk	78.8%	12.1%	1.7%	0.3%	2.7%	1.6%	2.7%
Washington	67.5%	13.4%	11.2%	0.3%	3.0%	0.9%	3.7%
Top 51 Metropolitan Areas	73.2%	11.8%	7.5%	0.4%	2.9%	1.0%	3.2%

Calculated from Census Bureau data
Metropolitan areas as defined in 2010

Table 2
Work Trip Market Share: 2010
Metropolitan Areas Over 1,000,000 Population in 2010

	Car, Truck or Van: Alone	Car/Van Pool	Transit	Bicycle	Walk	Other	Work at Home (Includes Telecommute)

Atlanta	77.6%	10.3%	3.4%	0.2%	1.3%	1.5%	5.8%
Austin	75.6%	10.5%	2.3%	0.6%	1.9%	1.8%	7.3%
Baltimore	76.5%	9.6%	6.0%	0.2%	2.6%	1.0%	4.1%
Birmingham	84.8%	10.0%	0.6%	0.1%	1.0%	0.5%	3.1%
Boston	69.5%	7.5%	11.8%	0.7%	5.4%	0.8%	4.4%
Buffalo	82.0%	7.5%	3.8%	0.3%	3.0%	1.1%	2.3%
Charlotte	80.6%	10.0%	2.0%	0.2%	1.5%	0.6%	5.1%
Chicago	71.0%	8.5%	11.2%	0.6%	3.1%	1.0%	4.5%
Cincinnati	84.1%	7.9%	2.1%	0.1%	2.0%	0.4%	3.4%
Cleveland	82.3%	7.2%	3.6%	0.3%	2.2%	0.7%	3.7%
Columbus	82.4%	8.0%	1.7%	0.5%	2.3%	0.6%	4.6%
Dallas-Fort Worth	81.3%	10.1%	1.4%	0.2%	1.2%	1.4%	4.6%
Denver	76.3%	9.6%	4.1%	0.8%	1.9%	1.1%	6.2%
Detroit	84.6%	8.5%	1.5%	0.2%	1.4%	0.8%	3.0%
Hartford	81.5%	7.9%	3.1%	0.3%	3.0%	1.0%	3.2%
Houston	79.4%	11.5%	2.3%	0.3%	1.4%	1.7%	3.4%
Indianapolis	83.9%	8.2%	0.9%	0.3%	1.5%	0.8%	4.3%
Jacksonville	82.5%	8.9%	1.0%	0.5%	1.4%	1.2%	4.5%
Kansas City	83.7%	8.5%	1.2%	0.2%	1.4%	0.9%	4.1%
Las Vegas	78.9%	10.5%	3.8%	0.6%	1.6%	1.3%	3.3%
Los Angeles	73.5%	10.7%	6.2%	0.9%	2.6%	1.2%	5.0%
Louisville	83.5%	9.2%	1.9%	0.2%	1.3%	0.9%	3.1%
Memphis	83.6%	10.3%	1.0%	0.1%	1.5%	0.9%	2.7%
Miami-West Palm Beach	78.8%	9.4%	3.5%	0.6%	2.0%	1.4%	4.4%
Milwaukee	80.1%	9.3%	3.4%	0.5%	2.6%	0.7%	3.4%
Minneapolis-St. Paul	78.3%	7.9%	4.8%	0.7%	2.4%	0.9%	4.9%
Nashville	81.3%	10.7%	1.0%	0.2%	1.2%	1.0%	4.6%
New Orleans	78.1%	11.0%	3.2%	0.7%	2.6%	1.9%	2.5%
New York	50.5%	6.8%	30.7%	0.5%	5.9%	1.6%	3.9%
Oklahoma City	82.7%	10.6%	0.5%	0.3%	1.6%	1.0%	3.4%
Orlando	82.1%	9.2%	1.6%	0.3%	1.1%	1.4%	4.4%
Philadelphia	73.9%	8.0%	9.6%	0.5%	3.5%	0.8%	3.8%
Phoenix	76.7%	11.8%	2.0%	0.6%	1.5%	1.5%	6.0%
Pittsburgh	77.0%	8.9%	5.6%	0.3%	3.7%	0.9%	3.5%
Portland	72.1%	8.8%	6.2%	2.2%	3.3%	0.9%	6.5%
Providence	81.3%	8.3%	2.6%	0.5%	3.2%	0.9%	3.2%
Raleigh	82.0%	8.7%	0.9%	0.3%	1.1%	1.1%	5.9%
Richmond	81.2%	10.1%	1.8%	0.4%	1.2%	0.7%	4.6%
Riverside-San Bernardino	76.1%	14.8%	1.7%	0.4%	1.8%	1.4%	3.8%
Rochester	82.6%	7.1%	1.8%	0.4%	3.9%	0.7%	3.6%
Sacramento	75.6%	11.2%	2.9%	1.7%	1.9%	1.1%	5.5%
Salt Lake City	77.7%	11.3%	2.9%	0.8%	2.3%	1.0%	4.0%
San Antonio	79.5%	11.5%	2.1%	0.1%	2.0%	1.4%	3.3%
San Diego	76.2%	10.1%	3.3%	0.8%	2.8%	1.0%	5.9%
San Francisco-Oakland	61.5%	10.6%	14.6%	1.7%	4.2%	1.2%	6.2%
San Jose	77.5%	10.3%	2.9%	1.6%	1.8%	0.9%	5.1%
Seattle	70.5%	10.2%	8.2%	1.1%	3.5%	1.0%	5.5%
St. Louis	83.0%	7.7%	2.6%	0.2%	1.9%	0.8%	3.7%
Tampa-St. Petersburg	80.3%	9.5%	1.6%	0.8%	1.4%	1.4%	5.0%
Virginia Beach-Norfolk	80.9%	9.4%	1.8%	0.5%	3.3%	0.9%	3.1%
Washington	65.6%	10.6%	14.0%	0.5%	3.5%	1.0%	4.9%
Top 51 Metropolitan Areas	73.7%	9.4%	7.9%	0.6%	2.8%	1.2%	4.4%

Calculated from Census Bureau data
Metropolitan areas as defined in 2010

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life”

Photo: Manhattan (New York), with the Woolworth Building in the distance (by author)

Biggest Boomer Towns

Joel Kotkin and Wendell Cox — Fri, 12 Aug 2011 11:53:37 -0400

The boomer generation, spawned (literally) in the aftermath of the Second World War, will continue to shape the American landscape well into the 21st Century. They may be getting older, but these folks are still maintaining their power. Those born in the first ten years of the boomer generation — between 1945 and 1955 — number 36 million, and they will continue to influence communities and real estate markets across the country, especially as they contemplate life after kids and retirement.

Much has been written about where “empty nesters” might move as their children move off on their own. One longstanding favorite is the notion that, having jettisoned their children, the boomers will also desert their suburban communities for the bright city lights.

Unfortunately for developers — some of whom have invested heavily in high-end housing for urbanizing “empty nesters” — the actual data do not support this thesis. Indeed, our analysis of migration by this cohort in the past 10 years shows a 10.3% decline among core city dwellers, a loss of some 1.3 million people over the past decade. For this analysis, Forbes, with the help of demographer Wendell Cox, looked at population numbers from the Census for boomers aged 45 to 54 in 2000 and compared them with the numbers for those ages 55 to 64 in 2010.

These population changes include reductions due principally to deaths. Census data do not include mortality information. This cohort lost 3.2% of its population over the 10 years. This would only marginally reduce the changes between 2000 and 2010, while the scale of differences between the metropolitan areas would be identical.

So where are these surviving boomers settling as they enter their likely extended golden years? The results may surprise urban boosters who have confidently expected them to flock downtown.

To be sure, a few of the highly affluent — the ones mentioned in the mainstream media — may purchase homes, or pied-à-terres, in places like Manhattan, Chicago’s Gold Coast or San Francisco. But these areas actually have suffered an exodus of boomers over the past decade. In our ranking of the 51 largest metros in the U.S., the urban cores of San Jose, San Francisco, Los Angeles and Chicago scored near the bottom, suffering double-digit percentage losses of boomers. According to the last Census, New York’s urban core, which the Daily News suggested is packed with aspiring seniors, lost 12% of boomers in their mid-50s to mid-60s — or about 274,000 people.

Over the past three years you could blame this loss on the economy, which has postponed retirements brought home many of the boomers’ young, largely unemployed or underemployed children back to the suburban homestead. Or you can credit it to more active lifestyles among boomers who appear to working later than ever. According to a Careerbuilder.com survey, over 60% of workers over 60 indicated they are postponing retirement.

Yet perhaps something more profound is at work here. An analysis of those who were 55 to 65 in 2000 and 65 to 75 in 2010 reveals an even stronger anti-urban bias, with an over 12% drop in city dwellers. Since these folks are far less likely to have kids at home and more properly retired, this cohort’s behavior suggests that aging boomers are if anything less likely to move to the cities in the next decade.

Indeed, if boomers do move, notes Sandi Rosenbloom, a noted expert on retirement trends and professor of Planning and Civil Engineering at the University of Arizona, they tend to move to less dense and more affordable regions. The top cities for aging boomers largely parallel those that appealed to the “young and restless” in our earlier survey. The top ten on our list are all affordable, generally low-density Sun Belt metros:

Las Vegas, Nev.
Phoenix, Ariz.
Tampa-St. Petersburg, Fla.
Orlando, Fla.
Riverside-San Bernardino, Calif.
Raleigh, N.C.
Austin, Texas
San Antonio, Texas
Jacksonville, Fla.
Charlotte, N.C.-S.C.

But according Sandi Rosenbloom, a noted expert on retirement trends and a professor of planning and civil engineering at the University of Arizona, most boomers are staying put, largely in the suburbs they settled in decades ago. The propensity to move, she points out, starts to drop precipitously as people leave their early 30s. Roughly 1 in 3 people in their 20s move in a given year; by the time they enter their 40s, that figure slides to about 1 in 10. As people age into their 50s and beyond, the percentage drops to roughly 5%, or 1 in 20.

“The boomers are staying put more than anyone thought,” Rosenbloom says. “People of that generation tend to own their own homes and stay there. The idea that they are moving to the city really comes from the wishful thinking school of planning.”

The recession has exacerbated this stay-at-home trend. The number of people moving is at its lowest level since the early 1960s. When boomers do decide to move, Rosenbloom notes, they do so largely for prosaic reasons, such as being closer to children or, more important, grandchildren.

Others succumb to the temptation to cash out expensive housing in metros like New York, Los Angeles, the Bay Area or Boston for less costly residences in Sun Belt locales. Housing in and around these core cities, particularly in attractive neighborhoods, Rosenbloom adds, are simply too expensive for the vast majority of budget-conscious seniors.

Much of this also has to do with the lifestyle preferences of both boomers and seniors, which appear far different than those put forth by urban pundits. People over 55 that Rosenbloom has interviewed usually express a preference to stay or relocate in places that are less crowded and congested. Furthermore, most are reluctant to give up their cars, and many are less able to walk than drive. This may explain why most retirement communities end up on the urban fringe or farther.

This trend — which Rosenbloom has also encountered in the U.K., Australia, Canada and New Zealand — is also reflected by the growing shift to smaller towns and cities among both aging boomers and seniors. The “young and restless” may head to suburbs, particularly in the lower-cost Sun Belt cities, but some older Americans appear headed to even less densely populated regions. Over the past decade over 1 million aging boomers and seniors moved to more smaller cities and rural locations from suburban or urban locations.

What do these trends suggest for the future of our communities and real estate? For one, the big opportunities for selling to aging boomers will remain primarily in the suburbs and some select more rural locations. We also can expect the new senior citizens to move to more affordable places close to their children.

These findings do provide some long-term hope for the housing market, particularly in suburbs. Leading demographers have been busy predicting a massive drop-off in single-family homes as boomers retire and their children leave. Yet our analysis on the Census reveals that most boomers — as well as those older than them — are staying in the suburbs a lot longer than expected. Many will likely to stay in their homes and old neighborhoods well into their 70s or even 80s, leaving either their home either in an ambulance or to an assisted living facility.

Developers and planners anxious to service aging boomers should, instead of building downtown towers, address the needs of this generation precisely where they now live and are likely to stay. This could include adding to new residential options in the suburbs to enlivening local shopping districts while boosting senior services in everything from recreation and public safety to health care. As the rock and roll generation heads toward its dotage, both business and communities need to adjust their strategies based not on fantasies but on the realities so clearly evidenced by the Census.

This piece originally appeared at Forbes.com.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

The Next Boom Towns In The U.S.

Joel Kotkin — Wed, 06 Jul 2011 15:20:24 -0400

What cities are best positioned to grow and prosper in the coming decade?

To determine the next boom towns in the U.S., with the help of Mark Schill at the Praxis Strategy Group, we took the 52 largest metro areas in the country (those with populations exceeding 1 million) and ranked them based on various data indicating past, present and future vitality.

We started with job growth, not only looking at performance over the past decade but also focusing on growth in the past two years, to account for the possible long-term effects of the Great Recession. That accounted for roughly one-third of the score. The other two-thirds were made up of a a broad range of demographic factors, all weighted equally. These included rates of family formation (percentage growth in children 5-17), growth in educated migration, population growth and, finally, a broad measurement of attractiveness to immigrants — as places to settle, make money and start businesses.

We focused on these demographic factors because college-educated migrants (who also tend to be under 30), new families and immigrants will be critical in shaping the future. Areas that are rapidly losing young families and low rates of migration among educated migrants are the American equivalents of rapidly aging countries like Japan; those with more sprightly demographics are akin to up and coming countries such as Vietnam.

Many of our top performers are not surprising. No. 1 Austin, Texas, and No. 2 Raleigh, N.C., have it all demographically: high rates of immigration and migration of educated workers and healthy increases in population and number of children. They are also economic superstars, with job-creation records among the best in the nation.

Perhaps less expected is the No. 3 ranking for Nashville, Tenn. The country music capital, with its low housing prices and pro-business environment, has experienced rapid growth in educated migrants, where it ranks an impressive fourth in terms of percentage growth. New ethnic groups, such as Latinos and Asians, have doubled in size over the past decade.

Two advantages Nashville and other rising Southern cities like No. 8 Charlotte, N.C., possess are a mild climate and smaller scale. Even with population growth, they do not suffer the persistent transportation bottlenecks that strangle the older growth hubs. At the same time, these cities are building the infrastructure — roads, cultural institutions and airports — critical to future growth. Charlotte’s bustling airport may never be as big as Atlanta’s Hartsfield, but it serves both major national and international routes.

Of course, Texas metropolitan areas feature prominently on our list of future boom towns, including No. 4 San Antonio, No. 5 Houston and No. 7 Dallas, which over the past years boasted the biggest jump in new jobs, over 83,000. Aided by relatively low housing prices and buoyant economies, these Lone Star cities have become major hubs for jobs and families.

And there’s more growth to come. With its strategically located airport, Dallas is emerging as the ideal place for corporate relocations. And Houston, with its burgeoning port and dominance of the world energy business, seems destined to become ever more influential in the coming decade. Both cities have emerged as major immigrant hubs, attracting on newcomers at a rate far higher than old immigrant hubs like Chicago, Boston and Seattle.

The three other regions in our top 10 represent radically different kinds of places. The Washington, D.C., area (No. 6) sprawls from the District of Columbia through parts of Virginia, Maryland and West Virginia. Its great competitive advantage lies in proximity to the federal government, which has helped it enjoy an almost shockingly ”good recession,” with continuing job growth, including in high-wage science- and technology-related fields, and an improving real estate market.

Our other two top ten, No. 9 Phoenix, Ariz., and No. 10 Orlando, Fla., have not done well in the recession, but both still have more jobs now than in 2000. Their demographics remain surprisingly robust. Despite some anti-immigrant agitation by local politicians, immigrants still seem to be flocking to both of these states. Known better s as retirement havens, their ranks of children and families have surged over the past decade. Warm weather, pro-business environments and, most critically, a large supply of affordable housing should allow these regions to grow, if not in the overheated fashion of the past, at rates both steadier and more sustainable.

Sadly, several of the nation’s premier economic regions sit toward the bottom of the list, notably former boom town Los Angeles (No. 47). Los Angeles’ once huge and vibrant industrial sector has shrunk rapidly, in large part the consequence of ever-tightening regulatory burdens. Its once magnetic appeal to educated migrants faded and families are fleeing from persistently high housing prices, poor educational choices and weak employment opportunities. Los Angeles lost over 180,000 children 5 to 17, the largest such drop in the nation.

Many of L.A.’s traditional rivals — such as Chicago (with which is tied at No. 47), New York City (No. 35) and San Francisco (No. 42) — also did poorly on our prospective list. To be sure, they will continue to reap the benefits of existing resources — financial institutions, universities and the presence of leading companies — but their future prospects will be limited by their generally sluggish job creation and aging demographics.

Of course, even the most exhaustive research cannot fully predict the future. A significant downsizing of the federal government, for example, would slow the D.C. region’s growth. A big fall in energy prices, or tough restrictions of carbon emissions, could hit the Texas cities, particularly Houston, hard. If housing prices stabilize in the Northeast or West Coast, less people will flock to places like Phoenix, Orlando or even Indianapolis (No.11) , Salt Lake City (No. 12) and Columbus (No. 13). One or more of our now lower ranked locales, like Los Angeles, San Francisco and New York, might also decide to reform in order to become more attractive to small businesses and middle class families.

What is clear is that well-established patterns of job creation and vital demographics will drive future regional growth, not only in the next year, but over the coming decade. People create economies and they tend to vote with their feet when they choose to locate their families as well as their businesses. This will prove more decisive in shaping future growth than the hip imagery and big city-oriented PR flackery that dominate media coverage of America’s changing regions.

Cities of the Future Rankings
Rank	Metropolitan Area
1	Austin, TX
2	Raleigh, NC
3	Nashville, TN
4	San Antonio, TX
5	Houston, TX
6	Washington, DC-VA-MD-WV
7	Dallas-Fort Worth, TX
8	Charlotte, NC-SC
8	Phoenix, AZ
10	Orlando, FL
11	Indianapolis, IN
12	Salt Lake City, UT
13	Columbus, OH
14	Jacksonville, FL
15	Atlanta, GA
16	Las Vegas, NV
16	Riverside, CA
18	Portland, OR-WA
19	Denver, CO
20	Oklahoma City, OK
21	Baltimore, MD
22	Louisville, KY-IN
22	Richmond, VA
24	Seattle, WA
25	Kansas City, MO-KS
26	San Diego, CA
27	Miami, FL
28	Tampa, FL
29	Sacramento, CA
30	Birmingham, AL
31	New Orleans, LA
32	Philadelphia, PA-NJ-DE-MD
33	Minneapolis, MN-WI
34	St. Louis, MO-IL
35	Cincinnati, OH-KY-IN
35	New York, NY-NJ-PA
37	Boston, MA-NH
38	Memphis, TN-MS-AR
39	Pittsburgh, PA
40	Virginia Beach, VA-NC
41	Rochester, NY
42	Buffalo, NY
42	San Francisco, CA
44	Hartford, CT
45	Milwaukee, WI
45	San Jose, CA
47	Chicago, IL-IN-WI
47	Los Angeles, CA
49	Providence, RI-MA
50	Detroit, MI
51	Cleveland, OH

This piece originally appeared at Forbes.com.

Photo by Exothermic Photography

Rethinking Urban Dynamics: Lessons from the Census

Aaron M. Renn — Thu, 28 Apr 2011 05:39:30 -0400

Much has been made of the vaunted “back to the city” movement by “the young and restless,” young professionals, the creative class, empty nesters and others were voting with their feet in favor of cities over suburbs. Although there were bright spots, the Census 2010 results show that the trend was very overblown, affecting mostly downtown and near downtown areas, while outlying ones bled population. One culprit for this discrepancy seems to be that the intra-census estimates supplied by the Census Bureau were inflated – in some cases very inflated.

Looking at selected core cities for major US metropolitan areas, many of them were materially over-estimated:

One particularly egregious case relates to Atlanta. Its huge projected population increase in the 2000s led me to describe it as “one of America's top urban success stories.” The reality proved to be quite different. Rather than strong population growth in the city, the population growth turned out to be basically flat, quite a different story. Other declines might be more predictable, such as Detroit, or those who had previously challenged estimates like Cincinnati and St. Louis. Still, even urban cores in rapidly growing regions like Dallas and Houston were not immune from this trend.

There were some exceptions. Cities like Indianapolis, Columbus, and Oklahoma City came in slightly ahead of expectations, but the number of cities with misses and the sizes of the positive and negative misses tilted towards the down direction.

It seems clear now that the justification for much of the “back to the city” story reflected bad estimates. People can't be faulted for relying on the official government numbers – I did. But the reality of the 2010 Census, as demonstrated by Wendell Cox and others, is that the 1990s were actually better for urban population growth in America than the 2000s in many respects.

One legitimate bright spot for cities lay in the growth of downtown and near downtown areas. Though often starting from low bases, these areas often showed impressive increases. For example, St. Louis showed good growth downtown despite a very disappointing decline in total city population:

The poster child for this phenomenon was Chicago, where a fairly expansive area in the greater core showed large population growth. Areas that were formerly almost all commercial, such as the Loop, added significant residential population, while areas that were nearly derelict like the near South Side have blossomed into thriving upscale neighborhoods.

The problem, from places ranging from Chicago to Cleveland, is that the gains in the “core of the core” have been more than offset by losses elsewhere, especially the flight of blacks and other minorities – many of them immigrants – to the increasingly diverse suburbs.

Cities across America have invested enormous sums into downtown redevelopment and major projects in selected districts. The good news: these investments have shown some ability to move the needle in terms of attracting young professionals downtown. The bad news lies with the fact that these developments have been extremely costly, and have not transformed the overall demographic or economic climates of the cities that tried them. This demonstrates the limits of the policies. Those who aren't in the young professional, empty nester, or creative class demographic have rightly figured out that they are no longer the target market of city leadership. No surprise then that many of them have decided to vote with their feet.

Given the resulting overall negative swings, cities may want to revisit their strategy of putting all their chips in the downtown redevelopment basket in favor of less glamorous improvements in basic neighborhood safety, services, schools and other critical elements. A handful of elite enclaves and talent hubs may be able to thrive on a “favored demographic quarter” strategy, but for most places there just aren't enough young professionals and artists to go around.

Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile.

* Actual population minus projected population as of 4/1/2010 using a run rate projection based on the 2008-2009 estimated population growth.
** Base is the projected 4/1/2010 population above.

Photo by Ian Freimuth

Regional Exchange Rates: The Cost of Living in US Metropolitan Areas

Wendell Cox — Mon, 31 Jan 2011 00:36:24 -0500

International travelers and expatriates have long known that currency exchange rates are not reliable indicators of purchasing power. For example, a traveler to France or Germany will notice that the dollar equivalent in Euros cannot buy as much as at home. Conversely, the traveler to China will note that the dollar equivalent in Yuan will buy more.

Economists have attempted to solve this problem by developing "purchasing power parities," which are used to estimate currency conversion rates that equalize values based upon prices (Note 1). This helps establish the real value of money in a particular place.

When people move from one region of the United States to another they can encounter a similar phenomenon. For example, a dollar is not worth as much in San Jose as it is in St. Louis. Research by the US Department of Commerce Bureau of Economic Analysis (BEA), for example, found that in 2006 a dollar purchased roughly 35 cents less in San Jose than in St. Louis. BEA researchers estimated "regional price parities" for states and the District of Columbia and for all of the nation's metropolitan areas (Note 2). Regional price parities can be thought of as the equivalent of regional (state or metropolitan area) exchange rates. This research was covered in previous newgeography.com articles by Eamon Moynihan and this author.

This article uses Department of Labor, Bureau of Labor Statistics metropolitan area consumer price indexes to estimate the 2009 cost of living and per capita personal income adjusted for the cost of living.

Cost of Living: At the regional level (See Census Region Map, Figure 1), there are substantial differences in the cost of living (Figure 2). The lowest cost of living is in the Midwest, at 4.8 percent below the nation. The South has the second lowest cost of living at 3.9 percent above the national level. The West is the most expensive area, 13.5 percent above the national cost-of-living, while the Northeast’s cost-of-living stands 11.3 percent above the national rate.

The cost of living in the South may seem higher than expected. But if the higher cost metropolitan areas of Washington, Baltimore and Miami are excluded, the cost of living in the South falls to 1.5 percent below the national rate. If the California metropolitan areas are excluded from the West, the cost of living still remains 4.0 percent above the national rate.

Per Capita Income: The highest unadjusted per capita incomes are in the Northeast, followed by the West, the South and the Midwest. Yet when metropolitan area exchange rates are taken into consideration, the order changes significantly. The Northeast remains the most affluent, and the Midwest moves from last place to second place. The South is in third place, the same as its income rating, while the West falls from second place to fourth place (Figure 3).

Cost of Living: Variations in the cost of living, which is reflected by the metropolitan area exchange rates, remains similar in 2009 to the 2006 rankings.

The Top Ten: The lowest costs of living were in (Table 1):

1. St. Louis, where $0.891 purchased $1.00 in value at the national average.
2. Kansas City, where $0.903 purchased $1.00 in value at the national average.
3. Cleveland, where $0.921 purchased $1.00 in value at the national average.
4. Pittsburgh, where $0.941 purchased $1.00 in value at the national average.
5. Cincinnati, where $0.944 purchased $1.00 in value at the national average.

Rounding out the most affordable 10 are two metropolitan areas in the South (Atlanta and Dallas-Fort Worth), two in the Midwest (Detroit and Milwaukee) and one in the West (Denver). No Northeastern metropolitan area was ranked in the top 10.

Table 1
Estimated Cost of Living: 2009
Metropolitan Areas over 1,000,000 with Local CPIs
Rank	Metropolitan Area	Metropolitan Exchange Rate: to Purchase $1.00 at National Average	Compared to Lowest Cost of Living
1	St. Louis, MO-IL	$0.891	0%
2	Kansas City, MO-KS	$0.903	1%
3	Cleveland, OH	$0.921	3%
4	Pittsburgh. PA	$0.941	6%
5	Cincinnati, OH-KY-IN	$0.944	6%
6	Atlanta. GA	$0.958	8%
7	Detroit. MI	$0.959	8%
8	Milwaukee. WI	$0.959	8%
9	Dallas-Fort Worth, TX	$0.976	10%
10	Denver, CO	$0.996	12%
11	Minneapolis-St. Paul, MN-WI	$1.000	12%
12	Houston, TX	$1.000	12%
13	Tampa-St. Petersburg, FL	$1.006	13%
14	Phoenix, AZ	$1.011	14%
15	Portland, OR-WA	$1.034	16%
16	Chicago, IL-IN-WI	$1.041	17%
17	Philadelphia, PA-NJ-DE-MD	$1.054	18%
18	Baltimore, MD	$1.068	20%
19	Riverside-San Bernardino, CA	$1.078	21%
20	Miami-West Palm Beach, FL	$1.085	22%
21	Seattle, WA	$1.120	26%
22	San Diego, CA	$1.151	29%
23	Boston, MA	$1.175	32%
24	Washington, DC-VA-MD-WV	$1.181	33%
25	Los Angeles, CA	$1.222	37%
26	San Francisco-Oakland, CA	$1.258	41%
27	New York, NY-NJ-PA	$1.281	44%
28	San Jose, CA	$1.343	51%
Estimated from BEA 2006 data, adjusted by local Consumer Price Index for 2006-2009

The Bottom Ten: The most expensive metropolitan areas were:

28. San Jose, where $1.343 purchased $1.00 in value at the national average.
27. New York, where $1.281 purchased $1.00 in value at the national average.
26. San Francisco, where $1.268 purchased $1.00 in value at the national average.
25. Los Angeles, where $1.222 purchased $1.00 in value at the national average.
24. Washington, where $1.181 purchased $1.00 in value at the national average.

The bottom ten also included three metropolitan areas in the West (Riverside-San Bernardino, San Diego and Seattle), one in the Northeast (Boston) and one in the South (Miami). There were no Midwestern metropolitan areas in the bottom 10.

Per Capita Income: Per capita income in 2009 was then adjusted for the cost of living.

Top Ten:Washington has the highest per capita income, adjusted for the cost of living, at $47,800. San Francisco placed second at $47,500. Denver ranked third at $46,200, while the cost-of-living adjusted income in Minneapolis-St. Paul was $45,800 and $45,700 in Boston. The top 10 also included two Midwestern metropolitan areas (St. Louis and Kansas City), two from the Northeast (Baltimore and Pittsburgh) and one from the West (Seattle).

Bottom Ten: The least affluent metropolitan area was Riverside-San Bernardino, with a per capita income of $27,800. Phoenix was second least affluent at $33,900 while Los Angeles was third least affluent at $35,000. The fourth least affluent metropolitan area was Tampa-St. Petersburg at $36,600 and the fifth least affluent metropolitan area was Portland at $37,400. The bottom 10 also included two metropolitan areas from the South (Atlanta and Miami), two from the Midwest (Cincinnati and Detroit) and one from the West (San Diego).

The cost of living adjusted income data includes surprises. New York, commonly considered a particularly affluent metropolitan area, ranked 17th in cost-of-living adjusted income, and below such seemingly unlikely metropolitan areas as Pittsburgh, Kansas City, Cleveland, St. Louis and Milwaukee. These metropolitan areas also ranked above San Jose, which ranked first in unadjusted income in 2000, but now ranks 16th in cost of living adjusted income (Table 2).

Table 2
Personal Income Per Capita Adjusted for the Cost of Liviing
Metropolitan Areas over 1,000,000 with Local CPIs
Rank (Cost of Living Adjusted)	Rank (Unadjusted Income)	Metropolitan Area	Per Capita Income 2009: Adjusted for Cost of Living	Per Capita Income 2009: Unadjusted
1	2	Washington, DC-VA-MD-WV	$47,780	$56,442
2	1	San Francisco-Oakland, CA	$47,462	$59,696
3	8	Denver, CO	$46,172	$45,982
4	9	Minneapolis-St. Paul, MN-WI	$45,772	$45,750
5	4	Boston, MA	$45,707	$53,713
6	18	St. Louis, MO-IL	$45,288	$40,342
7	7	Baltimore, MD	$44,908	$47,962
8	15	Pittsburgh. PA	$44,848	$42,216
9	19	Kansas City, MO-KS	$43,862	$39,619
10	6	Seattle, WA	$43,730	$48,976
11	13	Houston, TX	$43,581	$43,568
12	16	Milwaukee. WI	$43,477	$41,696
13	11	Philadelphia, PA-NJ-DE-MD	$43,247	$45,565
14	21	Cleveland, OH	$42,734	$39,348
15	12	Chicago, IL-IN-WI	$41,990	$43,727
16	3	San Jose, CA	$41,255	$55,404
17	5	New York, NY-NJ-PA	$40,893	$52,375
18	20	Dallas-Fort Worth, TX	$40,494	$39,514
19	23	Cincinnati, OH-KY-IN	$40,437	$38,168
20	10	San Diego, CA	$39,647	$45,630
21	24	Detroit. MI	$39,147	$37,541
22	17	Miami-West Palm Beach, FL	$38,124	$41,352
23	26	Atlanta. GA	$38,081	$36,482
24	22	Portland, OR-WA	$37,446	$38,728
25	25	Tampa-St. Petersburg, FL	$36,561	$36,780
26	14	Los Angeles, CA	$35,045	$42,818
27	27	Phoenix, AZ	$33,897	$34,282
28	28	Riverside-San Bernardino, CA	$27,767	$29,930
Estimated from BEA 2009 income data and 2006 regional price parity data, adjusted by local Consumer Price Index for 2006-2009

Some expensive metropolitan areas such as Washington, San Francisco and Boston ranked at or near the top, but their cost-of-living adjusted incomes were considerably less than the unadjusted incomes. On average, it took $1.20 to purchase $1.00 of value at national rates in these three metropolitan areas. Washington's unadjusted per capita income was 40 percent ($16,100) higher than that of St. Louis, however when the cost of living is factored in, Washington's advantage drops to 6 percent ($2,500).

Caveats: The analysis above does not consider cost-of-living differentials within metropolitan areas. For example, data from the ACCRA cost of living index indicates generally higher prices in the cores of the largest metropolitan areas, such as New York (especially Manhattan), Chicago and San Francisco. Further, these data make no adjustment for relative levels of taxation. A cost of living analysis using disposable income would produce different results, dropping higher taxed metropolitan areas to lower rankings and raising lower taxed metropolitan areas higher.

Cost of Living Differences: Will They Continue? The spread in cost-of-living between metropolitan areas have been driven wider over the last decade by the relative escalation of house prices in some metropolitan areas in the West, Florida and the Northeast. Whether these shifts in cost of living will be reflected in migration patterns will be one of the things to look for in the new Census.

---------

Note 1: Purchasing power parity data is published by the World Bank, the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD).

Note 2: The BEA research applied regional price parity factors only to employee compensation and excluded other income. It is possible that, had the analysis been expanded to these other forms of income, the differences in cost of living would have been greater.

Photo: Rosslyn, VA business district, Washington (by author)

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life”

Time to Hate Those HOAs (again).

Andrew Kirby — Sat, 11 Sep 2010 00:54:32 -0400

The foreclosure crisis has been devastating for millions of Americans, but it has also impacted many still working as before and holding on to their homes. Even a couple of empty dwellings on a street can very quickly deteriorate and become a negative presence in the neighborhood, at the least driving down prices further, sometimes attracting crime. Untended pools can allow pests to breed. Many animals have been abandoned and shelters report overflowing traffic. The resulting impacts on local governments have been particularly visible, as property tax assessments have fallen and revenues have also gone south.

Less obvious is the impacts on home owner associations [HOAs], whose revenues have also taken a hit, albeit for rather different reasons. For the most part, HOA dues are not a function of the value of the home but rather the need to cover the costs of maintaining the common interests of the association: landscaping, security and so forth. These tend to be fixed, even if the values of the homes collapse, and may even rise if dwellings are empty and untended.

Many HOAs, especially in the newer metropolitan areas like Phoenix and Las Vegas where foreclosures have been most concentrated, have taken a beating because the number of households paying into the association has been depleted, quite badly in some instances. The problem seems, from press reports, to cover the economic spectrum. Low-income first-time buyers may stop paying their dues as an economy measure, while more affluent owners are more likely to have pulled cash from their home and are walking away from their debts. There are also thousands of empty homes that were purchased as investments at the height of the boom and may have never even been occupied.

The foreclosure debacle is now old news, but the HOA situation is receiving attention because association boards are now aggressively trying to recoup their debts, even from those who have walked away from their mortgages. The debt, they argue, is attached to the individual, not to the dwelling, and is being turned over to collection agencies. Now, this is hardly a novelty. Municipalities have been turning household utility debts over to third parties for years, often with some success, and without a murmur of protest. So why is it different if HOAs do it?

The answer is that HOAs are extremely unpopular with two vocal constituencies. The first is the academic community, and its hostility is part of the professional opprobrium that is heaped on gated communities, privatization and pretty much anything connected with suburban development. Interestingly, while the design aspects of gated communities have caught the attention of planners and urbanists, relatively few have focused on the dimension of governance. Those that have written on the topic have tended to be critical of private clubs that are seen to exist at the expense of the municipal collective. For what its worth, I don’t think I’ve ever known of an academic colleague who lived in an HOA, in contrast to the bulk of my students, who live in one or grew up there.

The second constituency is more rowdy. Academics just disdain HOAs, but this group is committed to exposing them as a vast conspiracy to subvert the American way of life. This may sound like another version of contemporary “Teamania” but it is has been around for at least the past decade, during which time I’ve been monitoring Internet posts and the like. To this group, any restriction on personal freedom — from the color of one’s drapes or exterior paintwork through the display of the national flag — is clearly anathema.

Early this year, my research on neighborliness in HOAs was covered in the local paper, and by the end of the day there were dozens of online posts. In response to the basic finding — that there is little fundamental difference between HOA and traditional neighborhoods — we received a torrent of angry responses. With a single exception, they all dismissed the findings out of hand, using an example of someone’s experience (rarely their own) to prove the point, at least to their satisfaction. One reader even tracked down my email address in order to demand an assurance that no public funds were used to promote this nonsense.

Like much in contemporary American politics, this leaves me confused. I don’t understand why an exclusive residential association, freely entered into, with explicit rules that are presented at the outset, offering services-for-cash, is un-American. After all, this is in contrast to a municipality that levies taxes for services from which one cannot opt out (if one has no children in the schools, for instance) and which may not be available to all (such as public transport), and which could easily be seen as a redistributive institution, an example of that socialism we keep hearing so much about.

For the record, I am happy to pay my property taxes for services I don’t receive — its just part of the social contract. Nor do I live in an HOA. But I can understand why our research indicates that most people who live in them do prefer them (and, for example, often move from one HOA to another). Rather than displaying the angst of those who seem to get nervous if anyone tries to step on their toes, these residents embrace belonging to a small polity in which they have a voice. And we should remember that rules, like fences, make good neighbors. As these neighborhoods become more diverse, traditional and non-traditional households alike can find reassurance in the behavioral conformity demanded of neighbors by an HOA.

This brings us back to the recent stories about management boards ‘hounding’ those who have not paid their dues. Similar accounts have shown up for years, and the thrust is always the same: punitive, out-of-control boards attack those already in financial distress. There is clearly a lot of the latter to go round, but it’s hard to see why HOAs are much different than any other organization that is looking at a handful of bad debts. Are the HOAs the victims here? Absolutely not. Many embraced the housing bubble, and permitted speculators to buy in, even though they had no intention of living in the properties. At the height of the madness, up to one third of all housing transactions in Phoenix were initiated by out-of-state buyers who drove up home prices precipitately, and eventually caused the median house price to double. This has since corrected. All CC&Rs (the rules of the HOA) that I have seen dictate however that the purchaser must live in the property and that rental units are not permissible. So, like all the other players, the HOA boards liked the price increases so much that they ignored their own rules and looked the other way, a lapse for which they are now paying the price.

Still, it would be a mistake compounding a mistake to climb on the anti-HOA bandwagon, now joined by the ACLU, which has recently joined the fray over a fight about a homeowner’s right to fly the Gadsden flag (motto: “Don’t step on me”). Libertarians should recognize that no-one has ever been forced to live in an association and that whipping up the wrath of state legislatures to control HOAs is a bad idea: it encourages even more government intervention, and it messes with the neighborhood, a form of governance that the vast majority rightly supports, even in HOAs.

Andrew Kirby has written about HOAs on several occasions, including the 2003 edited volume “Spaces of Hate”. He most recently wrote about ‘The Suburban Question’ on this site in February.

Photo by monkiemag

The Housing Bubble: The Economists Should Have Known

Wendell Cox — Wed, 25 Aug 2010 22:54:23 -0400

Paul Krugman got it right. But it should not have taken a Nobel Laureate to note that the emperor's nakedness with respect to the connection between the housing bubble and more restrictive land use regulation.

A just published piece by the Federal Reserve Bank of Boston, however, shows that much of the economics fraternity still does not "get it." In Reasonable People Did Disagree: Optimism and Pessimism About the U.S. Housing Market Before the Crash, Kristopher S. Gerardi, Christopher L. Foote and Paul S. Willen conclude that it was reasonable for economists to have missed the bubble.

Misconstruing Las Vegas and Phoenix: They fault Krugman for making the bubble/land regulation connection by noting that the "places in the United States where the housing market most resembled a bubble were Phoenix and Las Vegas," noting that both urban areas have "an abundance of surrounding land on which to accommodate new construction" (Note 1).

An abundance of land is of little use when it cannot be built upon. This is illustrated by Portland, Oregon, which is surrounded by such an "abundance of land." Yet over a decade planning authorities have been content to preside over a 60 percent increase in house prices relative to incomes, while severely limiting the land that could have been used to maintain housing affordability. The impact is clearly illustrated by the 90 percent drop in unimproved land value that occurs virtually across the street at Portland's urban growth boundary.

Building is largely impossible on the "abundance of land" surrounding Las Vegas and Phoenix. Las Vegas and Phoenix have virtual urban growth boundaries, formed by encircling federal and state lands. These are fairly tight boundaries, especially in view of the huge growth these areas have experienced. There are programs to auction off some of this land to developers and the price escalation during the bubble in the two metropolitan areas shows how a scarcity of land from government ownership produces the same higher prices as an urban growth boundary

Like Paul Krugman, banker Doug French got it right. In a late 2002 article for the Nevada Policy Research Institute, French noted the huge increases auction prices, characterized the federal government as hording its land and suggested that median house prices could reach $280,000 by the end of the decade. Actually, they reached $320,000 well before that (and then collapsed).

In Las Vegas, house prices escalated approximately 85% relative to incomes between 2002 and 2006. Coincidentally, over the same period, federal government land auctions prices for urban fringe land rose from a modest $50,000 per acre in 2001-2, to $229,000 in 2003-4 and $284,000 at the peak of the housing bubble (2005-6). Similarly, Phoenix house prices rose nearly as much as Las Vegas, while the rate of increase per acre in Phoenix land auctions rose nearly as much as in Las Vegas.

In both cases, prices per acre rose at approximately the same annual rate as in Beijing, which some consider to have the world's largest housing bubble. According to Joseph Gyourko of Wharton, along with Jing Wu and Yongheng Deng Beijing prices rose 800 percent from 2003 to 2008 (Figure). This is true even thought we are not experiencing the epochal shift to big urban areas now going on in China.

The Issue is Land Supply: The escalation of new house prices during the bubble occurred virtually all in non-construction costs such as the costs of land and any additional regulatory costs. It is not sufficient to look at a large supply of new housing (as the Boston Fed researchers do) and conclude that regulation has not taken its toll. The principal damage done by more restrictive land regulation comes from limiting the supply of land, which drives its price up and thereby the price of houses. In some places where there was substantial building, restrictive land use regulations also skewed the market strongly in favor of sellers. This dampening of supply in the face of demand drove land prices up hugely, even before the speculators descended to drive the prices even higher. Florida and interior California metropolitan areas (such as Sacramento and Riverside-San Bernardino) are examples of this.

Missing Obvious Signs: There are at least two reasons why much of the economics profession missed the bubble.

(1) Unlike Paul Krugman, many economists failed to look below the national data. As Krugman showed, there were huge variations in house price trends between the nation's metropolitan areas. National averages mean little unless there is little variation. Yet most of the economists couldn't be bothered to look below the national averages.

(2) Most economists failed to note the huge structural imbalances that had occurred in the distorted housing markets relative to historic norms. Since World War II, the Median Multiple, the median house price divided by the median household income, has been 3.0 or less in most US metropolitan markets. Between 1950 and 2000, the Median Multiple reached as high as 6.1 in a single metropolitan area among today's 50 largest, in a single year (San Jose in 1990, see Note 2). In 2001, however, two metropolitan areas reached that level, a figure that rose to 9 in 2006 and 2007. The Median Multiple reached unprecedented and stratospheric levels in of 10 or more in Los Angeles, San Francisco, San Diego and San Jose- all of which have very restrictive land use and have had relatively little building. This historical anomaly should have been a very large red flag.

In contrast, the Median Multiple remained at or below 3.0 in a number of high growth markets, such as Atlanta, Dallas-Fort Worth and Houston and other markets throughout the bubble.. Even with strong housing growth, prices remained affordable where there was less restrictive land use regulation.

Seeing the Signs: Krugman, for his part, takes a well deserved victory lap in a New York Times blog entitled "Wrong to be Right," deferring to Yves Smith at nakedcapitalism.com who had this to say about the Federal Reserve Bank of Boston research:

It is truly astonishing to watch how determined the economics orthodoxy is to defend its inexcusable, economy-wrecking performance in the run up to the financial crisis. Most people who preside over disasters, say from a boating accident or the failure of a venture, spend considerable amounts of time in review of what happened and self-recrimination. Yet policy-making economists have not only seemed constitutionally unable to recognize that their programs resulted in widespread damage, but to add insult to injury, they insist that they really didn’t do anything wrong.

Maybe we should have known better: beware economists bearing the moment’s conventional wisdom.

------

Note 1: The authors cite work by Albert Saiz of Wharton to suggest an association between geographical constraints and house price increases in metropolitan areas. The Saiz constraint, however, looks at a potential development area 50 kilometers from the metropolitan center (7,850 square kilometers). This seems to be a far too large area to have a material price impact in most metropolitan areas. For example, in Portland, the strongly enforced urban growth boundary (which would have a similar theoretical impact on prices) was associated with virtually no increase in house prices until the developable land inside the boundary fell to less than 100 square kilometers (early 1990s). A far more remote geographical barrier, such as the foothills of Mount Hood, can have no meaningful impact in this environment.

Note 2: William Fischel of Dartmouth has shown how the implementation of land use controls in California metropolitan areas coincided with the rise of house prices beyond historic national levels. As late as 1970, house prices in California were little different than in the rest of the nation.

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life”

Photograph: $575,000 house in Los Angeles (2006), Photograph by author

The Declining Human Footprint

Wendell Cox — Fri, 11 Jun 2010 05:38:11 -0400

There are few more bankrupt arguments against suburbanization than the claim that it consumes too much agricultural land. The data is so compelling that even the United States Department of Agriculture says that "our Nation's ability to produce food and fiber is not threatened" by urbanization. There is no doubt that agricultural production takes up less of the country's land than it did before. But urban “sprawl” is not the primary cause. The real reason lies in the growing productivity of American farms.

Since 1950, an area the size of Texas plus Oklahoma (or an area almost as large as France plus Great Britain) has been taken out of agricultural production in the United States, not including any agricultural land taken by new urbanization (Note 1). That is enough land to house all of the world's urban population at the urban density level of the United Kingdom.

America's Spectacular Agricultural Productivity

Even with less land, agriculture's performance has been stunning. According to US Department of Agriculture data, US farm output rose 160% between 1950 and 2008. Productivity per acre rose 260%. In particular , California's farms – often cited as victims of sprawl – have done quite well. Between 1960 and 2004 (Note 2), the state's agricultural productivity rose 2.3% annually and 3.0% per acre. By comparison national agricultural productivity rose less over the same period at 1.7% overall and 2.2% per acre.

According to the United States Department of Agriculture, from 1990 to 2004 (latest data), California's agricultural production rose 32% and on less farm land.

Of course, there has been substantial reduction of farmland close to some metropolitan areas, but overall the impact of urbanization nationally has not been substantial. For example, since 1950:

The farmland reduction in largely rural downstate Illinois has been four times that of the vast former rural areas of metropolitan Chicago, which is home to the world's third most "sprawling" urban area, after New York and Tokyo (see photograph, above).
The farmland reduction in the Phoenix metropolitan area has been 6 times the expansion of urbanization.

In addition, the nation's agriculture is subsidized to the tune of more than $15 billion annually, which is strong evidence that more land is being farmed than is required. Subsidies increase the supply of virtually anything beyond its underlying demand. This can be illustrated by imagining how much less transit service there would be if it were not 80% subsidized. Suffice it to say, America is not threatened by "disappearing farmland."

America has less farmland because it has not needed as much as before to serve its customers. Thus, considerable farmland has been returned to a more natural state. Generally, this has got to be good for the environment. Land that is left to nature does not require fertilization, for example. The same interests that have frequently claimed that farmland has been disappearing also decry the loss of open space. In fact, the withdrawal of redundant farmland has produced considerable open space – call it open space sprawl.

Repeat it Often Enough....

None of this has kept "disappearing farmland" from being a rallying cry among those who would construct Berlin Walls around the nation's urban areas. Yet the extent to which Bonnie Erbe of Politics Daily and National Public Radio embraced the fiction was surprising. Her "Vanishing Farmland: How It's Destabilizing America's Food Supply," was accompanied by "meant to indict" photograph of farm equipment next to new suburban housing.

Ms. Erbe's principal source was a web page from the American Farmland Trust, which seeks to conserve farm land. In its California Agricultural Land Loss & Conservation: The Basic Facts, the American Farmland Trust argues for more "efficient" (i.e. denser) urbanization and claims that, "One-sixth..." (17%) "... of the land urbanized since the Gold Rush ... has been developed since 1990." That might be an impressive figure, if it were not that the state has added 7 million urban residents since 1990, which is one-fourth (25%) of all the urban population added since the Gold Rush and equal to the 1990 population of New York City.

It is worth noting that California has agricultural preservation measures already in place for farm owners and, finally, that no one can compel an unwilling farm owner to sell their land to a developer or anyone else (except perhaps a government agency through eminent domain).

In California, as elsewhere in the nation, urbanization has not been the principal cause of farm land reduction. According to the US Census of Agriculture, farmland declined in California from 2002 to 2007 by 2.2 million acres. That 5 year reduction in farmland is approximately equal to the expansion of all California urban areas over the 50 years between 1950 and 2000.

Most Development is Not Urban

In the same document, the American Farmland Trust indicates support for the radical urban land regulations. Policies such as in Sacramento's Blueprint that raise significantly inflate the price of land, make housing less affordable. The agricultural, property and urban planning interests who would ration land for people and their houses have missed a larger targets such as ultra-low density “ranchettes” favored by a small wealthy minority who live in the country, but are not farmers.
According to the US Department of Agriculture, rural, large lot residential development (non-agricultural) covered 40% more land than all of the nation's urbanization in 2000. These parcels represent "scattered single houses on large parcels, often 10 or more acres in size." Further, since 1980, the increase in this rural residential development has been one-third greater than the land area occupied by all of the urban areas in the nation with more than 1,000,000 population.

Finally, if there is a serious threat to agriculture, it is from over-zealous regulation that has put farmers at risk. Water reductions in the San Joaquin Valley – mostly the result of environmental demands – likely have taken more land out of production than any sprawl-happy developer.

Declining Human Footprint: An International Phenomenon

The human footprint, as measured by the total urban and agricultural land has been declining for decades, both in the nation and California, where the greatest growth has occurred (Figure 1 & 2). The same is also true of Europe (EU-15), Canada and Australia, where all of the urbanization since the beginning of time does not equal the agricultural land recently taken out of production. Even in Japan, the human footprint has been reduced. It may be surprising, but human habitation and food production has returned considerable amounts of land to a more natural state in recent decades, while America's urban areas were welcoming 99% of all growth since 1950.

Note 1: This assumption represents the worst case, since not all land on which new urbanization was developed had previously been farmed.

Note 2: State data is available only between 1960 and 2004.

Photograph: Metropolitan Chicago, 2007 (Grundy County)

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

Arizona's Short-Sighted Immigration Bill

Joel Kotkin — Tue, 04 May 2010 11:19:02 -0400

Arizona's recent passage of what is widely perceived as a harsh anti-immigrant bill reflects a growing tendency--in both political parties--to focus on the here and now, as opposed to the future. The effort to largely target Latino illegal aliens during a sharp recession may well gain votes among an angry, alienated majority population, but it could have unforeseen negative consequences over time.

In terms of the Arizona law, this is not simply a case of one wacko state. The most recent Gallup survey shows that more Americans favor the law than oppose it, with independents and Republicans showing strong support. Despite the negative coverage in the media, the Arizona gambit could somewhat pay off in November. A weak economy tends to exacerbate nativist sentiments, something that has been constant throughout much of American history.

But there is a distinct danger for the GOP here, not only in Arizona but in the rest of the country as well. As Bill Frey of the Brookings Institute points out, there is a growing gap between the electorate, which is still largely white and older, and the much younger, far more rapidly growing Latino population. In Arizona Frey says the "cultural generation gap" between the ethnicity of seniors and children is some 40%, meaning that while 83% of senior are white, only 43% of children are. Nationwide, Frey estimates the gap in the ethnic composition of seniors and youths stands at a still sizable 25 points.

Arizona's large disequilibrium in the ethnicity of its generations is a product, in part, of the state's historic pull to white retirees. Yet its formerly booming economy, based largely around construction and tourism, required a massive importation of largely Latino, low-wage labor, much of it illegal. As a result over the past two decades, Arizona's Latino population has grown by 180%, turning what had been a 72% Anglo state to one that is merely 58% white.

You don't have to go very far--in fact just across the California border--to see what awaits Arizona's nativist Republicans. The Grand Canyon state's future has already emerged there. In the 1970s and 1980s California's generally robust economy made it a primary destination for immigrants from both Asia and Latin America. Comfortable in their Anglo-ness, papers like the Arizona Republic were dismissing California as a "third world state," particularly in the wake of the 1992 LA riots.

Like their Arizona counterparts today, many white Californians then were sickened by pictures of mass Latino participation in looting during the riots. Many were also concerned with soaring costs of providing social services to a largely poor immigrant population. Sensing an opportunity, in 1994 Gov. Pete Wilson--locked in tough re-election battle amid a deep recession--endorsed Proposition 187, a measure designed to prevent illegal aliens from accessing public services. The measure passed easily, with support from both whites and African-Americans. The strong backing among Independents and even some Democrats helped Wilson win re-election with surprising ease.

But the long-term consequences of 187 reveal the longer-term consequences for the GOP. During the Reagan era and even the first Wilson term, Latino voters split their votes fairly evenly between the parties. But after 1994 there was a distinct turn toward the Democrats, with the GOP share at the gubernatorial level falling from nearly half in 1990 to less than a third in subsequent election. In some cases, right-wing Republicans garnered even smaller portions of Latino voters.

This is a classic case of the past waging war on the future. Since 1990 Latino and immigrant population has continued to grow. Overall, the percentage of foreign-born residents, according to USC demographer Dowell Myers, has grown from roughly 22% to 27%. One-third of Californians in 2000 were Latino; Myers projects Latinos will constitute almost 47% of the state's population in 2030.

The political consequences will only get worse for Republicans. Latino population voting power already has doubled from roughly 10% of the total in 1990 to 20% in 2006.

This Latino population will become increasingly active and engaged. It is, for one thing, ever more English-fluent, and increasingly dominated by the second and third generations. This group could become permanently estranged, like African-Americans, from the GOP. If that happens, notes longtime Sacramento columnist Dan Weintraub, Republicans could "all but become a permanent minority party in California."

And the rest of the country will feel these trends; between 2000 and 2050, the vast majority of America 's net population growth will come from racial minorities, particularly Asians and Hispanics. Already one out of every five American children--tomorrow's voters--is Hispanic.

Of course, as Latinos integrate and intermarry, they may become less particular in their world view and share more in common with other middle-class Americans. Yet memories of slights against a particular group can overcome even economic self-interest. Blood often proves thicker than bank accounts. The tendency of Jews, a largely affluent and entrepreneurial tribe, to back often harshly anti-business Democrats has its roots in old world scars left from the pogroms in czarist Russia as well as the right-wing genocide in Nazi Germany. Some older voters recall the rabid anti-Semites once prominent in the American far-right as well as the more genteel exclusionism practiced by more refined upper-class Republicans.

In the future, today's images of shrill, anti-immigrant right-wing activists could resound for coming generations of Latinos as well as Asians and other newcomer groups. It could essentially deprive the Republican Party of voters who might otherwise consider the GOP option, handing the Democrats a permanently expanded base, not only in southwest but in much of the country.

None of this is necessary or good for the country. Political competition for ethnic groups is a healthy thing for national interests and for the individual groups. Lock-step support by African-Americans may make them powerful within the Democratic Party, but it also means they can also be taken for granted when push comes to shove. And, of course, when they are in power, Republicans have little real political stake in confronting the serious issues facing black America.

All this is particularly disturbing since competition for Latino voters should be intense. Heavily employed in construction and manufacturing industries, they have been badly hurt in the recession and their interests were not particularly addressed in the Obama stimulus plan. Many are also socially conservative, supporting, for example, California's Proposition 8 ban on gay marriage.

In coming months other proposed steps by the administration and its congressional allies, such as the proposed cap-and-trade legislation, could prove very tough on industries that tend to employ Latinos. Climate change-inspired moves against single-family homes--already in place in California--conflict directly with the aspirations of many Latinos as well as other immigrants who, unlike the usually affluent, homeowning white population, are still seeking the chance to buy their own home.

But instead of fighting for their economic interests, the Arizona law has handed the Democrats a golden opportunity for to engage their own demagogy on race issues. Instead of having to defend their plans to restart the economy and reorient them to middle and working class needs, Democrats now can play to narrow racial concerns among Latinos while further bolstering the self-righteousness of their affluent, white, left-wing base.

The reversion to racial politics prompted by the Arizona law ultimately does no good for anyone except "base-oriented" partisan campaign consultants, nativists and ethnic warlords. With all the long-term economic and social challenges that face this growing country, Phoenix's folly marks an unfortunate step backward to our more shameful past and away from a potentially promising future.

This article originally appeared in Forbes.com.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.

Photo by Caleb Alvarado

Las Vegas: The World’s Convening City?

Robert E. Lang — Mon, 26 Apr 2010 01:00:54 -0400

Conventional wisdom, and in many cases wishful thinking, among many urbanists holds that America’s sunbelt cities are done. Yet in reality, as they rise from the current deep recession, their re-ascendance will shock some, but will testify to the remarkable resiliency of this emerging urban form.

Origins: Bright Light City

The epicenter of the sunbelt rebound will be Las Vegas. The desert city has taken a unique road to a world city status. Most places get there by being financial, trade or manufacturing hubs, or can have a concentration of all three in the case of the biggest and most connected world cities. In contrast Las Vegas has achieved world city status via one key sector: entertainment.

Just about no one saw Las Vegas coming as a world city. Even in the late 20th century few would predict that the region could ever get to 1 million residents, let alone reach two million. In 1970 Jerome Pickard, a demographer working at the ULI—the Urban Land Institute in Washington, DC, projected U.S. metropolitan area populations to the year 2000. These estimates were nearly perfect, but for one major exception—he missed Las Vegas.

Las Vegas at the time seemed like, to make a bad pun, a one trick town. Its main industry, gambling (or “gaming” in local parlance), was pretty much unique to Nevada. Sure, the city already had landmark hotels and the famous “Strip” was by then iconic enough to influence American architectural theory, but the idea of an overgrown honky-tonk town as a true world city seemed a stretch.

A generation later, what changed? To start, gambling began to spread throughout the U.S. and indeed the world. First, Atlantic City, NJ, allowed gaming in the late 1970s and soon the floodgates opened. Soon people could gamble on riverboats in the Mississippi and off the Gulf Coast. Then a Supreme Court ruling allowed Native Americans to build and operate casinos—and they did just about everywhere.

Every time gaming expanded, analysts predicted the demise of Las Vegas. Yet history has shown that the widespread diffusion of gambling only induced a bigger appetite. In this socio-cultural-legal-lifestyle transition, Las Vegas became the epicenter of gaming. Many people who gambled in a nearby Indian reservation were really just warming up for Las Vegas.

The gaming industry in Las Vegas also matured in two key ways, offering a host of complimentary activities to go along with gambling. The first was the Las Vegas tie into Hollywood and live entertainment. By the 1980s, Las Vegas became one of the world’s largest venues for entertainment, surpassing even Broadway in New York. The city then began to add function after function related to tourism—food, shopping, and perhaps most importantly of all: conventions.

Las Vegas’s rise also was directly tied to infrastructure. Completed in the 1930s, Hoover dam provided Las Vegas with ample power and water. The other major improvement was a new highway to Los Angeles, which led to Vegas’s discovery by Hollywood figures.

At the same time, a series of complimentary economic drivers transformed the city over several decades. The casino and entertainment complex constructed in Las Vegas by 1970 soon engendered a proliferation of airline connections and convention business. The city had enough business to warrant non-stop links to just about every other major city in the U.S. The scale of tourism worked to keep landing fees among the lowest of any major American city. In 2008, McCarran Airport ranked 15th in the world for passenger traffic, with 44,074,707 passengers passing through the terminal, and 6th in airplane “movements,” which includes take offs and landings.

The other advantage Las Vegas possesses is lots of hotel rooms. In fact, nine of the top ten largest hotels in the world can be found on the Las Vegas Strip (which technically lies outside the city proper in unincorporated Clark County, NV). The presence of so many hotel rooms facilitated the emergence of the nation’s largest convention business.

The city is also a leading center of producer services specific to gaming. Las Vegas is to gaming what Houston is to energy, the command and control center in a booming global business. Like Houston, whose initial energy business growth came from nearby oil wells, Las Vegas’s initial advantage derived from being home to the first large-scale gaming industry. Many overlook the fact that the U.S. is a service exporting powerhouse, with almost a half trillion dollars in overseas sales last year. In fact the U.S. captures over 14 percent of total world service trade, which performed much better in the current recession than did goods trade. Las Vegas is now grabbing a bigger share of these exports.

As gaming spread, Las Vegas firms that specialize in building and managing mega-resort and entertainment complexes often built, designed, or consulted on new gambling centers from Atlantic City in New Jersey to Macau in China (which recently passed Las Vegas in total gambling revenue). In the current recession, as gaming revenue plummeted in Las Vegas, properties in much of the rest of the world kept performing, especially China. This geographic diversification strengthened the bottom line for such Las Vegas-based companies as MGM-Mirage and Wynn and sustained the local firms that export gaming services.

To consolidate its gaming and entertainment gains, Southern Nevada must still diversify its industrial mix to reach a multi-dimensional world city status as say Los Angeles. Fortunately Las Vegas has the capacity to further leverage its core industry. At the same time some other key sectors look promising, especially data storage and transmission, and alternative energy technology such as solar and geothermal.

Finally, Las Vegas is working to improve its transportation links to nearby Southern California and the Sun Corridor complex of Phoenix and Tucson. These regions are increasingly integrated with one another. Las Vegas’s inclusion in the larger Southwestern U.S megaregion should further connect it to the global economy and lift its status as a world city in full.

The Convening City

Ultimately, the Las Vegas case for world city status lies in its role as the globe’s leading convening space. There are more face-to-face exchanges in Las Vegas during a major convention than key financial exchanges in New York or London. Las Vegas, on any given week, may comprise the world’s most expert cluster in a particular industry.

The convening role that Las Vegas plays in the world economy comprises perhaps the biggest opportunity for additional diversification, especially given the way business is evolving in sectors such as business services. These gatherings provide a means of overcoming coordination and incentive problems in uncertain environments. It becomes an environment to create a critical “buzz” around a company, product or industry.

Most Las Vegas conventions are really about deal making. Conventions also are used for industry education, vendor networking, competitor insights, networking with prospects, hosting an exhibit, and seeing customers. Another dimension to building trust in Las Vegas lies in the fact that it is very much an adult place. It is a wide open, non-moralizing, libertarian place where grownups get to have fun. Las Vegas is a place where you can, and maybe even should, mix business with pleasure.

To move forward, Las Vegas needs to tweak its branding in a way that signals its dual personalities as a play hard and work hard city. This shift is already under way. The Las Vegas Convention and Visitors Authority now use the tagline “Only Vegas” and an omnibus identity for the city. Their website has two links: one aimed at business community: VegasMeansBusiness.com with the tagline: “Close the deal and make new opportunities.” and one for tourists: VisitLasVegas.com which uses the tagline: “What happens in Vegas, Stays in Vegas.”

So far Las Vegas has not leveraged its role as convening place to create something on par with the New York Stock Exchange or the Chicago Board of Trade. However, the convention business can be used as the basis of what may become a permanent trade show.

A harbinger of this future potential for Las Vegas can be seen in its new giant furniture mart, the World Market Center. This grew out of the city’s role in hosting the largest furniture/home wear convention every year. Las Vegas has developed a year round trade show capacity in furnishing with big annual events. This city is now poised to be a leading design center. Architectural and industrial design firms will follow. In this way, Las Vegas could emerge as the Milan of the U.S., where design leads to industrial spin offs.

Las Vegas can expand this model to host permanent trade shows in a multiple fields from home entertainment and biotechnology to alternative energy. Rather than become a new ghost town, as some urbanists imagine, the city in fact has a bright future, one that will continue to befuddle its many critics while enriching the opportunities of its citizens.

Robert E. Lang, Ph.D. is one of America’s most respect urban analysts. He is director of both Brooking Mountain West and the Lincy Institute and is a professor of Sociology at the University of Nevada, Las Vegas.

Photo: by Roadsidepictures