Seattle

Population Growth Slowing in Largest US Municipalities

Wendell Cox — Tue, 29 May 2018 01:33:38 -0400

The 2017 Census Bureau population estimates shows that population growth in the nation’s largest municipalities (incorporated cities and equivalent) has declined substantially relative to the healthier gains posted earlier in the decade. Among the 36 municipalities with more than 500,000 residents (including Honolulu, see below), the total population grew 0.63 percent between 2016 and 2017 (July 1), down more than one-third from the annual rate between the April 1, 2010 census and July 1, 2017. By comparison, the 2017 United States annual growth rate last year was 0.71 percent. The table below summarizes the results.

The United States has approximately 20,000 incorporated municipalities. These are distinguished from metropolitan areas, which are the labor and housing markets that have developed around the largest municipalities. Moreover, there are no national, or even state criteria that produce any sort of conformity in the size of municipalities, so that there can be huge differences in population. The largest municipalities in metropolitan areas can range from under 10 percent of the metropolitan population to more than 60 percent. In Atlanta, for example, the city of Atlanta has just 8.3 percent of the metropolitan area population, while in San Antonio, the city of San Antonio has 61.1 percent of the metropolitan area population.

Fastest Growing Municipalities

Seattle: The city of Seattle has emerged as the decade’s growth leader. Seattle has added 116,000 new residents since the 2010 Census and 17,000 since 2016. The resulting annual growth rates of 2.47 percent and 2.44 percent are the strongest among the municipalities with more than 500,000 population. Seattle accounted for 27 percent of the metropolitan area growth, more than its share of the population, which rose from 17.7 percent in 2010 to 18.7 percent in 2017.

Fort Worth: This second largest city in the Dallas-Fort Worth metroplex placed second in population growth between 2016 and 2017, with an increase rate of 2.18 percent. This is slightly below the 2.23 annual rate achieved since the 2010 Census, which was the fourth largest.

Charlotte: The third fastest growing city was Charlotte, which added 1.84 percent to its population in 2017. However, reflecting the overall rate, Charlotte’s most recent year gain was below its rate since 2010, which was 2.16 percent.

Columbus: The capital of Ohio is emerging as one of the nation’s growth leaders, as was already indicated in the metropolitan area data. Last year, Columbus ranked fourth in growth, at 1.79 percent.

San Antonio: San Antonio was the fifth fastest growing large municipality, adding 1.63 percent in 2017. This was slightly below its 1.81 percent rate since 2010. Reflecting the slower growth among the largest municipalities, this higher growth rate earned a lower ranking, at 7th.

Austin: Austin had been the national growth leader through 2016, but fell behind Seattle in 2017, due to a much slower growth rate. In 2017, Austin’s growth rate was 1.33 percent (ranked 12th), well below its 2.33 percent rate since the Census.

Denver: Denver experienced a trend similar to that of Austin. From 2010 to 2017, Denver added new residents at a rate of 2.25 percent annually. That rate dropped to 1.42 percent in 2017, as Denver was the 9th fastest growing large municipality.

The Largest Municipalities

New York: The nation’s largest municipality has seen its strong growth fizzle away. Between 2010 and 2017, New York added residents at a 0.74 percent annual rate, slightly higher than the national rate of 0.69 percent. In 2017, however, New York’s growth plummeted to 0.08 percent, about one-ninth of the national growth rate (0.71 percent). New York’s growth this decade peaked in 2011, when 99,000 residents were added. By 2017, the gain had dipped to 7,000. The four intensely dense urban boroughs experienced huge losses, the greatest in Brooklyn (Kings County), which had a growth rate of 0.77 percent since 2010, but lost population at a rate of 0.08 percent in 2017. The drop in growth rate also exceeded 75 percent in Manhattan (New York County) and 80 percent in The Bronx and Queens. Only Staten Island (Richmond County), with a population density less than that of Los Angeles, grew faster in 2017 than earlier in the decade (Figure 1).

Los Angeles: The second largest municipality has also experienced a substantial loss in growth rate, though not so precipitous as in New York. From the 2010 census to 2017, Los Angeles gained an average of 0.74 percent annually. In 2017, the gain was only 0.47 percent, over one-third less the average post-2010 rate. Further, despite multiple announcements of having reached 4,000,000 residents (see: “Elusive Population Growth in the City of Los Angeles”), the city still remains short (though by only 241). Los Angeles had the fifth largest population growth among the nation’s municipalities (19,000), a strong showing in a slowly growing area. By contrast, the balance of Los Angeles County, with 60 percent of the county population lost 6,000 residents while the metropolitan area’s other county (Orange) grew 13,000, 11,000 of it in the city of Irvine.

Chicago: Chicago, the third largest municipality extended its recent declines, after modest increases earlier in the decade.

Houston: The fourth largest municipality, Houston, also experienced modest growth, after strong growth earlier in the decade. These data are before the impact of Hurricane Harvey, the immediate population effect of which will be evident in next year’s estimates (Figure 2).

The Special Case of Honolulu

One municipality is missing from the Census Bureau’s list, Honolulu, Hawaii’s capital. Honolulu is an incorporated combined city-county with a population in 2017 of 989,000, the only incorporated general purpose government unit in Hawaii. As a combined city-county, Honolulu is similar to San Francisco, Baltimore, St. Louis, Nashville, Indianapolis, Denver and others. This population should result in Honolulu being ranked as the 10th largest city in the nation, between San Jose and Austin.

Yet, Honolulu is listed in the Census estimates tabulation with a population of 350,000 under the title “Urban Honolulu.” This is due to an agreement between the Census Bureau and the State of Hawaii. In fact, however, Honolulu is the 10th largest city in the United States.

Estimates are Only Estimates

Estimating population (rather than counting it in a Census) is anything but an exact science. This was proven again in 2010, when there were huge over-estimates of population. The population estimate for New York was 200,000 higher in 2009 than counted in the 2010 census. In Detroit, the over-estimate was nearly 200,000. Atlanta, however takes the prize, with an over-estimate of more than 120,000, which was an error of nearly 30 percent. On the whole, however, the population estimates were fairly accurate overall. It will be interesting to see how accurate this decade’s population estimates are in relation to the 2020 Census counts, and what it reveals about the changing fortunes of our largest cities.

MUNICIPALITIES OVER 500,000 POPULATION IN 2017

		Population (Millions)			Change
Rank	Municipality	2010 Census	2016	2017	2010-17	2016-17	% 2010-17	%2016-27
1	New York, New York	8,175	8,615	8,623	448	7	0.74%	0.08%
2	Los Angeles, California	3,793	3,981	4,000	207	19	0.74%	0.47%
3	Chicago, Illinois	2,696	2,720	2,716	21	(4)	0.11%	-0.14%
4	Houston, Texas	2,094	2,304	2,313	218	8	1.38%	0.36%
5	Phoenix, Arizona	1,447	1,602	1,626	179	24	1.62%	1.50%
6	Philadelphia, Pennsylvania	1,526	1,575	1,581	55	6	0.49%	0.39%
7	San Antonio, Texas	1,327	1,488	1,512	185	24	1.81%	1.63%
8	San Diego, California	1,302	1,407	1,420	118	13	1.20%	0.91%
9	Dallas, Texas	1,198	1,322	1,341	143	19	1.57%	1.43%
(*10)	Honolulu, Hawaii	953	993	989	35	(4)	0.50%	-0.41%
10	San Jose, California	953	1,032	1,035	83	3	1.16%	0.33%
11	Austin, Texas	802	938	951	149	13	2.37%	1.33%
12	Jacksonville, Florida	822	881	892	70	11	1.14%	1.27%
13	San Francisco, California	805	876	884	79	8	1.30%	0.94%
14	Columbus, Ohio	789	864	879	90	15	1.51%	1.79%
15	Fort Worth, Texas	745	856	874	129	19	2.23%	2.18%
16	Indianapolis, Indiana	820	857	863	43	6	0.70%	0.65%
17	Charlotte, North Carolina	736	843	859	123	16	2.16%	1.84%
18	Seattle, Washington	609	707	725	116	17	2.44%	2.47%
19	Denver, Colorado	600	695	705	105	10	2.25%	1.42%
20	Washington, District of Columbia	602	684	694	92	10	1.99%	1.41%
21	Boston, Massachusetts	618	678	685	67	7	1.44%	0.98%
22	El Paso, Texas	648	681	684	35	3	0.73%	0.41%
23	Detroit, Michigan	714	675	673	(41)	(2)	-0.81%	-0.35%
24	Nashville, Tennessee	603	665	668	64	3	1.40%	0.42%
25	Memphis, Tennessee	652	653	652	0	(1)	0.01%	-0.17%
26	Portland, Oregon	584	641	648	64	6	1.45%	0.98%
27	Oklahoma City, Oklahoma	580	639	644	63	4	1.44%	0.70%
28	Las Vegas, Nevada	585	632	642	57	10	1.29%	1.58%
29	Louisville, Kentucky	596	618	621	25	3	0.57%	0.54%
30	Baltimore, Maryland	621	617	612	(9)	(5)	-0.21%	-0.86%
31	Milwaukee, Wisconsin	595	598	595	1	(2)	0.01%	-0.36%
32	Albuquerque, New Mexico	546	558	559	12	1	0.31%	0.19%
33	Tucson, Arizona	523	532	536	12	4	0.32%	0.78%
34	Fresno, California	497	523	527	30	5	0.82%	0.89%
35	Sacramento, California	466	495	502	36	7	1.02%	1.42%
	Total (Including Honolulu)	41,622	44,446	44,728	3,106	282	1.00%	0.63%

(*) See note in text on Honolulu

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photograph: Honolulu: 10th largest city in the United States (by author)

Questions to Ask about Amtrak 501

Randal OToole — Fri, 22 Dec 2017 00:33:38 -0500

The wreck of the 501–the Amtrak train that crashed near Seattle on Monday–is raising lots of questions about Amtrak operations, but they aren’t always the right ones. Here are some questions that should be asked and some of the Antiplanner’s preliminary answers. Answers from Amtrak (the operator), FRA (the funder), Sound Transit (the track owner), or WSDOT (the train owner) may differ.

1. Congress required passenger railroads to install positive train control (PTC) by the end of 2015. Why did the Federal Railroad Administration (FRA) give money to the Washington Department of Transportation (WSDOT) for a new passenger rail line that would not open until after 2015 when the project didn’t guarantee funding for positive train control?

Answer: The Obama administration wanted to distribute high-speed rail funds to as many states as possible in order to build political backing for the program, so it couldn’t be bothered with positive train control. The tracks the train was on are owned by Sound Transit, which says it is installing PTC, but it won’t be finished until spring. Public releases of WSDOT’s application for funds for this train didn’t mention PTC.

2. Around 800 people die in railroad accidents a year. PTC would prevent only about 1 percent of these fatalities; far more would be saved by spending the same amount of money on better grade crossings and fencing of rail rights of way. Why do we put so much emphasis on an expensive technology that will do so little?

Answer: Accidents that PTC could have prevented tend to be more spectacular than people getting killed when a train hits their car at a grade crossing. This suggests that, when politicians decide where private businesses spend their money, it’ll get spent on grandiose programs rather than things that could really make a difference.

3. When an auto driver runs a red light and kills a pedestrian, we don’t blame the auto maker for not making driverless cars sooner; we blame the driver and, perhaps, the people who were supposed to train the driver. Why blame this accident on the lack of positive train control when the train driver should have slowed down and Amtrak should have made sure the driver was qualified to operate this section of track?

Answer: Everyone is looking for a scapegoat, and it is easier to blame an institution than an individual.

4. The train in question had about 250 seats, and this was the inaugural run on this route, which usually generates a lot of interest among rail enthusiasts. Yet there were only 80 passengers on board. Does this confirm that Lakewood Mayor Don Anderson was right when he said “this project was never needed”?

Answer: The big change in Seattle-Portland service was not an increase in speeds but an increase in frequencies (a change that may be delayed by the wreck of one of the new train sets funded by the federal government). Amtrak has only been able to fill 54 percent of this train’s seats, and WSDOT was hoping that more frequent and more reliable trains would increase the percentage of seats filled. We’ll know more after a year or so, but it doesn’t look good if the inaugural run filled less than a third of the seats.

5. Why do so many reporters call this a high-speed train? The top speed between Portland and Seattle is 79 mph, the same as it has always been and the same as most other Amtrak routes. In technical terms, this was a conventional, low-speed train.

Answer: Though this was a low-speed train, it was funded by Obama’s high-speed rail fund. By repeatedly using the term “high-speed trains,” reporters are keeping that idea in the public consciousness, perhaps in the hopes that Trump’s infrastructure plan will include money for more such trains. (This could backfire, however, by making people think that high-speed trains are more dangerous. They aren’t–but they are a lot more expensive.)

6. Why do we need passenger trains at all? Amtrak fares from Seattle to Portland start at $26 and cover less than half the costs of the train. Bolt Bus has six buses a day that take less time than the train at fares of around $15. Plane fares start at $65, though most are around $100 (which may still be less than the full costs of Amtrak), and there are dozens of flights a day.

Short-distance trains were made obsolete by buses in the 1920s. Long-distance trains were made obsolete by planes in the 1950s. When other transportation technologies, such as horseback riding, steamboats, and canals went obsolete, we let them go except for tourists and museums. Why can’t we let go of the passenger train?

Answer: America was suffering an inferiority complex in the early 1960s. We were losing the space race; some thought there was a missile gap with Russia; Japanese electronics were beginning to take over American markets. When Japan introduced its bullet trains in 1964, suddenly there was one more area in which our technology appeared to be inferior. Never mind that our jet airplanes were several times faster than Japan’s trains; Congress began funding passenger trains in 1965, and once a federal program gets started, it generates special interest groups dedicated to keeping it going.

Question: At least Amtrak is getting closer to covering its operating costs, right?

Answer: No, when Amtrak says that, it is lying. Amtrak counts more than $200 million in annual subsidies that it gets from the states as “passenger revenues.” Amtrak also pretends depreciation is zero even though, at more than $800 million per year, it is the second largest line item on its operating budget. Amtrak’s deferred maintenance has led to a backlog of needs in the tens of billions of dollars. When counting only ticket fares and on-board food service revenues against operating costs, including depreciation, Amtrak operations lose more than $1 billion a year and ticket fares cover only a little more than half the costs.

Question: At least Amtrak’s Northeast Corridor makes money, right?

Answer: Only if you don’t count depreciation, deferred maintenance, or other costs that Amtrak doesn’t try to allocate to individual routes. The Northeast Corridor needs at least $35 billion in rehabilitation work just to bring it up to a state of good repair. Another way Amtrak has made its trains appear to be profitable is by calling much of its maintenance work a capital cost, and Amtrak can’t afford to do all of the “basic infrastructure” maintenance needed in the Northeast Corridor, much less the rehabilitation work, without federal subsidies of close to $500 million dollars per year (see page 15).

Question: So is Amtrak’s maintenance backlog only in the Northeast Corridor?

Answer: No, Amtrak doesn’t own most of the tracks it uses outside of the Northeast Corridor, but it still has maintenance needs for its stations and rolling stock. When Amtrak took over private passenger service in 1971, the average age of passenger cars that it acquired from the railroads was 22 years, and they were so worn out that nearly all were replaced within a decade. Today, the average age of Amtrak’s passenger cars is more than 30 years, suggesting that it will soon need to spend billions replacing them.

Question: So are all trains obsolete?

Answer: No, only passenger trains are obsolete. Freight trains are extremely productive, and America has the finest, most advanced rail system in the world. That’s because it is mostly private and operates to produce profits, not to give politicians ribbon-cutting opportunities.

This piece first appeared on The Antiplanner.

Randal O’Toole is a senior fellow with the Cato Institute specializing in land use and transportation policy. He has written several books demonstrating the futility of government planning. Prior to working for Cato, he taught environmental economics at Yale, UC Berkeley, and Utah State University.

Photo: A handout photo made available by the Pierce County Sheriffs Department showing Amtrak train 501 which derailed onto Interstate 5 near Olympia, Washington — Shutterstock/AP HANDOUT/EPA-EFE/REX/Shutterstock—HANDOUT/EPA-EFE/REX/Shutterstock via Time.

Seattle Booms in Latest Census City-Level Estimates

Aaron M. Renn — Sat, 27 May 2017 01:33:38 -0400

Seattle tops the growth charts among the top 25 cities in the Census Bureau’s latest release of 2016 city and town population estimates.

Seattle, a land-locked (no annexation) city in the Pacific Northwest with a limited history of high density, managed to add 20,847 people last year, a growth rate of over 3% – tops among the 25 largest cities. Seattle has added about 94,000 people just since 2010. That’s over 15% growth. The total population growth in Seattle last year was about the same as that in New York City. Even if you rank by total change instead of percentage, Seattle would still be 5th out of the top 25 – ahead of some much larger places and some much sprawlier places.

Seattle’s urban and regional population growth are strong. It is a national bright spot for transit growth. Its tech economy is nova hot. I haven’t been there in a while, but it seems to me that Seattle is a city undergoing a significant transformation to the next level.

All but three of the top 25 cities posted growth in population, showing that there’s definitely central city growth happening in many places, even if the preponderance of national growth is suburban. The older cores of NYC, SF, DC, Boston, and Philly are all growing. Even the cities of Dallas and Ft. Worth grew nicely. Only Chicago, Detroit, and Memphis lost population. Houston, a geographically gigantic central city, posted fairly weak growth compared to what one might have expected.

In the Midwest, Columbus passed Indianapolis to become the 14th largest city in the country. Detroit, despite enormous population loss, is still about the same population as Boston and Washington, DC.

Here are the 25 largest cities in the country in 2016, ranked by year over year population growth rate:

Rank	City	2015	2016	Total Change	Pct Change
1	Seattle city, WA	683,505	704,352	20,847	3.05%
2	Fort Worth city, TX	834,171	854,113	19,942	2.39%
3	Phoenix city, AZ	1,582,904	1,615,017	32,113	2.03%
4	Denver city, CO	680,032	693,060	13,028	1.92%
5	Austin city, TX	930,152	947,890	17,738	1.91%
6	Charlotte city, NC	826,395	842,051	15,656	1.89%
7	San Antonio city, TX	1,468,037	1,492,510	24,473	1.67%
8	Washington city, DC	670,377	681,170	10,793	1.61%
9	Dallas city, TX	1,297,327	1,317,929	20,602	1.59%
10	Jacksonville city, FL	867,164	880,619	13,455	1.55%
11	Columbus city, OH	850,044	860,090	10,046	1.18%
12	San Diego city, CA	1,390,915	1,406,630	15,715	1.13%
13	Boston city, MA	665,984	673,184	7,200	1.08%
14	San Francisco city, CA	862,004	870,887	8,883	1.03%
15	Nashville-Davidson metropolitan government (balance), TN	654,078	660,388	6,310	0.96%
16	Houston city, TX	2,284,816	2,303,482	18,666	0.82%
17	Los Angeles city, CA	3,949,149	3,976,322	27,173	0.69%
18	El Paso city, TX	678,570	683,080	4,510	0.66%
19	Indianapolis city (balance), IN	852,295	855,164	2,869	0.34%
20	San Jose city, CA	1,022,627	1,025,350	2,723	0.27%
21	New York city, NY	8,516,502	8,537,673	21,171	0.25%
22	Philadelphia city, PA	1,564,964	1,567,872	2,908	0.19%
23	Memphis city, TN	654,454	652,717	-1,737	-0.27%
24	Chicago city, IL	2,713,596	2,704,958	-8,638	-0.32%
25	Detroit city, MI	676,336	672,795	-3,541	-0.52%

And here are the top 25 ranked by the 2010-2016 growth rate.

Rank	City	2010	2016	Total Change	Pct Change
1	Austin city, TX	815,587	947,890	132,303	16.22%
2	Seattle city, WA	610,403	704,352	93,949	15.39%
3	Denver city, CO	603,329	693,060	89,731	14.87%
4	Fort Worth city, TX	748,719	854,113	105,394	14.08%
5	Charlotte city, NC	738,561	842,051	103,490	14.01%
6	Washington city, DC	605,183	681,170	75,987	12.56%
7	San Antonio city, TX	1,333,952	1,492,510	158,558	11.89%
8	Phoenix city, AZ	1,450,629	1,615,017	164,388	11.33%
9	Dallas city, TX	1,200,711	1,317,929	117,218	9.76%
10	Houston city, TX	2,105,625	2,303,482	197,857	9.40%
11	Nashville-Davidson metropolitan government (balance), TN	604,893	660,388	55,495	9.17%
12	Columbus city, OH	790,864	860,090	69,226	8.75%
13	Boston city, MA	620,701	673,184	52,483	8.46%
14	San Francisco city, CA	805,766	870,887	65,121	8.08%
15	San Diego city, CA	1,306,153	1,406,630	100,477	7.69%
16	San Jose city, CA	955,290	1,025,350	70,060	7.33%
17	Jacksonville city, FL	823,318	880,619	57,301	6.96%
18	El Paso city, TX	650,604	683,080	32,476	4.99%
19	Los Angeles city, CA	3,796,292	3,976,322	180,030	4.74%
20	New York city, NY	8,192,026	8,537,673	345,647	4.22%
21	Indianapolis city (balance), IN	821,659	855,164	33,505	4.08%
22	Philadelphia city, PA	1,528,427	1,567,872	39,445	2.58%
23	Chicago city, IL	2,697,736	2,704,958	7,222	0.27%
24	Memphis city, TN	652,456	652,717	261	0.04%
25	Detroit city, MI	711,088	672,795	-38,293	-5.39%

And the top 25 ranked by total 2016 population:

Rank	City	2016
1	New York city, NY	8,537,673
2	Los Angeles city, CA	3,976,322
3	Chicago city, IL	2,704,958
4	Houston city, TX	2,303,482
5	Phoenix city, AZ	1,615,017
6	Philadelphia city, PA	1,567,872
7	San Antonio city, TX	1,492,510
8	San Diego city, CA	1,406,630
9	Dallas city, TX	1,317,929
10	San Jose city, CA	1,025,350
11	Austin city, TX	947,890
12	Jacksonville city, FL	880,619
13	San Francisco city, CA	870,887
14	Columbus city, OH	860,090
15	Indianapolis city (balance), IN	855,164
16	Fort Worth city, TX	854,113
17	Charlotte city, NC	842,051
18	Seattle city, WA	704,352
19	Denver city, CO	693,060
20	El Paso city, TX	683,080
21	Washington city, DC	681,170
22	Boston city, MA	673,184
23	Detroit city, MI	672,795
24	Nashville-Davidson metropolitan government (balance), TN	660,388
25	Memphis city, TN	652,717

This post originally appeared on Urbanophile.

Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

Photo by Rattlhed at English Wikipedia (Transferred from en.wikipedia to Commons.) [Public domain], via Wikimedia Commons

Vancouverizing Seattle?

Wendell Cox — Sat, 18 Feb 2017 00:38:35 -0500

A recent Wall Street Journal article (“For Chinese buyers, Seattle is the new Vancouver”) reported that Seattle was replacing Vancouver as the most popular destination for Chinese buyers in North America. For years, there has been considerable concern about foreign investment in the Vancouver housing market, especially Chinese investment. This demand is widely believed to have driven Vancouver house prices “through the roof.” In response, the British Columbia government recently imposed a 15 percent foreign buyers tax that has had the impact of significantly reducing new foreign investment in Vancouver’s housing market.

Yet the impact of the tax has still been muted. Houses remain just about as unaffordable as before. The Real Estate Board of Greater Vancouver benchmark price has dropped less than four percent from six months ago, before the foreign buyers tax was imposed. This compares to an 80 percent increase over the last 10 years and 47 percent increase over just the last three years (Figure).

Clearly there is something other than Chinese investment driving up Vancouver house prices. Since 2004, Vancouver’s median multiple (median house price divided by median household income) has risen from 5.3 to 11.8. This means that that the median house has increased in price more than six times the annual median household income.

The primary cause of Vancouver’s difficulties is a rigged housing market. For decades, Vancouver has had some of the strongest urban containment policy in the world. Regional land-use authorities have prohibited housing development from being built on a large agricultural reserve. This land is hardly needed for such use in a nation that has increased its gross agricultural output more than 150 percent since 1961, while reducing its land in farms by three times as many acres as is occupied by all urban settlements combined, according to the 2016 Canadian census. Of course, urban containment restrictions on new housing have driven up house prices, just as Middle East oil supply reductions used to drive up gasoline prices, before the recent supply increases from Canadian and US oil production.

Vancouver has literally become the third most unaffordable city (metropolitan area) in the nine nations covered by the Demographia International Housing Affordability Survey. This makes a mockery of the Vancouver’s frequent citation as one of the most livable cities in the world. The first principle of livability is affordability --- you cannot live where you cannot afford. Most young families of normal economic means cannot hope to ever buy a modest detached house with a yard as their parents or grandparents did decades ago in the Vancouver area. Only Hong Kong and Sydney are less affordable.

In a recent column (“Not much can or will be done to make Vancouver housing more affordable”) by Gordon Clark in The Province (Vancouver newspaper) describes how things have changed, in a story similar to what you will hear in Sydney, San Francisco and others of the world’s most unaffordable cities. In 1941, his postal supervisor grandfather purchased a house on Oak Street (a main central arterial leading toward downtown) for 1.5 years of income. In 1979 his teacher mother purchased a house in the city of Vancouver for 2.5 times her income. Now with houses costing nearly 12 times incomes, Clark regretfully concludes that nothing can be done: “because the solutions are unacceptable to most people.”

This illustrates what is perhaps the most powerful characteristic of urban containment regulation --- that it creates a strong lobby of support among those who have seen their house values irrationally escalate as a result of unwise government policy. In this environment, public officials simply wring their hands, decry the problem and implement nothing of substance to change the essentially flawed policies.

With this rigged market, it should not be surprising that people with money from outside Vancouver, and abroad, would seek to buy houses in Vancouver. After all, the policies all but guaranteed strong returns to anyone with enough capital to enter the market. It is as if a “Speculators Welcome” banner has been hung from Lion’s Gate Bridge. Not so welcome are those middle-income households being driven out of the market

Lessons for Seattle

All of this is a cautionary tale for the Seattle metropolitan area, which also has urban containment policy, but of more recent vintage. Just 140 miles or 225 kilometers south of Vancouver, Seattle’s has housing affordability that already as bad as Vancouver’s only 12 years ago.

Seattle has a severely unaffordable median multiple of 5.5, slightly worse than Vancouver’s 5.3 in 2004. In the late 1980s, before Seattle imposed its metropolitan- urban containment policy, the median multiple was as low as 2.4 (Table). Today, a Seattle household with the median income must pay three additional years of income for the median priced house.

Rising housing demand with severely constricted supply is associated with higher house prices compared to incomes. In this regard, Seattle has multiple risks, from households escaping California to escape from the even higher prices, Seattle is a bargain compared to the “dogs breakfast” of unaffordable housing associated with California where median multiples now exceed 8.0 in all of the major coastal metropolitan areas (Los Angeles, San Francisco, San Diego and San Jose). Prices are so high in California that a seller can buy a comparable house in Seattle for hundreds of thousands less. There may not be as much sun in Seattle, but there’s plenty of money left over for umbrellas and other goods and services.

Now the pressure is likely to increase as foreign investors who shop the world for rigged housing markets promise quick profits now turn their attention to the Puget Sound. In this environment, it would not be surprising for additional serious house price escalation to be in the offing, and Seattle to indeed become the new Vancouver in the next decade or two.

Given these forces, we can expect Seattle housing prices will continue to increase disproportionately to incomes unless there is land use policy reform. Sufficient supply must be allowed on greenfield land to keep house prices from rising farther. And “building to the sky”--- which is very expensive and not very family friendly --- is not likely to restore housing affordability in Seattle any more than it has anywhere else. For example, the Manhattanization of central Toronto, with its many new residential towers, has not prevented its median multiple from doubling from 3.9 to 7.7 in the last 12 years. Nor has it prevented a far less obvious (at least to the press) 80 percent share of population growth to be in the suburbs between 2011 and 2016.

Lost in all of this are ordinary middle and working class people, who routinely take a back seat in public policy to planning obsessions over urban form, and a “sense of place.” Middle-income households are far more in need of a “decent place” to live at a reasonable price. Architectural marvels or sleek streetscapes are no substitute. The issue is not ideological, it is rather practical and human. Nor is it about property rights, or free markets. The issue is that people are being denied the housing they desire by urban containment policy and its distorted priorities. As Paul Cheshire, Max Nathan and Henry G. Overman of the London School of Economics have pointed out, “people rather than places” should be the focus of urban policy.

It is ironic that progressive metropolitan areas, like Vancouver, where inclusionary zoning drip feeds housing to lower income households, have become, large exclusionary zones where average income households cannot afford houses. Seattle is headed down the same path. Soon it may be time to hang a “Speculators Welcome” banner from the Space Needle.

Photograph: Downtown Seattle (by author)

How Silicon Valley’s Oligarchs Are Learning to Stop Worrying and Love Trump

Joel Kotkin — Sat, 17 Dec 2016 00:38:33 -0500

The oligarchs’ ball at Trump Tower revealed one not-so-well-kept secret about the tech moguls: They are more like the new president than they are like you or me.

In what devolved into something of a love fest, Trump embraced the tech elite for their “incredible innovation” and pledged to help them achieve their goals—one of which, of course, is to become even richer. And for all their proud talk about “disruption,” they also know that they will have to accommodate, to some extent, our newly elected disrupter in chief for at least the next four years.

Few tech executives—Peter Thiel being the main exception—backed Trump’s White House bid. But now many who were adamantly against the real-estate mogul, such as Clinton fundraiser Elon Musk, who has built his company on subsidies from progressive politicians, have joined the president-elect’s Strategic and Policy Forum. Joining Musk will be Uber’s Travis Kalanick, who half-jokingly threatened to “move to China” if Trump was elected.

These are companies, of course, with experience making huge promises, and then changing those promises to match new circumstances. Uber, for instance, touted itself as a better deal than a cab for both riders and drivers before it prepared to tout a better deal for riders by replacing its own soon-to-be obsolete drivers with self-driving cars.

Silicon Valley and its leading mini-me, the Seattle area, did very well under Barack Obama, and expected the good times to continue under Hillary Clinton. Tech leaders were able to emerge as progressive icons even as they built vast fortunes, largely by adopting predictably politically correct issues such as gay rights and climate change, which doubled as a perfect opportunity to cash in on Obama’s renewable-energy subsidies. Increasingly tied to the ephemeral economy of software and media, they felt little impact from policies that might boost energy costs or force long environmental reviews for new projects.

No wonder Silicon Valley gave heavily to Obama and then Clinton. In 2016, Google was the No. 1 private-sector source of donations to Clinton, while Stanford was fifth. Overall the electronics and communications sector gave Democrats more than $100 million in 2016, twice what they offered the GOP. In terms of the presidential race, they handed $23 million to Hillary, compared to barely $1 million to Trump.

Yet, there is one issue on which the Valley has not been “left,” and that is, predictably, wealth. It may have liked Obama’s creased pants and intellectually poised manner, but it did not want to see the Democrats become, God forbid, a real populist party. That is one reason why virtually all the oligarchs favored Clinton over Sanders, who had little use for their precious “gig economy,” the H-1B high-tech indentured-servants program, or their vast and little-taxed wealth.

Jeff Bezos, the Amazon founder with a net worth close to $70 billion, used his outlet, The Washington Post, to help bring down Bernie, before being unable, despite all efforts, to stop Trump. So now Bezos sits by Trump’s side, hoping perhaps that the president-elect’s threats to unleash antitrust actions against Amazon will be conveniently forgotten as an artful “deal” is struck.

For these and other reasons, there’s little doubt that the tech elite would have been better off under Clinton, who likely would have, like Obama, disdained antitrust actions and let them keep hiding untaxed fortunes offshore. Now, they will have to share the head table with the energy executives they’d hoped to replace with their own climate-change-oriented activities.

The tech oligarchs have long had a problem with what many would consider social justice. Although the tech economy itself has expanded in the current period, its overall impact on the economy has been less than stellar. For all of its revolutionary hype, it’s done little to create a wide range of employment gains or boost worker productivity.

To be sure, there have been large surges of employment in the Bay Area, Seattle, and a handful of other places. California alone has more billionaires than any country in the world except China, and nearly half of America’s richest counties.

But for much of the country, notably those areas that embraced Trump, the tech “disruption” has been anything but welcome news. This includes heavily Latino interior sections, home to many of America’s highest employment rates. Overall, the “booming” high-wage California economy celebrated by progressive ideologues like Robert Reich does not extend much beyond the Valley. In most of California, job gains have been concentrated in low-wage professions.

Despite its vast wealth, California has the highest cost-adjusted poverty rate in the country, with a huge percentage of the state’s Latinos and African Americans barely able to make ends meet. California metropolitan areas, including the largest, Los Angeles, account for six of the 15 metro areas with the worst living standards, according to a recent report from demographer Wendell Cox. Meanwhile, the middle and working class, particularly young families, continue to leave, with more people exiting the state for other ones than arriving to it from the, in 22 of the past 25 years.

Even in Silicon Valley itself the boom has done little for working-class people, or for Latinos and African Americans—who continue to be badly underrepresented at the top tech firms as many of those same firms aggressively promote diversity. A study out of the California Budget and Policy Center (PDF) concluded that with housing costs factored in, the poverty rate in Santa Clara County soars to 18 percent, covering nearly one in every five residents, and almost one-and-a half times the national poverty rate. Since 2007, amidst an enormous boon, adjusted incomes for Latinos and African Americans in the area actually dropped (PDF).

Much of this has to do with change in the Valley’s industrial structure, which has shifted from manufacturing to software and media. The result has been a kind of tech alt-dystopia, with massive levels of homelessness, and housing costs that are prohibitive to all but a small sliver of the local population.

With a president whose base is outside the Bay Area, and dependent on support in areas where jobs are the biggest issue, the tech moguls will need to find ways to fit into the new agenda. The old order of relentless globalization, offshoring, and keeping profits abroad may prove unsustainable under a Trump regime that has promised to reverse these trends. In some senses the Trump constituency is made up of people who are the target of Silicon Valley’s “war on stupid people.” Inside the Valley, such people are seen as an obstacle to progress, who should be shut up with income supports and subsidies.

So can Silicon Valley make peace with Donald Trump, the self-appointed tribune of the “poorly educated”? There are two key areas where there could be a meeting of minds. One is around regulation. One of the great ironies of the tech revolution is that the very places that are home to many techies—notably blue cities such as San Francisco, Austin, and New York—also tend to be the very places most concerned with the economic impacts of the industry.

Opposition to disruptive market makers in the so-called sharing economy like Uber, Lyft, and Airbnb is greatest in these dense, heavily Democratic cities. What’s left of the private-sector union movement and much of the progressive intelligentsia is ambivalent if not downright hostile to the “gig” economy. Ultimately, resistance to regulations relating to this tsunami of part-time employment could be something that Trump’s big business advisers might share in common with the techies.

More important will be the issue of jobs. It may not work anymore for firms to lower tech wages by offshoring jobs or importing lots of foreign workers under the H-1B visa program, since Trump has denounced it. IBM’s Ginni Rometty, who had been busily replacing U.S. workers with ones in India, Brazil, and Costa Rica, has now agreed to create 25,000 domestic jobs. Other tech companies—including Apple—have also been making noises shifting employment to the United States from other countries. Trump may well feel what “worked” with Carrier can now be expanded to the most dynamic part of the U.S. economy.

If the tech industry adjusts to the new reality, they may find the Trump regime, however crude, to be more to their liking than they might expect. Companies like Google may never again have the influence they had under Obama, but many techies may be able to adjust. As long as the new president “deals” them in, the techies may be able to stop worrying about Trump and begin to embrace, if not love, him.

This article first appeared on The Daily Beast.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, was published in April by Agate. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Photo by Gage Skidmore from Peoria, AZ, United States of America (Donald Trump) [CC BY-SA 2.0], via Wikimedia Commons

Photo: MCR World

Super Bowl: Super Subsidy Sunday

Matthew Stevenson — Sat, 06 Feb 2016 14:43:34 -0500

Imagine what it would cost to fly from New York to Los Angeles if the country tolerated a National Airline League? Answer: about what a “personal seat license” will cost at the new City of Champions Stadium in Los Angeles, say $28,000.

In the latest shifting of NFL deckchairs, the League raided St. Louis, San Diego, and Oakland — cities that need things to cheer about — and told team owners that they are free to move to Los Angeles, the city of tomorrow, because of its willingness, today, to chip in on the construction of a $2.66 billion stadium in Inglewood, a city within Los Angeles, for the Rams and possibly the Chargers. Around the opulent new stadium the league will even have an NFL campus, maybe for all those 'communications majors' who play in the game?

Rather than take subsides on its construction bonds, the new LA stadium prefers to limit its local taxes until “costs are amortized.” That way it can boast: “No tax dollars or public funding will be used for the construction of the City of Champions Revitalization Project, including the new stadium.” The operative phrase is “for the construction.” Afterwards, the football depletion allowance will kick in, big-time.

The reason that the National Football League can move around its franchises is because Congress, in the Sports Broadcasting Act of 1961, deemed professional football a sacred national resource and conferred an exemption from anti-trust rules on the manufacturers of professional football.

Instead of running a sport where there is no limit on teams or competition, the NFL is the pigskin equivalent of OPEC, and its main function isn’t to govern a league of competitive teams, but to protect monopoly pricing and practices.

The National Football League runs on backhand payments to athletic organizations, sweetheart contracts, and monopoly pricing, in addition to screwing over its fan base by moving teams around. Its reward for urban price fixing isn’t prosecution for collusion under antitrust laws (it is exempt). Instead, it is awarded a national day of reverence, Super Sunday, during which 30 seconds of ad time costs $5 million, and the strategic national stockpile of guacamole is severely threatened.

The owners don’t actually own teams, but are general partners in a football trust, which allows them to share equally in all television revenues and collectively 'bargain' with concussed players, who are only free agents after five years of indentured service. By then, most are broken men. The league's attitude toward the declining mental of health of its retired players could be summarized as “So sue me”.

Yes, a few stars make big money, for a while, but teams are rarely on the hook for long-term guaranteed contracts and salaries are “capped,” they say, “in the interest of competition.”

Although NFL teams wave the flags of their home cities (best understood as their allocated captive markets), hometown fans have no sway over their local teams, which can pack up their pads in the night and move, as long as the new location is authorized by the League.

Nevertheless, St. Louis will still get the pleasure of paying off $100 million in outstanding debt on the Rams’ Edward Jones stadium, even though the team will be playing in LA.

What keeps NFL teams constantly on the move? Promises of state and city subsidies for new, multibillion stadiums, and then the granting of nearly all local revenues to the owner.

The new Santa Clara stadium, home to the hype of Super Bowl 50, has $950 million in hidden public finance, even though while the deal was being made the city was laying off teachers and firefighters.

According to Stadium Subsidy Trickle-Down Economic Theory, a new NFL stadium helps to 'revitalize' some downtrodden city. In reality, stadiums add little to urban life other than mountains of debt and part-time jobs for Sunday ushers and parking lot attendants.

The reason that NFL teams do little for their home cities is that the league’s economic model is akin to strip mining or wildcat drilling. Unlike coal or natural gas, though, the price of the harvested commodity is controlled at the league’s head office, although still for the benefit of absentee landlords. National revenues are shared, while local revenues flow into the pockets of the team’s owner, often a billionaire.

If, instead of a football trust, the US had an open market for gridiron services, when there was a demand in a growing city for a pro team tryouts would be held for players, and shareholders would gather to invest in the new franchise. Maybe when the franchise got good enough, it could compete with more established teams.

Think about it: if the city of Green Bay (population about 104,000) can support a championship team which is owned by the fans, it means that there are 278 larger cities in the country that could well duplicate its model and host professional football. Instead, only 31 other cities have pro teams, thanks to the league’s attitude toward parity and level playing fields. Metropolitan areas with populations greater than two million that don’t have a team include San Antonio, Las Vegas, Portland (Oregon), and Orlando, St. Louis and, possibly soon, San Diego and Oakland. Many other large American cities could easily support three or four professional teams.

All that these outlier cities can do to get a franchise is to promise the NFL ownership monopoly stadium subsidies and political tolerance for continuing the anti-trust exemption. Cities that want to keep their teams (such as San Diego) can pay ransom money in the form of a new, subsidized stadium and other favors. Challenge this payoff system and the league will vote away your team faster than you can say antidisestablishmentarianism.

The irony of Los Angeles now becoming the holy grail of two, or even three football teams is that, in the past, the city has had several franchises —ironically, the Rams, Chargers, and Raiders — and all left because the fan base preferred the beach and the Lakers to Sunday afternoons in the archaic LA Memorial Coliseum.

What has changed since Sid Gilman coached the Los Angeles Chargers in 1960 is that shared NFL television contracts make it irrelevant whether fans show up or not for the in-studio fan game experience, although generally most stadiums sell out.

What of the cities that have ransomed their future to an NFL team? How have they fared? Just because Forbes Magazine values pro football franchises at between $2 and $3 billion does not mean that the citizenry sees much benefit from having a team.

For example, the Hackensack Meadowlands Giants are now said to be worth $2.8 billion, but New Jersey taxpayers are still paying interest on the old Giants Stadium, where the end zone was rumored to be Jimmy Hoffa's resting place, and which was torn down so that a new stadium could be built in its place (“without public money”).

Most cities get a paltry rental stream from their subsidized ballparks, and that’s it. From the Seahawks, owned by Microsoft bigwig Paul Allen, Seattle gets $1 million a year in stadium rental income, while the team rakes in more than $200 million. And state taxpayers are on the hook for some $300 million in outstanding CenturyLink stadium bonds. (The 12th man abides.)

No wonder Allen’s $160 million yacht has been out tearing up the coral reefs of the Caribbean. Even to Hoffa, that red zone opportunity would be worth some dabbin’.

Matthew Stevenson, a contributing editor of Harper’s Magazine, is the author most recently of Remembering the Twentieth Century Limited, a collection of historical travel essays, and Whistle-Stopping America. His next book, Reading the Rails, will be published in 2016. He went to his first professional football game in 1960, and saw the New York Titans plays the Dallas Texans. He lives in Switzerland.

Flickr photo by Mike Morbeck: Cam Newton of the Carolina Panthers

Who Should Pay for the Transportation Infrastructure?

Thu, 08 Oct 2015 01:38:06 -0400

Urban regions are significantly more important than any one city located within them. Housing, transportation, economy, and politics help produce uneven local geographies that shape the individual identities of places and create the social landscapes we inherit and experience. As such, decisions made within one city can ripple through the entire urban region. When affordable housing is systematically ignored by one city, neighboring cities become destinations for those who cannot afford higher housing costs. Even when the minimum wage is adjusted in one city, others cannot ignore it.

In fact, a differential wage structure can produce diverse economic and labor geographies. Affordable housing and uneven economic development, in their turn, impact the regional transportation and infrastructure: if the cost of living and wages in one city in a particular region are high (as in San Francisco and Seattle), then low and middle-income workers will move to a more affordable neighboring city and pay a higher price, particularly in time spent, for transportation. They also pay more in fuel, and hence taxes that fund infrastructure maintenance and expansion.

In other words, while companies and the more affluent population benefit from the agglomeration economies of alpha cities, it is the lower-wage workers and the population at large that pay for these uneven development. Therefore, a company deciding to locate in Seattle or San Francisco, or any location, does not have to bear the cost their decision imposes on urban transportation and the infrastructure needed to support their operation. Instead it’s their employees, particularly those with lower earning power, who do.

How many LEED certified buildings and downtown redevelopment projects does it take to make up for this inequity? Should a city be considered green, if a significant portion of its low earners has to commute to neighboring cities to afford a home? Can a city be seen as sustainable, if in a style akin to medieval cities, serfs have to leave every evening and return in the morning to make sure that the ‘creative class’ is adequately served?

As states such as Washington engage with the old “pay as you go” policy of increasing fuel taxes to pay for the infrastructure, the question of what forces created the emergent commuting patterns remains unanswered. Was it just the commuters, acting as informed participants in the market economy, who sought to optimize their housing and transportation trade offs? Or did the locational choices of employers contribute to the growing commuting problems in the region? If commuters are subjected to “pay as you go” policies, shouldn’t employers who locate in expensive housing markets, irrespective of their employees’ income profile, be subjected to “pay as you locate” policies?

Perhaps no metro region will make a better case study for this inequity than the area that ‘serves’ Seattle. The Puget Sound Region consists of four counties; however, to make sure that no one county that might have an economic connection with Seattle is left behind, we can look at six counties: Snohomish, King (where Seattle is located), Pierce, Kitsap, Thurston, and Mason.

The entire urban region is served by a small number of highways, including Interstate 5. According to 2013 economic data, these six counties housed nearly 62% of all firms in the state. Furthermore, a quarter of all businesses in these counties were located within half a mile of a freeway. In terms of total employees, the six counties contained 69% of the state employment, and workplaces within half a mile of a freeway employed 37% of all employees in the counties. The inequity in the regional economic distribution is further exacerbated by the fact that the small area in West King county bounded by I-405 houses 30% of workplaces and 47% of employment, and generates a significant portion of the sales/revenue in the six counties. This area relies on I-5, I-405 and I-90 for the delivery of its employees from near and far.

The economic calculus of the early days of Interstate construction may have suggested that the trucking industry would benefit from this transportation infrastructure, but 1960s economists might be surprised by the type of companies now located within half a mile of freeways. In the six counties in Western Washington, the economic sectors over-represented in these geographies are: services and finance, real estate, and insurance (FIRE). Anyone driving on I-5 and I-405 (where Microsoft and other corporations are visible) can see this. None of these workplaces require trucking. While their well-paid employees can afford to live in well-to-do places, including Bellevue and Seattle, many others reside in less expensive places such as Auburn, Tukwila, Tacoma, and Federal Way.

A map of the region clearly suggests that neighboring counties and cities are housing those who work in West King County. Mobility has been the answer to unaffordability in this and other similar urban regions. If a city is unaffordable, is it fair to ask those who search for affordability in ‘other’ geographies pay for their so-called choices? Is this truly a choice? Are employers, current and future, asked to pay for their locational ‘choices?’

Surely, we can do better than asking employees to bear the burden of a regional economic imbalance. Freeways should not be freer to some than others. If this nation is about people paying for choices they make, then everyone should do so: employers and employees alike.

Ali Modarres is the Director of Urban Studies at University of Washington Tacoma. He is a geographer and landscape architect, specializing in urban planning and policy. He has written extensively about social geography, transportation planning, and urban development issues in American cities.

Seattle photo courtesy of BigStockPhoto.com.

Thinking About Housing in the Northwest

Wed, 14 May 2014 01:38:25 -0400

With one of the most successful economies in the nation, the real estate news in the Pacific Northwest is positive and gives hope for a housing sector recovery, albeit at different rates in different markets. CNNMoney reports that from the third quarter in 2012 to the third quarter in 2013, the median home price in the Seattle-Bellevue and Everett area increased by 13.7%. The forecast for changes from the third quarter in 2013 to the third quarter in 2014 is another 5.2%. Tacoma’s (Pierce County) housing prices did not grow as quickly, with an increase of 9.3% from 2012 to 2013, but it is expected to witness a sharper increase in 2014, with a healthy 8.6% change from the third quarter of 2013 to 2014.

As rosy as the real estate picture is, we should also remember that in the second quarter of 2013, as housing values began to climb in both markets, median family incomes were already too low compared to median home prices. In Seattle, the ratio of median home prices to median family income was 4.7, and in Tacoma it was 3.6. That made Tacoma a relatively affordable city. However, an expected increase of 8.6% in home values, without a corresponding increase in median family incomes will not do much for its affordability.

Without a major change in its employment structure that might lead to higher incomes for current and future residents of Tacoma, the differential in home prices could make Tacoma a residential destination for Seattle employees finding this city comparatively more affordable. Living half an hour from work, but paying significantly less for housing, is a great incentive, especially for young, single or double income, and childless families. For them, a two-bedroom condo with a view of Commencement Bay may do the job. For Tacoma residents whose median family income is about $20,000 less than their Seattle counterparts, rising home values may prove to be a challenge that cannot be easily overcome without a higher number of well-paying jobs that keep pace with rising home values.

Regional patterns of housing affordability

It is no longer news to anyone that most unaffordable cities rely on their less costly neighbors to house their working populations. The city of Los Angeles relies on the vast sprawl of its own suburbs and the Inland Empire. San Francisco does the same by having people commute from the larger urban region, all the way from the San Joaquin Valley.

The relationship between Seattle and other cities in King and Pierce Counties already follows the same script. Morning commutes into Seattle and afternoon rush hour traffic heading out of Seattle do not require statistics. The numbers are felt by anyone driving during those hours. However, two maps will help paint a vivid picture of the regional urban dynamics created by the unholy triangle of housing market price differentials, economic development patterns, and the resulting spatial mismatch between home and work places.

Maps for median housing values and commuting patterns in King and Pierce Counties clearly show that a good number of people who work in unaffordable regions of King County (including Seattle) rely on more affordable housing elsewhere. As the map of commuting patterns illustrates, for Pierce County, this starts right at the county border, where housing prices are lower (compared to median household incomes). This has already turned certain portions of Pierce County into bedroom communities, feeding economic growth elsewhere. In other words, job-rich areas are resolving their housing problems by pushing their employed populations to other areas, where home prices are more affordable. However, will the growth of housing demand in areas outside employment centers translate to increased housing values in previously affordable regions and push long-time residents out of the housing market?

To answer this question, we need to engage in a more detailed level of analysis.

Micro-geographies of affordability

In order to get a better sense of housing affordability patterns, we can rely on a simple indicator called median multiples (the ratio of median housing value to median household income). While this measure has its critics, it is easily understandable. The basic premise is that when median housing value exceeds median household income more than three fold, an area becomes unaffordable.

A few years ago, Wendell Cox used this method to identify the least affordable cities in the nation. He used the following table to classify various cities in the U.S.:

Demographia Housing Affordability Ratings
Rating	Median Multiple
Severely Unaffordable	5.1 & Over
Seriously Unaffordable	4.1 to 5.0
Moderately Unaffordable	3.1 to 4.0
Affordable	3.0 or Less
Median Multiple: Median House Price divided by Median Household Income

The map of median multiples for King and Pierce Counties reveals a pattern of housing affordability that indicates a looming problem as the housing market recovers. As of Census 2012, almost all Seattle and Bellevue areas were unaffordable, with median multiples exceeding 5. Comparatively speaking, Tacoma has had more affordable housing areas (with more census tracts with median multiples ranging from 3 to 4). Between Tacoma and Seattle, areas such as Federal Way have more affordable housing for the income levels found there. Tacoma’s North East community, adjacent to Federal Way, has higher housing values matching residents’ income levels. Given the commuting patterns, this region is clearly home to many who work elsewhere, earn better incomes, and spend a smaller portion of it on their homes.

In some areas, where median multiples exceed 5, current residents may have purchased their houses when prices were lower. In other words, at one point in time, the median multiple had a lower value. Under such conditions, residents have accumulated substantial equities, allowing them to sell in a more expensive market. However, the next group of occupants will need substantially higher incomes to afford these houses. With the potential arrival of a sellers’ market, any transition in the composition of homeowners will also coincide with a shift to higher socioeconomic status.

Given the overall housing affordability patterns, it is clear that with the looming hike in home prices, the last of the semi-affordable housing pockets in the region extending from Seattle to Tacoma could vanish quickly. Clearly, the well-paid employees in King County could choose to live in Pierce County, enjoy the views, but struggle with traffic up and down I-5. They could even benefit from a publicly funded transportation system. But this won’t resolve the growing traffic and the emerging spatial mismatch between housing and employment. At this point the entire urban region from Seattle to Tacoma should focus on job-housing balance, where the quantity and cost of housing are comparable to employment volume and average salaries paid. To be truly ‘green,’ decision makers need to think regionally. Passing housing or employment problems to neighboring cities is not the best approach to sustainability.

As for Tacoma, like any other urban region on the fringes of a major metropolitan area, the city has a few options moving forward. First, it could act as a satellite city and build more houses for people who work in the larger urban region. Second, it could imagine itself as a major urban center with little interest in being a “second city.” In that case, it needs to focus on economic development, bringing more well-paying jobs that are suitable for its current and future residents, and build houses that are affordable for the types of incomes generated in the area. This strategy requires coordination between housing and economic development that reduces the spatial mismatch between housing and employment and improves the job-housing balance. This will help both housing and transportation conditions. That will also keep Tacoma affordable and make it unpretentiously ‘green.’

The National Association of Home Builders ranks Tacoma 103rd for housing affordability on a list of 224 cities. Spokane ranks 62 and Seattle 202 on the same list. Tacoma should aspire to appear on the list of the top 50 most affordable cities by 2020, and be recognized for the quality of life and employment opportunities it offers to current and future residents.

Boeing’s Long Shadow

Michael Luis — Mon, 10 Mar 2014 01:38:21 -0400

The recent wrangling over decisions on where to build the next version of Boeing’s 777 has left a residue of bitterness and rancor around the Puget Sound region. Were the Machinists forced to give too much? Were the taxpayers squeezed too far? While views will differ on those questions, one thing is clear: jobs lost at Boeing are very difficult, if not impossible to replace.

In the Seattle region we can easily forget how insanely fortunate we are to have Boeing Commercial Airplanes located here. As much as we love to talk about software, gaming, life sciences, internet commerce and other 21st century industries, Seattle owes its status as a large and prosperous metropolitan area almost entirely to the economic base established by Boeing fifty years ago.

And if we can avoid becoming another San Francisco, with high levels of income inequality, outrageous housing prices, a shrinking middle class and a consequent increase in social tensions, we will owe Boeing for that too.

Maybe we paid too much for the 777. But the alternative – Puget Sound minus Boeing – is a frightening idea. Ever since the Boeing Bust of 1969, Seattle area leaders have been trying to diversify the region's manufacturing economy, and with few major successes. The reason for this is obvious: our location in the upper left hand corner of the map.

Manufacturing industries tend to locate near their customers and suppliers to minimize transportation costs. Puget Sound is simply too far from national markets to make sense as a location for heavy industry. By the 1950s, the region had maxed out its potential in timber, fishing and shipping, and the economy stagnated. The manufacturing boom that followed World War II largely passed the region by, and in 1957 a prominent businessman accurately described the Northwest as "America's most important colony."

Then came Boeing's entry into the commercial jet aircraft business. Prior to World War II Boeing had served as a sort of R&D shop for the U.S. government, developing innovative military and airmail planes that never sold very well. Boeing developed the first modern commercial transport, the 247, which was immediately eclipsed by the Douglas DC-3. Boeing had some commercial success, but was still a minor player in the propeller age.

After World War II the military stopped buying B-17 and B-29 bombers, for obvious reasons, and Boeing fell into a slump. It gradually revived itself with the successful B-47 and B-52 jet bomber programs. But it was another military program--developing a jet powered refueling tanker that could keep up with the new jet bombers--that was the key. That tanker airframe was repurposed into the 707, an aircraft that revolutionized civilian air transport and led to the transformation of the Puget Sound economy.

With commercial jet aircraft factories, the region finally had a large, scalable manufacturing industry that did not depend on low transportation costs. In fact, the products deliver themselves! With the success of the 707 Boeing began a very aggressive strategy, launching four new airplane programs during the 1960s: the 727, 737, 747 and the ill-fated SST. Before the bust of 1969, Boeing employed well over 100,000 people in the region, accounting for nearly all the net job growth of the decade.

Since then, Boeing's Puget Sound area employment has fluctuated between 60,000 and 110,000. And although it is gradually shrinking as a share of the economy, Boeing provides one thing that fewer and fewer industries can offer: large numbers of secure, high-paying blue collar jobs. Boeing investments are measured in decades, and even with recent give-backs, the machinists enjoy a very nice compensation package. The layer of middle class employment at Boeing is what makes the Puget Sound region different from San Francisco, and holds the line against our evolution into a Superstar City.

Yes, Boeing's tactics have wounded pocketbooks and left a bad taste in the region's mouth. And its status as a largely Midwestern company (just try to find any Northwest connections on its board) further diminishes the emotional tie. But we cannot lose sight of the value it brings. There is simply no better industry around which to build a regional economy and we are incredibly lucky to have it here. So we'll swallow some pride and hold tight to a company that every region in the world would kill to get its hands on.

The Seahawks 12th Man paint job that Boeing workers put on a brand new 747 freighter just before the Super Bowl brought back a glimpse of the Boeing connection that we used to take for granted. The challenge for Boeing and for regional leaders is to rebuild that connection. In Seattle we will always live in the "Jet City."

Michael Luis is a consultant in public affairs and communications, based in the Seattle area, and is the author of Century 21 City: Seattle’s Fifty Year Journey from World’s Fair to World Stage. He also serves as councilmember and Mayor of the city of Medina, Washington. He can be reached at luisassociates@comcast.net.

Seattle photo courtesy of BigStockPhoto.com.

Life as a Second City

Wed, 12 Feb 2014 00:35:17 -0500

Imagine someone writes a newspaper story about you and prints the picture of your older, well-known sibling next to the column. It is clear to you why this was done: your sibling is more famous and recognizable. But how does that make you feel?

Following the January 28th State of the Union address, PBS interviewed a number of civic leaders. One of those interviewed was the mayor of Tacoma, a city with many of the challenges and attributes of a second child.

The older sibling (that is, Seattle) has a nationally recognizable architectural landmark and a larger economy, and there is a higher likelihood that people around the country have heard its name rather than Tacoma’s. Should we be surprised, therefore, that when Mayor Marilyn Strickland was being interviewed, “(D) Tacoma Washington,” was written at the bottom of the screen, but behind her was an image of Seattle’s skyline? The Tacoma Dome, Downtown Tacoma, the Museum of Glass, and other Tacoma landmarks were notably absent on the screen. Instead of using the Seattle image and perhaps to suggest where the program was being taped, PBS had an opportunity to educate the public (and to be factually correct) by showing a picture of Ms. Strickland’s town, Tacoma. Instead, PBS reinforced Tacoma’s “second city” image by visually identifying it with a picture of its more famous sibling. You cannot imagine how bothersome this is to people who live in Tacoma. A local columnist lamented that with Seattle’s picture as the backdrop, it was hard to focus on what the mayor was saying.

The “second city” phenomenon is not exclusively a Tacoma issue. Glasgow, Melbourne, Milan, Montreal, St. Paul, Long Beach, California and many other cities around the globe face a similar challenge. Either their identity has not been well-articulated, or it has not been understood by external observers. This is not a logo problem. It is not about a catchy phrase, and it is not about another cultural event. Unique architectural landmarks can create memorable identities, but these phallic symbols already dot cities the world over. Whether in Dubai, Barcelona, or Beijing, starchitects would be happy to add the next jaw-dropper to any city willing to deposit a large sum of public funds at their altars.

But for smaller cities, this level of economic competition is not affordable. This is where the notion of “urban branding” comes in. Cities need an internally generated and well-articulated narrative of identity before they can be recognized externally. At the beginning of the twenty first century, many cities, including Tacoma, are finding themselves struggling with this notion at local, regional, and international scales. How does a city get out of the shadow of another city? How do you broadcast who you are? Creating hipster colonies or 24 hour entertainment districts does not always work. Cities like Tacoma already house museums, artist colonies, hip hangouts, and, yes, waterfront condos with killer views. Nevertheless, the glitzy brother 20 miles north casts a long shadow that may stunt growth and contribute to a feeling of self-doubt.

To get out of this position, cities like Tacoma need more than cultural fairs and gimmicky tourist attractions. They need an inclusively created branding strategy. It is important that they know what works and what doesn’t, but strategies need to be based on a vision that gives the city the self-confidence it needs to move forward. Tacoma cannot be and should not be Seattle, in the same way that Long Beach is not and should not be Los Angeles. The identity of a city does not arise out of a formula calculated by the latest intellectual fashion, but from an inclusively-created vision that seeks input from the public, and asks help from experts, not the other way around. Perhaps one the worst ideas of the last twenty years has been an excessive reliance on “best practices” and “experts.” We need to learn about each other, but we need to do it our way and articulate a clear vision of who we are. The second child can also succeed.

Table: Tacoma is about a third of Seattle in population. With a lower density, less expensive housing and a more affordable cost of living, its households are on average slightly larger than those living in Seattle. Its small city charm, stunning views and history rival any urban area in the nation.

Tacoma & Seattle Quick Facts	Seattle	Tacoma	Washington
Population, 2012 estimate	634,535	202,010	6,895,318
Population, 2010 (April 1) estimates base	608,660	198,397	6,724,543
Population, percent change, April 1, 2010 to July 1, 2012	4.30%	1.80%	2.50%
Persons under 5 years, percent, 2010	5.30%	7.00%	6.50%
Persons under 18 years, percent, 2010	15.40%	23.00%	23.50%
Persons 65 years and over, percent, 2010	10.80%	11.30%	12.30%

White alone, percent, 2010	69.50%	64.90%	77.30%
Black or African American alone, percent, 2010	7.90%	11.20%	3.60%
American Indian and Alaska Native alone, percent, 2010	0.80%	1.80%	1.50%
Asian alone, percent, 2010	13.80%	8.20%	7.20%
Native Hawaiian and Other Pacific Islander alone, percent, 2010	0.40%	1.20%	0.60%
Two or More Races, percent, 2010	5.10%	8.10%	4.70%
Hispanic or Latino, percent, 2010	6.60%	11.30%	11.20%
White alone, not Hispanic or Latino, percent, 2010	66.30%	60.50%	72.50%

Foreign born persons, percent, 2008-2012	17.50%	13.50%	13.00%
High school graduate or higher, percent of persons age 25+, 2008-2012	92.90%	88.00%	90.00%
Bachelor's degree or higher, percent of persons age 25+, 2008-2012	56.50%	24.70%	31.60%

Housing units, 2010	308,516	85,786	2,885,677
Homeownership rate, 2008-2012	47.30%	52.80%	63.80%
Housing units in multi-unit structures, percent, 2008-2012	50.50%	35.00%	25.70%
Median value of owner-occupied housing units, 2008-2012	$441,000	$230,100	$272,900

Households, 2008-2012	285,476	78,447	2,619,995
Persons per household, 2008-2012	2.06	2.46	2.52
Per capita money income in past 12 months (2012 dollars), 2008-2012	$42,369	$25,990	$30,661
Median household income, 2008-2012	$63,470	$50,439	$59,374
Persons below poverty level, percent, 2008-2012	13.20%	17.60%	12.90%

Land area in square miles, 2010	83.94	49.72	66,455.52
Persons per square mile, 2010	7,250.90	3,990.20	101.2

Source: US Census Bureau State & County QuickFacts
Downloaded: February 8, 2014

None of this, however, diminishes the responsibility of media outlets. Tacoma is not Seattle. A major news outlet should educate itself and the public by using accurate images. The next time a TV station invites the mayor of Tacoma to participate in a program, here’s hoping they don’t show the Space Needle in the background.

For now, people will be sleepless in Tacoma until they figure out their way out of being the second city.

Tacoma photo by Flickr user Michael D. Martin.