Mar
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Real Estate Zoning – #6 – Josh Hirth
March 10, 2015 | Leave a Comment
I found Ed Glaeser article fascinating because of how he described income inequality as a revolving door. If the inequality shrank then more poor people would make their way to New York thereby increasing inequality yet again. Or in his words “If the next mayor wants to make New York City more generous to the poor — a worthy if difficult goal — he should at least recognize that this will attract more poor people to the city and may ultimately make the city more unequal.” In addition his comment “The bigger question, the more important one, is not how much inequality exists — but whether there is mobility for people on the lower rungs of the economic ladder”, really made me think of what income inequality really means. Its just a comparison of top and bottom. And the mobility between the two rungs of the latter as well as between the latters is what causes NY to be so unequal but at the same time provides for the poor in a way different from other cities. As poor (often immigrant) people move up the economic latter, more of the poorest people fill their shoes, thereby creating a scale that can never be equal.
When Mr. Glaeser discussed what he believed Mayor DeBlasio should focus on instead of the widening income gap, I was intrigued. “The next mayor should prioritize two policies that would make the city more welcoming to middle income Americans. He should promote housing affordability by reducing the regulatory barriers to building, and he should improve educational options. Housing will only become more affordable is if more housing gets built; draconian land-use regulations are the city’s biggest changeable barrier to new building.” While we have discussed exploring other means of education to help fix the city’s education problems (think charter schools) we have not discussed zoning in the city at length. That zoning is what perhaps is holding back our middle class from living in the city. Because of the restriction on building there is limited housing which raises the market price to levels that only the super rich can afford. The city also provides ample public housing to the tune of “400,000 people in public units and housing vouchers to another 225,000 residents.” But what about the middle class? Where do they fit in to the city’s equation?
The AEI article seems to agree with this solution “make it cheaper to live in high-wage, high-innovation cities by making it easier to build housing through looser zoning laws and other kinds urban development deregulation”, which seems to be the obvious solution. Who needs excessive regulation on building when it is seemingly the direct cause of a shrinking city dwelling middle class and the worsening of our economy. The article also mentions Ryan Avent, a columnist with The Economist, estimates the loss to GDP, because of building restrictions, at about .5%. Another possible solution would be making it easier to move between the latters, as in make it easier to move from US cities with less jobs to US cities with more jobs. However, by its very definition this will cause an increased in income inequality within the city with more jobs. So unless we are willing to accept that, we should look for other alternatives.
While I do think the “poor door” is completely unnecessary, I do understand its reasoning. We live in a world in which you get what you pay for. If you buy a coach ticket you sit in the back of the plane in cramped quarters. If your drop for a first class seat you get to sleep on a bed in the sky and are privileged to eat high class cuisine and expensive drinks. Seemingly, people don’t have a problem with that, and while I understand that may be a little different, I think the underlying reasoning is the same. You get what you pay for. More than that I think luxury developers are keeping their perspective condo buyers in mind with things like the “poor door”. They realize that most rational people would not be happy paying $5000 a month for the same thing that could be had at $500 a month. In terms of amenities, one possible explanation is that in many luxury condos the owners contribute money to a monthly HOA fee, which goes towards building upkeep and the amenities. If the renters aren’t paying for it, it would be hard to justify giving them access. If you don’t pay your monthly gym membership they wont let you in, just because the gym happens to be located in your building, doesn’t necessarily change the underlying equation.
The Washington post sums it up nicely “For years, activists and researchers have known that restrictive zoning is among the most powerful forces behind racial and economic segregation in the country.” It is the zoning in part, that is causing the income inequality because only the wealthiest can afford what is in high demand with limited supply. They add “Researchers have found overwhelming evidence that restrictive zoning raises housing prices, not just in San Francisco and other coastal metropolises, but in suburbs and city neighborhoods across the country. The stricter a region’s zoning laws, the more segregated it is likely to be.” It is these same zoning restrictions that continue to cause race segregation and equally important income inequality in our city.
