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Market Urbanism MUsings September 16, 2016

  1. This week at Market Urbanism: The “Global Buyers” Argument by Michael Lewyn The argument makes sense only when you add the following premise: housing prices can only be high in the presence of huge numbers of rich foreigners. I really don’t see any reason to take this premise seriously. Home-Sharing and Housing Supply by Michael Lewyn And if turning long-term rentals into short-term rentals is socially harmful, isn’t it even more harmful to prevent those long-term rentals from being built in the first place? Yet government does exactly that through zoning codes- often at the behest of neighborhood homeowners. Visions of Progress: Henry George vs. Jane Jacobs by Sandy Ikeda Much has been written, pro and con, on George’s single tax and also on Jacobs’s battles with planners the likes of Robert Moses, and if you’re interested in those issues you can start with the links provided in this article. Here I would like to contrast their views on the nature of economic progress and the significance of cities in that progress. Urban[ism] Legend: A Home Is A Good Investment by Emily Hamilton pursuing policies that encourage homeownership at the expense of other investment vehicles leaves people of all income levels worse off. Often, home ownership simply leads to higher levels of housing consumption rather than wealth-building. The consequences of buying a home may be dire for low-income families, and for the middle-class the decision should be based on rational calculations rather than the homeownership cheerleading that both parties offer. Airbnb Crowding Out Is A Symptom, Not A Cause Of Housing Shortages by Jim Pagels That Airbnbs may in fact take some small portion** of houses from the optionally relatively fixed full-time housing stock is a symptom, not a cause, of housing shortages and high prices. Asking if […]

Are States Really The Solution To Urban Mismanagement?

  Recently Stephen Eide, writing in City Journal, argued that states could run cities better than cities can run themselves, by offering an antidote to the mismanagement gripping many localities  (“Caesarism for Cities:, March 2016). In the process, he overlooked the nefarious nature of many state governments, and the way in which they already inhibit cities. Eide begins his article with a litany of urban issues: excessive debt, unfunded pensions and political dysfunction. “Local political apathy has enabled some cities to become dominated by one party or even one interest group, skewing the political process and often encouraging extensive corruption and mismanagement of finances…Fans of local autonomy are hard-pressed to explain these and other failures.” This was a flimsy premise, since everything he wrote could be applied to states themselves. In fact, the very magazine he was writing for routinely publishes articles decrying and detailing the excessive spending, debt, political dysfunction and unfunded pension crises of states like California, Illinois, Rhode Island and New York. Yet it is unlikely that we will see a piece advocating for the federal government to rein in state spending. “It makes more sense for state, not city, officials to do what’s right when faced with local fiscal distress instead of what’s politically convenient,” Eide wrote, offering no support for this faith in state officials. In fact, states have shown little willingness to engage in fiscal restraint. The Texas Department of Transportation recently spent over a billion dollars to relieve congestion on the Katy Expressway near Houston by widening it, thus subsidizing sprawl and inducing further demand. California’s unfunded gold-plated pensions equal around $600 billion, according to Eide’s very own City Journal. Similar tales of irresponsible spending can be found in virtually every state. It’s worth considering how urban fiscal problems are exacerbated by state interference. Many […]

Shut Out: How Land-Use Regulations Hurt the Poor

People sometimes support regulations, often with the best of intentions, but these wind up creating outcomes they don’t like. Land-use regulations are a prime example. My colleague Emily Washington and I are reviewing the literature on how land-use regulations disproportionately raise the cost of real estate for the poor. I’d like to share a few of our findings with you. Zoning One kind of regulation that was actually intended to harm the poor, and especially poor minorities, was zoning. The ostensible reason for zoning was to address unhealthy conditions in cities by functionally separating land uses, which is called “exclusionary zoning.” But prior to passage of the Civil Rights Act of 1968, some municipalities had race-based exclusionary land-use regulations. Early in the 20th century, several California cities masked their racist intent by specifically excluding laundry businesses, predominantly Chinese owned, from certain areas of the cities. Today, of course, explicitly race-based, exclusionary zoning policies are illegal. But some zoning regulations nevertheless price certain demographics out of particular neighborhoods by forbidding multifamily dwellings, which are more affordable to low- or middle-income individuals. When the government artificially separates land uses and forbids building certain kinds of residences in entire districts, it restricts the supply of housing and increases the cost of the land, and the price of housing reflects those restrictions. Moreover, when cities implement zoning rules that make it difficult to secure permits to build new housing, land that is already developed becomes more valuable because you no longer need a permit. The demand for such developed land is therefore artificially higher, and that again raises its price. Minimum lot sizes Other things equal, the larger the lot, the more you’ll pay for it. Regulations that specify minimum lot sizes — that say you can’t build on land smaller than that minimum […]

Market Urbanism MUsings September 2, 2016

  1. This week at Market Urbanism Palo Alto: The Land of Too Many Jobs by Jeff Fong The status quo isn’t defensible if you’re concerned with environmental degradation, inequality, poverty, slow growth, or even the decline of property rights. But, for tax protected homeowners, the status quo is exactly what they want and that’s reason enough for them to defend it. If Mayor Burt had simply called it like it is—that those in control of Palo Alto land use like the status quo, aren’t concerned with how it affects others, and will continue blocking incremental change—then we could have at least applauded his honesty. When It Comes to Walkability, Mexico City Is Miles Ahead by Nolan Gray Where in many U.S. cities open space is regulated into every single lot through floor area ratio regulations, Mexico City’s developments are dense and public space is efficiently relegated to the city’s ample parks and public spaces. This density and mixture of uses keeps sidewalks busy and safe at nearly all hours of the day. The Answer to Expensive Housing: Build More by Sanford Ikeda If you restrict the supply of housing, other things equal, what will happen to the price? That’s not a trick question. Any competent Econ 101 student would answer correctly that the price will rise. Can Housing Quotas Affect Demand For Housing? by Chris Bradford It’s a provocative argument. It turns the Econ 101 arguments upside down. Not surprisingly, it generated a fair amount of annoyed twitter chatter from market urbanists (including me) and sage head-nodding from those who believe new construction begets high home prices. 2. Where’s Scott? Scott Beyer is halfway through the longest single drive of his trip, the 1,000 miles between Austin and Phoenix. He will be stopping in San Antonio, Del Rio, El […]

The Answer to Expensive Housing: Build More

If you restrict the supply of housing, other things equal, what will happen to the price? That’s not a trick question. Any competent Econ 101 student would answer correctly that the price will rise. One reporter for the Washington Post gets it. In a hopeful sign of spreading economic literacy, Emily Badger writes: In tight markets, poor and middle-class households are forced to compete with each other for scarce homes. And so new market-rate housing eases that competition, even if the poor aren’t the ones living in it. Over time, new housing also filters down to the more affordable supply, because housing becomes less desirable as it ages. That means the luxury housing we’re building today will contribute to the middle-class supply 30 years from now; it means today’s middle-class housing was luxury housing 30 years ago. Typical critics of soaring housing prices have a much harder time grasping this. They don’t see that zoning rules and restrictions meant to make urban life more “livable” (often for the well-established homeowner) reduce supply and put strong upward pressure on prices. Minimum lot sizes, maximum density restrictions, minimum parking requirements, and so on all contribute to reducing the supply. And it raises prices not only for the wealthy, but also for middle- and lower- income families, as well. Instead, they think that new construction of market-rate housing is somehow the source of the problem, rather than a solution. (Emily Washington and I recently published a useful summary of the literature on the regressive effects of land-use regulation.) Ever wonder how ordinary people could afford to live in major cities before there were rent controls and land-use regulations? Builders built wherever it was the most profitable. The middle-incomers didn’t have to compete with the wealthy for middle-income housing, and the poor then didn’t have to compete with the middle-incomers for low-priced […]

Palo Alto: The Land of Too Many Jobs

Co-authored by Tony Albert and Jeff Fong SF Curbed recently sat down with Patrick Burt, Mayor of Palo Alto, to get his response to the high profile resignation of Kate Vershov Downing. Downing, of course, was the Palo Alto Planning Commissioner who publicly announced that she will move her family from the city because of high housing prices. Mayor Burt’s response illustrates a complete failure to accept either the nature or the cause of our housing crisis. And were we not so desensitized to this type of thinking here in the Bay Area, it would be hard to distinguish his comments from satire. Too Many…Jobs? Mayor Burt’s first, and perhaps most bizarre, assertion is that Palo Alto’s problem is job growth—both within the city as well as within its Peninsula neighbors. And that part of the solution must be to slow down or displace new job creation. Take a minute and let that sink in. An elected government official is calling out job growth as a problem, and advocating for policies to slow it down. Mayor Burt says that… we’re in a region that’s had extremely high job growth at a rate that is just not sustainable if we’re going to keep [Palo Alto] similar to what it’s been historically. Of course we know that the community is going to evolve. But we don’t want it to be a radical departure. We don’t want to turn into Manhattan. Job growth increases housing demand, and if housing supply increases more slowly than housing demand, housing prices rise to make up the difference. Mayor Burt is willing to admit that housing prices are too high, but actively rejects the idea that Palo Alto needs to significantly intensify land use with town homes or multi-family apartments. This leaves him backed into the absurd corner of addressing […]

Market Urbanism MUsings August 26, 2016

    1. This week at Market Urbanism Episode 1 of the Market Urbanism podcast came out this week.  Nolan Gray plans to release new episodes bi-weekly.  The RSS feed is http://feeds.soundcloud.com/users/soundcloud:users:236686274/sounds.rss You can currently find the podcast on Soundcloud and PlayerFM. It will be available within the next few days on iTunes, Stitcher, and TuneIn. If there are other podcasting services you would like me to plug the RSS feed into, please let me know in the comment section below. Cities And The Growth Of Our Collective Brain by Emily Hamilton Sandy Ikeda describes the entrepreneur’s environment as the “action space.” Today, an action space could be in a suburban home for an entrepreneur who creates a digital product that’s sold online. While action space doesn’t necessarily need to be a place of high density, this face-to-face element remains a key part of the world’s most productive action spaces. Economist Sandy Ikeda, a previous MU contributor, is back. Here’s the first of what will be weekly content, published every Tuesday at 10am eastern standard time–How The Housing Market Works In other words, it’s not the entrepreneurs, developers, architects, and construction companies that build very expensive housing in cities like New York that drives up housing prices! Indeed, those people are responding to what they believe buyers are willing to pay, and if they are prevented from building those units the result will be higher prices for everybody. And if you observe housing prices rise despite increasing supply, that probably indicates demand is currently increasing faster than supply. Prices, however, would have been even higher were the government to undertake policies that restricted supply. 2. Where’s Scott? Scott Beyer is spending his last night tomorrow in Austin.  Then he’ll spend a couple days in San Antonio, before leaving Texas. His Forbes article this week […]

Market Urbanism MUsings August 19, 2016

  1. This week at Market Urbanism Buses and Trains: The Turtle and the Hare? by Asher Meyers With buses a relatively safe, cheap and green form of travel, the wisdom of the government favoring trains at great public expense is dubious. This isn’t to say that trains are bad and buses are good—to each his own. But given the trade-offs involved, buses cannot be dismissed as inferior and obsolete—in the real world, budgets are limited and prices matter, so a small sacrifice of time and comfort is worth the savings. Parking Requirements Increase Traffic And Rents. Let’s Abolish Them. by Brent Gaisford Let’s get rid of parking minimums and allow new apartments to be built either without parking, or the reduced amount of parking preferred by developers. People without parking are less likely to drive, and less driving means less traffic. Plus, we’ll be one step closer to reducing our stratospheric rents. 2. Where’s Scott? Scott Beyer is in Austin. His two Forbes articles this week were about how Washington, DC’s Zoning Regulations Target ‘Fast Casual’ Restaurants and Tokyo’s Affordable Housing Strategy: Build, Build, Build The city had 142,417 housing starts in 2014, which was “more than the 83,657 housing permits issued in the state of California (population 38.7m), or the 137,010 houses started in the entire country of England (population 54.3m).” Compare this with the roughly 20,000 new residential units approved annually in New York City, the 23,500 units started in Los Angeles County, and the measly 5,000 homes constructed in 2015 throughout the entire Bay Area. Scott’s previous article on Austin’s rail transit, already well-cited by local media, got additional coverage in the American Spectator. 3. At the Market Urbanism Facebook Group: Adam Hengels on Stark Truth Radio with Robert Stark Ahmed Shaker posted videos of pedestrian and street traffic in […]

Market Urbanism MUsings August 5, 2016

  1. This week at Market Urbanism Does Home-sharing Create Negative Externalities? by Michael Lewyn Homeowners’ fear of being overrun by “transient” renters is based on an outmoded picture of urban life. In a rural area where most people are born and die in the same town, a fear of “transients” may make sense- but urban life is already highly transient. In renter-dominated blocks, people move in and out every year, so transience is already the norm. 2. Where’s Scott? Scott Beyer has, starting tomorrow, one week left in Austin. Tomorrow he’s visiting the southwestern Texas town of San Angelo. His two Forbes articles were about a Houston builder constructing the nation’s largest micro-unit project and Why Austin Needs to Unleash Sixth Street These noise complaints follow the same rationale as complaints now routinely made about new housing, offices or retail. That is, people move into urban areas thinking they will enjoy the benefits of greater density and culture; but when those qualities prove inconvenient, they try to squelch them. Scott’s work was also splashed all over Austin’s local news this week. He did two TV appearances–to discuss the city’s rail transit line and safety on sixth street–and was cited about these issues in the Austin American-Statesman, the Austin Business Journal, Curbed Austin and Austin.com (among other publications). 3. At the Market Urbanism Facebook Group: Ahmed Shaker reports his experiences of Chuadanga, Bangladesh and finds it dense, bustling, full of mixed-uses, and private transportation options are plentiful. Shanu Athiparambath wrote Why Do People Love Their Cities But Hate Urban Living? Todd Litman wrote: Funding Multi-Modalism at Planetizen via Rocco Fama and Christopher Robotham: Donald Shoup and Aaron Renn on the City Journal podcast via Mark Frazier: Does Elon Musk Understand Urban Geometry? via Matt Robare: City taxes as urban growth policies: choosing the taxes that get you […]

Market Urbanism MUsings July 29, 2016 (100 years of NYC Zoning bonus links)

  1. This week at Market Urbanism Does President Obama Have A ‘Regionalism’ Agenda? by Scott Beyer Such policies represent less a turn towards socialism, than one away from the nation’s existing socialized paradigm favoring suburbs, wherein housing regulations restrict dense infill development, while the public foots the costs of state highways, local roads, and other sprawl infrastructure. Obama, for all of his supposedly urban bias, has not been immune to extending this paradigm; for example, his stimulus package, writes economist Ed Glaeser, disproportionately benefited low-density states with low unemployment. 100 Years After Zoning In New York City, Government Dominates Land Use by Vince Graham Zoning is segregation – not only of land uses deemed incompatible, but of people deemed “undesirable.” Progressives behind New York City’s 1916 zoning ordinance regarded immigrants moving into northern cities from Europe and the South as “undesirable.” NIMBYs Outdo YIMBYs In Organizing Ability by Krishan Madan The reason boils down to the classic problem of concentrated costs and dispersed benefits: the beneficiaries of new housing are scattered, while those who benefit from a housing shortage–and thus higher prices–are concentrated. These organizational skills enable NIMBYs to dominate the discussion. 2. Where’s Scott? Scott Beyer spent his 3rd week in Austin. His two Forbes articles were Dallas And Houston: Centers For Economic Development and Austin’s Commuter Rail Is A Monument To Government Waste In 2014, the rail line had an operating deficit of $12.6 million. The upfront capital costs of $140 million, when amortized at 2% over 30 years, creates an additional $6.2 million annual cost to taxpayers. Add these two sums up, and then divide them by the line’s number of annual unlinked trips—763,551—and the per-trip subsidy works out to $24.62. 3. At the Market Urbanism Facebook Group: A Market Urbanism podcast with Nolan Gray?  Yes, it’s coming, and some hints leak […]