“Landlords have the advantage”

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A new report based on feedback from 500 property managers sums up the rental market:

Vacancy rates are at a low not seen in the last 20 years. According to the U.S. Census, national vacancy rates in the second quarter of 2015 were 6.8 percent for rental housing, down nearly a full percentage point (from 7.5 percent) from the same time in 2014. The last time vacancy rates dipped below 6.8 percent was the fourth quarter of 1985 (6.7 percent)…

As the rental market continues to become more saturated, property managers are having to do even less in order to fill apartment openings. In 2015, 55 percent of property managers said that they are less likely to offer concessions in order to fill vacancies than they have been in years past. In fact, 64 percent reported that they are not doing anything different from one year ago, in order to fill vacancies…

88 percent of property managers raised their rent in the last 12 months, which is likely to continue 68 percent of property managers predict that rental rates will continue to rise in the next year by an average of 8 percent, which is a two percent increase over the estimated 6 percent rent hike predicted by property managers back in 2014…

Millennials face limited job prospects, lower incomes and high student loan debts, making it harder to buy and easier to rent. 45 percent of property managers have noticed an increase in the number of millennials renters. (Maybe some were living at home, and have moved out into the rental market).

Renters are staying in their apartments longer. According to property managers, 34 percent found that renters are holding on tight to their apartments and renewing their leases (up from 29 percent in 2014), rather than moving somewhere new.

This fits with other evidence showing a expensive and tight rental market. So when are communities – from big cities that have tended to emphasize luxury units (like Chicago, New York, and Miami) to suburbs that have tended to approve nicer single-family units to protect property values and keep certain people out – going to have more reasonably priced rental units?

American cities that are no longer hypersegregated

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Between 2000 and 2010, eleven American cities moved off the hypersegregation list as defined by sociologist Douglas Massey:

Cincinnati may offer a compelling example of what it takes to desegregate. It progressed enough toward desegregation from 2000-10 to fall off a list of “hypersegregated” cities. Princeton University sociologist Doug Massey, who released the list this year, uses five traditional measures of black-white segregation, and he considers areas that score highly on at least four of those measures to be hypersegregated.

Eleven other cities have fallen off Massey’s list since 2000: Atlanta; Buffalo, N.Y.; Fort Wayne, Ind.; Grand Rapids, Mich.; Indianapolis; Louisville, Ky.; Pittsburgh and York, Pa.; Springfield, Mass.; Toledo, Ohio; and Washington, D.C.

Metro areas that have made the least progress – still with high marks in all five segregation measures – are Birmingham, Ala.; Baltimore, Chicago, Cleveland, Detroit; Flint, Mich.; Milwaukee; and the St. Louis metro area, which includes Ferguson, where the shooting of an unarmed black teenager by a white police officer last year sparked nationwide protests.

According to Massey, what works to decrease hypersegregation?

Other than zoning for affordable housing in the suburbs, segregation is less about policy and more about economic opportunity and “the degree of local racial prejudice,” Massey said.

May more cities have such success even as dealing with these two issues – providing more economic opportunity and limiting racial prejudice – are not easy tasks.

How Chicago became “the alley capital of the country”

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Chicago has a lot of alleys and here is how they came to be:

According to Michael Martin, alley expert and professor of landscape architecture at Iowa State University, the “why alleys” question is easy to answer. You just have to go back to the late 1700s, decades before Chicago was founded. America was young, and had hardly touched any of its newest territories to the west…

According to cartographer and Chicago history buff Dennis McClendon, alleys had become so commonplace in the American West that the Illinois General Assembly “simply expected it to happen in Chicago.”…

The I&M Canal Commission hired surveyor James Thompson to lay out Chicago at the eastern end of the canal in 1830. To attract prospective land buyers, the General Assembly ordered that the new town of Chicago be “subdivided into town lots, streets, and alleys, as in their best judgment will best promote the interest of the said canal fund.”…

For its boom years in the 1800s, Chicago was an alley monster; it planned new blocks with alleys, annexed towns with alleys, and added territory to its alley-riddled gridiron. But all grid things must come to an end, and soon communities started popping up without alleys.

The first of those communities arrived in 1869. That year, Frederick Law Olmsted — the father of landscape architecture (and who later played a huge role in Chicago’s landscape) — planned the community of Riverside, which was situated on what was considered to be the far western outskirts of the Chicago region. It was the first planned suburb in America, and the earliest sign of divergence from Chicago’s alley trend.

In other words, Chicago has alleys because when it was founded, many communities had alleys. Chicago just happened to boom at this time and the alley was seen as a normal feature – until it slowly petered out in the late 1800s and early 1900s. Then, different expectations took over which emphasized lawns and cars. The vast majority of post-World War II housing does not include alleys as the car is given a prominent spot at the front of the house (with a driveway and garage) and the backyard became a private and important space. Today, New Urbanists promote alleys largely because they are a traditional design feature that removes undesirable activities (like cars) to the back and allows the house to be closer to the street (encouraging sociability). And, I have hard time imagining many municipalities want to pay for alleys – they add an additional layer of cost and infrastructure.

Three tips for avoiding turning a $250 million bridge into a $13 billion one

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A new book chronicling the long saga of the new Bay Bridge offers these lessons for avoiding massive cost changes/overruns:

Reference other projects. Frick points to a couple ideas for controlling mega-project costs. Scholar Bent Flyvbjerg, who has studied infrastructure cost overruns around the world—and who often boils them down to political deception—has promoted the idea of basing costs on a “reference class” of similar projects already completed. The fear with that is project leaders won’t bother to keep costs down if they know they can hit a certain number, but Frick says that possibility bothers her less than the uncertainty surrounding costs that goes on right now.

Widen early cost ranges. Giving a precise cost number out to multiple decimals, as the state legislature did with its $1.285 billion estimate in 1997, makes the figure seem more scientific and precise than it really is, and creates that much more public frustration when the costs keep rising in the future. “In the early planning stages, ranges in the projects would be really important to provide,” she says.

Track progress more closely. Frick also suggests that officials pay more attention to “transaction cost economics”—an approach that “analyzes project development over time,” she writes, in an effort to identify the precise “political and economic origins” of new costs. This fuller accounting also considers costs that often go overlooked, such as the time and energy that go into public participation. Without better cost estimates, projects will continue to suffer from the type of strategy described to Frick by one senior engineer:

“Basically at the onset of a project I think the higher ups prefer a dollar amount and schedule that doesn’t shock the public.”

Which, as the Bay Area knows, only makes the shock that much worse when it finally arrives.

The typical resident is going to look at this and ask how in the world this was allowed to happen. Large infrastructure projects have a lot of moving pieces but the change in price is still hard to understand. Of course, there may be a political penalty for adhering to this advice – a higher projected cost upfront is likely to limit support. Yet, going with an unreasonably low projection with no cost range borders on dishonesty.

Housing policy that encourages both affordable housing and rising home values

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This article points out a contradiction in housing policy: can we promote affordable housing while at the same time suggesting housing should be a good investment?

So how are these two conflicting ideas to be reconciled? Well, that’s the basic challenge of housing policy. Perhaps a start would be to acknowledge that there is, in fact, a tension here—that “protecting” or “promoting” property values is the same thing as “making housing more expensive.” It’s somewhat discouraging, for example, when community organizations claim that “affordability doesn’t mean housing values have to remain stagnant,” without acknowledging that if housing values aren’t stagnant—i.e., they’re growing—that means they’re also becoming less affordable.

But there is some hope. One thing that could help is robust production of housing that isn’t priced by the market, and therefore isn’t affected by rising market prices. That can be accomplished through public housing, privately-developed affordable housing with programs such as the low-income housing tax credit and housing vouchers. At the moment, few places produce non-market housing at anything close to a scale that would provide broad affordability, but there are encouraging examples: Portland, for instance, has created 2,300 units of affordable housing in its redeveloping Pearl District, adjacent to downtown, financed largely by taxes.

In many places, having a wide variety of housing types and sizes can also make room for people with a wide variety of incomes. My street in the Edgewater neighborhood of Chicago, for example, contains a handful of single-family homes, whose value at this point probably reaches into the six figures; expensive newer condo buildings; older multifamily buildings, some of which have large, luxuriously updated units, and others whose apartments are somewhat smaller, or have less up-to-date finishes; and a few single room occupancy buildings, with minimal accommodations. As a result, there is market-rate housing for everyone from upper-middle-class professionals to working-class immigrant families to low-income elderly adults. Of course, that sort of diversity is typical of a pre-zoning “illegal neighborhood”: A vanishingly small proportion of American neighborhoods allow that sort of mix to be created today, which is a large part of the problem. Making these kinds of neighborhoods more common might make America’s housing policy a little more cohesive and less contradictory.

In the explanation of why we have two contradictory positions, I think two key pieces are missed. One is the political dimension of these two goals for housing. Both have broad appeal – people want to be able to move to better neighborhoods even as they want higher housing values – and politicians continually push homeownership for the average American.  This has been a common theme going back to the 1920s (see an example from 1931). To put it bluntly, it helps secure votes. Second is the role of residents themselves who continue to want both outcomes. Policy, particularly at the federal level, is important here and a number of scholars have noted how decisions about mortgages and urban renewal privileged homeownership in the suburbs. Still, numerous residents practice NIMBY behavior, resisting change once they have their secure position within the home and neighborhood they want. Given the amount of money required to buy a home – it is the biggest single investment many people will make – this is understandable but it certainly doesn’t help others.

Both of the proposed solutions above are difficult to pull off. Using public money for public housing or affordable housing has been opposed since the early 1900s. Having mixed use and mixed income neighborhoods may be popular with some (New Urbanists, young people moving to the city) but it doesn’t get the same level of support from the broader public. To have housing for all or many would mean giving up some on the idea of housing as investment but those with more means – from the middle class on up – will not like this idea one bit.

Are McMansions bad for children?

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I recently read how one family wanted to help their kids avoid McMansions:

No McMansions: Andrew Porter said that his family was drawn to Maywood by the idea of raising his two preschool-age daughters in a community full of homes that felt plucked from a bygone era.

“The historical designation really helps preserve the character of the neighborhood,” said Porter, a lawyer in his mid-30s who lives on 23rd Road. “You don’t have to deal with people tearing down the original structures and replacing them with huge McMansions on tiny lots.”

So here is one argument for how McMansions could be bad for kids: they get to experience older homes in a historic neighborhood. What might be other reasons?

  1. McMansions encourage consumption. They are big houses with room for lots of stuff.
  2. McMansions teach bad things about proper architecture and design.
  3. McMansions are often constructed in suburban neighborhoods where kids become dependent on cars, limiting their opportunities to explore, and have limited interactions with neighbors.
  4. McMansions are poorly constructed (not built to last, cheaper materials) and this could hurt kids in the long run.
  5. Fires work differently in McMansions.
  6. If the oft-criticized teardown McMansion is located on a small lot, there is little room for kids to play.

I imagine some McMansion critics could add to this list. Of course, the owners of such homes might argue McMansion could also be positive for kids – how many parents would move into a home that could hurt their children? I’m actually a little surprised neither side makes this case more strongly; claiming that their actions are best for their children or future generations is a common tactic of opinionated people in the United States.

Facebook’s new emoji reactions based on sociological work

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Facebook used sociological work to help roll out new emojis next to the “Like” button:

Adam Mosseri has a very important job. As head of Facebook’s news feed, Mosseri and his team were assigned the task of determining which six cartoon images would accompany the social network’s ubiquitous thumbs-up button. They did not take the task lightly. To help choose the right emoji to join “like,” Mosseri said Facebook consulted with several academic sociologists “about the range of human emotion.”…

The decision was reached after much deliberation. Arriving at the best of those trivial and common picture faces followed a lot of data crunching and outside help. Mosseri combined the sociologists’ feedback with data showing what people do on Facebook, he said. The goal was to reduce the need for people to post a comment to express themselves. “We wanted to make it easier,” he said. “When things are easier to do, they reach more people, and more people engage with them.”…

In order for something to qualify for the final list, it had to work globally so users communicating among various countries would have the same options, Mosseri said. One plea from millions of Facebook users, which the company ultimately ignored, was a request for a “dislike” button. Mosseri wanted to avoid adding a feature that would inject negativity into a social network fueled by baby photos and videos of corgis waddling at the beach. A dislike option, Mosseri said, wouldn’t be “in the spirit of the product we’re trying to build.”

Operation emoji continues at Facebook while the company monitors how Spaniards and Irish take to the new feature. The list isn’t final, Mosseri noted. The first phase in two European countries is “just a first in a round of tests,” he said. “We really have learned over the years that you don’t know what’s going to work until it’s out there, until people are using it.”

Facebook and Mark Zuckerberg have been clear for years that they do not want Facebook to spread negative emotions. Rather, the social network site is about finding and strengthening relationships. The emojis both avoid dislike (though this set of six emojis includes one for sad and one for angry – but these are different than dislike) and make it easier for people to react to what others post.

Here are two factors that could affect these reaction emojis:

  1. Facebook will be pressured to add more. But, how many should they have? At what point does more options slow down reactions? Is there a proper ratio for positive to negative emojis? I’m guessing that Facebook will try to keep the number limited as long as they can.
  2. Users in different countries will use different emojis more and ask for different new options. At some point, Facebook will have to choose between universal emotions and providing country-specific options that appeal to particular values and expressions.

Claim: Broadway brought NYC back from the 1975 brink

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A New York journalist suggests Broadway helped revive the city and improve Times Square:

Much credit typically goes to mayors like Ed Koch and Rudy Giuliani, who cleaned up vice districts, pushed out undesirables and clamped down on nuisance crimes. Once the infrastructure was functioning and crime reduced, the argument usually goes, the natural asset of a great city, the draw of its history, the life-affirming force of its romance, its prestige and its pull, could all be trusted to work their magic. The politicians just had to make it possible for New York to be New York.

But Riedel argues that it was actually the theater and restaurant owners — people sick of plying their struggling trade in an environment that was collapsing all around them — who did the real work on the ground that transformed the fortunes of New York. The offices of Gotham City chugged along; people could head home right after work. But you can’t run an entertainment or dinner business if the police are telling people to get off the streets by 6 p.m.

So, in Riedel’s telling, the late Gerald Schoenfeld of the Shubert Organization went to work, back there in the mid-1970s. He harassed cops on the take to do their jobs and arrest the pimps and prostitutes; he organized all of the businesses in and around Times Square so that they had a collective voice; he found private cash to fill the potholes and empty the garbage cans that the city was leaving full; he waged war against corruption and vice. Retail-style.

With some well-chosen allies, he went about this mission block by block, nasty business by nasty business, sometimes resorting to unsavory, hardball tactics. This was controversial at the time — streetwalkers had rights — but Schoenfeld and his pals also were confronting a massive sex business with documented ties to the mafia — a sex business that dominated the very streets where kids now go to see “Aladdin.” Schoenfeld’s contribution was not least his figuring out that the one had to go before the other could arrive. Ergo, the circle of life.

This may be a popular argument these days about those in the arts and some urbanists: culture industries can help revive moribund cities or neighborhoods. The artists or creative types move in first and then others follow, drawn by the intriguing cultural experiences and economic opportunities.

The story above complicates the narrative a bit though. These theaters had been present for a while – they didn’t move in all the sudden in the mid 1970s. The theater industry also had resources in terms of social connections and money to use – poor artists they were not. The narrative told above may lend itself more to growth machine models of urban development rather than cultural ones. A collection of powerful business owners (probably with the aid of political leaders) were able to make things happen behind the scenes to clean up and revive Times Square.

Naperville’s role in the founding of Coors

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After seeing numerous Coors Light commercials during football, I was reminded of Naperville’s part in the formation of Coors:

The J&N Stenger Brewery sat in what is now downtown Naperville between the late 1840s and early 1890s, slaking thirsts as far away as Chicago, Elgin and Ottawa. It was founded by Peter Stenger Sr. and was later run by sons John and Nicholas. John took over after Nicholas’ death in 1867.

In 1869, Stenger hired 22-year-old Bavarian-born Adolph Coors–yep, that Coors–as a foreman. He stuck around for about four years before taking off for Golden, Colo., where in 1873 he opened The Golden Brewery, forerunner of Coors. No one is sure exactly why Coors left Naperville, although some reasons have been bandied about.

According to the book “Coors: A Rocky Mountain Legend,” Stenger hoped that Coors would marry into the family.

“Stenger had three daughters,” said Brian Ogg, assistant curator of the Naperville Heritage Society. “And I think he did want to marry the brewmaster to one to his daughters. But it didn’t take, for whatever reason, and Coors left town.”

Both parties – Naperville and Coors – went on to do big things. Coors founded a company that is now part of the Molson Coors Brewing Company and has annual sales of $5 billion. Naperville had a number of industries in and near downtown in its early history including this brewery, Kroehler Furniture, and several quarry operations (including what later became Centennial Beach). Today, Naperville is known less for manufacturing and more for a large and wealthy population alongside high-tech and white-collar jobs in major corporations along I-88.

Yet, it is interesting to think about what might have happened if that relationship had worked out. Could Naperville today be home to a brewing empire? Would the city leaders then have made different choices about annexing land and building subdivisions after World War II? Would having such a business in the city exacerbated the downtown alcohol problems of recent years?

American homes grow in size yet lots shrink

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Zillow finds that American homes continue to grow larger even as their lots shrink:

Nationally, the median size of a new house is now 2,600 feet, a full 500 square feet (or almost 25 percent) more than it was just 15 years ago.

Yet the median lot size is now 8,600 square feet, down 1,000 square feet (or about 10 percent) over the same period:

Zillow continues to find interesting patterns in real estate data. So what could be behind this trend? Both the land and the home (materials, labor) cost developers and builders money. Thus, smaller lots with bigger houses can reduce land costs even as the home price might stay similar or increase because the home is growing. Or, perhaps this is also the result of land regulations from municipalities. Small lots could be preferred by some places because subdivisions and residential properties then take up less space.

One of the common complaints about McMansions is that the big house are on small lots. Yet, this may be necessary for some housing in order to (1) make housing more affordable (lower the costs for land) and (2) to limit damage to the environment (use less land and open land for more green space or open space).