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The Dow of Cities
- rhapsodic 8y agoI prefer suburban living to city living. But I'm really glad to see the revival of cities in the US, particularly the one I live just outside of. The professional, upper middle class people who are moving in are rehabbing old housing stock and neighborhoods that had been decaying for decades, and it's good for everyone, in my view -- even suburban property owners such as myself.
- bostonpete 8y ago> it's good for everyone, in my view -- even suburban property owners such as myself I agree it's good in general but maybe not so good for people who are being displaced due to rent hikes caused by gentrification.
- rhapsodic 8y ago>I agree it's good in general but maybe not so good for people who are being displaced due to rent hikes caused by gentrification. You're correct. Thanks for pointing that out.
- jeffbax 8y ago> rent hikes caused by zoning codes and regulations that push the price of building up higher and higher -bostonjeff
- gowld 8y agoBuilding isn't expensive. The space above the land is (infinitely) expensive due to zoning constraints.
- StudentStuff 8y agoRequiring garden space and car storage for every bedroom built is a quick way to double a project's costs. Why have zoning codes that prohibit the best use of the land?
- losteric 8y agoZoning codes are a double-edged sword. On one hand, they stop someone from building a high-rise in the middle of a low-density residential area... on the other hand, the very same regulations prevent the market from scaling up to meet new demand. New zoning legislation moves slowly when constituents benefit from rising real-estate prices (to the detriment of the broader public). Legislation like "new construction must not be more than N floor(s) higher than surrounding properties" might help, rather than the simple fixed height limit many areas set.
- StudentStuff 8y agoIf a proposed high rise is near a BRT line or rail, a reasonable zoning code shouldn't mangle it or block its construction.
- rosser 8y ago...and we're already pretty far down the rabbit hole of how zoning gets so complex. There are always exceptions. There are always circumstances. There are always NIMBYs. AFAICT, you cannot regulate how land is used — which isn't necessarily a bad thing — without bumping into those things, which seems invariably to compromise, or at least complicate, the effort. I would still very much prefer zoning over someone who can afford to do so deciding, simply on that basis, that he's going to build, say, a tannery up-wind of my home. Imposing your externalities upon others is, IMO, a bright-line breach of the NAP. (Since it's so often Libertarian-leaning folk who are all, "But zoning!") EDIT: phrasing
- rayiner 8y agoGetting rid of zoning doesn't mean getting rid of nuisance law. If someone builds a tannery upwind from your propeety, you can sue him formcausing a nuisance. And he can either pay you, stop, or buy you out depending on what is economically efficient. The peoblem with zoning is that it allows you to stop lots of things that would not qualify as a nuisance. And it prevents lots of things that would be an economic win (buildimg a high rise in a previous low rise neighborhood if property owners were willing to sell out).
- dredmorbius 8y agoThatsThePoint.jpg
- losteric 8y ago> people who are being displaced due to rent hikes caused by gentrification. Isn't that displacement gentrification itself? When demand exceeds supply, housing goes to the highest bidder...
- CNJ7654 8y agoSpot on. It's good for those living in the cities, obviously, but the rising wages generated by this is good for those of us who live in suburban/rural regions and commute to the city
- jasonmp85 8y agoTBH I'd have rather read about The Dao of Cities.
- Terr_ 8y agoOr the S&P 500 of cities -- the DJIA is a silly metric.
- patmorgan23 8y agoHe most stock indexs aren't great. Non of then have inflation controls and they AVG single units of a company's stock rather than their market caps.
- chrisweekly 8y agoI wonder what the broad adoption of autonomous vehicles will do to the urban-center growth curve.
- ghaff 8y agoThe common wisdom is that it will lead to more dispersion. (In fact, this will probably be true even before full hands-off door-to-door systems are available.) To the degree that at least some people live in cities, not so much because they want to, but because they work there and don't want the commute, they might move to the suburbs if that commute becomes easier. Of course, if a lot of people think that way, traffic probably becomes more congested.
- throwawayjava 8y ago> To the degree that at least some people live in cities, not so much because they want to, but because they work there and don't want the commute, they might move to the suburbs if that commute becomes easier IDK if those people exist in high numbers within city centers. Those folks are all clustered along transit lines just outside of city city centers, right?
- ghaff 8y agoYou may be right at least for cities with decent commuter rail systems. I'm most familiar with Boston and, if someone is working in town and doesn't want to live downtown, there are quite a few nice inner suburbs that aren't that far away along a rail line.
- moorhosj 8y agoThe rise of dual-income households has put a premium on commute time (as it now impacts both parents). I believe this has helped drive the 50% outperformance of city-center real estate cited in the article. Autonomous vehicles would likely slow that trend, not sure it would eliminate or reverse it all together.
- 8y ago
- gnode 8y ago> You can’t literally buy stock in a city, but buying a house is the closest thing imaginable. Maybe not accessible for the retail investor, but can't this be done by buying collateralized debt obligations? If you could be issued a CDO based on urban mortgages in particular, then you could profit from the rise of urban house prices.
- gervase 8y agoI could be wrong, but my understanding is that these are rarely packed on a geographic basis, and more on a risk (or owner?) profile basis, which kind of breaks the "buying stock in a city" metaphor.
- gnode 8y agoMy understanding is that they group the owners together, then issue CDOs such that some are paid before others. Those which are paid last have the highest risk, but the largest rate of return. If you believe house prices are safer than the rest of the market does, you'd buy the high return high risk CDOs. It's also my understanding that they aren't issued on a geographical basis (beyond the country or state level). However, that's not to say they can't be, if investors take interest in distinguishing rural and urban mortgages.
- gowld 8y agomarket-specific residential REIT: https://www.reit.com/what-reit/reit-sectors https://www.reit.com/what-reit/reit-sectors
- ThrustVectoring 8y agoThat instrument would be far more useful on the short side - someone with a house in SF likely wants to limit their exposure to idiosyncratic SF-only housing price risk.
- gnode 8y agoIt works both ways. This is essentially what happened in The Big Short, although for profit, rather than hedging. You can purchase naked credit default swap options, whereby the issuer with insure debt which you don't own against default. This comes with some obvious criticism, much like taking out insurance for someone else's house.
- jpao79 8y agoI really like this website: https://teleport.org/welcome https://teleport.org/welcome
- dredmorbius 8y agoThe notion of valuing cities is an interesting and useful one. The notion of doing this by way of real estate valuation is somewhere between misguided and actvely dangerous. Asset price inflation is not, should not be confused with, and proxies poorly for, real economic wealth increase. The definition of wealth itself has been and remains something of a conundrum within economics. It wasn't until I actually started reading Adam Smith closely some years back that I realised his definition, "the annual produce and labour of the nation", is a flow rather than a stock measure. (Smith biographer and editor Edwin Cannan commented similarly in the late 19th century, I'm late to the party). As such, Smith's metric bears a strong resemblence to Leslie White's law, "culture evolves as the amount of energy harnessed per capita per year is increased, or as the efficiency of the instrumental means of putting the energy to work is increased". https://en.wikipedia.org/wiki/White's_law https://en.wikipedia.org/wiki/White's_law Which might make for a more useful metric basis than City Observatory are proposing.
- carapace 8y agoReminds me of "Constructal law" (sic). > "For a finite-size system to persist in time (to live), it must evolve in such a way that it provides easier access to the imposed (global) currents that flow through it." https://en.wikipedia.org/wiki/Constructal_law#Constructal_law https://en.wikipedia.org/wiki/Constructal_law#Constructal_la...
- dredmorbius 8y agoThanks for that, TIL. Oh, wow! Very interesting set of pubs. https://www.worldcat.org/search?q=au%3ABejan%2C+Adrian%2C&qt=hot_author https://www.worldcat.org/search?q=au%3ABejan%2C+Adrian%2C&qt... https://plus.google.com/104092656004159577193/posts/hniKFN5RoUH https://plus.google.com/104092656004159577193/posts/hniKFN5R...
- carapace 8y agoCheers
- brailsafe 8y ago> You can’t literally buy stock in a city, but buying a house is the closest thing imaginable. I feel like this might be more generalized to "home" rather than "house", though I suppose it depends on what your conception of a house is. So far as I'm aware, focus on single family detached houses leads to a gradual decrease in every measurably quality of urban living by using a sprawl as a vehicle.
- padobson 8y agoThe new Fitch analysis make it abundantly clear that cities are hot, and suburbs are not. I'm not sure this is true. I'd say it's more like demand in cities is outpacing supply, whereas that's not the case in the suburbs. It seems more like a commentary on the scarcity of real estate (both natural and artificial) in city centers.
- padobson 8y agoHas anyone ever considered moving to some wilderness and just developing an urban center there, a la Sim City? If there's such a shortage of cities, perhaps building one from scratch is a viable option.
- forgotmysn 8y agohttps://en.wikipedia.org/wiki/Fordl%C3%A2ndia https://en.wikipedia.org/wiki/Fordl%C3%A2ndia
- carapace 8y agoThat is incredible.
- padobson 8y agoGreat reference! I seem to remember some old computer game, I think it was Amazon Trail 3[0], in which there was a side quest where you had to trade rubber for other items while near Fordlandia. [0]https://en.wikipedia.org/wiki/Amazon_Trail_3rd_Edition https://en.wikipedia.org/wiki/Amazon_Trail_3rd_Edition
- konschubert 8y agoI think this has been done many times in human history. Sometimes with success, usually with failure. But considering the shortage of cities, maybe it is actually time for another success story?
- droidist2 8y agoNot wilderness, but a city from scratch (Songdo, South Korea): https://en.wikipedia.org/wiki/Songdo_International_Business_District https://en.wikipedia.org/wiki/Songdo_International_Business_...
- twic 8y agoIt's been done in various ways. Brasilia: https://en.wikipedia.org/wiki/Bras%C3%ADlia https://en.wikipedia.org/wiki/Bras%C3%ADlia England's garden cities: https://en.wikipedia.org/wiki/Garden_city_movement https://en.wikipedia.org/wiki/Garden_city_movement And later the New Towns: https://en.wikipedia.org/wiki/New_towns_movement https://en.wikipedia.org/wiki/New_towns_movement I'm would guess there are examples from the former communist bloc, but i'm not familiar with them. Would Magnitogorsk count?
- kaycebasques 8y agoI'm a bit hesitant to give this article any mind, simply based on the fact that they're using an antiquated index like the Dow as their point of comparison.
- gowld 8y agoMoving beyond the middlebrow dismissal... The only thing wrong with the Dow is the way it's weighted. Not a particularly relevant concern for the metaphor.
- kaycebasques 8y agoI don't see why it was necessary to make it personal with the "middlebrow" remark. > The only thing wrong with the Dow is the way it's weighted. You are right. Price-weighting is indeed unintuitive. Other things wrong with it: * Its name, "Dow Jones Industrial Average". It's far from an average of modern US industry. * It size. 30 companies is a small basket, when we have many alternatives that cover the economy much more comprehensively.
- rmah 8y agoOr the fact that they don't seem to be aware of the Case-Shiller index which measures the same thing, is the industry standard, and is widely reported in the financial media.
- rmah 8y agoWhy not just use the Case–Shiller index? It's been around for 18 years, has data from 1890 to today, has a solid methodology that has been scrutinized by many economists, and is the industry standard for US residential home prices. Oh, and it's also widely quoted in the financial media.
- twelvechairs 8y agoCase-Shiller cuts it a different way though. The post is pointing out that city centre areas in general are increasing in value compared to outer areas. Case-Shiller is an index of price trends across different metro areas that doesnt differentiate city centres from suburban areas. I don't think the headline statement for a 'dow of cities' is really useful to implement. But there is a good point in there of society and industry not paying much attention to broad trends in cities. Case-Shiller is well regarded, but its a very blunt tool for analysis.
- mlinksva 8y agoThey're comparing zip-code level Case-Shiller index based on distance from city center. Metro level (which is what is widely quoted as far as I know) does not get at what they're trying to characterize, which is relative demand for housing in more urban environments.