Half Changed World

It’s clear that when I don’t have the energy to post, I should put up something about housing costs, and then my commenters will take it from there. 

I’ve been listening to the This American Life’s piece about the housing bubble and crash, and it’s fascinating.  As suggested by the title of the episode, The Giant Pool of Money, it focuses on the supply side of the mortgage business, how it was in everyone’s business to keep generating loans and not to ask questions about whether they were really good risks.  It’s nearly an hour, and if you didn’t grab the podcast already, you need to stream it, but it’s worth listening to anyway.

When I posted about whether young people are "falling behind" their parents, almost all of the commenters agreed that a big part of the reason that even relatively affluent young adults *feel* poor is that homeownership seems so out of reach (even with the declining market).  This made a lot of intuitive sense to me.

But my dad then sent me a ton of Census data on homeownership rates by age, going back to 1982.* (Yes, I come by my geekery honestly.)  And his point is that households under age 35 were just about as likely to own homes in 2008 (41.7 percent) as in 1982 (41.2 percent).   Homeownership rates for this group hit a low of 37.3 percent in 1993-1994, and then rose to 43.1 percent in 2004, before falling off slightly.

So how is it possible that homeownership can feel so out of reach to almost everyone I know, even as the homeownership rate didn’t decline at all?  Well, part of the answer is that I live in an expensive housing market, so the "everyone" I know is a biased sample.  (The readers of this blog are more diverse, but I think are still disproportionately living in large urban areas, compared to the country as a whole.)   Also, a whole lot of condos were built in the 1990s, so if by "homeownership" you mean "owning a single family detached home," the homeownership rate probably did decline somewhat.

But it’s also true that a lot of people — at all age groups — bought homes only by extending themselves to their limits.  There was this credit bubble that you might have heard about… (Supposedly in 2005, half of all loans made in DC were interest-only.)  And there was this dreadful fear that if you didn’t jump in right away, even if you couldn’t really afford it, you’d be priced out forever.  So, the people who didn’t buy houses felt like they were falling behind because they couldn’t afford a home, and the people who did felt like they were falling behind because they couldn’t afford anything else.

*The Census table is only online as a text file — if you want my Dad’s Excel spreadsheet, I’m happy to send it on.

I left off yesterday with Robert Frank’s hypothetical question of which would you prefer, World A, where you live in a 4,000 square foot house and everyone
else lives in a 6,000 square foot house OR World B, where you live in a
3,000 square foot house and everyone else lives in a 2,000 square foot
house.

He argues that most people would prefer B.  I’m not sure whether that’s true, and to the extent it is true, how much it’s driven by the correlation between housing prices and school quality.  I think I’d choose B, but my reasoning is that in world B, there would probably be nicer parks and other public spaces. 

The NY Times this week had an interesting article on people who were rejoicing in Bear Stearns’ downfall, and more generally in the possibility of a setback to the Wall Street types who have driven up the cost of living in New York.

Based on a few posts that looked interesting from the TPM Cafe bookclub, I requested Daniel Brook’s The Trap.  I got it last week, and spent about an hour skimming it today, but couldn’t really get into it.  The online discussion is far more interesting.

Brook’s overall thesis is that the high cost of living in desirable urban areas, the cost of college and health care, and the very high salaries paid to workers in certain professions (big law, investment banking, management consulting), makes it harder for idealistic college grads to follow their dreams.  I think that’s probably true, but am not sure it’s the major crisis he portrays. 

Two quick points:

1)  As several of the commenters at TPM Cafe pointed out, Brook is wildly overstating the case when he suggests that the only alternatives are selling out and being a "saint" destined for poverty.  And by overstating the case, he actually makes it easier for people to sell out.  In reality, I know plenty of people who have darn good lives on public and nonprofit sector salaries.  By and large, they don’t have second homes and they don’t expect that their kids will make it through college without taking out student loans, but they’re not living on ramen noodles either.

2)  When I wrote about the cost of living last of week, the comments were running pretty strongly against the "just move" idea.  And I agree that you shouldn’t have to move time zones in order to make ends meet.  But I don’t have a lot of sympathy for recent college grads who feel like they’re entitled to live in hip urban neighborhoods and don’t want roommates.

On a related note, my team at work is hiring a Research Assistant.  I’m not sure exactly what they’re offering for salary — probably not enough to live in Dupont Circle, even with a roommate — but the benefits are excellent, they take work-life balance seriously, and it’s a terrific group of people. 

Laura at 11d and Megan McArdle are going back and forth about child care subsidies today.  The comment that struck me was this one from "buffpilot" at Megan’s blog:

"We don’t need to give a subsidy to anyone, but making a means-tested
welfare, would be fine with mean. But base it on the income needed in
Mississippi – since you can move! If you want to live in NYC make the
money, don’t have kids, or move. Its YOUR choice. But don’t ask me to
give you money so you can live your lifestyle without making any
sacrifices. That’s what you want."

Similarly, when Bitch PhD posted last month about how unaffordable housing is, even given that her family has a good income, she got lots of "that’s what you get for living in California" type comments.

I really don’t have a good answer for the public policy question of how to handle cost of living disparities.  As has been pointed out repeatedly during the SCHIP discussion, a family in NYC living on $60,000 is in a fundamentally different situation than a family in Iowa with the same income.  But at least some of that difference is a matter of choice.  Are you willing to tax an Iowa family with a potentially lower income level to help that New York family?  Or do you tax the New York family more?  In spite of the federal tax deduction for state income and property tax payments, richer states — with higher costs of living — tend to pay more in federal taxes than they get back.  This is justified in the name of progressivity. But if you you take the cost of living argument seriously, progressivity might cut in the other direction.

Posts like this one, at Corporate Mommy, intimidate the heck out of me.   Geez, they did that all themselves?  I can paint a room and replace the flappy part of a toilet, and that’s about the limit of my home improvement skills.  Come on, I grew up in an NYC apartment — when something broke, you called the super.  So I liked the article in this Sunday’s Washington Post magazine about a woman who bit the bullet and learned to do some electrical work around her house.

T’s a bit more skilled than I am, but not as much as I sometimes think he should be.  Not because he has a Y chromosome, but because his father is pretty handy.  But he had bad experiences "helping" his father as a teenager.  That said, he’s become a fair hand with a solder iron since we bought the house.  His father showed him how to do one and the first one he did took him about 3 hours, but since the house had essentially no grounded plugs or GFCIs when we got it, there were lots of opportunities to practice.

Fundamentally, those are the two elements that you need to learn most hands-on skills — someone to show you how to do it, and the opportunity to practice.   In general, we don’t have either for home improvements, which is why we’ve spent the last two months sending emails back and forth with the guy we’re trying to get to do our bathroom.  (One of the lighting fixtures fell out of the ceiling tonight, so I’m hoping that we can expedite this process a bit.)  I didn’t learn how to do crafts as a child, either, and have mostly
self-taught those, but the difference is that I don’t really mind having a
sloppy quilt where none of the corners quite line up stuffed into a closet.  I don’t want to live with a kitchen where the cabinets don’t line up for the next 20 years.

See also: The Simple Dollar on The Do It Yourself Dilemna

Sunday’s Post had an article about how Fairfax county is looking into the possibility of CityCars — little two seater electric cars that could be used for short hops, say between your house and a metro station (they only go 10 miles between charges).  They don’t exist yet, but the concept is very neat — they stack together like grocery carts, so you can fit six of them in the space that it takes to park one regular car.  (See the third picture from the left here.  Aren’t they cute?)

The Post article mostly discusses the safety issues of mixing CityCars with either pedestrians or cars.  I think that a lot depends on how fast they go — if their maximum speed is, say, 30 miles per hour, that’s too slow to be safe on the roadways, too slow to be safe on the sidewalks.

But I’m more interested in the logistics of how they’d be rented  The idea is that individuals would not own CityCars but they’d be stored at metro stops and other central locations, essentially like car rental programs (e.g. ZipCar and FlexCar).   I think that’s because the nested parking only makes sense if each person takes the frontmost car, rather than having to shuffle them all around to get at your personal car.

The Post article suggests that you could pick them up at the airport, then return them the next day.  But that doesn’t make sense to me, since someone would have to follow you back to the airport to give you a ride home.  (Similarly, while I have a FlexCar membership, I can’t use it to borrow a car to come home from the metro, since you have to return it to the same place where you picked it up.)

CityCars seem to make a lot more sense for daily commuters, assuming that it wasn’t prohibitively expensive to keep them overnight.  I’d certainly be happy to take a CityCar to the metro, especially if there were guaranteed parking for them.  And given that the parking lots at metro stations fill up by 8 am or earlier, it seems like a lot of other people would be interested.  And they’d also work for people who work at surburban locations that are just a bit too far from public transportation to walk, which would help inner city residents who don’t own cars.

But you’d have to have enough of them that everyone who wanted one could be confident of getting one, because it wouldn’t take getting stranded a whole lot of times to make people give up on the program.   And the smaller the program, the higher the percentage of "excess" cars you’d need to ensure that you didn’t run out.

Someone on one of my email lists posted a link to WalkScore which is a google maps based site that attempts to measure how walkable a neighborhood is, mostly based on the proximity of various places you might want to go (stores, schools, parks, etc).

Our new house scores a 25 out of 100, right between not walkable and driving only.  I think that’s probably fair, although my subjective rating is mostly based on the things that didn’t make it into their scoring system.  There are a bunch of things we go to that are within a mile, and they seem to assume that people won’t walk that far.  I’m happy to walk that far, but I’m not willing to cross Columbia Pike other than with a stoplight, even when there’s a marked crosswalk.  D’s elementary school is about 1/2 a mile away, but there’s no sidewalks for part of it, so the county provides a bus.  Lots of things are in biking distance, although I’m not sure I’d be willing to bike the places I won’t walk, and the hills are brutal.

Our old house scores an 83, which I think is about right, maybe a bit low.  The first time I entered the address in NYC where I grew up (a week or so ago), it gave me a 97 or 98, which seemed like proof that you couldn’t get a 100 using their algorithm.  But I just tried again, and it spit back a score of 100, so I guess they fixed that glitch.

I’d love to see some analysis of the distribution of the population of the US across their index.  My guess is that no more than 5 to 10 percent of the US lives in places that score as very walkable (70 or higher), and that probably 1/3 of those who do live in New York City.

Via Laura at 11d, I read this thread on cities vs. suburbs at Matthew Yglesias’ blog.  One comment jumped out at me:

"What’s with this "suburbia is cheaper" claim? Where I live, suburbia is
more expensive (which is why low income people live in cities and older
suburbs)."

I’m not sure overall which is cheaper.  It’s certainly true that far-out suburbs are cheaper than close-in suburbs (at least in the DC area, I think elsewhere too.)   That’s why Prince William county just passed a harsh anti-illegal immigrant measure — lots of immigrants have moved there, because a bunch of people can share a house for a lot less than renting small apartments close in.  And there’s lots of evidence that everything from food to bank fees to insurance costs more for residents of poor inner city neighborhoods.

So why don’t more poor people move to the suburbs?  The US Department of Housing and Urban Development did an experiment called Moving to Opportunity where people who lived in public housing were divided into 3 groups, one that was offered Section 8 housing vouchers that could be used anywhere they chose, one that was offered special vouchers that could only be used in low-poverty neighborhoods, and one that was not offered vouchers, but continued to live in public housing.  This was a voluntary program, so everyone in it had said that they wanted to move.  One of the interesting findings is that the majority of the people who used the unrestricted vouchers moved into neighborhoods that were still high poverty — not as high as the public housing they came from, but still more than 20 percent.

Under the voucher program, what you pay is based on your income, not the rent, and you can rent any house up to what HUD calls the "fair market rent" for the metro area.  So why did the voucher recipients stay in high poverty neighborhoods?  If the researchers asked this, I haven’t found the report that says it.  But I can take some guesses: Because those are the neighborhoods that they knew, where their friends and family lived, where they knew how to navigate the transportation system and which grocery store had the best deals.  Because landlords discriminated against them — or because they were afraid that they might.  Because they didn’t have cars, and the upfront cost of buying a car is obvious, while the added costs of buying food in inner-city neighborhoods is hidden.

All this is mostly a long way of saying that I’m not sure that the fact that poor people live in inner cities proves that they’re cheaper than suburbs.

So, Yglesias argues that the suburbs are only so cheap because the roads and other infrastructure are so heavily subsidized.  Lisa Margonelli says that it’s a myth that people will drive less if gas prices get high enough.  She argues that high gas prices have hit the poor the most.  I think this is probably right — if people’s driving
is responsive to gas prices, it’s clearly only in the very long run, as
people choose where to work and live.  Somewhat less plausibly, Richard Brodsky claims that Bloomberg’s proposed congestion pricing plan for driving in Manhattan would be regressive, hurting poor and middle-income drivers the most.  I’m pretty dubious about the idea that many poor New Yorkers own cars.

But outside of New York, I think the evidence is overwhelming that helping low-income families own cars is a highly cost-effective anti-poverty strategy.  (We’ve actually just donated our old car to Vehicles for Change, an organization that does this.)  It opens up a world of job opportunities, lets people shop at lower-cost stores, go to church and doctor’s offices and more.  In an ideal world, you could do all these things by public transportation, but in most of the US you can’t. 

So, how do we help the environment without penalizing low-income families?  I still think that some version of Pay at the Pump auto insurance would be a good thing.  It would convert a big part of the fixed cost of owning a car into a variable cost of driving it, so would both make car ownership more affordable for the poor, and discourage driving at the margin.  School reform isn’t usually thought of as part of an environmental agenda, but if you could improve urban schools to the point that they seemed like a reasonable alternative for families who have options, more of them would choose to live in cities.

I can’t say that I liked the first book I read by Rachel Cusk, her memoir A Life’s Work.  While I thought her prose was remarkable, I found it incredibly infuriating that as intelligent a woman as Cusk clearly is, would do something as irrevocable as having a child with so little forethought about how it would affect her life.  It’s one thing to hate the tediousness and isolation of parenting a newborn; it’s another thing to be surprised to discover that caring for a newborn can be tedious and isolating.

But her writing was powerful enough to make me pick up her new novel, Arlington Park, when I saw it at the library. The good news — Cusk still writes some extraordinary sentences.  The bad news — Cusk doesn’t feel compelled to have any plot at all.   The book is just about a group of women who live in a suburb of London, and what they do one rainy day — drop children at school, drink coffee, go shopping, take care of children, go out to dinner.  But when I say it like that, it sounds something like Mrs. Dalloway.  So imagine Mrs. Dalloway if the author didn’t have any affection for her subject, and you’ll have something like Arlington Park.

Here’s a paragraph chosen pretty much at random to illustrate what I mean:

"’Gypsies,’ Maisie said.  She shook her head.  ‘What a place to have to live.  Right where people come to pick up their sofas.’

Christine pondered the caravans and tried to work out what Maisie’s remarks signified.  It wasn’t the nicest thing to have a pack of Gypsies staring at you when you came to collect your sofa, she could admit, but it wasn’t the end of the world either."

Ultimately, for a book like this to work, I think you need to enjoy the company of either the author or the characters, and I was left quite cold about both.