Episode Summary

  1. Affordable housing is a supply and demand issue. If you want a house right now, you're bidding against investors. Some think that legislation could help solve the supply side problem
  2. Public transportation portfolios needs to be diverse. The same way a wise investor will invest across industries. Urban planners and communities need to invest across methods.
  3. Paris is absolutely dominating the bike game. They're changing existing infrastructure use, they're building new infrastructure, and they're budgeting to maintain it. And citizens have responded by actually using it which helps fuel additional plans.

To help with housing supply, ban investors? (2 min read)

Pigovian tax study shows change in transportation habits (4 min read)

Plan Velo: Act 2. (4 min read) Because Act 1 went well (8 min read)

Outside the Episode

Source: ETHzurich

Transcript

Hello, ladies and gentlemen boys and girls. Gather 'round as consider the patterns of development in real estate, architecture, and urban planning.

Pattern recognition is a skill and when you start to study a specific area long enough you collect data, and you start to notice patterns. These patterns, in a way can be like secrets as Peter Theil would call them. If we step back and observe what's going on, what do we see? What reveals itself?

Taking these 5 to 10 minutes, I'm going to share what I think is most interesting and connect these dots to patterns I've started to observe over the last year. My hope is that I give you something interesting to elevate your work, whether you're a real estate agent, developer, city staff member, or curious citizen.

First up, published in September of this year, an article in the NL Times by...well...there doesn't appear to be an author associate on this page....

Titled, "Dutch cities want to ban property investors in all neighborhoods." Raises some interesting questions.

Quoting from the article, "large municipalities in the Netherlands plan to make wide use of a legislative amendment that will allow them to designate neighborhoods where investors won't be allowed to buy cheap and medium-priced homes and rent them out, NOS found after surveying the municipalities.

This legislative amendment is expected to take effect on January 1 [of '22]. The intention is to give people looking for a home a better chance of finding one on the tight Dutch housing market. Last year, a third of all homes sold in the four large cities were bought by investors."

This is Kyle now. An interesting move here. The pattern, of course, is supply and demand. Housing is expensive because demand is high and supply is low. Which means not a lot of affordable housing.

It reminds me of a conversation I had with a real estate agent here in town and we were discussing the appraisal value of some of the properties. Now, we're located in a small midwest town but I think this trend holds true based on what I'm reading elsewhere. An appraisal value is coming back and yet the houses are selling for 10,20,30% more than the appraised value.

Why would houses be selling that much higher than the appraised value? A conclusion that could be reached is that "people" are looking at the appraised value and saying it doesn't matter if they pay a premium because they know that they can rent the property out and make their 1.25 DSCR.

So I say "people" because this legislation is making the argument that if it isn't owner occupied it's an investment.

Back to the article, the proposed legislation is attempting to put an end to this cycle. Because right now it would appear that you aren't bidding against Mr. and Mrs. Jones with 2 kids for that new house. You're bidding against Jones, LCC the flippers or the upstart airbnb hosts. Or worse Black Rock (an international investment company).

What is strange about some of the wording in the article is "investor" the argument could be made that all property ownership is an investment. And of course all the gray are that would come along with missing middle style type housing. That could allow a property with multiple units to be owner occupied and still be rented out...a can of worms there.

So that's one example of regulation in real estate. What about regulation in transportation?

An article in Streetsblog USA by Kea Wilson. Quoting from the article, "participants in a study who received cash for choosing modes of transport that are most beneficial to society ended up driving far less than study participants who did not get the reward — a finding that suggests that the U.S. might be able to reduce many car trips if existing auto-centric incentives were altered."

This was the largest study of a comprehensive "polluter pays" model. 3700 residents in Switzerland had an app that tracked their travel and then paid/didn't pay them based on how their choices affected their neighbors. ie. The smaller your carbon footprint the more you got paid.

This model is called a pigovian tax, which is a tax on any market that generates negative externalities. So even though you might have your cool sports car from 1978 that sounds awesome and gets 5 miles to the gallon (you are happy) you are generating negative outcomes (externalities) for the people around you.

It appears to be a pretty robust experiment. Everyone who participated received the report card of their transportation activity but only some got paid based on their results (the control group didn't get paid). That control group, even with data indicating on their report card of their behavior, didn't change their behavior. Check out an example of the report card in the show notes. The group that did get paid, did alter their behavior.

Generally paying people to not do stuff. Works. Pretty sure I've read studies that it's the best, most effective way to get people to stop smoking. Also saw that their experimenting with this economic concept to slow down gang violence.

Anyway anyway...

Of course, this leads to the delicious counter argument.

This study was in Switzerland! Not the US. So it's possible that this experiment wouldn't have the same results here. Most likely because we don't have the additional options available to us. Even if you get the report card, and even if you get paid to change your behavior, what are your options when you're a photographer that needs to drive to 3 shoots a day across the west side of the state.

Which leads us to another common pattern - have diversity in your transportation portfolio. You don't start to build crosswalks when you see pedestrians. You build cross walks so that pedestrians will come.

Last up, a reminder for all the listeners that are aspiring politicians. You can run on a bike/pedestrian 1st platform and probably win. Hidalgo did it in Paris, Plante did it in Montreal. I wonder if there's more...

This week, specifically, Hidalgo's at it again. She's now running for the president of France, and unveiled Plan Velo - act 2. An additional 290 million dollars with the goal of making Paris a 100% cycling city. Act 1 was 174 million focused on increasing the number of cycleways and parking spaces. Act 2 includes the creation of more and includes a pledge of maintenance.

Is Act 1 working? How can we have an Act 2 already? Well apparently with Act 1 bike has doubled and even tripled on most existing lanes. There's an article in the NYTs titled, "As Bikers Throng the Streets, It's like Paris is in Anarchy..." Check out the show notes for a vid of one particularly busy intersection.

So yes. Act 1 is working. This, related to our previous pattern of build it and they will come (hopefully) and the population in has responded not only in the voting booth (at least for Mayor) but also in their change of behavior demonstrating that people in Paris really would rather bike.

This leads us to our patterns of the week:

  1. Affordable housing is a supply and demand issue. If you want a house right now, you're bidding against investors. Some think that legislation could help solve the supply side problem
  2. Public transportation portfolios needs to be diverse. The same way a wise investor will invest across industries. Urban planners and communities need to invest across methods.
  3. Paris is absolutely dominating the bike game. They're changing existing infrastructure use, they're building new infrastructure, and they're budgeting to maintain it. And citizens have responded by actually using it which helps fuel additional plans. Hidalgo has got the tiger by the tail! Lets she how far she goes!

That's all for this week, talk to y'all soon.