Thursday, January 31, 2008

Home affordability in real-life context, top rankings, tunnel costs, a Portlander disagrees, renewable energy in Houston

The small items are piling up faster than ever this year:
"A household moving from San Jose to Austin would save more than $1,000,000 in purchase and mortgage costs for the median priced house. This is the equivalent of 17 years median household income in San Jose or 26 years in Austin. Moving to Atlanta, Dallas-Fort Worth, Houston or Indianapolis from San Jose would save more than $1,500,000, which is the equivalent of from 25 to 30 years of median household income in the less costly markets."

Wow. I don't know about you, but saving 25-30 years of income has an absolutely amazing impact on my quality of life... ;-)

In the footnotes, I also discovered that we're the second-fastest growing metro market over 5 million people in the high-income world, ahead of Atlanta and just behind DFW.
  • Speaking of rankings, came across some new ones:
Houston ranks # 1, Job Growth, by: U.S. Bureau of Labor Statistics

Houston ranks # 1
, Lowest Cost of Living and Least-Expensive Housing Among 24 Metropolitan Areas with Populations of More Than 2 Million, by: ACCRA Cost of Living Index

Houston ranks # 2
, Texas -- Best Business Climate in the Nation, by: Site Selection

Not bad. Not bad at all.

"Houston's exports jumped 28 percent to $53.3 billion in 2006, according to a new analysis of exporting data the U.S. Department of Commerce released Thursday.

The Bayou City maintained its ranking as the nation's second-biggest exporter, trailing the New York City region, which exported $66.2 billion in merchandise. Houston beat out Los Angeles, which exported $48.7 billion in 2006. ...

Free trade agreements with Mexico, Canada and Central America helped the city boost its exports, experts said."

This Portlander disagrees

I was astonished to see a letter in Wednesday's Chronicle from an Oregonian who says he likes what has been done to Portland. (Please see "Concept of city planning / Portlander's opinion.") As a recovering Portlander who worked for the city in the early days of its "transformation," I watched heavy-handed zoning tactics and the urban growth boundary make that beautiful town unaffordable to all but the affluent and childless. Traffic congestion rivals New Delhi or Rome.

While living there, I watched "new urban" planners change Portland from a rock-solid blue- and white-collar city with strong family neighborhoods to a kind of urban Disneyworld for aging boomers who want a place to play while they sip their lattes. No cars in the city center, no industry along the river and lots of expensive condos.

My husband, a native Portlander descended from settlers who traveled the Oregon Trail and put down deep roots, sadly watches our Oregon grandchildren grow up outside his hometown. High housing prices and mediocre schools have driven families out of the city. Unemployment is always higher than the national average, and Portland taxes are astronomical. The money goes to light rail and the creation of neighborhoods with a "sense of place" where nobody wants to live. (nice quip!)

Except for the world-class roses, Portland, Ore., has little that Houston should want to replicate.

SHERRY SYLVESTER
Garden Ridge

  • Finally want to end on this random email I received. Good to see renewable energy initiatives congregating in Houston to diversify our energy base. More on extremely promising algae as renewable energy in this Chronicle article from late last year.
National Algae Association
4747 Research Forest Dr., Suite 180
The Woodlands, Texas 77381
inquiries(at)nationalalgaeassociation.com (I converted to no-spam format to avoid the spam spiders)
National Algae Association, The Woodlands, Texas
(February 1, 2008)
Announces the opening of its new headquarters serving all areas of the Algae industry.

Algae researchers and producers can come together to exchange ideas concerning the latest developments in Algae production and the products made from Algae. The Association provides an open exchange forum for the publishing of technical papers and the announcement of the results of research into the latest Algae related technologies. The Association also supports discussion and development of new markets that take advantage of the tremendous potential of Algae, not only as a source of renewable energy, but also in the exploration and development of other markets for algae products, such as cosmetics, pharmaceuticals and fertilizers.
For more information contact: inquiries(at)nationalalgaeassociation.com or 936.321.1125
That's it for this week. Have a great Super Bowl weekend.

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63 Comments:

At 9:24 AM, February 01, 2008, Blogger Brian Shelley said...

Concerning the 16-mile tunnel. I thought that the more interesting aspect was that it was proposed by a private developer, and supposedly privately financed.

 
At 11:19 AM, February 01, 2008, Anonymous kjb434 said...

It's important to note that is not just one Portlander that feels that way. I have some friends that lived there too. They left because their cost of living compared to the salary just made life too hard. The husband was a sous chef in a local restaurant and the wife was the head of store for a large retail clothier.

Both live in Houston now. The sous chef is now a head chef at a local Houston restaurant in the Montrose area. The wife transfered to a managerial position here in the same company. Their dollar goes a lot further now.

P.S. They have one car. The husband bikes are walks to work here in Houston as he did in Portland. They are what i would consider the typical urban couple. The wife also rarely used the car unless she has too in non-work related tasks.

 
At 12:32 PM, February 01, 2008, Anonymous Anonymous said...

I just hope Jetblue Pilots know where Houston is:

"Built in 1924, The Museum of Fine Art in Houston is a magnificent 55,000-piece attraction, and is the largest art museum in the Midwest outside of Chicago."

 
At 2:42 PM, February 01, 2008, Anonymous houstonp said...

Additionally, Houston has recently scored as the top city in the country on several key growth metrics including:
• #1 Job Growth (source US Bureau of Labor Statistics – March 2007)
• #1 Lowest Cost of Living among 24 MSAs with population greater than 2M (source ACCRA Cost of Living Index 2006)
• #1 Most Affordable Housing among 24 MSAs with population greater than 2M (source ACCRA Cost of Living Index 2006)
• #1 Largest Immigrant Communities in the US (source Center for an Urban Future April 2007)

The 2008 Houston Real Estate Investing trends report also shows the media home price is doing better than most parts of the country. You can get the full report at http://www.houstonproperties.com/report.html

 
At 9:31 PM, February 01, 2008, Anonymous Anonymous said...

also of note in the demographica study is that DFW ranks higher in housing affordability than Houston. Tory, does that seem strange with DFW's harsh zoning requirements driving up the costs associated with building?

 
At 10:13 PM, February 01, 2008, Blogger Tory Gattis said...

I'll copy over the same comment on Dallas I made in the last post:

DFW is roughly the same size as Houston, 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 5:29 AM, February 02, 2008, Anonymous Anonymous said...

Are the no jobs in The Woodlands, Katy (energy corridor), Sugarland, SE (plants/mfg), Pearland (medcenter)? Is everyone driving into dwtn, galleria and greenway plaza?

 
At 7:50 AM, February 02, 2008, Blogger Tory Gattis said...

Certainly some, but I'll repeat another comment from the last post:

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.

 
At 7:52 AM, February 02, 2008, Blogger Tory Gattis said...

Oh, and just to clarify: the energy corridor jobs are all in the city of Houston, although I'm sure some of the employees live in Katy. And the Medical Center is considered part of the job core along with downtown, uptown/Galleria, and Greenway. It's not in Pearland, although I'm sure many of the employees live out there and commute in.

 
At 11:55 AM, February 02, 2008, Blogger Brian Shelley said...

Tory,

Do you have a link to data on jobs in the core? I can do another one of my regressions. :)

 
At 3:04 PM, February 02, 2008, Blogger Tory Gattis said...

Brian,
The links in my post are from 1990 census data. Here's the response I got from Wendell on the update:

Here is the 2000 data... Be careful, however, because the geographical areas are not consistent between the two years... one should not do any trend analysis between 1990 and 2000. 1990 data was based upon MPO CBD definitions and in some cases the MPOs made no such designations, so we defined them. There was no MPO definition in 2000, so we have defined all.

http://www.demographia.com/db-cbd2000.pdf

There is also non-CBD data.

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

1. Houston does not have more jobs in its core than Chicago. Not by a loooooong shot.

2. Dallas's downtown is comparable in number of jobs to Houston's. Dallas's "center of gravity" is not displaced towards the northwest any more than Houston's is displaced towards the west.

3. Your arguments about housing prices in Dallas are starting to look very weak.

 
At 9:56 AM, February 04, 2008, Blogger Michael said...

In addition, your Demographia link lists the following cities as cheaper than Houston (all with zoning, to my knowledge):

1) Atlanta
2) Detroit
3) Cleveland
4) St. Louis
5) Pittsburgh
6) Cincinnati
7) Indianapolis

That is in addition to DFW and San Antonio, which have previously been discussed. Sure, some of those are rust-belt cities that have not done a good enough job of trying to be a "business-friendly" climate, but that just reinforces the point - zoning and planning are, if anything, a very, very weak factor in housing prices as compared to other factors.

Another point - Houston may look good now largely because we did not participate in the housing boom of 2003-2006. We are now starting to participate in some appreciation.

Also, while the strategy of "building out" and not up may have worked ok for the past 30 years of cheap land and cheap resources, this does not mean our strategy for adding 3.5 million people over the next 30 years should rely on building Perry Homes out to San Antonio, which would seem to be what the "market" and current road-warrior TxDOT would prefer. This seems very patently impractical to me.

Maybe other cities like LA and NYC have not found a good solution to the "affordable housing" problem, but Houston certainly does not seem like a model for the future either.

-Mike

 
At 10:32 AM, February 04, 2008, Anonymous kjb434 said...

Michael,

I think there is more evidence that the "market" is not the suburban only development pattern typically seen here in Houston.

While Houston continues to build outward because of land prices, cheap housing, etc; the city center is continuing to get denser and grow up.

Just look at Kirby Drive, Richmond from Wesleyan to Montrose. Montrose from Washington to West Gray.

Midtown is actually starting to pick up because the "market" is ready for it. Several developers of denser projects own land in midtown and sat on it. Even if it was zoned dense, who says they would have built on it. Camden is waiting on it superblock development until they can justify it.

I didn't even thow in Almeda just east of the Medical Center.

The market is responding the demand that density is needed. Also, many of the people moving here which are young/unmarried/and childless are deciding on the inner city. They may not stay there when they begin families, but they are starting there.

Also, with Houston being relatively unaffected from the housing collapse and with strong economy, it is reasonable to start seeing housing prices going up. Again, the is market reaction to demand. The reaction will cause some development farther out to keep a lower price point, but is forcing denser inner city development too.

 
At 11:14 AM, February 04, 2008, Blogger Michael said...

KJB,

Agreed. To my knowledge, this is also happening in the other cities (Atlanta, DFW, St. Louis, etc).

And note that a lot of the development you mention (along Richmond, Post Oak, Med Center) is occuring where public infrastructure (light-rail) is already developed, or is slated for construction. Are you trying to suggest that zoning would have prevented these types of developments? I think you've got it all backwards if that is the case. Much like light-rail (or highways) signal that a community is prepared to invest in and support certain levels of density, so too does zoning. And developers, from my understanding, actually like to see that commitment, because it means they can build more dense, profitable structures.

Tory is arguing that zoning and planning are inherently expensive, unwieldy, and we should stay away from it at all costs. On the other hand, I think the costs of zoning/planning are very small. For evidence, just look at all of the other major cities that use it, and still have lower housing prices than us, and in some cases (Dallas / Atlanta) far superior transit than us.

-Mike

 
At 12:16 PM, February 04, 2008, Anonymous mike said...

Just to make clear, "mike" is different from "michael" (although michael signs his posts internally as "mike").

Of all the major cities in America that I have visited (basically every major city except Minneapolis, Miami, Cleveland, Detroit, and San Diego), I have never seen two that were more similar than Houston and Dallas.

 
At 12:33 PM, February 04, 2008, Anonymous kjb434 said...

Michael,

I'm not saying zoning would have prevented it. I'm saying its clear that zoning is not needed to get the dense development that so many urban planners want and think they have to have zoning to get.

Why create a new bureaucratic arm of our local government when our current system is actually working mighty fine.

 
At 1:43 PM, February 04, 2008, Anonymous mike said...

For a lot of people, it is not working mighty fine.

 
At 2:07 PM, February 04, 2008, Anonymous kjb434 said...

Mike (not Michael),

For "who" it's not working mighty fine?

For someone where the property next to them happens to change? I don't see it written as a right that you are guaranteed to live in an insulated world where nothing affects you. The idiocy that people have magical rights to stop everything and anything from affecting their property value is something i can't understand. Any purchase of property involves some risk and no gaurantees.

For an old neighborhood that is gentrifying? It's not the developers fault that an old cottage neighborhood is drastically changing. It's the previous property owners that decided to sell. The developers aren't destroying anything or forcing people to leave. Some of these home owners that sold see this is a way to move up in the world.

 
At 3:20 PM, February 04, 2008, Anonymous mike said...

"The idiocy that people have magical rights to stop everything and anything from affecting their property value is something i can't understand."

I don't know about "everything and anything," but aside from that, it's called democracy.

 
At 3:45 PM, February 04, 2008, Anonymous kjb434 said...

Is it democracy to remove someone else's property rights because you don't like market risk and change?

To me, a government entity having the power to restrict the value of your property by restricting potential use is closer to a (insert a non-democracy government here).

Beauty of this city is that you can build practically what you want where you want. Just think of how many businesses will close is any of the more common variations of the zoning laws get enacted. If you look into the the Cherryhurst neighborhood (west of Waugh, south of W. Gray, east of Shepherd, and north of Westhiemer), you'll see many homes that are actually businesses. The owners of these properties would lose that right because zoning wouldn't allow that. Lawyers, Antique Shops, Small Restaurants (bye-bye Mockingbird Cafe), hair salons, tea houses and many more are examples.

 
At 9:27 PM, February 04, 2008, Blogger Tory Gattis said...

> Houston does not have more jobs in its core than Chicago. Not by a loooooong shot.

Well, now I have 2000 data. In the original post I was stuck with 1990 data. They have 542K jobs downtown, vs. 423K jobs in our core 4 job centers. Yes, they have more, but I would say it's a lot closer than a "looooooong shot".

> Dallas's downtown is comparable in number of jobs to Houston's. Dallas's "center of gravity" is not displaced towards the northwest any more than Houston's is displaced towards the west.

Check the link. They have about half as many jobs downtown as we do (153K vs. 79K). Then we have 3 other major job centers not far from downtown that triple that number - they don't. On top of that, we have extremely large eastern job centers around the Port and Clear Lake/NASA to balance out the western job centers of Westchase and the Energy Corridor. Dallas has essentially nothing to the east or south of downtown. Clearly, our jobs are far more centrally concentrated than theirs.

> In addition, your Demographia link lists the following cities as cheaper than Houston (all with zoning, to my knowledge):

1) Atlanta
2) Detroit
3) Cleveland
4) St. Louis
5) Pittsburgh
6) Cincinnati
7) Indianapolis

Yes, when demand does not outstrip supply, zoning is not much of a factor. The critical case is when it does. A free market allows supply to catch up with demand (as it is in Houston). Land-use regs/zoning often does not.

 
At 10:00 PM, February 04, 2008, Blogger Michael said...

Well, I don't have up-to-date figures for Chicago, but I do know:

1) Their labor force is approx 4.5 million
2) Houston's labor force is maybe 2.5 million
3) Chicago's labor force is much more consolidated in its CBD and surrounding areas
4) So, your conclusion that Chicago would have fewer jobs in its CBD and surrounding than Houston strikes me as pretty absurd. Indeed, these numbers should not even be as close as you suggest.

>>Yes, when demand does not outstrip supply, zoning is not much of a factor.

So, demand apparently does not outstrip supply in the zoned cities of Atlanta, DFW, San Antonio - which are all growing as fast (or faster) than Houston, and are all cheaper than Houston.

Oh wait, but Atlanta is not like Houston, and neither is DFW or San Antonio. Only Moscow is...

 
At 10:10 PM, February 04, 2008, Blogger Michael said...

>>Check the link. They have about half as many jobs downtown as we do (153K vs. 79K). Then we have 3 other major job centers not far from downtown that triple that number - they don't. On top of that, we have extremely large eastern job centers around the Port and Clear Lake/NASA to balance out the western job centers of Westchase and the Energy Corridor. Dallas has essentially nothing to the east or south of downtown. Clearly, our jobs are far more centrally concentrated than theirs.

What is the point of this argument? We have a bunch of spread out job centers with under 20% concentration in the core, and so do they. We have people living in a 600 sq mile region, and so do they.

I think Fort Worth counts as a pretty large Western job center in the case of DFW.

Sorry but who cares if the mathematical center in our case is only 10 miles west, whereas in their case maybe it is 15 miles northwest? These are still very similar cities and metropolitan areas.

 
At 10:46 PM, February 04, 2008, Blogger Tory Gattis said...

Again, checking the data at the link, 14% of Chicago's 3.8m jobs are downtown. 9% of Houston's 1.7m jobs are downtown, but you can almost triple that number once you include TMC, Greenway, and Uptown as part of the core. Chicago has an impressive downtown, but people don't realize how many of Chicago's jobs are (far) outside of it. In fact, far more of the metro's F500 HQ's are outside of the city of Chicago in the suburban towns than in the city itself. See the list here:
http://money.cnn.com/magazines/fortune/fortune500/2007/states/IL.html

Choose to believe what you will, but I won't repeat the arguments about DFW, SA, or ATL. They all have very lopsided job growth to one side of town and one set of suburbs, which greatly moderates housing costs because people don't need to be in the core to be close to their jobs. The equivalent for Houston would be if you took all the jobs in TMC, Greenway, and Uptown/Galleria (about equal to two downtowns) and smeared them along Beltway 8 between SugarLand and The Woodlands. Then we wouldn't have much pressure on housing prices in the city core either, just like those cities.

 
At 10:58 PM, February 04, 2008, Blogger Michael said...

>>but you can almost triple that number once you include TMC, Greenway, and Uptown as part of the core

And Chicago has no other job centers within a 7 mile radius of downtown? Even if they are not "major job centers", I still think plenty of people work in those areas in Chicago - etc. I have been there, and there is a lot of medium / dense residential, but there is also medium / dense commercial in these areas. There are easily a few hundred thousand jobs if you extend your comparison to CBD + beyond in both cases. So, you are basically comparing apples and oranges as it stands right now.

>>Then we wouldn't have much pressure on housing prices in the city core either, just like those cities.

I still fail to see the point of this argument. The comparisons should be done on an MSA or PMSA level. The types of differences you are talking about would be balanced out by slightly higher prices in those other cities in their suburbs. If all of the jobs were at Beltway 8, you would have higher housing prices at Beltway 8 instead of TMC. The overall net effect of this configuration on demand for the metro area would be pretty close to 0. Again, I fail to see the importance of this. Unless you are saying that Wendell's data does not take into account suburbs.

 
At 9:07 AM, February 05, 2008, Blogger Tory Gattis said...

I don't know Chicago that well, but I know it's flat (no towers) beyond downtown (except for some residential along the Gold Coast), and no non-CBD job centers are listed here (although I'm sure this list is not comprehensive, but it does seem to hit many of the biggest cities):
http://www.demographia.com/db-noncbd.htm

And, of course, Houston has plenty of jobs in the core too that are not in the big 4 job centers. In fact, we probably have more, at least proportionally. I base this on Houston being a freeway town, and many jobs hug the freeways and can attract employees from wherever (notice all the mid-rise office towers along the Loop and 59, for instance). But Chicago is very reliant on heavy rail, which is totally focused downtown. A major employer would be killing his employees (and certainly limiting the employees he could attract) if he didn't locate near that core transit loop. Locating near one of the lines (but not downtown) either limits him to employees along that one line, or creates a painful downtown transfer and reverse-commute for employees living in suburbs on the other lines (they come into downtown on their line, then transfer to the outbound line to get to their job outside the CBD).

Let me try again on the argument. Imagine two extreme case cities. In one, the jobs are evenly dispersed over the entire metro. Then there's little attraction to living in one place vs. another based on commute times, and so housing prices will stay close to construction costs (not that there can't be more or less attractive areas or school districts that shift values, but we're focused on the commute-time variable here).

In the other extreme case, imagine all the jobs of the metro packed tightly into a single core (like say, Manhattan in NYC). Now, the closer houses are to that core, the far more valuable they are (far beyond construction costs), because commutes will be substantially shorter for those residents.

My argument is simply that Houston is closer to the second case than DFW, SA, or Atlanta - although certainly we're no NYC.

 
At 9:35 AM, February 05, 2008, Anonymous Mike said...

"Is it democracy to remove someone else's property rights because you don't like market risk and change?"

If you can find a constitutional problem with the idea of regulations, then take it to the courts.

 
At 9:40 AM, February 05, 2008, Blogger Michael said...

>>In the other extreme case, imagine all the jobs of the metro packed tightly into a single core (like say, Manhattan in NYC). Now, the closer houses are to that core, the far more valuable they are

I still think this comparison misses the boat. Given 2 cities of equal population, equal number of jobs, equal land area, and equal housing availability, it should not matter where you place the jobs or the housing on the map - overall demand and supply are roughly equal - so total land value + improvements will be roughly equal. Greater demand in one area will be offset by lesser demand in others. I think in this sense, comparing Houston, Dallas, and Atlanta is a pretty fair comparison, regardless of where you put the dots on the map. NY is a very different beast.

What you might expect to see is in Dallas, zoning causes higher prices, because of lessened supply. This does not appear to be the case. Which makes me wonder again - even you say land-use regs "generally" restrict construction - well, maybe in places like Atlanta and Dallas, instead of arguing why they are so different from Houston, maybe they already fall into this "less restrictive zoning" camp which does NOT restrict construction. That is, they have achieved the happy middle where developers don't build monstrosities in residential neighborhoods, but otherwise the free market is allowed to work. What would be so wrong with that? Why don't you want to consider that possibility?

 
At 9:57 AM, February 05, 2008, Anonymous Mike said...

Tory,

Your arguments concerning Houston vs. Chicago, Dallas, and other cities are growing increasingly desperate. You say Houston has a comparable core to Chicago, but to do that, you have to expand Houston's core to include the Galleria, 7 miles to the west, and the TMC, 4 miles to the south. Pretty large core there. And why not throw Dallas's Galleria area in with its "core" population? It's not any further away from downtown than ours is.

I am actually sitting in Dallas's Galleria area as I type, and I can tell you that the center of gravity in this city is towards downtown. That's where you will find the highest density of living and most expensive neighborhoods (just as high if not higher than around downtown Houston).

If you are trying to say that housing prices in Houston are as high as in Dallas because Houstonians are forced to live closer together and therefore the price of land is higher, and that Dallas's prices would be lower if it didn't have zoning, you will have to show me that Houstonians do in fact live closer together. As far as I can tell, the two cities are pretty similar in terms of density (in contrast to the other cities you chose for comparison).

The notion that Houston is more comparable in development patterns to Boston, Philadelphia, Miami, and Chicago than it is to Dallas is nothing short of preposterous.

 
At 2:12 PM, February 05, 2008, Blogger Tory Gattis said...

> Greater demand in one area will be offset by lesser demand in others.

You're forgetting that there's a floor on home prices based on construction costs. Prices can go higher than that based on demand, but they really can't go lower. So a higher median home price for my second case than my first case is valid.

You say they have less restrictive zoning than most of the rest of the country. True. I say they have less core demand than Houston for the reasons I've outlined. What keeps our prices in line with theirs is our free market and their lack of demand. If we adopted their even less restrictive zoning, I believe our prices would shoot up rapidly past theirs, as supply would no longer meet demand. Maybe not if the zoning allowed everything we currently allow, but then what's the point of adding a new bureaucracy? And if it does constrict development, an iron law of economics says prices will increase to match supply and demand.

Mike: I'm talking about density of jobs, not high-density or high-end residential. Houston has a higher density of jobs in the core than Dallas, as a percentage of the metro.

> The notion that Houston is more comparable in development patterns to Boston, Philadelphia, Miami, and Chicago than it is to Dallas is nothing short of preposterous.

Not saying the development patterns. Saying the demand for living close to the core is more like those cities than Dallas.

 
At 3:31 PM, February 05, 2008, Anonymous Mike said...

If there's a higher demand for living in the core of Houston than in the core of Dallas, then shouldn't there be a higher density of residences?!

 
At 10:08 PM, February 05, 2008, Blogger Tory Gattis said...

Yes, there should be. Wikipedia shows slightly higher density for Houston over Dallas. But that's over hundreds of square miles for each city. I think if you focused on the cores, esp. the new townhome, tower, and apt complex areas inside the loop, Houston would have a more substantial density advantage.

 
At 10:28 PM, February 05, 2008, Blogger Michael said...

>>You're forgetting that there's a floor on home prices based on construction costs. Prices can go higher than that based on demand, but they really can't go lower. So a higher median home price for my second case than my first case is valid.

No, this actually doesn't matter. This minimal price is going to be roughly the same in both areas.

Think about it - unless you can show me some social theory of why value would increase less based on the spatial patterns you have outlined, there is no mathematical or logical reason why that would be the case given two otherwise identical cities.

 
At 7:24 AM, February 06, 2008, Blogger Brian Shelley said...

Michael,

"Think about it - unless you can show me some social theory of why value would increase less based on the spatial patterns you have outlined, there is no mathematical or logical reason why that would be the case given two otherwise identical cities."

Imagine Lake Jackson suddenly exploded adding 100,000 jobs over the next five years. Prices in Lake Jackson would go up, but there's miles of undeveloped land to keep prices down. This would also count towards Houston metro population, but I think it's unlikely that it would have much of an effect on home prices in the city of Houston. However, if those same 100,000 jobs were created just in downtown, I would expect home prices near downtown to rocket upwards because there isn't gobs of raw land close by.

 
At 7:43 AM, February 06, 2008, Anonymous Mike said...

I think there's actually more high density development around downtown Dallas than around downtown Houston. Either way, I now live in central Dallas, and I can't really see a difference between the two. NOTHING like the difference between Houston and Boston, or Chicago, or Philadelphia, all of which you think are more comparable to Houston than Dallas is.

 
At 8:45 AM, February 06, 2008, Blogger Tory Gattis said...

In case A (even spread of jobs), all houses are near construction cost. In case B (heavy core jobs concentration), many are near construction cost (outlying suburbs), but others near the core are much more valuable. Any way you slice the math, average prices are higher in B than A. Yes, the *minimal* price will be the same in both, but average price will be much higher in case B.

 
At 9:31 AM, February 06, 2008, Blogger Michael said...

>>In case A (even spread of jobs), all houses are near construction cost. In case B (heavy core jobs concentration), many are near construction cost (outlying suburbs)

No - this is just flat-out wrong. The same number of jobs, the same housing supply and land area, the same demand for housing, will yield the same aggegrate pricing level across a metro area.

Brian, your example relies on the fact that Houston's downtown is already so strong, and perhaps the suburbs are already so close to construction cost. However, I do not think it disproves the idea that placement of people / jobs / housing - given equal quantities of all across 2 metros, would alter the aggregate supply / demand curves. Therefore, the point about whether Houston and Dallas are spread out slightly differently is, to me, irrelevant.

 
At 10:33 AM, February 06, 2008, Blogger Tory Gattis said...

> The same number of jobs, the same housing supply and land area, the same demand for housing, will yield the same aggegrate pricing level across a metro area.

In case B a set of houses are far more attractive than then others because of shorter commute times. If you assume people put any value at all on their time, they will pay more for these houses. Also in case B, commutes are worse for the suburban houses, but they can't pay less than construction cost. One set of houses gets more expensive, another set stays the same (vs. case A). That leads to a higher average price.

 
At 11:13 AM, February 06, 2008, Anonymous mike said...

Again, if so many more people in Houston need these short commute times, why doesn't Houston have more density than Dallas in its core?

 
At 12:31 PM, February 06, 2008, Blogger Michael said...

>>In case B a set of houses are far more attractive than then others because of shorter commute times. If you assume people put any value at all on their time, they will pay more for these houses.

This ignores other factors such as transit systems which may allow for very short commute times even with great distance (whether that is commuter rail or HOT lanes), school districts, and the shorter commute times in case A for a much larger percentage of the population. Case B only drives up the price in one small area.

Regardless, if you look at the price per square foot maps on zillow for Dallas vs. Houston, they look very comparable. Dallas's high-price area is north of downtown. Houston's is west. The rest of both metros is very affordable.

One area has zoning, which does not seem too restrictive, and prevents the type of Ashby high rise controversies we now have here. Which system do you prefer? I prefer Dallas, on the face of it.

Also, for you and Mike, arguing about density - again, Dallas and Houston are like identical twins:
Dallas - 3,605.08/sq mi
Houston - 3,701/sq mi
(courtesy of Wikipedia)

I know it is not a comparison of density in the core, but I think that both cities will be becoming more dense in the core going forward as smart growth strategies prevail.

 
At 1:39 PM, February 06, 2008, Anonymous mike said...

"Regardless, if you look at the price per square foot maps on zillow for Dallas vs. Houston, they look very comparable."

But that's only because Dallas has zoning and Houston doesn't, according to Tory. If Dallas didn't have zoning, its prices would drop. If Houston had zoning, its prices would jump up to the neighborhood of prices in Miami, Philadelphia, and Boston. Because Houston is a traditional, downtown-centralized city like those are (even though the exact opposite argument was used to explain why we shouldn't invest heavily in rail), not a decentralized, suburban one like Dallas.

Why the entire west half of Houston's loop area gets included in its "core," while Dallas's "core" includes neither its Central Expy. business district nor its North Tollway business district, nor its Stemmons Fwy. business district, nor its multiple medical centers between downtown and 635, has not been explained.

 
At 7:23 PM, February 06, 2008, Blogger Tory Gattis said...

To clarify, Houston is a bit of an odd hybrid. We're not as downtown CBD centric as some of the cities you list, but also not as dispersed as DFW, ATL, Phoenix, etc. We have 4 major job centers relatively close together within a 5-mile triangle. That, unfortunately, makes commuter rail not work very well vs. a single CBD like NYC and Chicago, but a HOV/HOT express bus lane network can serve it quite well.

I don't know Dallas' job centers very well, but none were listed here vs. several for Houston:
http://www.demographia.com/db-noncbd.htm

As far as who's building more density, I'll refer you to this post comparing Houston to both Dallas and heavily planned/regulated Portland:
http://houstonstrategies.blogspot.com/2007/03/houston-vs-dallas-portland-who-builds.html

 
At 10:16 PM, February 06, 2008, Blogger Michael said...

>>As far as who's building more density, I'll refer you to this post comparing Houston to both Dallas and heavily planned/regulated Portland:

Regarding your previous post, I think it is kind of silly to compare the amount of dense building in any one given year. Cities are built over hundreds or thousands of years. Quick - who built more high density housing in 1874 - Boston or NYC? Who cares? At the very least you could compare a decade's worth of data (I'll be the first to admit such data might not be readily available ;))

My point is that all cities across the country are seeing increased demand for dense, urban living. This demand is not met in one year, but over a generation (or longer).

Looking at population density provides a better measure for where things stand right now:

Dallas / Houston - 3700 people / sq mile
Portland - 4200 people / sq mile

Let me know when Houston is at 6000 people per square mile, and Dallas is still at 4000, and then you'll have made a good point. In the meantime, I'll continue to believe that Dallas is taking the better approach to growing their city.

 
At 9:02 AM, February 07, 2008, Anonymous mike said...

"I don't know Dallas' job centers very well, but none were listed here vs. several for Houston"

If you were to take a core area of the size you gave Houston's core and superimpose it over Dallas, you would end up with not just downtown, but also a string of office towers along Central Expwy., a string of office towers (plus the marts) along Stemmons Fwy., a major business district along the North Tollway (Galleria), a major university (SMU), and no less than four medical centers. I think the gap between Dallas and Houston for "core" jobs would narrow significantly.

"As far as who's building more density, I'll refer you to this post comparing Houston to both Dallas and heavily planned/regulated Portland"

The problem with looking at city statistics is that much of Dallas's multi-family units are in Addison and Richardson (around the Galleria), not in Dallas. This would be like if all Houston's apartments in the Galleria area were subtracted from the numbers.

 
At 9:10 AM, February 07, 2008, Anonymous mike said...

Continuing from the post above, it's hard to think of what office districts in Dallas/FW would not be in this core. You would have a few more office buildings further north along the tollway, a moderate number of buildings in Irving (perhaps comparable to the Energy Corridor), and then a modest business district in Fort Worth. That's about it.

 
At 9:22 AM, February 07, 2008, Blogger Michael said...

Just a quick note - the following seems to be a *great* site for Dallas demographics (for future comparisons and projections). Just offhand, pulling up their 2005 numbers for Dallas CBD + Dallas Outer CBD employment yields 221 K jobs (not the 79 K that Tory mentions).

http://tinyurl.com/25ggdn

I am not sure where the other business districts are, but maybe Mike or Tory can throw together more accurate comparisons from now on. Or Mike - you can see if you get to 500 K jobs in Dallas' core with the business districts you've mentioned.

 
At 3:22 PM, February 07, 2008, Anonymous Mike said...

Looking at Michael's site, I added the 2005 jobs for Dallas CBD, Dallas Outer CBD, Telecom Corridor, Addison, and Richardson, and ended up with 477k. This seems like an area roughly equivalent to Tory's "core 4" of Houston CBD, Greenway, TMC, and Galleria (total pop 423k).

 
At 8:50 PM, February 07, 2008, Blogger Tory Gattis said...

If you're going to Richardson, I think that's about the same as adding the Energy Corridor and Westchase to Houston, not to mention the Port. And, of course, that doesn't count any of the jobs and buildings in the core of Houston not in those 4 centers (which is a lot, essentially along every freeway).

I like the link. Great data. If you look at the Dallas maps here (2035)
http://www.nctcog.org/ris/demographics/forecast/maps/2030Emp.pdf
and here (growth 2035)
http://www.nctcog.org/ris/demographics/forecast/maps/Empgrowth.pdf
I think you'll see a strong bias to the northwest.

Then look at Houston here:
http://www.h-gac.com/community/forecasting/documents/2035RGF.pdf
p.11, 14, and 15
A slight western bias, but not nearly as much as DFW.

They also show Houston with 579K jobs inside the loop in 2005, and that doesn't even include most of Uptown/Galleria.

 
At 12:31 PM, February 08, 2008, Anonymous Anonymous said...

Late post regarding Houston and Dallas - I'm not saying it has anything to do with zoning, but Houston's big job destinations *are* significantly closer together than Dallas's. Don't forget that Loop 610 is about the same size as Loop 12. Houston's Galleria is about as far from downtown as Preston Center in Dallas. Dallas's Galleria is about as far from downtown as Memorial City in Houston.

jt

 
At 2:04 PM, February 08, 2008, Anonymous Mike said...

"If you're going to Richardson, I think that's about the same as adding the Energy Corridor and Westchase to Houston, not to mention the Port."

It's their Galleria area. It's on the first freeway north of downtown (635) much like our Galleria. No way is that like adding the Energy Corridor or the Port.

"They also show Houston with 579K jobs inside the loop in 2005, and that doesn't even include most of Uptown/Galleria."

I'm looking at jobs in the major centers, not every job inside the loop. Just the office complexes themselves. So now the whole loop is part of Houston's core?

 
At 2:12 PM, February 08, 2008, Anonymous Mike said...

"I'm not saying it has anything to do with zoning, but Houston's big job destinations *are* significantly closer together than Dallas's."

Dallas's Galleria would be a little further than ours, but not as far as Memorial City (or the Energy Corridor). We've added maybe two miles, three tops to our radius. And that makes us more comparable to Boston, Philadelphia, and Chicago than it does to Dallas?

 
At 3:10 PM, February 08, 2008, Blogger Michael said...

Mike,

It is called "a stretch" - you kind of have to suspend ordinary rational processes to get there. But you can do it!

It's the same type of logic that says that having to wait 5-10 minutes for a train transfer makes rail unsuitable for our community, but neglects to mention that most people easily spend at least that amount of time stuck at traffic lights on a one-way commute (don't even get started on traffic congestion issues, where the average driver loses 56 hours a year to sitting in traffic).

-Mike

 
At 4:23 PM, February 08, 2008, Blogger Tory Gattis said...

> "If you're going to Richardson, I think that's about the same as adding the Energy Corridor and Westchase to Houston, not to mention the Port."

> It's their Galleria area. It's on the first freeway north of downtown (635) much like our Galleria. No way is that like adding the Energy Corridor or the Port.

According to Google, Dallas CBD to Richardson is 16 miles. Houston CBD to Eldridge (the heart of the Energy Corridor) is 15 miles. Westchase is 17 miles.

Again, I'll refer you to the maps I linked. Pretty obvious bias to the far northwest in DFW.

 
At 4:40 PM, February 08, 2008, Blogger Michael said...

I'm still missing it!

Dallas city has over 1 million jobs according to that site. Tarrant county had 864,000 jobs.

Richardson, which is a separate city, had another 100 K jobs.

The only difference is that, like Tory says, our energy corridor is technically within the city of Houston.

The "bias to the Northwest" that Tory is referring to is measured because you are looking at areas with higher than 3.5 jobs per acre. That does not sound granular enough to me to see that the CBD is still a very powerful area there.

If there is any bias, it is to the North. You can draw a horizontal line from Fort Worth through Dallas, and not much density below that. A lot of density north of that.

Now, look at Houston's 2035 map - and exclude anything southeast of 59. Now, for all the talk of the port and Clear Lake, there really isn't much overall density there, is there?

 
At 5:18 PM, February 08, 2008, Anonymous Anonymous said...

mike,

I didn't say anything about Boston, Philadelphia, or Chicago.

Eyeballing some actual maps, I make the Dallas CBD-Galleria distance as ~11 miles, and the Houston as ~6. That might just be "a little further", but area-wise it's like 3 to 1. (CBD-Memorial City is also ~11.)

Dallas and Houston *are* very similar, but Houston's "core" really is much more distinct than Dallas's.

jt

 
At 11:04 AM, February 09, 2008, Anonymous mike said...

"According to Google, Dallas CBD to Richardson is 16 miles."

Okay, exclude Richardson. Still over 300k for Dallas's core (not counting medical centers, which I couldn't find data for) vs. 423k for Houston's core. Not too much different.

Dallas's Galleria is 9 miles away vs. 6 miles for ours. A little different, but not much. And the "center of gravity" is south of 635, not to the "far northwest."

"I didn't say anything about Boston, Philadelphia, or Chicago."

No, you didn't. Tory did. See above.

 
At 11:06 AM, February 09, 2008, Anonymous mike said...

Actually, change "over 300k" in the above post to "nearly 400k" without Richardson.

 
At 9:44 AM, February 11, 2008, Anonymous Anonymous said...

O.K., I have to defend my native Dallasite geographical knowledge credentials. Thumb and forefinger say Dallas CBD to Galleria is ~11 miles. Google Maps says Dallas City Hall to Galleria ice rink is 10.82 miles.

Again, I'm not saying that the distance of various landmarks from each other has anything to with zoning. I just wanted to inject some actual numbers into the discussion since it seems like y'all are basing your arguments on them.

If the "Galleria metric" was meaningful, the difference would be very large. Doing the same Google trick for Houston I get 5.82 miles, so the area within Dallas's "Galleria circle" is 346% that of Houston's.

jt

 
At 3:04 PM, February 11, 2008, Anonymous mike said...

"Doing the same Google trick for Houston I get 5.82 miles,"

Funny, I just did it and got 7.1 miles. I also dragged the route for shortest distance. Maybe you are picking the furthest away landmark in Dallas's downtown (City Hall) and a much nearer landmark in Houston's downtown.

Don't know how on earth you got the 346% stat. These "core" areas are not perfect circles.

I'm happy to agree that Dallas's job centers are slightly more dispersed than Houston. It's still more similar to Houston - by far - than any other American city. The fact that Tory didn't include it in his comparison list of cities that have zoning is plain dishonesty. So is using an area seven miles in width vs. strictly using downtown Dallas proper for his "core" comparisons.

 
At 11:27 AM, February 12, 2008, Anonymous Anonymous said...

mike,

(10.82/5.82)^2 = 3.46

I wasn't trying to be sinister in picking the city halls as a proxy for the downtowns. You're welcome to pick Allen's Landing and John Neely Bryan's relocated cabin. I'm not sure how you could get 7.1 miles in Houston without stretching all the way to "NoDo" (do people still try to call it that?) though.

Again, I'm just talking geography, not trying to make a bigger point about zoning and density. I don't think there is any essential relationship between zoning or lack thereof and how closely spaced various prestige destinations are, at least not one that isn't swamped by other factors. But if we are going to compare Dallas and Houston geography to try to prove some point or other, it is a mistake to equate Dallas's LBJ (I-635/I-20) and Houston's Loop (I-610)

jt

 
At 12:50 AM, February 19, 2008, Anonymous Anonymous said...

Hey Houston is rated #1 fattest city too.

Yay!

 
At 7:34 AM, February 19, 2008, Blogger Tory Gattis said...

Not for several years now, although we're still on the list - which is a crock in any case. See here:
http://houstonstrategies.blogspot.com/2006/01/indiscriminate-fitness-magazine-picks.html

 

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