Lumpiness: in cities’ property values, and in metro structure

Two only tangentially related thoughts on lumpy growth:

1. Richard Florida in The Atlantic Cities was one of the few major outlets to cover a report from the Demand Institute (a collaboration between Nielsen and The Conference Board) called “A Tale of 2000 Cities.”

The top 10% of American cities account for more housing wealth than the next 90%. The gains in the 2000s were tilted towards the already wealthiest communities.

The report includes an extensive look at a typology identifying nine types of American communities primarily by the strength of their local housing markets, post-recession. In keeping with the name, the results show a striking divergence, with a select handful of healthy markets sweeping up much of the gains — and leaving half of American cities and towns “currently facing fundamental economic pressure.” The report’s summary says: “In today’s global economy, nothing is more important than the strength and sustainability of the local labor market, regardless of whether employers are serving customers in Chicago, Chile, or China.”

If anything, today’s telecom-centric, information economy has resulted in the geography of opportunity getting lumpier, not more diffuse as earlier expectations had predicted — “reports of the ‘death of distance’ have been much exaggerated.” We telecommuters haven’t all decamped to mountaintops. The most valuable places are becoming even more so: they account for not only an outsized share of wealth but also the gains of recent years.

The underlying economic reality, that human capital is what drives most prosperity today, is why I differ from my colleagues who believe that “investment ready places” can thrive based on previous investments in capital goods like housing.

(I’ll have more thoughts in a later post about how macroeconomic changes, and in particular greater economic inequality, have left their mark on “gateway cities.” In the meantime, I highly recommend Ryan Avent’s ‘The Spectre Haunting San Francisco,’ which ties in man-of-the-moment Thomas Piketty as well.)

On another note, the report also has a good omen for suburban retrofits in “favored quarter” suburbs, in the form of an interesting but familiar disconnect between housing supply and demand in “Affluent Metroburbs.” 58% of housing stock in these communities is detached, “but fewer than half [of those seeking to move] say they are seeking a detached single-family home, compared with a national average of 60 percent.”

Among residents of “historic skyline cities,” a broad category that includes both healthy and less-healthy cities, there isn’t exactly a stampede to the exits. 54% of those who intend to move still “intend to stay in an urban area,” and “nearly one in five” wants to move for better schools (hardly the unanimity some cry about).

2. Alon Levy has a great post about how, on a macro scale, the gridded West has a suburban layout that fosters high-coverage bus networks, whereas more organically settled Eastern suburbs have a dendritic, hub-and-spoke layout that lends itself to commuter rail. (Yes, he points out that Johnny-come-lately Washington has, through Metro, grown into the latter pattern.)

This might go some way towards explaining “the Western Paradox” in Brookings’ findings regarding transit access to jobs. In short, Western cities (particularly in the desert southwest) had a strange spread: many jobs were technically accessible by transit, but low transit-to-work mode shares. The highest mode shares were found in older eastern cities, where a large fraction of suburban service jobs are inaccessible by transit.

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