Austin Contrarian

New York City is much cheaper than such a dense place ought to be

Charlie Gardner finds an association between metropolitan area weighted density and housing affordability:

Income is more strongly correlated with weighted density than total population, although not dramatically so. However, median home values were even more strongly correlated with weighted density.  The result is that, for cities of equivalent size, the city with the higher weighted density will generally be less affordable in relative terms, even if incomes are higher (for instance, Sacramento is almost twice as dense as similarly-sized and lower-income Kansas City, but is only two-thirds as affordable).

I believe high home prices are generally caused by housing being too scarce rather than housing being built too close together, so I didn't expect weighted density to have much bearing on home affordability. In fact, it doesn't: the association between weighted density and affordability is weak, with weighted density explaining only about 17% of the variation in affordability (the ratio of median home price to median income*) among metropolitan areas. Whatever the culprits for unaffordability, they're mostly something other than density. (Being located in California is a better predictor of high relative housing cost, for example, than having high density. The variation in affordability explained by weighted density drops to 10.5% when California cities are excluded.)

Below is a scatterplot pairing the weighted density of each MSA with the ratio of its median home price to median income. The trend line slopes upward, which means that housing tends to get less affordable as the metropolitan area gets denser. As the scatterplot should make clear, though, weighted density doesn't really have much predictive value, particularly for MSAs with weighted densities less than 5,000-6,000 pssm. (Contrast this with having "San" or "Santa" in the city name; this seems to be a very good predictor of high unaffordability.)

 (click to enlarge). 

One thing that jumps out from the chart is just how much of an outlier the New York City metropolitan area is. It's an outlier in density, of course - it's almost three times as dense as LA and San Francisco. But it's also an outlier in its distance below the trend line.  The New York City metropolitan area is much, much more affordable than the trend line predicts. The trend line predicts that the median home in the New York MSA should cost a bit more than 15 times the median income; in reality, the ratio is under 11. Moreover, the slope of the trend line is itself skewed downward by New York City: if you fitted a trend line to the data ignoring NYC, it would predict a home value-to-income ratio of arond 20 for a city with 31,000 ppsm. 

New York City has horrible land-use regulations. Ed Glaeser et al. estimated a few years ago that regulatory constraints are responsible for at least 50% of the overall unit value in the average owned apartment in Manhattan. Vast swaths of the City have been mummified by historic preservation districts. The City has casually downzoned large chunks of Brooklyn. Many of New York's suburbs are notoriously NIMBY.

Still, it ain't California.

As California's coastal cities prove, a city (with sufficient amenities) can make itself completely unaffordable at any given weighted density. While California has many natural amenities, they're no greater than, say, Honolulu's. Honolulu, of course, is squeezed into a small sliver of land on an island between volcanos and the ocean. (Note that roughly half of New York's metropolitan population is also situated on three islands.) Santa Cruz and San Luis Obispo don't have Honolulu's (or New York's) geographic constraints. What they do have is a nasty set of land-use regulations that are, evidently, just as effective as volacanos, rivers and oceans  in depressing the supply of new housing below the market-clearing level.

*Charlie uses the reciprocal; i.e., median income divided by median home value.  That yields a slightly stronger correlation with weighted density, but the resulting trend line is not as steep.

(NB. Corvalis, another outlier, is not particularly expensive; it just has a very low median income. I assume this means that college students are an unusually high percentage of the population.)

Old Urbanist on weighted density (and other stats)

Charlie Gardner at Old Urbanist has done the tedious but very useful work of collecting a bunch of metropolitan area statistics, running pairwise regressions, and then publishing the correlation coefficients in an elegant little chart. If you are looking for the correlation between, say, 2010 metropolitan area population  and 2010 weighted density (spoiler: it's 0.793.), or the correlation between weighted density and median home value (0.582.), there you go.

He's also got some provocate thoughts on the relationship between weighted density, productivity and affordability.

Filtering up

An honest-to-goodness example of an apartment complex about to "filter up." People understand that a tight housing market leads landlords to raise rents. What they often don't seem to understand is that a tight housing market also causes some landlords to invest more money in their properties in order move them into a more expensive submarket. That's how a shortage of units in the $1,200/month submarket (for example) can hurt someone shopping in the $800/month submarket.

In this case, high demand for rental housing in south Austin has convinced Pensam Capital to upgrade what I'm betting are fairly cheap apartments just a couple of blocks from South Lamar. If this were happening a couple of years from now, everyone would be blaming South Lamar's new apartment complexes for gentrifying the area. But other than the Post property a mile away, the others have just started or are just about to start construction. It's hard to attribute Pensam's investment to anything other than high rents and a shortage of upscale rental housing in the area.

Filtering down happens too, of course. It's just that no one sends a press release to the Austin Business Journal when they decide to cut back on maintenance and allow their property to slip in to a cheaper submarket. Extreme instances of housing filtering down still make the news, though.

Proposition 15

Another one from Ryan. Proposition 15:

This one is even more interesting to me than the Prop 3 map because it tells me something I didn't guess, namely that the vote on Prop 15 was so geographically polarized. Almost all of central and east Austin supported or strongly supported Prop 15. The support dropped with distance from city hall. (Most notable exception: precinct 325, the little patch of dark blue in the northeastern part of downtown.)

Someone ought to regress the perentage voting for Prop 15 on various variables such as median family income, percentage minority, median home price, distance from city hall, and percentage voting for Obama. My guess is that one of the latter two would have the tightest correlation.

Update: Courtesy of Ryan Robinson, the data set of individual precinct results.

Prop 3 voting results

Ryan Robinson, the City's demographer, has put together this map showing where Proposition 3 (10-1 representation) received its votes:

I don't think there's any surprise here. Suburbanites -- and even central voters south of Lady Birdy Lake -- concluded that they're not well represented by the central-Austin-dominated Council.  

10-1 did poorly in west Austin and the central neighborhoods north of UT. A cynic might claim that these voters opposed 10-1 because it will dilute their outsized influence on City Council. I'm an optimist, though. I'm confident all those Tarrytown and Hyde Park "nay" votes were spurred by the fear that 10-1 will lead to ward politics and more NIMBYism.

78704 really is losing children

Stephanie Myers last week had a piece in the Austin Post entitled, “Are Families with Children Being Forced Out of the City?” “Forced” is a loaded term, but families with children undeniably are a declining share of central Austin’s population. Families with children have been declining in share for decades and, as Myers notes, are now declining in absolute numbers in the central city as well.

Why this is happening is up for debate. A fruitful debate, though, requires accurate facts, and I think it’s important to correct the article’s impression that the 78704 zip code somehow is “bucking this trend” and seeing a rise in children. (To orient the out-of-town readers, 78704 is the zip code directly south of downtown Austin.)

The Census data show, clearly and unambiguously, that the population of children in 78704 declined between 2000 and 2010. Back in March 2011, I ran a table showing that nine of the eleven census tracts in ’04 lost children, and the zip code lost nearly 1,400 children overall.

A few months later, I published this chart showing that the population in the zip code declined for every single year of age between birth and seventeen.

 

The loss of children was broad and deep.

There’s yet another way to measure the change, and that is relative to the Austin average. Divide a census tract’s percentage of population under 18 by the citywide percentage of population under 18. This number (itself a percentage) tells you the concentration of children in the tract relative to the citywide average. This is sometimes referred to as a “location quotient.” (The Census Bureau used location quotients extensively in its recent report on U.S. metro area.)

For example, in 2010, 11.15% of the residents of census tract 13.03 (Zilker) were under 18 while 22.2% of all Austin residents were under 18. Children thus were concentrated in tract 13.03 at just 50.2% of the citywide average concentration.

I calculated the location quotients for children under 18 for all of the the 78704 tracts, using both 2000 and 2010 census figures (including the 2000 citywide averages). Between 2000 and 2010, the concentration of children declined, relative to the city average, in every single census tract.

Children were more underrepresented in 78704 in 2000 than 2010, both in absolute terms and relative to their citywide share.

Note that in 2000, 78704 had only one census tract (13.07 – Galindo) with a share of children above the city average. By 2010, though, Galindo’s share had plummeted to 80% of the city average.

Don’t make the mistake of thinking that 78704’s low share of children is due to an overabundance of VMU-style apartments, or to an overabundance of rental housing in general. Owner-occupied housing in 78704 is simply less likely to be used to raise children than owner-occupied housing in the city as a whole.

Citywide, 33% of owner-occupied homes were occupied by a household containing one or more related children under 18 in 2010. The percentages were far below that for every single ’04 census tract. The closest was Barton Hills (19.01), where approximately 25% of the owner-occupied homes contained a related child. Only approximately 18% of the owner-occupied housing in tract 13.03 (Zilker) contained a related child in 2010. Across the entire zip code, only 20.5% of owner-occupied homes contained a related child. (Comparable data is not available for 2000, unfortunately.)

I haven’t seen any persuasive evidence that the population of children in ’04 is increasing. On the contrary, we've recently heard a lot of complaints that short-term rentals are further “hollowing out” '04, making it less desirable for families with children. (I’d have more sympathy for this position if these neighborhood associations hadn’t worked so hard to make them inhospitable to larger households.)

The article cites school enrollments, but using raw school enrollment figures to track changes in population is tricky because of transfers. For example, of the approximately 380 students enrolled at Barton Hills Elementary, approximately 180 are transfers. Of course, some of these transfers are from neighboring schools. Calculating the population of school-age children requires accounting for both the source school and destination school for all these transfers, as well as homeschooled and private-schooled children. And it requires doing this for multiple years, because we're not concerned with what might be a random fluctuation from one year to the next, but an apparently long-term, secular trend. I haven't seen anyone do this analysis.

I'm also skeptical of ad hoc recounts performed by local residents. To be clear, I'm not questioning the integrity of their counts, but merely their relevance to comparisons of 2010 census counts and 2000 census counts. It's virtually certain that the census canvassers missed people in 2010 in the Zilker neighborhood, for example, but it's virtually certain that they missed people in every neighborhood in 2010, and in every neighborhood in 2000. If you want an ad hoc survey to count as compelling evidence against the decline thesis, you need a good explanation why the census takers would be more likely to miss children in 2010 than 2000.  Again, I haven't see one.

Census density data back online

I noted the other day that the Census spreadsheet with density data for all U.S. metro areas had some errors and had been taken down. A corrected version has now been re-posted.

Again, do check out the nifty graphing feature that allows comparisons between cities. Here, for example, is a graph comparing the weighted densities of  Portland and Austin at various distances from their repective city halls:

As you can see, Portland is much denser at the very center, Austin is much denser in the 1-2 mile band, and then Portland is generally much denser between the 2-mile and 13 mile marks. (The cities are pretty close between 5-7 miles).

Portland's MSA population-weighted density is roughly a third denser than Austin's. The chart above gives part of the reason -- Portland is denser across most distances. But this chart in conjunction with the last provides the full explanation:

Portland has a huge bulge in population between the 4-mile and 12-mile marks, where it is consistently more dense than Austin. So it's not just that Portland has a large swath that is denser than Austin -- that swath also happens to be where the bulk of the people live.

Why pay for it when we'll keep getting it for free?

Another data point illustrating that Austin's historic landmarking process is deeply flawed.

Last week, the Historic Landmark Commission unanimously voted to grant historic landmark zoning to Westgate Tower, the 1966-vintage condo tower between Lavaca and Colorado at 11th Street. Planning Commission and Council will vote next.

The Staff memo cites several reason for granting the designation:

• it was designed by prominent architect Edward Durell Stone;
• it is an excellent example of the New Formalism approach to modern architecture;
• it was one of the first mixed-use high-rise buildings in Austin;
• it was an early innovator in the now-standard practice of perching a condo tower on a pedestal of parking;   
• its height and proximity to the Capitol made it terribly controversial, and sparked the creation of the Capital View Corridors;
• it has been inhabited over the years by prominent state government leaders; and
• it was at one time the home of the Headliners Club.

Staff could have added that it is an excellent illustration of mid-century architectural flourishes such as the anti-pedestrian faux arcade. Here's the Lavaca streetscape:

 The Colorado arcade is just a few notches removed from a blank street wall:

Westgate Tower is thus a nice counter-example to the principle that street-fronting, ground-floor uses make for pedestrian-friendly buildings.

This is gratuitous snarkiness because I don't really quibble with the Commission's finding that Westgate Tower meets the criteria for landmark designation. It is, in fact, listed in the National Register of Historic Places. And given the very low barthe city has set for historic designation in recent years, Westgate Tower is quite significant indeed.

The fundamental problem here is not the designation itself but the consequence of the designation. The designation comes with an automatic tax break of up to $2,500 in City taxes and up to $3,500 in AISD taxes.  The staff report doesn't calculate the total loss to the city and schools from the designation -- which, frankly, is a glaring omission -- but we're talking serious money:  if the 105 condo owners receive just an average of $4,000 each, that's $400,000 in lost tax revenue per year.  

What, exactly, would we get for all this money?

The building is in no jeopardy of being demolished. Thanks largely to Westgate Tower itself, the northwestern and southeastern portions of the property are in a Capitol View Corridor and all of the property is in the height-capping Capitol Dominance Zone. It's a safe bet that no one will ever be able to build anything bigger there, and I seriously doubt whether it would be possible to squeeze in as much square footage as exists today.

I haven't tried to calculate the market value of the building. Assuming just an average of $400,000 per condo and ignoring common space and commercial space yields a total value of $41 million. In order to be redeveloped, someone would have to assume that the relatively small tract would be worth $41 million (plus cost of demolition) more with another building there. Land just isn't worth that much in Austin.

Even if someone did float a redevelopment proposal, it would have to get the assent of the condo owners. I don't know whether the condo declarations require a unanimous vote or merely a supermajority vote,  but there's no way a rational offer would ever buy near-unanimous agreement among the condo owners to sell out.

And what if someone did make a crazy offer that the condo owners accepted? Because the building is now listed on the National Register, any building or demolition permit application would automatically go to Steve Sadowski, the City's historic preservation officer, who would put a hold on it for consideration by the Historic Landmark Commission.

There is simply no credible threat that the building will be demolished. The city is proposing to give away hundreds of thousands of dollars per year to condo owners for doing nothing other than continuing to own their condos. 

The condo owners association tried to make a case that the building is under threat from rogue condo owners. From Infact Daily:

Ann Dolce, a director of the Westgate Condominium Association, said that throughout her 11-year board tenure she had seen many threats to the exterior of the building. She said the landmark designation would be a major tool to retain the design and integrity of the building.

Dolce cited as threats property owners’ requests to tint windows, install satellite dishes, enclose terraces and remove brick screening. She singled out the board’s greatest concern-- attempts by owners to purchase numerous units to obtain control and make decisions about the building.

If what we're buying is protection from minor alterations such as window tinting, then that's a pretty bad deal. Preserving the original window tinting on Westgate Tower or keeping it satellite-dish free isn't worth hundreds  of thousands of dollars per year in tax breaks. Plus, chances are any alteration that would bug me very much would bug the other condo owners a lot more.

The root of the problem is that the City (and AISD) tax breaks are not tied to the cost to the owners of preserving the property. Tax breaks grossly undercompensate the owner of a run-down building on an underdeveloped piece of property. They grossly overcompensate the owner of a property that is already being put to its approximate best and highest use. The City’s one-size-fits all compensation policy gives neither the city nor the property owners the incentive to make the right decisions.

A better system would tie the City award to the owner’s actual cost. As part of its investigation into the landmark designation, staff should estimate the cost to the owner of any extra maintenance burden and lost development rights, using clear and well-articulated criteria. The City should then award a percentage of those costs when it landmarks the property, whether in a lump-sum grant or in the form of taxes rebated over a fixed period. The County and AISD could follow suit if they want.

The size of the award, naturally, would vary with the stringency of the restrictions. We might be willing to pay someone $10,000 to preserve the building in perpetuity but only be willing to pay $10 to keep satellite dishes off the roof. A flexible system would allow us to pick and choose how much preservation to pay for.

If that were the system in place today, then landmarking Westgate Tower would not be a controversial matter. The Westgate Tower condo owners would receive only nominal compensation for agreeing not to do what they won't be doing anyway. Under the current system, they stand to make a windfall for doing nothing other than buying into a politically savvy condo owners’ association.

The 50 densest American metropolitan areas, by weighted density

As reported by the Census Bureau in the spreadsheet here:

A few comments:

1. The Census Bureau went all in on the weighted density metric. I say that because it obviously invested a lot of resources in the weighted density calculations. For example, in order to allow meaningful comparisons between 2000 and 2010 weighted densities, it retabulated the 2000 census tract data using the 2010 census tract boundaries.  In order to calculate the weighted densities at various distances from downtowns, it identified the location of the city hall in the principal city of each metropolitan area and the population centroids of tens of thousands of census tracts. This was not an idle undertaking.

2. I've been pushing weighted density for a few years now, so I'm glad to see the Census Bureau buying into it. I'm also hopeful that since this data is now out there, in readily accessible form, and from an authoritative source, it will actually be used. When researchers investigate relationships between a particular characteristic of an MSA and density, perhaps they'll now use weighted density rather than the useless standard density. (For an example of researchers using standard density, see this paper on urban scaling, as discussed by Wendell Cox.)

3. Most MSAs saw a decline in weighted density. This does not mean most MSAs lost population. On the contrary, all but a handful gained population. Nor does it mean that population fled the central cities for the suburbs. The Bureau reports that, on average, the largest metro areas experienced double-digit percentage growth within 2 miles of their largest city's city hall, and those in the second largest metro area size category also experienced growth, although at a slower rate. Chicago, which saw a sharp drop in weighted density, gained over 48,000 downtown residents. In fact, a metropolitan area can gain population everywhere and still see a drop in weighted density.

4. I previously calculated the weighted densities of the four large Texas MSAs. My 2000 calculations don't match the Bureau's 2000 calculations because, as noted above, it retabulated the 2000 census data using 2010 census tract boundaries. I can't do that. I note that apparently I got the Houston MSA 2010 weighted density wrong; it is now denser than the Dallas MSA rather than significantly less dense. I apologize to all 6,086,895 +/- 2,485 residents of the Houston MSA. Note that El Paso is Texas's densest MSA.

5. Austin barely made the list at number 48. Atlanta did not -- its 2010 MSA weighted density was only 2,173 ppsm.

Austin's weighted density, 2000-2010

One of the counter-intuitive things about weighted density is, well, that it's weighted. To calculate the weighted density of, say, a metropolitan statistical area, you first calculate the density of each census tract and then assign it a weight equal to its share of the total MSA population. A census tract that has 1% of the total population is assigned a "weight" of 0.01, a census tract that has 2% of the total population is assigned a "weight" of 0.02, and so forth. The idea is that a tract with twice the population should have twice as much impact on the final average, because a person chosen at random is twice as likely to live there. (Weighted density is precisely the expected density of the census tract in which a random residents lives.)

This can produce seemingly weird results. One that surprises people is that a city can add people everywhere (and grow denser everywhere) and yet still experience a decline in weighted density.

Austin provides a nice example. The Austin MSA experienced rapid growth during the aughts, growing by 37.3 percent. But its weighted density (as calculated by the Census Bureau) dropped by 3.9%, from 3,259 ppsm to 3,132 ppsm.  

Here is a graph of the change in weighted density by distance from City Hall in downtown Austin. (I made the chart using data taken directly from the Census Bureau's Excel spreadsheet.)

Austin experienced a sharp increase in density in the center of town (0-1 miles), a steady increase in density between the 7-mile and 23-mile points, and an outright (noticeable) decline in density in only three tracts. But even these declines were relatively small.

You might be tempted to infer from this chart that Austin's weighted density rose, but you do not, in fact, have enough information to make that inference. You need to know where the growth took place. So consider this chart, which shows the population within the concentric bands at one-mile intervals from City Hall:

This chart shows that while the part of town nearest City Hall experienced healthy growth, almost all of the growth in the MSA population occurred between the 7-mile and 23-mile marks. Now, if we go back to the weighted-density graph, and draw in a line (brown) to mark the 2000 MSA weighted density, it's easy to see what happened:

Almost all of the MSA population growth occurred in the area between the black lines. But this entire area, in 2000, had below-average density, because it lies below the brown line denoting the 2000 MSA weighted density. And although the healthy population growth during the aughts pushed up its density some, it generally did not push it up to the 2000 average. Because this area now comprised a greater percentage of the total population, it received a larger weight and pulled down the average. This merely reflects the fact that a 2010 resident was more likely to live in the low-density 7-23 mile band than a 2000 resident. The MSA's weighted density accordingly declined even though the MSA added population or retained population almost everywhere.