Thursday, August 28, 2014

Poverty and Geography: The Myth of Racial Segregation

Migration trumps race and place at Pacific Standard magazine.

Theme: Geography of income inequality.

Subject Article: "Return Migration and Geography of Innovation in MNEs: A Natural Experiment of On-the-Job Learning of Knowledge Production by Local Workers Reporting to Return Migrants."

Other Links: 1. "Wrong Way Nation."
2. "Graduate migration to cities displaces less well-educated."
3. "Density Boondoggles: Innovation Districts."
4. "Europe's brain drain in action: Incredible animation shows great cities emerging over the centuries as intellectuals and artists move across the world."
5. "What Can Hurricanes Teach Us About Socioeconomic Mobility?"
6. "People Develop, Not Places."

Postscript: Much of economic and community development practice takes conventional urban economic theory as a given. I was in that camp when I started blogging back in 2006. All of that changed when I read Robert Guest's book, "Borderless Economics: Chinese Sea Turtles, Indian Fridges, and the New Fruits of Global Capitalism." I can't put the genie back in the bottle. The problem with this line of thinking is that it undermines the rationale for a lot of redevelopment projects currently en vogue. It undermines the rationale for efforts to fight persistent poverty. I find myself embroiled in existential debates instead of a friendly exchange of constructive criticism. Migration is economic development. People develop, not places.

Monday, August 25, 2014

Concluding Remarks About Housing Affordability and Supply Restricitions

Forget supply issues. The wages are too damn low at Pacific Standard magazine.

Theme: Labor markets and housing affordability.

Subject Article: "The Affordable Housing Shortage: Considering the Problem, Causes and Solutions."

Other Links: 1. "Why Is the Rent Too Damn High in New York? Don’t Blame Housing Supply."
2. "Recent Owners’ Equivalent Rent Inflation Is Probably Not a Blip."
3. "Zoning and Market Pricing of Housing."
4. "Federal Reserve Bank of Minneapolis: Banking and Policy Working Paper 02-2."

Postscript: All roads take me back to the exceptional real estate demand case of Vancouver:

At the same time, there's a vein of thought that Vancouver's recent focus on rezoning land to provide places to live-especially a downtown condo forest that has become the city's defining feature-has left it with a dearth of office buildings and factory sites where all those new residents might actually be able to find work.

I rarely encounter a description of the tension between residents and businesses over dear urban land. Residents have to work somewhere in order to pay rent. In terms of housing affordability, the Minneapolis Fed study concludes that income (i.e. demand) matters more than supply restrictions. The considerable time I've spent studying this issue, that conclusion makes sense, in a fundamental supply-demand kind of way. To date, everyone who has taken issue with my position argues a point I have conceded. No one has taken aim at the demand side of the equation and the work of scholars such as David Ley (see above article about Vancouver's real estate market). Yes, less restrictive zoning makes land and homes less expensive. That's not a counter-argument to the many posts I've written on the subject.

Tuesday, August 12, 2014

Thursday, August 07, 2014

Housing Affordability and Supply Side Economics

Dr. Doom weighs in on the debate about housing supply versus demand at Pacific Standard magazine.

Theme: Housing affordability geography.

Subject Article: "San Pedro project illustrates a cause of limited housing affordability."

Other Links: 1. "Fleeing New York and San Francisco for ‘Cleveland’."
2. "Supply Side Economics: Do Tax Rate Cuts Increase Growth and Revenues and Reduce Budget Deficits ? Or Is It Voodoo Economics All Over Again?"
3. "Nouriel Roubini: Professor of Economics and International Business Stern School of Business, New York University."

Postscript: Supply-side economics (e.g. Laffer curve) make intuitive sense, thus appealing to politicians who are pursuing some other agenda. Theoretically, everything is a go. Practically, when academic scrutiny is applied to practice, the suggested benefits disappear. The journey from abstraction to on-the-ground change is a perilous one. The main disconnect I see is taking Glaeser's work (which establishes a link between supply restrictions and housing prices) and assuming that the practice of upzoning (one of many supply-side avenues) will deliver affordable housing. Dr. Doom's cautionary tale teaches us to beware of such claims "about the magnitude of these effects". Glaeser is today's Laffer.

Wednesday, August 06, 2014

Fleeing New York and San Francisco for ‘Cleveland’

Once again tackling housing supply versus demand at Pacific Standard magazine.

Theme: Globalization and gentrification.

Subject Article: "Affordable Housing Draws Middle Class to Inland Cities."

Other Links: 1. "Exotic Romancing at Tennessee Williams Fest."
2. "Urban Geopolitics: Why Chicago Is Dying."
3. "The Way the Modern World Works: World Hegemony to World Impasse."
4. "And the Global City shatters into a million pieces. 'Affordable Housing Draws Middle Class to Inland Cities'"
5. "When Social Scientists Fail Demography."
6. "Illusion of Local: Why Zoning for Greater Density Will Fail to Make Housing More Affordable."
7. "Expat Cuts Hit Hong Kong Luxury Rentals: Market Struggles as Multinationals Trim Packages for Relocated Employees."

Postscript: More from Other Link #7:

The normal summertime surge in demand for high-end apartments in Hong Kong's top neighborhoods was weak again this year as companies changed the way they pay for housing for their expatriate employees and the finance sector continued to struggle.

A shift away from banking and toward retail and other sectors, among companies relocating staff, has pushed down demand. Hong Kong's efforts to cool its housing sector have weighed on the market as well.

Expatriate families relocating to Hong Kong, the main prospective tenants for high-end leases above 80,000 Hong Kong dollars (US$10,300) a month, usually move in the summer months before the school year begins. The start of the third quarter is the "traditional busy time" in the high-end leasing market, according to Edina Wong, senior director of residential leasing at Savills, a real-estate consultancy company. This year, "there's been a minor bump, but not as big as previous years'."

It hasn't been nearly enough to make up for the longer trend: a decline in luxury rental demand by 30% to 40% over the past two years, according to Ms. Wong. "It's a huge drop," she said. "The higher the rental, the quieter it is."

The above quoted passage accomplishes two things. First, putting aside the tax intended to cool the real estate market, the demand slack has a dramatic impact on prices. Second, the overall real estate market is segmented, providing a more nuanced picture of housing affordability in Hong Kong. In my next post, I tackle the disaggregation of housing markets.