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

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

those 33% of people paying more than half their income in rent in the bronx are not thinking about all the gd hipsters in williamsburg

iatee, rising rents in the bronx are definitely in large part a result of gentrification of other parts of the city. This fits very well within your own explanations so far ITT>

I mean "incomes haven't kept pace with rent" is not an explanation of housing costs

nor is domestic migration ie 'the johnny from idaho gentrification'

"Gentrification and the rapid loss of subsidized rental housing have also pushed housing costs up for low- and moderate-income families, housing experts said."

that's from the article you linked

lol well I didn't read it, it's the nyt and they buy the same narrative that moses takes apart in the above links

if you want the word gentrification (its a not particularly useful word and never defined clearly) to include 'lower crime rates across the board, a change in the general preference for living in cities, etc.', then yes, 'gentrification' has affected prices in the bronx substantially. but johnny from idaho opening up a cafe in brooklyn has not.

johnny from idaho opening a cafe in brooklyn is just a specimen of the larger phenomena you are talking about so I don't really see what point you are trying to make anymore

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.

iatee the gen stuck article i referenced said "restrictive regulations on multi-family home building" are "discouraging talented middle-income people from settling in San Francisco and New York" and then you said "(artificially) high rent due to zoning both make the cities (artificially) less competitive, discourage millions of well-educated people from moving there". So the argument wasn't rising rent is a problem for immigrants in the bronx in need of affordable housing, it was explicitly at the start (as is MY's argument) that lower housing costs would attract more "well-educated people" from around the U.S. who are clearly in short supply in major coastal cities or something. And the discussion, at least initially *was* very much just about housing for such people.

That's sort of what set me off.

And when you think about it, and I don't want to do the work of breaking down a full-fledged model here or anything, there's basically a version of trickle-down economics applied to housing at work -- if the supply of profitable high-rise lofts along the riverfront goes up then somehow that will mean lower housing costs for folks in flushing. In a super-simplified model, yes. In the real world, I really don't think that's how things will play out. So I that regard I think that Hurting is on to something.

I mean, if you think about it, more high-quality housing for the upper middle class might just mean that you have more upper middle class moving in (or just not moving out to the suburbs/jersey at such a pace). And that's sort of MY's express goal. But how that would mean anything good for other folks is a bit beyond me.

johnny from idaho opening a cafe in brooklyn is just a specimen of the larger phenomena you are talking about so I don't really see what point you are trying to make anymore

well it's more *another response* to the larger social, economic, immigration factors. 'gentrification' is a narrative that people think they understand, so it's attractive. but it's fuzzy enough that people use the term and the word to mean whatever they want. crime didn't go down in the bronx because of 'gentrification'.

here's population change in the bronx:

1980
1,168,972
−20.6%

1990
1,203,789
3.0%

2000
1,332,650
10.7%

2010
1,385,108
3.9%

(most people think 2010 is a massive undercount)

why do you need 'johnny from the bronx' and his cafe in brooklyn to understand a massive increase in rent when population growth went from negative 20 to plus 10 in a very short span of time?

Well that depends on what is causing the increase in population in the Bronx. If it's people coming from other boroughs who can no longer afford them, then yes, gentrification is a cause.

that lower housing costs would attract more "well-educated people" from around the U.S. who are clearly in short supply in major coastal cities or something. And the discussion, at least initially *was* very much just about housing for such people.

purely from an economic pov, educated upper-midddle class people w/ bank accounts do 'create more jobs' than people without them. that phenomenon has an upper limit, which is (one reason) why supply side tax cuts are wasteful. but in cities, people w/ money have substantially more opportunities to create service jobs than they do in a wealthy suburb. dog walkers, tutors, dry-cleaners, restaurant workers, taxi drivers etc. it's easier to turn something you don't want to do into a service job than it is in suburban texas. so, strictly w/ 'job creation' in mind, nyc is better off when it attracts upper-middle class people, people in the 'culture industry', whatever - just as other parts of the country are worse off when their upper-middle class leave. if you are a poor nyer w/ a hs education and no job, then 'more rich people' is def in your self-interest. more foreign immigration? that's not quite as clear. but you'd rather focus on the rich people than the immigrants.

driving a taxi, for example, was not always a job done 100% by immigrants

'johnny from the bronx' lol I meant 'johnny from idaho' he goes by johnny from the bronx now tho

anyway I'm also not arguing that nyc should *only* attract wealthy and/or well-educated people just that it's ridiculous to act like it's a bad thing for the nyc economy, including nyc unskilled labor, w/ whom they will not be sharing a labor market. and again, one more time, people leaving nyc domestically still have higher incomes than people coming in.

a good piece on that: http://emlab.berkeley.edu/~moretti/socret.pdf

and a good piece on gentrification here:

(keeping in mind, again:

a. it's usually left as a vague and mysterious force, but there is still *something* that can be defined as a process and measured

b. under any definition that requires 'young white americans' as key actors, 'gentrification' is not a particularly important issue for the nyc housing market at large, or the majority of poor people in the nyc metro area, an overwhelming majority of who are in neighborhoods that are nowhere close to filling up w/ johnny from idahos. those poor people don't get media attention because there isn't an interesting narrative to the poor neighborhoods that hipsters aren't moving to. people get kicked and priced out of their apartments in the bronx too.)

and with all that in mind

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2802068/#R1

Our findings do suggest that neighborhood gentrification is associated with disproportionate in-migration of college graduates, particularly white college graduates under 40 without children. However, in the full sample, synthetic cohort analysis of out-migration finds no evidence of disproportionate exit of low-education or minority householders. A decomposition of the total income gains in a gentrifying neighborhoods attributes a substantial 33% of income gains to black high school graduates. This sizeable contribution results from the fact that black high school graduates make up a full 30% of the population of gentrifying neighborhoods in 2000 and that the average income of this demographic group in gentrifying neighborhoods increases substantially during the 1990’s.

Our results indicate that, on average, the demographic flows associated with the gentrification of urban neighborhoods during the 1990’s are not consistent with displacement and harm to minority households. In fact, taken as a whole, our results suggest that gentrification of predominantly black neighborhoods creates neighborhoods that are attractive to middle-class black households. While this does not rule out the possibility of negative effects in individual neighborhoods or other time periods, it does suggest that policy makers can approach discussions of gentrification with the knowledge that recent gentrification has not solely benefited high-income white households at the expense of lower-income or minority households.

post about density and why it's good

http://www.washingtonpost.com/blogs/ezra-klein/post/the-growth-lesson-america-could-take-from-china/2011/08/25/gIQAxRiU9R_blog.html

http://grist.org/oil/5-is-the-new-4-how-high-do-gas-prices-have-to-go-to-change-behavior/

the dream is real

i used to drive up and down the highway a lot just as something to do! used up a lot of gas to go nowhere

Kids used to be more into the "scooping the loop" thing where you'd drive around the square/downtown area of a small town. A bunch of obnoxious kids from rural surrounding communities used to pull this crap in the city, but I think gas prices and a revitalized downtown is killing that crap.

idk we used to just hop on the highway and talk and listen to music and it was p great. don't really drive unless i have somewhere to go most of the time these days

iatee, from yr. linked paper:

Because the focus of our research is on the demographic trends in gentrifying neighborhoods, we do not want our definition of gentrification to determine the results. Some definitions of gentrification require educational up-skilling, racial turnover and even displacement, but our analysis of in-migration and exit will be much less interesting if we condition our sample on these outcomes. We instead take gentrifying neighborhoods to be those tracts in the low-income neighborhood sample that experience an increase in average family income between 1990 and 2000 of at least $10,000.

Low income

So the problem then is that this definition theoretically won't beg the question with regards to up-skilling or displacement, but by construction it *does* select for an increase in income. So the results you cite, even in the best possible interpretation, say that for neighborhoods that poor and got less poor, the people in those neighborhoods got less poor. The distribution of how they got less poor would be interesting, but the figures only capture a portion of it. The strongest result seems to be that in neighborhoods so selected, the people who got less poor the most were black people with high school educations. But there's no causality there at all. All we really know from this is that of the poorest metropolitan neighborhoods, those of them where income rose generally can attribute a fair amount of this rise in income to increases in income of black high school graduates living in these neighborhoods. Which is I guess a fine observation, but once you break it down, has nothing at all to do with gentrification -- especially since going from an avg. family income of under 30,000 to one of under 40,000 is not at all what any of us in this thread have been using as a metric for "gentrification."

Also if you read the methodology, the discussion of synthetic cohorts should make it clear that they really have no idea how many people moved in and out -- just a story about shifting demographic ratios. Which, again, is interesting, but hardly is capable of doing the lifting you would like it to.

er, above, "low income" should read "low income is defined in this paper to be avg. income in the lowest quintile of u.s. families"

but in cities, people w/ money have substantially more opportunities to create service jobs than they do in a wealthy suburb. dog walkers, tutors, dry-cleaners, restaurant workers, taxi drivers etc.

other than taxi drivers, is there any reason to think that this is true?

in fact lemme toss some things in complete opposition in there for you - yard cleaners, lawn service, landscaping, fence peeps, car mechanics

Yeah, landscaping is a HUGE thing.

Not to mention home maintenance. I like homes, but having some shared resources in a building cuts down on the number of maintainable items. Individual houses each have their own power, water, and sewer service along with heating, cooling, and all related costs and maintenance issues. All of which mean more service jobs.