Last week Richard Florida headlined an “Urban Lab” panel at the NYU Schack Institute of Real Estate. It was moderated by Sam Chandan, who is dean of the Shack Institute. 

Here are 6 takeaways from the discussion, with a few of my own thoughts attached:

1. Suburban brain drain. This is happening. Florida states that (real estate) development is the key to rebuilding the suburbs. It will challenging to reorient the suburbs away from the car (though suburbs vary greatly), but I do agree that many suburban areas need a refresh to keep them relevant against this brain drain.

2. Decline in home ownership. Florida believes we will see owning vs. renting drop to about 50-50. This would be a pretty big change given that US homeownership is currently hovering in the low 60s and this is already at historic lows. However, the trend is towards urban and that often means more renting.

3. New city characteristics. Access to urban amenities, cultural capital, and transportation is critical and should drive new development. Transit and rail infrastructure can “open up” new areas and combat issue #4, below.

4. Housing affordability. Florida reiterates “the great inversion.” Poverty moving to the suburbs; cities now housing the rich. He also isn’t sure that capitalism alone will solve this problem. Gives example of Manhattan where market is focused on high-end luxury residential.

5. Florida argues that planning and real estate knowledge need to come together to overcome some of the information-asymmetries inherent in the development industry. I’ve written about similar ideas before. I try and apply this sort of multi-disciplinary thinking to urban issues.

6. Micro-living is not a silver bullet for “chronic poverty.” I think it serves a segment of the housing market.

This month the White House released a Housing Development Toolkit. The report starts by talking about the local barriers to building and makes this statement:

“The growing severity of undersupplied housing markets is jeopardizing housing affordability for working families, increasing income inequality by reducing less-skilled workers’ access to high-wage labor markets, and stifling GDP growth by driving labor migration away from the most productive regions.”

It then goes on to highlight a number of tools that American cities have adopted or should adopt “to promote healthy responsive, affordable, high-opportunity housing markets.” 

They are:

• Establishing by-right development
  

• Taxing vacant land or donate it to non-profit developers
  

• Streamlining or shortening permitting processes and timelines
  

• Eliminate off-street parking requirements
  

• Allowing accessory dwelling units
  

• Establishing density bonuses
  

• Enacting high-density and multifamily zoning
  

• Employing inclusionary zoning
  

• Establishing development tax or value capture incentives
  

• Using property tax abatements
  

None of this will be news to regulars of this blog. We have spoken about almost every single tool in the above list. 

I’m not necessarily sold on all of them (good discussion to have), but I have gone on ad nauseam about eliminating parking minimums (off-street parking); the value of accessory dwelling units (commonly called laneway housing here in Toronto); and the negative impacts of barriers to building.

The good news is that there’s growing alignment around a similar set of actions. Change takes time. There’s usually a heavy bias towards the status quo.

Barry Ritholtz recently published an article in Bloomberg View called: Still a Lot of Negativity on Housing. 

He basically says that “many people” should go out and buy a home given the current state of the US housing market and the historically low interest rates. That’s a perfectly fine argument. But it’s not all that interesting.

The article does, however, have a moderately interactive chart showing the percentage of US households that own their homes.

It shows the pre-2008 peak:

And it shows, somewhat surprisingly, the recent “search for bottom.” I knew there was a significant post-2008 decline, but I guess I thought it had stabilized. Instead, the US is hitting homeownership rates not seen since the mid-1960s.

Big cities tend to have a higher percentage of renters. Millennials are flooding into cities. The digital economy now encourages mobility, which contradicts traditional notions of homeownership. There are all kinds of potential hypotheses that could be extracted here.

But the other interesting thing I noticed in the article, was this:

However, at some point in life, you probably no longer want to have a landlord telling you what color your walls can be or become tired of having strangers share a wall with you. I am not a zealous believer that everyone should go out and buy a home. However, for many people, buying makes sense – especially with mortgage rates as low as they are (the current rate of about 3.45 percent for a 30-year fixed-rate mortgage is just 0.10 percent higher than the record low).

I couldn’t help but notice the embedded cultural bias. The inference is that when you rent, you share walls. In other words, you live in some sort of multi-family apartment. 

But when you finally go out and buy a home, you graduate from that. You no longer need to share walls with strangers. Because an owned home equals a single-family detached dwelling. That’s how you know you’ve made it.

Well, I have shared walls in my owned home. I guess I’m not there yet. :)