Richard Florida
by Richard Florida
Tue Feb 24th 2009 at 2:48pm UTC

Crisis Geography

New York City strives to diversify its economy out of finance – focusing on incubation and “garage” spaces for creatives and entrepreneurs. The New York Times:

Rather than write them off as losers in the casinos of capitalism, city officials are encouraging them to start over, the Silicon Valley way. As part of a $45 million program, the city will subsidize garage-size offices as hatcheries for their most promising ideas for new businesses in finance or other fields.

Ryan Avent sees the crisis as an opportunity for the Big Apple, but hard choices must be made:

New York should also come to grips with the fact that high real estate prices may have cost it some economic vitality. The expense of homes and business space no doubt led to a loss of talent to other metropolitan areas. It’s difficult to take a professional risk when one has to work all out to pay the rent.

In one sense, then, the crisis creates a direct opportunity for the city. Assuming that basic public services can be maintained, the decline of real estate prices in New York could help new industries to flourish. It’s impossible to overstate the advantages the city has available in terms of talent and institutions. But New York leaders should learn from their heavy dependence on Wall Street, the wealth of which crowded out other industries — an unbalanced income distribution is risky for a city. To prevent this from happening in the future, New York needs to focus on affordable housing, and should work to make it easier to build a lot of new housing. It should also stay focused on services that make middle-class city life possible: good public schools, good public transit, good public safety, and good public amenities, like parks and museums.

Cities in the sand sink deeper, according to the Wall Street Journal.

Builders rushed into this one-time agricultural crossroads during the housing boom. They put up beige stucco houses on winding streets, with names like Heavenly Place and Good Vibrations Lane. They lured young people who couldn’t afford homes in nearby Phoenix or its costly suburbs. The population soared to 37,000 last year from 1,400 a decade ago, making Maricopa one of the nation’s fastest-growing towns. Now, it’s become a dead end for some of those people.  “We’re trapped,” says Tracy Campbell ..

Housing prices nosedive again according to the new Case-Shiller Index: Phoenix and Las Vegas remain hardest hit.

It’s impossible to get mortgages above the conforming limit – that means the market is virtually frozen in regions like New York, San Francisco, and D.C. The Wall Street Journal:

The lack of financing is particularly acute in markets where rising home prices have made jumbo loans a necessity for even middle-class borrowers, such as New York City, coastal California and Washington, D.C. “If you own a $650,000 home in many parts of this country, you’re not a wealthy person by any stretch, and you’re being cut out of any relief,” says Guy Cecala, publisher of Inside Mortgage Finance. Around 4% of all borrowers have loans that exceed conforming limits, according to an estimate by First American CoreLogic. But that share rises in high-cost states such as California, at 17%, and New York, at 8%. condos – with high rates.

An essay on how the crisis brings tough times to troubled towns (via Planetizen).

Wired Magazine on the need to shift from cars to people/ pedestrians.

8 Responses to “Crisis Geography”

  1. tpk-nyc Says:

    “New York needs to focus on affordable housing, and should work to make it easier to build a lot of new housing.” Amen.

    The key here is “a lot” and not in Coney Island or the Rockaways.

    I’m skeptical that the powers that be will ever let this happen. It’s in the best interest of the city as a whole, but not for those that already overpaid for real estate. If anything, they’ll want to contract supply.

  2. Buzzcut Says:

    Uh… if high housing costs are a problem, why aren’t the stupidly high taxes? NYC’s income tax is just straight up theft.

    That article on Maricopa, Arizona was stunning. New homes are going for less than $100k, more than 50% off their highs. What a fantastic opportunity for young people and others left behind by the housing boom. I was thinking of my parents, on the brink of retirement. They could sell their NYC area apartments and live quite nicely in Maricopa. Being typical stuck up NYC people, that’s not likely to happen, of course. But at least homelessness is unlikely. ;) It’s a load off my mind.

    Housing is a zero sum game. If you bail out everybody who is underwater, you prevent the young and renting from the opportunity to become homeowners at the lower prices that SHOULD result from the bust.

  3. Swordsman Says:

    Why bash New Yorkers?

  4. Wil Says:

    Donald Judd’s project in Marfa Texas, or Andrea Zittel in Joshua Tree, California show how truly creative people can work in any location that interests them and don’t need to be in NYC….If the choice is to operate from a small overpriced rental space in New York, or a huge new underpriced house (possibly with a pool) in Arizona, where, incidentally, it was 85 degrees today….Northern Arizona, because of proximity, has for years functioned as a back office for Los Angeles, so it is not a bad location for business…..


  5. Robert Says:

    Forcing developers to pay for affordable housing just makes market housing even more expensive for everyone else; in other words those who have made successful choices and try hard end up subsidising those who don’t.

    Instead, tax rises in property values and use that to pay for state housing that is reserved for the most hard up on stringent terms, with plenty of support and care programmes.

    “Affordable housing” and “social housing” are misnomers.

  6. hayden fisher Says:

    Finally!!! Of course NYC would get it first! $45 million for entrepreneurs to develop start-ups in garages. That will fill the financial sector bite taken out of the big Apple in no time. I wonder how long it will be before other cities and towns figure out that re-building begins with re-seeding entrepreneurism with programs like this; and the super-funding of SBA programs.

    This is the best news I’ve heard in a long time!!!!!

  7. tpk-nyc Says:

    Mr. Avent advocates making it “easier to build,” not subsidizing developers or forcing them to pay for affordable housing. New York’s zoning restrictions and onerous permit requirements greatly increase costs. The largest impediment however is the shrill, yet highly effective, Nimby lobby. The city couldn’t even spruce up Washington Square Park without a huge protest and knock-down-drag-out law suits that went on for years and cost millions of dollars. The main issue? Whether or not they should move the fountain a few yards to align it with the arch.

  8. Buzzcut Says:

    tpk, have you been watching the Prospect Heights, Brooklyn Brownstone being renovated this season on “This Old House”?

    I read that there was a little NIMBY-ism going on (mostly complaints about parking and noise, so surpise there), but also a lot of community pride that it was happening in Prospect Heights.

    The other interesting thing as an ex-New Yorker (been gone almost 20 years now) is how many of the contractors (and the homeowners!) were not native New Yorkers (based on their accents, or really, lack of any accent). There were many immigrant contractors, but also a lot of midwestern white guys (and gals), which I assume the homeowners were as well.

    That’s a huge difference from when I was a kid. Other than recent immigrants, everybody was FROM New York. In fact, multiple generations were from NY. Not so, now.

    I blame Giulliani. ;)