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Category housing

Do We Need “New Urbanism” To Fix “Unwalkable Sprawl”?

At Volokh, Ilya Somin discusses a recent piece in the American Prospect (also linked from here) that favors “New Urbanism” to prevent “unwalkable” sprawl.  Somin favors “voting with your feet” as the preferred method of satisfying location preferences.  Unfortunately, voting options have been whittled down through government interventions: To the extent that we do need to enable more people to live in densely populated urban areas, it’s far from clear that government planning is the best way to achieve that goal. We can better achieve the same objective by cutting back on planning rather than increasing it. In many large cities, the cost of housing is artificially inflated by restrictive zoning laws, which tends to price out the poor and some middle class people. In the suburbs, as Adler points out, zoning policies sometimes artificially decrease density, for example by forbidding "mixed use" neighborhoods where commercial and residential uses are in close proximity to each other. The ultimate question is whether we should trust deeper interventions into land use to fix the complete failure of past interventions.  Long before “New Urbanism” was the progressive utopian ideal, sprawling, auto-friendly and trolley-free, single-family suburbs was their “American Dream”.  But, progressives quickly forget their history when it turns out their past visions created something they are now supposed to hate: Like previous generations of planners, the new urbanists often ignore the diversity of human preferences. Some people do indeed like high-density "walkable" environments. Others prefer to have more space and more peace and quiet. Neither preference is inherently superior to the other. To paraphrase a popular liberal slogan, we should celebrate diversity, not seek to use urban planning to force everyone to live the same lifestyle whether they want to or not. The post evokes the typical variety of comments ranging from standard […]

Rothbard the Urbanist Part 1: Public Education’s Role in Sprawl and Exclusion

I’ve been meaning to address the public education system’s complex role in land use patterns, and found that Murray Rothbard does a better job in his 1973 manifesto, For a New Liberty than I ever could.  In summary, locally-funded public education is an engine of geographical segregation, which encourages flight from urban areas, and was a driving motivation for the popular acceptance of exclusionary zoning in newer suburbs.  As a result, wealth is consistently concentrated geographically, and housing affordability is at odds with these restrictions of supply intended to exclude poorer people from draining the property tax base. Here’s a paragraph from the chapter on education: The geographical nature of the public school system has also led to a coerced pattern of residential segregation, in income and consequently in race, throughout the country and particularly in the suburbs. As everyone knows, the United States since World War II has seen an expansion of population, not in the inner central cities, but in the surrounding suburban areas. As new and younger families have moved to the suburbs, by far the largest and growing burden of local budgets has been to pay for the public schools, which have to accommodate a young population with a relatively high proportion of children per capita. These schools invariably have been financed from growing property taxation, which largely falls on the suburban residences. This means that the wealthier the suburban family, and the more expensive its home, the greater will be its tax contribution for the local school. Hence, as [p. 133] the burden of school taxes increases steadily, the suburbanites try desperately to encourage an inflow of wealthy residents and expensive homes, and to discourage an inflow of poorer citizens. There is, in short, a breakeven point of the price of a house beyond which a […]

Undead Ideas: Rent Control

In these days of economists constantly debating the right way to revive the economy, it seems like there is no way to find consensus among economists.  Economists don’t spend much time debating the issues they agree on, and to them, rent control is about as dead an issue as the earth revolving around the sun.  In 1992, 93% of American and Canadian economists surveyed agreed with the statement “A ceiling on rents reduces the quantity and quality of housing available.”  Opposition to rent control among economists spans the political spectrum from Milton Friedman and Walter Block to leftist Nobel Laureates Gunnar Myrdal and Paul Krugman.  In fact, it was the socialist Swedish economist Assar Lindbeck who famously said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it.” (Assar Lindbeck, The Political Economy of the New Left, New York, Harper and Row, 1972, p. 39) Never underestimate opportunistic politicians when they smell blood in the water.  With housing prices already falling, politicians want to be seen as champions of the little guy and do something for “affordability” with one side of their mouth, and force housing prices to “recover” with the other.   With the economy in disarray, even widely discredited schemes such as rent control are making a comeback in politician’s playbooks of idiotic moves that please certain constituents. Rent control was implemented twice on a national scale in the United States.  Rents were first frozen during the difficult years of World War II, and frozen again in 1971 as part of President Richard Nixon’s wage and price controls intended to curb inflation.  After Nixon’s wage and price controls expired, many cities kept some form of rent control intact. Could President Obama resurrect an undead Richard Nixon to implement […]

My Article at FreePo on the Resurrection of Rent Control

The Orange County Register’s new site, Freedom Politics just posted an article I wrote for them on rent control.  Here’s a snippet: In these days of economists constantly debating the right way to revive the economy, it seems like there is no way to find consensus among economists.  Economists don’t spend much time debating the issues they agree on, and to them, rent control is about as dead an issue as the earth revolving around the sun.  In 1992, 93% of American and Canadian economists surveyed agreed with the statement “A ceiling on rents reduces the quantity and quality of housing available.”  Opposition to rent control among economists spans the political spectrum from Milton Friedman and Walter Block to leftist Nobel Laureates Gunnar Myrdal and Paul Krugman.  In fact, it was the socialist Swedish economist Assar Lindbeck who famously said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it." The article is part of a series called “Undead Ideas” and I’m told the article is supposed to feature a humorously hideous illustration of a zombie Richard Nixon, which is the reason for the Nixon joke.  I will share the illustration once it is public.     Could President Obama resurrect an undead Richard Nixon to implement nationwide rent control in the face of the impending stimflation?  There’s a 93% chance his economic advisors wouldn’t let him do such a thing.  However, Nixon’s undead corpse has been spotted mumbling "I am now a Keynesian" in places like California and New York City where bad ideas never seem to die. I actually thought of the word “stimflation” on my own, but I checked and learned I wasn’t the first to think of it.  The domain stimflation.com had just been reserved last week… […]

NY Rent Control Revival

In an act of pure legislative idiocy in the face of overwhelming consensus among economists against rent control, the New York State Assembly started the ball rolling to strengthen rent regulation. NY Times: The Democratic-led Assembly passed a broad package of legislation designed to restrain increases on rent-regulated apartments statewide. The legislation would essentially return to regulation tens of thousands of units that were converted to market rate in recent years. In addition, the legislation would reduce to 10 percent, from 20 percent, the amount that a landlord can increase the rent after an apartment becomes vacant; limit the owner’s ability to recover a rent-regulated apartment for personal use; and increase fines for landlords who are found to have harassed their tenants as a way of evicting them. The legislation would also repeal the Urstadt Laws’ provision that in 1971 effectively took away most of New York City’s authority to regulate rents and transferred it to the state. Opponents of the legislation are concerned that the New York City Council, known for its pro-tenant leanings, would enact laws that are unfavorable to landlords. Expect some amazingly ignorant quotes from legislators while this is debated: Linda B. Rosenthal, an assemblywoman who represents the Upper West Side, said that unless rent-regulation laws were changed, middle class people were at risk of being driven out of the city. Actually, rent control drives out the middle class, making housing only affordable to the rich and beneficiaries of subsidies and rent controls. New housing will be nearly impossible for middle class tenants to find. Plus, for those who favor one particular class of people over others, rent control increases class tensions… “Pretty soon we’re going to end up with a city of the very poor and the very rich,” Ms. Rosenthal said. “Our social fabric […]

Redistribution

Discussing Ithaca, New York’s plan to increase permitted density and reduce parking minimums, I can dig what Matthew Yglesias says : The distributive impact of parking minimums is to redistribute income from people who don’t own cars to people who do own cars—not to shift income from poor to rich. A rich family will probably have at least one car for every family member who’s at least 16 years old. A family of more modest means will probably own fewer vehicles. More generally, while I’m obviously not a hard-core free marketers, it does make sense to consider a free market position our default position. Mandating the construction of extra parking doesn’t reduce harmful environmental externalities. Rather, it generates them. It doesn’t help the neediest members of society, it makes it more difficult for them to afford housing. It doesn’t correct important information deficits—people are perfectly capable of asking whether or not a house they’re considering buying or renting comes with a reserved parking space. — Update: here’s a follow up.

The Story of I’On: Struggles of a New Urbanist Project

  I recently googled upon a post at a blog called “Rub-a-Dub” that mentioned a land development project in Mount Pleasant, SC called I’On. I imagine the developers of the I’On “Traditional Neighborhood Development” (TND) community are sympathetic with Market Urbanism, as they named streets after John Galt (of Ayn Rand’s Atlas Shrugged), free-market economists Ludwig Von Mises and Thomas Sowell, as well as urbanist writer Jane Jacobs. (ironically, Jane Jacobs Street doesn’t have sidewalks) Who says New Urbanists and free markets can’t mix?  (well, I’m sure we all can name at least one such person…) What I found interesting was the story of the development shared in the comments of the post by Vince Graham, Founder and President of the development company.  The story really conveyes the struggles developers go through to get projects through the approval process; especially when the standard 20th century, auto-centric layout is being challenged by innovative development solutions. The reason why there is only single family homes and a limited amount of commercial space in the neighborhood is due to unfortunate compromises necessary to get the neighborhood approved through the arduous political process. Here is a summary: A Summary of the Political Background and Permitting History for I’On. Background:The traditional walking neighborhood of I’On is located on a 243-acre infill site in Mt. Pleasant, SC located 5 miles from Charleston’s historic district and 3 miles from the Old Village of Mt. Pleasant. The site is surrounded by conventional subdivision development of the 1950’s, 60’s, 70’s, and 80’s. Approximately 60% of I’On’s acreage was originally comprised of former agricultural fields, 30% was 30-40 year old hard wood growth, and 10% took the form of three man made lakes. The design workshop for I’On took place in May of 1995. I’On received approval in March of […]

Talking points on the housing bubble

By Sandy Ikeda Last week I spoke to a standing-room-only crowd of students and faculty about the current economic and financial turmoil.  I shared the podium with three of my colleagues, who range all the way from far to the left of Barack Obama to very, very far to the left of Barack Obama.  Needless to say, they all blamed, to a greater or an even greater degree, “the free market.” Now, I do think it’s possible in principle for wide-spread mal-investments to occur in an unfettered market.  (F.A. Hayek writes about the possibility in his Monetary Theory and the Trade Cycle, which you can read online here.)  But enormous speculative bubbles, of the sort we’ve just witnessed in the housing market, are typically the result of government interventions and policies. So in my talk on this highly complex issue I tried to make three points:  (1) the immediate cause of the financial panic on Wall Street was the housing bubble with its sudden rise in mortgage defaults; (2) the free market, which stands for minimal government and the absence of privilege or discrimination, did not create this bubble; and (3) government (and Fed) policy and pressure did, by undermining lending standards across the board and pushing lending rates artificially low. This blog has already referenced Russell Roberts’s fine collection of blog posts on the problem, and if you’re already familiar with the issues then obviously there will be nothing new here for you.  But I think it might be useful to have a list of “names and dates” that make the above case.  The following is not meant to be exhaustive (e.g., it doesn’t even mention important international factors), but is only an outline of the major legislation and policies relevant to the housing bubble. (Caveat:  My expertise in […]

Market Meltdown and Bailout Videos

Wow! This market is a mess. As a great follow up to his posts at CafeHayek on government’s intervention in the housing market, Russell Roberts discusses the situation and bailout with reason.tv: Also… Here’s the video from an Economics forum discussion at MIT (my Alma mater) on Wednesday: The US Financial Crisis What Happened? What’s Next? And another forum at USC. [HT Richard’s Real Estate and Urban Economics Blog]

Cook County (Chicago) Sheriff Won’t Evict in Foreclosures

Cook Co. sheriff won’t evict in foreclosures from Associated Press Cook County Sheriff Tom Dart says he’s ordered his deputies to stop taking part in evictions of properties that have been foreclosed upon. Dart says the change goes into effect Thursday. He says the decision comes because many of those being evicted are people who’ve been faithfully paying rent and didn’t even know about the foreclosures. Dart says he thinks he’s the first sheriff in a major metropolitan area to stop such evictions during what’s become a major foreclosure crisis around the nation. Dart says the number of mortgage foreclosures in Cook County has skyrocketed this year and that he expects that number to climb much higher. — It’s really tragic that renters who have otherwise valid lease contracts, lose that right because of their landlords’ failure. But, I don’t have the same sympathy for the defaulters themselves. What do you think will result from this move? Will banks stop foreclosing in Chicago without the rule of law on their side? Will defaulters squat?

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