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Affordability and the City

Downtown housing affordability is an international problem.

Interesting article:  Alan Ehrenhalt argues in The New Republic that cities throughout North America are undergoing a "demographic inversion," in which the center city is once again becoming home to the well-off rather than the poor.

Chicago is gradually coming to resemble a traditional European city--Vienna or Paris in the nineteenth century, or, for that matter, Paris today. The poor and the newcomers are living on the outskirts. The people who live near the center--some of them black or Hispanic but most of them white--are those who can afford to do so.


That certainly rings true for Portland, Seattle, and Vancouver, too.  In fact, Ehrenhalt discusses Vancouver, with its "forest of slender, green, condo skyscrapers," at some length.  So apparently, the problems of urban housing affordability aren't just local ones; they're international in scope. (At least we're in good company.)

The article also makes a trenchant observation: the recent North American view of the city as a dumping ground for people who are too poor to escape is something of a historical anomaly.  More typically, cities have been magnets for wealth, not repositories for the impoverished.  Recent trends are, as much as anything else, a return to historic norms. 

Still, Ehrenhalt argues that the urban resurgence is being driven by some ahistorical demographic shifts:  later childbearing, professional couples choosing fewer (or no) kids, more empty nesters in good health.  Those kinds of shifts are likely to persist -- which will mean plenty more people will opt for urbanity over suburban living.  And high demand will likely mean higher prices for homes close to downtown.

So my question in all of this is:  given that people with lots of disposable income are choosing to move closer to downtown, is there a good way -- or, indeed, any way -- to retain decent, affordable housing for middle- and lower-income folks close to downtown jobs? 

I used to think that the best answer was simply to build more housing close to downtown, in part by getting rid of unhelpful restrictions on development.  Build enough housing, I figured, and supply and demand would meet at a more amenable price point.  But I'm no longer sure how much that will help; Vancouver's center city has grown enormously, but prices haven't moderated.  It could be that downtown development is a virtuous cycle with a vicious edge:  as the city gets wealthier, its amenities get better and better, attracting even more wealth -- and making it harder and harder for middle-income folks to find a decent, affordable place to live that doesn't require a long and fuel-wasting commute.

I'm not sure that there's a simple solution here.  I think it's worth a look around.  Has any city -- from Paris to Chicago to Vancouver -- found a good antidote to high housing costs near the city center?  If anyone knows of effective, tried-and-true models for urban housing affordability, I'm all ears.

Then again, this is not the worst sort of problem for a city to have. Consider the alternative.  For decades, wealthy folks avoided downtown, and many urban centers became concentrated enclaves of deep poverty.  The results -- economic segregation of the inner city -- fostered far worse social ills than housing affordability presents today.

Of course, some folks are opposed to gentrification in any form; but it's worth remembering that back in the 1970s and 1980s -- when cities had far less little wealth and economic vitality -- life for downtown residents was pretty lousy.  Idealizing that past is a mistake.  In comparison, current trends in downtown revitalization -- despite the affordability problems -- are in many ways a breath of fresh air.

[Photo courtesy of Flickr user hfabulous.]

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So far the market has proven it cannot provide affordability. As noted in the article, downtown real estate has traditionally been for the rich. Seattle experimented with laneway cottages, which were more affordable, but guess what. Next time they sold, the price jumped. Goodbye affordability.

Policies and programs are the only thing that can provide affordability. Several developments, such as Verdant in Vancouver, at SFU's UniverCity, have resale covenants. You buy in at 20% below market and you must sell for 20% below market.

Employer housing would be another interesting way to keep the people who are the face of the city living in the city. Think of all the baristas, cab drivers, servers and clerks that provide the huge majority of our interactions in a city. Should they not be living in the city. Especially from a climate change perspective, it is insane for so many people to commute in for the suburbs.

Finally, would could build a lot smarter. Prefab and modular are very popular in a lot of other markets. Vancouver developers have gotten very efficient at building very stupid, inefficient buildings, but they have not felt a pressure to innovate beyond that. A lot more affordability could be generated with different ways of building, which could then be preserved with resale covenants.

We need to ask what world we want to live in, and then try to create that world. Saying the market is the only thing that can provide is ideological bullshit.

Posted by: Ruben on 19 Aug 08

The solution is Paris is to have an unbelievably thorough public transportation system. If the city center is the center of wealth, that should also be the center of the tax base, and the center of funding for extensive and reliable public transportation.

Posted by: Alan on 19 Aug 08

Melbourne's 2030 plan was to encourage high density housing around local shopping/commercial centres. So far, it's not working out that way and the urban sprawl 'car is king' model still dominates.

I think part of the problem is the layout of the mass transit system: spokes without the wheel rim. It encourages the mentality that you live *here* and work *there*.

Posted by: Tony Fisk on 19 Aug 08

As a Vancouver resident, I'm not sure I agree that we've really tested the "supply and demand" equation at all. The barriers and regulations surrounding development are still high, and despite the number of residential towers, there is no way that enough have gone up to satiate demand. The rental market, with an insanely low vacancy rate, both feeds this demand and helps prove my point: relative to demand, supply is still very low in downtown and in the closing surrounding areas.

I would love to see an analysis of the costs of putting a tower up downtown or near downtown, and look at how that can be reduced for developers, so that building a more affordable development would still be a nicely profitable venture.

Posted by: Matt on 19 Aug 08

This is the logical conclusion of efficient markets. If people have the right to own property and sell/lease it to others, and in the absence of factors such as areas of high crime etc, there will always be concentric price circles around the desirable areas of cities - usually the centre. Tokyo is an excellent example of this where property prices increase the closer one gets to the central areas and then secondarily with proximity to subway/train stations.

Does that mean the markets provide affordable housing for all in the city centre? No. But if you can't afford a place in the centre, bite the bullet and buy a place further out. Sorry people, the market is reality: no-one has a divine right to live in the middle of town.

Posted by: Doug on 20 Aug 08

In Berlin, there is no real affordability problem. The price has gone up in a few trendy neighbourhoods, but there is still plentiful cheap acommodation. Demographic change itself becomes a driver for cheaper property at some point (when the population starts declining). But the US is not near that point. The obvious solution is to look away from the centre. So, increase the density and urban character of the suburbs, and provide good corridors for public transportation and biking. Much cheaper in the end.

Posted by: nanne on 21 Aug 08

I think we should keep in mind there are two kinds of affordability - rent affordability and ownership affordability. Many people can't afford to buy, even in the suburbs. Let's look beyond global warming and justice issues. Economic, social and racial re-segregation (which is what we're really talking about here) is bad for EVERYONE, not just the folks forced out of their once affordable neighborhods. Without diversity of all kinds it's way too easy to fall into groupthink or live in a bubble. Ideas are never challenged, dogma never questioned. And there's nothing worldchanging about that.

Posted by: aj on 21 Aug 08

There seem to be a fair number of comments here that are either resigned to or supportive of the idea that the "market knows best." The real-estate market in Vancouver, where I live, is a clear example of that not being the case. Both office space and affordable housing are in short supply, while expensive condos bought as investments or second homes sit empty much of the year.

If what we are after is simply economic efficiency and a maximum return on property investment than I'd side with the market. The real issue here is sustainability not, as Doug said, anyone's "right" to live in one place or another.

To craft efficient livable urban spaces we need to protect mixed use, mixed income land-use. Otherwise all we are going to get is a switch in the direction of commuter flows and a re-division of neighborhoods along income lines. I've written this up in more detail here

This issue is a perfect example of the links between sustainability and equity. Not because it feels good, or makes you sleep easy at night, but because unequal divided cities are simply not efficient. You can't get the full benefits of mixed-use density without paying attention to affordability.

Posted by: Alex Aylett on 25 Aug 08



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