New Census numbers confirm the resurgence of cities

With the release of the new American Community Survey data on Tuesday, we are now able to see how the fine-grained nature of metropolitan areas has changed over the last few years. This is the first release since the 2000 Census that really provides enough detail to map these changes, and the New York Times has stepped up to the plate with a handy mapping tool. The Census American Factfinder website will get an upgrade in about a month, and mapping will be much easier once that happens.

Poking through some of the data, I haven't been able to discern any interesting new trends that have not previously been identified. But we do see some pretty clear confirmation of earlier predictions, such as those made by Bill Lucy and David Phillips in Tommorrow's Cities, Tomorrow's Suburbs. Taking a look at a number of indicators, they outlined the beginnings of a reversal of the 20th century story of urban decline. Instead they found evidence of city centers prospering and the aging suburbs around them falling into economic decline.

Take a look at these maps of changes in median income by census tracts between 2000 and 2005-2009, courtesy of the NY Times site. Orange is positive, blue is negative.

Charlotte, North Carolina

 Chicago, Illinois

 Cleveland, Ohio

 Columbus, Ohio

 Houston, Texas

 Indianapolis, Indiana

 Louisville, Kentucky

 Philadelphia, Pennsylvania

 Pittsburgh, Pennsylvania

 Washington DC

 Atlanta, Georgia

Atlanta offers a particularly striking pattern. During this interval, the median household income in the whole Atlanta metro area grew a reasonably healthy 12.4%. But looking just at urban Atlanta, we see a growth in median income of 44.5%. It turns out that Atlanta's wage growth is being driven almost entirely by wage growth in its core. The suburbs are still a tad bit wealthier in general, but that will probably not last more than a year or two longer.

Then see how this stacks up against the age of the housing stock in the core and the surrounding "suburbs."

Homes in urban Atlanta are, on average, much older than they are in the rest of the metro area. Despite the remarkable wage growth in the center of the metro, there still has been relatively little actual home construction for some reason. Less than 10% of all homes built since 2000 have been built in urban Atlanta (although it's worth noting that this share is up from the low of 5% in the sprawling 90s). Conventional wisdom says that wealthy people gravitate to newer homes, and the houses then trickle down to lower-income households as they are bought and sold over time. But wealthier people are moving to the core of Atlanta despite, or maybe because of, its older homes and neighborhoods.

One last important note: this census dataset doesn't do a very good job showing changes due to the housing market collapse, because the data is sampled from both before and after it happened. We'll have to wait a couple more years for Census data showing the new spatial patterns that emerge from the rubble.

Transit Oriented (affordable) Development

In case you missed it, the Dukakis Center for Urban and Regional Policy at Northeastern University dropped a bombshell of a report about Transit-Oriented Development (TOD) back in October. Key finding:

"Rising incomes in some gentrifying [Transit-Rich Neighborhoods] may be accompanied by an increase in wealthier households who are more likely to own and use private vehicles, and less likely to use transit for commuting, than lower-income households."

Ironically, they found that enhancing transit infrastructure can actually make ridership go down (and car ownership up) in the neighborhood it serves. That's a puzzling dilemma that deserves some attention.

TOD advocates have understood for a while that infrastructure and design need to be carefully coordinated to produce successful results. Just plop down a new station without changing any of the zoning codes in advance, and you're guaranteed to end up with a park and ride lot surrounded by much of the same 20th century stuff. There's transit, and there's development, but the orientation part is missing entirely.

Back in 2003, Patrick Seigman published a handy and oft-cited TOD checklist,"Is it Really TOD?"

"A true TOD will include most of the following:

• The transit-oriented development lies within a five-minute walk of the transit stop, or about a quarter-mile from stop to edge. For major stations offering access to frequent high-speed service this catchment area may be extended to the measure of a 10-minute walk.
• A balanced mix of uses generates 24-hour ridership. There are places to work, to live, to learn, to relax and to shop for daily needs.
• A place-based zoning code generates buildings that shape and define memorable streets, squares, and plazas, while allowing uses to change easily over time.
• The average block perimeter is limited to no more than 1,350 feet. This generates a fine-grained network of streets, dispersing traffic and allowing for the creation of quiet and intimate thoroughfares.
• Minimum parking requirements are abolished.
• Maximum parking requirements are instituted: For every 1,000 workers, no more than 500 spaces and as few as 10 spaces are provided.
• Parking costs are "unbundled," and full market rates are charged for all parking spaces. The exception may be validated parking for shoppers.
• Major stops provide BikeStations, offering free attended bicycle parking, repairs, and rentals. At minor stops, secure and fully enclosed bicycle parking is provided.
• Transit service is fast, frequent, reliable, and comfortable, with a headway of 15 minutes or less.
• Roadway space is allocated and traffic signals timed primarily for the convenience of walkers and cyclists.
• Automobile level-of-service standards are met through congestion pricing measures, or disregarded entirely.
• Traffic is calmed, with roads designed to limit speed to 30 mph on major streets and 20 mph on lesser streets."

But is there anything missing?

We're seeing that having a mix of incomes is not just a bonus policy goal, but something woven into the success of a TOD on it's own terms. On the one hand, attracting the professional class is realistically the only way to generate the capital needed to spur substantial redevelopment. But the service-sector workers are the ones who are more likely to forgo car ownership, use transit more frequently, and actually walk to work in that cool, mixed-use cafe. Both the urban design features the architects want and the return on investment the transit planners want depend on a healthy mix of incomes.

Many cities now seek to capture some of the value generated by their public infrastructure investment into land-banked supported affordable housing. Groups like Denver's Urban Land Conservancy carefully anticipate any market changes along transit corridors and grab some of the land before it becomes prohibitively expensive. Then innovative housing models, such as community land trusts, can be used to hold down the value of the land to a level affordable to low- to moderate-income households indefinitely. When these units are built they'll be doubly affordable, in both housing and transportation costs for the residents.

"Density, Diversity, and Design" is still the operative catchphrase, as long as by diversity we mean the people as well as the structures and uses.

Smart growth and fiscal responsibility

I noticed that Geoff Anderson, President and CEO of Smart Growth America, has come out in favor of the recommendations submitted this week by the National Commission on Fiscal Responsibility, at least the ones pertaining to tax reform.

"Unbeknownst to most, the federal government plays a massive role in the real estate market by subsidizing and enabling all kinds of development in our communities. With ballooning deficits, now seems like a good time to revisit these subsidies and make sure they are achieving a legitimate public purpose -and not, in the commission’s words, 'creating perverse incentives.'"

The smart growth movement has a long history of focusing on fiscal responsibility, dating back the the Costs of Sprawl published in 1974. This makes sense. Those of us who are too frugal to throw away the ketchup bottle before it's completely drained, cringe at the sight of underused parking lots being given over to weeds while far-off greener pastures are built on. It was all the more frustrating to watch this being done around the country with money that didn't actually exist. "Can we really afford this?" has been asked all along by John Norquist and James Howard Kunstler (albeit in very different ways!), and now finally this question is gaining some traction at the federal level.

The Home Mortgage Interest Deduction stands front and center in all of this. The deficit commission wants to limit the deduction to mortgages of $500,000 or less on primary residences. A healthy debate has been occurring among urbanist blogs about whether the HMID, in general, leads to a dispersal of housing. I'll dive in: I think no and maybe, depending on the region, but that there may be an important inter-regional impact to consider. My take on this is heavily influenced by Edward Glaeser and Joseph Gyourko's book Rethinking Federal Housing Policy (free pdf here).

In supply-constrained regions (like San Francisco), the extra money infused into the housing market by the HMID is swallowed up almost entirely into the prices of existing homes. There are few options for more development, so existing homeowners can simply raise their sale price to account for the buyer's willingness to spend more. This doesn't effect the built environment but it does mean housing affordability is compromised. In fact, the lower middle class takes a double-whammy with this. They pay taxes but don't make enough to use the deduction at all. Then they have to compete in a housing market inflated by the wealthier people who do benefit from the deduction. In these situations, the HMID may actually push people away from homeownership - the exact opposite of its stated purpose.

In elastic housing markets (like Houston or Detroit), the HMID probably does effect the built environment and drive down home prices to some degree. However, Glaeser and Gyourko's research indicates that the deduction is still not inducing much homeownership, because the subsidy is only available to wealthier households who are not usually the ones on the margin between renting and owning. They would buy anyway. Instead,

"A more important effect probably is on the quality of the home consumed, with people living in bigger and better homes than they would otherwise."

They question the wisdom of this tax incentive,

"In the old world of dumbbell apartments in dilapidated tenements, there may have been a case for government policies to improve quality and size. That case seems to much harder to make in today's world of suburban McMansions."

This is why I guess "maybe" for these regions. The quality improvement could mean either nicely-built craftsman bungalows or subdivisions of cavernous and disposable homes, but the HMID itself would not have much impact on the land costs - and that's what determines the spatial distribution of housing throughout the region.

What about the national scale? If the HMID pushes home prices higher in San Francisco and, at the same time, makes houses bigger for the same price in Phoenix, it's not hard to imagine some people who are considering a relocation to choose Phoenix partially on account of this effect. So the HMID may not make a region more sprawling than it would be without it, but it may help redistribute the national population away from places that are condensed to places that historically have been sprawling.

Bottom line: the HMID is essentially a one hundred billion dollar program for giving bigger homes to wealthier households in places that don't have much of an affordability problem anyway, all the while exacerbating the affordability in places where it already is a problem. It's not surprising that a group like Smart Growth America may question whether this is the best use of taxpayers' money in an era of overwhelming deficits.

UPDATE:  Here's a recently published study on the Home Mortgage Interest Deduction that puts some empirical meat on the bones I've described here. The Modeled Behavior blog summarizes the results:

"Using national data from 1984 to 2007 they found that the MID did not increase overall homeownership. In areas with light land use regulation they found that homeownership among higher income families was increased, and in tightly regulated housing markets homeownership was decreased for all income groups except the lowest. The effects, both positive and negative, generally range from 3% to 5%. Regardless of the regulatory environment, homeownership among the lowest income group was not affected at all by the MID.

The authors estimate that it each additional homeowner created by the mortgage interest deduction costs the government $53,590, a number they rightly call “staggering”.

An important implication of the findings is that in urban areas, where land use regulations are typically more restrictive, homeownership is likely to be negatively impacted."