More on the Millennial Housing Shortage Fallacy

Scene from Chicago’s South Shore neighborhood.  Great lakefront location, great Loop access, wonderful homes for buyers and renters alike, but escapes the attention of many.  Why?

First of all, thank you to all who’ve stopped by this site to check out my recent thoughts on housing and gentrification.  I have to admit that writing here is a little like working in a vacuum, so I’m grateful for the reads and responses.

Honestly, I didn’t intend to fire off a debate.  I tend to question conventional wisdom, call things as I see them, and see if there’s support anywhere for my position.  I see a lot of conventional wisdom developing among those on one side of the housing and gentrification debate, and simply wanted to express a counter view.  I guess I succeeded.

In response to my post linked above, University of Chicago master’s student and urbanist blogger Daniel Kay Hertz put together a pretty good dissent.  In it, he argues that putting zoning caps in areas of Chicago like Lincoln Park would simply force others to move elsewhere and push gentrification outward:

“I think this is an issue where it’s really important to distinguish between people and places. It is probably the case that, at least in the short term, capping housing supply in places like Lincoln Park makes it more likely that investment will move to adjacent neighborhoods – like, say, Wicker Park (or from Manhattan to Brooklyn, San Francisco to Oakland, etc.) – because once the number of affluent people who want to live in Lincoln Park exceeds the number of housing units allowed to exist there, some of those affluent people will have to settle for living nearby. This is called gentrification.”

Later in his post, Hertz cites a couple studies that suggest that there are strong correlations between stringent zoning and income and racial segregation.  One study even estimates the number of increased number of housing units that would be available to minority residents if zoning regulations were relaxed.  But if I were to sum up what I see as the theme of his post, it is the part where he presents data that documents increases in housing prices per square foot in a couple Chicago neighborhoods, and then this statement:

 “Having been priced out of Wicker Park, white-collar workers are now moving to Logan Square, where they’ve driven up housing costs by almost 70% in five years. Is that the kind of economic development we want to promote?”

In a word, yes.  And now it’s time to explain.

First, both studies that Hertz cites, Density Zoning and Class Segregation in U.S. Metropolitan Areas, and The Impact of Land Use Regulation on Racial Segregation: Evidence from Massachusetts Zoning Borders, are correct in their conclusion that low density zoning artifucially reduces supply and increases price, and creates barriers that generate greater racial and economic segregation.  I agree with that analysis.  I’ve done lots of work as a planner and seen strong evidence that supports this conclusion.

But, as I read the studies, this is most applicable at the metro area scale, when talking about ways to reduce metro level segregation.  Meaning, suburban low density zoning reduces supply in the suburbs, increases price there, and creates barriers there.

I don’t see these conclusions as applicable in an urban, gentrifying context like in Chicago.  The housing market in older, large and built-up cities is quite different from that in the suburbs.  While suburban locations owe their higher home prices to constrained supply, desirable in-city locations owe their higher prices to substantial demand.  This point is made in an article posted on Better Cities, saying the lack of good urbanism throughout the nation is raising prices where it does exist.

To me, the impact of artificially high prices in the suburbs doesn’t rest on desirable urban neighborhoods; it rests on the working-class and middle-class neighborhoods of cities.  My reasoning is that if prices are artificially inflated in one place, they are artificially depressed somewhere else — and in Chicago, that often turns out to be much of the South and West sides, and many south and west suburbs.  An easy Google search can tell you that similar homes in, say, Oak Forest and Niles have widely disparate prices.  City neighborhoods outside the area I call “Global Chicago” have borne the brunt of this, where prices are far lower than elsewhere in the region.

When we talk about cities in particular, and not metro areas in general, I think it’s more appropriate to adopt a sociological approach to the issues, rather than the economic one pursued by many of today’s back-to-the-city movers.  I think research from someone like Patrick Sharkey, associate professor of sociology at NYU and the author of Stuck in Place: Urban Neighborhoods and the End of Progress Toward Racial Equality is more useful here.  In an interview with the Atlantic Cities last summer, Sharkey offered up one way that his sociological research counters the economic conventional wisdom:

“I find in my research that black young adults originating in highly segregated cities often make moves into much more integrated communities when they leave home and form their own households. But as we track these young adults later in their lives, however, they tend to drift back into poorer, more segregated neighborhoods as they move further into adulthood. What explains this pattern? It is not that the young adults are moving back into poor, segregated communities as they get older, but rather that their communities are changing around them. In other words, even when black young adults choose to start their adult lives in more integrated communities, they end up in neighborhoods that are relatively segregated because of the residential decisions made by others around them.”

Emphasis added.

Reducing social and economic segregation will require a sociological approach, and generous amounts of political will.  Unfortunately, we lack much of the will.  We have laws on the books at the federal, state and most local levels to turn the tide, but enforcement has been virtually non-existent.  A series on segregation by ProPublica over the last 18 months highlighted how segregation has gradually returned to pre-Brown v. Board of Education levels over the last 40 years, and much of it has to do with lax law enforcement.

Time does not permit me to finish this now; look for more later.

2 thoughts on “More on the Millennial Housing Shortage Fallacy

  1. You say that you feel like you're “working in a vacuum” on this blog sometimes, but I hope that doesn't eventually discourage you from writing stuff. I might not comment on every post, but I do read most of them and think about them nonetheless, and I'm sure that most others who read your blog are the same way. Besides, your blog is no less active than Jim Russell's or Chris Briem's in terms of reader input. Aaron Renn's blog is very busy, but he's been doing his thing for almost a decade now. I guess all I'm trying to say is that a lack of consistent dialogue doesn't necessarily mean that nobody's listening or considering. Besides, I've seen your work reposted or linked to on other websites and blogs, which means that people are paying attention. Besides, I found your blog after Aaron Renn linked to it, which goes to show you that the extra exposure can help expand your audience.

    With that said, I still believe that the comment interface on this blog is cumbersome enough to be inconvenient for commenting, and that could be artificially decreasing the amount of comments you get. It took me a few tries to really understand how it works.

    Like

  2. Thanks for your comment, but more importantly for your regular visits here. I do have site improvements in mind that might make comments easier and the whole experience better, so stay tuned.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s