Monday, October 08, 2007

Evidence for Opportunity Urbanism

Digging through some of my older stuff looking for some good blog material, I came across this Demographia analysis of Sydney vs. DFW. Their main point is that Sydney's extremely tight land use restrictions drive up housing costs, which are three times higher in Sydney than DFW, even though it's a much smaller metro with plenty of land around it - they just don't allow housing to be developed on it.

Looking through the stats on page 5, you can also see that it has severely constricted Sydney's growth, and that their (forced) 2x density vs. Dallas dramatically reduces average speeds and increases commute times, even with a comprehensive transit network in place.

But the stat that really jumped out at me is that even though their median household incomes are very similar ($61K vs. $64K), DFW's GDP per capita is 43% higher! ($35K vs. $50K) Now, there may be something going on here with exchange rates and purchasing power parity (see the tables), but I think there may also be some evidence here backing up Kotkin and I's Opportunity Urbanism model (report, my op-ed), which says that lower housing costs leave more discretionary income available to pump up a vibrant local economy. Even though incomes are similar, Sydney residents are paying three times as much for their housing, leaving a whole lot less discretionary income to circulate around their city and drive local GDP. Keep that in mind next time you hear calls for more zoning and land use regulation in Houston...

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20 Comments:

At 11:14 PM, October 08, 2007, Anonymous Neal said...

I submit the following links for public consumption as to what is happening in Sydney and in other Australian cities:

http://www.saveoursuburbs.org.au/

http://en.wikipedia.org/wiki/Save_Our_Suburbs

A YouTube link with a five part video series entitled "The End of Affordability" where SOS leader, Tony Recsei, quietly describes his group's point of view.

http://tinyurl.com/yqeaex

As was noted in the wiki entry, Save Our Suburbs has now grown from being a political movement and is now a political party which is fielding candidates for office in the New South Wales state of Australia.

Here is a Sydney Morning Herald story which describes that the City is has been stuck in its worst housing construction slump since WWII:

http://tinyurl.com/2jamok

To repeat what Barton Smith said in class - if prices in an urban area get too high, then that becomes a signal for an urban area to quit growing. But then again, for some that might be joyous news.

Neal

 
At 8:41 AM, October 09, 2007, Blogger ian said...

If nobody wanted to live in Sydney, then there would be nobody living in that expensive housing. The simple fact that it IS such a vibrant city makes me think that maybe people like living there. . .and maybe part of the reason people like living there has something to do with those land-use restrictions? Eh? Possibly?

I kid you not, I would definitely be willing to trade a bit of our cheap housing for some nearby wilderness and farmland. . .especially if at the same time I could have some decent places to shop in my inner city neighborhood instead of having to always drive out to the ~shudder~ suburbs.

 
At 12:12 PM, October 09, 2007, Blogger Michael said...

So, you support the Ashby high-rise, I take it?

Really, what is wrong with zoning? You can't just look at GDP figures between two cities and attribute the differences to zoning laws, sorry! There are way too many other factors at play! Let's see, we have a port, and NASA, and the energy industry, for starters... not sure what industries Sydney is known for, but I think zoning laws is about the last place I would start looking to explain GDP differences.

Obviously, zoning is not a panacea. But saying "zoning is always bad" is about equivalent to saying "all taxes are bad" to me. Which is a nice saying, and may win you an election, but unless you want anarchy, not very practical for running a society. And unless you want a completely chaotic city, with strip clubs and factories next to residences, no zoning is also not the best answer for a city.

Obviously zoning, like anything else, can be applied inappropriately. But building a skyscraper on the north side of Rice Village also seems inappropriate. And looking at a general set of principles for traffic congestion impacts, etc, as Mayor White supports, seems like a good direction to be going in.

I do think the city will need more powerful zoning laws, however, because my understanding is they are fairly powerless right now - even the traffic impact study is not mandatory. I would be willing to vote for more powerful zoning in Houston in a heartbeat.

 
At 12:15 PM, October 09, 2007, Blogger Michael said...

Sorry, the comparison was between Dallas and Sydney - so subsitute Telecom / Tech for some of the other Houston-specific industries I was referring to.

 
At 2:58 PM, October 09, 2007, Anonymous Anonymous said...

One interesting thing about Houston is all the shiny towers that go up. The Mosaic and Cosmopolitan are very pretty as are some of the new towers in the Medical District. Houston just keeps picking up steam and rolling along faster........

 
At 3:23 PM, October 09, 2007, Blogger Tory Gattis said...

Ian, I got an email from a reader noting a similarity between your comment and a previous post of mine with this quote by Robert Bruegmann:

http://houstonstrategies.blogspot.com/2007/03/bruegmann-on-developers-attitudes.html

"... The heads of most large development organizations share a set of distinctly upper middle class aesthetic and other biases with many land use "reformers." It is easy for them to imagine the good city as having a vibrant and upscale core, a pristine, gentrified countryside in easy driving distance, and all of the less attractive aspects of urban living - notably families of modest means - accommodated out of sight on as little land as possible."

You probably didn't mean it that way, but that is how it comes across...

 
At 9:13 PM, October 09, 2007, Blogger ian said...

Absolutely not. I live in the middle of less-than-upper-middle-class Eastwood, and I wouldn't have it any other way. But you know what? My less-than-upper-middle-class neighbors aren't living 20 miles out!

 
At 8:31 AM, October 10, 2007, Anonymous Mike said...

Your post leaves out an important detail: Dallas has zoning.

 
At 9:18 AM, October 10, 2007, Blogger ian said...

Let me back up a little -- after thinking about it a little more, maybe you're right. If only the wealthy can afford to live in places like Sydney, then how vibrant can such places truly be? Clearly, pricing the poor out of our cities is unacceptable. But I strongly believe our current resource-hogging strategy of sprawling out to the far corners of the Earth is unacceptable as well. I feel like it is setting us up for an impending disaster -- and it already hasn't been so great for local wildlife and ecosystems. I'm convinced that there MUST be a way to create a lively city with a strong economy that simultaneously exists in harmony with nature and doesn't push out those who need the most help.

Honestly, I don't have the clearest vision for what such a place would look like, let alone what we need to do to get there. But I think it necessarily requires people to sacrifice some of the luxuries they've come to feel they deserve. Just crunching some very simple figures reveals that if everyone in the world lived like the average American, there would not be enough land on the planet to sustain the population. If you believe certain website calculators, there wouldn't be enough land on MANY Earths to sustain such a populace. If we truly want to fight for that ever-elusive yet noble goal of eradicating poverty and lifting all humanity to a comfortable standard of living, we're going to have to come to terms with the fact that that standard of living will necessarily be lower than what many of us currently enjoy.

 
At 9:19 AM, October 10, 2007, Blogger Tory Gattis said...

Dallas zoning: Yes, but it's some of the least restrictive zoning around. This also comparing the DFW metro area, which includes many unincorporated areas without zoning.

I'm not saying all restrictions are bad - just that people should consider that there *is* a downside to them, especially as they get more limiting on supply meeting demand.

 
At 10:26 AM, October 10, 2007, Anonymous Anonymous said...

To quote Ian..."But I strongly believe our current resource-hogging strategy of sprawling out to the far corners of the Earth is unacceptable as well." When we get even NEAR that point, I could see your concern but we're not near there yet.

 
At 10:40 AM, October 10, 2007, Blogger ian said...

This comment has been removed by the author.

 
At 11:52 AM, October 10, 2007, Blogger Tory Gattis said...

There may be long-term global issues to work out (and simple scarcity economics will solve many of them, as well as new technology), but in the specific cases of America and Australia, there are vast amounts of available land that even the greatest sprawl would barely nick. Our total urbanized land area in America is less than 5%. And both countries also do a pretty good job of environmental and ecosystem protection.

 
At 12:28 PM, October 10, 2007, Blogger Brian Shelley said...

An alternative to zoning:

Perhaps an arbitration board that would determine real property value lost based on research and precedents. With some sort of checks and balances to keep them under control.

Example: If my neighbor decided to put up strobbing neon lights on his house, should they be removed by force of law, or should I be compensated for "damages"?

In the case of the high-rise in near Rice Village, I feel for the people who's yards will now be in the shade. Should we stop the tower or should those homeowners be compensated for loss? Whether that's $100 or $100,000 would be up to the arbitration board.

Just a thought.

 
At 12:44 PM, October 10, 2007, Blogger Michael said...

Hmm,

Not sure how this directly relates to zoning discussion, but remember that urbanized land is not the same as required land - ie farmland (for crops and grazing land for cattle), forests (for oxygen), etc. Remember, if you cut off NYC from the rest of the world, everyone there would starve to death, suffocate to death, or die of dehydration.

Figures I have seen suggest that the average American requires 20-30 acres of land to sustain them, whereas in some foreign countries the figure is more like 10-15 acres (if not less). I do not remember how much clean water supply is also required, but that is a separate figure.

I think Ian is suggesting that as more countries come up to American standards of living and can start challenging our 40% share of the world's resources (and only 5% of the population) with their new jobs / relative strength of their currencies, we may be forced to make some adjustments. Indeed, the cost of oil, milk, beef, etc. have all been rising faster than inflation recently. So to suggest that here in Houston we can continue to "win" the resource wars versus our neighbors in China / India / etc. might be wishful thinking. I believe "scarcity economics" is also going to have an effect on the American lower / middle class.

I do, however, also agree with Tory, that new technology will have to play a key role in helping to keep our lifestyle changes to a minimum.

 
At 1:19 PM, October 10, 2007, Anonymous Anonymous said...

Brian Shelley says

"An alternative to zoning:
Example: If my neighbor decided to put up strobbing neon lights on his house, should they be removed by force of law, or should I be compensated for "damages"?"

We already have this. It is called the nuisance doctrine. In the case of the High-rise, these people can go to court and if they can prove that the tower damages them and that it was an unexpected developement, then they will be compensated.

If it was expected and damages them, then the probability of the tower being built and the level of damages would have already been factored into the price of land when they bought the place so they took a gamble and lost and should not be compensated.

If it was unexpected the developer would have to price in the damages that he will be forced to pay in court when deciding wether to go forward with the development or not.

 
At 9:16 AM, October 11, 2007, Anonymous Mike said...

"Example: If my neighbor decided to put up strobbing neon lights on his house, should they be removed by force of law, or should I be compensated for "damages"?"

They should be removed by force of law. Compensation is just license for rich people to be able to do whatever they want. There's nothing wrong with using the law to ensure order... it's been done since the beginning of time.

 
At 11:47 AM, October 11, 2007, Blogger Brian Shelley said...

Re: Anon

I did a quick search on the "Nuisance Doctrine", but couldn't find what matched your description.

I did find "Coming to Nuisance" doctrine which seems to be what I was talking about.

http://www.capmag.com/article.asp?ID=640

It's a little more legalese than I'm good at, but it seems to be what I was talking about.

 
At 11:56 AM, October 11, 2007, Blogger Brian Shelley said...

Re: Mike

"Compensation is just license for rich people to be able to do whatever they want."

Huh? Isn't it rich people in Southhampton trying to stop the developer by force of law? In my experience it is usually wealthier people who are trying to enforce their taste preferences by law on less wealthy people. Not always, but usually.

"There's nothing wrong with using the law to ensure order..."

I'm imagining that everyone around the strobe light house would receive tens of thousands of dollars in compensation. Wouldn't
that help ensure order?

 
At 3:08 PM, October 11, 2007, Anonymous Neal said...

Brian,

Yes, there is a doctrine in American jurisprudence known as "Coming to the Nuisance". One of the classic cases of "Coming to the Nuisance" is Spur vs. Webb, decided in 1972.

Briefly, the case involved the operation of an animal feedlot by Spur Industries, 15 miles west of Phoenix. The developer, Webb, built a subdivision in the direction of Spur and, as time went on, steadily expanded towards the feedlot operation. Eventually, homeowners who happened to live nearby the feedlot business complained of flies, odor, and other nuisances. The matter went to court and the court granted (I think) a permenant injunction to Webb, but essentially said that in return the developer was going to have to compensate Spur for either shutting down the operation or to help pay for moving the feedlot and cattle.

There was discussion about private and public nuisances, but one item that may be of interest is to ask the rhetorical question of whether building a highrise in a settled neighborhood is in fact a nuisance?

Neal

 

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