The Gated City by Ryan Avent

For you urbanites out there, check out this podcast with Ryan Avent, author of The Gated City.

Avent's central thesis is that cities in the United States such as Boston, NYC, San Francisco and Washington D.C. are all very desirable places to live but are very expensive to live in. There are many reasons for this including limited and restrictive housing construction which drives up housing costs. Thus, they have not seen the same levels of population growth and housing stock construction as places like Houston, Las Vegas and Phoenix, for example.

Is this a bad thing? Depends on which question you are asking. Avent suggests that the coastal cities that have not seen a growing housing stock and are pricing out a lot of people (including middle class families and skilled labour). These are the people we need to keep our cities productive. As cities become more and more attractive places, demand for housing will inevitably increase.

But if housing supply does not respond to this demand, then how are they suppose to grow? And if one of our goals is to foster vibrant and productive cities by providing skilled jobs for people who cannot even afford to live there (hint hint,Vancouver) then we fail at achieving our main goal.

Avent talks about how self-interested people living in high dense and highly desirably places (like San Francisco) can fight against housing development in their neighbourhoods (classic NIMBYism) which pushes that development away to other places that are more open to housing development such as Houston. Sound familiar? It should be. Ed Glaeser discusses the environmental implications of this at length.

Some statistics and facts from the podcast:

"The median owner-occupied home in Houston in 2009 was just about $130,000 in value. And in San Jose it was over $600,000. And that just dwarfs the difference in wages. And it's not associated with the difference in construction costs. There is a difference in construction costs but it's very small relative to the premium due to the difficulty in building in those areas in the country".

"From 2001-2009, the housing stock in Boston, NY, and the Silicon Valley area, each of those, it grew by a little over 5%. And then you look at a city like Las Vegas, the housing stock grew by almost 40%. And in places like Phoenix and Charlotte it grew by 25%. So it's just a huge difference in growth in the housing stock, which really has nothing to do with demand but has entirely to do with the ease of building in those places".

There is a fascinating discussion in this podcast about city politics, urban planning, how zoning can be problematic, the consequences of distorting public policy and much more.

If you want a more condensed version of this, check out this 10 minute video via The Economist.

Here is a short review of the book.