Housing Booms and City Centers

A Team of Harvard Real Estate Scholars have released an interesting new working paper titled; "Housing Booms and City Centers" . Here is the abstract for Ed Glaeser's new paper;

"Popular discussions often treat the great housing boom of the 1996-2006 period as if it were a national phenomenon with similar impacts across locales, but across metropolitan areas, price growth was dramatically higher in warmer, less educated cities with less initial density and higher initial housing values. Within metropolitan areas, price growth was faster in neighborhoods closer to the city center. The centralization of price growth during the boom was particularly dramatic in those metropolitan areas where income is higher away from the city center. We consider four different explanations for why city centers grew more quickly when wealth was more suburbanized: (1) gentrification, which brings rapid price growth, is more common in areas with centralized poverty; (2) areas with centralized poverty had more employment concentration which led to faster centralized price growth; (3) areas with centralized poverty had the weakest supply response to the boom in prices in the city center; and (4) poverty is centralized in cities with assets, like public transit, at the city center that became more valuable over the boom. We find some support for several of these hypotheses, but taken together they explain less than half of the overall connection between centralized poverty and centralized price growth."

My view is that in the 2000s, many center cities enjoyed improved quality of life as both crime and pollution declined in the center cities.  These improvements lead to gentrification and this concentration of Market Potential (i.e population density and high per-capita income) attracted better restaurants and shopping opportunities so that the process created a type of domino effect.    Think of the area near USC and the quality of life improvements in that campus' greater vicinity.  

Comments

[A Facebook User]

I definitely agree with your remark regarding gentrification and the domino effect. I have seen it happen around my old property which I now rent.
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[Account Deleted]

Nice post on the past expreince, it really happened and will be happening all through again..this is part of this real estate game..

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[Account Deleted]

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[Immg]

Good post on the already expreince, it really happened and will be happening all through again..this is part of this real estate game

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[Bobby Brooks]

I've noticed an increase in city centers as well, have you noticed a different in growth as compared to tax rates? I would imagine the Los Angeles Metro Area would be increasing in population of people who want/demand city services, i.e. county and state assistance but is decreasing in numbers of people who make a high enough income to pay taxes to support these services. I believe this high income earners are relocating to areas where their incomes can remain relatively the same or slightly lower, but their tax burden has decreased dramatically, this is evidenced by the huge influx of California's to Texas. Bobby Brooks Realtor http://www.austinestatesrealty.com

[mohajerat]

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