Trying to predict the 2017 housing market

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This summary of predictions for housing in 2017 includes 17 different estimates from various groups. Here is the one I’m most interested in:

Most observers expect home sales and prices to moderate in the coming year. They say suburbs will make a comeback while the days of low mortgage rates are over.

Suburbs will make a comeback you say? Perhaps there will indeed a Donald Trump effect for suburbs. Here is one more specific suggestion that might contribute to this:

The percentage of people who drive to work will rise for the first time in a decade as homeowners move farther into the suburbs seeking affordable housing.

Cheaper gas probably doesn’t hurt either.

Looking through these 17 predictions, few explicitly apply to suburbs. Most are about two things: millennials (with some help from baby boomers) are driving the housing market and there will be a slow rise in housing values.

One bonus summary statement:

One prediction you can always count on: No matter what’s happening with the economy, NAR is always going to say it’s a great time to buy. Its fourth quarter Housing Opportunities and Market Experience survey found that 70 percent of people say now is a good time to buy a home. NAR also predicts the rate on a 30-year fixed mortgage will rise to 4.6 percent by the end of 2017.

Perhaps there is one prediction missing: will the homeownership rate rise after dropping in previous quarters?

And who is going to check to see if these predictions for 2017 were successful?

Asking again: who buys McMansions?

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Given the negative connotations of the term McMansion, who exactly purchases such homes? The A.V. Club takes a quick shot:

It doesn’t seem likely that McMansion Hell will make these kinds of houses disappear from the landscape. Not as long as there are orthodontists and hedge-fund managers with money to burn.

This is a standard claim: the people who move into McMansions are the nouveau riche and they want the home to impress others. They are not concerned with architectural purity; they just want neighbors and people to drive by and be wowed by the grandiosity and features. But, is this actually true? We don’t know some fairly basic information, such as who lives in McMansions or what they actually think about domestic architecture.

For me, the basic question is this: if McMansions are so unquestionably bad, whether due to architecture or excessive consumption or contributing to suburban sprawl, why do people continue to move into them or live in them? There is something in the McMansion that appeals to a good number of Americans with the means to afford them (and before the housing bubble burst, more of those who maybe couldn’t afford them). And if you oppose McMansions, I’m guessing the architecture criticism simply doesn’t register with many Americans. The postwar era is littered with bad housing (I know ranch homes get some love today but they aren’t special) and aesthetics may not matter much compared to other factors (like the quest for more space or being in certain desirable locations) when purchasing a home.

Making carpooling in America great again

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A scientist discusses the issues that need to be solved for Americans to voluntarily carpool in larger numbers:

Maybe carpooling apps should let drivers set clear terms about the kind of behaviors they expect and encourage in their car, says Glasnapp. Maybe they permit conference calls and snacking, or maybe they’d prefer friendly, food-and-phone-free conversation. (Or total silence!) Riders should have the option to choose specific types of in-car experiences, too, with the understanding that the lower cost they are paying to carpool comes with a different set of expectations than does ride-hailing.

Technology has simplified the logistics of the rider/driver experience, says Glasnapp, but that sometimes comes at the expense of control. Most carpool apps offer specific time brackets during which drivers and riders can schedule rides—for example, on Scoop, morning trips have to be solidified by 9 PM the night before, and evening trips by 3:30 PM the same day, and matches are made after that deadline. That clarity is nice, says Glasnapp, but it’s almost too inflexible, since the system penalized him for making changes afterwards, and didn’t notify him if his ride offer had been accepted until after the cut-off. On the other hand, Waze operates its carpool system at any time of the day that drivers are on the road, which can be somewhat chaotic for riders’ expectations, says Glasnapp. The best carpool app will find a balancing point between structure and flexibility…

Finding the sweet spot for payment might be the most elusive goal for a great carpool system. Each app Glasnapp tested had their own approach to setting prices and payments for passengers and drivers: On Waze, riders pay a price that reflects the federal mileage reimbursement rate of $.54 per mile; this money is transferred directly to the driver. Lyft took the approach of setting flat fares, where carpool drivers earned up to $10, and riders paid anywhere between $4 and $10. Scoop pricing follows a similar model, and it also partners with local employers to provide discounted trips for riders, Glasnapp says. So long as drivers are still getting their cut, that’s an attractive strategy for all parties.

Even if the mileage rate is attractive on its face, though, the length of the journey has to match up to the driver’s expectation of fair compensation. If you’re already driving 40 miles to work, a request from a rider who is 17 minutes out of the way might require a pretty healthy compensation for you to accept—more than, say, the $10-and-under that a standard Lyft or Waze trip paid. “I think there is a magic number for every driver based on amount of inconvenience,” Glasnapp says. This is also sort of a chicken-and-egg problem—if there were more carpool drivers on the road, they wouldn’t be receiving such far-flung requests. But a great carpool app will need to nail the (highly individual!) question of pricing, so that more drivers want in.

A few other problems I could imagine:

  1. The lack of personal space. Is there a way to design carpool vehicles where each person has this own compartment? This would cut down on the problems of differences in behavioral expectations and have the passengers and drivers not even interact or possibly even see each other.
  2. Can everyone who wants to find someone to carpool with? I’m imagining it would be tougher for those with irregular work hours or who live in certain locations (or have unique paths). Would this be seen as a penalty for certain people for circumstances that may be difficult to control?
  3. Is the answer necessarily an app?
  4. The article suggests Americans have done this twice before – World War II and the 1970s Oil Crisis. This could be reassuring …or not. Might it suggest that Americans will only carpool when circumstances really demand it?

The clustering of wealthy counties in the United States

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With recently released data, the Census Bureau describes the patterns in the wealthiest counties in the United States:

A Census Bureau report on the “highlights” of the data released yesterday noted that the nation’s wealthiest counties are disproportionately in the corridor of territory that runs from Virginia and Maryland and then north along the East Coast.

“Seventy-seven counties had a median household income within the highest range ($81,129 to $125,900),” said the “highlights” report. “Forty-two of these high-income counties were located in the Northeast region, Maryland and Virginia.”…

Nationwide, the median household income in 2015 was $55,755, according to the Census Bureau. That means the local median household income in each of the nation’s three richest counties—all of which are Washington suburbs in Northern Virginia—are more than twice the national median household income.

Of the Top 20 richest counties in the nation, nine are suburbs of the city that serves as the seat of a federal government

It then wouldn’t be too hard to look for patterns in other demographic data across these wealthier counties. One marker – noted in this article – is that many of these wealthier counties are suburban. But, I’m guessing these counties are also well educated and largely white.

It would also be interesting to see how those concerned with inequality would deal with county level data. Many American counties don’t have a lot of control compared to municipalities or states. There can be a lot of variation within counties, both really wealthy and really poor pockets. Usually, recommendations about poverty or affordable housing are made at a municipal or regional level. Is there a way to leverage counties to address particular issues?

Local note: it appears that three Chicago area counties – Lake, DuPage, and Kendall – fit into the highest range in the data. See page 3 of the Census highlights.

Avoid public wi-fi

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Here is a helpful reminder:

And finally, don’t forget for one minute that public Wi-Fi is dangerous.

This one illustration is humorous:

Evan, now 11, programmed fake Wi-Fi portals and took them to food courts shopping centers across the Austin, Texas, area and waited to see how many agreed to some pretty outrageous conditions. For the love of free internet access, they’d have to give their OK for the Wi-Fi owner to do things like “reading and responding to your emails, monitoring of input and/or output, and ‘bricking’ of your device.”

More than half of the shoppers shown these terms accepted them.

I like that this the article ties this issue to shopping malls. This might primarily be due to this time of year when plenty of people are out purchasing gifts. However, it also works because shopping malls are about as close as we get as Americans to public spaces. Where else can you regularly go for a safe environment to be around other people to do one of the ultimate American activities (consume)? While this article reminds us that the mall may not be so safe, is it odd that Americans tend to think of it as a safe place? And if malls want to keep attracting people (who then spend money), shouldn’t they do something about protecting their wi-fi?

I see an opportunity for either malls or security firms: ensuring that your public wi-fi experience is a good one.

Cities using ride-sharing services to supplement mass transit

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Several pilot programs in American cities take advantage of the rise of ride-sharing companies:

Transit agencies, perennially strapped for cash, have embraced these pilot programs as a way to save money and, potentially, provide better service. Outside Tampa, for example, the East Lake Connector bus cost the Pinellas Suncoast Transit Authority about $16 per person per ride. Riders paid $2.25 each. That route has since been discontinued. In its place, starting this month, riders will pay $1 for an Uber, Lyft, or cab ride from anywhere in the county to the nearest bus stop. The transit agency will achieve the low fare by providing a $5-a-head discount.

And here is some criticism for such efforts:

There are serious concerns with such programs: For starters, the savings are in part derived from trading public-sector employees like bus operators for low-wage stringers like Uber drivers. For the most part, though, the partnerships have made bad service a little better. In Pinellas, for example, the program emerged in response to a 2014 referendum in which local voters declined to adopt a 1 cent sales tax in support of transit.

But now that chain of cause and effect is being reversed. The rise of ride-hailing companies is increasingly viewed not as a fix for bad service but as its justification. It is invoked, as you might expect, in bad faith by conservatives who have advocated against public investment for decades. But even pro-transit politicians and officials have begun to see ride-hailing services as an acceptable substitute for public transit. As a result, cities across the country are making important decisions about transportation that treat 10-year-old companies as fixed variables for the decades to come…

We’ve known for a while that Uber is unprecedentedly unprofitable, its $60 billion-plus valuation notwithstanding. But as we begin to make policy decisions based on it and its competitors’ impact, we have to recognize that this state of affairs can’t last. It is not just the taxi cartel that makes conventional cab rides cost more than Uber rides. It’s the patience and optimism of Silicon Valley investors. Maybe Uber will continue its shift into shared rides, which (as a prior generation of transportation operators learned 150 years ago) are more profitable. Or robot cars will eliminate driver jobs, dropping the marginal cost of providing rides (though adding billions in capital expenditures). But in any case, whether it achieves its desired market share or not, the company will have to start raising prices.

This criticism makes sense: mass transit is all about economies of scale and having large numbers of people following more fixed routes. Failing to build infrastructure now means there will be reduced mass transit options in the future.

But, I think there may be a larger issue that undercuts this criticism: what if large numbers of Americans don’t want to use mass transit, either when given other opportunities or they have enough resources on their own to get where they want or they don’t want to pay for it through taxes and municipal funds? Even with plateauing driving in recent years, this doesn’t necessarily mean Americans want to sacrifice their mobility or personal space to use mass transit more. If this is true, perhaps driverless cars are the true answer for individualized mass transit – not ride-sharing – as they would offer personal space and mobility but without the hassle of driving oneself. Of course, this could also destroy mass transit as we currently know it…

The ever-active big city as antidote to Donald Trump

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One New Yorker writes about how the city itself is a salve against the election of an undesirable candidate:

Urbanism isn’t perfect, certainly not as we’ve ever managed to live it in New York. It’s brought us income inequality and political complacency and an ugly disdain for the forsaken voters on whose rage our boy-king just boogie-boarded into office. But the city is not one that will respond to that comeuppance with humility. And as the days wore on after the election, and we settled back into our know-it-all selves, we began to feel a little less ignorant or even ill-informed. We know plenty. We know tolerance and science and that cosmopolitanism does not mean unanimity but that it does mean vitality, and that you shouldn’t intervene when two drug addicts are yelling at each other outside a Chinatown subway station but that you should when it’s one of them yelling at a Mexican woman to clear out of town. We know that, whatever he thinks of Hamilton, there are safe spaces for the president-elect in this city — Staten Island, for starters, and Hasidic Williamsburg and the ‘21’ Club and Jean-Georges, apparently. Thankfully, we know there are unsafe spaces, too, including right outside his front door, where many continue to rally every day despite the armored trucks and sandbags and police with blacked-out name tags. We know that “inner cities” aren’t “war zones” and that ending discriminatory policing doesn’t lead to a rise in gun deaths — we actually know that because the city is an urban laboratory for city-first governance, and it has yielded real results. We know that putting America First means welcoming the world, and we know our immigrants have enriched us, not raped us. We know that city life can be ugly, but also that we are all strong enough to live among some ugliness. We know that, stranded in a country that may soon privatize public schools, we have just established universal pre-K, and we know — or think we know — that it works. We know that we have pretty gender-­accommodating public bathrooms because we know people who still fuck and do drugs in them. We know that La Guardia is a dump — but so what? We know this city is, ultimately, ungovernable — that it’s too unruly, that it’s at its best when it’s unruly, and that its unruliness is what gave rise to what people like Trump used to call the American Dream. We know that people like him are the cost of that unruliness, and that you can learn to live with them by mocking them. We thought we knew the country would listen to our warnings, but we’re not going to stop making them. We know, whatever one might think of Bill de Blasio, our giant in Gracie Mansion is up to the task of grandstanding, suggesting he’d erase the city’s ID-card data rather than endanger immigrants. We know the city will be independent, and we know the city will also continue to be itself — a theater of freaks and refugees and the restless who were never elsewhere able to feel at home. We know that an open and tolerant and ­progress-minded future still lies before us, even if we have to go it alone, and even if that future now looks a few feet smaller at the shoreline.

And we also know that we are not in fact alone — that New York is not an island but an archipelago. Our mayor has resister-cousins in Chicago and Los Angeles and Providence, San Francisco and Seattle and Minneapolis — and those are just a few of the cities mobilizing themselves as immigrant sanctuaries. We know that the number of Democratic counties has shrunk over the last decade or two, as entrepreneurs and other hustlers flooded into cities, and we know that the counties that went blue in this election account for nearly two-thirds of the American economy. We also know that Peter Thiel was basically the only Trumper in Silicon Valley. If you have to live in a bubble, really, you could do worse.

This could be relatively easy to dismiss as an example of urban dwellers or coastal residents leaning Democratic versus those in more rural areas or in the middle of the country voting Republican. But, the underlying idea is more interesting: is the city, particularly the #1 global city in the world New York City, bigger than presidential elections? Regardless of who is president, this city moves on with its own concerns and attitudes. It is affected by national politics but it is also a world onto itself. More broadly, the economic heart of the city – giving rise to all the traffic (vehicular and pedestrian), Wall Street, dynamic urbanism described by Jane Jacobs – continues.

Los Angeles continues to tweak McMansion regulations

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The work continues in Los Angeles about how to best address McMansions:

The City Council this week voted 13-0 to rewrite two ordinances governing the size of new houses in single-family neighborhoods and on hillsides, the Los Angeles Times reported:

“One mansionization measure backed by the council would reduce the square footage allowed for houses in R-1 zones — areas where only single-family homes are permitted — to 45% of the overall lot size, down from 50%. The council also moved to eliminate provisions that have allowed homebuilders to obtain additional square footage for their projects.

For example, developers have had the right to go 20% bigger when they showed they followed environmentally friendly design standards. That would disappear under the council’s plan.”

This isn’t the first time the city has taken on the issue. The first mansionization ordinances passed in 2008. But homeowners and others argued that the law didn’t go far enough to protect neighborhoods, and McMansions are still invading historic neighborhoods.

This highlights how regulating McMansions is not a one-time deal. In this case, the city already had regulations on the books. But, with enough pressure from residents, two changes were made to limit the size of new homes (through two different means). Presumably, these regulations could change even further as residents and builders see how things go over the next few years. It is harder to imagine the McMansions guidelines would allow for larger homes but builders, developers, and residents interested in such homes also could exert influence.

This may also serve as a reminder about the difficulty of crafting city-wide ordinances when different neighborhoods (and residents) might have different concerns about McMansions. In other words, what works in one neighborhood may not work in another. I could understand why local governments wouldn’t want to create a patchwork of regulations but it would be interesting to know how many residents and neighborhoods are driving these regulations.

“Move to a leafy suburb to cut cancer risk”

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A new Harvard study suggests the risk of getting cancer decreases when people live around more greenery – such as in suburbs:

People whose homes are surrounded by the most greenery are 13 per cent less likely to die of cancer. Their risk of dying from respiratory disease also drops by 34 per cent, the biggest ever study into green spaces and health has shown.

Overall mortality was 12 per cent less for people who had the most greenery within 250 metres of their homes during the eight year follow-up period.

It is thought that being surrounded by vegetation improves mental health and lowers depression. It also allows people to get out and about more, giving more opportunities for exercise and social engagement, both of which are known to be protective against disease. The lack of air pollution in green areas also plays an important role…

More than 100,000 women enrolled in the Nurses’ Health Survey were followed between 200-2008. Scientists used satellite imagery from different seasons and years to monitor how much greenery surrounded their homes.

The early suburbs of England and the United States were popular in part because of their health benefits compared to the growing dirty industrial cities. The suburbs then featured much more greenery and the idea of having a small house in the midst of nature. I’m not sure today’s suburbs can truly compare, particularly those closer to the central city. I’m reminded of James Howard Kunstler’s commentary in this TED Talk about the “nature band-aid” that is often applied in suburbs today. But, this study suggests that a greener setting – even if it is heavily modified by humans in suburban settings – can help.

When the candidate with the big data advantage didn’t win the presidency

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Much was made of the effective use of big data by Barack Obama’s campaigns. That analytic advantage didn’t help the Clinton campaign:

Clinton can be paranoid and self-destructively self-protective, but she’s also capable of assessing her own deficiencies as a politician in a bracingly clear-eyed way. And the conclusion that she drew from her 2008 defeat was essentially an indictment of her own management style: Eight years earlier, she had personally presided over a talented, sloppy, squabbling, sprawling menagerie of pals, longtime advisers and hangers-on who somehow managed to bungle the building of a basic political infrastructure to oppose Obama’s efficient, data-driven operation.

To do so, Mook hired a buddy who had helped Terry McAuliffe squeak out a win in the 2014 Virginia governor’s race: Elan Kriegel, a little-known data specialist who would, in many ways, exert more influence over the candidate than any of all-star team of veteran consultants. Kriegel’s campaign-within-a-campaign conducted dozens of targeted surveys—to test messaging and track voter sentiment day-by-day, especially in battleground states—and fed them into a computer algorithm, which ran hundreds of thousands of simulations that were used to steer ad spending, the candidate’s travel schedule, even the celebrities Clinton would invite to rallies.

The data operation, five staffers told me, was the source of Mook’s power within the campaign, and a source of perpetual tension: Many of Clinton’s top consultants groused that Mook and Kriegel withheld data from them, balking at the long lead time—a three-day delay—between tracking reports. A few of them even thought Mook was cherry-picking rosy polling to make the infamously edgy Clinton feel more confident…

In numerous interviews conducted throughout the campaign, Clinton staffers attested to Mook’s upbeat attitude and mastery of detail. But, in the end, Brooklyn simply failed to predict the tidal wave that swamped Clinton—a pro-Trump uprising in rural and exurban white America that wasn’t reflected in the polls—and his candidate failed to generate enough enthusiasm to compensate with big turnouts in Detroit, Milwaukee and the Philadelphia suburbs.

It would be fascinating to hear more. The pollsters didn’t get it right – but neither did the Clinton campaign internally?

The real question is what this will do to future campaigns. Was Donald Trump’s lack of campaign infrastructure and reliance on celebrity and media coverage (also highlighted nicely in the article above) something that others can or will replicate? Or, would the close margins in this recent presidential election highlight even more the need for finely-tuned data and microtargeting? I’m guessing the influence of big data in campaigns will only continue but data will only get you so far if it (1) isn’t great data in the first place and (2) people know how to use it well.