Well-Located Housing and the Tokyo Option
This post is meant to make a simple observation about cities, which I hope to expand later.
The high cost of housing in many cities is a function of supply and demand. But supply and demand of what? I think the answer is basically "housing from which it takes about x minutes to get to high-paying jobs." The point of formulating it this way is to capture the intuition that what we mean by "housing" isn't just raw number of units, but rather units that are usefully located. For the rest of the post I'll use the term "well-located housing" to refer to housing from which places of employment can be reached relatively quickly.
There isn't a sharp threshold here—housing that is within 15 minutes of jobs is obviously better than housing that is 30 minutes from jobs, but in most big cities either of those would qualify as "well-located housing." However, you might want to attribute more value to the 15-minute housing than to the 30-minute housing, and there are various ways to do this. For instance, to determine how much "well-located housing" a particular development will add, you could divide the square footage by the average commute time to the city's employment centers. Or you could divide the square footage by the commute time to the nearest employment center, on the logic that people will generally choose to live near work. Or you could sort housing into tiers (1-10 minutes from work, 10-20 minutes from work, and so on), and attribute more value to the low-commute-time tiers. Or maybe square footage isn't the right measure and you should care more about number of bedrooms, or something. I think my argument would work for a wide variety of approaches, so I won't worry too much about the precise definition of "well-located housing."
The point I want to make is that there are several different ways to increase the supply of well-located housing. One way is simply to permit the construction of more housing in areas that are already well-located. This is the focus of the YIMBY (yes in my backyard) movement, which favors relaxing legal limits on housing construction in urban and suburban areas.
But it would also work (in a sense) to take existing housing and make it better-located. Imagine a city that is built along a river and that has a central business district adjacent to the river where most good jobs are located. Also imagine that the nearest bridge across the river is 5 miles away and there is no ferry. In the status quo, the housing immediately across the river from the city is not well-located (unless there is some other employment center nearby, and let's assume there's not), so its existence does not meaningfully contribute to the supply of housing for the city. Building a bridge across the river near the central business district will dramatically lower the commute time for residents of the housing across the river. In our framework this amounts to an increase in the supply of well-located housing and, other things being equal, a drop in the price of well-located housing.
Of course there are complications. First, the "new" well-located housing (maybe the better term is "newly well-located housing") may be located in a different political jurisdiction from the city where the central business district is located, with important consequences that are beyond the scope of this blog post.
Second, there will be winners and losers from the construction of the bridge. As with any increase in supply, the incumbent owners of well-located housing will suffer as prices fall (and their tenants will benefit). Meanwhile the owners of housing across the river will enjoy a windfall, while their tenants will pay higher rents but enjoy shorter commutes, with mixed effects on welfare (for instance, retirees will pay higher rents but might not care much about short commute times). On net the metro area should benefit (depending, of course, on how expensive it is to construct the bridge), but the distributional effect may be large and for many people may completely swamp the average effect. (To put it another way, there may be a lot of losers from the policy even if it is quite beneficial on the whole.)
Third, if the bridge dumps a lot of new drivers into an already-congested downtown, it may lengthen commute times for the rest of the city, so the net effect on well-located housing may be ambiguous.
You can substitute almost any transportation infrastructure for the bridge and the logic will stay the same, with some differences depending on the particular form of transportation chosen. For instance, in a large city grade-separated rapid transit tends to make nearby housing much better-located. I bring this up because YIMBYs are often surprised at the low density of the Tokyo metropolitan area. Tokyo is, famously, the most populated metro area in the world, with tens of millions of people "well-located" relative to its job centers. But Tokyo accomplished this not by building (very) densely, but rather by building an excellent train system that created a sprawling megalopolis of well-located housing, much of it single-family and relatively little of it taller than three or four stories. (It is not an entirely fair comparison, but you would struggle to find a single ward of Tokyo that is denser than the neighborhood of Park Slope, which itself is not particularly dense by the standards of New York City.)
Unfortunately the "Tokyo option" is not really available to very many cities in the U.S., if any. This is because (A) construction costs are ludicrously high for new trains in the U.S. (and, relatedly, our transit systems are notoriously poorly run), (B) our political institutions are not designed to encourage mass transit (in particular, our transit-oriented cities tend to be boxed in by affluent suburbs that make Tokyo-style sprawl difficult or impossible to achieve), and (C) we are to some degree "locked in" to our existing housing stock, which is generally not transit-oriented. However, I think YIMBYs who are motivated by a desire to reduce housing costs should consider transit construction/improvement as a complement to/substitute for upzoning. Where density is already high (as in much of New York City), the lowest-hanging fruit probably consists of transit improvements. Transit improvements offer the possibility of increasing the stock of well-located housing while avoiding a political backlash from NIMBYs who, as I've argued previously, tend to be influential in urban politics.
(As an aside, I have read conflicting accounts of land use regulation in Tokyo. Some YIMBYs seem to believe that zoning is quite strict, while other YIMBYs seem to believe that Tokyo has few if any zoning restrictions. In a future post I will try to resolve this question.)
I want to bring up one more option to increase the supply of well-located housing, which is to build lots of little employment centers rather than a few big ones. This is the approach favored in the sprawling car-based cities that have grown in the southern and western United States, and I think urbanists tend to underrate its effectiveness. It is true that we observe agglomeration effects in lots of industries, where a firm's productivity is a function of proximity to other firms in the same (or related) industries. This would tend to favor development of a few large business districts, which in turn favors (above a certain scale) the use of mass transit and dense residential construction to achieve a lot of well-located housing.
But agglomeration is often industry-specific. The movie studios in Los Angeles don't particularly need to be near its financial industry, or its aerospace industry, or its beer breweries, or whatever. By developing lots of small job centers, each of which is easily reachable by car from the nearby housing stock, a city can do a pretty good job of capturing agglomeration effects while delivering well-located housing.
Of course there are complications. A car-based city is one that will be hard to navigate for anyone who can't drive (for financial or other reasons). However, I don't want to exaggerate this point—I imagine that once you take into account the cost of housing, most sprawled-out sunbelt cities are more affordable than New York City even accounting for the cost of a car.
Another complication is that once you have specialized job centers, "well-located" becomes specific to the industry in which the individual works. A brewer may not need to live near a movie studio for work purposes, but if she is married to an actor she may want to anyway. If the brewery cluster and the movie studios happen to be across town from each other, it creates a problem. Also, a worker who switches industries may also need to switch houses, which involves significant moving costs. This would be rarer in cities where jobs are all clustered together, because in that case switching jobs should not affect your commute much.
Finally, the car-based model probably doesn't scale very well. Beyond a certain point, traffic congestion starts to degrade the "well-locatedness" of most/all of the housing in the metro area. Car infrastructure is noxious (no one wants to live too close to the highway, and parking lots use up expensive, well-located land and are unpleasant to walk past). Moreover, car-based development is (to a certain degree) incompatible with evolving toward a transit-oriented, pedestrian-friendly city structure. In other words, up to a certain city size car-facilitated sprawl is probably the best policy, but as the city continues to grow it finds itself stuck in a pattern of development that no longer makes sense. Unfortunately it is hugely expensive and politically difficult to reorient the city toward a development pattern that is suitable for a large population. For this reason I think it's worth considering transit-oriented development at a relatively early point in a city's lifetime, although I admit this is a very tricky issue.
The high cost of housing in many cities is a function of supply and demand. But supply and demand of what? I think the answer is basically "housing from which it takes about x minutes to get to high-paying jobs." The point of formulating it this way is to capture the intuition that what we mean by "housing" isn't just raw number of units, but rather units that are usefully located. For the rest of the post I'll use the term "well-located housing" to refer to housing from which places of employment can be reached relatively quickly.
There isn't a sharp threshold here—housing that is within 15 minutes of jobs is obviously better than housing that is 30 minutes from jobs, but in most big cities either of those would qualify as "well-located housing." However, you might want to attribute more value to the 15-minute housing than to the 30-minute housing, and there are various ways to do this. For instance, to determine how much "well-located housing" a particular development will add, you could divide the square footage by the average commute time to the city's employment centers. Or you could divide the square footage by the commute time to the nearest employment center, on the logic that people will generally choose to live near work. Or you could sort housing into tiers (1-10 minutes from work, 10-20 minutes from work, and so on), and attribute more value to the low-commute-time tiers. Or maybe square footage isn't the right measure and you should care more about number of bedrooms, or something. I think my argument would work for a wide variety of approaches, so I won't worry too much about the precise definition of "well-located housing."
The point I want to make is that there are several different ways to increase the supply of well-located housing. One way is simply to permit the construction of more housing in areas that are already well-located. This is the focus of the YIMBY (yes in my backyard) movement, which favors relaxing legal limits on housing construction in urban and suburban areas.
But it would also work (in a sense) to take existing housing and make it better-located. Imagine a city that is built along a river and that has a central business district adjacent to the river where most good jobs are located. Also imagine that the nearest bridge across the river is 5 miles away and there is no ferry. In the status quo, the housing immediately across the river from the city is not well-located (unless there is some other employment center nearby, and let's assume there's not), so its existence does not meaningfully contribute to the supply of housing for the city. Building a bridge across the river near the central business district will dramatically lower the commute time for residents of the housing across the river. In our framework this amounts to an increase in the supply of well-located housing and, other things being equal, a drop in the price of well-located housing.
Of course there are complications. First, the "new" well-located housing (maybe the better term is "newly well-located housing") may be located in a different political jurisdiction from the city where the central business district is located, with important consequences that are beyond the scope of this blog post.
Second, there will be winners and losers from the construction of the bridge. As with any increase in supply, the incumbent owners of well-located housing will suffer as prices fall (and their tenants will benefit). Meanwhile the owners of housing across the river will enjoy a windfall, while their tenants will pay higher rents but enjoy shorter commutes, with mixed effects on welfare (for instance, retirees will pay higher rents but might not care much about short commute times). On net the metro area should benefit (depending, of course, on how expensive it is to construct the bridge), but the distributional effect may be large and for many people may completely swamp the average effect. (To put it another way, there may be a lot of losers from the policy even if it is quite beneficial on the whole.)
Third, if the bridge dumps a lot of new drivers into an already-congested downtown, it may lengthen commute times for the rest of the city, so the net effect on well-located housing may be ambiguous.
You can substitute almost any transportation infrastructure for the bridge and the logic will stay the same, with some differences depending on the particular form of transportation chosen. For instance, in a large city grade-separated rapid transit tends to make nearby housing much better-located. I bring this up because YIMBYs are often surprised at the low density of the Tokyo metropolitan area. Tokyo is, famously, the most populated metro area in the world, with tens of millions of people "well-located" relative to its job centers. But Tokyo accomplished this not by building (very) densely, but rather by building an excellent train system that created a sprawling megalopolis of well-located housing, much of it single-family and relatively little of it taller than three or four stories. (It is not an entirely fair comparison, but you would struggle to find a single ward of Tokyo that is denser than the neighborhood of Park Slope, which itself is not particularly dense by the standards of New York City.)
Unfortunately the "Tokyo option" is not really available to very many cities in the U.S., if any. This is because (A) construction costs are ludicrously high for new trains in the U.S. (and, relatedly, our transit systems are notoriously poorly run), (B) our political institutions are not designed to encourage mass transit (in particular, our transit-oriented cities tend to be boxed in by affluent suburbs that make Tokyo-style sprawl difficult or impossible to achieve), and (C) we are to some degree "locked in" to our existing housing stock, which is generally not transit-oriented. However, I think YIMBYs who are motivated by a desire to reduce housing costs should consider transit construction/improvement as a complement to/substitute for upzoning. Where density is already high (as in much of New York City), the lowest-hanging fruit probably consists of transit improvements. Transit improvements offer the possibility of increasing the stock of well-located housing while avoiding a political backlash from NIMBYs who, as I've argued previously, tend to be influential in urban politics.
(As an aside, I have read conflicting accounts of land use regulation in Tokyo. Some YIMBYs seem to believe that zoning is quite strict, while other YIMBYs seem to believe that Tokyo has few if any zoning restrictions. In a future post I will try to resolve this question.)
I want to bring up one more option to increase the supply of well-located housing, which is to build lots of little employment centers rather than a few big ones. This is the approach favored in the sprawling car-based cities that have grown in the southern and western United States, and I think urbanists tend to underrate its effectiveness. It is true that we observe agglomeration effects in lots of industries, where a firm's productivity is a function of proximity to other firms in the same (or related) industries. This would tend to favor development of a few large business districts, which in turn favors (above a certain scale) the use of mass transit and dense residential construction to achieve a lot of well-located housing.
But agglomeration is often industry-specific. The movie studios in Los Angeles don't particularly need to be near its financial industry, or its aerospace industry, or its beer breweries, or whatever. By developing lots of small job centers, each of which is easily reachable by car from the nearby housing stock, a city can do a pretty good job of capturing agglomeration effects while delivering well-located housing.
Of course there are complications. A car-based city is one that will be hard to navigate for anyone who can't drive (for financial or other reasons). However, I don't want to exaggerate this point—I imagine that once you take into account the cost of housing, most sprawled-out sunbelt cities are more affordable than New York City even accounting for the cost of a car.
Another complication is that once you have specialized job centers, "well-located" becomes specific to the industry in which the individual works. A brewer may not need to live near a movie studio for work purposes, but if she is married to an actor she may want to anyway. If the brewery cluster and the movie studios happen to be across town from each other, it creates a problem. Also, a worker who switches industries may also need to switch houses, which involves significant moving costs. This would be rarer in cities where jobs are all clustered together, because in that case switching jobs should not affect your commute much.
Finally, the car-based model probably doesn't scale very well. Beyond a certain point, traffic congestion starts to degrade the "well-locatedness" of most/all of the housing in the metro area. Car infrastructure is noxious (no one wants to live too close to the highway, and parking lots use up expensive, well-located land and are unpleasant to walk past). Moreover, car-based development is (to a certain degree) incompatible with evolving toward a transit-oriented, pedestrian-friendly city structure. In other words, up to a certain city size car-facilitated sprawl is probably the best policy, but as the city continues to grow it finds itself stuck in a pattern of development that no longer makes sense. Unfortunately it is hugely expensive and politically difficult to reorient the city toward a development pattern that is suitable for a large population. For this reason I think it's worth considering transit-oriented development at a relatively early point in a city's lifetime, although I admit this is a very tricky issue.
posted by James | 12:26 PM
0 Comments:
Post a Comment
<< Home