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Scatter plot that encapsulates a lot about the urban geography of relative economic dynamism and housing affordability between cities | by tanetahi
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Scatter plot that encapsulates a lot about the urban geography of relative economic dynamism and housing affordability between cities

Found in an article by Harvard-educated economist Jed Kolko: [www.trulia.com/trends/2014/05/middle-class-may-2014/]

 

Two things he doesn't cover though.

 

Because as a long-term trend, economic activity is becoming location-elective (i.e employers have increasing freedom to choose where to locate their firms because the nature of the work is not directly tied to some immovable resource), economic activity is becoming ever more concentrated in the desirable parts of each country, generally well-established cities on the coast with good transport connections, a well developed financial-services sector, and advanced culture; NY and SF in the US, and Sydney and Melbourne in Australia, London in the UK, and so on. Thus worldwide there is a trend towards mega-cities developing at the expense of most regional towns and cities (apart from those that have a special attraction such as a mining boom or an attractive seaside location). It is the failure to appreciate the inevitability of megacity development by national and city authorities, and to plan accordingly, that underpins much of the current problems of these metropolises.

 

Some readers of Kolko's article claim he overlooked the role of non-resident overseas investors in inflating the property values of cities such as San Francisco and Seattle (and Sydney in Australia). But that is a myopic view. Real-estate investors home in on cities that are economically booming and where housing supply is chronically tight, precisely because they know that those are the places where prices are most likely to rise further by the greatest amount. In other words, although speculative investors' selective interest in these cities undoubtedly exacerbates un-affordability, their presence is a reaction to, not the primary cause of, an underlying problem.

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Uploaded on July 26, 2014