Cycle of Suburban Development

The cycle goes like this:

You have a metro area. Metro areas are always expanding. Infill development is almost non-existent, because it's cheaper to build on the edge.

Suburban development runs like this: A developer buys a parcel of farmland, creates a subdivision plan, and creates 'paper' lots. They then sell to a builder, who takes the plan and does the actual construction: utilities first (sewer, water, electric) and then the houses. Roads get done after the foundations are poured. The the houses 'got vertical'.

The land buyer buys at a certain price per acre, and holds the land until it becomes valuable enough for suburban development. Rule of thumb is that the land cost is 20% of the house, so a $200k hour will sit on $40k of land. Assuming a quarter acre lot, that's $160k/acre.

Now, there are people who want more land (for farming or a quasi-rural lifestyle or for keeping horses).  They want about 5 acres, but can't afford afford it at $160k/acre. So they go even further out, paste the edge of the metro area, and buy farm land at $20k/acre from Farmer John.

Ten years later, the metro area has expanded, and the land prices have increased. So the farmer next door to Farmer John sells out, at $40k/acre. But since the land price has doubled, new residents can only afford half as much, so the new in-movers take 2.5 acres. Big enough for horses, but too small to plow.  Ten year after that, the land brokers start buying land at $80k. Ten years after that, developers buy that at $160k, and develop it as subdivisions.

So the land is a mix of farmland, 'hobby farms', horse property, and new subdivisions. In a few decades, the rest of the farmland will be subdivided and the 'hobby farms' developed as townhomes.

More Reflections on TOD

TOD emerges from a 'Joint Development' context, which it fell under the aegis of Redevelopment Agencies. The amount of developable land in the quarter mile radius around a transit station is small enough the become a 'project' for a redevelopment authority, rather than a planning-scale enterprise. This has both benefits and hazards. They can be prone to monopolistic situations where a single owner declines to develop. They can also be 'sterilized' by administrative, legal, or topographical complexities.

Development is not autocatalytic process--it needs something to start it. A 'landmark project' can set the tone of an area. A quality new building is a neighborhood amenity, and can catalyze a 'virtuous cycle' of public investment, rising amenity, & private redevelopment. So can a major public investment.

The primary value of any property has little to do with the property, and everything to do with the location of the property.

Court Co-op

A developer friend argued that too many single family homes for rent in a neighborhood was dangerous to the neighborhood, because renters failed to keep up the property. The planner in me bristled, considering this nothing more than blatant NIMBYism. But after longer discussion, I was forced to agree.

Non-occupying owners, don't receive any of the use-benefit from even minor improvements (new paint, new windows). As a landlord, it's very hard to know if an improvement is worth the money. Will repainting increase the rents? (Market information on residential rents is scarce).

As a renter (with a lease only a year long), I'm very reluctant to fix anything, let alone make improvements--I know the only value I can obtain for doing so will be utility over the next year, so it's not in my interest to make improvements that will endure beyond my lease.

How to make rentals (and thus affordable housing) available in single family neighborhoods? I would suggest 'Court Co-ops'. A 'Court Co-Op' would consist of adjacent single family homes clustered around a shared street, with a Co-Op Ownership structure.

 Co-ops are most often seen in Manhattan apartment buildings. A co-op is like condo association, but instead of the condo property being owned by an outside company, the owners of the condos are also the owners of the condo corporation, with a board of directors chosen by residents. 'Private communities' or 'planned communities' already represent a trend toward 'private government' in the form of HOA (Home Owners Associations), which have the power to exact a mandatory fee from residents, and then use those funds to make repairs and improvements to common resources.

HOA's make sense because a not insignificant portion of the value of a home is 'neighborhood value', as a result of the quality of your neighbors home. Providing a mechanism to guarantee the maintenance of all houses in the neighborhood (to the cost of to households) represents and equitable sharing of risk and benefit. (Although I'm less fond of their deed restrictions on renting....).

Salt Lake City would be an excellent place for this. Due to the large size (660' on a side) of blocks in Salt Lake City, many have 'courts', or mid-block alleyways, with small houses built on each side of the alley. Some courts are city streets, while others have only decrepit asphalt paving, installed by the original owner before it was subdivided into house parcels. Changing the courts into 'Court Co-ops' would provide a mechanism to both revitalize the areas and ensure that the properties are maintained, thus generating benefit for all occupants, whether owner or renter.

*The developer friend stated that the same effect was not true for multi-family units, because they enjoyed the services of professional management companies (with much better information on rents, the ability to adjust rents in response to changing conditions, legal liability with the city...).

The Future Holds..

Utility access (especially transportation access) determines the development potential of many parcels. Historically, a steady supply of developable land has been ensured as a result of an expanding roadway network. Federal subsidy for road network expansion can be expected to become scarcer and Federal funding is reoriented towards preserving existing roadways. Freeway and highways, which provide the greatest increase in ex-urban accessibility to urban employment and services, have typically been justified on the basis of congestion mitigation. Future efforts on congestion mitigation are more likely to emphasize less costly and more efficient solutions such as ITS and transit improvements. While roadway expansion can be expected to continue, it seems likely future roadway expansion will no longer exceed the rate of population growth. 

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