Housing
March 9, 2018

How did US cities become so segregated?

Below are excerpts from a review-essay in the New York Review of Books about a very disturbing new book called The Color of Law: A Forgotten History of How Our Government Segregated America by Richard Rothstein (Liveright, 345 pp., $27.95). The article by Jason DeParle is behind a paywall. I have highlighted some key sentences.

‘In The Color of Law, Richard Rothstein writes: “Residential segregation was created by state action,” he writes, not merely by amorphous “societal” influences. While private discrimination also deserves some share of the blame, Rothstein shows that “racially explicit policies of federal, state, and local governments…segregated every metropolitan area in the United States.”
‘…Government agencies used public housing to clear mixed neighborhoods and create segregated ones. Governments built highways as buffers to keep the races apart. They used federal mortgage insurance to usher in an era of suburbanization on the condition that developers keep blacks out...
‘The demand for segregation was made plain in workaday documents like the Federal Housing Administration’s Underwriting Manual, which specified that loans should be made in neighborhoods that “continue to be occupied by the same social and racial classes” but not in those vulnerable to the influx of “inharmonious racial groups.” A New Deal agency, the Home Owners’ Loan Corporation, drew color-coded maps with neighborhoods occupied by whites shaded green and approved for loans and black areas marked red and denied credit—the original “redlining.”
‘…The FHA financed Levittown, the emblem of postwar suburbanization, on the condition that none of its 17,500 homes be sold to blacks. The policies on black and white were spelled out in black and white.
‘…De jure segregation is long gone from the books, but its significance is more than historical. The conditions it created endure. American cities remain highly segregated. Schools are highly unequal. Huge gaps in wealth persist between blacks and whites, largely driven by differences in home equity.
‘Among the government’s tools for imposing segregation, few were as powerful as public housing, which both reinforced color lines and drew them where they hadn’t existed. Public housing typically conjures high-rise black ghettos. But it started during the Depression mostly to help working-class whites. The first agency to build public housing was the Public Works Administration, which was launched in 1933…
‘Starting during the New Deal and accelerating in the postwar years, the government transformed American life with a campaign to promote homeownership and suburbanization. But the sale of the American Dream explicitly excluded blacks.
The FHA didn’t segregate America just one loan at a time. By underwriting mass developments, Rothstein writes, it created “entire subdivisions, in many cases entire suburbs, as racially exclusive white suburbs.” None was more celebrated than Levittown, an ingenious solution to the postwar housing shortage—thousands of affordable, mass-produced homes offered to veterans with no down payment. But only the government’s promise to insure the mortgages allowed William Levitt to secure the construction loans. “We are 100 percent dependent on Government,” he said. Among the FHA’s conditions, in Levittown and other mass projects, was that no homes be sold to blacks …
‘Blacks have about 60 percent of the family income of whites, but less than 10 percent of the wealth—a huge gap and one that impedes advancement. Nest eggs finance education; they tame emergencies…
‘The Color of Law ends at the Nixon administration. A lot has changed since then. The growth of the black middle class and better (if not great) fair housing enforcement has reduced segregation, although it remains high. A standard segregation measure, the “dissimilarity index,” peaked in 1970 at 79 (meaning that 79 percent of blacks in a typical metro area would need to move to achieve an even distribution). By 2010 the figure had fallen to 59. Cities are divided in new ethnic and economic ways. Latinos outnumber blacks, and segregation by income has soared—largely from rich families flocking to rich neighborhoods. The changing landscape affects access to opportunity in ways still not fully understood.’

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From Business in Vancouver via Jak King:

Is this a textbook example of Adam Smith’s dictum, or are there other factors?

In Vancouver, for example, Altus Group says construction costs for a higher-quality four-storey, wood-frame condo building would peak at $250 per square foot. This compares with $195 per square foot in Toronto and $175 or less in nearly every other city in the country.
The Altus cost estimates are for hard construction costs only and do not include land values, or any of the soft costs, including profit, associated with completing a project. Altus did not provide an explanation why construction costs would vary from one jurisdiction to another.

But the difference is less pronounced in commercial construction:

For example, the hard construction cost for a Class A five-to-30 storey office building in Vancouver ranges from $270 to $340 per square foot. This compares with $220 to $290 per square foot in Calgary and Edmonton. The price for such an office building in Toronto ranges from $210 to $315 per square foot, according to Altus.

It’s no wonder people are having such trouble finding tradesmen for small jobs. We finally found a guy in his 70s to pour a bit of concrete last year.

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[Jenelle Schneider / PNG]
Golf and country-residential go together like bears and garbage cans. The Morgan Creek development of recent decades has pushed big house cul-de-sacs into rural land along 32nd Avenue east of Highway 99 – its accessibility to malls and commuting was made easier by the 32nd Avenue interchange that went in about 15 years ago.
Now there’s this, where the Hazelmere Golf Course on 8th Avenue east of 176th (the Pacific Highway which leads down to the truck crossing) has been the only non-rural incursion for many years. This article by Larry Pynn in the Vancouver Sun describes the latest attempt to push an “urban” use past the Metro containment boundary. (Thanks to David Riley for the tip.)

A planned residential development in rural Hazelmere in south Surrey was described Friday as both a dangerous land-use precedent and a boost to young farmers and the local environment.
The Metro Vancouver regional board ultimately decided that residents should have a say at a public hearing before a final decision is made on the project.
Regional staff had recommended against the City of Surrey’s request to amend the Metro 2040: Shaping our Future land-use designation map in order to accommodate the development proposal.
The amendment would create a “23.7-hectare non-contiguous extension” of the Metro 2040 Urban Containment Boundary, and redesignate lands from Metro 2040 Rural to General Urban.
The plan for a 145-lot single-family residential subdivision, housing about 450 residents, would require extending regional sewer lines to the site, which is part of the Hazelmere golf course development.
“The proposed amendment challenges the most fundamental elements of Metro 2040 – containing urban sprawl, focusing urban growth to support complete communities, and efficient transportation and infrastructure investments,” the staff report read.
“In addition, approval would set a clear precedent regarding the permeability of the urban containment boundary, and likely trigger additional land development speculation in the rural areas of southeastern Surrey and other similar areas of the region.”

 
 

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A very telling, quite neutral article about Michelle Yu and her specialty of land assemblies by Christopher Cheung in the Vancouver Courier.

There are three Vancouver Specials near the old Little Mountain social housing complex on Main Street. The specials were built in 1979 and were assessed at about $1.4 million each. But as a set, they sold for more than $10 million, according to Western Investor in December. That’s more than double what they would’ve fetched if sold separately.

These assemblies are for multi-family buildings on arterials, empowered by Vancouver zoning, and the land cost is totally out of control – in this case 250% of the current appraised land value, which will be passed on in the sale price or as rent.
Can anyone reading this still believe that the replacement of these sorts of detached houses, which provide homes for extended families, students in suites and shared-accommodation arrangements, will provide affordable new housing geared for people who earn their living in Vancouver-level wages?
Or is the game now just to provide more small housing units in the hope the price will eventually drop?

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Further to the February 20 post about Transportation Service Providers, there is this from The Guardian:

London-based transit app Citymapper is today launching Smart Ride, a hybrid bus and taxi service that will take riders around a fixed network in the capital.
The company is operating the service under a private hire licence from Transport for London, following a pair of trial “smart bus” routes in the capital. The new licence limits the firm to operating vehicles that can carry eight or fewer people, but frees it to run future routes that can change dynamically as demand shifts, rather than being legally mandated to stick to specific timetables and stopping patterns.
“We believe in the future of shared transportation in cities, there is no way we’re going to solve for congestion and pollution otherwise,” Omid Ashtari, Citymapper’s president and head of business, told the Guardian. “But the regulations we see are not stacked in the favour of the bus industry to make sure that works.

 

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Via Jak King, a blow to those students wanting to buy multi-million dollar west-side Vancouver houses, via betterdwelling.com.

Foreign buyers just got one of the most aggressive hurdles when buying Canadian real estate. The Canadian Imperial Bank of Commerce (CIBC) quietly notified its mortgage advisors the “Foreign Income Program” has ended. The program was replaced on February 1, 2018, with a new program designed to ensure compliance with B-20 guidelines from OSFI. This change will have a drastic impact on those that use foreign income to qualify for a mortgage, from one of Canada’s largest banks.
… The improved income verification does introduce two new downside pressures for real estate prices. First, it’ll be more expensive for non-residents dodging local taxes to buy a house. Second, the amount they can borrow will be stress tested against the declared income.

Lots of detail in the article itself.

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This excellent piece of journalism by Mike Howell in The Courier, which can be read here, is paid for by the sale of advertising, including this on the inside front page of its print edition …

… a highlight of which is: “Elites from all over the world are gathered here, but only a handful of them can take a place on this hottest street.”
I’m not trying to incite class warfare, and I really am pleased that we have “one of the most famous streets in the world.” Honest!

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More evidence, if any is still needed, that the move to replace detached houses with townhouses is a development play that has nothing to do with providing affordable housing. This is from Jak King, a blogger in Grandview.

I live on Adanac hill in the same block as the WISE Hall.  The north side of the street running up to Victoria used to have several crumbling old Edwardian houses that were full of very cheap rental units. They have all been  demolished over the last few years and replaced with townhouses.
You may recall that townhouses are supposed to be one of the cheap alternative to single family houses, and the Planning department are pushing them more and more into Grandview (see the recent Open House) as a solution to the housing affordability problem.
The townhouse development right next door to my building has just been completed and I happened to see one of the townhouses advertised in a real estate office this morning:

Let’s step back a moment and remember that the median family income in Vancouver is roughly $75,000 a year.  Therefore, a normal family in Vancouver can never possibly afford this townhouse which, with a 30% down payment, requires an income double what most earn.
The minimum down payment is $265,600. No family can possibly save that much in 20 years on a median income in Vancouver. But let’s assume — as the build-at-any-cost crowd do — that the purchasers have boomer parents able and willing to assist with the down payment. It still doesn’t work.
The annual mortgage payment is $56,652 which is more than the entirety of their take home pay after tax and deductions.

 

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