Monthly Archives: July 2012

Claim: having too many big homes contribute to the housing market downturn

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Several experts suggest that one contributor to the downturn in the housing market is a lack of demand for large houses:

America has too many big houses — 40 million, to be exact — because consumers are shifting preferences to condos, apartments and small homes, experts told the New Partners for Smart Growth Thursday, holding its 11th annual conference in San Diego through Sunday.

Relying on developers’ surveys, Chris Nelson, who heads the Metropolitan Research Center at the University of Utah, said 43 percent of Americans prefer traditional big, suburban homes but the rest don’t.

“That means we are out of balance in terms of where the market is right now, let alone trending toward the future,” he said.

He estimated that this demand suggests a need for 10 million more attached homes and 30 million more small homes on 4,000-square-foot lots or less. By contrast, demand for large-lot homes is 40 million less than currently available.

These experts suggest that older adults and the younger generations are looking for smaller, more urban homes. But how does this line up with recent figures that suggest big homes are being built and sold?

While this sounds like an interesting conference, I wonder how this group might be spinning the recent data and trends. What do you do if 43% of Americans do want “big, suburban homes” but you personally are committed to building and pushing for smaller and denser housing? Presumably you leave the building of those larger structures to others but 43% is still a large number. It would be interesting to see how this group and its experts speak as they see some light at the end of the tunnel (several demographic groups who want smaller homes) versus time periods when it may have seemed more Americans prefer big houses and sprawl (1980s through roughly 2006).

Chicago helped lead the way in northern residential segregation

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A blog post from Chicago magazine tells part of the story of how Chicago helped lead the way for northern segregation:

In his new book Segregation: A Global History of Divided Cities, Carl H. Nightingale traces the phenomenon back to Sumer, but narrows down to a focus on Johannesburg and Chicago. In the former, segregation was explicit. In the latter, it couldn’t be; in 1917, the NAACP challenged a segregation ordinance in Louisville, leading to the decision in Buchanan v. Warley, in which “a multiracial team of attorneys led by a black professional had forced a white supremacist judiciary to choose between racism and a basic premise of laissez-faire capitalism—and property rights won out, at least in the case of neighborhood segregation.” But there was profit to be had in racism, and it would soon find ways around “laissez-faire capitalism,” with curious allies in the Progressive movement.

About a decade before Buchanan, the National Association of Real Estate Boards grew out of the Chicago Real Estate Board; it would coin the term realtor, and set professional standards for the sale of real estate (now the National Association of Realtors, it remains one of the most powerful lobbying organizations in the country). In the 1920s, its general counsel was Nathan William MacChesney, a former president of the Illinois Bar and a co-founder of Northwestern’s Journal of Criminal Law and Criminology. MacChesney was considered a progressive; in the words of David Roediger, “the principal figure in the ‘progressive’ reform of real estate.”

The NAREB, and MacChesney, had a powerful progressive ally in Richard T. Ely, then an economist at the University of Wisconsin; in the mid-’20s, he moved to Northwestern. Ely, a proponent of the Social Gospel, had ties to Chicago progressives—he was the first president of the American Association of Labor Legislation, a “useful synechodoche for progressive economics,” which had Jane Addams on its board.

But Ely and MacChesney also represented troubling strains in the Progressive movement, as Nightingale writes:

Though neither elaborated a full-fledged theory of race in print, both had swum in a similar soup of racialized and imperialist reform politics for most of their careers…. several times [Ely] advocated measures to slow down the reproduction of people he deemed part of the “sad human rubbish-heap”—the “feeble-minded,” welfare recipients, and criminals…. MacChesney, whose list of board memberships in reform organizations was legendary, likewise wrote a eugenical tract advocating sterilization programs for the mentally ill and for prisoners…

The Great Migration continued to increase Chicago’s black population, but the city now had a powerful tool to control it. By 1940, according to historian Beryl Satter, Chicago had more racial-deed restrictions than any other city in the country; half the city was covered by such covenants. Nor was it limited to Chicago, Satter writes: “Real estate boards across the nation recognized CREB’s pioneering work in maintaining all-white communities and looked to CREB for advice as they crafted their own racially restrictive plans.” The fear that Johnson—himself a child of the Great Migration—and his colleagues had warned about in 1922 came to fruition, encoded into law.

Chicago is a global city but also has a checkered past. I don’t think many Chicagoans today would like the comparison to Johannesburg.

This history should be familiar to those who know America’s past: real estate interests and others, including the federal and local governments, developed a system of racially-restrictive covenants, discriminatory mortgage lending practices, and other practices like blockbusting in order to limit where blacks and other minorities could live. When these techniques were struck down and fair housing laws became common by the late 1960s, whites responded by leaving many urban neighborhoods and moving to the suburbs.

No, Chicago really is a global city

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Aaron Renn writes in City Journal that the global city of Chicago faces several really tough issues:

The idea was to portray Chicago as a “global city,” and it was successful, to judge from the responses in the national media. As Millennium Park opened (a few years late) in the mid-2000s, The Economist celebrated Chicago as “a city buzzing with life, humming with prosperity, sparkling with new buildings, new sculptures, new parks, and generally exuding vitality.” The Washington Post dubbed Chicago “the Milan of the Midwest.” Newsweek added, “From a music scene powered by the underground footwork energy of juke to adventurous three-star restaurants, high-stepping fashion, and hot artists, Chicago is not only ‘the city that works,’ in Mayor Daley’s slogan, but also an exciting, excited city in which all these glittery worlds shine.”

But despite the chorus of praise, it’s becoming evident that the city took a serious turn for the worse during the first decade of the new century. The gleaming towers, swank restaurants, and smart shops remain, but Chicago is experiencing a steep decline quite different from that of many other large cities. It is a deeply troubled place, one increasingly falling behind its large urban brethren and presenting a host of challenges for new mayor Rahm Emanuel…

Chicago also needs something even harder to achieve: wholesale cultural change. It needs to end its obsession with being solely a global city, look for ways to reinvigorate its role as capital of the Midwest, and provide opportunities for its neglected middle and working classes, not just the elites. This means more focus on the basics of good governance and less focus on glamour. Chicago must also forge a culture of greater civic participation and debate. You can’t address your problems if everyone is terrified of stepping out of line and admitting that they exist. Here, at least, Emanuel can set the tone. In March, he publicly admitted that Chicago had suffered a “lost decade,” a promisingly candid assessment, and he has tapped former D.C. transportation chief Gabe Klein to run Chicago’s transportation department, rather than picking a Chicago insider. Continuing to welcome outsiders and dissident voices will help dilute the culture of clout.

Renn is rehashing issues that Chicago has faced for decade: corruption, clout, unions and pensions, aldermen, population loss, and fiscal concerns. Throw in the recent issues with crime (it’s worse than Afghanistan!) and things look bad.

But I would argue a bit with Renn’s premise: Chicago’s image as a global city is more than just an image or a veneer. For example, AT Kearney named Chicago the #7 global city in the world (five different dimensions) in 2011. When the premier of China came over to the US in 2011, he went two places: Washington, D.C. and Chicago to meet with Mayor Daley about business. A lot of this is tied to Chicago’s historic role as the finance capital of the heartland, the place where futures were invented and developed. It is also tied to Chicago’s ongoing transportation importance: as I’ve blogged about, something like 70% of Class I freight traffic in the US moves through the region (and there are multiple large intermodal facilities), it has many major highways, and the second busiest airport in the US. Chicago is known for its architecture (one of the homes of the International Style), its museums, and its place in American history as the first real boom city (later duplicated by Sunbelt cities).  Add in the beautiful lakefront parks (and I’m still surprised more big cities haven’t developed their waterfront space in similar ways), being a leader in rooftop green spaces, several world-class universities, and dozens of interesting neighborhoods. This doesn’t discount what Renn said about the city having financial difficulty but Chicago isn’t the only place with these concerns. There has been plenty of commentary lately about blue vs. red social models and places like California, NYC, and many other Rust Belt cities face similar concerns: how to balance large-scale social programs with pro-business attitudes. As I’ve suggested on the blog, I think Emanuel is more pro-business than many Republicans would give him credit for and he is definitely in the Clintonian mold: promote traditional Democratic interests but also push for big business and jobs.

Cities can rise and fall over time and perhaps Chicago is at a turning point. However, it is has weathered issues in the past, being perhaps the only Rust Belt city that did okay between 1960 and 2000, and may weather new problems in the future.

Demographics suggest don’t invest in McMansions; invest in group homes

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Looking at the demographic trends in the United States, one analyst suggests investors shouldn’t look to McMansions but rather group homes:

A large majority of older Americans want to remain in their homes, and more importantly, in their communities. The homes they raised their families in might not suit their purposes any longer, so what are their options? In 2005 (before the housing crises) a survey was taken by AARP of adults over the age of 50, and they reported that the homes they currently lived in wouldn’t accommodate them “very well” as they aged. So these seniors have a push-pull of wanting to “age in place” but their homes aren’t suitable for them to remain independent.

Seniors in the early stage of making a housing transition will remain in owner-occupied or rental housing and live independently. Only about 4.7 percent live in a group home and 7-10 percent live in a senior facility.

I see group homes as an area of opportunity. Group homes could become the answer for many seniors. I have been preaching for the last year or two that new homeowners aren’t looking for McMansions. New buyers (Echo Boomers and younger) want something simpler that gives them more flexibility. So what will happen to these McMansions? Group homes could be perfect. Many of these homes were built with private baths attached to each bedroom, large kitchens and great rooms. These homes can be adapted for disabilities by adding lifts and rails in bathrooms, for example. Then these homes can operate very well as group homes. This can give seniors the option to stay within their community, but not be isolated. Not to mention it’s a cash cow for investors, I’ve seen these kind of properties create a 100% positive cash flow (this would include covering the debt service).

As seniors make the enevitable change they will release much more housing than they absorb, but it will be absorbed by newly formed households. For example, between 2000 and 2010, people who began the decade age 55+ moved out of 10.5 million housing units. Most of these were owner-occupied dwellings. During the same period households grew (under the age of 55) by 21.8 million. Thus leaving about 11.2 million new households needing housing. Take into consideration that forty percent of this time was during a major recession where we saw much slower household formation.

I can see two quick issues with group homes. First, some of these places today are very expensive as they can require residents to buy a unit and pay extra fees on top of this. Second, communities would have to approve the zoning necessary for these homes.

This reminds me of Kate Bollick’s Atlantic cover story “All the Single Ladies.” She ends the story by discussing a “dormitory” for women in Amsterdam that helps provide community while giving adults some individual space. Bollick suggests this sort of living space could be the wave of the future but I think it might take some time to catch on in the United States.

 

Philosophy professor makes a case for getting a sociology major

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A philosophy professor argues that there are two good reasons for undergraduate students to major in sociology:

This comes down to several convincing points. First, sociology is a scientific discipline. It teaches students to use empirical data to understand current social realities. And sociologists use a variety of empirical research methods, from quantitative research to qualitative methods, to comparative and historical studies. Students who study sociology as undergraduates will certainly be exposed to the use of statistics as a method for representing and analyzing complex social phenomena; they will also be exposed to qualitative tools like interviews, focus groups, and participant-observer data. So a sociology education helps the student to think like a social scientist — attentive to facts, probing with hypotheses, offering explanations, critical in offering and assessing arguments for conclusions.

Second, the content of sociology is particularly important in our rapidly changing social world. Sociology promises to provide data and theory that help to better understand the human and social realities we confront. Moreover, the discipline is defined around the key social issues we all need to understand better than we currently do, and our policy makers need to understand if they are to design policies that allow for social progress: for example, race, poverty, urbanization, inequalities, globalization, immigration, environmental change, gender, power, and class. We might say that an important part of the value of a sociology education is that it gives the student a better grasp of the dynamics of these key social processes.

So sociology is indeed a valuable part of a university education. It provides a foundation for better understanding and engaging with the globalizing world our young people will need to navigate and lead. It provides students with the intellectual tools needed to make sense of the shifting and conflictual social world we live in, and this in turn permits them to contribute to solutions for the most difficult social problems that we face.

This sounds like the pitch many a sociology professor makes in an Introduction to Sociology course.

This also got me thinking about how many academics outside of sociology would defend sociology and suggest students should pursue it. Perhaps this is an issue for many disciplines but at the moment I can’t remember seeing too many public defenses of sociology from people of other disciplines.

Time magazine: “The Return of the McMansion”?

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Time echoes some other commentators: new data suggests we may be headed back toward bigger houses and McMansions.

When the real estate market imploded and ushered in the Great Recession, one of the biggest casualties was the size of our homes. For years, we’d been building increasingly large homes because, well, we could — and because we assumed all those two-story foyers and master suites could only go up in value. The recession put a screeching halt to this trend: After peaking at 2,521 square feet in 2007, the average size of a new home has dropped, a trend many industry observers thought would continue…

Census data shows that the average size of a new home built last year was 2,480 square feet, the first increase after three years of successive declines. Nearly 40% of new homes built last year had four or more bedrooms, a return to the all-time high reached in 2005 and 2006. And nearly 20% have three-car garages, an increase following two years of declines…

This reversal is unexpected. In a 2010 report, the National Association of Home Builders speculated that the trend of smaller homes might be due to a secular shift and that our preference for small houses would continue after the recession ended. “Part can also be attributed to trends in factors like the desire to keep energy costs down, amounts of equity in existing homes available to roll into a new one, tightening credit standards, less emphasis on the pure investment motive for buying a home, and an increased share of homes sold to first-time buyers,” the report says. “Not all of these trends are likely to reverse themselves immediately at the end of a recession.”

This illustrates the problems of making sweeping predictions on recent data: it is really difficult to predict long trends. Does the 2011 data now suggest we are going back the other direction toward bigger houses? What if the figures go down slightly again in 2012?

A second issue: moving back to bigger houses doesn’t necessarily mean that they are McMansions. The backlash against McMansions has been stiff in the last decade so these new big homes might be quite different. Perhaps they have emphases on customization (a concern of Sarah Susanka and the “Not So Big House”), more traditional looking neighborhoods (a concern of New Urbanists), and are greener and more sustainable homes.

Bury power lines to reduce outages

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Amidst widespread power outages, David Frum argues that the United States should pursue a particular infrastructure goal: bury more power lines.

The choice has been made for reasons of cost. The industry rule of thumb is that it costs about 10 times as much to bury wire as to string wire overhead: up to $1 million per mile, industry representatives claim. Since American cities are much less dense than European ones, there would be a lot more wire to string to serve a U.S. population than a European one.

Cost matters.

But now reflect:

1. There’s reason to think that industry estimates of the cost of burying wires are inflated. While the U.S. industry guesstimates costs, a large-scale study of the problem conducted recently in the United Kingdom estimated the cost premium at 4.5 to 5.5 times the cost of overhead wire, not 10.

2. U.S. cost figures are a moving target. American cities are becoming denser as the baby boomers age and opt for central-city living, as I discussed in a previous column. Denser cities require fewer miles of wire to serve their populations.

3. Costs can only be understood in relation to benefits. As the climate warms, storms and power outages are becoming more common. And as the population ages, power failures become more dangerous. In France, where air conditioning is uncommon, a 2003 heat wave left 10,000 people dead, almost all of them elderly. If burying power lines prevented power outages during the hotter summers ahead, the decision could save many lives.

4. As you may have heard, we’re suffering very severe unemployment just at present. Joblessness is acute among less educated workers, many of whom used to work in the now severely depressed construction industry. Burying power lines is a project that could put many hundreds of thousands of the unemployed to work at tasks that make use of their skills and experience.

I don’t think you have to make a stimulus argument to get power lines buried. You could also make an aesthetic argument: many would suggest power lines are ugly. In denser areas, power lines clog up the streetscape and in more rural areas power lines block natural views.

While Frum suggests costs are indeed an issue, couldn’t local communities take care of this in their ordinances and zoning? For example, a city could require that new developments have to have buried power lines. Perhaps the cat is already out of the bag on this one but how many new developments in the US have buried power lines?

Another note: I live in a neighborhood where the power lines are buried. I do think it looks a lot better. However, this is not a fool-proof solution. Last summer, our power went out four or five times, several of these more than one day. This required the power company to come out and dig up areas throughout the neighborhood. If you came to our neighborhood today, you can still see where they did their digging and sort of planted grass again. Second, our neighborhood is connected to several other neighborhoods by above ground wires. Therefore, we could still lose power as a neighborhood if these overhead lines all went down. Thus, you would need to pursue burying power lines on a broad scale for everyone to benefit.

When the store with a cult following comes to town

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I recently ran into an article about “16 Brands That Have Fanatical Cult Followings.” This got me thinking about how people want certain stores to move near them. Take this example from this article as several people expressed how much they wanted a Wegmans.

On its website, Wegmans writes that in 2003, almost 5,800 loyal customers wrote “love letters” to the company, with almost half of the letters including pleas to build supermarkets in their communities. One letter included rewritten lyrics to “Yesterday” by the Beatles:

Yesterday,
A Wegmans store, it seemed so far away.
But a new one opened in Dulles today.
Now I will drive
Towards Wegmans’ way.

Wegmans mania reached a new high when a group of musical theatre students in Massachusetts created an entire musical based on the brand. They rewrote popular Broadway songs in praise of the store.

That’s some devotion. And yet, this sort of interest isn’t uncommon. I’ll briefly mention some of the stores that prompt reactions from loyal residents and communities:

-Trader Joe’s is on this list. Multiple friends have told me how much they like this store and one mentioned how while on trips he was prone to finding the Trader Joe’s before leaving to grab things for home.

-I’ve heard similar things about Ikea.

-The article has an interesting conclusion: do some of the bigger brands count as cult favorites?

The infamous Cult of Mac spans far and wide, with a deep obsession with anything and everything Apple. Starbucks blankets America, driving endless droves of coffee-lovers to its baristas. Whole Foods fans swear by the huge supermarket chain’s pesticide free cantaloupes.

Are these followers still a cult if the companies they fawn over have grown into some of the world’s biggest and most successful multinational corporations?

I say yes. Even though these may be big brands, having one of these stores indicates that the community is on the map. This is a bit of strange logic – corporate America wants to be near us! – but it suggests some prestige. Plenty of communities around the United States would have to have a Starbucks. Now only would it bring in revenue and people, having a Starbucks indicates a community has a certain kind of customers (i.e., people with money to spend on coffee) and can also help attract other businesses. Second, I saw that several Facebook friends were very excited about Whole Foods moving to Mishawaka, Indiana. This is a classic case of a cult brand moving in: the South Bend/Mishawaka area is more blue-collar, middle America but having a Whole Foods suggests it has some more sophistication and wealthy residents. Third, Apple stores are less common so perhaps more meaningful: the Apple store in downtown Naperville suggests the place is akin to an upscale shopping mall or thriving big city.

Granted, there is some breaking point to this. Not every place is thrilled to have a Starbucks and some might argue that there are too many already (the company itself suggested this in recent years). In comparison, fewer people are thrilled about a Walmart moving in. There must be some threshold when too many chains are viewed negatively and start impinging on local culture. This threshold likely differs by type of place: places that hope to be “up and coming” likely welcome such stores while wealthier communities with some tradition and enough prestige resist such chains, no matter how cult friendly.

This discussion of cult brands also gets at the heart of Naomi Klein’s arguments in No Logo. Do we want to live in a world where people regularly select and interact with cult brands? Does this kind of devotion detract from more authentic civic life?

Quick Review: The Pruitt-Igoe Myth

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This documentary (written about earlier here) is a fascinating look at the ill-fated Pruitt-Igoe housing project in St. Louis but it also speaks more broadly to public housing in general in the United States. A few thoughts about the documentary:

1. The documentary tries to tell a comprehensive story about why Pruitt-Igoe failed. The argument is that is was not about bad residents or poor architectural design: the project was built as part of a system that is set up to fail where the government supported suburban growth after World War II, white flight out of cities like St. Louis, a flood of poorer residents to northern cities looking for jobs, urban business interests looking to clear slums and open up development opportunities, a shift away from an urban industrial economy, and issues of race and segregation throughout. In other words, this is a complex issue and simply eliminating public housing or building better developments don’t effectively address all of the relevant concerns.

2. This contains a great mix of archival photos, video clips, and interviews with former residents. I wish more of these images of cities and public housing from the 1950s and 1960s were readily available.

3. There is an interesting section on control over the residents of the projects. For example, the documentary says men were not allowed to live in the projects in the early days for women with children to get aid money. Therefore, a new generation of children in the projects lived without fathers and male figures. Additionally, early residents were not allowed to have television sets.

4. The documentary effectively shows the hope present at the beginning of such projects. For many of the early residents, this was a step up from tenements. These projects were not failures from day one. The repeated pictures of the projects with the gleaming St. Louis Arch in the distance drives this point home. Additionally, one resident repeatedly tells of good moments in her life while living as a kid in the projects.

5. While the film is directly about St. Louis, this is a story repeated in numerous other American big cities. The Chicago story doesn’t seem too different: the projects were built on land civic and business leaders chose, the projects were a step up from tenement living, and within several years the projects became incredibly segregated, rundown, and the social problems began to spiral out of control.

6. There is one issue that the film doesn’t tackle: why exactly did this one project get torn down and not notorious projects in St. Louis and other cities? Why, for example, did it take until the 1990s and the HUD’s HOPE VI program for projects like the Robert Taylor Homes and Cabrini-Green (the last building demolished just last year) to be demolished? There is clearly more to the story here in St. Louis as well as elsewhere: as the projects experienced more problems, why did it take decades to do something about it? (I’m not suggesting here that demolishing the projects was necessarily the best way to go. As the film briefly asks, what happened to all of those people who left?)

In the end, this would be a great film to show in class to discuss public housing and related issues of urban development, race and class, and public policy.

Some big cities only made possible by air conditioning?

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This seems pertinent with the recent heatwave in the Midwest and East Coast: how many of the major cities of the world wouldn’t exist without air conditioning?

It wasn’t until the beginning of World War II that homes in southern U.S. cities began using air conditioning units. By 1955, one in every 22 American homes had air conditioning. In the South, that number was about 1 in 10, according to the historian Raymond Arsenault [PDF]. Since this increase in air conditioning use, many of these Southern cities experienced a population boom.

I took a look at the metro areas in the U.S. with more than 1 million people and found which have historically been the hottest, based on the number of cooling degree days per year — a statistic used to measure how much and how many days the outside temperature in a certain location is above 65 degrees. Using numbers from NOAA, I found that between 1971-2000, six big cities in the South had an average of at least 3,000 cooling degree days. I also compared the 1940 metro population (when available) to the metro population in 2010. From the time just before air conditioning became popular in the South to today, population growth in the region has skyrocketed. This raises the question: would these hot Southern cities be around, at least in their present form, if air conditioning hadn’t been invented?

But, of course, there are bigger, hotter cities across the globe. In fact, seven of the largest metros in the world have an average high temperature above 90 degrees Fahrenheit.

Not surprisingly, all of these cities are found in developing countries. As Michael Sivak, a professor at the University of Michigan notes, only two of the warmest 30 global metros can be found in developed countries. With the middle class growing in warm metros in countries like India, demand for air conditioning is increasing. A recent New York Times article reported that sales of air conditioning units in India and China are growing 20 percent per year and are fast becoming a middle-class status symbol. Last year, 55 percent of new air conditioners were sold in the Asia Pacific region.

Is there some sort of giant control group we could use to figure this out? Over the weekend, I was in a 150 year old church with no air conditioning. It was hot though I think this was primarily because there was no air movement; indeed, when we walked outside afterward, it felt more pleasant as there was a slight breeze. Before air conditioning, people obviously survived in such temperatures (and also survived in the winters without central heating as we know it today).

So this seems to be the real question: could we expect that there would be major changes in population distributions if there was no air conditioning whatsoever? Would Florida really have few people and post-World War II Sunbelt expansion not taken place? The best solution to all of this would be to have people move to more temperate climates where it doesn’t get too hot in the summer or too cold in the winter. This generally requires consistent breezes, usually off major bodies of water. Of course, not everyone can live in places like Hawaii which only has a record high temperature of 100 degrees. Did the Mediterranean climate help give rise to empires like Greece and Rome (though it makes it difficult to then explain the Sumerian, Assyrian, Babylonian, and Persian empires which must have adapted to desert climates)?

More broadly, we could discuss the influence of ecology on population growth and state building. I remember studying the mysterious decline of the Maya in southeastern Mexico/Guatemala. More recent scholars have suggested some kind of ecological explanation, perhaps a drought, that led to increased contentious competition for dwindling resources.