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Sunday reading 4 September 2016

Welcome back to Sunday reading. Our lead article: sheep.

A Guardian article by Will Coldwell describes how the Faroe Islands have developed Google SheepView to map their landscape:

Living across 18 tiny sub-polar islands in the north Atlantic, Faroe islanders are used to working in difficult conditions. So tired of waiting for Google Street View to come and map the roads, causeways and bridges of the archipelago, a team has set up its own mapping project – Sheep View 360.

With the help of a local shepherd and a specially built harness built by a fellow islander, Durita Dahl Andreassen of Visit Faroe Islands has fitted five of the island’s sheep with a 360-degree camera.

Pinterest

As the sheep walk and graze around the island, the pictures are sent back to Andreassen with GPS co-ordinates, which she then uploads to Google Street View.

“Here in the Faroe Islands we have to do things our way,” says Andreassen. “Knowing that we are so small and Google is so big, we felt this was the thing to do.”

Exciting.

For something completely different, Scott Beyer (Forbes) describes how America’s ugly strip malls were caused by government intervention.

There is a common architectural language that I’ve found while traveling America. The most interesting part of any city is generally its downtown, with historic buildings and narrow streets. But drive a couple miles—or in small towns, several blocks—in any direction, and the terrain quickly devolves. Major roadways turn into strip malls fronted with parking lots and endless stretches of chain retail. These strip-mall arterials exist nationwide, robbing cities of their appeal. The common wisdom is that they result from “the market,” as monuments to American capitalism and consumerism. But that is a big fat myth—they have been forced into existence by government regulations.

Single-Use Zoning

Let’s assume, just for the sake of conversation, that nobody finds a corporate fast-food establishment particularly attractive. The visual impact of these places is nonetheless minimal and sporadic in mixed-use, urban settings, where they bump up against different building types, or sit at ground level within buildings. But along many American strip malls, fast-food chains—and other low-budget retail—are clustered side by side, extending into infinity with their loud signage, cookie-cutter design, drive-thru windows and parking lots.

We can thank single-use zoning for this. Most cities’ comprehensive zoning maps separate residential, commercial and industrial uses. They usually allow commercial retail on just a handful of key roads that run from downtown to the suburbs. So that’s where most of the retail ends up. It’s as if the government has taken uses that are fundamentally ugly, and crammed them together, causing the ugliness to spread. People still shop on these strips because they have no other choice, but don’t celebrate the areas themselves, often finding them distasteful and congested.

The article goes on: minimum parking requirements, setback controls, and density limits are other major offenders.

Are there alternatives? Yes. Joe Cortright (CityObservatory) reports on new research into the value of walkable neighbourhoods. People in the US pay higher prices to live in more walkable locations, even though they’re not intrinsically more expensive to build – prima facie evidence of a regulated shortage of good urban places:

One of the hallmarks of great urban spaces is walkability–places with lots of destinations and points of interest in close proximity to one another, buzzing sidewalks, people to watch, interesting public spaces–all these are things that the experts and market surveys are telling us people want to have.

Its all well and good to acknowledge walkability in the abstract, but to tough-minded economists (and to those with an interest in public policy) we really want to know, what’s it worth?  How much, in dollar and cents terms, do people value walkable neighborhoods?  Thanks to the researcher’s at RedFin, we have a new set of estimates of the economic value of walkability

What they found is that increased walkability was associated with higher home values across the country. On average, they found that a one point increase in a house’s Walk Score was associated with a $3,000 increase in the house’s market value. But their findings have some importance nuances.

First, the value of walkability varies from city to city. Its much more valuable in larger, denser cities, on average than it is in smaller ones. A one point increase in Walk Score is worth nearly $4,000 in San Francisco, Washington and Los Angeles, but only $100 to $200 in Orange County or Phoenix.

Second, the relationship between walkability and home value isn’t linear: a one point increase in the Walk Score for a home with a very low score doesn’t have nearly as much impact as an increase in Walk Score for a home with a high Walk Score.  This suggests that there is a kind of minimum threshold of walkability.  For homes with Walk Scores of less than 40, small changes in walkability don’t seem to have much effect on home values.

Some places get it. Paris is redesigning major intersections – many of which are currently massive multi-lane roundabouts – to give more space to people on foot. Adele Peters reports in Fastcoexist:

Right now, the Place de la Bastille in Paris is basically a traffic island: A huge memorial sits in the middle of a road packed with cars. There’s no way to easily cross the street on foot. But that will soon change. The square is one of seven major sites that Paris is redesigning for pedestrians and cyclists.

“Parisians are finding out that what were once admirable squares of theirs are now just intersections,” says Jean Macheras, the Paris delegate of the French Transportation Users Assocation.

The shift started with the Place de la République—until 2013, it was also a busy road, but now it’s a pedestrian plaza planted with trees, lined with benches, and filled with people. The transformation was so popular that the city decided to keep going.

Each of the new designs give pedestrians at least 50% of the space in the square, taking away lanes of traffic even though each of the streets is a major route in the city. At the Place de la Bastille, the square will reconnect with a curb on one side, creating a new green space for people to sit. At the Place de la Madeleine, trees will mark off more pedestrian space and a new weekly market will be added.

Places that don’t figure out that they need to adapt their approach are not going to be awesome. The combination of an aging population and car-dependent suburbs will lead to some negative social consequences. Jenni Bergal (Miami Herald) reports on the challenges facing many suburbs:

Greg Glischinski and his wife, Sheri, have lived in their two-story brick and wood Colonial-style house for more than three decades. The retirees, both in their 60s, want to stay where they are for the rest of their lives.

But their house has no bedroom or full bathroom on the first floor. It is on a cul-de-sac, and public transportation options are limited. As they grow older, the Glischinskis may need in-home assistance with tasks like bathing, dressing and preparing meals – an expensive proposition.

“It’s a huge problem for boomers,” said Greg Glischinski, 66. “Quite frankly, I don’t know what we’re going to do.”

Turns out the kids who listened to rock ‘n’ roll on their transistor radios and watched spellbound as men walked on the moon – the first American generation raised in the suburbs – want to grow old there.

In fact, the American suburbs, built for returning GIs and their burgeoning families, are already aging. In 1950, only 7.4 percent of suburban residents were 65 and older. By 2014, it was 14.5 percent. It will rise dramatically in the coming decades, with the graying of 75.4 million baby boomers mostly living in suburbia.

But car-centric suburban neighborhoods with multilevel homes and scarce sidewalks are a poor match for people who can’t climb stairs or drive a car.

“Most (boomers) are in a state of denial about what really is possible and what’s reasonable for them as they age,” said John Feather, a gerontologist and the CEO of Grantmakers in Aging, a national association of foundations for seniors.

Meanwhile, the invaluable Kim-Mai Cutler points out that growing cities that are doubling-down on single house zoning in an attempt to maintain suburban amenities for young families are, in fact, pricing out and driving away young families:

New Zealand’s conversation about housing affordability has been far more reasonable than the conversation in San Francisco and Silicon Valley. But that still hasn’t stopped some politicians tying themselves in knots about whether or not they want houses to become more affordable. The Spinoff’s Hayden Donnell covers Nick Smith’s rhetorical convolutions:

Housing Minister Nick Smith understands. He wants to appease younger and poorer voters by making housing more affordable.

But he wants to do it without actually lowering house prices, which would upset a horde of elderly homeowners, who are swaying their way through the longest, most debaucherous property boom in New Zealand history, drunk on the nectar of billion-dollar-a-year price rises.

It’s an impossible task.

On Saturday, Smith came up with an innovative solution: becoming two Nick Smiths.

In an interview with Patrick Gower on The Nation, Bad Smith appeared first, comforting homeowners fearful their endless property bacchanal may be winding down.

“I want house-price inflation in single digits,” he said, in response to a question about whether he wants house prices to fall.

“If you ask me what the objective of my policy, both in Auckland and throughout New Zealand, it’s for house-price inflation to be in single digits.”

Almost immediately afterward, the Housing Minister’s brain slithered out of his body to be replaced by a better version of itself.

“In 2014, just before the election, you said – and this is when the housing multiple was seven – you said your goal was to get it down to four,” Gower said, searching for assurance that was still the Housing Minister’s position.

Good Smith leaned in to reply, gleaming under the coat of his new skin.

“Yeah, I think, long-term.”

It’s literally impossible for one man to hold both those views at the same time. The housing multiple in Auckland is nearly 10. Even if house prices don’t rise at all, household incomes would need to go up more than 200% – from $76,000 to $250,000 – to bring a million-dollar home down to a housing multiple of four. If wages and salaries keep going up at their current rate, that could take roughly 50 years. But single-digit house price inflation could mean 9%, in which case it would never happen at all.

NICK SMITH'S HOUSING POLICY.

NICK SMITH’S HOUSING POLICY, APPARENTLY.

It’s now been a month since Green leader Metiria Turei was flayed alive for committing the cardinal political sins of making sense and telling the truth about house prices. But her wild claim that homes need to cost less than King Tutankhamun’s tomb to be affordable was at least a viable position for a human mind.

Incidentally, lower house prices are popular among voters.

To close: If you want to read one longer article this week, I’d highly recommend Bill McKibben’s new piece in the New Republic: “We need to literally declare war on climate change“:

In the North this summer, a devastating offensive is underway. Enemy forces have seized huge swaths of territory; with each passing week, another 22,000 square miles of Arctic ice disappears. Experts dispatched to the battlefield in July saw little cause for hope, especially since this siege is one of the oldest fronts in the war. “In 30 years, the area has shrunk approximately by half,” said a scientist who examined the onslaught. “There doesn’t seem anything able to stop this.”

In the Pacific this spring, the enemy staged a daring breakout across thousands of miles of ocean, waging a full-scale assault on the region’s coral reefs. In a matter of months, long stretches of formations like the Great Barrier Reef—dating back past the start of human civilization and visible from space—were reduced to white bone-yards.

Day after day, week after week, saboteurs behind our lines are unleashing a series of brilliant and overwhelming attacks. In the past few months alone, our foes have used a firestorm to force the total evacuation of a city of 90,000 in Canada, drought to ravage crops to the point where southern Africans are literally eating their seed corn, and floods to threaten the priceless repository of art in the Louvre. The enemy is even deploying biological weapons to spread psychological terror: The Zika virus, loaded like a bomb into a growing army of mosquitoes, has shrunk the heads of newborn babies across an entire continent; panicked health ministers in seven countries are now urging women not to get pregnant. And as in all conflicts, millions of refugees are fleeing the horrors of war, their numbers swelling daily as they’re forced to abandon their homes to escape famine and desolation and disease.

World War III is well and truly underway. And we are losing.

That’s all for the week. See you next time!

35 comments to Sunday reading 4 September 2016

  • Brendon Harre

    Bernard Hickey has an article about Government assisted housing -like we had in 1974 -the last time we had a genuine housing boom. I put the following comment online which to me gets to the heart of the housing crisis problem. http://www.interest.co.nz/opinion/83374/bernard-hickey-argues-new-zealand-needs-rediscover-its-1974-house-building-mojo-which

    “I have helped write some articles which I think would correct some of the housing market imperfections http://www.interest.co.nz/opinion/83082/brendon-harre-and-david-lupton-s…. Bernard makes a case for direct government involvement.

    I think the greater point is there are options to fix the housing crisis from the supply side which the government is not taking. Of course as many say here, there is opportunities to reduce demand by limiting/removing the effects of foreign buyers and high immigration.

    I think for New Zealand the housing crisis will define who we are as a people -are we a egalitarian people that gives everyone a chance in life or are we a people that allows New Zealand to be a playground where only the interests of the wealthy are considered. I made a similar point to the Homeless Inquiry.”

    https://medium.com/@brendon_harre/homelessness-inquiry-my-verbal-submission-d7f555370816#.vgixcs3u6

  • buttwizard69420

    I’ll bite: It’s all very well and good saying home prices need to collapse, but considering how we can’t just abandon houses and walk away like in the States, there needs to be a serious discussion about what negative equity is going to mean for NZers if it happens.

    • Brendon Harre

      It will mean the poorer side of our community gets a chance for a change. In Auckland there are 450,000 people over the age of 15 who live in an owner occupied home and there are 600,000 people over the age of 15 who rent. Perhaps making policies in housing to benefit the less wealthy would be more democratic? The 450,000 didn’t care that rents and house prices have increased faster than wages for several decades now -depriving a greater number of their fellow residents. Should we care if the boot is on the other foot? Besides the market will crash at some point anyway.

      • buttwizard69420

        Yes Brendan, we absolutely should. While houses would become more affordable for more people, they’re still going to be cutting back on spending to make their mortgage repayments. One good thing about cheap credit and house prices making people feel rich is that they spend more. While I’m not saying it’s not in our long term interests for it to happen, it is naive to think there would not be some pretty massive negative effects on the wider economy, and we need to plan for those now.

        • Brendon Harre

          If the government used all the tools available to it to fix the housing market, yes there might be a house price correction -maybe -it could just be a greater variety of more affordable homes are allowed to be built.

          To address the risk of house price correction – a brave reformist government could work with the Reserve Bank, which could lower interest rates and temporarily (say for 5 years) raise the inflation rate target as part of a coordinated response.

        • jmarshall

          This (spending more when you feel wealthy) just isn’t happening this time around: Other than buying more houses, spending is low just like it is when housing isn’t insanely inflating.

          Thus, I doubt a decrease will actually affect much in the overall economy. Some people will lose out, but likely not all that many. After all, you have to be pretty well off to afford to buy now anyway, and with the deposit, prices would have to really crash for many to be out of pocket.

    • Nick

      For a start, negative equity doesn’t affect people unless they can’t afford their mortgage payments and need to sell up. And for those people that do find themselves in that situation, it’s unfortunate, but surely part of the gamble they took when mortgaging themselves to the hilt in the first place. Everyone knows house prices can fall as well as rise, even if they pretend not to.

      The rich (i.e Auckland home owners) aren’t the people that deserve sympathy here.

    • Simon Lyall

      The people complaining will the same people who when prices are rising say things like:

      * ” it isn’t an investment it is a home ”
      * ” I can’t sell because it would cost me as much to buy elsewhere ”
      * ” I’m not planning to sell and it just makes my rates higher ”

      but we all know they will suddenly scream when their house value drops 20 percent overnight (ie to what it was worth 2 years ago). Probably followed by 20 years of grumbling that they didn’t sell at the peak when their equity was $1 million.

      Yes there are going to be a bunch of people that are going to lose out here. Most of them will be those who bought in the last few years with very high leverage. Effectively the whole banking policy for the last 5 years has been to try reduce the number of these people and make sure that the crash doesn’t take down the banking system

      The big question is is our housing policy aimed at getting people housed of ensuring maximum profit for investors?

      • Ricardo

        Nothing will change. What a lot of commenters fail to realise is that the forces causing the rises are global and not internal. When you get your head around the real economics involved now, that did not apply in 1974, you will see that the solutions, if any, are so different. As a global player now, with no restrictions, locals don’t get a look in.

  • Brendon Harre

    Another point is that the Netherlands is the size of Canterbury and we have only a little over 1/2 million people. Why we need to protect land from the demands of city dwellers is beyond me. Especially when lifestyle blocks -i.e. ultra low density housing for the rich is considered ok.

    • Peter Nunns

      If Canterbury had 18 million inhabitants, I’m sure that it *would* be as densely inhabited as the Netherlands. But with half a million, what’s the need?

      Although given the dairy industry’s short-sighted destruction of water quality, there might not be that strong of an environmental argument for preferring agricultural to urban uses on the Canterbury Plains. Runoff from roads and carbon from cars versus nitrates and methane from cows – could be six of one, half a dozen of another.

    • MFD

      “Especially when lifestyle blocks -i.e. ultra low density housing for the rich is considered ok.”

      Lifestyle blocks can be a lot less costly to buy than inner city accomodation and the low density is, to some extent, a function of the lack of provision of services. Typically, when a lifestyle block is carved off a farm there are no additional roads provided, no reticulated water and no sewerage. The latter is relevant because these days septic tanks require (by legislation) a relatively large area of land. In the Auckland region this sets the minimum land area.

  • So adjacent places to live in AKL; median dwelling cost in St Marys Bay >$2m. In the City Centre < $500k. Difference? Apartments. Need cheaper dwellings, need cheaper dwellings at scale, need cheaper dwellings at scale close to where people want to live... you work it out. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11702849

    • So when we had sufficient supply, as described by Bernard Hickey below, it was because the government was a builder and lender. But, as he also says, because we built cheaper smaller dwellings, what are the smaller and cheaper dwellings of this age? Apartments and terraces. Bare land is so much further away and so costly to add heaps of dwellings to of any price, that the market only sees value in adding more expensive ones. We just have to use all our land much more efficiently. Up.

      http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11703478

    • “St Marys Bay >$2m. In the City Centre < $500k. Difference? Apartments"

      25% of the price, but only 5% of the space. So really, apartments are much more expensive. And they come with very heavy restrictions, as you have to comply with the body corporate rules. Non-conformity is outlawed. Want to paint your outside wall a different colour? Nope, individuality is the domain of the 'burbs I'm afraid. Remember, apartments are how the Soviet Union, China and North Korea house their people. Very telling.

      If you want a cheap house, get out of Auckland. Plenty of houses on 1000sqm sections for under $200k.

      • Peter Nunns

        Your tedious rantings on this subject would be much more credible if you led the move out of Auckland.

      • And what about Paris? Correct me if I’m wrong but I think you see a lot of apartments in that aerial image.

      • Sailor Boy

        Geoff’s world; where buying a king bed is cheaper than a single because the cost per area is less, where buying an orchard is cheaper than buying an apple, and spending $2m on an adequate home is cheaper than spending $0.5m on an adequate home.

        • Bigted

          Adequate home means different things to different people and the price is directly related to where in the world you want that adequate home.

          • Ted clearly ‘adequate’ shifts with available budget. People able and willing to spend $2m+ on a dwelling have choices, those with less than a quarter of that [and almost all borrowed] obviously have fewer choices and have to have a more flexible idea of what’s adequate. My point is without more dwellings per parcel of land and therefore lower cost per unit the choices for this group shrink. And this is undeniably true as the median real estate figures show comparing the apartment-rich city centre and the enforced lower density of bigger detached homes in St Marys Bay.

            Geoff prefers people with less money to go away, to some small town where there’s no work rather be able to have the option to live in an apartment…. This is a hard hearted and bullying opinion, that is frankly hard to understand; what does it really matter to him how someone else chooses to live? He appears to be so offended by someone choosing something different to him that he prefers they are homeless and/or jobless. A stone for a heart.

          • Bigted

            While I agree that the intensification of the inner suburbs needs to happen the people with the $2M houses in St Marys bay will disagree with you. When intensification does come to St Marys bay it will be a matter of replacing one $2M house with two $1.9M semi detached houses, effectively doubling the land cost.

          • I am not arguing for intensification of St Marys Bay, simply for more intensification in general and in particular where feasible; especially [but not only] in proximate, well connected, currently undervalued areas.

            The mention of St Mary Bay is simply because it is adjacent to the city so highlights the value difference is about land use not location in this case.

            We still have too many limits on rational land-use from all sorts of weird quarters; Geoff’s anti-urban snobbery being just one, a particularly daft one, and largely irrelevant, but there are others too. Incumbency is the more difficult one to shift.

          • Sailor Boy

            I realise that, Geoff doesn’t. A 2 bed apartment is adequate for me, so is a 6 bed victorian house in St Mary’s Bay, one of those is demonstrably cheaper.

      • Roger W

        You’d make a better argument if you instead factored the body corporate fees into the interest costs on that $500K

        • Sailor Boy

          4k for body corporate on a half million apartment and 16k for maintenace on the structure of the $2m house.

        • There are advantages of having a body corporate. You have to pay your yearly fee, but they’ll maintain the building, and I think they are required to maintain some buffer for unexpected costs. They’ll have the outside of the building cleaned. They may maintain common areas. Large apartment buildings have a garbage room so you don’t have to (1) buy garbage bags and (2) you don’t have to keep them around for a week.

          But it has to be well-managed, if you’re on a tight budget it’s no fun if the fee doubles within a couple of years. I don’t know if that’s common, but it apparently happens in some places.

  • Brendon Harre

    Good report from Eugenie Sage -Green Party MP about the Christchurch Homeless Inquiry. https://blog.greens.org.nz/2016/09/03/homelessness-inquiry-listens-in-christchurch/

  • stu donovan

    Can’t believe no-one’s commented on SheepView 360 yet; ewe are all missing the bigger picture.

  • john smith

    On Minister Smith and the property boom: there are similar tensions in Australia, where generous tax concessions for home ownership have encouraged investors to overheat the market in the hope of capital gains. When the Labor Opposition recently proposed reducing the concessions, the government must have done the numbers and decided that sucking up to existing owners was safer than trying to help would-be buyers. They found some statistics purporting to show that the habit of owning investment property reaches quite a way down the income scale (I don’t know the details), and on that they built some truly laughable hooklines to the effect that reducing the tax concessions would deny all those deserving nurses, teachers amd firies the opportunity to ‘create a bit of wealth for their families.’

    There’s no doubt that this is a war between the people who are already on the merrygoround (mostly older, richer) and those who would like to get on it (mostly younger, poorer).

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