A BROADER ISSUE
Democratising Prosperity: Global Perspectives on Housing Affordability
The issue is not… not… Land use Cities The issue is… is… Quality of Life
The Great Greek Dream Athens
Social Equity
Presentation to the Urban Consolidation Seminar Adelaide By Wendell Cox 29 July 2005
Future of the Nation
Housing Affordability Crisis in Australia
Housing Affordability in the USA
EXAMPLE OF ADELAIDE
THE RULE, NOT THE EXCEPTION
160% 140%
Inflation Adjusted
Median House Price
120% 100% 80% 60%
GDP per Capita (AUS)
40% 20% 0% -20%
1981
1986
1991
1996
2001
OUTLINE Nicolai Ceaucescu Father of Smart Growth
Social Housing Bucharest
UNDERSTANDING “URBAN SPRAWL”
The American Dream St. Louis 23 July 2005
The Anti-Sprawl Theology CONDEMNING WHAT THEY DON’T UNDERSTAND
Understanding “Urban Sprawl”
Public Transport: Hopeless Rhetoric
Not enough people going to the same place at the same time
PUBLIC TRANSPORT: HOPELESS RHETORIC
Don Valley Parkway & Commuter Rail Toronto
Democratizing Prosperity
BACKGROUND: DEMOCRATISING PROSPERITY Swedish Dream Stockholm
The Role of Home Ownership
HOME OWNERSHIP AND PROSPERITY Japanese Dream Sapporo
Threatening the Dream
THREATENING THE GREAT AUSTRALIAN DREAM Spanish Dream Barcelona
Preserving the Dream
PRESERVING THE GREAT AUSTRALIAN DREAM Portuguese Dream Porto
1
NOT A BRIEF FOR SPRAWL LONE MOUNTAIN COMPACT
The Great German Dream Leipzig
Understanding Urban Sprawl
Sprawling Paris 1954-1999
Paris to Tourists & Urban Planners
Paris: Avenue de l’opéra
Tourist Paris is Not Paris DIFFERENCE BETWEEN AUSTRALIA & EUROPE: HISTORY
Population 82% Outside City of Paris
“ … absent a material threat to other individuals or the community, people should be allowed to live and work where and how they like.”
Employment 67% Outside City of Paris
Paris Missed by Tourists & Planners
The Great French Dream Paris
2
Milan
MODERN “SPRAWL” SPRAWL” = AUTO ORIENTED DEVELOPMENT
Paris Atlas Where People Live and Work Æ
Merriam Webster: “the spreading of urban developments on undeveloped land near a city” city”
Toronto
Sprawl is “suburbanisation.” suburbanisation.” Tourist (& Planner’s) Map of Paris Æ
Sprawl is “urban growth” growth” – nearly all urban growth in the highhigh-income world has been suburban in recent decades.
Tokyo
Sprawl = Automobile oriented development (especially in Australia, the US, Canada, Western Europe and Japan).
Portland
Australia: No Shortage of Land
History of Urban Growth Is the History of Sprawl
AGRICULTURE & FARM LAND: 1981-2002
500 450 400 350 300 250 200 150 100 50 0
The Great Australian Dream Melbourne
Hectares (x1,000,000
Reduction= Land Area of Victoria, Tasmania + South Island (NZ)
1981
2002
Urban Area Densities
The Declining Human Footprint
AUSTRALIAN & NEW WORLD SIMILARITIES
MIRRORS TREND IN CANADA & UNITED STATES
3,000 SURPRISES Sydney More Sprawling than Los Angeles Los Angeles Least Sprawling in New World
2,500 2,000
Urbanisation Å2001 (<0.3%) Human Æ Footprint Reduction 1981-2002
1,500 Agriculture & Urban
1,000
Urban Population Per Square Kilometer
500 0 la At a nt
rth Pe
ne ba is Br
n to on m Ed
d
es
ne ur bo el
de ai el Ad
M
n la ck Au
ey dn Sy
l ge An
o nt ro To
s Lo
3
Universality of Auto-Based Sprawl
Urban Areas: Historical Densities
URBAN DENSITIES COMPARED TO PRE-AUTO ERA
40,000 Paris
35,000
20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0
Population per Square Kilometer
London
30,000 25,000 20,000
New York
15,000 10,000 5,000
Los Angeles
0 1800
1850
1900
1950
2000
The Great Romanian Nightmare Bucharest
Urban Population Per Square Kilometer
1900
Now
Pre-Auto
Japan
W. Europe
Australia
Canada
U.S.
Toronto Area Green Belt Plan MUCH PAIN, LITTLE GAIN Additional 2031 “Smart Growth” 2000 Land Area
Additional 2031 “Business as Usual”
Ceaucescu: Understood Curbing Sprawl FATHER OF URBAN CONSOLIDATION
The Automobile is Here to Stay NO ONE PROPOSES RETURN TO PRE-AUTO ERA
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Share of Motorized Travel Urban Areas Over 3,000,000
Restore Public Transport City? REJECT AUTO BASED URBAN AREA?
• No serious proposals. • Would require dismantling more than 85% of urban area & resettlement. • Auto oriented urban area is here to stay.
Australia
Western Europe
Canada
United States
Asia
• Densification worsens the quality of life.
4
Suburbanisation Dilutes Congestion
Suburbanisation Speeds Traffic Up
TRAFFIC INTENSITY IN WORLD URBAN AREAS
4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0
TRAFFIC SPEEDS IN WORLD URBAN AREAS
60 Vehicle Hours/ Square Kilometer By Population Density
1990: KM/H by Population Density
50 40 30 20 10
Under 750
750-1,999
2,000-3,999 4,000-7,999
8,000 & Over
Suburbanisation: Shorter Work Trips INTERNATIONAL EXAMPLES
0 Under 750
750-1,999
2,000-3,999
4,000-7,999 8,000 & Over
More Air Pollution at Lower Speeds Based Upon Index of 1.00 at Lowest Point for Each Pollutant By Miles per KM
25
60 50
20
40
15
30
10
20
CO
10
5
0 Dallas-Fort Houston Worth
Los Angeles
Atlanta
Sydney
Paris
Tokyo
NOx
CO NMHC
NOx
VOC
0
“Jobs“Jobs-Housing Balance” Myth THE RECORD Hong Kong: Average Work Trip 7.7 KM
Other Location 17.9%
Job Lo cation 17.9%
Neighborhood 25.9%
Other Reasons 17.7%
House 20.5%
Reason for Neighborhood Choice US Census Survey
5
Urban Villages: Insignificant & Futile
Exaggerating Suburban Costs
”JOBS-HOUSING BALANCE:” THE RECORD
US SUBURBS LESS EXPENSIVE THAN CORES
$350
>700 USA Municipalities Fees/Capita: 2000
$300 $250 Water
Average Work Trip Distance Welwyn Residents
Welwyn
$200 $150 $100 $50
Example: London Area New Towns
Sewer Density 3.020
Density 1,880
Density 1,090
Density 800
Core (1939)
Ring 1: 1959
Ring 2: 1979
Ring 3: Later
$0
Suburban Cost Research
Suburban Cost Research
U.S.A. “CANNOT AFFORD” SUBURBANIZATION?
“ILL INFORMED & DISINGENUOUS”
• How did we manage to afford the last 60 years? • Bankrupt suburbs predictions: 1960s • Studies: Theoretical, not real data. • $225 billion US cost claim (to 2025) $30 per capita annually
NOT SINCE COPERNICUS … has the conventional wisdom been so wrong.
“… if the urban policies … were not so ill informed and presented in such a disingenuous way, there would not be a need for this contribution to the debate on Australia’ Australia’s cities” cities” - Patrick Troy (The (The Perils of Urban Consolidation). Consolidation).
Factors Driving Suburbanisation IT IS MORE THAN POPULATION GROWTH • Strong PostPost-War population growth • People moving from rural areas to urban areas • Housing growth well above population growth Average household size down 1/3 • Larger, more efficient commercial structures
no imperative has been demonstrated.
• Employment growth well above population growth Contributing factor: More women in the workforce • Affluence
6
“Smart Growth” On the Retreat
Not All You Hear is True
NEWS SLOW TO REACH AUSTRALIA?
LOS ANGELES TRAVEL BEFORE & AFTER RAIL
200
450,000 400,000 350,000
Portland Urban Growth Boundary: Acres
300,000 250,000 200,000 150,000 100,000 50,000
1997
Public Æ Transport
175 2040 Plan
Actual 2004
Trend 2040
Å Public Transport
150 125
Å1989-2003Æ OPENED
100
Other Smart Growth “Climbdowns” Maryland Portland New Jersey Vote Against Minneapolis-St. Paul Density Suburban Washington
0
75 50
Auto
25 0
1 Metro Line 3 Light Rail lines 6 Suburban Lines 800 KM A$13 Billion
Before Rail: 1989
Public Transport: Hopeless Rhetoric
Auto
Latest Data: 2003
Public Transport Work Trip Share IMPORTANT TO CBD, A SMALL PART OF THE MARKET
CBD: Work Trip Share
Not enough people going to the same place at the same time
Sydney Area Employment
ÅPublic Transport 70%
CBD 13% Public Transp ort 10%
Outside 87%
Don Valley Parkway & Commuter Rail Toronto
Autos 90%
Elsewhere: Work Trip Share
Skeletal Auto Competitive Transit FOR PORTLAND
Auto Competitive Public Transport ONLY TO DOWNTOWN
Auto Competitive Public Å Transport
7
Urban Density & Transit Competitiveness
Misleading or “Doubtful” Information
HIGH INCOME WORLD URBAN AREAS OVER 3,000,000
UNREALISTIC EXPECTATIONS FOR PUBLIC TRANSPORT
35
CAR COMPATIBLE Å DENSITY
25
TOO DENSE FOR CARS NOT DENSE ENOUGH FOR PUBLIC TRANSPORT
20 15
PUBLIC TRANSPORT COMPATIBLE DENSITY
Population (Millions) Æ
12%
Population/Square KM Æ 30
MELBOURNE 2030 PLAN Reduction of Auto Market Share in Percentage Points Goal is many times previous record
10% 8% 6% 4%
10
2%
2020 Goal
Since 1980
5
0% Melbourne
0 0
10,000
20,000
30,000
40,000
50,000
AntiAnti-Sprawl Policies: Prospects
Boston
Brussels
Zurich
Portland
-2%
Background: Democratising Prosperity
More intense traffic congestion More intense air pollution But worse: Lower home ownership, leading to a lower standard of living
There are Rich Households in all Societies
The Great Swedish Dream Stockholm
What Distinguishes Societies is the Extent of Poverty Overwhelming Reality
Rocinda Favela Rio de Janeiro
Luxury Condos Near Rocinda Favela Rio de Janeiro
8
History of the World is the History of Poverty
Affluent Economies Have Achieved a Democratisation of Prosperity $40,000 $35,000 $30,000
United States
GDP-PPP Per Capita 1990$A (OECD)
Japan AustraliaÆ
$25,000 $20,000 $15,000
ÅWestern Europe
$10,000 $5,000
US Poverty Threshold
$0 1870
Economic Progress is Not Automatic The Case of Argentina
1890
1910
1930
1950
1970
1990
Home Ownership and Prosperity
$40,000 $35,000 $30,000
GDP-PPP Per Capita 1990$A (OECD)
United States Japan Australia
$25,000 $20,000
Western Europe
$15,000 $10,000
Argentina
$5,000
US Poverty Threshold
$0 1870
1890
1910
1930
1950
1970
1990
The Great Japanese Dream Sapporo
GDP/Capita: 1990 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50%
Discontinuous ÅAxis
100%
Purchasing Power Parity
78% 74%
Australia
GDP/Capita: 2003
80%
80%
72%
UK
USA
France
Sweden
Japan
100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50%
Discontinuous ÅAxis
76%
Australia
100%
78%
75%
UK
Purchasing Power Parity
73%
USA
France
73%
Sweden
Japan
9
STRENGTH OF THE LIBERAL ECONOMIES
Competitive Intensity HOME BUILDING: AUSTRALIA & EUROPE (1990S)
$120 $100 $100
“Competitive intensity”
$80 $75
$60
Examples: Less restrictive land regulation Retailing
$40 $20 $0 Germany
Australia
Competitive Intensity
How Urban Residents Used to Live (And Some Still Do)
ECONOMIC FREEDOM AND AFFLUENCE
Central Athens, 2005
Lisbon, Portugal
Copenhagen, Denmark
Houses: A Principal Share of Wealth ABS: 1996
Home 43%
How Most Urban Residents Live Today Household 17%
Other 21% Savings 12% Securitie s 8% Stockholm, Sweden
Antwerp, Belgium
10
Democratisation of Prosperity is Associated with Urban Growth
Democratisation of Prosperity: Associated with Personal Mobility 140
500% 450% 400% 350% 300% 250% 200% 150% 100% 50% 0%
120 Real Per Capita GDP/Household
100
United States Growth x1,000,000
80 Autos per Household
60 40
Urban
20
Rural
0 1939
1971
Democratization of Prosperity is Associated with Suburbanization 120% 100% 80% 60% 40%
Canada from 1951, US from 1950 Others from 1965
20% 0% Canada
United States
Western Europe
1800-1850
2001
Japan
Threatening the Dream
Australasia
1850-1900
1900-1950
1950-2000
Democratisation of Prosperity: Associated with Rising Home Ownership 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Renters
Home Owners
1947
2001
BASIC ECONOMIC PRINCIPLE SCARCITY & RATIONING TEND TO RAISE PRICES
This means:
Spanish Dream Barcelona
Rationing land for housing development tends to raise house prices.
11
BASIC ECONOMIC PRINCIPLE HIGHER PRICES TEND TO MEAN FEWER BUYERS
Smart Growth: Strategies & Housing Impacts STRATEGIES
EXAMPLES
IMPACTS
Urban Growth Boundaries & Green Belts
Australia Portland Denver London Toronto Northern Virginia, Boston Australia California
Raises housing prices
This means: Higher housing prices tend to lead to lower rates of home ownership.
s ise t” n R es “Su he W s e t in tudi s
Italian Dream Milan
ANDRES DUANY There is NO question that urban growth boundaries and that elaborate environmental public processes increase the cost of housing by creating scarcity. (And don’ don’t tell me otherwise, because I am not stupid, nor am I inexperienced, nor do I have underdeveloped powers of observation).
HARVARD STATE OF THE NATION’S HOUSING 2005 “Development constraints drive up land and construction costs as well as prevent new housing from keeping pace with rising demand.”
Down-zoning Excessive Development Impact Fees
Raises housing prices Raises housing prices
…our evidence suggests that zoning and other land use controls play the dominant role in making housing expensive.
WACHOVIA BANK “We have identified three major factors which have worked to restrain supply over the past decade, all of which remain very much alive and well today. today. The first is the spread of the Smart Growth, Slow Growth and No Growth movements throughout the country.” country.”
12
U.S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT REPORT “A number of Communities … have used smart growth rhetoric to justify restricting growth and limiting developable land supply, which lead to housing cost increases.”
LAND USE REGULATION RETARDS ECONOMIC GROWTH
AN ALARM ON PLANNING IN THE UNITED KINGDOM “The nightmare scenario for the British economy could be that a ‘tipping point’ was reached where the financial services industry of the city decamps to cheaper cities elsewhere in Europe.”
“metropolitan areas with stringent development regulations generate less employment growth than expected given their Industrial bases”
House Price/Income Multiple A SIMPLIFIED MEASURE
US: House/Income Multiple: 1970-2000 GROWTH CONTROLS: LARGEST PRICE ESCALATION
70% 60% • Median house price divided by median household income.
• Permits ready comparison, national and international
50%
Widespread Land Rationing Æ
40% 30% 20%
• Historical value: Approximately 3.0
0% -10% -20%
Average Mississippi North Dakota Arkansas Iowa Louisiana Minnesota Virginia Connecticut New Mexico Kansas Texas Alaska Wyoming Alabama Oklahoma Missouri Ohio Wisconsin South Dakota Nebraska New Jersey Tennessee Georgia Illinois Kentucky Vermont Florida Nevada West Virginia New Hampshire New York South Carolina Maryland Delaware Pennsylvania Indiana Idaho North Carolina Rhode Island Michigan Utah Arizona Maine Montana Hawaii Colorado Massachusetts Washington California Oregon
10%
• Simplified and understandable
13
Housing Affordability: US Urban Areas
US House Multiple: 2000
2000 CENSUS
CENSUS DATA: LARGE URBAN AREAS
6
House Value: Household Income Multiple: 2000 Census
5 4 3 2
Land Rationing
1
4.11 3.15
SAN HOU DFW PGH STL KC TSP IPS PHI ORL VB CIN CPS ATL BAL DET COL PHX CLV NO MIL WD LV RSB CHI MIA PRV SAC DEN POR SEA BOS NY SD LA SJ SF
Í More Affordable
0
5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0
2.74
Average
Little Land Rationing
Land Rationing
Land Rationing Raises Land Prices International Housing Affordability Ratings And Rankings
500 TIMES INCREASE IN S.E. ENGLAND
£300 £250 £200
Land Price: 90 Hectare Farm Southeast England (Leunig, LSE)
2005.02
£150 £100 £50 £0 Development Not Permitted
Development Permitted
Kiwi Dream Auckland
Housing Cost Multiple: 2004
Housing Cost Escalation in Australia
AUSTRALIA, NZ, CANADA & USA: OVER 1M METRO AREAS
EXAMPLE OF ADELAIDE
10.00
160%
Median House Price/ Median Household Income
8.00 6.00
Fast Growing & Affordable Atlanta Dallas-Fort Worth Houston
140%
Inflation Adjusted
120% 100%
Subsidies Cannot Solve the Problem
80%
4.00
60%
2.00
40% 20%
Land Rationing
GDP per Capita (AUS)
0% BUF RCH STL IPS PGH DFW SAN KC OKC ATL AUS LVL SLC HOU COL OTT NVL CGY MON MEM NO RDU PHX PHI MSP VB POR ORL TSP TOR MIL DEN BAL CHI SEA BOS VAN WD PER SAC LV AUK BRS ADL MEL NYC MIA SF SYD SD LA
0.00
Median House Price
-20%
1981
1986
1991
1996
2001
14
Adelaide’s Deteriorating Affordability
Housing Cost Multiple
HOUSING MULTIPLE: RECENT ESCALATION
6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0
Median House Price/ Median Household Income
10.00
Median House Price/ Median Household Income
8.00 6.00 4.00
Historic Multiple
Adelaide 2000
Adelaide 2004
2.00 SYD
MEL
ADL
BRS
PER
PHX
OTT
HOU
ATL
IPS
DAL
Land Rationing
0.00
Metropolitan Area Population: 2003
CONCEPTUAL MODEL
TALE OF TWO CITIES: ADELAIDE & KANSAS CITY
Millions
Elements of Housing Price Multiple 10
Example Using House US Price to Household Income Multiple: 2004
8
1.4 1.2 1.0
Land Scarcity Premium
6
0.8
1.4
0.6
4
Speculation
2
0.2 LA
SF
MIA
NY
WDC
0.0 BOS
SEA
CHI
PHI
HOU
ATL
1.1
0.4
Underlying Housing Cost to Income Multiple DFW
0
AUSTRALIA & NORTH AMERICA EXAMPLES
Kansas City
Adelaide
Metropolitan Area Growth: 2000-2003
Urban Population Density
TALE OF TWO CITIES: ADELAIDE & KANSAS CITY
TALE OF TWO CITIES: ADELAIDE & KANSAS CITY
1,200 70,000 60,000
1,000
50,000
800
40,000 30,000
Population per Square Kilometer
600
65,000
400
1,100 900
20,000 10,000
17,000
200 0
0 Kansas City
Adelaide
Kansas City
Adelaide
15
Auto & Public Transport Share
Traffic Intensity: 1990
TALE OF TWO CITIES: ADELAIDE & KANSAS CITY
TALE OF TWO CITIES: ADELAIDE & KANSAS CITY
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
30,000 25,000 20,000 95%
100%
15,000 10,000 5,000
5%
0% Kansas City
0
Adelaide
Kansas City
Adelaide
House Price Multiple: 2004
Conclusions
TALE OF TWO CITIES: ADELAIDE & KANSAS CITY
TALE OF TWO CITIES: ADELAIDE & KANSAS CITY
7.0 6.0
Daily Vehicle Kilometers/ Urban Square Kilometer
• Similar interest rates Low Interest Rates Both Urban Areas
• Adelaide housing affordability much worse
5.0
• Kansas City larger
4.0 6.2
3.0
• Adelaide urban population density higher
2.0 1.0
• Kansas City housing demand greater (faster growth)
2.6
Similar Results for Dallas-Fort Worth, Houston Comparisons with Sydney
0.0 Kansas City
Adelaide
• Both have high auto market shares, but Adelaide has larger public transport share. • Similar traffic intensity, though Kansas City is less.
The Democratisation of Prosperity is not Complete
Preserving the Dream 100% 90% 80% 70% 60% 50% 40% 30% The Great Portuguese Dream Porto
20% 10% 0%
Home Owners
Renters
16
STRONG ECONOMIC GROWTH: IS NECESSARY
Land Rationing: Toward a Nation of Renters: Restoring Inheritance as the Deciding Factor 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Renters Eventual Rates Based Upon Housing Price Multiples
Home Owners
70%
40%
Australia Now
Perth Rate
The Great Canadian Dream Toronto
But “Smart Growth:” constitutes an assault on the economy.
15% Sydney Rate
The Great Australian Dream THERE IS NO REASON TO STOP DEMOCRATISING PROSPERITY
LIVING IN THE “FUTURE TENSE”
The Great Spanish Dream Valencia
The Great Australian Dream
The Great Australian Dream
EMERGING IN MEXICO
HAS BECOME THE GREAT UNIVERSAL DREAM
The Great Mexican Dream Guadalajara
The Great Japanese Dream Tokyo
17
The Great Australian Dream
BACK TO BASICS
HAS BECOME THE GREAT UNIVERSAL DREAM
THE ROLE OF PLANNING:
People’s Route Æ Æ The Great Chinese Dream Hong Kong (Fairview Park)
Paris Suburbs
Planner’s Route Æ Æ
Not telling people how to live… Rather, helping people live as they prefer
18
