Housing Crisis? Maybe the problem is how few communities in America are attractive.

[haha]

Philip Greenspun's Weblog » Perceived Housing Crisis Due to Shortage of American Communities Where Anyone Would Want to Live?

Philip Greenspun, an ER, a former software exec, an MIT graduate and a helicopter pilot thinks the so called housing crisis might be an effect of the overall disfunctionality of American neighborhoods. He says there are so few places that people with any choice want to live, that these places get huge property appreciation, while other places are essentially unaffected.

Ha

 

[JoeWras]

His concept of desirability is different from other's. His thing is walking distance and infrastructure. Others may consider drivability, etc.

He does have a point though. In today's world, there is all kinds of information available. For example, ratings of school districts. This can jack up prices pretty high in certain areas.

 

[haha]

His concept of desirability is different from other's. His thing is walking distance and infrastructure. Others may consider drivability, etc.

No doubt this is true. But this is likely not the reason that property prices are exploding in Boston, New York, San Francisco etc. Anyway, what is drivability? Some place where there are very few cars, meaning very few people or at least very few who have to get into cars to get to work, grocery stores, an attractive bar or restaurant. A whole matrix of car centered communities has grown up in Silicon Valley. Yet a fair number of people will ride a connector twice a day between San Francisco and various Valley destinations. Time consuming, unhandy, but very attractive to many people who are willing to pay a considerable premium to live this way. Silicon Valley demonstrates that drivability can easily go away.

Although anything can happen, IMO choosing a community for drivability is 20th century, and the current trend toward living in communities with good pubic trans, urban amenities and walkability will not be reversed unless crime turns good cities bad. Apparently Bryant Park in NYC has taken an unfortunate u turn back to pre-Giuliani days.

Seattle is piker in this league, but it has its charms. This weekend my son was in town. I walked about 15 blocks to the 4 Seasons overlooking the ferry dock, had breakfast with him then hung out at the rooftop pool. Before I got divorced and came back into the city I lived in an exurb. It was fine, but many things were aversive because once I was home from work, I really did not want to get into that car again.

 

[ArkTinkerer]

I wonder if the problem is also the over regulation of housing. Think about it...Rooming houses are really regulated out of existence. Mobile or "manufactured" homes are barred from many towns and cities. Small homes are prohibited. Not everyone needs a $150K 3 bedroom 2 bath brick home.

 

[HFWR]

I wonder if the problem is also the over regulation of housing. Think about it...Rooming houses are really regulated out of existence. Mobile or "manufactured" homes are barred from many towns and cities. Small homes are prohibited. Not everyone needs a $150K 3 bedroom 2 bath brick home.

A $150k 3/2/2 is a shack around here. New builds are all McMassive...

 

[photoguy]

Very interesting blog post.

One other factor that affected me was the concentration of jobs to certain urban areas. In some fields, once you specialize, there are only so many places that you can work.

Having taken the SV buses I can say that they are horrible. Incredibly slow (they don't move any faster than the traffic around you), often delayed, bouncy, although they do have wifi. However, they are not as horrible as driving yourself in rush hour.

 

[unclemick]

Around here we try to convince them to move to Texas.

heh heh heh - it kinda works in winter. I still lust to drive but BC( before the car )Seattle's U district in the 60's was my walking ground. No place I've lived since even came close.

 

[Koolau]

I'm no housing expert, but I have lived in a few and visited a lot of neighborhoods in the mid west which meet most of the criteria in the article AND are reasonably affordable ($150K range). The last city where I lived before moving to Paradise was a college town with a good bus system, a number of amenities, relatively low crime, and was quite "drivable" except at rush hour (7:30Am to 8:30AM and 4:30PM to 5:30PM). It had several open-space parks with walking trails and relatively few truly blighted areas. It's possible that the city was so "good" because of the wide variety of employment opportunities.

Now, if you don't like the prairie, occasional sub zero (or 95 degree) weather, 100 miles to a "big" city, then you might ER and move to Paradise where it's not very drivable (and only walkable in some areas - though they have a good bus system) and housing is 4 or 5 times the $150K level. I'm not disagreeing with the article, but I'm just not personally seeing it (for the most part.) YMMV

 

[daylatedollarshort]

I wonder if the problem is also the over regulation of housing. Think about it...Rooming houses are really regulated out of existence. Mobile or "manufactured" homes are barred from many towns and cities. Small homes are prohibited. Not everyone needs a $150K 3 bedroom 2 bath brick home.

+1. The local housing shortage in the Bay Area is partly due to a lack of buildable land due to the ocean, bays, and hilly terrain, but largely simply due to building restrictions.

"Strict building regulations have made it impossible to significantly increase the Bay Area's housing stock.
The Bay Area economy is booming. So why aren't more people moving there? - Vox

Berkeley is easing rules for granny flats to help with the shortage -
Officials to relax rules for Berkeley ‘granny flats’ | Berkeleyside

 

[brewer12345]

Its a mystery why everyone wants perfection in a home. This stuff costs big money and there are lots of idiots only looking at the monthly payment competing with you. I guess I have always been willing to be somewhere between "tolerable" and "good enough" when buying a home.


I'd happily give up the current spread if we could move the hell away from a big city, but DW would have none of it. Suburbia it is...

 

[Bamaman]

I often see home prices on HGTV that are unbelievable--many of which are in Toronto area. When I was working, I traveled often to South Florida, San Diego, Los Angeles, Seattle, Connecticut, Pennsylvania and most of Virginia. We just returned from San Francisco and Hawaii. I honestly have no idea how anyone can afford to live in any of these places and have the income to save enough money to retire young.


We have very inexpensive real estate and very low taxes the above places just don't provide. To live elsewhere, we'd just not the standard of living we have without spending $ millions on a house. We're not suffering with 3 Robert Trent Golf courses within eyesight, a 6 mile sunset view lake house and 27 steps to our boathouse.

 

[Birdie Num Nums]

Around here we try to convince them to move to Texas.

heh heh heh - it kinda works in winter. I still lust to drive but BC( before the car )Seattle's U district in the 60's was my walking ground. No place I've lived since even came close.

I attended the UW in the early '70s and, yeah, and it was nice place to walk around and hang out. The record stores and small eateries in particular were some of my favorite spots. Plus the campus itself was pretty nice. I didn't have a car then either. Soon after, the U District became a magnet for homeless kids and other riff raff. The past handful of years has seen a dramatic change in the landscape, as all these tall, multi-story apartment buildings have gone up just east of I-5 between 41st and 50th. Still more are being built as I write, some so close to the next one that you can almost reach out your fourth floor bedroom window and shake hands with someone in the nearby office building.

 

[FUEGO]

I think you would have to pay me $3 million to live in NYC, not the other way around.

High housing prices probably have more to do with constraints on supply. Try building a new high rise residential tower in SF, for example. The place is attractive, mostly because of higher than average paying jobs.

And some places are popular because they are exclusive. Stellar prices keep the riff raff out. Here in Raleigh, there are pockets of very expensive urban real estate even though you can't walk to a grocery store, whereas you can live a few miles away within walking distance of one or more grocery stores. Go figure.

 

[NW-Bound]

I think you would have to pay me $3 million to live in NYC, not the other way around. ...

I would make sure that the $3M is in addition to the condo that they are going to buy in your name. Else, that $3M leaves you with nothing after buying a place.

 

[FUEGO]

I would make sure that the $3M is in addition to the condo that they are going to buy in your name. Else, that $3M leaves you with nothing after buying a place.

I'd slum it and buy a $2 million walk up in the bad part of town and add the other million to my stash.

 

[Htown Harry]

Interesting essay here:
A New Index Maps the Quality of Life for 2,000 U.S. Neighborhoods - CityLab

A new study published in the Journal of Urban Economics ... provides important new insight on how much Americans are willing to pay to live in certain areas and to access the amenities that improve quality of life. The study looks at more than 2,000 neighborhoods across the country...the strength in the work of these economists lies in its specificity. Using people’s willingness to pay to live in specific areas as a measure of the quality of life there, the economists’ new index makes comparisons not just across metros, but within them.

Their primary metric appears to be the percentage of income devoted to housing:

 

[Gatordoc50]

My take is that the hedge funds which are buying tremendous amounts of real estate focus on areas that can support high rents. They are driving up the cost of housing and we have yet to see the effect. Unless wages rise, I predict either an exodus from these areas or a change in housing density allowed. Many popular communities are already changing their zoning to allow granny apartments and cottages to be added on to existing structures.

 

[Greencheese]

I agree with photoguy and it comes down to jobs. As we move towards a specialized economy most people find that they need to live near large urban areas to find work. Gone are the days where small factories dotted the rural midwest and everyone in town just worked there. Add the crappy commutes that living in the exhurbs can entail you then have a recipe where if you want a house it needs to be in that "sweet spot".

I believe that previously the movement out of cities essentially masked the pitfalls of urban sprawl and now that people are moving back into the cities its weaknesses are more apparent. Young people don't want the rural factory life and they don't want hellish commutes, seems pretty obvious to me what's going to happen to prices then.

 

[Mulligan]

I often see home prices on HGTV that are unbelievable--many of which are in Toronto area. When I was working, I traveled often to South Florida, San Diego, Los Angeles, Seattle, Connecticut, Pennsylvania and most of Virginia. We just returned from San Francisco and Hawaii. I honestly have no idea how anyone can afford to live in any of these places and have the income to save enough money to retire young.


We have very inexpensive real estate and very low taxes the above places just don't provide. To live elsewhere, we'd just not the standard of living we have without spending $ millions on a house. We're not suffering with 3 Robert Trent Golf courses within eyesight, a 6 mile sunset view lake house and 27 steps to our boathouse.

The numbers tossed out for those houses just staggers me. And just the way they calmly say, "we have a budget of $700,000". Many of them are young couples tossing out those numbers. But as always, our thoughts are determined by our own circumstances. I am from a small town midwest area, and would never get a home loan for more than two times my income.
That just isn't a realistic scenario for nice metro areas.


Sent from my iPad using Tapatalk

 

[NoiseBoy]

To live in Manhatten and raise a family requires enough income to pay the rents and to send your children to a private school. The same holds true for most of our largest cities, I believe. That is one key reason why people buy homes in suburbia; to get affordable access to good schools. Walkability and the other factors mentioned in first article probably aren't high on the list for parents comtemplating 20 years of paying for their kids education IMHO.

 

[unclemick]

I agree with photoguy and it comes down to jobs. As we move towards a specialized economy most people find that they need to live near large urban areas to find work. Gone are the days where small factories dotted the rural midwest and everyone in town just worked there. Add the crappy commutes that living in the exhurbs can entail you then have a recipe where if you want a house it needs to be in that "sweet spot".

I believe that previously the movement out of cities essentially masked the pitfalls of urban sprawl and now that people are moving back into the cities its weaknesses are more apparent. Young people don't want the rural factory life and they don't want hellish commutes, seems pretty obvious to me what's going to happen to prices then.

Lofties - that's what some call them here in KC. The movement is still going on and trying to gain traction in various small neighborhoods.

heh heh heh - one sees them in good weather carrying a days worth of groceries or jogging or dog walking or biking or hanging out.

 

[Midpack]

I guess I am missing what really new with the authors point. As long as I've been alive, there have been premiums for desirable cities/neighborhoods/streets, unimaginable premiums in parts of NYC, Boston, San Fran, LA, Seattle, DC, etc. However, the disparity between the most desirable neighborhoods and the worst may be wider (e.g. the worst have become worse over the past generation or two?) - and income inequality/disparity has "enabled" a wider spread than ever before. What's desirable may change a little, for example walkability is more fashionable and suburbs less so, than in the low cost energy days long ago.

And it seemed the author was really sharing his (political economic) views on rent control actions more than anything else.

 

[brewer12345]

To live in Manhatten and raise a family requires enough income to pay the rents and to send your children to a private school. The same holds true for most of our largest cities, I believe. That is one key reason why people buy homes in suburbia; to get affordable access to good schools. Walkability and the other factors mentioned in first article probably aren't high on the list for parents comtemplating 20 years of paying for their kids education IMHO.

Ding, ding, ding!

I see the "walkable" stuff as merely marking a predominance in the US population of the "newly wed and almost dead," as my real estate finance professor described renters many years ago. Once the millenials grow up a bit and have some kids they will start realizing that in most cities walkable equals crappy schools, high pollution and higher crime levels, they will head out to the burbs like their parents did.

 

[bld999]

I guess I am missing what really new with the authors point. As long as I've been alive, there have been premiums fordesirable cities/neighborhoods/streets, unimaginable premiums in parts of NYC, Boston, San Fran, LA, Seattle, DC, etc. However, the disparity between the most desirable neighborhoods and the worst may be wider (e.g. the worst become gotten worse over the past generation or two) - and income inequality/disparity has "enabled" a wider spread than ever before. What's desirable may change a little, for example walkability is more fashionable and suburbs less so, than in the low cost energy days long ago.

And it seemed the author was really sharing his (political economic) views on rent control actions more than anything else.

+1

There's some in depth work done by people like Edward Glaeser and Richard Florida [linked above] Not going for trivial, but a "housing crisis"
is just supply and demand imbalance. The reasons are numerous and various.
Take juicy jobs out of San Jose, I wouldn't find it attractive, nor would Williston, ND be much fun without the oil boom. Both have a "housing crisis", well, Williston now...

 

[AllDone]

I think that there has also been a fashion change in what is considered desirable in a neighborhood. Fashion changes a lot faster than available housing stock.