“August 2023 will become the worst month for housing affordability this century”

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Housing in the United States is becoming less affordable than at any point in recent years:

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On Monday, the average 30-year fixed mortgage rate reached 7.48%, marking the highest level since the year 2000. Even prior to this recent surge in mortgage rates, housing affordability, as monitored by the Atlanta Fed, had already deteriorated beyond the levels seen at the housing bubble’s peak in 2006. Once this latest mortgage rate surge is factored in, August 2023 will become the worst month for housing affordability this century.

The journey to this predicament can be traced back to last year’s sharp rise in mortgage rates, which escalated from 3% to over 7%. That rate surge, coupled with the Pandemic Housing Boom pushing U.S. home prices up over 40% in just over two years, deteriorated housing affordability across the nation…

While the current lack of housing affordability echoes the affordability conditions leading up to the 2008 housing crash, there are distinct differences that set the two periods apart. Unlike the years preceding the 2008 crash, the nation is not grappling with an excessive surplus of existing homes for sale. In fact, housing inventory levels are hovering at historic lows, with July 2023 witnessing a staggering 47% decline in homes available for sale compared to July 2019.

Furthermore, the U.S. housing market in 2023 is not plagued by the risky mortgage products that contributed to the 2008 bust. In fact, the Pandemic Housing Boom was the opposite of the boom in the aughts: This boom was primarily led by households with high incomes, who because of low mortgage rates and remote-work policies were seeking out a new home.

I am a little surprised there are not more leaders proposing solutions or calling for addressing this issue. Housing is often the biggest expense in a household budget. People may not be able to find stable, quality housing. They will not be able to develop wealth. It is difficult to move. People will pay more in interest. People can experience anxiety about housing. And so on.

There might be a temptation to sit back and say people should wait for interest rates to stabilize and/or decline. Or, the housing market will have more inventory at some point.

Yet, housing is a complicated issue and there are multiple ways to address it. How can more housing at lower price points be built? How can existing homeowners rally for the need for cheaper housing costs (even as they might benefit from rising home values)? What incentives or sticks are needed to get various actors in the housing industry moving on providing more options?

One reason for more studio and one-bedroom apartments: not all places want more children in the community

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A Chicago housing report looks at what kid of rental units have been constructed in recent years:

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Chicago is seeing more rental housing developments geared toward families like the Matariyehs, as buildings with higher concentrations of two-bedroom or larger apartments are coming on the market or under construction. On top of the shortage of housing broadly, there is also a shortage of family-sized rental housing — typically defined as units with two or more bedrooms — in Chicago and nationally. Rental housing for families that is affordable is in especially limited supply, as two- to four-flats have continued to be gobbled up or priced up by gentrification in Chicago.

A 2020 report from the Chicago Department of Housing finds that for the past decade, market-rate construction has leaned heavily toward studio and one-bedroom units, which, in turn, has shaped affordable housing production. For affordable housing developed through the city’s Affordable Requirements Ordinance — the policy which requires many developers to make a chunk of their units affordable housing — more than 75% of units under construction or completed as of 2020 were studios and one-bedrooms, with less than 5% being three-bedroom units or larger, according to the city report.

Whether in city neighborhoods or suburban communities, larger units mean more children might be present. Children need to go to school. Children can create noise. Children might be drawn to different local amenities than others.

Some of this is a cost question. Housing proposals in suburbs can often into details about how many children might be attending local schools. How will these costs be covered?

Some of this might be a lifestyle question. The explosion of developments and communities for older residents appeals to a particular set of people. Or, more American households include only one person.

When thinking about more expensive developments in cities and suburbs, many places look at two groups of residents they want to target: young professionals and downsizing seniors. The first group is college-educated and is looking for a package of culture and entertainment. The second group is looking to move to a smaller space and enjoy life in ways they might not have been able to with work and/or family obligations.

There will always be at least a few places and developments that appeal to families. Suburbs, for example, can be known for being family-friendly. There is money to be made here.

But, shifts in households and lifestyles may mean an increasing number of places with relatively few or no children – and this is reinforced by the built environment.

Giving books away to build relationships, share good reading

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I do not know if I could ever do this regularly but I like this sentiment:

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But what if, in this quest to declutter, we think about our physical books not as baubles with which to impress potential mates, but as a way to exist in, and relate to, the world. When you give a book away, you have given it the opportunity to befriend a stranger. You’ve given it the opportunity to dazzle, to dismay, to make an impression. And no, you’ll probably never cross paths with that book again. Even a loan will not find its way home to you. But if you’re lucky, some years from now, you may hear someone mention a scene, or allude to a plot, or even misquote a passage, and you will recognize the spirit of your old friend, even outside its corporeal form: “I read that once, a long time ago,” you’ll say. You’ll say, “I loved it, too.”

As someone who likes to read, it is often a private experience. A book can involve you in a story or a world of new ideas. A lot happens in your own head and body. Sometimes you get to talk about all of this – the experience, the content, the style, etc. – with others. Lots of classes are built on this idea where you come together around texts you have all read.

Actually giving away books, especially ones you enjoyed and want others to enjoy, can have benefits. Building social capital is good. Sharing experiences and ideas is good. Perhaps that next person is also able to pass along the book.

While I am not giving books away, I have taken to buying cheaper copies of ones I really like so I can share them. Perhaps this is a small step in a similar direction. I know certain books have influenced me and I hope they might also influence others.

The possibilities of linking together sets of data

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I saw multiple interesting presentations at ASA this year that linked together several datasets to develop robust analysis and interesting findings. These data sources included government data, data collected by the researchers, and other available data. Doing this unlocks a lot of possibilities for answering research questions.

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But, how might this happen more regularly? Or, put differently, how might more researchers use multiple datasets in a single project? Here are some quick thoughts on what could help make this possible:

-More access to data. Some data is publicly available. Other data is restricted for a variety of reasons. Having more big datasets accessible opens up possibilities. Just knowing where to request data is a process plus whatever applications and/or resources might be needed to access it.

-Having the know-how to put datasets together. It takes work to become familiar with a single dataset. To be able to merge data requires additional work. I do not know if it would be useful to offer more instruction in doing this or whether it matters which individual datasets are involved.

-Asking research questions gets more interesting and complicated with more variables and layers at play. Constructing sets of questions that build on the strengths of the combined data is a skill.

-Including more – but concise and understandable – explanations of how the data was merged in publications can help demystify the process.

And with all of this data innovation, it is interesting to consider how projects that link multiple datasets complement and come alongside other projects with only one source of data.

The growth of the South required air conditioning

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The South is hot during the summer – especially so this year – and architectural adaptations to deal with the heat have given way to air conditioning:

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“They would build homes with transoms over the doors and over the windows,” Dr. Diaz explained. “They would build homes with the front door and the back door in complete alignment — you could basically create a wind current through the house.”

Days were structured around the heat, waking at 4 a.m. to work outside, then taking breaks and eating a big meal in the middle of the day…

The ascendance of air-conditioning was a transformative force in the South, facilitating the rise of suburbs and making the region less forbidding for companies that wanted to move in. Now, transoms and rising early have been replaced with drive-throughs and attached garages and cranking up the A.C. — for people with the means and jobs that allow it.

“People are so completely dependent on air-conditioning,” said Craig E. Colten, a professor of geography at Louisiana State University. “You run around on our campus and you see people going between classes in shorts and sweatshirts because the air-conditioning is so ramped up.”

Even as air conditioning makes inside activity more possible, it would be interesting to see how much activity during the hot months takes place inside compared to the rest of the year. If people in colder climes spend more time inside during the cold months, is the same true in the South during the summer?

And do not forget the importance of air conditioning for office work.

Instituting racial covenants for whole neighborhoods outside of Kansas City

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Developer J.C. Nichols helped popularize the implementation of racial covenants for whole suburban subdivisions:

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Also known as covenants, they’d existed for decades, typically as an agreement between a developer and buyer on a single lot, proving unpopular to Americans who didn’t want to be controlled on their own property. But Nichols sensed he could foster long-term stability, which would be profitable for him and for homeowners. He initiated restrictions on entire neighborhoods, placing them on the land before any lots were sold—a private zoning system before municipal zoning was widespread. He’s credited as the first developer to emphasize the covenants for middle-class areas and to make them self-renew after periods of 25 to 40 years unless a majority of residents objected, ensuring they’d essentially last forever. For enforcement, he set up homeowners associations.

Nichols’ restrictions started with a few sentences on neighborhood plat documents and eventually ran for a few pages. They set minimum prices for home construction, mandated single-family housing and banned apartments, required a specified amount of space on the fronts and sides of homes, and regulated routine housing elements like chimneys, trellises, windows, vestibules, and porches.

There were also racial restrictions that barred Black residents from owning or renting homes. An early billboard for Nichols’ Country Club District development described the area as “1,000 Acres Restricted.” Newspaper ads claimed that Nichols’ neighborhoods blocked “all undesirable encroachments” and promised that “complete uniformity is here assured.”…

Nobody had seen a swath of suburbia as vast his neighborhoods, which comprised the Country Club District: By the 1940s there were more than a dozen contiguous upper-class and middle-class subdivisions filled with bubbling fountains, tree-lined vistas, and cul-de-sacs, providing homes for as many as 50,000 people across two states. Many subdivisions were buffered by parks and golf courses, and they were all tied together with restrictive covenants. It was the “American’s domestic ideal,” opined a visitor from the New Republic.

Nichols wasn’t the only builder applying covenants. Their use accelerated after 1910, imposing segregation and strict land-development rules across the country. But he was their most prominent proselytizer, promoting their spread through speeches and articles and in leadership roles with national real estate organizations. Nichols’ covenants in Sunset Hill and Mission Hills, two of his poshest neighborhoods, were said by his company to have been copied in more than 50 cities.

Developers, officials, residents, and others developed and put into practice a number of measures to keep people out of white suburban subdivisions. Today, these measures tend to be more economic and zoning-based with fewer explicit references to race and ethnicity. But, as noted above, the outcomes are clear: the suburbs were segregated by race and ethnicity.

Trying to clear paths for the redevelopment of vacant urban lots

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Several big cities are working to make it easier to improve vacant lots:

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Detroit officials want to triple property-tax rates on vacant land and reduce rates by an average of 30% for homeowners. The idea is to spur development on 30,000 neglected vacant lots held by owners who pay almost no taxes. It is a tall order. The city’s population has fallen by two-thirds since its 1950s heyday, and the Detroit land bank holds another 63,000 vacant lots. 

In Pittsburgh, the city council this month passed a measure to more easily transfer the 13,000 or so city-owned lots and vacant properties to a municipal land bank and into the hands of developers or nonprofits. The city’s population is down by more than half since its peak in the 1950s.

Chicago, whose population has fallen by about a quarter since the 1950s, has more than 10,000 city-owned vacant lots. Another 16,634 are caught in a limbo of back taxes and unpaid fees. Every other year, the county tries to unload such properties in a tax-lien auction known as the Scavenger Sale. Only about 8% of the properties in the auctions from 2007 to 2019 went to buyers who managed to obtain a clear title, the Cook County Treasurer’s office found…

A measure signed into law last week by Illinois Gov. J.B. Pritzker aims to resuscitate such properties. It cuts interest rates on overdue property taxes to 9% from 18%. It also allows Cook County to automatically acquire tax liens on delinquent properties before they reach the Scavenger Sale, reducing the time it takes to clear titles and transfer them to developers or nonprofits.

Even with reduced obstacles, it will take time for the number of vacant properties to be significantly reduced.

Once the property can be purchased and redeveloped, new questions emerge. What will be built there? What do owners, developers, and builders see as the price points that make it worth their time? How do new buildings and/or land uses fit with the existing neighborhood?

In other words, this is a multi-decade story worth paying attention. How did these properties become vacant and where did the residents go? Where do things stand now? What will they look like in the future? Specific decisions now could help alter the story to come.

More suburban sprawl = disappearing night sky

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A resident of Naperville, Illinois describes one consequence of the growth of the suburb and the Chicago region:

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Growing up, Carhart said he learned the intricacies of the Milky Way from his suburban backyard in Naperville. But slowly, the 64-year-old said, he watched the stars disappear. If someone were to visit his childhood home today, he said, they could count the number of stars they see on their fingers…

“The light pollution is tremendously worse. Out by Naperville we could see the glow in the nighttime sky of Chicago off in the distance, but it only went a little ways up in the sky,” he said. “Over the years we watched it get brighter and then extend overhead and all the way to the other horizon and just take over the sky.”

What can help reduce this light pollution in a large metropolitan area?

The National Park Service suggests considering whether outdoor lighting is necessary, or if reflective tape or reflective surfaces could be used instead. Other sustainable outdoor light specifications, according to the Park Service, are LEDs at 2700 Kelvin. These lights emit a warm color hue instead of blue or white. The Park Service also recommends purchasing LED bulbs that have the lowest lumens possible — the unit of measurement used to specify brightness — and ones that can accommodate motion detectors or dimmers, which it says can enhance health and safety…

Referencing a study from 2020 that found only about 20% of a city’s brightness can be linked to streetlights, Walczak said regulation or policies surrounding light pollution should be directed toward commercial businesses, such as parking lots or building facades.

The proposed solutions – and another suggested later in the article that uses special equipment to avoid certain light wavelengths – are efforts to work around the sprawl of the region. If there are over nine million people living in the Chicago region, is it possible to have a visible night sky?

This could be another argument against suburban sprawl. As Americans develop more land outside of cities, light spreads. Homes and yards have lights. Roadways have lights. Buildings have lights.

Naperville’s success – rapid population growth, vibrant downtown, lots of jobs – comes with lights. It could come with less light than it might have now . But, how many suburbanites are willing to trade lights for seeing the night sky? How many lights are for safety purposes that suburbanites care about (roadways, properties, etc.)?

It would be interesting to see some major suburban communities lead the way on this. And it would likely take significant regional efforts or numerous communities going this direction to make a visible difference.

Enron, McMansions, and unlikeable villains

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The Enron scandal broke in late 2001. And it involved McMansions?

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The characters in this drama were larger than life in the Texas vein, but they lacked the roguish charm of the wildcatters of old, that quality that could make you forgive all. Yes, there were motorcycle races in the desert and Porsche Carreras and River Oaks McMansions, along with ill-advised love affairs and stiletto-in-the-back corporate intrigue. But in the end the Enron villains weren’t that much fun. They were just rich. And arrogant.

According to another story, Enron executives upgraded their residences in the years prior to the scandal:

Only a few years ago, Skilling, Fastow, and Michael Kopper — Fastow’s lieutenant in the Enron scandal, according to conclusions drawn in the Powers report — all lived within walking distance of one another in the quiet upper-class neighborhood called Southampton Place, which borders Rice University. It is a nice neighborhood, with houses that go for around a half-million dollars, but all on small lots, with alley parking in the back. Skilling lived in a simple, square brick house with his wife and three children. Kopper lived a few blocks away in a cottage he eventually remodeled to have an almost Japanese-style look, the house taupe in color, with a gray roof…

And before all three men — Skilling, Fastow and Kopper — bought new properties, tore down the existing structures, and started building their dream houses. Once again, all in the same neighborhood. The neighborhood where the rich live in Houston. The neighborhood where Lay lives. River Oaks.

So now Skilling resides in a mammoth Mediterranean-style home with a tile roof, and he’s engaged to Rebecca Carter (the one known as Va Voom), who under Skilling was promoted to executive secretary to Enron’s board of directors at a salary of $600,000. Fastow is building something that looks like a country manor, almost Tudor-ish. And Kopper and his partner William Dodson opted for a postmodern abode — boxy, all white and beige and glass and hard angles. A house so close to the Lays’ luxe apartment building that the shadow practically falls across Kopper’s lawn…

Skilling’s house is decorated in a sleek, black-and-white theme, in homage to Enron’s corporate colors. But he hired the Houston-based design team of Michael Galbreth and Jack Massing — who are known as the “Art Guys” — to do his guest quarters.

Several thoughts upon reflecting on this story from the past:

  1. Texas does like its houses bigger and I found in a 2012 published article that McMansions were not treated the same way in the Dallas Morning News compared to the New York Times.
  2. Did Skilling live in a McMansion or a mansion, a home with more square feet and not a mass-produced home within a subdivision?
  3. Does calling his home a McMansion fit better with an image of a corporate villain? The term McMansion is not usually used positively and could hint at the ill-gotten rise of Skilling. Does a more garish McMansion make it easier to dislike a figure?
  4. On a “Lives of the Rich and Infamous Tour B” in the Houston area, you may see “Homes of the leaders of Enron:  Kenneth Lay (1942 – 2006) and Jeffrey Skilling.”

The (long) time it takes to develop academic arguments

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One feature of summer and breaks for college faculty is the possibility of more time for writing and working on projects. While this writing time does not always happen given other responsibilities in life, time is needed to develop academic projects. And we may need numerous summers, breaks, and semesters to fully put together works. What do we need this time for?

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-Writing and submitting proposals and grants.

-Developing ideas and precise research questions.

-Becoming familiar with the already-existing literature.

-Collecting data and evidence.

-Analysis.

-Crafting narratives that align with the research question, existing scholarly conversations, and the evidence we have.

-Writing and rewriting.

-Conversations with others.

-Presentations, whether to the public, academic groups, students, or others.

-Responding to reviewers and editors.

-Thinking (all throughout the process)

While the activities above are in a rough order from a beginning of a project to the end, it does not always work this way. These are also not necessarily discrete stages; they can blend together and are often recursive and connected as working on one part leads to going back to an earlier step or portion.

All of this means that a single writing project can easily take years. Some projects take longer than others. It can be hard to predict how long a project can take. What does this all add up to? Hopefully a coherent and compelling project.

If we added to publications and presentations a clock for the time involved, this could help reveal the time spent. Without letting such figures turn into a competition or a quest for efficiency, it could open conversations about processes and resources.