Sunday, February 14, 2021

The future of superstar cities and Houston, CA's problems, warehouse glut, why tech in HTX?

Hope everyone's staying safe and warm during this way-way-way-too-cold Valentines+Presidents Day winter storm.  The lead item this week is a really interesting piece my friend George sent me on the future of superstar cities by Matthew Yglesias.  I think his observations are directionally correct, but he’s missing some pretty important nuances.  

First, he’s completely ignoring extended family pulls that bring people back to regions.  

Second, he’s seeing everything thru the lens of the footloose and fancy-free celebrity rich (the Matt Damon and NBA references), and that is an incredibly tiny part of the population. His alternate lens is 20-something tech startups – also a pretty narrow niche.  Normal people have family ties and different reasons for picking places.  A lot of the NYC/LA amenities he thinks are so key aren’t that valuable to families, and they’re the ones most likely to leave.  

Third, he’s ignoring the *relative* impact of remote work.  NYC and LA have a mix of people who want to be there for lifestyle and have to be there for work. Once the work reason is gone, a lot of them have left and will continue to leave (look at the Wall Street types moving to Miami). The lifestyle people may stay, but those cities are still declining relative to what they were when they could hold onto both groups.  They will face massive budget deficits which will push them to raise taxes which will push even more people to leave.

As far as Houston, we’re not on the national media radar, but I have personally seen a *ton* of out-of-state plates around recently. The media forgets that they don’t drive most people’s location decisions – it’s what they hear from friends and family, and most Houstonians like it here and plug it to their extended friend/family networks (including talking about the kind of home they can afford), and those friends/family decide to move here based on that recommendation.  But obviously the weak oil industry is not helping, and the GHP is absolutely right we need to diversify our economy and build our innovation economy (my latest idea for that).  But our core engine is a good sustainable one – not oil, but having a great lifestyle (esp restaurants) at an affordable price (from lack of zoning) that people tell their networks about. As long as we sustain and keep improving that, we will keep growing, even as ‘hotter’ cities like Austin and Miami become ever more crowded and unaffordable.  As long as articles like this are being written about us, we’ll do just fine:

Moving on to this week's items:

Houston. Houston has done it right. (one of my more popular tweets) More of these cities should look to our model for handing rapid growth without unaffordable housing.

"Conservatives do not resist many regulations of the sort seen in California because we want cities to be horrible or because we secretly are in the pockets of developers who for some reason want their cities to be horrible; rather, we are skeptical of such schemes because they tend to create artificial shortages, distort markets and investment decisions, and prevent solutions from emerging organically. “Markets work!” is cartoon libertarianism, but you know what? Markets work. And if you don’t let them work, you end up with artificial scarcity, high prices, and rationing."

Hear, hear!
    1. Houston has a welcoming and collaborative culture
    2. Great sports teams and miles of biking trails
    3. Self-care is an important part of the culture
    4. The legendary food
    5. The large talent pool
"In some ways, Houston is anomalous. Its business-friendly regulation puts very few restrictions on building. “There’s no zoning,” said Ryan Byrd, a principal of Colliers International Houston. “If there’s land that doesn’t have a pipeline, wetlands or is in a flood plain, you can build a building in less than one year.”

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At 1:28 PM, February 16, 2021, Anonymous Dom said...

Funny how business friendly regulations lead to over development in apartments, office space, and warehouse space in Space City while making Houston a very flood prone city.

I prefer a balance.

At 2:14 PM, February 16, 2021, Blogger Tory Gattis said...

Most cities are unbalanced the other direction, with lack of supply and high prices. I'll take Houston's high supply and affordability any day, even if that means sometimes developers overbuild and lose money. Better them than the city citizens and consumers.

At 7:03 PM, February 16, 2021, Blogger Feral Writers' Project said...

One of the difficulties with discussions of regulation and liberty in Houston is that an entrepreneur, such as a developer, often does pay the real costs of his or her private decisions after he or she "loses," but not after a "win." This leads to confirmation bias about the success of what we call the Houston system (though Phoenix seems to be similar in many respects). Crucially it also leads entrepreneurs to make different bets than they would if they knew they would shoulder the costs when they win, just as they will if they lose. Flooding is a prime example of this. No single developer was Too Big To Fail and had to get rescued after Allison, Ike, Harvey... but because Harris County had no regulation prohibiting them from letting their runoff increase downstream peak flood levels until July 2019, hundreds of developers built more than they would have if they knew they could not avoid paying fees to prevent or mitigate their free rider impacts on other private property owners. The link below is not long, but it is an honest analysis of how we differ from a marketplace that finds accurate prices as cheaply as possible, like an engineer would want to do.

At 9:09 AM, March 31, 2021, Blogger Unknown said...

La does so bad its behind Orange County and Riverside in lots of job growth. Also, LA is way behind Orange County in median income.

At 9:10 AM, March 31, 2021, Anonymous Anonymous said...

LA does so bad its behind Orange County, the inland empire, and San Diego in job growth the past 10 years. LA's median income is way behind San Diego or Orange County. Yes, the burb counties outperformed it.


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