Cities and Their Vital Systems Infrastructure Past, Present, and Future (1988) / Chapter Skim
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6 Growth of U.S. Cities and Recent Trends in Urban Real Estate Values
6 Growth of U.S. Cities and Recent Trends in Urban Real Estate Values
Pages 108-145
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From page 108... ...
S Cities and Recent Trends in Urban Real Estate Values JOHN S
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From page 109... ...
In conclusion, questions are raised about what is needed in the way of urban infrastructure, what may not be needed, and who should pay for it. DEVELOPMENT OF THE NATIONAL METROPOLITAN INFRASTRUCTURE Urban growth nationwide can be divided into epochs that reflect the impacts of major technological innovations on the construction of urban infrastructure.
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From page 110... ...
Change became more rapid during the iron horse epoch as the struggle for hinterlands began in earnest. The development of regional rail networks extended the influence of rising urban centers deeper into the surrounding agricultural regions.
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From page 111... ...
A rapidly growing national population and an increasingly sophisticated economy now ensured that large metropolitan centers could grow despite reverses in their industrial export sectors. INFRASTRUCTURE LESSONS FROM GEOGRAPHIC HISTORY Behind the steadily increasing proportion of Americans living in metropolitan centers lay a more complex picture of metropolitan growth.
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From page 112... ...
Urban growth in some respects has been unidirectional within epochs, but it becomes confused as society adopts an important innovation that redefines the locational significance of places within the national transportationcommunication infrastructure. A group of urban planners in 1880 might have been fairly successful at outlining growth patterns for the ensuing 20 or 30 years, but how would such a group have fared in 1920, when their experience with the characteristics of a rail-dominated transportation network was on the verge of becoming obsolete?
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From page 113... ...
An understanding of these complexities of urban policy is currently of special interest because of indications that metropolitan America is entering a new growth epoch. PAYING FOR INFRASTRUCTURE IN THE NEW SERVICE ECONOMY It can be argued that this new metropolitan growth epoch centers on the service industries and on an infrastructure of information handling; that the new jobs will come from the service industries; and that much of the new economic infrastructure will be built around offices, airports, computers, and telecommunications systems.
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From page 114... ...
In metropolitan areas, large and untaxed capital gains on residential real estate accumulate in high-class suburbs, whereas corresponding uncompensated capital losses are drained from the homes and businesses of innercity neighborhoods. Suburbs grow faster than they otherwise would.
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Thus, population movements affect the demand for infrastructure, and corresponding movements in real estate prices redistribute the ability to pay. Capital gains on real estate in new areas often escape taxes, however, and capital losses in areas of decline and outmigration are usually uncompensated.
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From page 116... ...
116 Cal Ct U: o ._ _' of To Cal o JO Cal V)
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From page 117... ...
Upper-middle-class neighborhoods are found in one or more sectors of the city; other sectors are middle class in character, and the rest are distinctly working class in their measures of income, occupation, education levels, housing values, rent levels, and life-styles. Each sector reveals a tendency to project outward the general social class character of its inner-city neighborhoods.*
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From page 118... ...
Stage in the Household Life Cycle A second geographical pattern is formed by the spatial segregation of households according to stage in the household life cycle. Small housing units built at high densities and favored by single persons, and small households at the beginning and ending stages of the household life cycle, are located mainly near the core of the central city along transit routes, near outlying commercial centers, and in suburban apartment districts, often adjacent to transport corridors and commercial land.*
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From page 119... ...
Certain portions of the central cities seem to resist these forces of decline and decay in the housing market. The evidence that they resist is the persistence of above-average housing values and above-average rents in a fast-changing metropolitan housing market.
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From page 120... ...
Chicago Housing Values and Rent Levels In the city of Chicago the median value of owner-occupied housing (in tracts where owner-occupied housing predominates) and the median contract rent (in tracts where rental housing predominates)
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From page 121... ...
that attract these households from other places and in the process maintain the value of housing. Changes in Housing Values and Rent Levels in Chicago, 1970-1980 The 1980 median contract rent in the Chicago SMSA was $214, which was 65 percent higher than the median of $130 in 1970.*
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Median value of owner occupied housing percentage increase, 1970 to 1980 (where owner occupied units predominate) , or median contract rent percentage increase, 1970 to 1980 (where rental units predominate)
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From page 123... ...
WHITTIER O I 4~ Hi. ~ ~J Los Angeles-Long Beach SMSA19701980 Change Median value, owned units$ 24.285$ 87,400 260 % Median contract rent$ 123$ 244 98 % Chicago SMSA19701980 Change Median value, owned units$ 24,360$ 65,000 167 % Median contract rent$ 130$ 214 65 % FIGURE 6-1 Continued.
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From page 124... ...
Thus, the higher-thanaverage price inflation for housing must be traceable to strong demand in those neighborhoods for a relatively fixed supply of rental and owned housing units. Los Angeles Housing Values and Rent Levels The unrelenting demand pressure on the Los Angeles SMSA (i.e., Los Angeles County)
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From page 125... ...
The median value of specified owner-occupied housing units in the SMSA was $64,300; the SMSA median contract rent was $220 (Stegman, 19851. There is significant variation from borough to borough in the city's housing values and costs.
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From page 126... ...
Median value of owner occupied housing percentage increase, 1970 to 1980 (where owner occupied units predominate) , or median contract rent percentage increase, 1970 to 1980 (where rental units predominate)
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From page 128... ...
and housing values (i.e., in tracts where owner-occupied housing units are the majority) above the SMSA average are concentrated on Manhattan at the southern tip of the island; north of Houston Street on either side of Fifth Avenue in the vicinity of New York University; south, west, and east of Central Park; around the edges of the Bronx near the water; in Queens on either side of Flushing Meadow Park; and in scattered neighborhoods of Brooklyn near Jamaica Bay, Rockaway Beach, Manhattan Beach, park districts, and near the bridge to Manhattan (see Figure 6-21.
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From page 129... ...
Above-average advances in housing prices in such neighborhoods, however, usually force many renters out even if zoning permits them. Owners are insulated from above-average value increases they actually benefit from them whereas renters enjoy no such protection, except in the rare case in which rents are kept well below market levels by local rent control ordinances.
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From page 130... ...
If they cannot, the leadership eventually abandons the central city for the suburbs, leaving a core city with a much diminished capacity to dictate the terms of its future as a place to live, work, and recreate. Most new housing units built in recent decades have been erected on new land in suburban settings, yet construction has also continued in the city.
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From page 131... ...
Sometimes industries and, as a consequence, the regions in which they are headquartered appear merely to be preying on other segments of society as a result of defective or incomplete understandings of how the urban economy works. Perhaps the costs of expanding the infrastructure should be charged more fully to the primary beneficiaries, as in the case of property owners in high-value, rapidly appreciating real estate submarkets.
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From page 132... ...
ADAMS ~ /i''. 4 Mi \/' FIGURE 6-3 New central city housing in the Northeast: Buffalo, Boston, Pittsburgh, and Newark.
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RECENT TRENDS IN URBAN REAL ESTATE VALUES Housing Units Built 1979 through March 1980: Northeast /~,,. :: ' : Number of Units -I 101 - 1000 , ~- ~ 51-100 ...
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Data source: see Figure 6-3. Significant amounts of new housing construction occurred in Milwaukee in the vigorous northwest sector, where the eight leading tracts had >1,500 new units.
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135 Rr;scS IN U~¢ MEL E ~MCKEE r {m. Her of Units ~ i01 - 10°° 51 - 100 26 - 50 1_25 1 - 10 *
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One tract near downtown Kansas City, Mo., received almost 100 new housing units, and a peripheral tract in Kansas City, Kans., had >50. Other tracts in both cities had few or none.
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From page 137... ...
RECENT TRENDS IN URBAN REAL ESTATE VALUES r, , KANSAS CITY Number of Units · 101 - 1000 · 51 - 100 · 26- 50 e 1 1 - 25 ~ 1 - 10 * No Data FIGURE 6-5 Continued.
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From page 138... ...
Data source: see Figure 6-3. Scattered development and redevelopment projects in Baltimore added >100 new housing units in each of seven tracts, but the core tracts in general had little new housing, like most tracts elsewhere in the city.
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From page 139... ...
RE CENT TRENDS IN URBAN REAL ES TA TE VAL UES it, at,, \ \ BALTIMORE a 1 ' ' 1 1 0 4 Km.
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From page 140... ...
Data source: see Figure 6-3. The few hundred new housing units added to core tracts in Dallas do not compare with the many thousands built on the north and east sides during the same period.
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RECENT TRENDS IN URBAN REAL ESTATE VALUES 141 HOUSTON 4 Em FIGURE 6-7 Continued.
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From page 142... ...
Data source: see Figure 6-3. Half of the core tracts of Sacramento received no new housing construction, and the other half had only modest amounts.
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In all three cities, core tracts generally had new construction but at levels lower than in newer peripheral tracts.
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1982. An alternative approach to housing market segmentation using hedonic price data.
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From page 145... ...
Piscataway, N.J.: The Center for Urban Policy Research.
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