Category Archives: Politics

Homeownership continues to drop, housing costs rise

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Twin trends in American housing: homeownership is down while housing costs increase. First, on homeownership:

Only about a decade ago, in 2004, 69.2 percent of all homes were occupied by their owners; the home ownership rate has since fallen to 63.4 percent, the lowest in almost fifty years despite some of the most attractive mortgage interest rates on record. In part this is due to the difficulty young couples have in qualifying for a mortgage, as once-burned, twice-fined and increasingly risk-averse banks, looking over their shoulders at their regulators, raise their lending standards.

But even a further loosening of credit standards that have already been relaxed for “jumbo” loans (in excess of $417,000 and $625,500, depending on the region) is unlikely to change the trend towards renting rather than owning, last month’s increase in construction of single-family homes notwithstanding. Jordan Rappaport and Daniel Molling, economists at the Federal Reserve Bank of Kansas, find that adults in their 20s and early 30s, so called millennials, are not alone in preferring to rent rather than buy. Ageing baby boomers, now in their 50s and 60s, have tired of mowing, hunting for plumbers, fixing leaky roofs and coping with the nightmares that accompany realization of the one-time American dream of home ownership. They have accounted for the bulk of new renters, and are likely to continue to “be the main drivers of multifamily [apartment] construction as they age through their senior years,” conclude the Bank’s economists.

Second, on housing costs:

Consumer prices rose modestly in July, and according to the U.S. Labor Department those gains were largely due to a 0.4 percent increase in the cost of shelter—the government’s measure of housing costs. This was the largest increase in the shelter index since 2007.

While inflation for other Consumer Price Index (CPI) basket items has been decelerating, the inflation of shelter has only been going up since 2010. Compared with July of last year, shelter prices are up by 3.1 percent. In the coming months, shelter inflation is expected to continue…

Rising housing costs, paired with stagnant wages, are a big concern for most Americans because not only is rent often already the largest part of monthly expenses—it is increasingly becoming more expensive. One study found that half of all renters spend more than 30 percent of their income on rent and utilities.

Interestingly, this is getting very little attention from politicians. Let’s say a politician wanted to appeal to the masses in the United States. One traditional way of doing this has been to push homeownership, a strategy pursued from Presidents since the 1920s. Owning a home might be the modern equivalent of a chicken in every pot for Americans. Since owning a home has been viewed as an essential part of the American Dream, most politicians want to be viewed as in favor of expanding this opportunity. (Of course, there are other reasons for pushing homeownership including boosting the economy and fighting communism.)

Perhaps other issues are more pressing at the moment. Or, I suspect few leaders really know what to do about reviving housing given the efforts in the early 2000s to expand homeownership that contributed to a big economic bust. Yet, since most major politicians today want to appeal to the middle class (and they don’t pay much attention to the poor – another story for another day), this would be one easy way to go if they could just figure some sort of plan.

The culture wars have moved online

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The culture wars may be raging most furiously in a new space and this has consequences:

The culture wars may have changed, but that doesn’t mean they’re over. Nowhere is this more clear than on the internet. Hartman’s culture wars were fought in national magazines, peer-reviewed journals, cable news shows, and in the halls of Congress: all venues with some degree of gatekeeping. Today, a broader swath of self-proclaimed culture warriors can engage in comment sections, on blogs, and on Twitter, where the #tcot hashtag is filled with echoes of earlier flashpoints. Whether the internet is simply a new, more broadly accessible forum for old debates about the meaning of America, or whether it is facilitating a new kind of culture war altogether, is not entirely clear. Nor are online spaces any less susceptible to the imperatives of capitalism than any other part of American culture. But if the culture wars are over, no one told their most energetic partisans: on this new frontier, the battle rages on.

If this is the case, it has altered the culture war landscape in multiple ways:

1. Increased the speed of battle. Now, new issues can pop up all over the place through text and videos on multiple platforms. Who can keep up with it all?

2. The old gatekeepers – traditional media like television, newspapers, and radio as well as politicians – have to scramble to keep up. This means they may race to the bottom or endlessly cycle through everything to stay relevant.

3. The culture wars don’t have to be about big issues but rather can be a larger series of micro battles. There may be no big “culture war” but rather an endless number of skirmishes involving small numbers of participants.

4. Anyone can participate with the possibility of being part of a larger conversation behind their smaller sphere. However, it is hard to know which of these skirmishes might blow up.

Fight NYC inequality with more expansive subway options

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One writer suggests Mayor DeBlasio could address inequality in New York City by improving the subway:

To see how that works in practice, de Blasio should spend a week commuting on the subway from various points in the city: taking the No. 7 train from Flushing, the L train from Greenpoint, the F train from Fort Hamilton Parkway.

Such an exercise may remind de Blasio that while a few rich people can bail out of mass transit by taking ever-cheaper black cars, most New Yorkers are stuck on a subway system that is creaking under record ridership.

The mayor should do some weekend, night and borough-to-borough commutes, too, so he can see how hard it is for lower-paid, off-hours workers to get around when the MTA cuts its service.

Then, the mayor should agree to Gov. Andrew Cuomo’s request to put $3 billion into investments in subways and buses over the next five years, helping to pay for the next few stops on the Second Avenue Subway, plus better technology on existing subway lines.

The mayor should think seriously, too, about funding his own transit project. He mentioned a subway on Utica Avenue, and then never talked about it again. With China’s economy cratering, it’s a good time to build — steel and concrete are cheaper.

Former Mayor Michael Bloomberg’s extension of the 7 train to Manhattan’s Far West Side will open soon — and New Yorkers will remember that Bloomberg did it.

What will they remember about de Blasio?

Powerful politicians often like to enhance their legacy through the construction of massive buildings or public works projects. And mass transit can easily become an issue tied up with social class and race as mass transit in theory is supposed to be more democratic. But, how many would like their legacy to be underground subways in a city that already has an extensive system? Such projects often take billions of dollars, cause all sorts of disruptions, and can be lengthy. This might only work in New York City, a place so dependent on daily subway usage (particularly compared to other large American cities).

If pushed by the mayor, can a new line be called the de Blasio line? I can’t help but think of the “Rod Blagojevich, Governor” signs every time I pass through the open road tolling facilities on Chicago area tollways…

Argument: solve Interstate issues by handing them back to the states

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One writer suggests it is time for the federal government to get out of the business of funding interstate highways:

Assuming time travel is off the table, let’s learn from our mistakes. First, let’s get the federal government completely out of the business of maintaining the interstate highways crisscrossing our big metropolitan areas. Hand these roads over to state governments as soon as possible, and free state governments to finance these roads in any way they see fit, from higher state gas taxes to variable tolls they could use to reduce traffic congestion. Second, for interstate highways that connect cities across deserts and cornfields, let’s replace the federal gasoline tax with per-mile tolls. One of the many problems with the gas tax is that as gas mileage improves, and as a small but growing number of drivers turn to electric vehicles, gas tax revenue is not keeping up with the needs of the highway system. Per-mile tolls can solve that problem by charging drivers according to how much they actually use the highway system, regardless of the kind of vehicle they’re driving. And as Robert W. Poole Jr. explains, they can be pegged to the cost of each road and bridge, which will help ensure that roads and bridges are adequately financed.

After adopting this approach, we will see states investing in the infrastructure projects that best meet their needs, with some states, like California and New York, choosing to invest more heavily in urban mass transit while others, like Texas and Utah, build bigger and better highways. What remains of the federal highway system, meanwhile, will evolve over time, as the routes that attract the most traffic will grow in line with their per-mile toll revenue while those that attract the least will stay the same size, or perhaps even shrink. We’ll have an infrastructure worthy of a bigger, denser, more decentralized America—the kind of infrastructure that Ike, in his infinite wisdom, would be proud of.

An interesting argument that might have appeal for both liberals and conservatives. For conservatives, having more local control is generally good and states could innovate in a way that a larger bureaucracy might not. (At the same time, corporate interests cross state and national lines and they might not like a decentralized highway network.) For liberals, highways have often been used in redevelopment projects harming poorer neighborhoods and state control would theoretically give neighborhoods and communities more say over the fate of highways. Additionally, interstates encourage sprawl and liberals might want to reign in highway building and maintenance in many places.

I could also imagine several objections to this argument:

1. How many states would be willing to take this on right now given budget issues? This would have to be phased in over time. Which government officials want to take responsibility for raising tolls for driving?

2. Uniformity in the system could be a good thing ranging from common road signs to expectations regarding levels of maintenance and service across states.

Ah, another story of an overzealous Census surveyor

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Worried the Census Bureau is going to force compliance in answering its surveys? Here is another story of a zealous employee:

An East Dallas woman is outraged after she claims one U.S. Census worker showed up at her door for a housing survey and would not take “no” for an answer…

“She’s ringing the bell, knocking on the door. And I’m like, ‘I don’t want to participate.’” Said Platz. The East Dallas resident said it started with a series of three letters from the U.S. Census Bureau. A few days later after receiving the third later, a census worker showed up. Her husband verbally declined.

But a few days later, a different worker showed up at their home and would not leave according to Platz…

The census worker sat on the bumper of her van for the next 30 minutes. Sonia said the worker would only get up from the back of her van every few minutes to see if she had changed her mind about taking the housing survey…

It was a real federal census worker according to the regional office that covers Dallas. A supervisor confirmed more than 100 other workers are out in the area conducting the same work. The regional office said employees are encouraged to be “pleasantly persistent” and never take “no” for an answer at first.

I would guess that at least 95%+ of Census workers don’t cause such problems. But, an occasional case of Census workers who really want survey responses may be enough to keep people worried. And it would be interesting to hear how the Census Bureau deals with such employees.

To be snarky about it, perhaps people shouldn’t worry too much about the zealous Census worker as the NSA could just gather the relevant information without anyone knowing…

American culture wars to move next to fighting over the suburbs?

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Joel Kotkin is back with the claim that the next American culture war will be over the suburbs:

The next culture war will not be about issues like gay marriage or abortion, but about something more fundamental: how Americans choose to live. In the crosshairs now will not be just recalcitrant Christians or crazed billionaire racists, but the vast majority of Americans who either live in suburban-style housing or aspire to do so in the future. Roughly four in five home buyers prefer a single-family home, but much of the political class increasingly wants them to live differently…

Yet it has been decided, mostly by self-described progressives, that suburban living is too unecological, not mention too uncool, and even too white for their future America. Density is their new holy grail, for both the world and the U.S. Across the country efforts are now being mounted—through HUD, the EPA, and scores of local agencies—to impede suburban home-building, or to raise its cost. Notably in coastal California, but other places, too, suburban housing is increasingly relegated to the affluent.

The obstacles being erected include incentives for density, urban growth boundaries, attempts to alter the race and class makeup of communities, and mounting environmental efforts to reduce sprawl. The EPA wants to designate even small, seasonal puddles as “wetlands,” creating a barrier to developers of middle-class housing, particularly in fast-growing communities in the Southwest. Denizens of free-market-oriented Texas could soon be experiencing what those in California, Oregon and other progressive bastions have long endured: environmental laws that make suburban development all but impossible, or impossibly expensive. Suburban family favorites like cul-de-sacs are being banned under pressure from planners…

Progressive theory today holds that the 2014 midterm results were a blast from the suburban past, and that the  key groups that will shape the metropolitan future—millennials and minorities—will embrace ever-denser, more urbanized environments. Yet in the last decennial accounting, inner cores gained 206,000 people, while communities 10 miles and more from the core gained approximately 15 million people.

This is one long piece but provides a lot of insight into what Kotkin and others have argued for years: liberals, for a variety of reasons, want to limit the spread and eventually reduce the American suburbs in favor of more pluralistic and diverse urban centers. I would be interested to know which issue Kotkin is most afraid of:

1. Maybe this is really just about politics and winning elections. The split between exurban Republican areas and Democratic urban centers has grown with the suburbs hanging in the balance. Perhaps conservatives fear moving people to cities will turn them more liberal and hand all future elections to Democrats. Of course, lots of liberals had fears after World War II that new suburbanites were going to immediately turn Republican.

2. This may be about the growing teeth of the environmental movement operating through legislation but also agencies and others that are difficult to counter. Suburban areas may just take up more resources but Kotkin and others don’t see this as a big issue compared to the freedom people should have to choose the suburbs. Should there be any limits to using the environment on a societal level?

3. Perhaps this is about maintaining a distinctively American way of life compared to Europeans. Some fear that international organizations and the United Nations are pushing denser, green policies that most Americans don’t really want. The suburbs represent the American quest for the frontier as well as having a plot of land where other people, particularly the government, can’t come after you. This ignores that there still are single-family homes in Europe – though on average smaller homes on smaller lots.

Or, maybe this is a combination of all three: “If the suburbs go, then what America was or stands for dies!” Something like that. Imagine “Don’t Tread On Me” making its last or most important stand on the green lawns of post-World War II split levels.

I have a hard time seeing this as the next big culture war topic that reaches a resolution in a short amount of time (say within a decade), primarily because so many Americans do live in the suburbs and the suburbs have such a long standing in American culture. But, perhaps a movement could start soon that would see fruition in the future.

Homeownership rate continues to drop (63%); why aren’t politicians talking about it?

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The American homeownership rate is 63%, matching 1993 levels:

Overall, home ownership, the cornerstone of the American Dream, is down to 63 percent, a far cry from the 69 percent registered in 2004. The Joint Center for Housing Studies of Harvard University’s annual “State of the Nation’s Housing” report said current home ownership percentages rival that of 1993.

Those figures, however, are much worse for minorities, especially blacks. “The homeownership rate for minorities continues to lag: It peaked at 51.3 percent in 2004, and has now fallen to 47.2 percent. Of all minority groups, African Americans have the lowest rate of homeownership, just 43.8 percent,” said the report.

The reason for the decline is the languishing economy and poor pay. Harvard said that a key factor is the “steady erosion” of incomes since the recession began.

While I would assume most politicians would continue to support the idea of homeownership (and most major politicians since the early decades of the 1900s have done so), I haven’t really heard much about this in policy debates. Perhaps this is because other issues – immigration, gay marriage, taxes – have been in the spotlight but homeownership was a pretty foundational idea for much of the last century of American life. Or, perhaps this is because few people have ideas for how to increase homeownership, especially with the housing crisis of the late 2000s still looming large in the rearview mirror.

If a politician wants to make a novel/old tried and true argument for the 2016 election, they could push homeownership for all again. The rental market is tight, the bottom end of the housing market is sluggish, and I imagine there are a lot of voters who would like to hear how they can purchase a home.

More on “Obama wants to reengineer your neighborhood”

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Commenting on HUD’s plans to introduce more poorer residents into wealthier communities, a conservative argues this is an assault on the ability to sort by social class:

This is not about blocking housing discrimination, which has been illegal since 1968. It is unlawful for someone to deny you a loan or prevent you from buying a home because of your race, creed or color. Socioeconomic status is — and ought to be — another matter. If you want to buy a nice house in the suburbs, you have to be able to afford it. Apparently, Obama thinks that’s unfair discrimination by the “holders of capital.”

Putting decisions about how local communities are run in the hands of federal bureaucrats is an assault on freedom. Local autonomy is essential to liberty. As Milton Friedman put it in “Capitalism and Freedom,” “If I don’t like what my local community does, be it in sewage disposal, zoning or schools, I can move to another local community. .?.?. If I don’t like what my state does, I can move to another. If I do not like what Washington imposes, I have few alternatives in this world of jealous nations.” Washington has no business imposing decisions about zoning and housing policies on thousands of local communities…

Having Washington micromanage the housing and zoning policies of thousands of local communities is not going to change this. The answer is not to force local governments to build affordable housing in affluent communities. The answer is to restore upward mobility in the United States so that more people can afford housing in affluent communities.

Free markets can solve residential segregation, right? Except this simply hasn’t worked over time in the United States. The end of the argument in this article suggests the Obama administration has not been good for poorer Americans. This may be the case but there aren’t many (or any?) magic free trade eras in American history where people of different races and backgrounds could move wherever they wanted even when in the same social class. For example, research in recent years continues to suggests that blacks and Latinos who have the same or similar socioeconomic status as whites tend to live in poorer neighborhoods. Urban renewal – when the government forces residents out of poorer neighborhoods for newer development projects usually benefiting wealthier people – may not work but neither would a completely unfettered market.

Additionally, race and ethnicity are intimately tied to social class in the United States. To suggest that we can easily not discriminate by race but social class is something different ignores the realities of how these key life factors have worked together for hundreds of years.

No money, no Illiana Expressway

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According to Illinois officials, the Illiana Expressway project has been halted:

Illinois Department of Transportation officials decided “in light of the state’s current fiscal crisis and a lack of sufficient capital resources, the Illiana Expressway will not move forward at this time. Project costs exceed currently available resources,” a statement from the governor said.

The move is not surprising, given Acting IDOT Secretary Randy Blankenhorn opposed the road when he was chief of the Chicago Metropolitan Area for Planning.

“We see no evidence the Illiana would lead to sustained job creation over the long term,” Blankenhorn said in 2013. “There is potential it would expose the state to significant financial risk.”…

Rauner is feuding with Speaker Mike Madigan and Senate President John Cullerton over the Democrats’ budget and how to solve a massive deficit.

This has been quite the controversial project and there have always been questions about the initial funding and ongoing costs. New highways are costly and Illinois doesn’t have much money to spend. Yet, now we get to find out whether this is simply another bargaining chip in the ongoing budget battles in Springfield. While we’ve seen a lot about the Chicago area politics of this expressway, what does Madigan think about it? Will the claims that the highway would be a boon for economic development be resurrected at some point?

Chicago still leading the way for corruption

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A new report finds Chicago is still at the top of American cities in corruption:

According to new research released today by University of Illinois at Chicago political science professor Dick Simpson, there were 45 convictions for public corruption in 2013 (the latest year available) in the U.S. court district that covers the Chicago area. That’s way, way above the 19 convictions in Los Angeles and 13 in the Southern District of New York (Manhattan). But Houston had far and away the most pols convicted on federal corruption charges in 2013, with 83.

Since the U.S. Department of Justice began to collect data in 1976, Chicago’s Northern District of Illinois, which includes Chicago, Cook County and 17 other counties, has had 1,642 convictions, according to Simpson. That compares with 1,316 in LA and 1,260 in the New York district, which includes Manhattan, the Bronx and six other counties…

If it makes you feel better, Simpson notes that on a per capita basis, Illinois is in seventh place. The District of Columbia, Louisiana, Mississippi, Alaska, and North and South Dakota rank higher than Illinois.

In this case, I don’t know if the quantification helps at all. When scholars or activists produce such figures, they are often trying to draw attention to a particular cause by pointing out the large numbers. This is how social problems are made. On the other hand, Chicago has had a reputation for corruption for decades. Do these numbers mean anything if residents of the region already expect this? Perhaps the comparison of numbers with other cities and regions can help. Yet, it doesn’t look like knowing these figures changes very much.

And what is going with Houston – is the oil money flowing a little too freely?