December 28, 2006

To the Editor
Statesman-Journal
Salem, Oregon

Dear Editor

Victor Merced (December 26 Housing affordability keeps economic recovery at bay), is right to be concerned about declining housing affordability and home ownership in Oregon. The cause is Oregon’s land use policies, which were adopted without any serious consideration of the consequences. By law, Oregon communities ration land and rationing land raises land prices just as surely as rationing gasoline would. In many areas around the world, including Oregon, housing costs have been decoupled from incomes in an unprecedented manner due to such policies. On the other hand, where liberal land use policies are in place, housing affordability has been retained, even in areas growing much more quickly than Oregon. If, for example, the median house price in Portland was the same in relation to incomes as in Dallas-Fort Worth, it would cost approximately one-half as much. There are choices. One cannot stingily release land for development without it driving up land costs and denying young and minority households of home ownership and its opportunities for financial advancement. It is time for Oregon to have a long overdue debate about the very real choices between cities that please planners (and architects) and cities that provide opportunity for all.

Wendell Cox
Co-author, Demographia International Housing Affordability Survey
http://www.demographia.com/dhi-ix2005q3.pdf
Principal, Demographia (St. Louis metropolitan area)
Visiting Professor,
Conservatoire National des Arts et Metiers, Paris

Posted by Wendell Cox at 11:23 PM | Permalink

To the Editor
The Washington Post
Re: "L.A., Long Ruled by Cars, Becoming a Transit Leader (December 17, 2006)

The implication that transit has been responsible for the reduction in traffic delay hours in Los Angeles is absurd.

In the period cited (1993 to 2003), road use increased more than 40 times as much as transit use (measured in passenger miles). Moreover, per capita daily miles of automobile use increased. The improvement in delay times cannot, therefore, be attributed to transit. Over the same period there have been significant improvements in traffic management and many projects to expand highway capacity and remove bottlenecks.

Putting aside the hype, the reality is that transit's share of travel remains below the modern mid-1980s peak. After that, there was a significant drop in ridership, as out-of-control cost increases forced fare increases that drove riders, especially those with low incomes, away. The fact is that transit's share of travel in Los Angeles has not recovered, despite opening a subway line with two branches, three light rail lines, an expensive busway and six commuter rail lines.

Sincerely,
Wendell Cox
Member, Los Angeles County Transportation Commission, 1977-1985
Visiting Professor, Conservatoire National des Arts et Metiers, Paris

Posted by Wendell Cox at 11:35 AM | Permalink

A Washington Post article indicates the disappointment that the higher densities being built in Fairfax County, Virginia (a Washington, DC suburb) have not resulted in less intense traffic congestion.

Surprise!

County officials blame developers for not keeping their bargains to reduce car use by residents in their buildings.

Needed: A University of Reality

It seems appropriate to establish a University of Reality, Fairfax County campus for the remedial education clearly needed by officials and bureaucrats at the county.

The curriculum would start with a basic resume of rights. Developers cannot reduce car use by their residents. To the extent that the county relied on such promises only demonstrates its gullibility.

Then there would be a field trip. Manhattan would be the destination. It is too bad none of the planners or elected officials of Fairfax County has ever been to Manhattan, where they could have readily seen the bankruptcy of any thought that increasing densities could reduce traffic congestion. But the 3 hour Amtrak ride or one hour plane trip was apparently too much for the county budget. Of course, there are other reasons for visiting New York and one might have thought that some of them might have been there simply to see the sights.

Manhattan is the most dense piece of real estate in the high-income world, with the exception of Hong Kong. It is hard to find more intense traffic congestion than in this dense Nirvana, unless you happen to visit Hong Kong. The same situation can be observed in virtually all of the world’s dense cities. Had at least some of the planners or elected been to Europe, they could have seen further evidence that density is strongly associated with more intense traffic congestion. Regrettably, the tuition at the University of Reality is not sufficient to finance such unprecedented travel.

The mathematics is simple. If an area increases its density 10 times through high-rise development, it must reduce is automobile travel by 90 percent per household simply to keep the traffic from growing. This means that to reduce traffic volumes by 10 percent will require each household to cut its driving by 91 percent. Then there is the inconvenient truth that households that live in high-rise condominiums and apartment buildings tend to have a higher ratio of adults --- they are few children. This means that the such households tend to drive more. If, for example, the average household in one of Fairfax’s towers of disappointment should be 2.0 and the average household size in the “ticky tack” single family dwellings that preceded had an average household size of 3.0, per household driving would need to drop by more like 95 percent. For any who thinks this can be accomplished, I have a rail ridership projection for you.

For Fairfax residents, who have been manifestly misgoverned on this issue, the traffic will just get worse until the powers that be finish their education and begin putting realistic policies into practice.

Posted by Wendell Cox at 08:28 AM | Permalink

The transport journal Access (University of California Transportation Center) added what appears to be a theology column in a recent issue. Floating Cars was an indictment of automobile ownership and bemoaned the fact that many cars were left behind in New Orleans, demonstrating an “excess” of automobiles and seems consistent with the anti-automobile religious dogma so rampant in urban and transport planning these days.

The author, Daniel Baldwin Hess would have preferred that two car households use both cars, rather than one to evacuate. That certainly would have made the heavy traffic leaving the city better. Apparently, it did not occur to him that the cars were used by their owners in the normal course of their lives --- central city residents accessing jobs throughout the urban area that cannot possibly be reached by transit in a reasonable period of time. Better unemployed and on the bus or streetcar than employed using the demon car?

In fact, as Brookings Institution and Progressive Policy Institute research demonstrates, automobiles greatly increase the ability of inner city poor to access jobs. Both the automobile and the home-owning suburbanization that it has permitted have been principal drivers in the democratization of prosperity that has occurred throughout the high-income world since World War II. And, yes, as Hess indicates, the US does have the highest automobile ownership rate. It also has by far the highest per capita income, measured in purchasing power, of any major nation. There is a connection.

But facts aren’t needed in theology, just faith.

Posted by Wendell Cox at 04:15 PM | Permalink

Letter to the Editor
The Chicago Tribune

Dear Editor:

The $1.25 million "Drive Less, Live More" program announced by Chicago-area transit agencies ("Campaign Pushes Car-Less Commute," December 15) says a lot about what is wrong with mass transit in the area.

It is complete nonsense to assume that if people just knew more about transit they wouldn’t drive as much. People are not as daft as city planners believe. They know what it costs to drive. They also know there are economic and social costs associated with switching to transit services, which are slower and often don’t even go where they need to go.

There is no question about the value of the area’s mass transit services to downtown Chicago, where more than half the workers commute by transit. Elsewhere though, most who use transit do so because their low income deprives them of cars.

State Transportation Secretary Tim Martin was quoted as saying "it’s all about expanding service." Indeed it is, and this publicity program does nothing in that regard. People will get out of their cars when transit is a viable option. If that should ever happen, they wont need the state or transit officials to tell them.

Sincerely,

Wendell Cox
Senior Fellow, Heartland Institute
Visiting Professor, Conservatoire National des Arts et Metiers

Posted by Wendell Cox at 02:45 PM | Permalink

Perhaps it is time for the foundations and academicians dedicated to linking automobile use and obesity to turn their attention to other spurious connections between land use and health. Let’s start with smoking.

A quick look at the latest United States Bureau of Labor Statistics (BLS) Consumer Expenditures report provides what may be evidence of a strong connection between smart growth and smoking.

In 2005, the BLS reports that expenditures on tobacco products were $344 per household in smart growth Portland and $308 in smart growth Denver. However the situation was much different in Atlanta, Dallas-Fort Worth and Houston, where more liberal land use policies prevail. In Atlanta, per household tobacco expenditures were just $142 annually, less than one-half the Portland figure. Dallas-Fort Worth and Houston were at $228 and $246 respectively, both well below Portland.

In the event that Portland does become more dense, as the planners have dictated (though there is scant evidence that it has happened yet), local concentrations of smoke will be higher, making the health risk from second hand smoke all the greater.

Of course, this issue will require much more study, but federal data certainly suggests that chain smoking and smart growth go together. At this point the case is at least as strong as the connection between automobiles and obesity --- something the anti-suburban lobby has tried to do while making sure that diet and the explosion in video game use by children are as truants absent from their econometric specifications.

References:
BLS Consumer Expenditures Page

Posted by Wendell Cox at 05:08 PM | Permalink

Elizabeth Farrelly of the Sydney Morning Herald may have revealed the ultimate urban consolidation (smart growth or anti-suburban) agenda in a December 13 column entitled The End of the Great Australian Dream Cannot Come Soon Enough. The Great Australian Dream is the “down under” equivalent of the American Dream of home ownership. Farrelly is clearly outside the mainstream of Australian thought on the issue of home ownership, though may well be expressing the views of many in the urban planning community.

Home Ownership and the Democratization of Prosperity

In Australia, as in the United States, Western Europe, Canada, New Zealand and Japan, the suburbanization for which Ms. Farrelly and those of her ilk have such contempt has been associated with the greatest expansion of broadly distributed wealth in the history of the world. In short, for the first time, prosperity has been democratized.

Before World War II, most people in these countries lived in conditions that would qualify as poverty by today’s standards. The less expensive houses built on suburban land made it possible for millions of households in Australia (and elsewhere in the high income world) to enter the mainstream of economic life. Instead of paying rent to landlords, they paid down their mortgages and accumulated equity. Their cars gave them access to employment virtually everywhere in the urban area, instead of to the few locations where there were decent mass transit connections. Australia would be a poorer nation today if its home ownership rate were at the 40 percent pre-war level instead of the current 70 percent.

Australia: Broad Consensus in Favor of Home Ownership

Home ownership has strong support throughout Australia. Through the years, the federal and state governments have enacted a number of plans to make it easier for people to buy their own homes.

Wealth Destroying Urban Consolidation (Smart Growth) Policies

However, problems have developed, as urban planning interests sharing Farrelly’s views have taken control of land use policy in the states. The culprit is urban consolidation policies (called smart growth in the United States) and related urban planning policies. These have created severe land shortages in all Australia’s state capitals, as state governments have banned development in large areas or allowed development only at rates that are much less than the demand. Of course, this rationing has led to much higher prices for housing, as land prices have skyrocketed. Before urban consolidation, land in Sydney accounted for one-third of the cost of a new house. Today land accounts for more than three-quarters of the cost. In contrast, the cost of constructing a house has barely changed over the same time (inflation adjusted).

The irony is that this government stinginess in land is in a country with less than 0.25 percent of its land in urban development. It is laughable that there should be a shortage of land in Australia. The land shortage exists only because of government contrivance, which has occurred because there is a shortage of economic understanding among planners and politicians.

The price of the median house in Sydney and Perth has risen to approximately three times the those of many US and Canadian urban areas, including fast growing as Atlanta, Dallas-Fort Worth and Houston. A typical Sydney or Perth household can expect to pay 10 years more of their earnings to buy a house than a household in Atlanta, Dallas-Fort Worth or Houston (including additional mortgage interest charges). The cost inflation has been experienced throughout the nation. Median house prices in Melbourne, Brisbane, and Adelaide are more than double the prices relative to incomes in Atlanta, Dallas-Fort Worth and Houston.

In short, state government urban consolidation (smart growth) and urban planning policies have destroyed housing affordability throughout Australia. The same situation has occurred in some Canadian and US markets, such as Vancouver, San Diego, San Francisco-San Jose and Portland. However, many markets in both countries continue to have housing affordability ratios consistent with historic norms, with a median multiple of 3.0 or less (median house price divided by median household income). All of this seems likely to place a drag on the Australian economy in the longer run.

”End of the Australian Dream: Bring it On"?

In a rant bubbling over with elitism, Ms Farrelly dismisses Sydney’s suburban houses as chook shacks (chicken houses). She concludes with “End of the Australian Dream? Bring it on.” Ms. Farrelly may have emerged as the “Marie Antoinette” of urban consolidation or smart growth. “Let them eat cake” is her message and it appears to be the message (wittingly or unwittingly) of those who favor urban consolidation (smart growth).

Farrelly’s prescriptions will mean fewer homeowners in the future, less household equity (wealth) and more money paid to landlords. Even those households lucky enough to purchase their own homes will find their lifetime purchasing power eroded by hundreds of thousands of dollars just to pay the artificially inflated housing prices that are the result of urban consolidation and smart growth. This will mean that, for the first time in decades, middle and lower income households are likely to live at a lower standard of living than before.

The Issue: Home Ownership, Not Urban Form

However, there may be a silver lining. Ms. Farrelly provides a welcome call to changing the terms of debate. The issue is home ownership, not urban planning.

Until recent years, the principal issues surrounding urban consolidation and smart growth were about cities, their shape and form. More recently, especially in Australia, the issue has become housing affordability, with the then Reserve Bank Governor, Prime Minister, Treasurer and other public officials pointing to land supply restrictions as the culprit. Now, Ms. Farrelly puts the issue squarely where it belongs --- home ownership.

Farrelly’s opposition to home ownership message may be shared with some urban planners and some residents of eastern Sydney’s luxury high-rise condominiums. However, few in politics and few in the real world share this elitist view. As a result, opposition to home ownership is electoral suicide in most constituencies.

Now comes Elizabeth Farrelly, saying that less home ownership would be better. That is exactly the issue that should be the focus of public discourse.

Notes:

These issues are discussed in greater detail in my new book War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life

International housing affordability data for 100 urban areas is provided by the Second Annual Demographia International Housing Affordability Survey.


Posted by Wendell Cox at 03:17 PM | Permalink

One thing is sure --- the now hundreds of billions of additional transit spending have done nothing to increase transit’s share of urban travel or to reduce traffic congestion. Indeed, transit’s share of work trips has fallen nearly two-thirds since 1970, at the same time more than one-half trillion dollars ($500,000,000,000) in subsidies have been spent. In effect, taxpayers have been paying transit to not carry people.

The United States Bureau of the Census American Community Survey (ACS) indicates that working at home is well on the way to catching up with transit work trips. Since 1990, there has been an increase of 1,400,000 people working at home in the nation, while transit work trips have risen only 100,000.

Moreover, outside the New York metropolitan area, which accounts for 40 percent of transit ridership, working at home already leads transit, and by a large margin. ACS estimates the in 2005, 4.5 million employees worked at home, while 3.7 commuted to work using transit.

Perhaps it is time to think about paying people to work at home rather than paying transit to not carry people.

Posted by Wendell Cox at 04:13 PM | Permalink

For any who perceive that “urban sprawl” (a pejorative term for suburbanization) is an American phenomenon, the new European Environmental Agency report Urban Sprawl in Europe: The Ignored Challenge provides a radically new perspective. Yes, there is suburbanization in Europe, and plenty of it.

Regrettably, Urban Sprawl in Europe is far from an objective, comprehensive review of urban trends. It blindly repeats dogma and, most importantly, fails to consider the momentous advantages that the land use developments of the last one-half century have provided in Europe.

The Positive: Hysteria is Absent

Starting with the positive, Urban Sprawl in Europe generally uses muted language and is devoid of the hysterical theology so often found in anti-suburbanization reports in the United States, Canada and Australia. This is, in itself, something of an accomplishment.

Repeating the Dogma

Nonetheless, there are serious problems with Urban Sprawl in Europe. Predictably, the report finds all manner of problems with suburbanization and no benefits. The report repeats the dogma that has misled planners and public officials in the United States, Canada and Australia. For example:

· The report ways that traffic congestion is greater is less compact (more sprawling) urban areas. The international data, some of the of which is cited by Urban Sprawl in Europe says the opposite. More compact urban areas --- what the European Environmental Agency would like, have more traffic congestion.

· The report says that air pollution exposure “may” be at higher levels in suburban areas because of higher volume and slower traffic. There is no “may” about it. Air pollution levels in suburban areas tend to be lower in suburban areas because traffic is less dense and it flows more quickly. While city versus suburban traffic data is difficult to obtain, San Francisco illustrates the greater traffic congestion that is evident in central cities compared to suburbs.

· The report claims that less compact urban areas are more costly, claiming higher transportation and infrastructure costs. The higher transportation costs are more than offset by much lower housing costs, a matter the report does not address. Infrastructure costs are not necessarily lower in more suburbanized areas, as Joshua Utt and I found in a report published by the Heritage Foundation .

The report applauds Munich and Bilbao for being the only two urban areas studied that since 1950 increased their populations than their land areas. In effect, this means that Munich and Bilbao “sprawl” less in relation to their populations than they did in 1950.

It may be surprising to find out which urban area is the champion in that regard. It is Los Angeles, which managed to increase its population at more than double the rate of its increase in land area from 1950 to 2000, a rate well above that of either Bilbao or Munich. Moreover, during that period, urban development in Los Angeles was largely market driven, rather than planning driven.

The European Environmental Agency acknowledges that suburban low-density lifestyles are more attractive to people (so much for the theory that Europeans like high rise city living, while Americans, Canadians and Australians like the suburbs). Europeans have chosen overwhelmingly to move to the suburbs, just like people in the new world. Nonetheless, the report implies that it would be better for bureaucrats to make lifestyle decisions, not the people who actually live the lives.

The Usual Absent Public Transport Vision

Predictably, the report complains about Europe’s automobile oriented culture. Just as predictably, the European Environmental Agency offers no vision that would get people out of their cars without seriously hobbling their mobility and quality of life. There is, of course, good reason for this. No such vision could be financed by any economy in the world (see The Illusion of Transit Choice).

Ignoring Economics

However, the most serious problem with Urban Sprawl in Europe is not what it says. The principal problem is rather what the report ignores.

Somehow, over the past 60 years, the Western European (and other high-income world nations) have suburbanized as never before and have embraced the personal mobility of the automobile. These developments that anti-suburbanites and the European Environmental Agency view as negative have in fact been associated with the greatest expansion of affluence in history --- what I call the democratization of prosperity.

Urban Sprawl in Europe simply ignores the important issues of economics. Research indicates that personal mobility is associated with greater economic growth and the reduction of poverty. There is plenty of evidence that development of housing on less expensive land on the urban fringe has created wealth and played a major role in producing a comfortable middle class. These are issues that an intellectually honest and comprehensive discussion would include.

The Risks of Ignoring Economics

The failure to consider these issues is already taking a toll in urban areas that have blindly followed the anti-suburban pied pipers. Some urban areas have consciously sought to limit personal mobility and seen businesses locate to other urban areas. The urban areas of Australia and New Zealand, along with Portland and a number in California have so strangled their land markets by development controls that the (see Second Annual Demographia International Housing Affordability Survey) historic relationship to incomes has been shattered. The result is that millions of future households will not be able to own their own homes or will have to pay hundreds of thousands of dollars more. This translates, at least in part, into consumer spending that will not occur, jobs that will not be created. United States Federal Reserve Board has published research showing that metropolitan areas with more stringent land use control experience less economic growth than would have been expected.

Revisions are Needed

Urban Sprawl in Europe would best be thought of as a preliminary working draft. Serious revision is required. The dogma needs to be replaced with objective research. Most importantly, the missing elements of economic impact need to be added.

Note: These issues are dealt with in greater detail in War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life, a new book by Wendell Cox.

Posted by Wendell Cox at 06:31 PM | Permalink

A large ice storm hit the St. Louis area last night and power is out to nearly one-half of the area. The area’s light rail line, Metrolink, has suspended service for much of its alignment and is providing substitute bus service.

Meanwhile, there appears to be no instance of light rail providing replacement for buses anywhere in the metropolitan area --- for that matter probably never in history, anywhere. Another demonstration of the flexibility of urban rail.

Posted by Wendell Cox at 08:58 AM | Permalink