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Liberalizing Cities
From The Ground Up
Delete all Seattle's highways. Invent new neighborhoods. Explain macroeconomic trends with home size. Money flows uphill to water. Do NIMBYs really hate density? Urban economics is on a tear.
I and many other scholars have argued that minimum parking requirements increase the cost of housing (by taking up land for parking that could be used for housing, and by imposing costs that are passed on to consumers), increase the costs of doing business, and create a variety of other social harms. One occasional counterargument is that because most people drive to work and other destinations, developers would build lots of parking even if such parking was not legally mandated. A recent study discussed in Transfers Magazine shows otherwise, by focusing on recent reforms in Seattle. That city eliminated parking requirements in its most dense areas and reduced parking requirements in some other areas. If minimum parking requirements were irrelevant to developer decisions, developers would have built as much parking as they did before the reforms. In fact, this was not the case. For example, in areas where no parking was required, 30 percent of residential developers built parking-free housing. Even developers who built some parking usually built less than was required under pre-reform standards.
When laypeople hear the phrase “rent control”, they typically conjure up one of a few images. Tenants imagine easy street, a world where housing is ridiculously low cost. Maybe they think of rent control in NYC, where they saw the characters from Friends live in large apartments for far below market value. Landlords think of reduced profits, and tenants who live in a unit for years on end, never paying market value. Economists on both the left and right, meanwhile, simply picture bad policy. A prime example is Thomas Sowell, a world-renowned economist who claims both tenants and landlords suffer from rent control. He discusses the economics of rent control in his book Basic Economics, and his arguments have been summarized here. With Rent Control Comes a Greater Demand for Housing In an uncontrolled market, prices vary with the amount of demand. That is, prices rise because the amount of a product that people want exceeds the amount that is available at current prices. Put simply, more people want an item than there are items to go around, so to get that item you go into an indirect bidding process with other buyers. Imagine a fellow named Jerry and a girl named Elaine. Jerry wants a one-bedroom apartment in San Diego, but he can only afford $850 a month in rent. Elaine also wants to find a one-bedroom apartment, but she can afford $1,500 a month. Because there is currently a free market in San Diego, Jerry can’t find a one-bedroom for $850. There are a limited number of units and there are many more “Elaines” who are also willing to pay $1,500, which means rents hover around that value. As a result, Jerry reluctantly rents a 3-bedroom apartment with two roommates. Elaine finds a one-bedroom one at market price. […]
[this is a pilot for a regular weekly series rounding-up the week’s happenings in the world of Market Urbanism. I’d love to get your feedback in the comments or contact us directly. If the response is positive, we’ll continue it.] 1. Here at Market Urbanism, Scott Beyer wrote about Charlottesville developer Oliver Kuttner for his series on America’s Progressive Developers. Not uncommon in US cities, Kuttner faces ever increasing obstacles to innovative development: I do believe that every time you add an extra layer in city hall, you make interesting buildings less likely. 2. Scott was also quoted in The New Tropic about Miami gentrification: If you have a population increase and you don’t increase housing, people will get pushed out read the rest of the quote and article here. 3. At the Market Urbanism Facebook group: Nolan Gray shared some encouraging news about D.C.‘s new zoning code. Similar good news from Hartford, Connecticut! via John Morris China to build worlds largest Mega-City. “What could possibly go wrong?” asks Mark Frazier. Trump thinks Eminent Domain is wonderful via Anthony Ling. 4. Elsewhere: Michael Lewyn at Planetizen: Right to the City Daniel Hertz at City Observatory: In some cities, the housing construction boom is starting to pay off Dan Savage jumps on the SFyimby bandwagon: When It Comes to Housing, San Francisco Is Doing It Wrong, Seattle Is Doing It Right, Cont. Jonathan Coppage at The American Conservative: Why San Francisco Has to Build Up Kim-Mai Cutler at TechCrunch: A Long Game Chicago‘s proposed anti-Airbnb ordinance limits the number of nights a host can have guests, an additional 2% tax on top of Chicago’s 17.5% hotel tax, and possible jail-time for users! Let’s hope the opposition triumphs. Strong Towns interviews @stuckbertha (that Tunnel Boring Machine that got stuck 1,000 ft under Seattle) during #NONEWROADS week 5. And finally, Stephen Smith‘s tweet of […]
Expect a lot more of these… 1. Beijing tries to relieve congestion by…building a quarter-million parking new spaces and 125 miles of new downtown streets?! But don’t worry – bike sharing! 2. Seattle inches closer to a Shoupian on-street parking policy, and Austin ponders charging for on-street parking after dark and on Saturdays. My favorite comment from the Seattle story is this one: “Get rid of the illegal aliens and we will have LOTS of room to park! And plenty money! Sanctuary idiots!” I guess that was one positive aspect of the Holocaust: more parking! (Oops, did I just Godwin this blog?) 3. East (a.k.a. Spanish) Harlem wants to develop its transit-accessible parking lots and fill them with “low- and middle-income residents” to aid in its “struggl[e] to maintain its affordable housing stock,” but of course “they want to prevent the construction of large apartment towers.” Sorry, East Harlem – you can’t have your cake and eat it too. 4. As if we needed any more evidence that diverting police officers for voluntary bag searches in the DC Metro was an absurd idea. 5. A Green candidate for London mayor has proposed expanding the area that the congestion charge covers, build tiers in, and raise prices to the point where entering the innermost part of London would cost drivers £50/day (!!). As long as we don’t end up on the right-hand side of the Laffer curve – that is, as long as the city can raise more revenue at £50/day than it could at any lower price – I think this would be a step in the direction of market urbanism, since it would emulate the behavior of a profit-seeking road firm. (One way of testing that is to raise the charge gradually and to stop once total revenue starts […]
As promised, I want to reprint the responses I got from Wendell Cox and Randal O’Toole, but first I wanted to invite everyone to a livechat that’s being organized by Tim Lee. Tim used to write for Cato, but now he’s pursuing a PhD at MIT and doing freelance writing on tech policy. He organizes these livechats occasionally and has been kind enough to ask me to be his guest, so if you want to participate (or just watch), go to Tim’s website on Wednesday between 9:30 and 10:30 pm EST, and click on “General Chat” on the bar in the lower right-hand corner. The audience should be relatively small, so if you have something you want to ask or discuss or debate, there’s a good chance that we’ll get to it. So anyway, Marc Scribner has posted his response to my response to his response to my response (sorry, couldn’t help myself) to Seattle’s recent land use liberalization. Wendell Cox’s response was similar to Marc’s, so my disagreements are similar, but Randal O’Toole took a different approach, and one that I pretty much completely agree with: I have no significant problem with liberalizing parking codes. My one caveat is that planners need to remember why those parking minima were there in the first place. In some cases, they were put in because some guru somewhere said that was the way to do it. But in other cases, there was a genuine concern about the need for off-street parking in order to prevent congestion around on-street parking. In this case, I agree with Don Shoup that the remedy is for the city to charge market rates for on-street parking. Sometimes, of course, the market rate is zero. But other times parking should be metered to insure that everyone who really wants […]
A few days ago I wrote about inner Seattle’s residential density liberalization, and I mentioned that I’d emailed a few land use writers at libertarian think tanks to get their reaction. I’m happy to report that all of them responded, and throughout the week I’ll post links to/reprint their responses, along with any comments I might have. So first I’d like to direct y’all to CEI’s OpenMarkets.org where Marc Scribner responded. He essentially said that the move looks like a net benefit in terms of land use liberalization, but that Seattle’s limits on sprawling growth (as opposed to infill growth) are more serious and costly. I’m glad that he agrees with me that Seattle’s new plan will be a positive marginal change, but I’m not sure that I agree with some of the other things he says. I’m certainly not going to defend King County’s urban growth boundary – we’re opposed to them, and think that people who are concerned about sprawl could achieve better results less coercively by simply allowing more infill and stopping the subsidies for all modes of transportation. But I do wonder how Marc reached the conclusion that sprawl restrictions are more onerous than density restrictions. He points to the run-up in housing costs in Seattle over the last decade, but given that we’ve already established that Seattle has both sprawl-prohibiting and density-prohibiting regulations, I don’t see how he’s decided that the former are more significant than the latter. This is a difficult question to answer, and on some level can only be done properly by liberalizing and observing. But barring that, econometric methods can be used to make guesses as to how restrictive such regulations really are – something we’ve tried to do before with parking minimums. I do not, however, see any of those […]
It’s not often that I find a plan that I can wholeheartedly agree with, but this one from Seattle sounds damn near perfect, at least in terms of marginal change (my emphasis…apologies to Publicola for stealing their content!): 1. Instead of the current generic land-use standards, the new regulations include five different allowed housing types: Cottage housing (collections of small single-family-style houses), row houses (rows of units attached by a single wall), townhouses (attached units that occupy space from ground to roof), autocourt townhouses (townhouses that each have a private garage), and apartments. 2. The maximum allowable height would be increased from 25 to 30 feet (basically, from three to a potential four stories)—a change that prompted commenters like Eastlake gadfly Chris Leman to accuse the council of supporting “larger and taller condos… that are bulkier and …. really worse than the worst townhouses” because they would block views, make it impossible to plant trees, and displace low-income housing. 3. The size of new developments would be determined by floor-area ratio (the ratio of a building’s floor area to the lot on which it is built) rather than simple building footprint, allowing more flexibility in building size. 4. Row houses would not be subject to the same density limits as auto-oriented townhouses, allowing them to cover more of a lot. 5. The law also includes new design standards to improve the appearance of new low-rise buildings and make them fit better into neighborhoods; 6. The changes would reduce the setbacks required between housing and the street (and between low-rise townhouses or row houses and each other), allowing more development on a lot; 7. Require developers to provide space for garbage, recycling, and food waste bins for smaller buildings, making it easier for residents of small town houses and apartment buildings […]
Austin Contrarian discusses an article that describes how Seattle has become less affordable in recent years. He prescribes a recipe for Austin to become what he calls a “Superstar City” such as New York, Boston, San Francisco, or Seattle. By “Superstar City”, I assume he means an ultra-hip place where housing prices rise rapidly, NIMBY activism grows, and development is restricted, making it even less affordable for many, except the wealthy and subsidized. The agenda would work for any city: Here’s the agenda I’d propose for propelling Austin into the “Superstar City” pantheon: (1) discourage the construction of traditionally affordable housing like garage apartments and duplexes; (2) restrict the amount of land available for multi-family housing; (3) strictly limit multi-family density; (4) limit the construction of upscale condos and townhomes in order to force affluent homebuyers to compete for the scarce supply of close-in housing; (5) ban small-lot and “urban home” zoning; (6) require property owners/developers who build dense developments to shoulder the financial burden for things like affordable housing, parks and infrastructure; and (7) impose onerous design standards to increase the cost of new construction. We can call it the “progressive” agenda. We’ll be in the superstar ranks in no time. Austin Contrarian: Sound familiar?
