
Why the Great Divide Is Growing Between Affordable and Expensive U.S. Cities - jseliger
http://blogs.wsj.com/economics/2016/04/18/why-the-great-divide-is-growing-between-affordable-and-expensive-u-s-cities/
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dexwiz
There is some sort of cultural attraction in play also. All of the cities in
red would be considered some sort of high profile cultural hub.

I live in a very cheap city that's very close to the price baseline on that
graph. Land here is cheap. My girlfriend lives on close to 1/3 acre, in the
city, for less than 200k. The city is seeing a large influx of on new
businesses looking to relocate cost centers here, ie lots of call centers. So
there are jobs, there are houses, there are all the amenities of a normal
city.

But there are next to no cultural outlets. Nightlife is confined to 3 or 4
strips in the entire city. Most festivals boil down to parents and kids buying
food from trucks and tents. There are no major music festivals. Craft beer is
pretty much limited to IPAs. Natural attractions are woods or lakes. Any
sometimes during sporting events in our city, broadcasters show the visiting
team's skyline, because ours is so lackluster.

I am looking to move cities, but after factoring in an astronomical rise in
housing cost, and a price of living adjustment that does come close to
matching, I am having second thoughts. Why move to a city to do stuff, if once
I get there I cannot afford to do anything.

Side note, the article is not particularly informative. Its pretty basic info:
look at these cities that cost a lot, and the reason is because new builds are
limited. Seems like an excuse for someone to make the infographic.

~~~
api_or_ipa
Since moving to Palo Alto, I have to think that this area resembles more of a
small town that you describe rather than a large, cultural city. Local brewed
beer is rare to non-existant. Pub beer labels read the usual brands you'd
expect. We're skewered between San Jose (go Sharks!) and SF(go Giants &
Warriors!) and save for a few brief weekends of Stanford football are
completely void of our own sporting events. Our skyline is worse than
lacklustre, it's non-existent. In fact the lack of tall building means
Stanford's own belltower has some singular local prominence. Except for the
fact that nearly every building is emblazoned with the Who's Who of tech
company branding, it would be difficult to pick out Palo Alto from any other
sleepy college town.

~~~
jonknee
> Except for the fact that nearly every building is emblazoned with the Who's
> Who of tech company branding, it would be difficult to pick out Palo Alto
> from any other sleepy college town.

The $3m but very unremarkable homes make it a little easier.

~~~
Chinjut
If they're unremarkable, perhaps not...

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davidf18
Economics Nobelist Paul Krugmann, Harvard economist Edward Glaeser, and
Financial Times Columnist (with masters in Economics) Tim Harford and others
have been writing about this.

It has to do with "rent-seeking" using politics to create artificial scarcity,
in this case scarcity of housing though zoning density restrictions and
overuse of historic landmark status. The rent-seeking creates microeconomic
market inefficiencies. Ultimately, I believe there will have to be federal
laws to break up the "rent-seeking" in cities.

Another example of "rent-seeking" was the artificial limit of 13,000 taxi
medallions. The market value of a single medallion rose to $1.2 million until
Uber/Lyft came along and increased the supply of taxi-like vehicles. Now the
market value is <$700K.

See: Build Big Bill by Glaeser: [http://www.nydailynews.com/opinion/build-big-
bill-article-1....](http://www.nydailynews.com/opinion/build-big-bill-
article-1.1913739)

Tim Harford: The Undercover Economist
[https://www.amazon.com/dp/0199926514](https://www.amazon.com/dp/0199926514)

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danielvf
I was surprised to see the city afforabilty/size chart tracks political
parties so closely. Almost all the high growth, affordable cities are
Republican leaning, while the high growth expensive cities are predominately
Democrat.

I wonder how close the correlation actualy is.

~~~
RestlessMind
I too noticed that.

Cities with least price increases: Austin, Raleigh, Atlanta, Vegas, Charlotte,
Phoenix...all of them in states leaning Republican.

Cities with most price increases: San Jose, Boston, NYC, LA, Seattle, San
Diego, DC... all of them in states leaning Democratic.

Could it be because of the parties' philosophies about regulations?
Conservatives would let you build without much hassle, thus letting supply
meet demand. Liberals, on the other hand, would regulate and constrain the
supply.

Apart from political ideologies, what could be other possible reasons for such
disparity?

~~~
graeme
Aren't all the cities in the latter group already dense than the former group?

I didn't check all of them, but these are the _least_ dense cities in the
second group, in people per sq mile:

1\. San Jose: 5000

2\. San Diego: 4000

LA is 8000. NYC is 28000.

For the former, "build without hassle" group, here are the _highest densities_

1\. Atlanta: 3360

2\. Austin: 3358

3\. Raleigh: 3158

4\. Phoenix: 3025

Las Vegas is 1659, Charlotte is 2720.

\-------------

I pulled the numbers from Wikipedia. Here's an alternate theory: the cities in
the second list are pretty full. So costs go up, despite the fact that the
cities are unusually dense.

Further, it's impossible to build NYC in modern America. Zoning laws now
require more sprawl. The cities in the first list are mostly building low
density housing. (Hint: even tall buildings neighborhoods can be low density
if built wrong.)

~~~
skybrian
And that's the problem. Supposedly high density in U.S. cities isn't all that
high. They're nowhere near "full" (what does that mean when you can build
taller buildings) but zoning laws prevent growth.

~~~
graeme
Eh. I feel like this conversation is lacking basic statistics.

San Francisco: 18,451

Tokyo: 16,000

San Francisco is not all that high, but denser than Tokyo. Cities don't need
to be high to be dense. That's one of the biggest misconceptions. Most of the
world's high density cities don't do so by using skyscrapers.

The actual problem? I think it comes down to two factors:

1\. Almost all density in NA was built pre-car

2\. So density is limited by the size of areas that were built in the pre-car
area.

Taller buildings isn't necessarily the answer. Narrower streets is a larger
determinant of density. But it's very hard to tear down streets, make them
narrower and add new buildings.

It's especially hard to rebuild the suburbs around cities like San Francisco
and make them more San Francisco-like. If the whole Bay area was built like
SF, there would be no silicon valley rent crisis. Yet for some reason everyone
focuses on SF.

I'm writing this in Montreal, a city built like SF. It's infuriating that this
whole debate happens without people googling density stats.

How many people would have guessed that SF is denser than Tokyo, per square
mile? Tokyo is _bigger_ , and holds more people, because the Japanese have
sensible zoning. But "tall buildings" is not how they do it over the whole
span of the megalopolis.

~~~
khuey
Your 16000 (people per square mile) number for Tokyo must be for the whole
prefecture, because the actual city (the 23 wards) is significantly more
dense. Wikipedia tells me roughly 37000.

~~~
graeme
Probably. And the Bay Area around SF is really not dense. Around 1000, which
is terrible.

My main point is that SF is not the problem. It's the Bay Area.

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peatmoss
> Mr. Romem said ideally cities would relax regulations and build upward
> rather than outward. But, he said, promoting development on empty fields is
> more politically feasible than building apartment towers in single-family
> neighborhoods, and thus likely to ease affordability pressures more quickly.

That's the key line for me. As an urban planner, I'm bought in on the idea of
growth management--at least much of it. But every policy has its unintended
consequences. As far as planning is concerned, I think it's pretty
incontrovertible that more upward development is needed. Getting there
politically is an unsolved problem.

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jxramos
This is exactly what Sowell spoke about several years ago, nice to see it with
hard data though.

Thomas Sowell: Oh, because Dallas wasn't part of the boom and it wasn't part
of the bust. Peter Robinson: How come? Thomas Sowell: Because in Dallas they
don't have the restrictions on building houses that we have in Coastal
California. Houston was--is very similar. Houston doesn't even have zoning
laws. And so therefore if people wanted more houses in Dallas or Houston, the
villages built more houses and the prices didn't rise. Peter Robinson: Supply
is able to adjust to demand. Thomas Sowell: That's it. Peter Robinson: Much
more easily, much more easily in these markets. Thomas Sowell: Yes.
[http://media.hoover.org/sites/default/files/documents/uk-
sow...](http://media.hoover.org/sites/default/files/documents/uk-
sowell-7-09.pdf)

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bsder
I note that the areas that are marked "affordable" are some of the ones who
had the worst housing crashes.

IIRC, Las Vegas, Phoenix, Atlanta, and Raleigh all had housing markets that
were hugely outpacing the local salaries until everything crashed.

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actaeon169
So, a small supply combined with a large demand creates higher prices? This
new finding could revolutionize our understand of economics... we should study
this further.

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noahmbarr
"expansive cities versus expensive cities"

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Animats
It's the WSJ. Of course regulation has to be the problem.

But usually, it's geography. Manhattan and SF have water borders. There's
sprawl outside them, but the good stuff is near the center.

If you don't have geographic obstacles, cities can get insanely huge. Mexico
City. Beijing. Shanghai. Tokyo. The US has the New York-Newark-Jersey City,
NY-NJ-PA Metropolitan Statistical Area, with about 20 million people, the
world's second largest city area. That's what happens when expansion jumps the
geographic obstacles.

~~~
vlozko
Did you not read the article?

"Many of the more expensive cities are prevented from growing outward by
natural barriers, such as oceans or mountains. Those cities are unlikely to
grow significantly upward or outward in the next couple of decades, he said,
and thus the price divide is likely to continue to widen."

~~~
Animats
_" On the one side are cities such as San Francisco, Boston, New York and
Miami that have slowed their pace of expansion dramatically since the 1970s,
in part as they have added layer upon layer of building regulations."_ That's
pure WSJ editorializing.

~~~
swampthinker
I mean, do you have any idea what kind of regulations there are on building in
Boston?

Southie is booming right now, but it sure as hell isn't for cheap housing. The
headaches of dealing with Boston zoning are now far outweighed by the benefits
of building in the Seaport.

