No Light Rail in Vancouver!

Condo Booms Go Bust

Oct 26

2007

A couple of years ago, it seemed like every major downtown in America was experiencing a condo boom, lending support to planners’ claims that baby boomers and others were moving back to the inner cities. Now most of those booms are busting: Las Vegas, Miami, Minneapolis, Portland — all the hip places.

Condo and office towers under construction along Portland’s South Waterfront.

Of course, real estate prices are declining almost everywhere. But there was supposed to be this huge pent-up demand for downtown living. Planner Harriet Tregoning, who once held the exalted title of “Secretary of Smart Growth” in Maryland, even wrote about the “coming oversupply of single-family home” in a recent book on urban planning. (Her article is given added credibility by being preceded by one by the Antiplanner.)

Yet in city after city, developers saturated the market for high-density downtown living by building just a few condos. While I am sure the market will return, just like the market for all housing, developers should be wary of listening to planners in the future.

Here is Tregoning’s reasoning for why we are going to have a surplus of single-family homes in the future:

1. All dogs have four legs.

2. Most animals at the zoo have four legs.

3. Most animals at the zoo are dogs.

Oops, excuse me, that isn’t her reasoning, but hers is very similar. Here is her argument:

1. Most people who live in high-density developments (excuse me, “vibrant, walkable communities”) are singles or childless couples.

2. Only 32 percent of American households have children, and this is expected to decline to 28 percent by 2025.

3. Therefore far more future Americans will want to live in vibrant walkable communities and far fewer will want single-family homes with large yards.

In particular, says Tregoning, as baby boomers become empty nesters, they will want to enjoy second childhoods “in vibrant, walkable communities, enjoying all of the cultural and mental stimulation they can.” Meanwhile, most young families won’t want to buy the large homes vacated by the baby boomers as they, for the most part, won’t have children either.

I am sure all of the brilliant readers of the Antiplanner can see the flaw in her reasoning: Just because some childless households like living in vibrant walkable communities doesn’t mean they all will. In fact, the evidence indicates that only a small minority of childless people aspire to such lifestyles.

Between 1990 and 2000, the populations of virtually every demographic category — all household sizes, all age classes, all races, all incomes, all levels of education — grew far faster in the suburbs than in the cities.

After the 2000 census, some researchers were quick to proclaim a downtown rebound. They found that downtown populations in two dozen American cities had grown by almost 50,000. Wow! Almost 50,000!

Meanwhile, the suburban populations of those same two dozen cities grew by a mere 6.8 million. That’s only 137 times as much as the downtown growth. The central cities as a whole, including downtowns, had grown by less than 1.5 million, or less than a quarter as much as the suburbs. The downtown populations of four of the cities in the sample actually declined.

In addition, I can’t help but noticing that many of the condo booms were in cities (Miami, Minneapolis, Portland) where planners had used urban-growth boundaries to create artificial shortages of single-family homes, thereby increasing the demand for multi-family housing. Or in Nevada, where the shortage of single-family homes was created by government ownership of most of the land in the state. How many condo buyers could you find in those cities if residents could buy single-family homes at Houston prices?

I can’t speak for my fellow baby boomers, but I know that I find vibrant inner-city neighborhoods extremely attractive — for about an hour. Then I find myself saying, “Get me outta here!”

Of course, I may just be weird. I love trains, I love cycling, and I hate driving. I don’t like yard work, and I enjoy good food. It seems like I am a perfect candidate for vibrant walkable neighborhoods — but I doubt if I will ever live in a big city again.

Maybe other baby boomers will want to return to such neighborhoods. If they do, I have no doubt developers will build them places to move to — provided government doesn’t get in their way. In the meantime, we don’t need planners to use our taxes to subsidize high-density housing, and we don’t need planners to use zoning to penalize low-density housing.

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Reprinted from The Antiplanner