Jan 16th, 2006
Problems of Economic Class Separation in Typical Neighborhoods and Possible Solutions (part 1/3)
I’ve written before concerning the benefit of a mix of economic classes in a given neighborhood. In review, those benefits include lower crime rates at the regional level as well as an economic base to support local artisans and trades. I’ll go over the basic arguments for both at the end of this post but for now I’ll assume that the reader understands these benefits. Many great places in America have this diversity in small, usually historic, areas. University City, which is a streetcar suburb of St. Louis, is a good example. It’s cheap enough for college students to find houses to rent but nice enough to facilitate streets full of $1,000,000+ homes. It has long been the heart of the arts in St. Louis and there is very little crime. Unlike most places in America, there is a diversity of economic classes here.
Although many places in America suffer from gentrification,* suburbia is the only development type that builds this economic monoculture into each neighborhood. Most of suburbia is separated into chunks of housing units distinguished by cost (and not much else). Subdivisions are separated into houses “from $360,000-$400,000!†or some other narrow price range. This is clearly not a preferred development type at the regional level nor is it desirable type by a growing number of citizens of all ages and types who see the benefit of living in small town neighborhoods like Rolla or even diverse cities like University City. Even the lily-white city of St. Charles has a diverse range of housing prices and is by far the most interesting and culturally rich part of St. Charles County.
One solution to this might be simply building developments that offer a wide range of housing sizes and types and thereby a diversity of prices. This is exactly what the New Urbanism seeks to do and it is exactly what we find (as of today!) in the New Town at St. Charles. Prices here start at ~$150,000 and go to $1,000,000+. All these houses, in all their diversity can be found in walking distance (1/4 mile) of each other. The problem with this solution is found in the track record of new urban communities. A small cottage (~1300 ft^2) in Seaside Florida sells for 1.2 million. A small house in Kentlands sells for $800,000. If anything, New Urbanism almost guarantees gentrification. This is a problem because the philosophy behind the New Urbanism is one that celebrates a diverse range of housing types for a diverse range of people. If lower classes of people cannot afford to live in these communities than there is no difference from the regional perspective between typical suburban developments and new urban developments. New Urbanism becomes the New SubUrbanism.
There are some other possible solutions that I am working out in my mind that I hope to present here with as much clarity as I can manage. The two are equity sharing and the land-value tax. Both assume a new urban, streetcar suburb, traditional neighborhood, or other development form that does not have a single economic class built into it due to its homogeneity.
(to be continued)
*Gentrification is the heightened price of ALL houses in neighborhood due to an increased desire to live there by those with money – this heightened price is generally understood to not be affordable by anyone other than the very rich
Economic Class Separation
I thought this was pretty good….
Your post pointed out to me something I’d not quite thought of this way before. You wrote about subdivisions where the housing prices are in a narrow band, leading to an economically (and probably otherwise) narrow band of people there (I’m not saying narrow-minded, just within a narrow demographic band, mind you!)
At one level, this is unsurprising. The developer of the subdivision gets this big piece of land, and divides it up to create some number of lots. Most likely they are all of equal size. Some may be considered more choice than others: if a neighboring property is a conservation trust, never to be built on, the lots backing on it will be more appealing. If there is a body of water on the property, those lots that have water views might be more appealing, and would sell for more. But all are the same distance from jobs and shopping and highways, so maybe the more valuable lots are worth, say, 10% more than the least valuable, since they are all pretty much the same size.
Then he goes to build the houses, and his goal is to maximize his profits. There seems to be a rule of thumb that the way to do this is to build houses that will sell for about 4 times whatever he paid for the land (and in the case of a subdivision like this, this figure may include his development costs: surveying, putting in the roads, drainage, etc.). So if the lots are all comparable in size, and roughly the same value, he maximizes his profit by making all the houses pretty much alike in selling cost. Yes, some may have a few more amenities built in than others. But most of those amenities raise the price by relatively small percentages.
So how do we get a range of prices within a subdivision, so as to attract people in a wide range of economic and demographic situations?
To the extent that we have to impose rules, I’d prefer to make them simple. Suppose we said that some fraction of the land area had to be devoted to smaller lots or to multi-family arrangements.
Smaller lots would lead to smaller houses which should be more affordable. Multi-family arrangements would lead to more families per acre, economies (in construction and in energy use thereafter) that come with shared walls — and lower purchase prices per unit, bringing in people with someone lower incomes, and perhaps in different phases of their lives.
Will local zoning permit this? Some towns are so opposed to having more children in their schools that they will permit only the development of housing for seniors, or only two-bedroom units, or something else that will serve to keep young families out.