Category: land and how we use it

I quibble with the use of the word “investor” here as the real investors are the people who live and work in and around that building, adding value. The putative investor will be simply collecting accumulated rentier wealth, growing rich in his sleep, as JS Mill said.

Landlords grow rich in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.

Someone once said to me there was no way they could be convinced that density would lower housing costs…maybe this would do it. And this was from someone who has traveled to Paris and other cities in France, London, as well as NYC and other dense US cities.

Supertalls are, of course, not the answer to the housing crisis. As the NYU economist Arpit Gupta explained to me, gentle density is what’s most urgently needed to reduce pressure in the housing market. “The vast majority of people in Manhattan live below the 10th floor,” he told me. “Downtown Paris is about the same size and has the same population as Manhattan, with few people living above the sixth floor. So what that tells me is that ‘missing middle’ construction—in the form of townhomes, and apartments that don’t go above the sixth floor—can actually produce all the density you really need in a city.”

NB: Seattle is twice the size of Paris by area but Paris has 3 times the population or 6 times the density yet no one complains that Paris is a mass of impersonal skyscrapers and housing blocks.

This “missing middle” housing is cheaper to construct than skyscrapers, meaning that these shorter buildings can pencil out for middle- and lower-income Americans. By contrast, the per-unit cost for skyscrapers will likely always exceed the budget of average-income workers.

And of course, the only way to get these to pencil out is by lowering the cost to acquire land through ground rents. Lower the barrier to entry and let the city take in more revenue over time…if the city’s finance department is imaginative enough to see that. Or they could preside over budget shortfalls and austerity while speculators play their games.

Malthus understood land, as part of his theory on population, but no one talks about that…

But it must perhaps also be allowed, that, under a system of private property, cultivation is sometimes checked in a degree, and at a period, not required by the interest of society. And this is particularly liable to happen when the original divisions of land have been extremely unequal, and the laws have not given sufficient facility to a better distribution of them. Under a system of private property, the only effectual demand for produce must come from the owners of property; and though it be true that the effectual demand of the society, whatever it may be, is best supplied under the most perfect system of liberty, yet it is not true that the tastes and wants of the effective demanders are always, and necessarily, the most favourable to the progress of national wealth. A taste for hunting and the preservation of game among the owners of the soil will without fail, be sup­plied, if things be allowed to take their natural course; but such a supply, from the manner in which it must be effected, would inevitably be most unfavourable to the increase of produce and population. In the same manner, the want of an adequate taste for the consumption of manufactured commodities among the possessors of surplus produce, if not fully compensated by a great desire for personal attendance, which it never is, would infallibly occasion a premature slackness in the demand for labour and produce, a premature fall of profits, and a premature check to cultivation.

Malthus understood the fundamental inequality of land ownership. His other ideas, on overpopulation and food, were overcome by contraception and agricultural science, but the distribution of land is a political/economic problem.

How it started…

This radical vision was the work of Victor Gruen, a Jewish refugee who had fled Nazi-occupied Austria in 1938. He set his sights on bringing a dose of Viennese urbanity to what he saw as the car-dominated “avenues of horror” of American commercial strips. He imagined Southdale as the centre of a new high-density, mixed-use district, surrounded by housing and offices, as well as a school and a medical centre, with an artificial lake wrapped by curved streets, all forming a utopian “blight-proof neighbourhood”.

How it’s going…

Southdale spawned thousands of imitators across the country, many designed by Gruen, leading him to be crowned Father of the Shopping Mall – a label he grew to despise when he saw what he had unleashed. In 1978, two years before his death, he renounced this legacy. “I would like to take this opportunity to disclaim paternity once and for all,” he said. “I refuse to pay alimony to those bastard developments. They destroyed our cities.”

A good idea — “a new high-density, mixed-use district, surrounded by housing and offices, as well as a school and a medical centre” — spoiled by the speculative games of land ownership. There is another way, as the world’s most livable city proves time and time again.

So many cities are being handed a great opportunity to remake themselves, as shopping malls are decommissioned across the country. Blame Amazon if you like, rue the loss of a vast air-conditioned respite from the weather as you need to, but let’s think more about what we can make from this. In Seattle, one of the first malls in the USA is being gradually remade — 55 acres of land next to a freeway and a transit hub serving light rail and busways, adjacent to a community college and surrounded by established housing, homes and apartments. So far, all we have seen is a hockey training arena because entertainment is more important than housing to those who have a home of their own (like the city’s leaders).

How much social housing or mixed-use development could be built on 55 acres and how popular would it be, given the access to everything that’s already there? 10-15 minutes to downtown by train and access to the whole Eastside — Redmond and Bellevue — by the end of the 2024 makes that area incredibly valuable. But who will cash in? Not the city or county that made the investment in that land. And who won’t be able to buy in? The people who work in the city but can’t afford to live there — exist, yes, but live, in the fullest sense of the word? No. A ground rent or land value tax that captures the value — let the owner hold the title — would go a long way to to undoing the most fundamental inequality — access to land.

Progress and Poverty, first published in 1879, was American political economist Henry George’s most popular book. It explores why the economy of the mid-to-late 1800s had seen a simultaneous economic growth and growth in poverty. The book’s appeal was in its balance of moral and economic arguments, challenging the popular notion that the poor, through uncontrolled population growth, were responsible for their own woes. Inspired by his years living in San Francisco and his own experience with privation, George argues instead that poverty had grown due to the increasing speculation and monopolization of land, as landowners had captured the increases in growth, investment, and productivity through the rising cost of rent.
To solve this, George proposes the complete taxation of the unimproved value of land, thus returning the value of land, created through location, to the community. This solution would incentivize individuals to use the land they own productively and remove the tendency to speculate upon land’s increasing value. George’s argument was profoundly liberal, as individuals retain the right to own land and enjoy the profits generated from production upon it.
Progress and Poverty was hugely popular in the 1890s, being outsold only by the Bible. It inspired the Single Tax Movement, and influenced a wide range of intellectuals and policymakers in the early 1900s including Leo Tolstoy, Albert Einstein, and Winston Churchill.

And in keeping with the author’s principles, the book is free…no rent is extracted from it.

This guy gets it…

Colin O’Keefe, who owns a town home in Crown Hill, said that when he was looking for a home in the neighborhood, there was no need to search for a place with a backyard with Golden Gardens just a few minutes away by bike.

In almost 10 years, the 35-year-old estimates he has visited Golden Gardens more than a hundred times.

Nothing beats watching the sun set late in summer, the colors changing and rays moving each minute behind the Olympic Mountains, he said.

O’Keefe, who is planning his wedding reception at Golden Gardens, said he is disappointed about the decision to limit park hours and thinks spending money for police enforcement is a waste.

“When you lose people like us, who love parks and are the biggest advocates in the world for open space, it kind of feels like you lost the plot,” he said.

Who are cities and parks for?

It seems like the drag racing issue could be managed by traffic enforcement. And the crowd size issue tells me we need more public spaces, not reduced access to the ones we have.

How can cities manage their most valuable physical resource — land — for the benefit of everyone who chooses to live on it? How is the value created, who reaps the value, and how is it remitted back to the real investors — the community?

A 20% down payment on the standard Seattle home, which costs $800,000, will run you $160,000. Even with that down payment, you can expect to pay ~$3,400 on a 30-year mortgage. I must now remind people that I bought a home in the Central District for $70,000 in the not-too-distant year of 1998. (A 20-year adjustment to standard inflation places its value at around $120,000.) My down payment was $5,000. My mortgage, $600. I made less than $40,000 a year as a freelancer and adjunct lecturer. Those were the days for a young person in the arts. (Zillow presently places the value of that old house of mine at an unrealistic $800,000.)

We need to keep in mind that Seattle only had 563,374 people in 2000, not long after when he bought his little place, where today it’s at 753,675. That’s almost 200,000 — 34% — more people fighting over the same 84 square miles. If you don’t increase the density per square unit of area, every unit becomes more valuable. Charles Mudede knows that little house isn’t worth $800,000 but doesn’t expressly say why someone will pay that (and they will). It’s for the location, for the proximity to whatever the community has created there.

A reader made the observation that these missives don’t offer a lot of hope, don’t outline or explain the positives. Well, by chance, this came in today:

Today I took a walk in a beautiful neighborhood in Barcelona, where there is a famous palace/art museum called Palau Nacional de Montjuïc / Museu Nacional d’Art de Catalunya. As I walked toward it, coffee in hand before starting work, I remembered how while I was growing up in the suburbs in the U.S., I used to think that cities with places like this were somewhere you could only visit on vacation for a couple weeks a year. In my mind, beautiful countries were the stuff of luxury trips you could only afford if you were rich, or something you’d only see in movies or read about in books. I was shocked to realize, when I moved here for a research project several years ago, that people actually live in these places.

Sure, I theoretically understood this before, but to come face to face with this reality was moving and changed my worldview. I realized firsthand that normal people like you and me can and do live in beautiful, magical towns and cities year-round. And not because they are rich (I was a broke student for much of the time), but because in many places, it’s normal to strive to build beautiful, human-centered cities. It brings people joy and a sense of pride, it embodies values and culture in physical form, and it enhances our life experience in various ways. As I move forward with my work in the field of urbanism, my goal is not to encourage more people to move to these places (or to build castles), but rather to encourage people to make more places that are beautiful, interesting, exciting, fun to live in, unique and beloved. — emphasis added

What prevents us all from living in vibrant, interesting, people-centered places? Failure of imagination, fear of what we might lose…? For too many USAnian cities, the deeply-rooted car culture with the attendant waste of land on parking and roads, as well as the public health and environmental damage, will be hard to change. But a better future is out there and we could start working on it today.

As the saying goes, the best time to plant a tree is 100 years ago…the next best time is now. And the corollary that the wise plant trees in whose shade they will never sit. “An advanced city is not one where even the poor use cars, but rather one where even the rich use public transport,” argues Enrique Peñalosa. If your city’s traffic is so persistent as to warrant dedicated daily news coverage, you almost certainly have demand for a dedicated busway or train. What you don’t need are more lanes or bigger highways. Just because Elon Musk doesn’t understand induced demand doesn’t mean the rest of us don’t. We give up a lot for the freedom of driving which turns out not to be worth much in cities. For getting between cities, it makes some sense but not where land is valuable and where people need land for better uses.

So the sunlit uplands are there, if we want them. And if we can’t have what we want, what are we even doing? What is the value of choice if the choices are dumb and bad? We need to imagine better choices and make them reality.

No mention of why this property fetched such a high price…we see phrases like

the offering “garnered significant investor interest globally … due in part to the trophy quality of the asset in a submarket where the fundamentals are clearly improving.”

But no discussion of those fundamentals…that Seattle, like every city, has all the land it will ever have and the price to occupy and access it rises with demand, forcing the cost of living up. Forget all that stuff about money supply or the Wiemar republic and hyperinflation…the cost of land and its impact on the cost of living are constant and ubiquitous. The rising cost of land reflects the value of location and forces wages to rise for the businesses that value that location. Those who don’t command those wages are forced out, as shelter costs track the rising wages, like a buoy on the tide.

I guess I can’t expect the Business Journal to concern itself with these deeper issues but these articles are what we used to call “bead stringing” or “rip and read.” You just take the “news” releases from whatever industry you cover and print them, with a little light massaging or none at all.

A lot to unpack here — why do we continue to conflate housing with houses? — and the reluctance to accept that other people also want a place of their own, even if it means density.

“As a 30-something-year-old who is fully employed, my family and I have spent 18 of the last 24 months living in my in-laws’ basement. Not because we wanted to, but because we couldn’t find a house to buy.”

If a house is out of reach, is there no other option? People do raise families in multi-family buildings, some in very desirable locations. Not that his neighbors will accept a multi-family development:

Eskic went on to read a letter from a concerned citizen to a local Utah city council, in which the resident opposed a proposed townhome development and said they didn’t want to “live next to the kind of low-income people who typically reside in high-density housing.”

“I do not want their delinquent children attending the schools that my children attend. I do not want to deal with the increase in crime and drug use that inevitably accompanies such high-density housing units,” Eskic read from the letter. “I do not want my home values to decrease.”

We’ve already seen that density drives values up, as one would expect. But racism, xenophobia, whatever afflicts people like that isn’t amenable to reason.

The subject of the piece is a researcher but I wonder how many housing options they have seen, let alone researched. Are there no benefits to density and reduced car use, shorter distances between services? How would cities have grown without the car, in an alternate timeline? I get it, people want their private park and distance from their neighbors. They want a place to park a couple of extra cars or plant a garden or build a play structure for their kids or whatever. But doing that within a city comes with a cost. Not just to buy the land itself, but the opportunity cost of a city that allows more people to access it, to invest in it. It becomes a club, in other words.

This is all depressingly familiar, just another example of failure of imagination. “I want a house with a decent fraction of an acre and mature trees and good neighbors who look like me and drive nice cars and keep their lawns mowed and go to bed early” is not an urban planning strategy.

What if you lived in a building with people, some of whom look like you but many of whom are similarly educated, perhaps also work as researchers or knowledge workers, who have also decided they have better things to do with their time than commute to work by car or cut their grass for the approval of their neighbors? Is there nothing to gain from that set of choices? The 1950s are long gone. But they seem to linger in people’s minds, as some kind of dream world no one really wants to return to, if they had to.