Since the 1950s U.S cities have been expanding rapidly and have added about 10,000 miles per decade, but beneath the surface the divide between expensive and affordable cities has also been growing. Since the 1970s, large cities such as San Francisco, Boston, New York and Miami have slowed their expansion, while other cities in the Southeast and Texas have grown much more dramatically yet have seen a much slower price growth.
For example a developed residential area in Atlanta grew 208% from 1980 to 2010 while home values grew 14%, while in the San Francisco- San Jose area land grew by 30% while home values grew by 188%. One expert says "If you don't let the city grow, you're going to get prices going upward and see the middle class being pushed out". We have talked a lot previously about why the middle class in the U.S is disappearing, do you think that the difference between expansive and expensive cities is a major factor is a reason for the declining middle class, and what do you think that could be done because many of the expensive cities are prevented from outward growth due to natural barriers? Also how do you think the relationship between house values and area affected the housing crisis that led to the financial crisis in 2008?
http://blogs.wsj.com/economics/2016/04/18/why-the-great-divide-is-growing-between-affordable-and-expensive-u-s-cities/
For example a developed residential area in Atlanta grew 208% from 1980 to 2010 while home values grew 14%, while in the San Francisco- San Jose area land grew by 30% while home values grew by 188%. One expert says "If you don't let the city grow, you're going to get prices going upward and see the middle class being pushed out". We have talked a lot previously about why the middle class in the U.S is disappearing, do you think that the difference between expansive and expensive cities is a major factor is a reason for the declining middle class, and what do you think that could be done because many of the expensive cities are prevented from outward growth due to natural barriers? Also how do you think the relationship between house values and area affected the housing crisis that led to the financial crisis in 2008?
http://blogs.wsj.com/economics/2016/04/18/why-the-great-divide-is-growing-between-affordable-and-expensive-u-s-cities/
Bharath, personally I don't think that high housing costs are a reason for a declining middle class, because it just depends on where you live. Sure, it's tough to be middle class and afford a home in San Francisco, but not as hard if you live in Atlanta. For those cities with natural barriers preventing outward growth, I suppose the only solution would be to grow upwards with bigger and taller buildings. Of course, as the article mentions, you then run into zoning and regulation issues that vary by city. But I think there will come a point when they may be forced to either allow upward expansion or lower prices, because despite the healthy job market in areas like San Francisco, there will come a point where people will simply not be able to afford to move there, even if there's a great job available to them.
ReplyDeleteI agree with Lucas, but in a different sense. I don't think that gentrification (let's be honest), is creating the rift between the upper, middle and lower classes, rather it's the effect of this growing disparity between Americans and it's something that inveitably happens time and again.
DeleteDetroit is currently experiencing this phenomenon in the midtown and downtown areas because of the art movement. This artistic expression draws people in and with more people comes more business. Unfortunately, many people moving in have a massive difference in wealth compared to the current inhabitants and property values skyrocket. I recently had a friend who had to move out of her apartment because in 2011 she was paying about $700 a month, but by 2015, her rent had jumped to $1200, which was unsustainable.
Overall, I think this didn't have much to do with the housing crisis and that it's not a cause but a result of social barriers.