If you’re into cities, then you’re likely familiar with the Baron Georges-Eugène Haussmann.

He was Napoleon III’s urban planner and the man responsible for the Paris we all know and love today. Those broad avenues radiating from the Arc de Triomphe are his doing. His plans transformed Paris from a medieval city into what was considered to be, at the end of the 19th century, one of the most modern cities in the world.

What spurred this post is an exhibition currently on display at the National Gallery of Art in Washington. It’s on the photography of Charles Marville, who was, interestingly enough, initially commissioned to document Paris before Napoleon and Haussmann “destroyed” it.

In reading NPR’s summary, I was amazed to learn about the meticulous detail that went into the redesign of the city, which went all the way down to the gas street lamps that were rolled out following the “Haussmannization”of Paris. In fact, so much thought went into the appearance of these street lamps that their heights were actually modulated to match changes in street elevation; the effect being that as you looked down an avenue, the street lamps always appeared even and harmonious despite any ups-and-downs in the road.

But beyond street lamps, the exhibition also got me thinking about urban renewal as a broader concept. Today, I suspect that most people would consider Haussmann’s interventions to have been a positive thing for Paris. Before these changes, Paris was a cramped and crumbling medieval city.

However, while in retrospect these changes might seem positive, Parisians at the time hated what was happening to their city. The entire place was under construction. And if you’re a fan of Impressionism, you’ll know that many artists at the time began lamenting about the regularization of Paris. They yearned for the visual variety that once characterized the city.

But as any developer will tell you, change is not something most communities tend to embrace. In fact, it’s human nature for us to down play positives and play up negatives when faced with uncertainty (see Prospect Theory). 

And sometimes it’s merited. Fast forward to 1925 and you have yet another audacious Frenchman trying to destroy and rebuild Paris: Le Corbusier. Come to think of it, I wonder if he thought of himself as the next Haussmann. He certainly thought of himself as the man responsible for ushering in the next wave of modernity.

But while he didn’t execute on his Plan Voisin in Paris, he certainly left his mark on cities all across the world. The plan he intended for Paris, was more or less what we used to clear slums in a lot of cities. However it turned out to be a complete failure.

So I guess the moral of the story is that some change is good and some change is bad. But most of the time it’ll seem bad at first, making it hard to tell which is which.

Yale economist Robert Shiller - who is famous for his work on speculative bubbles and housing markets - was just awarded a Nobel Prize in Economics.

By way of his Case-Shiller Home Price Indices, he has argued that from 1890 to 2012 home price appreciation in the US (in real terms) has been basically zero. It has been flat:

As a result, he’s been very critical of the notion that homes should even be thought of as an investment. In this interview, he says the following:

“So, why was it considered an investment? That was a fad. That was an idea that took hold in the early 2000’s. And I don’t expect it to come back. Not with the same force. So people might just decide, "Yeah, I’ll diversify my portfolio. I’ll live in a rental.” That is a very sensible thing for many people to do.“

He also gives the example of Japan, which saw a massive run up in real estate prices and homeownership rates in the late 80s, only to then see them fall and stagnate for the next 20 years.

In the US, homeownership rates have gone from about 69% at the peak (2006) to roughly 65% as of 2013. The long term average is probably somewhere in between these two numbers.

But homeownership is a fundamental and heavily subsidized part of the American dream. Could America ever be a nation of renters?

Last Monday, the Office of the New York Attorney General subpoenaed Airbnb for information about all of its 15,000 “landlords” who rent out spaces in New York through their service. Airbnb has since refused to provide the information.

This is an interesting case. Airbnb is one of those startups that seemed initially like an idea too crazy to work, but has since grown to become a serious disruption to the hotel industry. However, the problem is that many jurisdictions have laws pertaining to illegal hotels. In the case of New York, the law prohibits short-term rentals under 30 days unless the permanent resident is present alongside the guest(s).

What this means is that renting out your apartment while you’re away for the weekend-which from my experience here in Toronto is how a lot of people use the service-is technically illegal in New York. State senator, Liz Krueger, believes that apartment building residents shouldn’t have to worry that their neighbouring apartment could turn into a de facto hotel room.

While I do sympathize with this concern, I think there’s a gradient of use here. Not every Airbnb user is operating a de facto hotel. Many, whatever that percentage might be, simply use it to earn extra income while their place sits idle. And to do this, the permanent resident is trusting their home to a stranger.

So in a way, there’s a filter in place that isn’t there when the unit is being operated strictly as a hotel suite. Therefore, maybe we just need to expand the definition of having a “permanent resident present” to include having their belongings and life in the place.

It’ll be interesting to see how this all pans out. But whatever the result, it’s clear that Airbnb is definitely shaking up the status quo. Do you think residents should be freely allowed to rent out their places on any term?