Category Archives: Places

Attempting to set up an American style home lending system in Russia

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Housing and mortgage industries can be quite different across countries. While many Americans might be quite used to our system (even though the system of 30 year mortgages we know now was a product of the mid-twentieth century), what happens when you try to apply the American system to another context? A sociologist looked at how this worked out in Russia after the collapse of the Soviet Union:

The new government tried to create a housing market by replicating the American housing system, essentially using the Federal National Mortgage Association, or Fannie Mae, as a template to encourage Russians to take out mortgage loans.

“This was all designed by USAID, one of their biggest foreign aid programs ever,” Zavisca said. “It was an American model of what a housing market is: home ownership and securitized mortgages.”

Supposedly all of that privatized housing and wealth would spur the natural development of a housing market. Those who felt they had more housing than they needed would look to trade down and use the leftover money for other things. The private sector would emerge to produce housing for those who had been left out.

“That didn’t really happen,” Zavisca said.

Housing construction declined by 70 percent from 1992 to 2002, the first decade after the Soviet era. The construction industry in Russia has evolved to cater to wealthy and well-to-do middle class clients who could pay with cash, but there is a lack of trust by both contractors and consumers. No one wants to pay up front and wait, or deal with credit.

Unlike Americans who for decades have willingly taken on 30-year mortgages to buy housing, Russians have largely balked at the notion. Even when young families were offered a $10,000 credit, roughly a year’s wages and the equivalent of $60,000 in the U.S., toward the down payment for a house, Zavisca said there was little interest.

“Few Russians are willing to take out mortgages because the risk of foreclosure is unacceptable, and because they view interest payments – which they call overpayments – as unfair. As one Russian put it: ‘To enter into a mortgage is to become a slave for 30 years, with the bank as your master.'”

That hasn’t stopped Russians from going into debt, though. They may be averse to mortgages but they love credit cards, small consumer loans and point-of-purchase store credit.

“In my interviews, people there often compared credit card debt favorably to mortgages, the inverse of here in the U.S., where mortgages are viewed as virtuous and responsible.

“Russia is completely the opposite. It may be a legacy of Soviet entitlement to housing, where housing is viewed as a right to them. Even thought the Soviet government owned the housing, people thought of it as their own and had the right to pass it down to their children, or swap with someone who wanted to trade with you.

“It was a kind of quasi-marketplace. It just wasn’t financialized.”

She said Russians find it odd that Americans call themselves “homeowners” from the day they close on a mortgage loan. For Russians, ownership only begins after all debts are paid off.

This suggests that our system may be more cultural than anything else. It goes beyond just being used to a particular set of economic and financial tools regarding homeownership; these instruments are backed by a particular set of cultural values that sees mortgages, and working hard to reach the point where one can afford a mortgage, as acceptable. The Russians may have a point here: one doesn’t technically own a home until the mortgage is paid and with the high rates of American mobility (moving roughly every 5-6 years on average), many homes are never truly owned.

It would be interesting to hear how Americans, in USAID or elsewhere, explained why this didn’t work in Russia. Have we tried implementing similar policies elsewhere and if so, how did those situations work out?

Increasing numbers of blacks moving to the suburbs

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One of the important shifts revealed in the 2010 Census is the increasing number of minorities in the American suburbs (also see the thoughts of the 2010 Census director here). This is particularly true of blacks who have moved from the city to the suburbs and this raises some concerns about the future of the neighborhoods they are leaving behind:

Taylor’s decision to live outside Chicago makes him part of a shift tracked by the 2010 Census that surprised many demographers and urban planners: He is among hundreds of thousands of blacks who moved away from cities with long histories as centers of African-American life, including Chicago, Oakland, Washington, New Orleans and Detroit…

Chicago’s population fell by 200,418 from 2000 to 2010, and blacks accounted for almost 89% of that drop. Hispanics surpassed blacks as the city’s largest minority group. Meanwhile, Plainfield grew by 204% overall, and its black population soared by more than 2,000%, the fastest rate in the region…

The trend has broad policy implications: As blacks who can afford to live in the suburbs depart, will cities have enough resources to help the low-income blacks left behind? Will the demand for housing be strong enough to support the revitalization of traditionally black inner-city neighborhoods? How will black churches, businesses and cultural institutions be affected? Will traffic congestion worsen because blacks moving to the suburbs keep their jobs in the city?

Roderick Harrison, a sociologist at Howard University in Washington and a former chief of the racial statistics branch of the Census Bureau, says the changes reflect the improving economic status of some African Americans.

Traffic seems to be a lesser issue compared to some of these bigger questions. And these questions are not new: at least since the 1980s, commentators have been asking about what may happen to urban neighborhoods and institutions when middle-class Blacks leave for the suburbs.

We could also ask about how this might change the suburbs. Are we at the point as a society where suburban residents really just care about social class, i.e. being able to buy into the suburbs and maintain a middle-class lifestyle? Or will whites leave suburban neighborhoods when Blacks move in just as they did in urban neighborhoods in the 1950s and 1960s? I wrote earlier about how minorities were fitting into Schaumburg, a noted edge city outside of the Chicago, and a noted historian, Thomas Sugrue, suggested that the move of Blacks to the suburbs in the Detroit region may not be all that positive. I suspect there will be a lot of discussions in suburbs about these changes, often couched in terms of issues like affordable housing (see this example from the wealthy Chicago suburb of Winnetka), property values, and the quality of schools.

It is interesting to note that Plainfield is cited in this particular story: Joliet, Plainfield, Aurora, and the suburban region far southwest of Chicago is a booming area. And if you were curious about the African-American growth in Plainfield, it was 0.8% Black in 2000 (110 out of 13,038) and is roughly 6% Black in 2010 (out of 39,581).

Summing up Mayor Daley’s mixed “public housing legacy”

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There wasn’t much talk about public housing before the election earlier this year to replace Mayor Daley in Chicago. (Frankly, there isn’t much talk about this at the federal level either.) But one journalist suggests that Mayor Daley left a “complex public housing legacy” for the new Mayor Emanuel:

Last month, as Richard M. Daley approached retirement, the Chicago Housing Authority released a first-of-its-kind report on residents who were forced to leave the high-rises. It concluded that the changes made life safer, more stable and more hopeful for thousands of families.

But while Daley was praised by some for abandoning the high-rise system, housing advocates say the changes have done little to break the grip of poverty.

“As an urban-development strategy, the transformation is an A. It gets a far poorer grade if it is approached as a strategy to help low-income populations to achieve social and economic stability in their lives,” said Columbia University sociologist Sudhir Venkatesh, who spent 18 months living in Chicago’s Robert Taylor Homes as a graduate student in the early 1990s.

Some observers, like author Alex Kotlowitz, fear the disappearance of the high-rises means Chicago’s poverty has passed out of sight and out of mind.

Some of the media talk about public housing in Chicago has been positive: the once notorious high-rises, particularly those at the Robert Taylor Homes on the south side and the Cabrini-Green complex on the north side (see thoughts about the demolition of the last high-rise here, here, here, and here), are now gone. (It was a bit strange last week to ride the Brown Line north out of the Loop and not see any Cabrini-Green high-rises.) In the eyes of the media, the problems of concentrated poverty and crime have been reduced. The land can be put to other uses, particularly at Cabrini-Green as it is very valuable land between Lincoln Park and the Loop.

On the other hand, the concerns of people like Venkatesh and Kotlowitz will not go away. Simply destroying public housing high-rises does not deal with the larger issues: there are still large parts of Chicago where residents have reduced life chances compared to better-off parts of the city. In the article, new Mayor Rahm Emanuel is cited as saying that the goal of reducing the isolation of the public housing residents (the goal that was “short of ending poverty”) has been successful.

I can’t imagine the new mayor will or perhaps even can devote much time to this issue as the persistent problems of budgets, crime, jobs, and education need to be addressed. Still, it will be interesting to see how Emanuel addresses public housing moving forward.

High housing prices in Vancouver due in part to increase in Chinese homeowners

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Vancouver may be known as one of the most liveable cities in the world but the housing prices are also quite high. This is in part due to an increase in Chinese homebuyers:

Buyers from mainland China are leading a wave of Asian investment in Vancouver real estate as China tries to damp property speculation at home. Good schools, a marine climate and the large, established Asian community as a result of Canada’s liberal immigration policy make Vancouver attractive, said Cathy Gong, who moved from Shanghai to the Shaughnessy neighborhood on Vancouver’s Westside about three years ago.

China, where home prices rose 28 percent in Beijing and 26 percent in Shanghai last year, according to the country’s biggest real estate website owner SouFun Holdings Ltd., has taken steps to curb property speculation within its borders. Chinese home prices gained for 19 straight months through December and climbed in almost all 70 cities tracked by the government during the first quarter. Premier Wen Jiabao placed curbs on mortgage lending, boosted down-payment requirements and limited the number of purchases.

“As the Chinese get more and more prosperous, they are diversifying their assets out of China,” said Jim Rogers, an American investor who moved to Singapore from New York four years ago so his daughters could learn Chinese. “Vancouver is very high on the list.”…

The current group of Chinese homebuyers in Vancouver is the third “wave” from Asia since 1990, following Taiwanese and Hong Kong immigration, said Manyee Lui, a veteran Vancouver realtor. “People from mainland China are the new immigrants,” Lui said.

This is a reminder that real estate truly is a leading industry in the global economy as people from different countries seek out desirable properties. In escaping a real estate bubble in China and increased regulation but with money to spend, Chinese homebuyers are now looking at Vancouver. (Vancouver may not be the only place: I also recently wrote about a story of Chinese residents building “monster homes” in New Zealand.)

It is interesting to note the reactions of Vancouver residents: the influx of Chinese homebuyers has raised housing values, perhaps pricing others out of the market, and the schools now have a large number of non-native English speakers. At the same time, I assume Vancouver residents take pride in the cosmopolitan nature of their city. One resident mentioned the possibility of the government restricting foreign homeownership – is this really the route to go? Will this end up turning into a debate between local and global interests?

Decentralization as a reason why LA just doesn’t care as much about the results of their sports teams

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In an article that throws out a number of reasons why Los Angeles doesn’t seem to be as disappointed as other places when their sports teams don’t do well, a sociologist cites the factor of decentralization:

Sports fans in L.A. are more likely than those in other cities to come from somewhere else, bringing their old loyalties with them, diluting our civic passion.

“L.A. is very diversified and decentralized,” said David Halle, a UCLA sociologist who studies big-city culture. “That’s part of the whole zeitgeist.”

It’s different in, say, Boston, where books are written about how entrenched New England families pass the Red Sox and Celtics down through generations.

It is intriguing that decentralization is cited as a reason for lower levels of sports loyalty. The Los Angeles region is well-known for its sprawling landscape with a number of residential and economic nodes. Does this mean that there is a less cohesive civic feeling, using sports loyalty as a proxy for this, in Los Angeles compared to other places? Is this true of all places with pronounced sprawl?

There is an image (and rightfully so) of Los Angeles as the place where millions of Americans went to in the mid 20th century for the climate, the stars, and above all, economic opportunities. So is this the case in other American cities that have had a large influx of people, particularly other cities in the South and West that have grown in the last 60 years? Does Atlanta or Charlotte or Houston have similar lower levels of sports loyalties? I assume this might be the case in Florida and Arizona with a large number of retirees. But over time, wouldn’t there be a base of native Los Angeles residents who are loyal to local teams?

170 options for improving the Eisenhower

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The Eisenhower expressway is a key artery for traffic entering and leaving Chicago. The public is now invited to look at plans, including 170 possible improvements, that have been developed and could be put into practice in the future:

In response, highway design engineers have come up with 170 different ideas to reduce gridlock and accidents on the Eisenhower. The plan also focuses on improving travel options for mass-transit riders and bicyclists and pedestrians using nearby arterial streets…

The possible solutions include widening the Eisenhower to four lanes in each direction for the entire length of the highway to make room for “managed lanes’’ that would handle car-poolers, express buses or drivers willing to pay tolls to commute more quickly during rush hours, according to IDOT planners.

An expansion of CTA Blue Line rail service, from its current terminus in Forest Park to DuPage County, and other new transit services are also on the table, officials said. They include a possible light-rail line and designating a bus-rapid transit corridor that would be open to express buses traveling between the suburbs and downtown at least part of the day…

Major improvements are needed because traffic volumes on the Eisenhower are up to 180,000 vehicles a day, making it one of the busiest and most congested expressways in the Chicago region, officials said.

It sounds like there are a lot of options on the table. As the article notes, this is now an issue because this road is handling much more traffic than was originally intended and the traffic is not just one-way (in to the city in the morning, out in the afternoon) but now goes both directions. I can also imagine that all of this will stir up some discussion: special toll lanes? Construction that will go on for years? More money spent on mass transit? It seems like multiple solutions are needed included getting more drivers off the road as well as improving the traffic flow along this stretch.

Of course, a lot of this is for down the road as the planning has to take place and the money has to be found:

So far funding is available only to continue preliminary engineering, which is expected to be wrapped up in the spring of 2013, officials said. Design would then take several more years.

“Part of our analysis is to examine the financing options,’’ Harmet said. “We are a ways away from construction.’’

While the discussion could just center on the Eisenhower, this could also lead to larger conversations about the role of highways and mass transit within metropolitan regions. If the Eisenhower, and other local highways, are continually issues, perhaps new things have to be tried and transportation has to be dealt with on a more comprehensive level within regions (see a study like this for a broader metropolitan approach).

The state of public transit in the 100 largest American cities

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The Brookings Institution just released a new report, Missed Opportunity: Transit and Jobs in Metropolitan America, examining the mass transit systems in the 100 largest American cities. Here are some of the findings:

Nearly 70 percent of large metropolitan residents live in neighborhoods with access to transit service of some kind…

The typical metropolitan resident can reach about 30 percent of jobs in their metropolitan area via transit in 90 minutes…

About one-quarter of jobs in low- and middle-skill industries are accessible via transit within 90 minutes for the typical metropolitan commuter, compared to one-third of jobs in high-skill industries…

Fifteen of the 20 metro areas that rank highest on a combined score of transit coverage and job access are in the West…

With the primary focus of the report on jobs, there is a lot of interesting data. Here are a few things I noticed in going through the full report:

-Page 3 highlights three trends for metropolitan areas: “metro growth and expansion” with both city and suburban growth during the 2000s, “employment decentralization” (with a figure that only roughly 20% of metropolitan jobs are within 3 miles of the city center), and the “suburbanization of poverty.”

-Page 4 notes some of the problems of mass transit in today’s metropolitan regions: “old hub and spokes” which don’t work as well since “39 percent of work trips are entirely suburban” (a problem in the Chicago region, hence the need for the Star Line), “serving low-density areas” (a problem in many suburban areas and a recurring problem in the western suburbs of Chicago such as Naperville), and “spatial mismatch and the costs of transportation” (the idea that the people who work in certain jobs/industries don’t necessarily live near these jobs).

-Page 13 has an explanation for why they chose a 90-minute one-way commuting threshold in the study. If you change the threshold, the percent of jobs available changes quite a bit: “[A]cross all metro areas, the typical worker can reach about 30 percent of total metropolitan jobs in 90 minutes. At a 60-minute commute threshold, only 13 percent of jobs are accessible for the typical worker. For a 45-minute commute, the share drops to 7 percent.” This seems to be quite a high threshold but as they note, more than half of metropolitan commutes are longer than 45 minutes (according to 2008 American Community Survey data).

-Page 18 has a graph comparing the availability of high/medium/low skill jobs within 90 minutes by city or suburban setting. Interestingly, a higher percentage of jobs accessible from the city were high-skill while a higher percentage of accessible suburban jobs were low-skill.

-Pages 20-21 look at some of the differences between the West, with the most accessible mass transit and higher percentage of accessible jobs, and the South, the region at the other end of the spectrum. The findings about the South are not too surprising as it is known for sprawl but the finding that the West dominates the list of cities (15 of the top 20) is interesting. Does this suggest that these Western cities have made much more concerted efforts to provide mass transit?

If you look at the more specific data for the Chicago region, it appears to be fairly average compared to the other 100 metro areas.

Homes still large in New Zealand

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While new American homes have gotten smaller and this trend might continue into the future (I wrote about a piece in Slate that has been getting a lot of attention on this front), homes in New Zealand had also increased in size in recent decades though this might change in the near future:

Latest research from Quotable Value puts the average size of a home built since 2010 at 205 square metres, against just 142.4 square metres in 1980.

Quotable Value research director Jonno Ingerson said much of the increase could be put down to a rise in the construction of four bedroom homes, particularly during the last 20 years…

However significant increases in the cost of building in recent years meant the rate of growth was now slowing, suggesting homes may not get much larger, he said.

“There is also a push by some of the larger city councils to encourage medium density housing in fringe city suburbs. This type of housing will have smaller floor areas than the traditional suburban family homes that have been built over the last 20 years.”

It sounds like similar trends are taking place in New Zealand.

Several years ago, I had read a number of books comparing housing in the United States to European countries. While there are often clear differences there, it would be interesting to see recent research or books comparing the US housing market to that of Australia and New Zealand where bigger houses had also become the norm in recent decades. Will all three countries end up following a similar path toward smaller homes?

Men’s Health on the isolation of suburbia

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One can find commentary about suburbs almost anywhere, including at a Men’s Health blog. Here are their thoughts about the isolation of suburbia:

Researchers note that urbanites find liveliness, other people, and diversity more satisfying than those in the suburbs do. Suburbanites seem to find more satisfaction in economic status…

In the process, we replaced urban “stoop culture” with isolation. “Immigrants and other urbanites used to have casual interactions on a daily basis,” she says. “But once people started moving to the suburbs, they lost that sense of spontaneous social interaction.”

Sure, suburbanites technically could have walked the distance to their neighbor’s house. But the focus was more on individual households—partly due to the decline of the extended family. “Moving to the suburbs also meant moving away from your extended family into single family households,” Park explains.

This made our individual—fenced in—households the focus of our lives. Not just that—our new neighbors had different backgrounds and we had less in common with them, meaning forming new relationships took even more effort. (Fortunately, we finally had the TV to turn to instead!)…

The problem isn’t really suburbia itself; it’s isolation, which can affect anyone. (Fess up, city dwellers. Do you really even know who lives next door?)

On one hand, this post trades in some common images of suburbia: isolated homeowners who really live in “Disturbia, USA” (in the headline) and a thesis that asks “what’s wrong with the modern suburb?.” On the other hand, this issue of isolation is a commonly-cited problem in American life today. Interestingly, the last part of the post I cited above suggests the problem of isolation is found in both cities and suburbs. So is the problem really suburbia or is suburbia simply a symptom of larger issues of individualism and status-seeking within American culture?

Quick Review: The Cosmopolitan Canopy

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While I have already written some about Elijah Anderson’s new book The Cosmopolitan Canopy (here and here), I had a chance to read the book for myself and I have a few thoughts.

1. The book is supposedly about the public spaces in Philadelphia (and other big cities) where people of different races and social classes can mingle and interact without the difficulties that race and social class can often impose. Interestingly, this isn’t really the focus of the whole book (more on this shortly). But in this section, I thought some of the analysis was thin. It is clear that Anderson has spent a lot of time in some of these spaces, such as the Reading Terminal Market. I don’t doubt his observations but others have written before about public spaces and how they operate.

1a. Thinking about this, I would enjoy seeing some work on this in suburban settings. Since this is where most Americans now live, how do public spaces in the suburbs operate?

2. The strongest part of the book, in my opinion, was the latter half when Anderson focuses more on the experiences of black males in these canopies and elsewhere. Here, Anderson provides a lot of insight into how race still is a master status, even within high-powered workplaces. His examples are interesting, including settings like law firms and upper-end restaurants, and he has some insights into how race still has a profound impact on everyday interaction. This section reminded me of Anderson’s extended story of John Turner in Code of the Street where the ethnographic data really tells us about the current state of American race.

2a. It would also be interesting to get the stories of the whites involved in these examples.

3. The emphasis of the book is Philadelphia but I would have enjoyed reading about the flavor of this particular city opposed to other large cities. Would cosmopolitan canopies work the same in other places? Does the interaction depend on the mix of groups and races? What happens in newer large cities where there may be fewer public spaces and established neighborhoods? Are spaces like Rittenhouse Square or The Gallery unique or similar to other spaces?

On the whole, I think Anderson contributes to our knowledge by exploring how race still matters in American lives today. The part about cosmopolitan canopies is intriguing but could be better developed.