Monday, June 28, 2021

Flexible remote work beating hybrid models, Austin's CA housing frenzy, Kinder housing insights and flaws, and more

A fair number of interesting items this week:

“I feel like we have more friends here now than we’ve ever had in California,” Josh Rubbicco said. “People were so welcoming and friendly.” ... 

“The pricing power of Austin, which is number one in the country, is driven by California, plain and simple,” Toll Brothers CEO Douglas Yearley said on an earnings call last month. “The phenomenon is fascinating. We’ve never seen migration like this.”

  • WSJ: Remote work is the new signing bonus (and only 2% of VMWare employees showed up when offices re-opened!). This has a ton of ramifications, and not just to cities. Talent will migrate to a lot of more flexible competitors. Companies that insist on in-office will be less competitive – JP Morgan may lose waves of bankers, and competitors will be eager to poach. Maybe ultra-wealthy companies like Apple will just throw money at employees until they work in the office, but most companies won’t have that option. The old extroverted execs that mastered office politics will try to push everybody back into the office, but it will cost them dearly, in talent (lost and paying a premium to keep) and in office space. They won’t just lose the talent competition, but the cost competition. There will be major changes in the competitive landscape of a lot of industries. And it’ll be interesting to see if these hybrid models hold up over time. I think the Adobe total flexibility model is more likely to dominate. Employers with the hybrid model will soon make exceptions for key talent that want to be more remote. Once they do that, existing employees will ask for the same flexibility out of fairness. And then they’re on a slippery slope to the Adobe flexible model.
  • Continuing the remote work question, Rice's Kinder Institute interview with downtown's Bob Eury on The return to work will determine the fate of downtowns. Is Houston ready for what’s next?
  • Rice's Kinder Institute releases their 2021 State of Housing in Harris County and Houston report (story). A lot of good insights in here, but I have two critiques: 
    1. Building in 100y and 500y floodplains is only bad if buildings are not properly elevated, which they should be under current regulations.
    2. I'm not sure comparing renter incomes to the median house price is the right comparison. Renters fall on the lower end of the income spectrum, so shouldn't the relevant question be if they can afford houses one or two standard deviations below the median house price? Or put another way, if renters on average earn X% of the region's median income, the question shouldn't be if they can afford the median house, but houses at X% of the median price.
  • UCLA: Value Capture Reconsidered: What if L.A. was Actually Building Too Little? Hat tip to George. Abstract: 
"Should cities only allow new housing on the condition that the developers of that housing deliver public benefits in return? This idea is often called “value capture”, and is used to justify — among other things — various forms of inclusionary zoning. The author argues in this essay that value capture is conceptually and logically flawed. It rests on the idea that new housing is not by itself a public benefit, and on the assumption that not building housing is socially harmless. Most of all, it inverts one of the most important insights in urban economics and urban public finance: that value rests primarily in land, and that development is an important way to share and redistribute land value."
Finally, we'll end with a little fun. This map is wild - so many Houstons! (how many can you count?!) And I think I might inquire about buying a shack in Beverly Hills, TX just so I can tell people "I have a 2nd home in Beverly Hills", lol ;-D

xkcd: No, The Other One (click to enlarge)

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Monday, June 21, 2021

Will TX get a 5th large metro? FT ranks HTX top city of the future, TX as the capital of US logistics, the next entrepreneurial revolution

I'm back from a short trip that caused me to miss last week's post and ready to catch up on some smaller items:

"A new study from the fDi Intelligence division of the Financial Times places Houston at No. 7 among the top major cities of the future for 2021-22 across North, South, and Central America. Among major cities in the Americas, Houston appears at No. 3 for business friendliness and No. 4 for connectivity."

"America's political class seems to believe that, due to automation, we will enter an era of secular stagnation and need welfare schemes like UBI to support people. 

Texas, as the U.S. leader in trade & logistics, is a giant rebuttal to that. 

Texas shows how through low taxes, loose land/housing regs, natural resource extraction, and open trade, a state can foster blue-collar jobs and upward mobility."

  • More from Scott Beyer: Will Texas Get a Fifth Large Metro? Texas’ “Big 4” metro areas—Dallas, Houston, Austin and San Antonio—have all exploded with growth. Will a 5th sleeper one emerge? His conclusion? If it will be anywhere, it will be in the I-35 corridor between Austin and San Antonio at the edge of the Hill Country. Not so much a fifth metro as the gradual merger of two of them. Eventually Austin-San Antonio may be right up there with Dallas-Ft. Worth and Houston in size.  I agree with his assessment. The most compelling value proposition for most people moving to Texas is the suburb of an existing Triangle metro, where they'll have access to all that metro's jobs and amenities (including a major airport). Check out the cool maps he has of the largest Texas metros and their relative growth rates. 
  • Joel Kotkin: The Next Entrepreneurial Revolution - The pandemic’s economic destruction has also created new winners. One of his profiles is based in Houston:

"Out of the wreckage, some restaurant entrepreneurs are finding new ways to survive—and even thrive—by using the kinds of technology Jaffe sells. But what’s mattered most, suggested Chris Williams, owner of Houston’s famed Lucille’s soul food house, has been finding ways to stay in touch with customers through the pandemic. Faced with closures, Williams, unlike many of his counterparts, decided to keep all his staff. Instead of cutting personnel costs, he innovated, changing the menu to make it friendlier to online delivery, instituting a delivered Easter brunch, making extensive use of the yard adjacent to the restaurant, and having his employees make the deliveries, rather than rely on expensive services like Uber Eats. He also made a very public effort to feed thousands of hungry people in Houston, which was also hit hard by a cratering in oil prices.

“The lesson of 2020,” Williams said, “is you do best to invest in your employees and your company. The community is your business. People see what we are doing and order from us. The community work turned out to be a dual-purpose dollar.”

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Sunday, June 06, 2021

Reason video on Houston, Texas MUDs as an affordability model, Houston's pioneering reduced minimum lot sizes, and some very cool maps

The lead item this week is a very cool video from Reason, "Density or Sprawl? How To Solve the Urban Housing Crisis", and specifically starting at 11:38 when Scott Beyer and Randal O' Toole start talking about the Houston example.

Reason: "The city of Houston gets it more or less right" on densification vs. sprawl, with a variety of housing types. Free market with deed restrictions, but no zoning and no urban growth boundary.

A great video, although I wish they hadn't shown the beer can house (talk about poster-child for terrifying people about eliminating zoning!) and had used a map less than 50 years old, lol. It didn't even have a completed 610 Loop on it! 

Moving on to this week's other items:
"Houston is known for its lack of Euclidean-style zoning, but the city still has various ordinances that control land use. In 1998, Houston reformed its subdivision rules to allow for parcels smaller than five thousand square feet citywide. In this paper, we discuss the unique land-use rules in place in Houston prior to reform and the circumstances that led to reform, including the “opt out” provisions, which mediated homeowner opposition to substantial increases in housing density. We then analyze the effects of reform. After relief from large lot requirements, post-reform development activity was heavily concentrated in middle-income, less dense, underbuilt neighborhoods."
Finally, a great piece in Governing magazine from Market Urbanist Scott Beyer on the power of Texas MUDs to create affordable housing supply.
Municipal utility districts seem to work in the Lone Star State. They have increased the housing supply, using lighter regulations, resulting in downward pressure on costs. Now, they may be catching on elsewhere.

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Tuesday, June 01, 2021

Be Someone City Opportunity Urbanism event, relaxing min parking reqs, HTX #1 building homes, hurricane risk, and more

The lead item this week is a Houston event I'll be speaking at Wednesday evening June 16th: Building a 'Be Someone' City: Houston and the Rise of Opportunity Urbanism

"Cities have historically been the gateway to America and our nation’s promise of opportunity and upward mobility. Today, however, many of our nation’s highest profile cities have become ‘luxury products’ affordable only for the highest income earners. Houston and other ‘opportunity cities’ have historically bucked this trend by embracing policies that lower the cost of living, create jobs, and enhance the quality of life for all. But a continuation of this success is under threat from an array of proposed ‘command and control’ policies that will erode our city’s dynamism. Houston’s success is no accident, and it’s future is worth fighting for.

Join the Liberty Leadership Council and the Urban Reform Institute for a vibrant discussion of Houston’s market-centered, ‘people-oriented’ approach to urban policy, planning, and development.

We’ll talk zoning, transportation, infrastructure, housing, and everything in between—all while enjoying views of downtown and toasting the Bayou City."

You can register here and I hope to see you there!

Moving on to this week's items:

  • City Journal: End of the Road for Parking Requirements - They serve as a tax on housingHouston should pass a plan to automatically reduce parking minimums citywide by 8%/year - enough for real impact over time w/o public blowback. Why keep building parking that autonomous taxis will make obsolete in the 2030s or even sooner?
  • Excerpts from a Market Urbanist Scott Beyer Facebook post after his most recent trip to Texas:

"Texas is already known for high econ freedom and autonomy from the feds. The more I learn, the more unique it seems on this front. Counties without zoning. Toll roads galore. Limited land handed to the feds. Independent not unified school districts. Separate energy grid. Higher speed limits. And I could go on. The governance here is truly different. 

A culture of exceptionalism: Texas wants to be the best, and has built an unapologetic brand around it - “everything’s bigger in Texas.” Coastal urban America used to have that bravado, but is now overcome with Nimbyism and guilt-mongering."

"More permits (48,208) were issued last year for new-home construction in the Houston area than anywhere else in the U.S. DFW ranked second (43,884), and Austin held the No. 5 spot (21,653)."

  • Houston and NOx and SOx – Companion Pollutants
  • Drive & Listen: Wow this is super cool and mesmerizing. You can set the speed of the vehicle, street noise, music - even change radio stations while driving in 50 different cities around the world, spending as much time as you like in any one of them. Someone needs to do this for Houston!

Finally, we'll end with a little dark humor meme that makes a great point:

Ever-growing layers of bureaucracy are how societies stagnate, and it's the direct cause of increasing unaffordability in cities across the country.

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