Study Puts Urban Housing Stock in Perspective

Via Mark Thoma, new research from Jan Brueckner and Bob Helsley:

Jan presented the paper at the first annual UCLA-UCI-USC real estate research day. The finding was straightforward but still interesting: if congestion for commuting to the suburbs is not priced at marginal cost, the urban center will be maintained at less than the social optimum, so the housing stock in the center will deteriorate below the social optimum.

For those who worry about whether this implies that taxing sprawl will reduce the stock of affordable housing, Jan points out that the mechanism for making housing cheaper is greater residential density: with optimal taxation of congestion, one gets very small high quality housing units in the center city.

Here’s the abstract:

The objective of this paper is to show how the same market failures that contribute to urban sprawl also contribute to urban blight. The paper develops a simple dynamic model in which new suburban and older central-city properties compete for mobile residents. The level of housing services generated by older properties depends on current maintenance or reinvestment expenditures. In this setting, market failures that reduce the cost of occupying suburban locations, thus leading to excessive suburban development, also depress central-city housing prices and undermine maintenance incentives, leading to deficient levels of central-city reinvestment. Corrective policies that shift population from the suburbs to the center result in higher levels of reinvestment in central-city housing, therefore reducing blight.

The paper is here (PDF). While at Brueckner’s site, I also noticed this paper (PDF):

This paper identifies a new factor, the age of the housing stock, that affects where high- and low-income neighborhoods are located in U.S. cities. High-income households, driven by a high demand for housing services, will tend to locate in areas of the city where the housing stock is relatively young. Because cities develop and redevelop from the center outward over time, the location of these neighborhoods varies over the city’s history.

The model predicts a suburban location for the rich in an initial period, when young dwellings are found only in the suburbs, while predicting eventual gentrification once central redevelopment creates a young downtown housing stock. Controlling for other determinants of where the poor live (e.g. proximity to amenities and public transit), empirical work indicates that if the influence of spatial variation in dwelling ages were eliminated, central-city/suburban disparities in neighborhood economic status would be reduced by up to 10 percentage points.

Model estimates further predict that between 2000 and 2020, central-city/suburban differences in economic status will narrow in cities of all sizes and especially so in the larger metropolitan areas as American cities become more gentrified.

This can be one fact of several improving the relative economic status of center cities. Interesting reading, in light of this, and this.

Comments

[Tony Petroski:]

From the article:

"Jan presented the paper at the first annual UCLA-UCI-USC real estate research day. The finding was straightforward but still interesting: if congestion for commuting to the suburbs is not priced at marginal cost, the urban center will be maintained at less than the social optimum, so the housing stock in the center will deteriorate below the social optimum."

Gobbledygook at its worst. Thank God Jan wasn't around to write the Declaration of Independence.

Also from the article:

"The objective of this paper is to show how the same market failures that contribute to urban sprawl also contribute to urban blight."

There are still folks researching and writing such papers? The results are straight out of HUD studies from 1962.

Do any of the researchers ever discover that all the big U.S. cities, without a single exception, are owned lock, stock and barrel by the Democratic party? There is a complete lack of political competition in these cities. Where is the research about groups like ACORN getting tax money to cement permanently into place the political corruption of these cities?

It's not a transportation problem or a problem of sub-optimum use of space. It's a complete corruption of normal political processes, those that in free countries usually result in some political competition. It's a continuation of policies instituted well back into the last century that will persist well into this century.

It's not "white flight" as any look at the diversity of suburban communities will attest. It's collectivist flight. Free people wanting to avoid the planning and stagnation of "Progressives" and those worried about "optimal" performance as defined in PhD papers. Do all your papers and symposia, continue to ally with the Democratic party, soak the suburbanites in taxes, and it still won't work. In 2050 you'll still be blaming folks in distant places for problems right in front of you that you can fix by yourselves without using force to coerce others into your plans.

Oct 14 10:46 AM

[Left Coast ...:]

I can only speak to California, but the urban blight led to the suburban flight, not the other way around. The main reason for the flight -- deteriorating schools and personal safety. The inner cities are still struggling with the schools. Fortunately, the safety issues are being addressed (in most cities). The safety improvements has removed an obstacle so that many empty-nesters are willing to relocate to the urban areas. You won't get families staying in the urban areas in great numbers until the schools are fixed.

Oct 16 11:51 AM