The ADRR

Since its inception, members of the American Downtown Revitalization Review’s (ADRR) Board have engaged in a near continuous e-mail dialogue about a wide range of issues, trends and opportunities that do not, in our opinions, always receive the attention they need and deserve in other media outlets and industry publications. The vitality of these conversations is evident in the number who join and/or read these back-and-forths more than two years after the ADRR’s launch; indeed, over time, non-Board members have added to the ferment with their own observations and insights.

As most others concerned about downtown revitalization, we at the ADRR have been trying to understand the challenges the Covid19 pandemic has generated and to identify effective strategic and programmatic responses to them. To help speed progress in this effort, our editor, David Milder, wrote “Are the Challenges Our Larger Downtowns Now Face Properly Scoped Out?” It is being posted at the same time as this transcript on part of the multi-day online discussion about the topics it raised.

The discussion on housing started off in this manner:

David Milder  May 6, 2022 at 2:23:38 PM EDT

I wonder if we can turn the discussion more to housing now.

Paul’s report on the State of Center City said that it had become the fastest growing residential section of its city and region, and that 9 million SF of office space had been converted to residential and hotel uses over the past two decades. Moreover the data in that report  indicates to me that desirability of living in and near Center City has not subsided during the crisis.

Dave Feehan has often mentioned the new housing going in and near downtown Des Moines, and I saw a few months ago some very impressive stats on the units that have gone into downtown LA. Moody’s recent report also shows continued strong demand for downtown housing and the high premiums residents are willing to pay for such units.

Stantec, and some other consulting groups as well as some urban oriented public interest groups are also arguing that housing is the horse to ride to recover from this crisis.

The issue it seems to me is not simply housing, but affordable housing. In turn, the complexity of that problem is compounded by 1) current market forces and continuing low production of units and 2) the expansion of the population that is now concerned about affordability to include people who can reasonably be said to have quite comfortable incomes, and are prone to be creatives and knowledge workers.

Andy and others will probably say that these comfortable income folks who can’t afford the prices in and near their downtowns will just find units in more distant locations in their cities, or in its suburbs or exurbs. While a lot of that was already happening pre crisis when 30 somethings deciding to nest or recently nested moved to the burbs, is that something our downtowns can now tolerate without weakening? In an age of Zoom and remote work can they, in Paul’s words  cope with  “a wave of digital suburbanization, which is like the ’60s and ’70s, when people moved out and left cities behind?”

So, I ask:

• Will housing be a viable engine for downtown growth and recovery?
• Do we need to be concerned about the affordability of downtown units if only people who can afford very high priced units keep buying them?
• If affordability is an issue, has our thinking about it been as creative as it could be? The solutions I’ve seen seem to mostly revolve around financial incentives. What about technological responses? Other cost cutting measures?

…

Richard Florida  May 7, 2022 at 9:26 AM

Great piece (on the current status of the economy: https://www.nytimes.com/2022/05/06/business/economy/jobs-report-april-2022.html?referringSource=articleShare)  and great comments.

I am simple minded on all of this. I think the core issue is housing prices. I have never ever in my life seen housing prices get this out of line with incomes. Those articles a month or so ago which showed that the average house in America out-earned the average American worker last year should be the signal alert.

Maybe … it is the case that incomes have grown to the point where people can spend a higher fraction of them on housing. But I don’t think they can spend this much.

When people can’t afford to buy houses, the market has to adjust.

While many think “soft landing,” I fear a much more significant correction coming.

Paul Levy  May 7, 2022 at 9:32 AM

Don’t focus so much on housing prices as on monthly mortgage payments. When interest rates hit historic lows, housing prices can rise and not create a crisis for the middle and upper middle class. But the problem is huge at lower income levels.

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