People Who Live In Suburbs: Classy, Icky, or Dudes?

I have to go home now sterling but I endorse anything max or chinavision tells you in the meanwhile.

the manhattan institute is not the only think tank in the world that's pro-density and the fact that it's libertarian doesn't mean that they can't accidentally be right on a certain issue.

if you can think of a way to solve the supply demand problem without decreasing demand or increasing supply, I'd like to hear it.

xp: eh, if the argument makes sense, it makes sense; the political label you put on it is beside the point

or to put it another way, someone can be wrong about 999,999 things and still get one thing right

One question that might be worth looking at is why does so much of the new higher density construction in Brooklyn, not just the "four neighborhoods" but Bed Stuy, Prospect Heights, etc. amount to luxury amenities condos that sell at a higher price point -- you know, roof decks, fitness centers, concierges etc. instead of a more affordable kind of building. Maaybe something about development costs still makes it make more sense to offer that kind of housing at that kind of price point. Maybe pent-up demand even in the upper-middle-class income bracket is still huge.

Although one thing I do want to clarify based on sterl's earlier post -- nothing about "condo" necessarily means unaffordable, it's just a kind of ownership structure. You can have cheap condos or expensive condos. An apartment that only requires $5000 down and a $600/mo mortgage payment could still be a "condo" hypothetically, even though you don't find that sort of thing in NYC right now.

One question that might be worth looking at is why does so much of the new higher density construction in Brooklyn, not just the "four neighborhoods" but Bed Stuy, Prospect Heights, etc. amount to luxury amenities condos that sell at a higher price point -- you know, roof decks, fitness centers, concierges etc. instead of a more affordable kind of building. Maaybe something about development costs still makes it make more sense to offer that kind of housing at that kind of price point. Maybe pent-up demand even in the upper-middle-class income bracket is still huge.

this is all anecdotal but i dont think this is true -- tons of new buildings in crown heights, bed-stuy, PH that are pretty basic. unless "small balcony" counts as an amenity -- but certainly no fitness centers, concierges, etc.

I didn't say I'm against increased supply. I said I thought MY's approach was bonkers. There are ways to increase supply that don't involve handouts incentives to big developers. My problem is with looking at the very real issue of affordable housing through the very narrow lens of "market efficiency" and doing so in a way that show cursory (at best) concern for ppl. that have been living in these cities for a long time and are getting priced out as opposed to ppl. that are just moving into these cities because they're young and want to be with other awesome young ppl in advertising and fashion and bigtime blog-writing and w/e. and also i have a problem with the idea that nyc, etc. are experiencing a hiring shortage which hurts them. minority unemployment in major urban areas (ny included) is crazy high. maybe some of those people can get jobs instead of johnny from idaho with his shiny new degree in communications?

icky

I didn't say I'm against increased supply. I said I thought MY's approach was bonkers. There are ways to increase supply that don't involve handouts incentives to big developers.

Removing building height restrictions is not really an "incentive to big developers" let alone a handout.

And to be fair to libertarians, it would be very non-libertarian to advocate developer incentives. Stuff like the 421-a tax break can't be supported by any self-respecting libertarian, because it's a "market distortion."

i really should stop but i also want to point out that at the moment new housing construction in nyc is down just like elsewhere not because of zoning this-or-that but because the broader economy is a bit crap, you know?

The current system favors the developers with the deepest pockets and political connections, because they're the only ones who can navigate the treacherous shoals of city council zoning boards. A more efficient market would lead to more competition which would lead to smaller profit margins.

I didn't say I'm against increased supply. I said I thought MY's approach was bonkers. There are ways to increase supply that don't involve handouts incentives to big developers. My problem is with looking at the very real issue of affordable housing through the very narrow lens of "market efficiency" and doing so in a way that show cursory (at best) concern for ppl. that have been living in these cities for a long time and are getting priced out as opposed to ppl. that are just moving into these cities because they're young and want to be with other awesome young ppl in advertising and fashion and bigtime blog-writing and w/e. and also i have a problem with the idea that nyc, etc. are experiencing a hiring shortage which hurts them. minority unemployment in major urban areas (ny included) is crazy high. maybe some of those people can get jobs instead of johnny from idaho with his shiny new degree in communications?

― s.clover, Monday, March 12, 2012 4:42 PM (9 minutes ago) Bookmark Flag Post Permalink

alright congrats, you have become the euler of this thread. the economic success of nyc has always been due to immigration. there are far, far more foreign immigrants in the outer boroughs than white kids w/ communication degrees. there would be even more if they didn't have to live 6 to a room in corona. do you have something against the majority of the borough of queens who weren't born in america? cause they're increasing housing prices as much as the white kids who live in a few neighborhoods in brooklyn.

I am pretty sure that max's blogger job would not have gone to an inner city kid w/o a college degree if max did not move to brooklyn. in fact, I would say that the labor markets probably don't have a lot of overlap. you've constructed a narrative on a handful of stereotypes. people moving to new york does not take jobs away from people, it creates jobs, just as people moving to america does not take jobs away from americans, it creates jobs.

"alright congrats, you have become the euler of this thread."

I will take this as a compliment?

iatee: I never said ppl moving to new york take jobs away. I did say, and this is true, that housing prices are clearly not a deterrent to lots of kids with communications degrees moving into closet-sized apartments increasingly deep into brooklyn and queens. and I would dispute that all immigration pushes up housing prices in the same way, because, duh.

and this is pretty embarrassing: "I am pretty sure that max's blogger job would not have gone to an inner city kid w/o a college degree if max did not move to brooklyn." lol inner city kids w/o degrees.

ok i'm done. (was shooting for the whiney of this thread btw, but them's the breaks).

alright this is the first time I have time to compose a real post and not write something on the fly:

a. euler, his '20-somethings who live in brooklyn are the key to this economic narrative' w/r/t gentrification was pretty comparable to your '20-somethings who live in brooklyn are the key to this economic narrative' w/r/t youth unemployment. there's a bias towards a certain story here, and that story is fairly marginal in the big picture.

b. there was no 'lol inner city kids w/o degrees', you suggested that college-educated kids moving to brooklyn were taking away jobs from city-natives. the only reason 'inner city kids w/o degrees' came up is because you suggested that johnny from idaho is bumping them out of the labor market. there's no evidence for that being true. if anything, they are competiting with the queens-esque immigrants for low-skill jobs, yet you didn't bring up those immigrants - 36% of the nyc population in 2000 - because it's a lot harder to make the case that foreigners shouldn't move to nyc than it is that 'johnny from idaho' shouldn't move to nyc, because lol white american kids amirite.

c. guilt by association w/ the manhattan institution is fairly ridiculous because the overwhelming majority of the support for cities, densification, mass transit etc. etc. comes from the far-left and the opposition from the right. it's like if I found a cato report on legalizing drugs and claimed it was a right-wing issue.

d. 'housing prices are clearly not a deterrent to lots of kids' doesn't say much. ipads are very expensive, but their prices are clearly not a deterrent to millions of people. however, if they were $50, millions more ipads would be sold. thus the price of ipad is both 'not a deterrent for millions of people' and 'quite clearly a deterrent for millions of people'. that there is such healthy demand even in the face of ridiculous supply restrictions reveals that there is quite a lot of pent up demand.

e. look at all those midwestern hipsters flooding the city, surely that is key to this narrative:
http://www.nytimes.com/interactive/2009/06/14/nyregion/0614-migration.html

nyc's population growth is due to new kids and immigrants, domestic migration has been deeply negative. a lot of that is retirees, but housing prices certainly haven't helped.

20somethings in brooklyn are a key part of the ny gentrification story as far as I know, and not dominicans or chinese in queens of whatever (who have been in queens or whose families have been in queens I should note far longer than ppl were hipstering-up the l line, and who are also gentrifyees and not gentrifiers). I never said that in-migrants were taking jobs from city natives. I said that the notion that NY has a huge hole in employment that in-migrants could fill (if only they could afford to!) is pretty dumb, given how much unemployment and joblessness there is, especially among minorities (including immigrant minorities!). there are of course jobs that arguably in-migrants are more qualified for, but that points to a bigger f'd-upness in society and sort of raises the question about why there's a concern to attract magic "young skilled professionals" instead of y'know thinking about jobs for all the ppl here already and getting priced out. But I guess if there are more bloggers and would-be fashion designers and artisinal ketchup crafters then arguably they need more people to make them coffee, so, you know, awesome! I mean, that's what the story distills down to as far as I can tell.

the reason I keep bringing up the MI is because I tried googling around a fair amount to find arguments about ny zoning that made sense, since nobody else (except dan) felt like digging them up, and pretty much everything I found was along those lines, and this is unsurprising, because the argument is almost entirely "set the invisible hand free" and to cop a line from reagan, it's typically pretty terrifying to hear "I'm from the free market and I'm here to help." It *is* a libertarian argument. Doesn't mean it's wrong. But it should give a little pause.

And I really want to know what skills and jobs these "millions of well-educated people" who would move to NY would bring. It wouldn't be industry, clearly, because all these proposals involve zoning away industrial areas. I mean the people that move here now more than glut the market already, clawing over one another for a handful of culture-industry (or finance) jobs at typically shitty wages and conditions hoping to strike it big and most don't. I fail to see how more of the same moving here wouldn't do more than just increase the competition for the same sorts of relatively scarce positions. Not that I'm saying they shouldn't move becuz think of hardworking NY gossip-columnists and boutique-suppliers, but just... good luck with that.

I also think there's sort of a willful blindness to the fact that in practice, to the extent that this stuff actually would have any impact (which, like I said, I'm dubious about to begin with), then that impact would be to increase gentrification.

Basically I have a hard time seeing how this is anything other than "upper middle class ppl who dislike upper middle class expenses would like to reduce those expenses by renovating over poor ppl's neighborhoods."

xpost don't those figures confirm that young ppl inmigrating from college towns really *are* key to this narrative?

also ffs nobody is disputing that ny housing is tragically expensive.

no, they confirm that they're a fairly small blip in the city's demographics

the jobs that well-educated people bring to nyc are the same jobs that they'd have elsewhere. the increase in population and wealth brings with it an increase in the demand for public transit workers, construction workers, cops, restaurant workers, teachers, etc. etc.

my roommate is a graphic designer. he is from cincinatti and asked to be transferred here because his company had a branch in hoboken. he does the same job that he did in cincinatti, but now he uses the income he made there to buy goods and services in new york city, to buy subway cards and to pay nyc taxes.

if you do believe that the economy is a zero sum game then you should be against all immigration to america, not just domestic immigration to nyc.

net migration inflows are northern metro areas and college towns, full stop, almost, according to nyt. (+puerto rico). net outflows are suburbs and sunbelt. plus this is as of 2007, so doesn't actually tell us about what's been happening rapidly these past few years, especially w/r/t the impact of the recession.

anyway i'm tired of defending myself from strawman accusations about "if you do believe that the economy is a zero sum game" because that's a lazy and dumb thing for you to say after all this discussion. i mean if you do believe that the economy is made of magical immigration into wealth transubstantiating fairy-dust then you should be for everybody in the whole world moving everywhere else in the whole world all at once because wow think of the jobs that would create!

I mean you really can't wave the krugman "network effects" wand here either because nyc is nothing but network effect to begin with anyway.

I can't mention network effects because nyc is a hugely successful example of network effects? because there is an upper limit to the amount of people who can benefit from network effects for some reason?

i weep for the citizens of the fine municipalities of the greater cincinatti area now bereft of yr roomie's disposable income, bus fare, & taxes.

w/ yr '20-something white domestic migration is the key to understanding nyc', you have def passed a few classes in the whiney school of cultural studies. you have blinders on that reveal your personal beefs w/ 'bloggers' or whatever but really your story just has so little to do with how the nyc metro area operates. rent is not expensive in the bronx because of 20-something white domestic migration, it is expensive because non-white, non-bloggers also want to move to the bronx, and there is still a limited supply of housing.

when did I say bloggers drove up bronx rents? oh right, I didn't.

p.s. you know what did? housing bubble: http://www.unhp.org/pdf/bubble.pdf

how we fix fallout from housing bubble? clearly remove the disincentives to building more houses!

wait your evidence for a housing bubble in the bronx is a pseudo-academic article that suggests that there might be a housing bubble building from 1985-2001? that was *before* the actual, nation-wide, nothing-particularly-ny-specific-bubble, and housing prices in the bronx are higher today than they were when that article was written. there was, quite certainly, no bubble from 1985-2001.

yup these guys clearly have no cred: http://www.unhp.org/mission.html

you obviously know more about the bronx than them. congratulations.

well, I know that there wasn't a housing bubble in the bronx from 1985 to 2001, I think most people know that actually

so do the authors of the paper, actually. but you'd have to read it to note that instead of dismissing it as "pseudo-academic" because um.. (I actually don't know why, because there isn't an ivy affiliation on the title page and so therefore it can't be worthwhile?). The paper is a study of housing from 1985 to 2001 (really 2002). But it only argues that there was a runup in prices starting in 1995 or so, and notes:

Controlling for inflation, location and other factors, sales prices for multifamily
properties in the Bronx have been rising since 1996 and have exceeded the previous peak
in the market that occurred in 1988 (chart 1). Regarding factors influencing profitability,
our initial findings do not reflect an increase in net operating income that is comparable
to the recent rise in prices. Using data from RPIE filings provided by the NYC Rent
Guidelines Board, net operating income in Bronx multifamily properties has not been
rising at the same rate as prices (chart 3). Instead, NOI (in 2002 dollars) has remained
relatively constant from 1990 to 2000.
Chart 2 illustrates the significant rise in average price per unit per year (in 2002
dollars) that has occurred since 1996. From 1996 to 2002 the simple average price per 8
unit increased almost 400% (based on data available as of December 2002, which is
incomplete for the fourth quarter of that year). Prices dip in 2001, but surpass 2000
levels in 2002.

but you know, they're only affiliated with fordham and if they have degrees they didn't stick them after their names so fuck them.

their conclusion:

Current price levels in the Bronx market do not appear to be supported by the economic fundamentals of real estate management. Speculative investment patterns, while possibly profitable for individual investors, will contribute to a general overvaluing of the Bronx multifamily market and when that bubble bursts, building deterioration and foreclosures are likely to increase significantly.

the second sentence 'bubbles are bad' is otm, the first sentence is not otm, housing prices are higher now than they were then

I mean lots of people were wrong about lotsa stuff, I just dont see why you thought it was a good idea to link that particular article

I know it's the next day and the discussion has waned (and I'm at work and can't guarantee full attention) but............
can the counter argument (against the pro increased development crowd) be distilled? is it that people should stop moving to nyc? that housing supply is adequate in nyc and does not need to be expanded? that expanding housing supply will have no effect on housing priced (or a negligible effect)? or that removing development restrictions (on zoning, height, density) will not be incentive enough to actually increase development? or that if there *is* a need for more housing, and increasing housing supply *will* help lower rents, and changing city codes or reducing them *will* in fact help drive development, then things are still bad because poorer residents won't benefit from the reduced housing costs? I feel like a lot of weight is being given to the last argument, right? maybe it's the nyc focus? I think a lot of other cities could benefit from loosened development restrictions too.

if removing restrictions ("deregulating") is too libertarian I'm happy to do it the other way too: it is now the law that you have to make all new construction high density.

Aren't construction costs for high rises in NYC (and most other large cities) such that they'll never result in "cheap" rents without government subsidy?

his argument, as best I can tell:

a. the primary cause of increasing housing prices is domestic migration, young people who are willing to 'gentrify' traditionally poor city-native neighborhoods (but become bitter when those neighborhoods get expensive)
b. new development is (inevitably) targeted at these same people and will only benefit them

for a lot of people this isn't a controversial argument. that's a pretty common story of 'what's happening to nyc over the last two decades'

but:

a. domestic migration has been negative over the last two decades* (it's probably about even now) and its size is marginal compared to foreign migration

b. even were that not the case, the people moving into nyc from the rest of the country have lower incomes than the people leaving the city, in every single borough (http://www.empirecenter.org/pb/2009/10/empirestateexodus102709.cfm).
and you can say, well, even tho they're poorer, domestic migrants are often people who are willing to spend a higher % of money on rent, and they're likely to want to live in a handful of places. which can explain why a handful of places are expensive. but it's not a very good story for why rent is expensive in places that are miles from where 'johnny from idaho' would set foot.

c. "20somethings in brooklyn are a key part of the ny gentrification story as far as I know, and not dominicans or chinese in queens of whatever (who have been in queens or whose families have been in queens I should note far longer than ppl were hipstering-up the l line, and who are also gentrifyees and not gentrifiers)."

20something white kids have been moving to nyc long before chinese people were moving to flushing, before west africans were moving to harlem, etc. etc. if you really think all queens demographic trends span multiple generations, idk what to tell you, except that no, a large percent of them don't and its weird and sorta patronzing to assume that all nyc international migration is part of this long and noble family tradition, which thus makes it different from domestic migration.

some short reads on this:
http://walk.allcitynewyork.com/2010/01/so-whats-greater-harlem.html
http://walk.allcitynewyork.com/2011/08/tract-1237.html

Aren't construction costs for high rises in NYC (and most other large cities) such that they'll never result in "cheap" rents without government subsidy?

well these need to be put in perspective - the real 'cost' is the opportunity cost that comes w/ poor use of urban land. in places that aren't manhattan, there's plenty of space to build high rises that would be 'cheap' w/o any subsidy esp since high rises are inherently 'cheaper' to build per housing unit.

I do kind of want to throw one wrench into this discussion though, which is that while supply and demand is the driving force, the kind of construction and development taking place can also alter demand. I mean I think there are tipping point effects where gentrification starts to actually create demand for more luxury housing and for higher-priced housing rather than relieve demand for "affordable" (whatever measure of that you're going by) housing. Neighborhood becomes desirable to a new class of people with higher incomes, those people suddenly demand more housing for their needs in that neighborhood. Macro version of this is more and more well-off people (from around the world, in NYC's case) want to live or at least have an apartment in the city. And yes, this is also fueled by speculative investment, especially since NYC real estate has actually proven to be relatively resillient compared to the overall US housing market.

Of course, bottom line is that NYC's vacancy rate has been ridiculously low for a long time. At some hypothetical point the forces of gentrification would slow down -- there isn't literally unlimited demand for luxury condos even in NYC. But the vacancy rate has been so absurdly low in NYC for so long that even a flood of new buildings is not going to have an immediate noticeable downward effect on prices.

there's nothing wrong w/ demand creating its own demand, we want as many neighborhoods as possible to be desirable to people w/ high incomes. and middle incomes. and low incomes. gentrification is bad only because we don't build substitutes and more transit.

But the result is the poorest people get pushed out to the furthest areas with the longest commutes to the lowest paying jobs and the least access to essential services. And they're the ones who are more likely to suffer from the longer commutes, e.g. because they can't afford childcare.

Plus the tax abatement thing not only distorts the market, but deprives the city of revenue it could be gaining from all these luxury condos to improve services for those poor that are pushed out.

Also, the abatement isn't even that good for the condo buyer (assuming he intends to stay for more than a few years):

http://www.urbandigs.com/2006/06/biggest_scam_in.html

instead poor people are pushed out into the rest of the country, where they still have the longest commutes, even lower paying jobs and get to pay for gas too.

tax abatement only 'needs to exist' because the market is so distorted from zoning

Is the vacancy rate actually low though? In London you always hear that "we need more houses - at least a quarter million by 2014!" or something, but the actual number of vacant properties in London is actually enormous

iatee I like that post about how gentrification and domestic migration is more complicated than the narrative all of us have internalized - I'd love to read more along the lines of those blog posts you linked to

the primary cause of increasing housing prices is domestic migration, young people who are willing to 'gentrify' traditionally poor city-native neighborhoods (but become bitter when those neighborhoods get expensive)

Not only did I not say this, but I repeatedly said I was not saying this. But I'm done trying to make arguments, since lazy reading apparently is making communication impossible.

I also never tried to argue against increased development as such, nor zoning changes in general, nor construction of new housing stock. I just tried to argue that MY's approach was sort of nuts and very underdocumented. I also thought making fun of bloggers + stuff was funny along the way, so my bad there. A little too close to home, bros.

(It occurs to me writing this that iatee tends to read me talking about "gentrification" and substitute that word with "primary cause of expensive housing" when no I'm just talking about gentrification and looking askance at discussion of housing issues that doesn't want gentrification to be part of the picture. Part of this is when MY [and iatee initially] discuss housing costs, they're basically talking about costs to the upper middle class, and not really paying any attention at all to affordable housing for other parts of the urban population. Also part of this is just putting fingers in ears and chanting "supply and demand" instead of really digging in to the actual structure of market issues at play in a given specific instance.)

Also as I keep mentioning I'm quite dubious about how 90% of the info on this is filtered through the manhattan institute (which also sponsors the empire center that iatee linked above), and just google these guys because they deserve 0% trust on anything without corroboration from at least a few other soruces.

theat empire center data is just census data dude

or rather, irs returns I think. in any case it's not 'politicized'

Is the vacancy rate actually low though?

http://www.nyc.gov/html/hpd/downloads/pdf/HPD-2011-HVS-Selected-Findings-Tables.pdf

City-wide rate is about 3%, which I was told by a housing policy guy is considered "crisis level"

(It occurs to me writing this that iatee tends to read me talking about "gentrification" and substitute that word with "primary cause of expensive housing" when no I'm just talking about gentrification and looking askance at discussion of housing issues that doesn't want gentrification to be part of the picture.

again, gentrification is 'part of the picture', there's just data that shows that it's *not a very important part of the picture*. it can affect some people, in some neighborhoods, but focusing on it at the expense of more important variables just shows a weird bias for 'the gentrification story'. when I talk about housing costs, I'm talking about housing costs for every single demographic in the city, most of whom are not upper income, most of whom are not part of the gentrification story.

old, but http://www.nytimes.com/2007/09/13/nyregion/13housing.html