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Back From the Storm

It’s funny how unaware one can be of his dependence on modernity until a ten-day stretch without power comes along. Fortunately, aside from the epic utility interruptions, there was no trouble at the house. Nearby, things weren’t so lucky. This was the scene at a neighbor’s place after the storm:

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Note that this picture was taken after a hundred-year-old tree had been removed from the roof. Here’s a shot of another tree that came down in the same vicinity:

So, the effects of Sandy were fairly bad in this part of Essex County. We have an elevation of about 500 feet a.s.l., and we’re situated on the first ridge of mountains that runs behind the coastal plain– so we took a direct blow from the high winds that came in off the ocean. But the impact here was still mild compared to what happened in low-lying areas of the region: There was no flooding here.

We had no idea, initially, how extensive the damage had been to the entire utility system. There wasn’t much specific communication from PSE&G, Verizon, or Comcast. In the end, it took ten full days to have our electricity restored — almost to the minute. To this day — 23 days after the storm — cable television has still not been restored. Go Comcast! No one in this cluster of houses uses a landline, so who knows what happened with those?

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Another Study on Housing Costs

Interest.com has a sobering study, showing that– even at this nadir of the American housing market– the cost of housing remains stratospherically detached from actual personal incomes. The spread was found in about half of all US housing markets, including in nearly every market that contained high concentrations of dynamic industries, educated populations, and existing wealth. Not surprisingly, the disparity was most pronounced in the housing markets around Northern California, Southern California, and New York City.

This is troubling news, because it tracks a phenomenon that LT has covered, and which has been written about in depth by writers at Forbes, the Economist, and elsewhere: That is, there is a growing body of evidence that entrenched, restrictive land use policies are strangling our best cities, creating high barriers to entry in their housing markets, and excluding the very people who would most benefit from the opportunities of their labor markets. Presumably, the same policies are also dampening potential growth in the same regions by excluding a large number of potential economic participants from the local pools, and draining disproportionate shares of local moneys into non-productive real estate acquisition costs.

My fear is that that the hopeful signs that we’ve lately seen of a nascent real estate recovery could be dampened by the structural obstacles posed by a blanket of misguided legal devices that prevent the market from reaching anything like a healthy equilibrium. That is to say, we can’t have a sustained and sustainable recovery in residential real estate until the supply of real estate products begins to actually match the critical mass of demand that exists. And right now, that demand is for smaller, cheaper, and more energy-efficient units in the regions where economic opportunities exist. Instead, what we have is a massive supply of empty McMansions in car-dependent regions like suburban Phoenix, and abandoned houses in urban nightmares like Detroit and Buffalo.

The problem is that individual local land use policies, as determined by local governments, block the kinds of development that might begin to meet this demand. And the voters in a lot of communities have a vested interest in maintaining the stranglehold up to a certain point, because their home values are exaggerated by the overall shortage of units. It’s a vicious cycle, and a dangerous one if we intend to continue to place home-ownership at the center of our economic model for the US economy.

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Art Imitates Land Use

After the Rain. Paul Cornoyer, c. 1900. (More about the artist, here.)

There’s something captivating about the contrast between nature and human development. Parks, urban waterfronts, skyline views from the countryside: People are drawn to these. I think Paul Cornoyer captured these kinds of contrasts well, and he also depicted other aspects of nature, such as weather, season, and light, as they affected the city.

One of the unique qualities of late-Victorian urbanism, which Cornoyer painted, is that it was the latest and most modern period in which development norms maintained a bright line between human construction and the wildness of nature. This was done by placing parks amid the concrete, and also at the city’s edge. Cast-iron, elevators, and railroads made very high densities possible by the late 19th century. Meanwhile, cars had yet to facilitate market-driven sprawl, and Howard and others had yet to provide the vision of a democratized suburbia.

So, there was still a market- and tradition- and technology-driven compactness to new places. And, at their edges, one would typically find very sharp transitions to much lower densities. Below is a detailed lithograph showing the northern frontier of New York City’s real estate development, as it stood in 1897— approximately when Cornoyer was painting Madison Square. Harlem can be seen at the far left; the foreground is (today) the Bronx; and Washington Heights is in the background, beyond the Harlem River:

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Bloomberg’s New York City

Michael Bloomberg has put an array of game-changing development projects at the forefront of his administration’s urban planning policy– and seen a lot of them through. As Bloomberg prepares to leave office at the end of his present term, The Architect’s Newspaper has put together a fascinating survey piece that describes many of the individual projects of the Bloomberg era, which together have reshaped the city in the most significant ways since the time of Robert Moses. (Thanks, Jon Goldman, for the tip!)

A new vision for Coney Island. Source: NYCEDC.

As a New Yorker (regionally, at least), I have very mixed feelings about Bloomberg’s planning legacy. On one hand, I now work in the city two or three days each week, and I have to say that I really enjoy the streetscaping changes that have been made to Broadway, in particular. Sometimes, when I feel like I need some exercise at the end of the day, I’ll walk up Broadway from the office in Gramercy Park to the PATH station at Greeley Square. The transformation of Broadway is palpable: Traffic lanes have been replaced with trees, bike lines, and outdoor seating. One day last week, a wedding was being performed in the middle of the street. With the reduction of motor-traffic, it became clear how much of the stress-inducing aggression that one expects to find in New York City is a direct result of having homicidal drivers competing for blacktop. Without them (or, even, with fewer of them), Broadway– in Midtown– has been transformed into a relatively quiet and peaceful setting. The redevelopment of Broadway is part of a wider administration focus on complete streets. No doubt that further reductions in vehicular traffic, as the Bloomberg administration has sought, would improve the ambience of the city, immeasurably.

On a much grander scale, I also really admire the ambition of a lot of the city’s signature projects, as highlighted in the Architect’s Newspaper article. The Hudson Yards Redevelopment Area, for example, will herald the most significant change to Manhattan’s geography since the 1920s: It will open an enormous new section of the city to Midtown-style development, supported by a  city-financed extension of the No. 7 subway (which is almost complete), and by the 2005 and 2009 upzonings of nearly 60 blocks on the Far West Side. Across town, in the middle of the East River, a new Cornell campus on Roosevelt Island will greatly increase the university’s footprint within the city limits. Downtown, the new World Trade Center is finally coming together, while Governor’s Island remains an empty canvas–but not for long. It’s an exciting time in New York City development. Forget about the numbers– the money to be made, the square footages to be built. Just look at the pictures in the above-mentioned article, and try to not be impressed by what’s happening.

On the other hand, I can’t help but feel that the city has become too managed, and too planned, on a human scale. It’s hard to characterize, exactly, what has been diminished over the last decade. But it feels as though the chaos and spontaneity that once made New York New York have been methodically reduced, and what we now have in New York is something more like a polished European capital, whose politically-connected denizens have shaped it to showcase their own riches and refinement, than like the crazy American city that we once loved. I still remember a city whose energy and danger seemed to promise that anything could happen here. What happened to that? The city of today is easier to deal with, in some ways. But it’s also become a preening, intolerant, and exclusive in-club, in ways that America’s largest city should never have been allowed to become. There’s something that I just find deeply dispiriting and stifling about much of New York now. It represents, I think, in all of its hair-splitting regulations, its commercialized hipness, and its matter-of-fact acceptance of locked doors, the decisive transformation of metropolitan America into a class-structured society whose boundaries are increasingly impenetrable to all but a select few. Its neatness is not something to celebrate.

It would be unfair, and perhaps too easy, given his personal characteristics, to lay most of the blame for this on Mayor Bloomberg. These changes have been coming for a generation, and many are the results of national and even global phenomena. Furthermore, to give credit where it’s due, the Bloomberg administration has probably done more to prioritize the development of affordable housing than any New York City mayor since the 1960s. Few things represent the narrowing of the city more starkly than its cost of living; and while Bloomberg’s willingness to tackle this may simply make good business sense, it also addresses an inequity that has been tolerated for far too long. At the same time, Bloomberg has had more than 10 years to leave his mark on the city, and it is what it is. There may be more affordable units in the pipeline as a result of his policies, but rest assured that their numbers will be very tightly controlled; and never will enough of them be permitted through the city’s land use policies to threaten the astronomical market equilibrium. Instead, the experience of living in New York City will become increasingly bureaucratized and contingent for those who are not rich: As Bloomberg once gloated, he believes the city is a “luxury product” for which people ought to expect to pay. And pay they do. His is not a vision of a city whose plans respond to the needs of its people; rather, it’s a city whose political players make room for the people they might need.

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What’s Up With U.S. Transfer Taxes in 2013?

Nobody knows. Congress has yet to take up the issue of extending or amending the current law, which is set to expire on December 31. If no legislation is forthcoming, then the lifetime exemption will fall to a million dollars, presumably ensnaring a large swath of the upper middle class– and even some of the house-poor or farm-poor in places that have seen property values skyrocket over the last generation. Simultaneously, the top rate on taxable assets will jump to 55 percent. The smart money is on some kind of legislative action after the election. My suspicion is that Congress will remain split, and the exemption will come down from its current $5.12M, but will still be set high enough to avoid hitting the vast majority of taxpayers. Beth Cohn has a nice overview of the current legal framework, and possible 2013 scenarios, over at JD Supra.