Houston Strategies

How Houston beats NYC for the middle class

I recently discovered this 2008 City Journal piece by noted urbanist Ed Glaeser comparing NYC and Houston, and despite being 15 years ago the points are still valid, if not even more so. I highly recommend reading the whole thing, but here are my favorite, albeit still extensive, excerpts:

Edward L. Glaeser: Houston, New York Has a Problem

The southern city welcomes the middle class; heavily regulated and expensive Gotham drives it away.

New Yorkers are rightly proud of their city’s renaissance over the last two decades, but when it comes to growth, Gotham pales beside Houston. Between 2000 and 2007, the New York region grew by just 2.7 percent, while greater Houston—the country’s sixth-largest metropolitan area—grew by 19.4 percent, expanding from 4.7 to 5.6 million people. To East Coast urbanites, Houston’s appeal must be mysterious: the city isn’t all that economically productive—earnings per employee in Manhattan are almost double those in Houston—and its climate is unpleasant, with stultifying humidity and more days with temperatures exceeding 90 degrees than in any other large American city. So if those two major factors in urban growth don’t explain Houston’s success, what does?

Houston’s great advantage, it turns out, is its ability to provide affordable living for middle-income Americans, something that is increasingly hard to achieve in the Big Apple...

Housing prices are the most important part of Houston’s recipe for middle-class affordability...

To understand what kind of houses these are, go house-hunting on the Web. In Houston, you’ll find a lot of nice places listing for $175,000, and they’ll probably sell for about 10 percent less, or $160,000. These are relatively new houses, often with four or more bedrooms. Some have over 3,000 square feet of living space, swimming pools, and plenty of mahogany and leaded glass. Almost all seem to be in pleasant neighborhoods—a few are even in gated communities. The lots tend to be modest, about one-fifth of an acre, but that still leaves plenty of room for the kids to play...

You thus get much more house in Houston and pay a lot less for it. This chasm would be just as big if you compared Houston with Los Angeles, where the average house price is a whopping $613,000. Small wonder Houston looks so good to middle-class Americans.

It looks even better once you take taxes into account...

Just as with housing, however, there’s a significant difference in the quality of transportation in Houston and New York. In Houston, the middle-class breadwinner likely will drive an air-conditioned car from an air-conditioned home to an air-conditioned workplace, and take 27.4 minutes to do it, on average. Commuting via New York public transit is more complicated. If you live in Queens, the average commute to midtown Manhattan (if that’s where you work, as we’ll say) is 42 minutes, and longer if you’re coming from Far Rockaway. From Staten Island, the average commute is 44 minutes—and often something of a triathlon, with bus, ferry, and subway stages. Our middle-class New York commuter thus spends at least 120 more hours in transit per year than does his Houston counterpart. And except perhaps for the ones spent on the ferry, none of those hours is as agreeable as sitting in an air-conditioned car listening to the radio...

After housing, taxes, and transportation, the New Yorkers have $26,000 left. The Houston family has $30,500, and those dollars go a lot further than they would in New York...The Houston family is effectively 53 percent richer and solidly in the middle class, with plenty of money for going out to dinner at Applebee’s (??? what Houstonian does this?!🙄) or taking vacations to San Antonio. The family on Staten Island or in Queens is straining constantly to make ends meet.

Don’t forget education. Ordinary public schools would be comparable in Houston and on Staten Island, with average SAT scores of about 950. The Houston family, though, has the option of moving to a slightly more expensive school district, like Spring Branch, which has an average SAT score of 1070, better than that in many New York suburbs...

True, New York boasts fantastic cultural advantages, hip downtown neighborhoods, and pleasures you can enjoy even if you don’t have much cash in your pocket—museums, parks, architecture. But the fact remains that living in Houston on $60,000 a year means a high-quality, spacious home, an air-conditioned commute, low local taxes, education options, and a decent amount of spending money left over. Living in New York City on $70,000 a year means a smaller, older home, a long and arduous commute, higher local taxes, fewer educational alternatives, and scrimping every day. For many middle-class families, at least those with kids, the amenities will be no substitute for a more comfortable life. In a sense, the real surprise isn’t that so many middle-income families are putting down roots in Houston (and in other fast-growing cities with similar characteristics, such as Atlanta and Phoenix); it’s that any of them remain in New York...

And the unavoidable fact is that New York makes it harder to build housing than Chicago does—and a lot harder than Houston does. The permitting process in Manhattan is an arduous, unpredictable, multiyear odyssey involving a dizzying array of regulations, environmental and otherwise, and a host of agencies. Then developers must deal with neighborhood activists and historical preservationists. Any effort to build in one of New York’s more attractive, older communities would almost certainly face strong opposition from the Landmarks Preservation Commission.

A further obstacle: rent control. When other municipalities dropped rent control after World War II, New York clung to it, despite the fact that artificially reduced rents discourage people from building new housing. As New York owners converted rental units into coops to escape the price controls, the city then turned to public housing to solve the problem of housing the poor. The city’s strange policy remains to try to increase the (modest) number of subsidized apartments rather than opening the market to more development, which would significantly increase the overall supply of housing at all price levels.

Houston, by contrast, has always been gung ho about development...

Indeed, the city is unique in America in not having a zoning code. Many deeds include land-use restrictions of various kinds, true, but these are voluntarily chosen by developers, not decided on high by government bureaucrats. Occasionally, groups rally to try to institute zoning regulations, but the growth machine invariably beats them back, often supported by some of the poorest people in the city. Houston’s builders have managed—better than in any other American city—to make the case to the public that restrictions on development will make the city less affordable to the less successful...

But Houston’s success shows that a relatively deregulated free-market city, with a powerful urban growth machine, can do a much better job of taking care of middle-income Americans than the more “progressive” big governments of the Northeast and the West Coast. 

Labels: affordability, development, growth, home affordability, zoning

posted by Tory Gattis @ 9:47 PM