Razib Khan One-stop-shopping for all of my content

June 21, 2017

American cities need to grow up to solve the housing crisis

Filed under: Culture,Housing Crisis — Razib Khan @ 7:51 pm

Martin Jacques observes in When China Rules the World that East Asian cities don’t have the organically evolved feel of European urban areas. He chalks this up to the rapid economic development of the “Asian Tigers” and Japan over the past few decades. Buildings were built, buildings were torn down. The rate of change didn’t allow for the accumulation of historical authenticity. There’s also another reason: many East Asian societies have built buildings out of perishable materials like wood and so not prized historicity of structures.

The oldest free standing timber building in China dates to 782. The Songyue Pagoda dates to 523, but it’s made of brick. In contrast great public buildings made of marble still exist in the Western world that date back to antiquity. The Pantheon became a church and so is preserved in nearly its full glory. Public buildings and historical architecture are great. But the valorization of the principle can come at a price.

Willamette Week has an article up on the attempt to “maintain historic character,” and how it prevents the emergence of affordable housing. Portland’s Laurelhurst Neighborhood Fights to Keep the Housing Crisis Out:

At the end of last month, residents of Laurelhurst turned out in record numbers to vote in their neighborhood association election for one reason: to get protection from developers.

The winning candidates pledged to bypass City Hall and ask the National Park Service to declare much of the 425-acre eastside neighborhood a historic site.

By being labeled “historic” the residents can block development, and preserve the state of their neighborhood the way they like it. They are very explicit about what they want to do:

By seeking to make the neighborhood a historic district, Laurelhurst residents are taking aim at what they see as the neighborhood’s greatest enemy: a real estate developer with a backhoe, bent on tearing down 100-year-old houses to replace them with apartments, a duplex or a huge new house.

“The whole street—it will look like Beaverton by the time they’re done,” says John Deodato, a longtime Laurelhurst homeowner who says he gets 20 letters a month from developers seeking to buy his home. “The city won’t do anything about it unless we do.”

Beaverton is a suburb of Portland. Though the analogy is imperfect, if Portland is West LA, Beaverton is Irvine. The connotation of this insult is clear to any Oregonian. It’s a sneer at those without refined sophistication and breeding.

Laurelhurst has a 14 to 1 Democrat to Repubican ratio, and median home value is $750,000. The median household income for the greater Portland area is $65,000. The median home value in Beaverton is about $360,000. I looked at Zillow and found an $800,000 home in Laurelhurst. You can see that it has appreciated nicely over the last 10 years.

The recent neighborhood association seats were contested. The outcomes were clear:

More than 800 people voted in the election—a record for the neighborhood, and more than 10 times the number of voters in the previous election. The vote went overwhelmingly for the historic district candidates. Pratt, the pro-historic district candidate for president, won just under 80 percent of the vote.

It is no surprise that the people who live in Laurelhurst are voting to protect their interests. Their implicit gated community, with its high property values. They may be progressive in their avowed values, but when their self-interest is at state, they make sure to take care of their self-interest and conserve what they have the way they like it.

There are of opponents to this trend of gentrified Portland neighborhoods. They profile an alliance between a developer and the head of 1000 Friends of Oregon, a nonprofit which favors density over sprawl. Below is some of their rationale, along with what someone in Laurelhurst has to say about these men:

“The reasons we are involved with this bill has nothing to do with whether the home builders are involved with it,” says McCurdy. “The bill increases housing opportunities—diverse housing opportunities and affordable housing opportunities—all of those inside our towns and cities, which is part of the land-use deal that we as Oregonians have had in place for 40 years.”

McCurdy believes what’s happening in Laurelhurst is a “misuse of historic district designation to prevent change.”

Critics of the bill call 1000 Friends’ and the home builders’ support an unholy alliance.

“Gov. McCall would be spinning in his grave to see his beloved 1000 Friends of Oregon organization working side-by-side with the Home Builders Association, buying into the alt-right, fake-news theory of demolition as the cure for affordability,” wrote Tracy Prince, vice president of the Goose Hollow Foothills League, in a May 17 letter to legislators.

In the early 2000s anything and anyone that self-styled progressives did not like was “neocon.” Today it is “alt-right.” Somehow this woman believes that allowing for development which would allow for an increase in the local housing supply and destroy some of the quaint town-like character of East Portland streets is “alt-right.” If she lived in the 1950s I wonder if she would accuse her enemies of being “Communists.”

The article has a definite slant against the Laurelhurst neighborhood association. The author of the piece lives in Northeast Portland, so she’s able to see through the pleading for the “special character” of Laurelhurst (in fact, records indicate that she is a recent transplant to the city from New York City, so her sympathies are likely not with the old-timers). At one point the author interviews a man who is living out of his pickup truck in Laurelhurst. He’s making $12 an hour, and couldn’t afford a place elsewhere in Portland, let alone Laurelhurst. She notes that “A Craigslist ad posted last week shows a restored attic in this neighborhood renting for $1,000 a month” in the neighborhood.

The piece concludes:

Pratt, the neighborhood association president, knows plenty about homelessness. A couple years ago, he served on the board of social services agency JOIN, which coordinates shelter beds.

Pratt acknowledges Portland needs to build more housing. But not too much of it in Laurelhurst.

“Everybody says the solution to homelessness is housing,” he says. “I don’t think the solution is that every neighborhood looks the same, and every neighborhood has everything, and your neighborhood [has] no uniqueness anymore.”

People have interests. But they don’t want to admit those interests in public. The Laurelhurst neighborhood association’s attempt to gain historic designation is regulatory arbitrage. They want to preserve their neighborhood and property values, and not let in the riff-raff have any space. Earlier in the piece there is a quote from the association president: “Pratt warns that if Laurelhurst isn’t allowed to decide what gets developed within its boundaries, the neighborhood will indeed become cheaper eventually—because it will become hideous.

Beauty is important. It has value. But if we need to sacrifice beauty for affordability, at some point the latter does have to overrule the former.

The political Left on the national level is at least waking up to the problem. Recently Mother Jones wrote Berkeley Says It’s Standing Up to Trump, But It’s Actually Busy Arguing About Zucchini. The title comes from this passage:

At Tuesday night’s city council meeting, which touched on a number of housing issues, this dissonance was on display in a resident’s complaint about a proposed new building that would cast shadows on her zucchini plants. The project was returned to the city’s Zoning Adjustments Board. The zukes live another day.

“Delaying or denying housing approvals suggests to Berkeley neighbors that their stalling tactics will work, and invites more of them in the future,” web developer Kevin Burke wrote in a letter to the council after the meeting, expressing his disappointment with the decision. “I would also much rather have a zucchini garden crisis than a housing crisis.”

The gut-punch is that an anti-development mayor has been elected in Berkeley. How “radical.” In San Francisco and San Mateo counties $105,000 a year for a household of four is low income. The average household income in San Francisco happens to be $105,000 per year.

Yesterday and today on Twitter there was a discussion about post-doc salaries. To a great extent this is a stage in academic life when the salary range is compressed because there are broad national guidelines and expectations. The median post-doc makes $46,000. The 10th percentile is $37,000, and the 90th percentile is $65,000.

So let’s compare some universities and their locales. In US News Stanford has the #2 genetics graduate program and Washington University in St. Louis the #5 program.

According to a cost of living calculator a “salary of $50,000 in St. Louis, Missouri should increase to $304,167 in Palo Alto, California.” This is because housing is 24 times more expensive in Palo Alto. So a hypothetical post-doc at Stanford that is paid $100,000 is equivalent to $16,000 in St. Louis. You might object that Palo Alto to St. Louis is apples to oranges, but the housing expense in the greater Bay Area means that you can’t just escape Palo Alto for relief. A Zillow check of Washington University vs. Stanford shows that houses within walking distance of the latter university are about 15 times more expensive than the former. The average assistant professor at Washington University has a salary in the low $100,000 range. At Stanford it is in the mid-$100,000 range. Basically a Stanford assistant professor makes about 1.5 times more in salary than a Washington University assistant professor, even though cost of living is going to be 6 times greater in Palo Alto.

At this point I could go into tangents about university housing for post-docs and faculty in the Bay Area (one of my friends is doing a post-doc at UCSF and had to have a subsidized apartment for obvious reasons). And obviously opportunities for consulting are more available in the Bay Area. But the point is not about academics and their careers. Rather, I’m using an illustration of the circumstances in which “winners” in American society, people with lot of higher education, can find themselves in financial stress.

There are genuine benefits of starting a career in the Bay Area. For an academic you have access to world-class institutions, with the Stanford, UCSF and Berkeley triangle, and UC Davis and UC Santa Cruz just beyond the horizon, and other institutions like San Francisco State to fill out the landscape. For a techie you know where the “action” is. If you are a single person, a $125,000 salary at Google won’t allow to you live luxuriously, but you can survive. Hopefully you’ll be able to make connections that help you later on, when you inevitably have to ask for a transfer because you want a house and a family.

This is the cycle of life now. But not for everyone. I lived in California for almost ten years, and there are those to the Golden State born whose families bought homes decades ago. The property tax regulations California are Byzantine, but there are plenty of cases where individuals are “grandfathered in” and pay very little tax on a very valuable property. And, these benefits can pass on to children. In other words you may have millennials paying tax rates on million dollar homes that date back to assessments in the 1970s, when their parents owned the house.

We can debate the merits of this system. One can make a case for giving those with deep lineage in an area privileges over newcomers. I lived in a house in Berkeley where the property owner told me once that he paid on the order of 15 times less tax than his neighbor, because the house had been in the family for 60 years. It was purchased by his grandparents, and owned by his mother, and it had passed on to him. His profession was as a part-time photographer and musician. Because his tax bills were so modest he could rent out rooms in the house and and survive in Berkeley even though his non-property income was irregular and not particularly high (when I lived in his house he would complain that he didn’t want to purchase health insurance due to the cost).

For those of us without those privileges if we want to live in the urban areas where our specialized skills return the greatest income and also where we can network and grow our career the best, we need to make sacrifices. For many people that means putting off getting married, putting off having children. Anyone who makes less than $100,000 a year will probably have to hustle in Silicon Valley. There are flophouses from San Francisco down to San Jose where young people of more modest means live together in a communal fashion in dormitories.

How did we get here? I think I’ve outlined a major part of how we got here. Many places people want to live are extremely expensive because supply of housing is constrained.

Houston has a great food scene, but quaint and charming is not something anyone would say about it. But it is very affordable. And, the fourth largest city in this country. It lacks zoning. In contrast San Francisco is beautiful. There is something special about it, from the feces on the sidewalks in the Tenderloin to the beauty of the Golden Gate bridge. Something would be lost if one allowed it to develop vertically. But do we want the city to become a playground for the wealthy and those born into old families of the city? Because that’s what’s happening with the choices we’re making in this country.

Our vision for the future used to be optimistic. We would live better. We would be space age humans. Much of it has come to pass. Our “phones” are amazing things. Electric driverless cars will transform our cities within the next generation. But the way we do housing in this country has not moved much beyond the middle of the 20th century. We need changes in culture, changes in technology, to make things better for future generations, rather than constraining them with the paltry opportunities of the present.

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