Growing Cities and Affordable Housing: The Effects of Rapid Urban Development

By Tema Flanagan

The human experience is increasingly defined by cities. Demographers have long observed a trend toward urbanization, both in the United States and around the world. In fact, beginning in 2008, for the first time ever, a majority of the world’s population started calling urban centers—rather than rural towns and villages—home. Just over 80% of Americans now live in cities (that’s as of 2010, the last time census data was recorded).

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But while there’s definitely an ongoing urbanization process happening in the United States—with millennials, especially, finding their way to big cities—it’s no longer simply defined by the emptying of rural communities into urban centers.

Here’s the thing about urbanization,” says Bill Rohe, director of the University of North Carolina Chapel Hill’s Center for Urban and Regional Studies. “The overall rate of urbanization—82%—has basically been stable for the last 10 years. What’s happening now is that people are moving away from some cities and into other cities. The real growth in urban areas is along the coasts and in places like Texas and Colorado.” As Rohe explains, the urban centers that are really booming tend to be the ones with the most tech industry jobs—Silicon Valley, San Diego, New York City, Boston, Austin, Atlanta, Charlotte, and Raleigh-Durham—or places like Denver and Miami that boast quality-of-life-type perks because of the larger metropolitan area.

This same trend can be observed even within individual cities, as people move from the outskirts of cities back into city centers, what some call the “back-to-the-city” movement. This means that certain neighborhoods (especially those in the periphery) are losing population, while others, typically those in the city core, are growing. “For a long time, the way affordability was achieved was that you just kept building further out,” says Kristina Leach, design historian and founding board member of the Anomura Housing Society. “But as the roadways get more congested, people are questioning whether they are willing to spend three hours a day commuting. They are wanting to get closer to their jobs. And being downtown is just generally more fun as the urban core revitalizes.”

The result? The urban centers that are seen as most desirable are growing at such a dizzying pace that it can be hard for city planners and developers to make the necessary adjustments to accommodate the increased need for housing and infrastructure like schools, roads, and public transportation.

Photo by Peeterv

Denver The Denver Downtown Partnership in May 2018 reported that downtown Denver's residential population has tripled since 2000 and that developers have been have been quickly responding to demand

The effects of rapid urban development on housing

The effects of rapid urban development on housing are pronounced, with issues like gentrification, housing availability, affordability, and environmental degradation all coming into play.  

As you might expect, simple supply and demand principles mean that as urban populations rise faster than the number of housing units, housing costs go up. But there are some underlying processes that exacerbate the trend toward more expensive, limited housing in the country’s fastest-growing cities.

For one thing, the density of existing cities can mean that there’s a limited supply of undeveloped land or space for building new housing stock within city limits. What undeveloped land does exist comes at a steep price, meaning developers are much more likely to maximize profits by building higher-end housing units. In fact, as Leach points out, in some urban areas—most notably in cities on the West Coast—the price of land can get so high that the assessed land value far eclipses the assessed value of any house that might be built on it.

Zoning also plays a critical role when it comes to the problem of adequate housing supply and rocketing housing costs in urban areas. Cities (and neighborhoods within cities) with zoning ordinances that favor single-family housing effectively limit the pace and density of growth and primarily serve the wealthier members of the population who can afford single-family homes as opposed to apartments, condos, or townhomes. In this way, zoning can dictate the way a population is dispersed within cities, often with problematic results (and sometimes with nefarious intent, as exclusionary zoning practices have historically been used to explicitly ensure de facto racial segregation). “Even as some urban regions are growing in population overall, sub-areas within those regions are depopulating because of the lack of diverse housing,” Leach says. “It’s the very citizens of these areas who are often causing the lack of diversity by refusing to allow more affordable options to be built. They have effectively blocked people from moving to their community.”

For example, 70% of the total housing stock in Portland, Oregon, is composed of single-family homes (standalone homes and single-family townhomes), and the size of newly constructed single-family homes is steadily increasing, further impacting affordability at a time when the city already has a severe shortage of affordable housing.

These forces often result in gentrification—or the displacement of existing, lower-income communities by middle and upper class residents moving into a city or neighborhood en masse. Because the back-to-the-city movement is made mostly of highly educated white professionals, this often means that the racial as well as the economic makeup of a city (or parts of a city) changes dramatically as the gentrification process unfolds.

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Photo by Gaetano Cessati

Miami Members of the Everglades Coalition have been urging lawmakers in Miami, Florida, to disallow development of buildings and roads outside the Urban Development Boundary (UDB) that prevents urban creep into the nearby Everglades

“Imagine a slightly down-at-the-heels district of a big city,” says Carol Krinsky, professor of art history at New York University and the former president of the Society of Architectural Historians. “Everyone can afford it, and chances are pretty good that everyone will be a similar race or ethnicity. All of a sudden, yuppies come in and they want different things: a charming pub instead of the neighborhood bar and grill. The social fabric of the area is affected seriously, and long-term residents are likely to feel resentful, displaced, and even disdained.”

While investors help stimulate the local housing market, they also artificially constrain the available housing stock as vacant units remain unavailable to local residents in need of permanent housing.”

Another problem that contributes to housing shortages in rapidly growing cities is housing stock that is tied up as an investment but left vacant. “There’s a big debate over whether you can achieve affordability through increased housing stock,” Leach says. “But what skews that is housing bought on speculation or second and third homes that stay vacant.” While these investors help stimulate the local housing market, they also artificially constrain the available housing stock as vacant units remain unavailable to local residents in need of permanent housing.

In especially hip cities like Austin and Nashville, the tourism industry can also affect housing availability and cost. That’s especially true where full-time short-term vacation rentals (such as those listed on Airbnb) are eating up housing stock that might otherwise be used as permanent housing. For example, Nashville is estimated to have more than 4,500 short-term rental units (many of which may be operating illegally). Not only does this limit housing availability for long-term residents, but it also changes the culture of neighborhoods, with some full-time short-term rentals bringing an unwanted party atmosphere to otherwise quiet streets. In response, Nashville’s city council recently approved a controversial bill that will phase out any short-term rentals that aren’t owner-occupied in residential areas by 2020.

Renters feel the burn

Ultimately, when it comes to rising housing costs and limited housing supply, renters (not homeowners) are the most seriously threatened. As prices rise, and with no equity in the houses and apartments in which they live, renters are often priced out of their previous neighborhoods. If they stay, they are forced to devote a larger and larger percentage of their income to housing costs. For example, as of 2017, 77.4% of renters in Wake County, North Carolina, (home to the booming cities of Raleigh and Durham) were defined as being “severely cost-burdened,” meaning that they devoted more than 50% of monthly income to rent. As rental costs go up, the most vulnerable groups are eventually forced to move further out, away from their jobs and communities with cultural, economic, and environmental implications.  

Take the sought-after mountain city of Asheville, North Carolina. A 2009 study by UNC’s Center for Urban and Regional Studies found that Buncombe County (in which Asheville is located) contained 67% of jobs in the area but only 54% of housing units. The result was that only 67% of Buncombe County workers were able to find affordable housing in the same county in which they worked (a number that was trending down over time). As part of the study, researchers conducted a survey of low-wage employees working in Buncombe county but living elsewhere. The survey revealed that 62% of respondents would be open to moving closer to their jobs if such a move were possible. The study also calculated that, if those workers who were open to moving closer to their jobs were indeed able to do so, they would save, on average, $4,600 in commuting costs per year per person, as well as significantly reducing tailpipe emissions as a group.

When the speed of growth is a handicap

In general, the speed of growth in the fastest-growing cities exacerbates all of these problems because it doesn’t give city planners and developers the time they need to properly anticipate and address rapidly changing needs. “When development is very rapid, people don’t have the opportunity to work out proper procedures,” says Krinsky. “What happens is that poor people are likely to be kicked out of slums or rural developments and nobody provides for them because the focus on rapid development is very profitable.”

Rohe agrees that the rapidity of development is a challenge in its own right. “There is a need to regulate the speed of growth in order to adequately provide services and infrastructure to serve that growth,” he says. And it’s not just housing. Infrastructure like roads and public transportation, as well as public services like schools, are all affected. Rohe notes that Wake County, North Carolina, has had its share of trouble figuring out how to serve schoolchildren in the midst of a population boom. “In 2006 or 2007, something like 7,000 students arrived in the school district in a single year,” Rohe recalls. “The typical elementary school has 600 or 700 kids, so what were the consequences? They were building schools as fast as they could but not nearly fast enough, and in the meantime there were tons of mobile classrooms all over. They had to go to a year-round schedule to accommodate more students. It was chaos.”  

Photo by Sean Board

Raleigh An April 2018 report from the Downtown Raleigh Alliance "outlines a $1.75 billion development pipeline for projects recently completed, under construction, or planned development"

An opportunity to innovate

While it’s clear that rapid urban development causes very real problems related to housing affordability and social justice, there are, of course, upsides to this sort of growth, including job creation, economic stimulus, the revitalization of downtown areas, and (in spite of gentrification) broadening cultural diversity as people flock from different regions of the country and the world.

One thing that everyone seems to agree on is that there aren’t any quick-fix solutions to the tangle of issues brought about by rapid urban development. But the benefits of addressing them would extend beyond those in a position of need to the whole city. “Affordability and urbanization are really two sides of the same coin,” says Leach. “We all want to live in sustainable communities, but fostering a sustainable community requires that we create diverse housing options. Cities can’t survive when we start to hollow out that diversity.”

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Affordability and urbanization are really two sides of the same coin. We all want to live in sustainable communities, but fostering a sustainable community requires that we create diverse housing options. Cities can’t survive when we start to hollow out that diversity.”

Another thing most everyone seems to agree on? This will take more than simply allowing market forces to play out uninterrupted. Rapid urban development and its attendant issues can be seen as an invitation to innovate in seeking realistic and effective solutions. “In some ways, the push toward greater urbanization represents an opportunity to improve our building methods and systems,” Leach says. “It would be smart of governments to take advantage of the building boom to help modernize their infrastructure and improve standards.”

Potential solutions to the problems of rapid urban development

Inclusionary zoning

Zoning that encourages mixed-income housing by requiring that a certain percentage of newly built homes are geared toward lower-income buyers and renters.

Incentives for developers

Developer incentives, such as density bonuses (which allow developers to build more units in an area than they otherwise would provided they build a percentage of lower-income housing), encourage mixed-income housing without penalizing developers.

Innovative building methods

One way to provide more affordable housing is to find better, more affordable building methods. A possible solution can be found in the disposable construction method that is being developed by the Anomura Housing Society in Victoria, British Columbia. Their house-building kits can be assembled, disassembled, and fully reassembled in different locations multiple times.

Accessory dwelling units

Accessory dwelling units, or ADUs, are second, smaller dwellings (either attached or unattached) built on the same property as a main house (think mother-in-law suites or garden apartments). One startup in Portland, Oregon, is seeking to address the affordable housing shortage in a city made up mostly of single-family homes by paying for the construction of backyard rental dwellings in exchange for a portion of the rent earned.  

Creative financing

Many nonprofits are exploring creative financing as a way of helping lower-income families bridge the gap between renting and owning homes.

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