Monday, January 28, 2008

Development regulations

I thought I might comment on some of the weekend Chronicle stories regarding development regulation. I think Mike Snyder's article "Would more housing rules raise Houston costs?" did a fairly good job of being balanced, including input from Wendell Cox, Barry Klein, and Dr. Edward Glaeser - who echoed my point about most cities discouraging rental housing and keeping home ownership rates artificially high relative to Houston. In it he raises the question of why San Antonio - with planning and zoning - has lower median home prices than Houston.

Everything comes down to supply and demand - and when demand outruns supply, prices shoot up. Therefore, cities must act (or, more often, not act) to help supply keep up with demand. Lots of variables go into that equation, and those variables clearly differ across cities. Obviously, San Antonio is a much smaller city and metro than Houston, with a much smaller employment base, including many fewer Fortune 500 companies. It also doesn't have the same economic boom from energy, health care, and the port that we're seeing in Houston. San Antonio has plenty of land, and has obviously kept supply in-line with their more modest demand.

I know the Chronicle article focused on cities, not metros, but the size of the metro is a key issue, because of the overall population pressures on traffic and commutes (driving up demand to be closer in). San Antonio's metro is roughly 1/3 of Houston's. To be more comparable, let's look at similar size metros (around 4-6 million), all of which are more regulated to various degrees (source):
  • Houston - $156K
  • Boston - $415K
  • Philadelphia - $243K
  • Washington DC - $438K
  • Phoenix - $256K
  • Atlanta - $175K
  • Miami/FtL/WPB - $347K
  • Riverside/SB, CA - $377K
Moving on to the op-ed on historic preservation: you can't help but applaud the hard work by the owner to restore the old house. It's a great example of private historic preservation, which Houston is experiencing a great wave of. But there's a lot of old stuff out there. Should the government be the one deciding what's preserved and what's not? Or the market? It seems to me that if something is cool enough to be worth preserving, someone will step in and do exactly that (as they did here). And if nobody's willing to step in and do it, then maybe it's not really worth preserving?

I found her quote at the end a little perplexing:
But my friend's home will still be standing, assuming developers who run this town (and who I understand recently joined forces in a group calling itself "Houstonians for Responsible Growth") don't manage to convince local politicians that they should use their eminent domain powers to, say, build a strip mall in the name of public progress.
Is she kidding? Has this city ever used eminent domain for private development? I know it's an issue in some parts of the country, but that kind of comment/scenario just seems totally out of left field for Houston. The free market should work both ways: people shouldn't be trying to control others' property, but developers shouldn't be expecting government help to acquire land for their developments - and I think, for the most part, they don't expect that in this town. And I wouldn't expect a very friendly reception by city hall if they did.

Overall, the name of the game is balance, which is something I think Mayor White got right in his State of the City address. I'm glad he's asking for creative ideas on helping keep that balance while improving quality of life issues. It'll be interesting to see what sorts of solutions get proposed.

Labels: ,

52 Comments:

At 7:18 AM, January 29, 2008, Blogger Brian Shelley said...

I'm always amused by lines like:
"'Cheap' is clearly a selling point, but 'quality of life' is going to win the 21st century,"

Is it really? Is this why Houston, Dallas, and Pheonix, which are known for not having a high quality of life are the fastest growing metros in the U.S.?

Is this why when you adjust for cost of living and number of children, the average household in Houston makes 20% more money than the average person in Boston (metros).

Will someone explain how they are winning?

 
At 8:40 AM, January 29, 2008, Anonymous kjb434 said...

And before someone jumps out and says that the commuter cost is not counted in Brian's numbers and owning a car eliminates any benefit in lower housing cost, it is. Even with driving an SUV in an hour long stop-and-go commuter, Houston is cheaper to live. And I think that is a major factor in quality of life to many citizens. The get to live their life they way they want versus having a government tell how they will get their quality of life.

Also, i really hate using the phrase "quality of life". Planners and urbanites have a completely different concept of what quality of life is compare to say many suburbanites. To some people having nice suburban schools, a larger house, and nice car is high on their quality of life. To some people living in the inner city in a condo and using effective mass transit and a walkable neighborhood is high on their quality of life.

The problem is that city planning groups have to anticipate this and they typically do a horrible job. Some metros push walkable neighborhoods on suburbanites that don't want them and limit development in the city by trying to plan a walkable environment themselves.

Private interests are doing a much better job a creating walkable neighborhoods within inner parts of the city of Houston right now. Within a few years, Kirby Drive from Westheimer to US 59 will be a dense urban neighborhood. The street is being rebuilt (because it is needed for various reasons) and will address the increase urbanization by providing more friendly sidewalks and pedestrians islands for crossing the street. Upper Kirby District is guiding this project using private interests and neighborhood input. The tree issue people complain about is a no-issue. Yes most of the trees will be lost, but we live in Houston. It will grow back. It only takes about 15-20 years for trees to take on a mature shape. Plus they won't have to fight the power lines after the street is rebuilt. Also, the rebuilding is occurring in a way that the street should not be torn up in the future.

The important thing is that the free market takes some time, but produces what is needed versus what planners want.

 
At 10:39 AM, January 29, 2008, Blogger Michael said...

I would say that DFW and San Antonio are far more comparable metros to Houston for a host of reasons - size, demographics, state regulations and taxes, industries - than the cities that you've chosen to compare us with. Why not compare Houston to Moscow while you're at it? Again, the article showed no significant difference (and in most cases Houston fared worse) than our neighbors. San Antonio and DFW are both major metropolitan cities that are both growing at 15-20% clips, just as Houston is.

Yes, zoning can theoretically increase costs. Just like a host of other factors can increase costs. But if done correctly, it should merely prevent the more ostentatious development goals (like high-rise condos on Ashby) and generally should not interfere with developers or citizens - as the examples of our Texas neighbors show us.

 
At 11:05 AM, January 29, 2008, Anonymous kjb434 said...

Every zoning advocate always, always, always throws in the qualifier "if it is done correctly" or "when implemented correctly".

This is a CYA for that fact that it doesn't always work correctly.

Our current system works fine. Doing an overhaul to be like everybody else is a waste of time and resources.

Minor adjustments to Chapter 42 in regards to platting requirements or the variance process (which works quite well) that involves the public input unlike zoning boards is all we MAY need.

Just attend a planning commission meeting or watch it on TV. I don't know another large city where neighborhoods have so much input into development.

TIRZ #5 is going through massive redevelopment plans. Some of the developer plans required a variance. This triggered public input because variance go outside of the current regs. Super Neighborhood 22 and other local citizens got deeply involved. I should know. I'm helping some of them.

They are now also involved with the TIRZ too. The local community is helping the develop in input for creating new trails and pedestrian bridges to connect not only the developers projects, but they existing residents to nearby parks.

I see this as a system that is working well.

 
At 11:16 AM, January 29, 2008, Blogger Tory Gattis said...

San Antonio is far smaller, taking the pressure off home prices. DFW is roughly the same size, but is an odd special case because of its bipolar nature, with the real metro "center of gravity" (jobs and people) being to the northwest towards DFW airport. That also takes the pressure off home prices, because so few of the jobs are in the core of the city of Dallas. Why would you pay a lot for a house in central Dallas when you can get a nicer, newer, bigger house with better schools just as close to your job out in the far northwest suburbs?

 
At 11:23 AM, January 29, 2008, Blogger Michael said...

KJB,

>>This is a CYA for that fact that it doesn't always work correctly.

>>Our current system works fine.

I would disagree. It looks to me like the Ashby development, unwanted developments in the Heights, Southhampton, etc - are all causing major citizen outrage. There is no clear path as to what should be done. I agree that something short of zoning may also work, but I hardly see the current rules as perfect either. In the Heights, they are trying to build a major condo complex on a road where fire-trucks can barely get by as it is now. If this is the sort of "quality of life" issue that people are concerned about, I would have to agree with the quote - "Quality of life is going to win in the 21st century".

I am not a zoning expert, but some on this board instantly equate zoning with high prices and the Soviet Union. On the other hand, it seems like common sense to me that if our neighbors are doing it, we should at least take a closer look at how their regulations work, and perhaps borrow some of their ideas. Not, as Tory has done, attempt to refute why DFW and San Antonio ARE comparable neighbors.

-Mike

 
At 11:27 AM, January 29, 2008, Blogger Michael said...

>>DFW is roughly the same size, but is an odd special case because of its bipolar nature, with the real metro "center of gravity" (jobs and people) being to the northwest towards DFW airport. That also takes the pressure off home prices, because so few of the jobs are in the core of the city of Dallas. Why would you pay a lot for a house in central Dallas when you can get a nicer, newer, bigger house with better schools just as close to your job out in the far northwest suburbs?

As we've discussed before, the same could be said of Houston. The "center" of Houston population wise is to the west of downtown. You can make the same arguments about getting a nicer house in the western suburbs in Houston.

>>San Antonio is far smaller, taking the pressure off home prices.

San Antonio may be smaller, but by city size alone, they are the 10th biggest city in the country (Houston is 4th). Metro San Antonio is still probably around 25-40% larger than Austin, which you apparently have no qualms with comparing Houston to.

 
At 11:40 AM, January 29, 2008, Blogger Brian Shelley said...

For city comparisons, we seriously need someone to produce some scatter plots.

 
At 12:03 PM, January 29, 2008, Blogger Tory Gattis said...

As I noted in this post:
http://houstonstrategies.blogspot.com/2005/07/jobs-in-core-houston-vs-other-cities.html
Houston has more jobs in the core than even Chicago or DC. Yes, our center of gravity is slightly west (around the Galleria), but nowhere near to the same extent as DFW.

As far as San Antonio, believe what you want, but the pressures in a 5.5m metro are far, far different from a 2m metro. Austin could have had a similar affordability to San Antonio if they had built a similar freeway network, although their regs are also far more onerous.

 
At 12:08 PM, January 29, 2008, Anonymous kjb434 said...

Michael,

Regarding the condo development in the heights. If this section of the heights doesn't have deed restriction, they should look into it.

If 70% of the residents in the neighborhood want to restrict development, they should set up the deed restrictions. This is very democratic. If only a couple of residents have an issue with the condo complex, then yes, it isn't a problem for quality of life for the rest of the residents that didn't complain.

A neighborhood just to the west of the heights called Clark Pines went through this process.

The only real complaint of the Ashby High rise is the traffic congestion and the developer complied by submitting a traffic study. The reason it is halted is because Mayor White (as a hypocrite) pulled the report because high dollar donors complained. Why was he being a hypocrite? Well every other neighborhood that has gone under mass gentrification doesn't really have a recourse to halt projects like this. And the Mayor often tells them the developers are just following the rules. I've seem him tell this to residents. I've seen council members voice this too at civic organizational meetings. Now the Ashby High-Rise comes along and the developer followed the rules, the Mayor changes his mind? He pulls the traffic study and halts the project.

Do we really want this kind of fluid flip-flop of a position to exist in a zoning board. Zoning boards often discriminate against an older poorer neighborhood (unless it has historic structures). Richer neighborhoods get what they want from zoning boards. And developers can lobby board members with their projects to have a vote for the project versus against.

Houston's planning commission is much more transparent. The make-up of the board is also a mix of pro-development and pro-restriction. They allow for the presence of common sense discussion. Much better than a team of urban planners, Peter Browns, and David Crossely's running the show.

 
At 12:18 PM, January 29, 2008, Blogger Michael said...

Tory,

Regarding
>>http://houstonstrategies.blogspot.com/2005/07/jobs-in-core-houston-vs-other-cities.html

What makes you think other cities do not have non CBD core areas as well? I'm pretty sure most do. We like to say that Uptown would be the 17th largest CBD in the country, but if every city wanted to break out all of their business districts in this manner, it would not be true.

Also, I think our labor force is about 2.5 million. So, 500K jobs in the "core" is great, but the fact remains that both Houston and Dallas are very sprawling cities that would seem to make for good comparison to me. We are already following the lead of Dallas in building our passenger rail network. Whether you want to look at their zoning regulations and general plan or not is up to you, but I'm sure people like Peter Brown are, or will be doing so.

-Mike

 
At 12:54 PM, January 29, 2008, Blogger Tory Gattis said...

> What makes you think other cities do not have non CBD core areas as well?

In most cases, cities zone to push all high-rise office centers downtown. Go to an observation deck in one of the towers in downtown Chicago (Hancock or Sears), and all you see is flatness in all directions beyond downtown. Get on the ship channel bridge in Houston, and you can see clusters of towers all over the horizon. Plenty of *metros* have small suburban office centers, usually in separate suburban cities, but few are as close to downtown as in Houston, and very few are as large as any of our core 4.

> We are already following the lead of Dallas in building our passenger rail network.

Not quite. Crossley had an article on this in Cite, and Christof has written about it too. Dallas built a commuter network (separate right of way, high speed, few stops) to serve suburban cities, hoping to refocus jobs in downtown Dallas (didn't happen). Houston is building an urban core network, with rail in the streets and frequent stops, and, so far, sticking with HOV express buses for commuters.

 
At 1:06 PM, January 29, 2008, Blogger Michael said...

KJB,

>>If 70% of the residents in the neighborhood want to restrict development, they should set up the deed restrictions.

What I do not understand, is why this is not a possibility for the Ashby high-rise area. If you drive through the neighborhood, it seems pretty clear to me that the overwhelming majority of the neighbors do not want it. Maybe someone with more knowledge of that specific case could enlighten us.

If the answer is some sort of "border" issue - like Ashby is technically in a different neighborhood than all of the neighbors that oppose it, then that seems like a pretty major limitation of deed restrictions to me - a problem whose scope will only continue to increase as densification of the core continues, and the boundary between neighborhoods is blurred.

Thanks,
Mike

 
At 1:20 PM, January 29, 2008, Blogger Brian Shelley said...

Allright, I did a quick scatter plot at lunch time and came up with this basic regression formula. Although I must confess that it excludes New York because I couldn't find a complete list of median home prices that were up to date. It does include 41 of the largest metros.

Median Home Price = 1.5 cents * population + 225,000.

This implies that home prices in Houston should theoretically be $55K more than San Antonio. Vs. Austin should be $61.5K.

 
At 1:31 PM, January 29, 2008, Blogger Tory Gattis said...

That's pretty cool, Brian. How good was the fit?

 
At 1:36 PM, January 29, 2008, Blogger Brian Shelley said...

The fit?

Bad. R^2 was 8.5%. I also didn't spend the time to make sure that the metro definitions were exactly the same. Places like Houston, Dallas, Detroit, (lower than trend) San Fran, San Jose, and Seattle (higher) really screwed up the variance.

 
At 3:29 PM, January 29, 2008, Anonymous kjb434 said...

Michael,

I think Ashby is just outside of the South Hampton Neighborhood. To me, regardless, this ends of being a NIMBY issue. And if that is what this boils down to, then this is a really bad case to use for zoning. I abhor the idea that a group of people will make a decision that could lower the property value of my property.

The site for the Ashby High Rise was sold to the developer at a price that the market dictated. The market said this tract can yield a dense residential space. This means the land owner can sell this property at a higher price. If zoning would have said this could only be a mid-rise, townhomes, or only single family, the property wouldn't have made much on the property. Zoning would have limited his property value.

Zoning has to pick sides (developer, land owner, home owner, neighborhood). Any side that is picked will be to the detriment of the other side. A more of a free market alternative that Houston offers gives everyone an equal footing. Everyone takes the same risk. If you live on the edge of even a deed restricted neighborhood, you take the chance that the property outside of the neighborhood may not stay the same.

You shouldn't have the power to say that there is a single family home behind my house and it will always stay that way. That the other property owner will not be allowed to change their property just because you don't like how it affects you. You aren't guaranteed property value. That's the risk of investment in your property whether for the long or short haul.

 
At 3:52 PM, January 29, 2008, Blogger Michael said...

KJB,

>>I think Ashby is just outside of the South Hampton Neighborhood. To me, regardless, this ends of being a NIMBY issue. And if that is what this boils down to, then this is a really bad case to use for zoning.

>>The site for the Ashby High Rise was sold to the developer at a price that the market dictated.

First you said that 70% of the neighbors should be able to impose deed restrictions, and now you say they have no rights in the Ashby case regardless. Which position do you actually believe? Those are very different attitudes towards land development restrictions.

Are the neighbors of Ashby sub-human life forms that should have no rights, whereas your friends in Clark Pines near the heights should?

I am fine with solving the Ashby high-rise case by annexing that area to South Hampton and imposing deed restrictions. But I don't think it is quite that easy.

I think continuing down the "neighborhood-based" approach to land use development clearly has some very nasty thorns for dense urban areas, that I have not heard any appealing solution so far aside from something along the lines of zoning, or regulating things like traffic, sewer, parking, and light (access to the sun), which also essentially amounts to zoning. I would rather just define which areas are low density residential, high-density residential, etc. as Crossley has proposed.

-Mike

 
At 5:23 PM, January 29, 2008, Anonymous kjb434 said...

Michael

What rights are you talking about? How is a building near your home removing your right? It doesn't. You still have all your rights. If you don't like the change that's happening in the area, you can move. That is your right.

Any right you claim you have is also a right of the neighboring property. In any situation, you are going to have to tread on one property's "right" to preserve your own in the world of zoning. The free market gives you the right to chose and take risk.

Also, what happens if we do have this magical cure all called zoning? Would would happen if the zoning board said that the site of the Ashby High Rise should be dense since it was an existing apartment. Once the zoning board zones this, you have some recourse, but you'll be fighting against the developer in more of an arbitration environment where being ill prepared is to your detriment.

In Houston's current planning commission setup, the local citizenry has power to make an appeal to the planning commission before any plat is approved. Citizen concerns often have to be addressed and the plat is deferred before approval. If concerns aren't fully addressed, the plat can be denied.

In my earlier case with TIRZ #5 and Super Neighborhood 22, these two entities and the developer are now working together at the planning commission request. The planning commission won't approve of the variance until and agreement between the groups is reached. To me, the people have more power in this setup.

The property for the Ashby High Rise would have fetched a much smaller price if zoning would have said only mid rise or townhomes could build on the property.

 
At 10:58 PM, January 29, 2008, Blogger Jeremy said...

This comment has been removed by the author.

 
At 6:56 AM, January 30, 2008, Blogger Brian Shelley said...

Jeremy,

Don't put your verbatum e-mail address on a blog. I never had a spam problem until I made that mistake.

Write it like: jtullis at rice dot edu

 
At 8:14 AM, January 30, 2008, Blogger Tory Gattis said...

I agree with Brian - I suggest you delete that comment and repost it without the email (or with it in the format he suggests). Spam spiders will find it and you'll regret it.

As far as the land lost to growth and access to nature, check out this post to see it's really not so bad:
http://houstonstrategies.blogspot.com/2005/03/sprawl-in-perspective.html

Air pollution is on a steady downward trend every year, as newer cars enter the fleet, older ones leave, and the refiners continue to improve their controls. And the next generation of cars will be even better.

In terms of diversity in neighborhoods, I would argue Houston has more of that than just about any other city in the country. In part due to the lack of zoning, we are quite a mixture, without the strict single-race/ethnicity neighborhoods like are found in Chicago, NYC, and elsewhere.

When it comes to history and character: obviously, people who value it, buy it - generally in the city core (esp. the Heights), but developers also realize that character sells, and they're adding it in the suburbs too (ex. Sugarland and Woodlands town squares, whatever you may think of them personally). North downtown has also done a good job preserving a lot of its historical character. We're never going to have the history of someplace like Boston, but I think we do fine with what we have - and it's well balanced with an incredibly vibrant, dynamic change. We're no "museum city"...

 
At 8:30 AM, January 30, 2008, Blogger Brian Shelley said...

Redid my regression.

New equation

Price = 1.55 cents * population + 209,000.

R2 = 23.2%

I found the data for NY, which actually helped the fit. I also combined San Francisco and San Jose and took a weighted average of their prices.

All in all, I think it reveals that their is credible evidence to support the idea that the bigger the city the higher the price of homes.

I don't think this negates the Houston/San Antonio comparison because both Houston and San Antonio land prices approach zero. I think it does show that Austin is really the true outlier in the state.

 
At 8:42 AM, January 30, 2008, Blogger Brian Shelley said...

One more comment about size and price. When I removed the metros that I believe are truly geographically limited (San Fran, Miami, Sea, SD, NO, & Portland), the correlation was still there.

 
At 11:39 AM, January 30, 2008, Anonymous Anonymous said...

About the median price differntial between Houston and San Antonio.

My impression from living in San Antonio is that the houses were much smaller than in Houston. So the question is how much house are you getting at that median price in San Antonio compared to the median price in Houston.

The first thing that got me thinking about this was all that hoopla when the median price in L.A. passed the half million mark. I looked into it and the thing that really amazed me was when the reporters went to find the half million dollar homes in the area, they were all thirty or forty year old bungaloes under 1000 sf.

So the median price is not all that matters, but how much house that median price buys you.

 
At 12:57 PM, January 30, 2008, Blogger Brian Shelley said...

Ask ye shall receive.

According the most recent American Household Surveys available. The median square footage of housing units.

San Antonio - 2004 - 1605 sq. ft.
Houston - 1998 - 1929 sq. ft.

Median asking price for homes are as of January 28, 2008 per MLS listing.

San Antonio - 177,000
Houston - 159,900

Assuming that Houston's housing size has not changed, and assuming that the MLS listing is a reasonable representation of each city.

Homes in San Antonio cost 33% more per sq. ft. than Houston.

No household survey was conducted for Austin.

 
At 1:04 PM, January 30, 2008, Blogger Brian Shelley said...

These are the median sq.ft. per unit of housing in select metros and when the data was collected.

NY 2039 2003
LA 1667 2003
CHICAGO 2052 2002
DALLAS 1994 2002
SANFRAN 1721 1999
PHIL 2260 2003
HOUSTON 1929 1998
MIAMI 1808 2002
WASH DC 2315 1998
ATLANTA 2129 2004
BOSTON 1956 1998
PHOENIX 1749 2002
RVRSDE 1606 2002
SEATTLE 1887 2004
MINNEAP 2062 1998
SANDIEG 1735 2002
NEW ORL 1721 2003
SANANTO 1605 2004

 
At 1:12 PM, January 30, 2008, Blogger Michael said...

Brian and Anon,

Those numbers and assumptions seem suspect to me - you are comparing some numbers that are nearly a decade apart, and then looking at only January 2008 asking prices. An alternate measure, which is up-to-date and computed through the same algorithms used to calculate the hypothetical value of ALL homes in a market (not just the ones that are listed in a given month), can be found through www.zillow.com, which has a nice heat map feature if you view a metropolitan area like Houston TX or San Antonio TX - then check the box for "Heat Map". It seems to show that Houston and San Antonio have roughly the same price per square foot (of mostly $100 per square foot and below) except in a few wealthier areas, such as River Oaks / Memorial in Houston, and Alamo Heights in San Antonio.

In both metros, it looks like if you want to find sub $100 / sqft housing, you should have absolutely no problem.

So, I still remain unconvinced through all this dicussion of zoning and comparable cities, of why a place like Houston would be more comparable to places like Philadelphia, Chicago, and DC, than Dallas and San Antonio. Even Tory's point seems to reinforce this - Dallas, Houston, and San Antonio are vast sprawling cities, whereas Chicago and others are very dense at the core.

-Mike

 
At 1:42 PM, January 30, 2008, Blogger Brian Shelley said...

Mike,

I don't disagree. I think that the data for the price per square foot is not good enough.

However, I think that Tory's point that as a city becomes larger home prices go up has merit. Prices were as of Jan. 2008 and population was as of 2006.

San Antonio should be noticable cheaper than Houston or Dallas based on that, and it isn't as far I can tell.

I replotted plotted using the sq.ft. data and again got a positive correlation between metro size and price per sq. ft.

 
At 1:51 PM, January 30, 2008, Blogger Michael said...

Brian,

Well, you are the statistics major ;).

But, tell me - do you feel confident that taking only the 41 largest metros is fair? What happens when you include, say, the largest 200 metros? Or the 100 largest? I'm not suggesting you actually do this, I'm just asking you to guess if you think your equation is geared more towards the largest metros as opposed to medium and smaller sized metros. Maybe what you are seeing with San Antonio is that both Houston and San Antonio (and places like Tulsa) are approaching a base price per square foot.

>>However, I think that Tory's point that as a city becomes larger home prices go up has merit.

Perhaps it is the density of the city that is the more important factor.

-Mike

 
At 2:04 PM, January 30, 2008, Blogger Tory Gattis said...

I think density is the effect rather than the cause of higher home prices. When housing gets too expensive, people downgrade the size of their living arrangements until they can afford them, from house to townhome to condo to apartment, thus naturally increasing density.

 
At 2:31 PM, January 30, 2008, Blogger Brian Shelley said...

Michael,

My approach is limited. It's probably more like a Nike Swoosh than just a straight line. I suspect that when a city first start to grow that the supply of land is virtually infinite. However, as the city gets bigger distances between points starts to matter.

If it takes 15 minutes to get anywhere, then who cares where you live. If it might take you an hour, that's a different story.

P.S.

I am no mere statistics major. I am an economist (by education, not by profession). :)

 
At 7:35 AM, January 31, 2008, Blogger ian said...

"I think density is the effect rather than the cause of higher home prices."

I think it goes both ways. After all, the areas around Houston that are growing more dense seem to be simultaneously growing more interesting and lively. Using a personal anecdote as a rough indication, my brothers and I like to explore the city on bike, and I'd say our most common destinations are the Kirby District via Allen Parkway, the Museum District, Midtown, Montrose, and the Village. The Galleria is fun too, although it can be suicide for a cyclist. These areas are fun to visit because of their density -- the sheer enormity of stuff you can see and do in such a tiny area. I have no doubt that there is a good number of people clamoring to live amidst the activity. . .and of course, demand up, price up.

IH

 
At 1:57 PM, January 31, 2008, Anonymous Anonymous said...

In a free market for land and development density is caused by high land prices.

 
At 2:05 PM, January 31, 2008, Blogger Brian Shelley said...

Re: Ian's comment.

This is the density-creates-its-own-demand theory. Interestin line of thinking. Not sure if I've seen it exist elsewhere in the real world.

 
At 2:27 PM, January 31, 2008, Blogger Michael said...

I would have to agree with Ian. Some people want to live in a dense urban area. Even those that don't would still like to live in an area where it takes less than 1.5 hours per day round-trip to commute to work. You don't see too many people living in Sealy and commuting to Houston. Or living in the middle of nowhere off in mid Texas. Even though it may make sense from a simple land-value perspective, it does not make sense when you take other factors into play, which are mainly proximity to work, family/friends, cultural activities, shopping / dining, etc.

Klineberg's studies over the past few years have shown that for the first time ever, more people are interested in moving into Houston's core than are interested in moving out of it. Land prices may be higher there, but the total cost of living is ameliorated somewhat by lower transportation costs (including time costs - which can be very high in Houston), and quality of life is higher in the core.

I am not sure if I would call it "density creates its own demand", but there are clearly many factors at play here. People do not live in Bellaire / Meyerland / heights / downtown because they could not afford a bigger place in the suburbs. They *choose* to live in the city.

 
At 2:37 PM, January 31, 2008, Blogger Tory Gattis said...

It should be noted that the "attractive density" you are describing is pretty much only found in unzoned Houston, not the zoned cities of West U, Bellaire, Southside Place, the westside villages, etc.

 
At 2:47 PM, January 31, 2008, Blogger Michael said...

>>It should be noted that the "attractive density" you are describing is pretty much only found in unzoned Houston, not the zoned cities of West U, Bellaire, Southside Place, the westside villages, etc.

True, but that only applies to the case of Houston.

I am not arguing that some areas would not need to be zoned dense residential.

In Chicago, NYC, St. Louis and other areas with zoning, you are seeing the same phenomenon. Areas that were once abandoned in the inner city are seeing a rebirth of high-density residential - whether that is new construction or rezoning of old commercial areas as dense residential. Places like Wrigleyville, Ballpark Village, and Brooklyn are attracting residents and developers, even with much higher prices than you would find elsewhere in the metro area.

 
At 9:10 AM, February 04, 2008, Anonymous Mike said...

"It seems to me that if something is cool enough to be worth preserving, someone will step in and do exactly that (as they did here). And if nobody's willing to step in and do it, then maybe it's not really worth preserving?"

Most ignorant statement I've ever read on this blog. You haven't lived in Houston very long, have you?

 
At 9:08 PM, February 04, 2008, Blogger Tory Gattis said...

Only 25 years. That statement I made probably works better for residential than commercial structures, although north downtown is a great example of several historic commercial structures getting reused (the Rice hotel being one example) - so if the true value is there for preservation, someone will usually step in.

The Alabama Bookstop is a case that saddens me. But, obviously, consumers have not shown a willingness to patronize a nice historic bookstore vs. a fancy new Borders, so B&N is forced to match them. I don't buy books retail very much these days (Amazon rocks), but, when I do, I do always try to patronize the Bookstop. Unfortunately, not enough others seem to do the same. The public has voted - with its feet.

 
At 10:18 AM, February 05, 2008, Anonymous Mike said...

"if the true value is there for preservation, someone will usually step in."

Then how do you explain all the truly valuable structures in this city that were torn down due to ignorance or shortsightedness? Are you telling me that all of those buildings along lower Main St. and Market Square that dated back to the Civil War didn't have any value for historic preservation?

The public didn't "vote with its feet" on the Alabama Bookstop. It is a profitable store. Yes, Weingarten could make more money if they demolished it and built a condo tower, but if we had a law that protected it, then Weingarten would simply build its condo tower somewhere else, make slightly less money (but still a profit either way), and the people of Houston would have both a charming piece of their history AND a condo tower.

This is the problem with your argument - you are equating a building's value to the city with its value to its owner. You are saying that the entire value of the Alabama Bookstop can be found in its cash register receipts. A naive and philistine suggestion. The truth is that it has a value to the passerby that is not realized in its receipts. For that value to be protected, a law must be made.

 
At 10:40 AM, February 05, 2008, Blogger Michael said...

Another great example, of course, is the River Oaks theater. This is, as far as I know, a profitable and charming theater. Is it as profitable as a new condo development for the land owner? Probably not. Is it worth more overall to the city of Houston as a 1930's era theater that is still profitable and which can never be replaced, than another condo development (that could also be built elsewhere)? Probably so.

Who is going to be glad to see the River Oaks go? This seems more like a failure of historic preservation and defending one of Houston's unique jewels than a triumph of capitalism IMHO.

 
At 2:21 PM, February 05, 2008, Blogger Tory Gattis said...

Unfortunately, "value to the public" (i.e. not just patrons) is a tricky slippery slope. The govt is our representation of the public. If they feel it has enough value to protect, they should pay for that value by buying a protective covenant on the property at market price. Otherwise they are essentially seizing valuable property without compensation (whoever last bought that land had an option value for redevelopment built into the price - govt can either pay to remove that option or seize it). The true test of historic value should be the govt's willingness to purchase the protection. If they're not, then maybe it's not that valuable to the public?

 
At 3:42 PM, February 05, 2008, Anonymous Mike said...

"If they feel it has enough value to protect, they should pay for that value by buying a protective covenant on the property at market price."

Why do that when they can just pass a law to protect it? By having property in a city you are beholden to the wishes of the people of that city. There is a basic social contract at work here. Your property would not have any value were it not for the city around it; hence a city can do things that diminish some of that value when it is for the greater public good.

 
At 10:09 PM, February 05, 2008, Blogger Tory Gattis said...

Then should they also be able to take it - or pay a very low price - if they need it for a school or road or transit?

 
At 7:47 AM, February 06, 2008, Anonymous Mike said...

If that's the procedure that the majority decides on. But taking a property is quite a bit different from requiring the owner to preserve it. The one forces someone out of their property. The other simply discourages opportunists who have no interest in the wellbeing of the neighborhood.

 
At 8:48 AM, February 06, 2008, Blogger Tory Gattis said...

In either case, property value is removed from the owner, just the same as cash taken out of his pocket. The property was worth more with the redevelopment option, and now it no longer has that option. How much value is it ok for the government to steal from owners without fair compensation? 10%? 25%? 50%? 80%?

 
At 9:37 AM, February 06, 2008, Blogger Michael said...

>>>The property was worth more with the redevelopment option, and now it no longer has that option. How much value is it ok for the government to steal from owners without fair compensation? 10%? 25%? 50%? 80%?

Shouldn't this work pretty much like eminent domain? That is, the government works out what they consider a fair market price for the existing land + improvements. You don't get to price in planned improvements, as far as I know. So, in general, the government can take away 100% of the value of your planned improvements (and even some of what the owner may consider "market value"), seeing as how they do not even exist yet.

In general, I think the government tries to be pretty fair. But obviously, they are not going to compensate a landowner for their intent to build the Sears Tower on a parcel of land.

 
At 10:42 AM, February 06, 2008, Blogger Tory Gattis said...

Fair price = market price. Market price includes the redevelopment option. If the market price of the land drops after the regulation vs. before, the the govt has performed a taking.

Let's say a city wants to convert some valuable undeveloped land into a park. Under eminent domain, they have two options. 1) pay full and fair market value for the land. 2) pass land-use regs that say the land can't be used for anything other than open space, destroying its value, then buying the land and the new, lower "market price". Case 2 is a clear violation of the underlying principles behind the concept of eminent domain, requiring fair compensation for govt takings.

 
At 10:57 AM, February 06, 2008, Blogger Michael said...

>>Fair price = market price.

I think I agree with you, but I don't think that including the redevelopment option is actually worth a whole lot. Sure, it might double or triple the value of the property in some cases, but I think the land owner would still prefer to own the land versus being forced to sell at a government imposed price. So, you are arguably still taking some hypothetical value away from the land owner. But government does this all the time.

 
At 11:23 AM, February 06, 2008, Anonymous mike said...

"In either case, property value is removed from the owner, just the same as cash taken out of his pocket."

If part of a property's value includes its potential to be used in ways that are detrimental to neighboring properties or to the city as a whole (such as building something aesthetically jarring or destroying part of its heritage), I have no problem with that value being taken away. This is called balancing public good with private good.

 
At 5:23 PM, February 23, 2008, Anonymous Anonymous said...

I think both of you are wrong on the issue. Just because a majority of people might want something does not give the government the right to do it. You can not take away people's freedoms just because the majority of the people so it is ok. That is wrong this country was built on the idea that the political minority would have as much freedom as the political majority. So if the river oaks theatre is redeveloped (which i hope it is not) by the person that owns it. o well that sucks. But not as much as having are freedoms taken away.

 

Post a Comment

Links to this post:

Create a Link

<< Home