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Month September 2008

Russell Roberts on Government Intervention in Housing

Russell Roberts of George Mason University, CafeHayek, and Econtalk wrote of series of Cafe Hayek posts on the various federal interventions in the housing market: Housing markets without the benefit of hindsight Fannie reaches its goals–sort of Zero Down! Fannie and Freddie’s other mission Section 8 Bill cared too Affordable equals “subprime” Calm down And don’t forget Andrew Cuomo Shiller and fundamentals The role of the CRA It’s not the CRA No money down, revisited Bear Stearns, the CRA, and Freddie Mac Stiglitz on the crisis

Portland Ideas??

I’m visiting Portland, Oregon for 5 days through next weekend for a wedding. It’s my first time there and I hear it’s a great city. What are the must-does to get the genuine urban experience? What are Portland’s specialty foods? What neighborhoods should I make sure I visit? Any new developments I need to see to witness what ways Portland is growing? Or should I say “smart” growing? Update: Who knows of the best locations to witness the most dramatic examples of Portland’s Urban Growth Boundary?

Parking Minimums Hamper Development and Affordability

Thanks to Dan and Benjamin for separately tipping me off to this link: AP: Cities rethink wisdom of 50s-era parking standards Like nearly all U.S. cities, D.C. has requirements for off-street parking. Whenever anything new is built — be it a single-family home, an apartment building, a store or a doctor’s office — a minimum number of parking spaces must be included. The spots at the curb don’t count: These must be in a garage, a surface lot or a driveway. Parking requirements — known to planners as “parking minimums” — have been around since the 1950s. The theory is that if buildings don’t provide their own parking, too many drivers will try to park on neighborhood streets. In practice, critics say, the requirements create an excess supply of parking, making it artificially cheap. That, the argument goes, encourages unnecessary driving and makes congestion worse. The standards also encourage people to build unsightly surface lots and garages instead of inviting storefronts and residential facades, they say. Walkers must dodge cars pulling in and out of driveways, and curb cuts eat up space that could otherwise be used for trees. “Half the great buildings in America’s great cities would not be legal to build today under current land use codes,” said Jeff Speck, a planning consultant. “Every house on my block is illegal by current standards, particularly parking standards.” Opponents also say the standards force developers to devote valuable land to parking, making housing more expensive. “We’re forcing people to invest in spaces for automobiles rather than in spaces for people,” she said. “There’s no way to recover that use.”

Happy Park(ing) Day 2008

I guess I must not be hip enough to have known about this beforehand, but there’s a very interesting citywide event happening here in New York today called Park(ing) Day. All throughout New York City, people are reclaiming parking spaces for their street-side enjoyment. It’s a very novel idea that helps convey a very important economic point: the opportunity cost of public parking spaces. Of course, the users are gladly feeding the meters, so who could complain? Who says we can’t let the market decide the highest-and-best use for the spaces?! parkingdaynyc.org Here’s a video from last year’s event:

WSJ: Rent Control Is the Real New York Scandal

In case you didn’t catch it last weekend, Eileen Norcross wrote an excellent piece on rent control in New York. She touches on Charlie Rangel’s four rent control apartments scandal, some history of rent control in New York, the destructive results of rent control, vast inefficiencies caused by rent control, and moves to further subsidize low and middle income housing in New York. I found this paragraph to be particularly startling, and I would bet that the vacancy rate for stabilized apartments is well below the overall vacancy rate: New York has a city-wide vacancy rate of just 3% — and when good rent-stabilized apartments come on the market, you have to either know someone or pay someone (a broker, for example) to get it. The result is that many renters who pay below-market rents are reluctant to move — because it’s too difficult to get as good a deal elsewhere in the city. Thus, economists Ed Glaeser and Erzo Luttmer estimate that 21% of the city’s renters live in apartments that are bigger or smaller than they would otherwise occupy. The controlled rents certainly don’t increase the number of affordable apartments. This demonstrates the hoarding effect, which we can see hampers mobility and the ability of a location to adapt to market shifts. Norcross agrees, ending the rent control regime will be a step towards solving New York’s housing shortages: There is a better way to address the lack of reasonably priced housing in the city. If Rep. Rangel, Gov. Paterson and all the other well-to-do New Yorkers lost their rent-controlled or rent-stabilized apartments, there would be a loud public outcry to loosen regulation and allow more new construction.

The Market, Zoning, and Freedom.

J. Brian Phillips wrote a great post at Houston Property Rights about liberal property rights in Houston, but what Brian had to say applies to every place. Here’s a snippet, but the entire post deserves a reading: when developers and builders see a need for greater density, they respond accordingly. And they can respond relatively quickly because they do not need to spend years seeking the approval of those who do not own the property. The market is a dynamic place. Each participant is motivated by his own self-interest, seeking to find the best use for his abilities and assets. When the market is unfettered, individuals can act as their judgment dictates, even when others think their ideas are folly. They need not convince the ignorant, the short-sighted, or bureaucrats. They need only convince those who choose to deal with them– their investors, their employees, and their customers. And each of these are motivated by their own self-interest. Those who seek to impede the market, which means impede the voluntary choices of individuals, are motivated by something entirely different. For all of their rhetoric about protecting the public or promoting the common good, their real goal is control. Their real goal is control over the men and women who build and produce. His writing concisely conveys many great points, and then he wraps it up with a rallying closing: no individual has a right to demand that others provide for his sustenance or happiness. He cannot compel others to provide for him, just as others cannot compel him to provide for them. He cannot force others to sacrifice for him, nor can others force him to sacrifice for them. That is not anarchy, that is the rule of objective law. That is freedom.

Econtalk Podcast: Shiller on Housing and Bubbles

Shiller on Housing and Bubbles Robert Shiller of Yale University talks with EconTalk host Russ Roberts about the current housing mess and related financial market problems. Shiller argues that the decade-long run up in housing prices was a bubble where speculative fervor outweighed any economic fundamentals. He also discusses the genesis of the Case-Shiller housing price index and his idea for how it might be used to reduce risk in the mortgage market. Note: This podcast was recorded on September 5, 2008, days before Secretary of the Treasury Paulson put Fannie Mae and Freddie Mac into conservatorship.

Another On “Conservatives” and Urbanism

While I sympathize with the theme and agree with regards to roadway spending and “conservative” hypocrisy, a recent article in the progressive The American Prospect takes a narrow-minded view of politics and urbanism, while throwing around broad generalizations about evolution and global warming to support their assertions: The Conservative Case for Urbanism In fact, one doesn’t have to be concerned about climate change at all in order to support such policies; values of fiscal conservatism and localism, both key to Republican ideology, can be better realized through population-dense development than through sprawl. Tom Darden, a developer of urban and close-in suburban properties, said Wednesday, “I’m a Republican and have been my whole life. I consider myself a very conservative person. But it never made sense to me why we would tax ordinary people in order to subsidize this form of development, sprawl.” Darden told the story of a road-paving project approved by North Carolina when he served on the state’s transportation board. A dirt road that handled just five trips per day was paved at taxpayer expense, with money that could have gone toward mass transit benefiting millions of people. “Those were driveways, in my view, not roads,” Darden said. I agree with Darden. However, so-called “progressives” fall into the same narrow minded trap when they support public transportation as a solution to global warming that “conservatives” fall into when they try to protect their auto-centric lifestyle. Many are really calling for more of the same top-down overspending on transportation infrastructure that will require a taxpayer bail out at some time in the distant future. Where is the rational voice trying to slow down overspending on all energy-reliant, sprawl-creating, redistribution of productive resources? While existing transit may be less bad environmentally in comparison to highways when looked at from a […]

Bike Sharing

My Other Bike is a Public Transportation System by Greg Beato at Reason.com: A bike delivers a strong sense of autonomy, too—stronger even than a car in many ways. It doesn’t, for example, require a license, registration, insurance. You aren’t beholden to routes or schedules. You go where you want, when you want. Unless the bike you’re riding is part of a bike-sharing program. Then your usage is more proscribed. Take, for example, SmartBike D.C., America’s first high-tech bike-sharing program. Launched in August, and, like Velib, funded by an advertising company (Clear Channel Outdoor in this case) in return for the right to advertise on the city’s bus shelters, the program currently consists of 120 bikes and ten docking stations, all of which are clustered within a relatively small radius downtown. For a $40 annual fee, users get a smart card that allows them to unlock a bike from its docking station and start contributing to America’s energy independence. Sounds like a great free-market solution. Right? Greg doesn’t think it’s so great: it’s like you own the bike, except you don’t. You’re not permitted to let someone else ride it. You’re not permitted to put too much stuff in the front basket. (The baskets are for “light goods” only.) You aren’t supposed to ride it in “inclement and dangerous weather.” You have to return it to very specific places at very specific times. If something on your bike breaks while you’re riding it, you aren’t supposed to take it to the nearest bike shop or attempt to make the repair yourself. Instead, you have to call SmartBike’s customer service line and wait for a repair person to respond to your request for help. At least when a bus breaks down, you can abandon ship and take destiny in your own […]

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