Sunday, January 26, 2020

Nobody wants to leave Houston! plus fareless Metro update, more on NYC vs. HTX affordability, our low-carbon future, and more

This week's feature is a followup on my proposal that Metro considering going farelessThe NY Times even did an article on more transit agencies considering and going fareless to increase ridership. Metro's been studying it and had their first results at a meeting this month. If you'd like to watch the presentation, it starts around the 30m mark in the video here, or the Chronicle summarizes their findings here.  The bottom line is that - although the loss of $70m of annual fares might be manageable - there are two major problems:
  1. Providing additional buses and drivers to handle the additional demand of a 36% increase in ridership from going fareless could cost up to $170m a year on top of Metro's roughly $700m budget, and they simply can't afford that.
  2. The safety risks are substantial with "problem riders", which have been an issue when other agencies have gone fareless.  
I was impressed with Metro's thorough analysis of six different scenarios, and satisfied that they came to the right (albeit unfortunate) conclusions.  I agree that the cost and safety concerns are just too high for most of the scenarios they analyzed.  They are still analyzing additional scenarios and I have suggested it would be interesting to add a scenario with a fixed-price unlimited monthly pass, including for Park-and-Ride riders. I’m not sure what the right price point would be - maybe at the equivalent of two local rides a day? - so $2.50 x 30 days = $75/month?  I think that could get a substantial boost in ridership (especially Park-and-Ride commuters) without the safety concerns or major loss of revenue.  We'll see what comes back...

Moving on to some additional items this week:
"Texas Monthly told a story that a lot of people wanted to hear: loosely regulated housing markets like Houston have long embarrassed ideological opponents of free markets who insist that only rent controls and massive public subsidies can provide affordable housing. There is a ready audience for the argument that Houston’s affordability is a mirage. If you ever find an argument like this tempting, though, ask yourself: is it more likely that you’re mistaken, or that the millions of Americans voting with their feet are?"

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Monday, January 20, 2020

Houston Is Now Less Affordable Than New York City?!

 "There are three kinds of lies: lies, damned lies, and statistics." -Mark Twain
This week the big Houston ruse was uncovered - the illusion unveiled.  I know you're thinking I'm talking about a certain baseball team, but I'm talking about Texas Monthly's expose that Houston is less affordable than New York City.  Evidently Houston has been suckering millions of people to move here with the false promise of affordability - and they all fell for it! (I guess because they're all bad at math?)  Suckering that many people has to be one of the greatest frauds perpetrated in history, right?  Well played, Houston, well played.  But now the truth is out and it's all going to come crashing down.

As news gets around, hundreds of thousands of Houstonians will soon be putting their house on the market to move to NYC.  Why wouldn't they?  Clearly it's cheaper to live there.  Texas Monthly and an "unbiased" nonprofit say so.

"Martha, call our real estate agent: we're selling the home and moving the family!  It says right here we can give up our four-bedroom house and two SUVS, move to a one-bedroom apartment in the Bronx, and come out ahead!"

"Oh Bill, that's a great idea! I'm so ready to trade in the Escalade for standing-room-only subway rides - we'll save a fortune!  But what about the taxes?"

"Well, it doesn't look like the study says anything about taxes, so they must not be an issue in New York..."

April Fools came early this year.  Thanks, Texas Monthly.

Now we can move on to the dry, fact-based part of the response to the study:
  • There is absolutely no normalization of size or quality of what people get for what they pay - all they look at is what people are actually spending.  In NYC, you might get a cramped apartment with roommates vs. your own house in Houston.  Same with the transportation: tax-subsidized subway fares (and those taxes are ignored in the calculations) vs. your own nice car/truck/SUV.
  • By the calculations in this study, if you move from NYC to Houston and spend the tax savings on a better house and car, your life got worse because their percentage of your income went up! 🙄
  • Conversely, using the methodology of this study, NYC can zoom up to #1 by jacking up their taxes high enough to leave less than 40% of income available to their citizens for housing and transportation! 
  • As I've said on this blog before, spending on a luxury vehicle (including depreciation) is *not* a basic cost of transportation, yet they include it in their figures.  A person can get around Houston quite cheaply with a used Toyota Prius if they choose to.  The fact that lots of people choose to splurge their extra discretionary income on a nice ride does not mean Houston is an expensive city to get around!  The same line of thinking would say that people in West Hollywood spend a lot on clothes, so they must not have access to affordable clothing! 😅
  • According to this study, if you move from Houston to LA, you'll actually save money!  Could that be because, after taxes, you'll just have less money to spend?
  • Also according to this study, if you move from Houston to San Francisco, you'll reduce housing and transportation from 49% of your income to 42% of your income!  And yet for some reason, masses of Houstonians don't seem to be picking up and moving to San Francisco?
And some additional facts courtesy of Wendell Cox, a fellow Fellow at our Center for Opportunity Urbanism:
Comparison of the costs of living in Houston v New York (MSA)  
The test of whether one metropolitan area is more expensive than another is the cost of living --- the cost of all goods and services, not only housing and transportation. The latest regional price parity (RPP) data from the US Department of Commerce, Bureau of Economic Analysis indicate that the New York metropolitan area has an RPP of 122.3 for all items (100.0 being the national average). The Houston metropolitan area has an RPP of 101.7. The cost of living for renters is thus 20 percent higher in New York than in Houston. 
 Other factors would make this difference even more. The just-issued 16th Annual Demographia International Housing Affordability Survey indicates that the median house cost in New York is 50 percent more expensive than in Houston (comparison of the Median Multiple, the median house price divided by the median household income). This is a bigger difference than among renters, with New York median rentals being 30 percent higher than in Houston, according to the 2018 American Community Survey. 
 Finally, state and local taxes are far higher in New York than in Texas. According to 24/7 Wall Street, New York taxation is about two thirds higher than in Texas. New York has the highest state and local taxes according to this analysis, while Texas ranks 45th.
Finally, just a self-reflection question for Texas Monthly: are you still actual critical-thinking journalists, or just clickbait publishers now?...

UPDATE: Reason offers their counter-arguments and quotes me! 

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Sunday, January 12, 2020

Media coverage for eliminating Metro fares, HTX accolades, growth, and density revolution - and are we really gentrifying that fast?

The featured news this week is that I was interviewed on both local NPR/KUHF and KPRC about my proposal that Metro eliminate fares.  Hopefully, we'll hear some positive news on it from Metro during their upcoming board meeting.

Moving on to other items this week:
  • Chronicle: Houston gentrifying faster than other Texas cities, Fed analysis finds. What I think this analysis misses is that Houston's lack of zoning allows densification much more easily than other cities, and we have created tens of thousands of new apartments, condos, and townhomes near downtown in recent years allowing higher-salaried newcomers without necessarily displacing existing residents.  I'm not saying gentrification and displacement is not happening (I'm sure some is), but average incomes can certainly move up substantially by adding new residents to new density without displacing existing ones.
  • This Texas-Sized City (Houston) Lets You Earn Big and Live Cheap. Some great excerpts:
"When you choose a place to live, you have to strike a balance between what you want and what you need. Big cities have lots of amenities and job opportunities, but they're often extremely expensive. Smaller areas tend to be a lot more affordable, but you might not be able to come close to earning as much money as you want in order to achieve your financial goals. 
But if you want the best of both worlds, there's one city among the largest metropolitan areas in the U.S. that strikes the right balance. As research from The Ascent into salaries and costs of living discovered, the Texas city of Houston should be high up on your list if you want a major population center that won't strain your wallet. 
One reason Houston has been able to keep itself as affordable as it has is that it lacks the extensive land use regulation that many similarly sized communities have. In many cities, zoning laws make it difficult for real estate developers to build new projects to provide more housing for residents, and that can keep housing prices artificially high. That hasn't been the case in Houston, where ample land has allowed the city and its suburbs to expand outward and support a growing population. 
For those seeking a big-city experience but wanting to stick to a budget and even put some money in the bank, Houston offers an attractive balance. With everything a major metropolitan area can offer at a fraction of the price tag you'll find in many similarly sized cities, Houston's worth a closer look for those who want it all."
"Perhaps more impressive is how much Texas expanded from April 2010 (when the last official U.S. headcount was conducted) to July 2019. During that period, Texas added 3,849,790 residents, according to the Census Bureau. To put that into perspective, nearly 4 million people live in the entire state of Oklahoma. Texas' population jumped 15.3 percent from 2010 to 2019, the third highest growth rate behind the District of Columbia and Utah. 
Experts cite economic and job growth — along with a low cost of living, a low cost of doing business, and low taxes compared with many other states — as drivers of Texas' population boom. Helping fuel the boom are substantial population spikes in the state's four largest metro areas: Austin, Dallas-Fort Worth, Houston, and San Antonio."
Finally, I'd like to end this week's post with a video of one of our COU events. It's a bit long, but a good one to leave on in the background while working at your computer. SMU-Cox Folsom Institute for Real Estate, the SMU Economics Center, and the Center for Opportunity Urbanism presented a lively discussion on Cities, Suburbs, and the New America, and Minorities, Immigrants, and Millennials in America’s Favorite Geography.  The event featured presentations from former Secretary of Housing and Urban Development Henry Cisneros, author Joel Kotkin, and MIT Professor Alan Berger.

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Sunday, January 05, 2020

Three perfect days in HTX, growth forecasts, increasing our density, reducing homelessness, protesting property taxes, and more

Happy New Year/Decade everyone! Hope you enjoyed your holidays as much as I did (OC/LA w/ family). Lots of backlogged smaller items, but before we get to them, a short word about our sponsor: if one of your new year's resolutions is to save big money on electricity this year, My Best Plan is incredible at absolutely optimizing the lowest-cost electricity plan for you.  I've known David over there for years (fellow Rice MBA), and his optimization algorithm is the best, bar none. And completely unbiased too, which can't be said for some of the other optimizers out there that have been uncovered as fronts for electricity marketing companies.  Send him (or me) your latest electricity bill to get an estimate of your potential savings - it's free, and you have nothing to lose while potentially saving hundreds or even thousands of dollars (as he's saved me over the years).

On to this week's items:
Finally, I'd like to end with this United's Hemispheres magazine video on 3 perfect days Houston. Hat tip to George.

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Thursday, December 26, 2019

2019 Highlights

Hope everyone is enjoying the holidays.  Time for our annual round-up of the best posts of 2019.  Looking at the list, I think it was a very good year relative to most of my others.  Hard to believe we're coming up on the 15th anniversary of this blog. I'll have to do a big retrospective post in March for that.

These posts have been chosen with a particular focus on significant ideas I'd like to see kept alive for discussion and action, and they're mainly targeted at new readers who want to get caught up with a quick overview of the Houston Strategies landscape. I also like to track what I think of as "reference posts" that sum up a particular topic or argument; and, last but not least, they've also been invaluable for me to track down some of my best thinking for meetings or when requested by others (as is the ever-helpful Google search).

Don't forget we offer an email option for the roughly once/week posts - see the Google Groups subscription signup box at the bottom of the right sidebar. An RSS feed link for newsfeed readers is also available in the right sidebar (I'm a fan of Feedly).

As always, thanks for your readership.
And don't forget the highlights from the first few years. For what it's worth, I think the best ideas are found there, often in the first year (I had a lot "stored up" before I started blogging) and most definitely in the best posts from the first dozen years and million pageviews.


Saturday, December 14, 2019

More on free transit, Houston densifying, CA vs TX, hard economics for TX HSR, Bastrop city plan, and more

Large backlog of items this week:
"Even if Texas Central could manage to attract 6 million passengers a year, the annual payment on a $20 billion loan at 3 percent interest over 30 years is just over $1 billion. That means it would have to collect nearly $170 per passenger above its operating costs in order to repay loans or give funders a return on their investments. Since airfares are already far lower than that, I don’t see any way for this to ever happen."
“1,545 people per day settled in Texas last year, with Harris County seeing the greatest influx from out of state than any other region,” according to Yardi Systems."
"The new code is very lean—based on the rural-to-urban Transect, it does not regulate uses, only nuisances. The thinking is that if the use creates no problem, why regulate it? There are no minimum lot dimensions or parking requirements. Shared parking is encouraged. Every lot is automatically allowed to have two accessory units. So, rather than the continuing the single-family zoning that is fiscally unsustainable as a dominant pattern, every lot can have three units. "
Finally, I'll end with a little good humor piece: Texas Luring Jobs Away From California With Promises Of Electricity:
"California Governor Gavin Newsom was dismissive of Texas's claims, though. “They’re making false claims of being able to deliver electricity 24/7,” Newsom said, “but it just can’t be done.” Newsom was also dismissive of the Lone Star State's other claims, such as affordable housing, plenty of water, cheap gas, plastic straws, and not constantly being on fire. "

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Wednesday, December 04, 2019

Why METRO should eliminate transit fares

Apologies for the infrequency of posts - it's been a busy holiday season.  The big item this week is my mention in this Chronicle article for getting Metro to reconsider spending $100 million on new fare-collection equipment while they're still looking at going completely fareless:
(Metro Chairman) Patman said she spoke with Tory Gattis, a local blogger who has argued for free transit as a way to boost use, on Wednesday after the Houston Chronicle reported on the agency’s plans to expand payment options. Gattis, she said, urged the board to give the contract more consideration in view of the fare study. 
“I agree we need to think carefully about the connection between the two,” Patman said. 
Gattis, in a Twitter post Wednesday, called spending that much to collect about $70 million each year “silly.” 
“$100 (million) could buy and operate enough buses to handle the surge in demand from going fare-less with only a 6 percent revenue loss,” he wrote.
This is something I've discussed here before when I was supporting the Metro bond referendum, and Harris County Commissioner Radack supports it as well.  Kansas City and others are also looking at going fareless to boost ridership. Both Forbes and Aaron Renn have written about the benefits of free transit fares. Here's how I see the case for free fares:

Benefits of METRO going fareless

Affordable: Only 4.9% of Metro’s budget comes from the farebox ($67.5m from $1,363.8m revenue budget). That's less than a couple years of normal sales tax growth.

Increased ridership:
  • People are strongly attracted to “free” and discouraged by any cost
  • Attract the occasional/discretionary rider (including tourists) who won’t go through the hassle of getting a Q card. From Forbes:
"This increased demand is not due solely to the availability of free and convenient transportation, but also to the fact that it is frictionless: people don’t have to worry about travel cards, cash or identification."
Reduced congestion and increased air quality:
Reduced drunk driving as more people choose transit to go out

Faster and more on-time trips from speeding the boarding process
  • Also lower fuel consumption lost to excessive idling at stops
Stimulates the local economy and vibrancy: people will go out more and do more shopping, eating out, nightlife, entertainment, socializing, etc.

Reduced costs from not having to collect, process, and enforce fares
Eliminates fare-based confrontations between drivers and riders (a larger problem than you might think)

Huge PR boost from being the first major city in America to go fareless
From my understanding, it sounds like they could consider fareless off-peak right away, but would need a few years to add capacity to be able to handle the extra demand at peak hours.  I've suggested a 5-year steady ratcheting down of fares (20% reduction per year) while adding incremental capacity where demand increases beyond existing capacity, which is especially likely on commuter routes.  Going fareless off-peak in the near-term can also attract the discretionary rider to move their trip from peak to off-peak hours, freeing up additional peak capacity.

That's the case for fareless. I'm looking forward to the results of Metro's study and what they decide to do. I sincerely hope they look at going big and bold rather than playing it safe.

UPDATE: Bill King sent me an older Chronicle op-ed of his making similar arguments, but with more detailed analysis on the costs and benefits.

UPDATE 2: Kansas City beat us to it, but it shows it's possible for a major city to go fareless and we could still be the first top-30 metro to do it. Hat tip to Chris.

UPDATE 3: CityLab: Why Kansas City’s Free Transit Experiment Matters

UPDATE 4: A Kinder analysis of some of my arguments for Metro going fareless.

UPDATE 5: Vox: Kansas City is making its bus system fare-free. Will other cities do the same?

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Sunday, November 17, 2019

World Series Houspitality, HTX #1 for entrepreneurship higher ed, cities Americans are leaving, Austin's fantasy, and more

A few items this week:
"Austin is one of the fastest-growing cities in America, and the city of Austin and Austin’s transit agency, Capital Metro, have a plan for dealing with all of the traffic that will be generated by that growth: assume that a third of the people who now drive alone to work will switch to transit, bicycling, walking, or telecommuting by 2039. That’s right up there with planning for dinner by assuming that food will magically appear on the table the same way it does in Hogwarts.
Planners have developed two main approaches to transportation. One is to estimate how people will travel and then provide and maintain the infrastructure to allow them to do so as efficiently and safely as possible. The other is to imagine how you wish people would travel and then provide the infrastructure assuming that to happen. The latter method is likely to lead to misallocation of capital resources, increased congestion, and increased costs to travelers. 
Austin’s plan is firmly based on this second approach. The city’s targets of reducing driving alone by a third, maintaining carpooling at an already too-high number, and increasing transit by 394 percent are completely unrealistic. No American city has achieved similar results in the past two decades and none are likely to come close in the next two decades."
  • Animated graph of Where Americans are Leaving: Net Domestic Migration Out Of Metro Areas 2010-2018. Mostly the big 3 of NYC, LA, and Chicago, but Houston does appear at the bottom near the end. Harvey losses I assume. Excerpt:
"People vote with their feet.  Sunbelt states overall offer stronger economies, more job opportunities, better weather, and lower taxes.  These trends may have political implications, as “blue state” residents move to “red” states, perhaps making them more “purple.”"
Finally, while we're all disappointed in how the World Series turned out (how the heck did the home team lose *every* game?!), there is a small silver lining in the ad Nationals fans put in the Chronicle, which I think is an excellent example of Houspitality!

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