I’m a little slow picking up on this one, but the Wall Street Journal recently interviewed Harvard Urban Economist, Ed Glaeser. Here are some excerpts from State of the City:
THE WALL STREET JOURNAL: What effect will higher gasoline prices have on urban planning in the U.S.?
MR. GLAESER: I would be very surprised to see a wholesale change in the nature of American urban development. We should certainly see changes in the short run, [such as] a slight decrease in demand for housing that’s particularly far away from city centers and dependent on long drives. That [type of housing] won’t be abandoned entirely, but it will certainly be cheaper.
WSJ: What about the idea of having the government purchase foreclosed homes and convert them into affordable housing? Would that be good for the economy?
MR. GLAESER: The government’s track record as a property owner is not so great. I am less enthusiastic about the government getting into this business. If we want strong policies towards taking care of the least well-off in our society, we should make sure supply is unfettered and continue working on the Section 8 [low-income housing] voucher program — that’s the right strategy.
Glaeser discusses Chicago’s success:
MR. GLAESER: I think Chicago has been remarkably successful in lots of ways. The city has managed to stay pretty affordable and Mayor [Richard] Daley has been extremely pro-growth.
Chicago, for many years, has had a relatively pro-growth environment, at least relative to California and New York — especially [before current Mayor Michael Bloomberg]. The climate in Chicago is, of course, far less pleasant than San Francisco and wages are lower than New York.
Still, it is somewhat remarkable that condo prices in Chicago [a median $232,000 in 2007] are less than those in Trenton, N.J. [$248,000], and not that far above Philadelphia [$197,000].
Over the past two years, Chicago has permitted around 14,000 units per year. Los Angeles permitted less than 10,000 units in 2007 and 14,500 units in 2006. Yet Los Angeles has almost twice the land area and over 50% more population. It is substantially less dense than Chicago, and there is substantially more demand for Los Angeles, yet Chicago is building more.
Bringing more units to market — think of all those cranes along the lake — explains in some part of why Chicago is more affordable. The absence of land-use controls [means] prices for condos will tend towards construction costs. After all, you can always build taller buildings.
Unfortunately, some local politicians have begun pandering more to NIMBYs. It hasn’t gotten out of control like coastal big cities, but I wouldn’t be surprised if the development climate changes once Daley retires.
New York City is a great place to be really rich and not a terrible place to be really poor, but it’s a pretty hard place to live on $60,000 a year. You don’t experience anywhere near the basic standard of living you would in Houston on the same income.
After living in NYC vs Chicago, I concur…
