In the National Review, a conservative American magazine, Reihan Salam takes a look at the confused state of the American debate over intensification. His article, entitled “The Great Suburbia Debate” criticises the position taken by Joel Kotkin, a long-time campaigner for low-density suburban development. He writes:
Though I’m an admirer of Kotkin, and though I can’t speak for every conservative who has made the case for denser development, he gets a number of important things wrong…
For example, Kotkin claims that “some conservatives” (again, no names) have been “lured by their own class prejudice” into turning against market forces. “In reality,” Kotkin writes, “imposing Draconian planning is not even necessary for the growth of density.” Of course, this is exactly the argument that Edward Glaeser makes in The Triumph of the City, a manifesto for the pro-market, pro-density right. “In places that have both liberal planning regimes and economic growth, such as Houston and Dallas,” he observes, “there has been a more rapid increase in multifamily housing than in cities such as Boston, Los Angeles, San Francisco or New York.” Indeed, this is why many conservatives, myself included, have explicitly argued that cities like New York, San Francisco, and Los Angeles should look to the liberal planning regimes of Houston and Dallas as a model. (To be clear, by “liberal” planning regimes, Kotkin means less-restrictive, more market-oriented planning regimes, and so do I.)
The global cities that manage to be both highly productive and affordable, like Tokyo and Toronto, tend to have liberal planning regimes, which allow for rapid growth of housing stock, and in particular of the multifamily housing stock. These regions are characterized by rapid housing development in the suburbs and in the urban core, and their “suburbs” tend to be more urban than low-density suburbs in the U.S. governed by stringent planning regimes that tightly restrict multifamily development. When Glaeser makes the case for density, he does so not by calling for “imposing draconian planning” on cities and towns. Rather, he explicitly calls for the relaxation of land-use regulation.
[…]
Kotkin relies heavily on the work of Wendell Cox, a transportation consultant who seems to believe that denser development is necessarily a product of central planning. In desirable regions, however, less restrictive planning regimes will naturally lead to higher densities, as property owners will naturally seek to maximize the value of their investments. Restrictive land-use regulations tend to limit density, not impose it on unwilling landowners.
Salam’s article is excellent and I recommend reading it in full. I pulled out these excerpts as they highlight a few essential facts that often go missing from the debate over urban policy:
- Denser development cannot be imposed by fiat – it will happen if and only if there is market demand for it (as there often is in places that are accessible to jobs and amenities). If nobody wants to buy apartments, then no apartments will get built!
- Urban planners can’t simply require people to build at higher densities – but they can limit density to below what the market wants.
- The rising demand for higher density development isn’t a market distortion, but evidence that the market is working.
In short, we must interpret rising population densities as the result of many individual decisions rather than the whim of an urban planner. My research shows that population densities are rising rapidly in Auckland and several other large NZ cities, which suggests that we’re voting heavily for density with our feet and our wallets. This is, as Salam suggests, a natural outcome of market forces and should be accepted with equanimity. We should recognise this demand where it exists and make complementary public investments in walking and cycling facilities and public transport.
Lastly, I’d note that people from all across the political spectrum should be able to appreciate cities. As Jane Jacobs observed in The Death and Life of Great American Cities, a good urban neighbourhood demonstrates many of the virtues that conservatives celebrate, such as small business ownership, a close-knit community that watches out for itself, and independent-minded civil society (often battling against big government bureaucracy in the form of overreaching traffic engineers).
As a result, we often see centre-right mayors implementing good urban policies. Big-city mayors such as New York’s Michael Bloomberg, London’s Boris Johnson, and Buenos Aires’ Mauricio Macri have been right at the forefront of the movement for better cities. They’ve realised that better cities are more prosperous, and that it’s possible to improve a city by improving the choices available to people.
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A good article.
Highlights that housing is a complex issue. It is a fatal conceit of planners to think they know the needs and desires of individuals and families perfectly.
Under the market, people vote with their feet and wallets. If regulation is eased and we are allowed to build both up and out, some mixture of the two will occur which reflects the desires of Aucklanders, and not just the high density advocates on this blog (of which I am one).
Aucklanders know we can’t have lower housing costs as well as large, low density sections. We have also seen from Sydney and Melbourne that banning foreign buyers doesn’t push prices down. In the end, we have a major supply problem in this city.
‘It is a fatal conceit of planners to think they know the needs and desires of individuals and families perfectly.’
It is a fatal conceit to ascribe some kind of conspiracy to planners too. The system they manage is a jumble of often contradictory regulations; the case that they are trying to ‘force’ intensification in the absence of any market demand for it is very very weak. There is much more restriction of density, height, and scale than there is of spread in city regulations, and much much more market demand to live in close proximity to the centre than half way to Hamilton or Whangarei. As is clearly shown by property prices.
Hi Patrick. I wasn’t suggesting that they were trying to force it density when it isn’t wanted. I think there is huge demand for density which planners and politicians haven’t allowed to be satisfied! I totally agree with the rest of what you said.
The point of the “fatal conceit” statement is that people in power often fall into the trap of thinking they can plan an economy. There are far too many people with individual preferences and desires for politicians and planners to take it all into account. This leads to perverse outcomes, such as the low density, car focusses city we have today.
The funny thing is, the ACT voters in Epsom who are supposed to be for the free market are some of the biggest opponents of the market when it comes to housing development.
Yep – pretty obvious. Free up the land, ease the restrictions, and the market will do the rest. That’s why I find it annoying that the very electorates/people who say they’re ‘free market’ are the ones who seem most in favour of strict planning rules. Surely they realise the hypocrisy in saying ‘smash the RMA and cut the red tape, but put strict rules in place so nobody builds anything anywhere near me’?
Planning was invented as a response to “free market” development. The problem with free market development is that it isn’t free, it has costs that are not borne by the developer but by the neighbours. I would bet that if KonradK woke up one morning to find an aluminum smelter next door, he’d scream to council. (And since the RMA allows the smelter to go ahead without bothering the neighbours for their input, it’s not out of the question.)
No, planning, as with most government regulation, was designed to ameliorate the abuses of the market. That’s just as relevant today as it ever was.
An excellent point! I do think that urban planning has an important role to play, as incompatible land uses often impose negative externalities on society or the environment. In such a context it is necessary to have some non-market process to make decisions about land uses.
My comments on Salam’s article, however, are about *interpreting* observed outcomes rather than recommending a particular policy. I don’t think it makes sense to blame (or credit) urban planners for increasing residential densities, as people will only build up when there is a demand for it.
Of course you need planning restrictions – for pretty obvious reasons. My point is that the very people who should be ideologically opposed to draconian planning laws are fighting tooth and nail to keep them…and holding back sensible, market-driven development in central Auckland as a result.
robert moses was an Urban Planner with a phd in Political Science.
I know this because i read the link on your article to wiki.
Not a traffic engineer. I am confused
Let me explain. Traffic engineer is used on this blog to describe any bad person. For example the dude that developed the hydrogen bomb- traffic engineer. The guy who shot Kennedy- traffic engineer. Mahmoud Ahmadinejad, the former president of Iran -traffic engineer. (actually one of these guys was!)
Road Czar perhaps is the better term, not technically an engineer but very much focussed on traffic. Moses liked to build big schemes of just about everything, but especially urban highways (and excluding transit and human scaled streets).
This is a hilarious comment. I approve.
For the sake of clarification, the key pejorative in that sentence was “overreaching”, not “traffic engineer”.
I’d find that easier to accept, Peter, if there wasn’t a big track record on this blog of implying that traffic engineers are the ones making the policy decisions. That may be true for some localised things, like a badly planned, pedestrian-hostile intersection* but as usual, when you look at the big picture, the buck tends to stop with the planners and politicians. You get what you ask / vote for.
*Sometimes – because ironically, AT has almost no engineers working in-house, as a former employee recently clarified to me.
Hell, you could level similar criticisms at economists. People sometimes tell me that I know the cost of everything and the value of nothing.
All you can do as a professional is to acknowledge that your field sometimes gets it right and sometimes gets it wrong. And to have a sense of humour about the whole thing…
I see, that makes sence Peter. Your comments are comparable to that of a small child frustrated not knowing what to do so thinks it best to apportion blame on the familiar ?
Peter; could the thinking structure of the organisation that is educating the current generation of professionals have a bearing on the way they implement their education/profession?
eg the Chicago school of economics? seems to have become a world wide norm while any alternative view seems to be rubbished!
mfwic. Brilliant!
I was actually thinking the same thing.
If you want to get a dose of small child, try reading your own posts P&T. Talk about whining….
Great comment.
Let me see if I can guess which one is the Traffic Engineer by a process of elimination…
The guy who shot Kennedy was a communist sympathiser, so no way would he believe in “traffic engineering” – that sounds too much like an anti-communist plot to be a good thing. I’m sure the only engineering he would have actually approved of was the traffic engineer responsible for running all those roads through/around Dealey Plaza past the Texas Book Depository and under the railroad tracks.
Thus causing a roading bottleneck enabling him to “shoot fish in a barrel”.
It was two guys who actually invented the Hydrogen bomb – they actually discovered radiation induced implosion, aka the Hydrogen bomb “secret” known for years by the not so secret code name of “The Teller-Ulam Nuclear Secret” . And in any case no way could those two guys imagine anything that was less dense than the insides of a super-critical nuclear mass, thats was flooding the adjacent area with intense radiation – with all its adjacent hydrogen bomb mass being intensely ablated and compressed by the nuclear radiation, starting the nuclear fusion reaction.
As a result they would therefore not see a “traffic jam” as other than a necessary pre-requisites to get any sort of chain reaction going and the bigger the jam the better the yield – i.e. “jams are a good thing.” which is the exact opposite of how Traffic Engineers see the world.
So that just leaves the former “El Presidente” of Iran?
Am I right?
In one! He has a Phd in Transportation Engineering from Iran University of Science and Technology in Tehran making him the world’s most famous traffic engineer.
Letting anyone develop anything they want on their land (with restrictions on blocking the neighbours sun) would be the end of high house prices. Don’t worry, no one is going to build a slum next door to you in Epsom, that would not make economic sense.
Also get rid of the crazy building code for single / double story houses and make it buyer beware.
I’m all for intensification, but wow these New Lynn apartments look awful. Rather than looking light, airy, inviting and outward looking these look grim, closed in, and quite intimidating.
I like the look of that building. I haven’t been inside so I can’t comment on that. Another phenomenon you sometimes see on this blog (apart from the traffic engineer thing) is subjective aesthetic judgments presented as objective fact.
Indeed, taste is subjective, so while if you like or dislike the appearance of that building, for example, is of some moment it certainly can’t be considered a universal truth. What is, however, universally factual, is that that building has provided 110 new highly affordable dwellings [from 250k] that have been enthusiastically bought by people happy to live there in the middle of New Lynn.
And that, in the midst of our city’s housing affordability crisis, is truly beautiful.
I can also add that I have been in two of the apartments are they are well appointed [appliances are included in purchase price], solid [dry and quiet], sunny, and roomy. And with fantastic views. Add the fact that they are attached to a medical centre, next to a mall, a library, and various community centres. Completely secure, with balconies. And for anything you can’t just walk to there is your very own car park, the western line, and about a gajillion bus routes passing downstairs too…. Those are pretty lovely facts too.
As the saying goes: ‘hansom is as hansom does’
But if you don’t like yellow I guess you might like something else.
Very well put, as usual!
taste may be subjective but there are time tested guidelines for building design that make them more pleasing to the eye, better adapted to human use, impact on the surrounding context, and classic elements of beauty going back to Michelangelo and beyond. the new lynn bldg doesnt do well against these criteria.
But it is a fact that I don’t like the design of these buildings.
Surely we don’t need to go down the route of some discussion forums, blogs etc where everyone has to preface their comments with “In my opinion” etc, or have people jump down their throats for stating opinion as fact.
This is a conversation, and that’s how conversations work – everyone knows that what people say reflects their personal opinions.
Having said that, look at the left hand side of the building in that pic. That is undeniably ugly. And that is a fact 😉
It is only a fact that it is your opinion. That does not make it a fact that the building is ugly, or pretty, or whatever your view is. Most of can discerned the difference between a fact and an opinion, so, you know; whatever.
Hot tip for dealing with buildings you find ugly – don’t live in them. In fact you don’t even have to look at them.
Seeing this thread has been started by Peter Nunns, who should be interested in the urban economic complexities that can be observed in real life……
“In places that have both liberal planning regimes and economic growth, such as Houston and Dallas,” Glaeser observes in “Triumph of the City”, “there has been a more rapid increase in multifamily housing than in cities such as Boston, Los Angeles, San Francisco or New York.”
That is because the land is so cheap and does NOT rise in value as it is “upzoned”. Cities with low, flat urban land rent curves anchored in a fringe with no UGB, have this feature.
This became a kind of assumed norm by many urban economists in the era before UGB’s, because it was true of cities with no choke on the process of conversion of rural land to urban land at the fringe.
However, in any city with a UGB or a proxy for one, it can be observed that upzoning immediately increases site rent (in the economic sense) so that the result is NOT more affordable apartments (or whatever is being built) – it is merely more expensive apartments stacked up and amassing bigger profits for the site vendor/rentier.
Planners and urban economists have generally still not noticed this, and their assumptions remain fixed on the false principle that building “up” can restore affordability lost by the imposition of a UGB. I have challenged many to provide me with an example of a city with fringe constraints that has built “up” and has ended up with affordable “housing”. No-one can.
Sincere advocates of any kind should be interested and concerned about this, not dismissive of the person pointing it out. Or worse, dismissive of constructive suggestions how to avoid this perverse effect and do better.
Sorry Peter, but you have missed the main point of the article.
What the article is saying is that less restrictive zoning, that is zoning that allows up, out AND (not just or) sideways development in the most cost effective way, also allows building at whatever density the market demands in a better real time, than cities with more restrictive zoning.
To then say the existence of the apartments in New Lynn as being an example of this is completely wrong. And that is the point Cox makes when he says that cities with restrictive zoning policies (like Auckland) cause some higher density because they cause higher prices and some of the purchasers of those apartments are priced out of their first choice, which would have been lower density. Also some of those who prefer the higher density have been priced out of location, in that if this was a city with less restrictive zoning they would have been able to purchase their higher density living closer in to the CBD that what they were otherwise able to.
Note Salam says he ‘thinks’ he might disagree with Kotkin, but is not sure. Well since he misunderstood Cox, then in reality he does not disagree with Kotkin at all.
This quote (which you forgot to put in) sums it up,
‘Indeed, this is why many conservatives, myself (Salam) included, have explicitly argued that cities like New York, San Francisco, and Los Angeles should look to the liberal planning regimes of Houston and Dallas as a model.’
If Auckland, wants to truly have more affordable high density then it needs less restrictive zoning across the board.
I’ve written a little bit about these issues before: http://greaterakl.wpengine.com/2014/09/29/the-importance-of-housing-choices-in-cities/
In terms of actually existing policy, Auckland doesn’t have a metropolitan urban limit any more. The Unitary Plan removes it and replaces it with a flexible (and expanding) rural-urban boundary, and the Special Housing Areas immediately provide for a lot more greenfield land. So I’m not sure it’s worth devoting any effort to critiquing a nonexistent policy.
Finally, if simply removing the MUL was sufficient to improve housing affordability, then Auckland’s housing should currently be getting more affordable. (Hint: it isn’t: http://www.massey.ac.nz/massey/about-massey/news/article.cfm?mnarticle=new-zealand-home-affordability-worsens-30-06-2014)
Removing the line on the map post MUL does not mean the effects on the MUL disappear overnight or ever will. The land was banked in the time of the MUL and hence the price that was paid for it is at restrictive inflated prices and underwrites the price of development going forward at the inflated prior price, unless the land owner goes broke. Further a RUB is still a restrictive boundary and a SHA even more so (even more than a MUL). On top of that, since infrastructure provided by council (mainly waste water) is provided in a very linear and monopolistic fashion, it is very easy for developers to ‘guess’ which land will be next released. You can remove all the lines if you like, but if the mind is still restricted, then the effect is the same. Auckland still has very restrictive zoning compared to the liberal planning regimes of Houston and Dallas, but counter intuitively protects property rights less, and this was another point the article by Salem was making.
Free markets are often but not always good. The point is the free market is good if and only if it results in an efficient outcome. But one of the most important reasons for market failure is externalities. If I can drive a V8 and dump carbon in the air and let everyone else suffer but not pay myself then that is not efficient. Planning as criticised above is supposed to be about addressing externalities. Shading neighbours or overloading public utilities are external costs for a developer. Planning is intended to address these by way of rationing or using a regulation to limit choices. There are better options from an economic perspective like taxes on the externalities or creating a market that is missing or even giving one person or company control over both properties but for now we have planning. Get rid of planning entirely and you won’t necessarily improve things.
“There are better options from an economic perspective like taxes on the externalities or creating a market that is missing or even giving one person or company control over both properties but for now we have planning….”
Because planning creates zero-sum wealth transfers to well-connected rentiers at everyone else’s expense, and the fiscal options do not. And the planning has unintended consequences that greatly erode the claimed benefits anyway, whereas the fiscal options definitely have a straight-line effect on the variables we are trying to affect.
Looking at couple of Peter Nunns’ Quotes, and in addition to DAS’ comments.
“In terms of actually existing policy, Auckland doesn’t have a metropolitan urban limit any more. The Unitary Plan removes it and replaces it with a flexible (and expanding) rural-urban boundary, and the Special Housing Areas immediately provide for a lot more greenfield land. So I’m not sure it’s worth devoting any effort to critiquing a nonexistent policy.
I’m not being disingenuous, but the Unitary Plan is NOT in force and will take until 2015 at least before it applies (or whatever version of it replaces the PAUP). Until then, development takes place under the current District Plans of the previous Councils, plus whatever can be implemented from the PAUP straightaway. This does not include introducing the RUB, as far as I can see.
http://www.aucklandcouncil.govt.nz/EN/planspoliciesprojects/plansstrategies/unitaryplan/Documents/Key%20topics%20in%20detail/upkeytopicslegaleffect.PDF
“Finally, if simply removing the MUL was sufficient to improve housing affordability, then Auckland’s housing should currently be getting more affordable.”
I noticed that houses being built under the SHAs (and yes there are not many on the market at present and demand outweighs supply at present) are more affordable as they start around $300,000 and go to $470,000. That is better than the hugely expensive Hobsonville Area. You might cite transport costs, but at worst the petrol cost to travel 100 kilometers/day by car is $25 or $600/working month compares to mortgage repayments of $1,895 for a $292,500 mortgage and $4,374 for a $675,000 mortgage. Minimum $2,000 better off.
What might not have been made so obvious was Bill English’s comment around the Election that they gave the Auckland Council two choices: either give us the SHAs we want or we’ll take the planning process off the Council:
‘”In Auckland it is basically illegal to build anything for less than $500,000,” he said. “The only reason we now have special housing areas is that we told the councils that if they didn’t agree we would take that power off them.”‘
Naturally the Auckland Council folded and has given them all the SHAs (63 of them now I think)they want, as well as a fast building consent process through the HPO at the Council. The result, cheaper houses, where the land has been opened up and the Auckland Council’s role minimized to building consent (and that at a fast 5 day turnaround according to one developer).
(Hi Patrick, I am still waiting for an answer to my earlier questions around how much land has been urbanized in Auckland and New Zealand.)
People keep saying that Houston and Atlanta don’t have zoning as if that somehow has anything to do with anti-density rules – they are two different things. That just means that there is no zoning – as in where you can run a business or a shop – so that can happen in residential areas. Which has led to very dispersed employment patterns in those cities. There are still limits on where industrial premises can be located.
They do have density limits and quite harsh density limits, they are not examples of free market housing. If they were, journalists wouldn’t be writing articles like this about freeing up density limits:
http://www.chron.com/news/houston-texas/article/Plan-could-alter-housing-density-outside-Loop-2437503.php
http://www.houstonchronicle.com/news/houston-texas/houston/article/Development-rules-change-targets-housing-4422075.php
http://houstonstrategies.blogspot.co.nz/2012/01/is-our-lack-of-zoning-myth.html
If multifamily housing is growing faster in those cities, that would only be because they started at such a low base and the density limits have been relaxed, so the market has finally been able to respond.
Looking at the first news article I see that it is not receiving majority (or any) support from residents:
“Developers at a City Hall public hearing on the ordinance last month said the proposed changes would allow them to easily develop single-family homes while also giving protections to neighborhoods. However, neighborhood activists were divided on the proposed changes, saying they had not been able to fully review them.
“I think there are some members of the alliance that are suspicious that it affords developers the opportunity to exploit or take advantage of less organized parts of town,” said David Robinson, president of the Super Neighborhood Alliance.
Some residents have said the updated code would not require enough guest parking for high-density developments while others have called for requirements for developers to provide more infrastructure improvements to prevent flooding and other “unintended consequences” of such properties, Robinson said.
“Many people don’t understand that this is a wonderful provision to help neighborhoods whose deed restrictions are either deficient or nonexistent,” said Mary Lou Henry, an urban planner who spoke at the hearing in favor of the updated ordinance.”
In fact, while it says neighbourhood activists were divided, the article provides no quotes from those people who are for the proposal. Meanwhile, urban planners and developers support it, but that is in their professional function, rather than residents; in any case their are not neighbourhood activists. I also find saying harsh density limits an oxymoron given Houston has had such a massive population increase over the last 10 years. Given it is so popular, you can hardly call their city’s density rules harsh as otherwise why would people move there?
Are you surprised there are also NIMBYs in Houston? I can’t imagine why that would surprise you.
“you can hardly call their city’s density rules harsh as otherwise why would people move there?” – I can call them harsh because they are. Are you saying that people only move to cities where they can live densely? Actually I have no idea what the point is you are trying to make really.
People move to Houston for work. At least partly because of the lack of other affordable denser housing options, they end up buying a McMansion in one of the suburbs 10s of kms from central Houston. That may be close to where the work but equally it might be even further from their workplace than central Houston.
The point is that Houston is not an example of free market forces. It is a classic example of only one kind of housing being allowed and so that is what the market supplies – that being sprawling low density suburbs.
Goosiod – you forgot the word ‘affordable’ to describe Houston, as in you can buy twice the house in Houston, or the same house for half the price, as you can in Auckland.
And you need to work on your definition of NIMBY – neighbourhood associations blocking development that is not within their own agreed neighbourhood deed restrictions and is within their own neighbourhood is NOT NIMBYism.
Because Houston has a longer history of MUD development it means that groups of individuals have better developed deed restrictions (equivalent of our covenants) as so can better protect their areas from development other than what is allowed within the restrictions. Thus there is far more likely that heritage areas are protected, unlike the issues that Auckland’s Franklin Rd residents are having. Although of course there is nothing from stopping the residents of Franklin Road getting together to covenant how their land individually and collectively can be developed in the future.
But as not all areas of Houston have strong deed or any deed restrictions, those residents are going through the same angst as many Aucklanders.
But even if the outcome over time is further higher density, the resulting housing is at a far more affordable price than in Auckland.
Perhaps neighbourhood associations blocking development that is not within their own agreed neighbourhood deed restrictions shouldn’t be called NIMBY, they should be called NIMBY+, NIMBY taken to the next level by codifying it into a legal framework.
Provided apartment prices don’t become the defacto ‘lower end’ prices and end up pushing everything else up, then sure. They’re also not without strings (body corp, leases etc) but if there are enough good quality ones on the market for a fair price then they could relieve some pressure on traditional housing.
Hi Goosoid,
When you used the word harsh it looked odd because I really can’t imagine people moving to Houston because it density rules are harsh. Maybe you view them as harsh but they don’t. In fact I think they like it.
I am not surprised there are NIMBYs. What you said originally was that journalists are writing articles that report the freeing up of density limits because the current regime is apparently harsh. All I am saying is according to the same articles the people who live there don’t view the freeing up of density limits as good. In other words, there is no division from the neighbourhood activists, which is not what the journalist asserted. You might label it NIMBYism, but that not the point I was trying to make. The way I read the article, everyone who is a resident that was quoted is happy with the current arrangement. NIMBYism is when you don’t want development of a particular sort over your back fence. In Houston, everyone doesn’t want the development that is being proposed, so there is no-one who is left out.
Because of this, people don’t want denser options, precisely because that brings smaller houses and in some cities, like Auckland, unaffordable housing. As I mentioned earlier, being 10s of kms financially doesn’t set people back and besides as has been said it has a dispersed employment base, so your scenario is unlikely to exist enough to be an issue.
The use of the phrase sprawling is something I have to call attention too as well in the local context. How much of New Zealand’s land has been urbanized?
Living miles from employment centres does impact you fiancially, there was a very good post recently by John Polkinghorne on this site showing this effect in play in the census data.
My apartment which is very small and dense is significantly more affordable than a stand alone house in the same location, and even if they cost the same I would still choose the smaller, denser dwelling as it is easier to clean, and allows me to leave at a moment’s notice indefinitely with security on guard. So yes, Aucklanders want dense housing.
Also, it doesn’t matter how much of New Zealand is urbanised, Auckland is sprawling in that every resident takes up on average a much vaster space than is, necessary, efficient, or in line with the desires of many Aucklanders. Very little of the US is urbanised but Atlanta is still sprawling compared to Manhattan, as is Phoenix compared to Portland.
It never seems to register with a lot of people, that employment has decentralised, this is the norm, Auckland at around 15% of regional employment in a single CBD is about normal.
So it is perfectly possible for a considerable majority of people to get a house close to where they work, somewhere in the other 85% of locations without having to cram their family into an apartment.
Sure if you want to work in the CBD, and you are single or intentionally a non-child-bearing couple, you get an apartment near the CBD. An apartment large enough for children is priced for the top 1% only.
But people choose housing and location on a range of criteria and trade-offs. In every city where there is unusually high house prices and long average commutes, “low” density is NOT the “problem”. The problem is always the high, spiky land rent curve sorting the population into locations on the basis of their incomes, and this effect over-riding the other criteria for location efficiency. The problem is also contributed to by congestion.
Part of what Alain Bertaud points out is that employment almost always remains weighted towards the city centre even though it is dispersed and dispersing, and hence the higher and steeper the land rent curve, the more people will be “priced out” into less efficient locations than in a city with a low, flat urban land rent curve.
Trying to re-centralise employment to try and make radial patterned public transport more viable, is to try and dam a tsunami of evolutionary economic forces. All you do is kill off far more the employment and economic growth you MIGHT have got overall, in the process of forcing it to be either in the centre or nowhere. There might be a handful of “superstar” cities around the world that seem to thrive in spite of forced containment, but in truth these cities are more like massive de facto gated communities for the privileged. Most cities most of the time are unexceptional cities that need to have the conditions for basic income and production for all levels of workers and consumers to be met.
And it seems extremely hard to get through to some that decentralisation (an aggressively pursued policy since the 1950s) is not a good thing, certainly not for employment:
http://www.brookings.edu/blogs/the-avenue/posts/2014/10/23-cars-economic-opportunity-tomer-kane
That article does not in any way prove that decentralisation of employment has been a bad thing. It repeats the clear and obvious findings that it means that public transport ends up providing very poor access to most jobs, and that “having a car” is the solution.
To work out if this is a bad thing, we need to prove that the massive collapse of urban economic land rent, the massive increase in utilisation of land as a factor of production in urban businesses, the numerous new forms of agglomeration that have evolved, the substitution of transport and communications for the old rent-creating necessity of “proximity”, and the democratisation of ownership of reasonably private homes, have been of less benefit than the costs of “automobility”.
I would bet that the average cost per resident in Hong Kong in ADDED economic rent for living space, is significantly greater than the cost per resident in Houston, in ADDED costs of transport and local public costs. In fact I doubt that there is much difference at all in the costs of “transport and local public costs per resident”, because infrastructure for all that density in HK does not come cheap – there is a U-shaped curve relationship between density and cost of infrastructure.
And if you netted out the proportion of costs in Houston that are DISCRETIONARY, that is, larger than necessary houses, lots and larger and higher-performance cars, there would be orders of magnitude difference. In HK most of the costs I am pointing out are not discretionary at all – you are forced to pay them merely to exist.
Can’t help the blind see, but here’s another one:
http://www.economist.com/news/finance-and-economics/21627628-difficulty-people-have-getting-jobs-makes-unemployment-unnecessarily
That Economist article does not contradict what I am saying either. I am saying that spatial mismatch between workers and jobs is the problem, same as that article is saying. I am saying that the reason for this, is that there are stickinesses in the housing market that are preventing efficient co-location, and that systemically unaffordable housing is the number one problem.
The problem of poor inner city populations who cannot move closer to now-suburbanised employment is a separate issue in its own right. The way the price of suburban housing falls as the structure depreciates, has provided the natural path out of this in most US cities now. You also get people complaining that gentrification has forced the poor out of the inner city!
Glaeser and Vigdor: “The End of the Segregated Century”:
http://www.manhattan-institute.org/pdf/cr_66.pdf
From the Executive Summary:
“…..The freedom to choose one’s location has helped reduce segregation. Segregation has declined in part because African-Americans left older, more segregated, cities and moved to less segregated Sun Belt cities and suburbs. This process occurred despite some public attempts to keep people in these older areas….
“……Gentrification and immigration have made a dent in segregation. While these phenomena are clearly important in some areas, the rise of black suburbanization explains much more of the decline in segregation…….”
I have placed some appropriate commentary of my own, and references and extracts, on that Economist article, “The Geography of Joblessness”, now.
Sailor Boy; why are prices going up so much for all forms of housing if “Aucklanders want dense housing”? I have not noticed the now highly rare 1/4 acre section going for bargain prices.
There is evidence in some US markets, according to leading urban economists like Alan W. Evans, that there has been an over-supply of large-lot housing, because when you disaggregate the various cost components of housing, you find that every added bit of section is lower and lower in value, to the point that it is barely adding value at all. I fully accept that. We are talking about cities with an average section size of 2/3 of an acre + here.
There are stupid unintended consequences of other laws causing this, regarding local tax funding of schools, and “exclusionary” policies not being allowed EXCEPT for large lot mandates….! Sort this out, and Americans will stop over-consuming urban land.
On the other hand, in most UK cities, 1/4 acre sections are so rare that the land value per square foot in any that exist, is HIGHER than the land value per square foot in the standard 1/16 of an acre section.
This is the kind of insight that “economics” can provide. Planners assertions that they “know” what space people want, is contrary to objective and scientific ways of analysing the evidence.
Also, if a city like Liverpool has systemically unaffordable housing, median multiple ranging between 5 and 6, even after losing 50% of its population since 1950. that is evidence that is as “scientific” as you can get, that people are still being forced by the regulatory rationing of land, to consume less land than they want. I am sure there are planners over there claiming that they “know” otherwise, too.
Phil your whole problem is simply where you start: you conflate ‘land supply’ with ‘dwelling supply’; they are not synonymous.
“Land supply” is what affects the formation of economic land rent and hence the affordability of housing.
Zoning, especially regarding density, merely determines the size of the housing units that will remain unaffordable.
Boston and Santa Clara have unaffordable big low density houses, because they have an inelastic supply of land combined with mandated low density.
UK cities have unaffordable small high density houses a similar price or higher to Boston or Santa Clara in spite of their much smaller size, because they have an inelastic supply of land combined with allowed high density of housing – the average in new developments is 20 units to the acre.
Hong Kong has “housing” around 40% tighter again than the UK’s (and 85% tighter than Boston and Santa Clara), and around 2.5 times more expensive again. The actual land rent with all those people stacked on top of each other, has risen by hundreds of thousands of percent in the process of housing “rent” (of the kind Marx would have called “monopoly rent”) being extracted from those people.
Upzoning and building up has never been the way to achieve affordability. It is a way to achieve greater efficiencies and allow agglomerations suited to higher density, to form, WITHIN an overall system that does not ration land supply. New York did not have rationed land supply while Manhattan was going from strength to strength, and I suggest that Manhattan would have been weaker today had something like the UK’s land-rationing system been imposed on it decades ago.
I also suggest that cities like Houston that fulfill BOTH these conditions – non-rationed land supply, and healthy allowance of building “up” in logical locations, will gradually capture significant new growth both in “suburban dependant” industry AND the “dense agglomeration” type industries. Someone may well choose Houston CBD in favour of Manhattan precisely because it has such significantly lower costs. Houston is already second only to New York in number of Fortune 500 Head Offices.
Please see these and the comments on them:
http://www.economist.com/news/special-report/21621157-sky-high-house-prices-most-desirable-cities-are-holding-back-growth-and-jobs-home
http://www.economist.com/news/leaders/21621800-digital-revolution-bringing-sweeping-change-labour-markets-both-rich-and-poor
Hi Sailor Boy,
As I outlined in a example using real market pricing for the cost of running a car and the smaller mortgage, at relatively low interest rates, a home owner would be $2,000 better off every month by buying a hose that is more affordable (assuming the worst case example that they are travelling 50 kilometers each way a day). So, if one wants an affordable house then building where it is cheaper produces the opposite of what you are saying. It simply does not impact you financially. My sense of what you are saying is you would spend the same amount of money for something even smaller. So, if you are willing a few questions so that we have an exact comparison:
1. How much was your apartment?
2. How much are your transport costs?
3. How big, in square meters is your apartment (and land area, if any)?
4. How many people live in the apartment?
Given I have provided numbers I think that is the best way to compare.
Now, you said that Auckland is sprawling. So that we are all on the same page, I want to know whether you know the %-figure of urbanisation in NZ or not. If you do, please tell me so that factually we are all on the same page. I notice that you impose your idea on what is efficient, but I say, give everyone a choice, which as I am sure you will know, may or may not include your view.
I would also point you to the Government’s moves that will largely determine what is going to happen anyway: opening up land, removing obstacles in the form of the Council’s processes and possibly even making the Council compete with other providers for the Consent process. The vision of a dense Auckland it going to be very limited, if at all.
There was a great letter in the Weekend Herald on Saturday, from one Ed Roggeveen, Huntly:
“What is the obsession so many people seem to have with buying a house in Auckland where a box-size unit costs close to half a million dollars?
I solved this problem years ago by moving south. I live in a quiet area on the green belt with excellent neighbours. For $375,000, I bought a four-bedroom, two-lounge, two-bathroom split-level home on half an acre with spa pool and tennis court — and property values here have not moved since that time.
My wife commutes to Ellerslie. It takes her an hour most days. The travel costs are a drop in the bucket compared to the interest we would pay on a mortgage for a similar property in Auckland.
First home buyers should think outside the box. We did and now we do not live in one.”
Ed Roggeveen, Huntly
Note from Phil Hayward: the planners intended to “reduce commuting distances” by making everything in Auckland so unaffordable that people would be forced to accept dog-boxes (still ridiculously priced anyway) or over-crowd in unrenewed housing. I also have anecdotes from Thames and Paparoa, of a mini-boom consisting of Auckland workers buying in there to get the housing they want, and commuting daily.
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