Diary

A Flight to the Suburbs?

Traffic is bumper to bumper as people scrambled to find alternate routes on Friday, March 31, 2017. Many commuters in some of Atlanta's densely populated northern suburbs will have to find alternate routes or ride public transit for the foreseeable future after a massive fire caused a bridge on Interstate 85 to collapse Thursday, completely shutting down the heavily traveled highway. (AP Photo/Alex Sanz)

One of the things the global warming climate change alarmists have been pushing is more dense urbanization. After all, if more of the population becomes urbanized, what my good friend William Teach calls the Warmists — personally, I prefer Warmunists — believe that more people will use public transportation and fewer will rely on private automobiles.

And, of course, our more heavily urbanized areas tend to vote Democratic!

The Washington Post noted just how evil it is to want to leave the cities for the suburbs:

Scientists just showed what building a new suburb does to the atmosphere

By Chris Mooney | March 8, 2018 | 8:00 AM EST

A team of scientists this week reopened the debate over suburbs vs. city centers, with new research showing that carbon dioxide emissions increased as suburban areas developed to the southwest of Salt Lake City in the past decade — while comparable population growth in the center of the city did not have the same effect.

It’s the latest evidence highlighting the environmental consequences of suburban expansion, often accompanied by more miles driven by cars and larger free-standing homes that require more energy for heating and cooling. As cities become a central focal point for action on climate change, the ways in which they manage their growth will be a key question.

Yet at the same time, the research itself shows how contentious and complicated this debate is likely to be. The southwestern Salt Lake Valley region in question, for instance, contains a noteworthy community called Daybreak that was itself built around energy-efficient homes and walkability and heralded for its design by the Urban Land Institute — precisely what climate advocates would seem to want to see more of.

“Of course, if you put more people where there weren’t people before, you’re going to have more emissions,” said Christopher Jones, a researcher at the University of California at Berkeley who heads up the CoolClimate Network, which studies the carbon footprints of different U.S. communities, and was not involved in the new study.

“The question is putting them in one type of development, compared with somewhere else.”

I just love that last quoted sentence, the underlying assumption of which is that Our Betters will tell us in which kind of housing we will be put. Perhaps Dr Jones didn’t intend for it to come out that way, but it did.

The Democratic presidential candidates all ran on various versions of a climate change fighting plan, and presumptive nominee Joe Biden has finally gotten more specific with his.

But, gosh darn it all, sometimes even Americans who nod their heads sagely in approval of the Green New Deal or some other environmental action plan, don’t always take personal choice decisions that mesh with that. From Barron’s:

How the Pandemic Has Changed What Home Buyers Want. Get Ready for ‘Mother of All Bidding-War Seasons.’

By Jack Hough | Updated June 14, 2020 | Original June 12, 2020

As stocks tumbled this past week, mortgage rates quietly shrank to near record lows, which means that conditions are perfect for house buyers, except for some nitpicks. Almost no one is selling. Prices are high. Open houses don’t pair well with pandemics. And banks are reluctant to lend—but only to people who need money.

Despite these hitches, transactions are getting done. The Mortgage Bankers Association Purchase Index for the week ending on June 5 was up 13% from the same week a year ago. Taylor Morrison Home (ticker: TMHC), the No. 5 U.S. home builder, whose sales declined 30% in April versus a year earlier, reported a 17% increase in May. “We’ve seen that momentum continue,” CEO Sheryl Palmer says. “How we can go from peak to trough back to peak again, all in about 10, 12 weeks, is unlike anything I’ve seen.”

Last week in this space, I touched on my chat with Yale University economist Robert Shiller, who predicted that house prices in the suburbs would rise faster than those in city centers in coming years, as buyers, now practiced at working from home, seek more social-distancing space. It could be months before house-price indexes offer proof. This past week, I reached out to Glenn Kelman, CEO of Redfin (RDFN), for a real-time read.

Redfin, which went public three years ago, hopes to gather market share in the highly fragmented real estate brokerage industry through low fees and technology savvy—virtual tours, advanced data analytics to recommend homes to buyers, direct online purchasing, and so on. Its shares are up more than 50% year to date, suggesting that investors view the company as a relative winner under current conditions.

Kelman says traffic growth for his online listings for houses in suburbs and small towns has outpaced that for in big cities by 164% over the past two months. That backs up agents’ anecdotal evidence that buyers are moving from cities out to the country, he says.

Wait, what? People aren’t moving to the cities, but out to the suburbs? How can this be?

There’s much more at the original.

The article noted that there has been a change in the demand, less for open floor plans and more for his-and-hers¹ home offices suitable for videoconference meetings. This means more square footage is required, something difficult in the cramped confines of urban housing.

Taylor Morrison CEO Sheryl Palmer says she doesn’t see as much evidence of buyers fleeing cities, perhaps because the company doesn’t have much exposure to markets hardest-hit by the pandemic, like New York. In recent customer surveys, the top two reasons for buying are the desire for better technology, and for more rooms.

“What it really means is, ‘What I have to do working from home has just changed, and I can’t retro my house,’ ” she says.

Palmer says she has seen solid interest from millennials, which might bode well for long-term demand.

“I think the sound bite sounded really good for the past few years, that millennials prefer the urban kind of core, and they’re not homeowners,” she says. “Our research doesn’t show that at all. In fact, about a third of our buyers are millennials, and nearly 50% of those buyers are buying their second home already.”²

But, but, but, I thought that it was the millennials who were really driving the climate change agenda!

Apparently it’s pretty easy to be for some form of the Green New Deal, as long as it’s going to restrict other people. When it’s going to restrict your own choices, perhaps not so much.

What does suburban life mean? It means longer commutes to work, but gasoline prices are very low — $1.949 per gallon for regular unleaded where I live — and some people who had no expectation of being able to work from home previously are now able to do so either full-time or a few days a week,³ which also reduces commutes.

Suburban life also means things like maintaining your yard, automobile trips to the grocery store rather than walking to the bodega on the corner, and voting Republican. It means being more concerned about your own property, rather than buying renters’ insurance, and whether you live in a good school district, and needing two cars rather than one, and needing a vehicle you can actually take on longer trips . . . which means the infernal combustion engine, not a plug-in electric.

And, let’s be honest, in these days of #BlackLivesMatter, it means a ‘whiter’ neighborhood. It means watching the ‘peaceful protests’ on television as the #woke vandalize and burn public property and, sometimes, private homes, and realizing, as property owners, they have something to lose themselves if the immature gain power.

Barron’s isn’t a political magazine; its focus is on business and economics. But if you want to understand politics, you need to know something about economics. The New York Times and The Philadelphia Inquirer and CNN might slant the news to push a political agenda, but business magazines and The Wall Street Journal don’t really do that, because their editors know that isn’t what their somewhat specialized readership want. If you are a businessman or an investor, you want the straight scoop, to help you to take your economic decisions, not ‘news’ slanted to influence how you vote.

And remember: most of us only vote once every two years, but we all take economic decisions every day. Most don’t really seem like much, but the seemingly simple decision between breakfast at home, or coffee from Starbucks, or a bagel from Dunkin’ Donuts is an economic one, deciding where you are going to spend your time and money.4 The enforced eating at home due to various business shutdowns necessarily changed people’s economic activities, even if they didn’t lose jobs or income. When you learn about the public’s aggregate economic decisions, you get a clearer picture of what is happening in the world. But people, regardless of their political positions, still wind up taking economic decisions that they believe are in their own better interests, and the (apparent) trickle of people moving out of big cities and to the suburbs is going to affect politics in ways that the left do not foresee.
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¹ – “His-and-hers”? I suppose that I should be horse-whipped for assuming the genders of couples. 🙂
² – Full disclosure: my 31-year-old daughter is buying her first house, a stand-alone single, though it is in the city.
³ – Full disclosure again: my 29-year-old daughter, an IT professional, goes in to work on Mondays and Tuesdays, and works from home the other three workdays. She kept her job throughout the ‘pandemic’ closures, working from home full time from March through May.
4 – Before I retired and moved to Kentucky, I took an economic decision every workday: would I stop at the Bagel Bunch or Dunkin’ Donuts on the way to work. Doesn’t seem like much, does it, but with roughly 280 days a year that I worked, and roughly $3.00 I spent every morning, over five years’ time I had spent $4,200 at the Bagel Bunch, and very little at Dunkin’. My initial reason for choosing as I did? The Bagel Bunch was on the right side of the road, while Dunkin’ was on the left, so it was easier to get in-and-out. A developing friendship with the owners only cemented that decision.
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