
The Dow of Cities - ALee
http://cityobservatory.org/dow-of-cities2018/
======
rhapsodic
I prefer suburban living to city living. But I'm really glad to see the
revival of cities in the US, particularly the one I live just outside of. The
professional, upper middle class people who are moving in are rehabbing old
housing stock and neighborhoods that had been decaying for decades, and it's
good for everyone, in my view -- even suburban property owners such as myself.

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bostonpete
> it's good for everyone, in my view -- even suburban property owners such as
> myself

I agree it's good in general but maybe not so good for people who are being
displaced due to rent hikes caused by gentrification.

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jeffbax
> rent hikes caused by zoning codes and regulations that push the price of
> building up higher and higher

-bostonjeff

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gowld
Building isn't expensive. The space above the land is (infinitely) expensive
due to zoning constraints.

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StudentStuff
Requiring garden space and car storage for every bedroom built is a quick way
to double a project's costs. Why have zoning codes that prohibit the best use
of the land?

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losteric
Zoning codes are a double-edged sword. On one hand, they stop someone from
building a high-rise in the middle of a low-density residential area... on the
other hand, the very same regulations prevent the market from scaling up to
meet new demand. New zoning legislation moves slowly when constituents benefit
from rising real-estate prices (to the detriment of the broader public).

Legislation like "new construction must not be more than N floor(s) higher
than surrounding properties" might help, rather than the simple fixed height
limit many areas set.

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xvedejas
Building high-rises (well, 8+ stories) in the middle of low-density
residential areas is something that happens in Japan, and I find it charming.
Why are we enforcing the aesthetic wishes of some people but not others?

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konschubert
Because there are ugly cities and there are beautiful cities. And they are so
for a reason.

This video is really informative in this regard and has changed my opinion on
a few things:

[https://m.youtube.com/watch?v=Hy4QjmKzF1c](https://m.youtube.com/watch?v=Hy4QjmKzF1c)

~~~
rukittenme
Society would be much better off in ugly cities rather than expensive ones.

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dredmorbius
The notion of valuing cities is an interesting and useful one.

The notion of doing this by way of real estate valuation is somewhere between
misguided and actvely dangerous.

Asset price inflation is not, should not be confused with, and proxies poorly
for, real economic wealth increase.

The definition of wealth itself has been and remains something of a conundrum
within economics. It wasn't until I actually started reading Adam Smith
closely some years back that I realised his definition, "the annual produce
and labour of the nation", is a _flow_ rather than a _stock_ measure. (Smith
biographer and editor Edwin Cannan commented similarly in the late 19th
century, I'm late to the party).

As such, Smith's metric bears a strong resemblence to Leslie White's law,
"culture evolves as the amount of energy harnessed per capita per year is
increased, or as the efficiency of the instrumental means of putting the
energy to work is increased".

[https://en.wikipedia.org/wiki/White's_law](https://en.wikipedia.org/wiki/White's_law)

Which might make for a more useful metric basis than City Observatory are
proposing.

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carapace
Reminds me of "Constructal law" (sic).

> "For a finite-size system to persist in time (to live), it must evolve in
> such a way that it provides easier access to the imposed (global) currents
> that flow through it."

[https://en.wikipedia.org/wiki/Constructal_law#Constructal_la...](https://en.wikipedia.org/wiki/Constructal_law#Constructal_law)

~~~
dredmorbius
Thanks for that, TIL.

Oh, wow! _Very_ interesting set of pubs.

[https://www.worldcat.org/search?q=au%3ABejan%2C+Adrian%2C&qt...](https://www.worldcat.org/search?q=au%3ABejan%2C+Adrian%2C&qt=hot_author)

[https://plus.google.com/104092656004159577193/posts/hniKFN5R...](https://plus.google.com/104092656004159577193/posts/hniKFN5RoUH)

~~~
carapace
Cheers

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rmah
Why not just use the Case–Shiller index? It's been around for 18 years, has
data from 1890 to today, has a solid methodology that has been scrutinized by
many economists, and is the industry standard for US residential home prices.
Oh, and it's also widely quoted in the financial media.

~~~
twelvechairs
Case-Shiller cuts it a different way though. The post is pointing out that
city centre areas in general are increasing in value compared to outer areas.
Case-Shiller is an index of price trends across different metro areas that
doesnt differentiate city centres from suburban areas.

I don't think the headline statement for a 'dow of cities' is really useful to
implement.

But there is a good point in there of society and industry not paying much
attention to broad trends in cities. Case-Shiller is well regarded, but its a
very blunt tool for analysis.

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brailsafe
> You can’t literally buy stock in a city, but buying a house is the closest
> thing imaginable.

I feel like this might be more generalized to "home" rather than "house",
though I suppose it depends on what your conception of a house is. So far as
I'm aware, focus on single family detached houses leads to a gradual decrease
in every measurably quality of urban living by using a sprawl as a vehicle.

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gnode
> You can’t literally buy stock in a city, but buying a house is the closest
> thing imaginable.

Maybe not accessible for the retail investor, but can't this be done by buying
collateralized debt obligations? If you could be issued a CDO based on urban
mortgages in particular, then you could profit from the rise of urban house
prices.

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gervase
I could be wrong, but my understanding is that these are rarely packed on a
geographic basis, and more on a risk (or owner?) profile basis, which kind of
breaks the "buying stock in a city" metaphor.

~~~
gnode
My understanding is that they group the owners together, then issue CDOs such
that some are paid before others. Those which are paid last have the highest
risk, but the largest rate of return. If you believe house prices are safer
than the rest of the market does, you'd buy the high return high risk CDOs.

It's also my understanding that they aren't issued on a geographical basis
(beyond the country or state level). However, that's not to say they can't be,
if investors take interest in distinguishing rural and urban mortgages.

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padobson
Has anyone ever considered moving to some wilderness and just developing an
urban center there, a la Sim City? If there's such a shortage of cities,
perhaps building one from scratch is a viable option.

~~~
xvedejas
Others have pointed out that this has happened, with cities like DC and
Brasilia, but I have yet to see an example of a new city that wasn't built in
a car-oriented way. If you want a fundamentally walkable city, you have to
make some decisions that hurt car drivers, and I don't think anyone has been
willing to do so with these projects.

~~~
TheCoelacanth
DC was not created in the middle of the wilderness. Alexandria was the the
22nd largest city in the country at the time DC's location was chosen and
Georgetown was only a bit smaller.

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chrisweekly
I wonder what the broad adoption of autonomous vehicles will do to the urban-
center growth curve.

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ghaff
The common wisdom is that it will lead to more dispersion. (In fact, this will
probably be true even before full hands-off door-to-door systems are
available.) To the degree that at least some people live in cities, not so
much because they want to, but because they work there and don't want the
commute, they might move to the suburbs if that commute becomes easier. Of
course, if a lot of people think that way, traffic probably becomes more
congested.

~~~
throwawayjava
_> To the degree that at least some people live in cities, not so much because
they want to, but because they work there and don't want the commute, they
might move to the suburbs if that commute becomes easier_

IDK if those people exist in high numbers within city _centers_. Those folks
are all clustered along transit lines just outside of city city centers,
right?

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ghaff
You may be right at least for cities with decent commuter rail systems. I'm
most familiar with Boston and, if someone is working in town and doesn't want
to live downtown, there are quite a few nice inner suburbs that aren't that
far away along a rail line.

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kaycebasques
I'm a bit hesitant to give this article any mind, simply based on the fact
that they're using an antiquated index like the Dow as their point of
comparison.

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gowld
Moving beyond the middlebrow dismissal... The only thing wrong with the Dow is
the way it's weighted. Not a particularly relevant concern for the metaphor.

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kaycebasques
I don't see why it was necessary to make it personal with the "middlebrow"
remark.

> The only thing wrong with the Dow is the way it's weighted.

You are right. Price-weighting is indeed unintuitive. Other things wrong with
it:

* Its name, "Dow Jones Industrial Average". It's far from an average of modern US industry.

* It size. 30 companies is a small basket, when we have many alternatives that cover the economy much more comprehensively.

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jpao79
I really like this website:
[https://teleport.org/welcome](https://teleport.org/welcome)

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padobson
_The new Fitch analysis make it abundantly clear that cities are hot, and
suburbs are not._

I'm not sure this is true. I'd say it's more like demand in cities is
outpacing supply, whereas that's not the case in the suburbs. It seems more
like a commentary on the scarcity of real estate (both natural and artificial)
in city centers.

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jasonmp85
TBH I'd have rather read about The Dao of Cities.

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Terr_
Or the S&P 500 of cities -- the DJIA is a silly metric.

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patmorgan23
He most stock indexs aren't great. Non of then have inflation controls and
they AVG single units of a company's stock rather than their market caps.

