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How are we doing? As a metro area, not that great

How are we doing? As a metro area, not that great
MinnPost photo by Corey Anderson
Twin Cities housing on average rose 42 percent and transportation 21 percent, the total 2.04 times the growth in income.

Former New York Mayor Ed Koch (whose name rhymes with "notch," in case you wondered) would famously gad about town asking his constituents, "How am I doing?" He was re-elected twice and served 12 years, so usually the answer was a thumbs up.

These days, seeking feedback is deemed an unadulterated positive. The goody-two-shoes notion is that we can't improve unless we understand our strengths and hear about our shortcomings. The process is not exactly pleasant, however. Human nature is such that even if the report is 99.9 percent favorable, the mind obsesses about the 0.1 percent that isn't -- and usually dismisses it as completely unfair. 

As a city, maybe we can take such feedback a little less personally -- although I admit I was very upset when I read that Travel and Leisure ranked the Twin Cities 11th worst dressed in the nation, and Forbes rated us a mere 6th for worst winter weather behind Cleveland, Boston, New York, Milwaukee and Chicago. (We were robbed!) So I thought it would be worthwhile to call readers' attention to two studies of recent vintage that show how we're doing in two crucial areas: cost of living and economic growth.

The first study called "Losing Ground" comes from the Center for Housing Policy and the Center for Neighborhood Technology. It compares the costs of housing and transportation to income in the 25 largest U.S. metropolitan areas. The overall findings: the combined costs of housing and transportation rose on average 44 percent from 2000 to 2010. That's about 1.75 times the 25 percent growth in median income. Ergo, families are struggling to keep up.

Here are the stats for the Twin Cities. Housing on average rose 42 percent and transportation 21 percent, the total 2.04 times the growth in income. That makes us 7th among ground losers. The absolute worst is Detroit, where costs rose 4.5 times higher than income; Seattle fared best, its residents' incomes pretty much keeping pace with expenses.

Negative bias

Before we go into a fetal position, wondering how we could be doing so poorly, you should know that these figures have a negative bias because the study in its assessment of average housing expenses did not include homeowners without mortgages. By doing that, I guess, the two organizations were able to justify their headline that "Housing and Transportation Costs Outpaced Income."

"Losing Ground" then looked at how families of moderate means are doing. Those are people earning between 50 and 100 percent of the local area's median income -- in the Twin Cities, from $33,000 to $66,000. In this case the study did include homeowners with paid-off mortgages -- and, suddenly, the Twin Cities, where, I imagine lots of frugal folks have paid off their mortgages, look much better. As you can see from the chart below, our housing and transportation expenses came to 54 percent of income or fourth best.

Housing and transportation costs as a share of income
Source: Center for Housing Policy and the Center for Neighborhood TechnologyHousing and transportation costs as a share of income for families earning between 50 percent and 100 percent of the median income in their city.

However, the study did point out that our town has higher-than-average transportation expenses. Even so, moderate-income renters in the Twin Cities were second least burdened of all 25 metros, spending 49 percent of their incomes on housing and transportation. Moderate-income homeowners were fourth least burdened, spending 57 percent. Miami was the worst in both categories. In fact, all the most cost-burdened cities were in California or the South. 

Still, as feedback proponents would say, there's room for improvement. Spending over half of family income on housing and transportation doesn't leave much over for education, savings, health care or even food. To keep housing and transportation costs low for moderate income families, the report suggests preserving and creating affordable housing options in "location-efficient areas." That recommendation has particular salience for the Twin Cities, where the billions of dollars we are investing in mass transit may boost in-town property prices, putting housing out of the reach of the families who most need it. I would add: create and preserve affordable housing where the jobs are growing; then we'll need fewer huge outlays for public transit.

Economic performance

Moving right along, the second how-we're-doing assessment comes from the Brookings Institution, which just put out the third of its annual Global MetroMonitor rankings. It reports the economic performance of the 300 largest cities in the world. (The think-tank has helpfully provided an interactive map where you can play endlessly with the results.) Prepare yourself: the news is depressing.

For starters, only three of the 76 U.S. metros in the study are recovering from the recession -- Dallas, Knoxville and Pittsburgh. Believe it or not, that's an improvement over last year when not a single city in the United States showed improvement.

Worse, 20 cities seem to be sinking back into recession, among them ours.

In the last year, our economic performance ranked 209th. Back in the day, from 1993 to 2007, Brookings estimates that we ranked 170th. Although employment increased by 1.2 percent in the last year, our per capita GDP dropped one-half percent. According to Brookings, that lagged the nation's performance. Employment in the United States grew by 1.4 percent and per capita GDP increased by 1.8 percent. (No. 1, by the way, is Macau, the gambling mecca off the coast of China, and ranking 300 is, as you probably guessed, poor Athens.) 

How could the Twin Cities fare so poorly, you ask, when there seems to be a spurt in new building and our housing market is in revival mode? Neither of those economic elements has sprung back to the boom levels experienced in, say, 2005.

What's more, the MetroMonitor focuses on growth. Some of the cities experiencing the most growth started on a base of almost nothing, which may explain why so many Chinese cities you never heard of rank far above us. Example: 39th-ranked Xuzhou, once known as Suchow, which startlingly, has a population of 9.8 million. Its growth in GDP per capita was a huge 5.9 percent in the last year. But GDP per capita is only about $9,400. The Twin Cities' is $57,300.

And, of course, Brookings is not looking at the most up-to-the-minute data. As they say, wait 'til next year.

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Comments (8)

Don't be silly, 2005 was a "bubble" not a "boom"

If you're expect a return to 2005 levels you're being silly. That was artificial wealth, illusion that was the product of a bubble. Nothing ever returns to "bubble" levels because the bubble has popped.

exactly right

We should be having a conversation about how to move beyond an economy that relies on outlandish rates of housing construction and exurban development, not trying to get back to the "good old days" of the speculative housing bubble.

Agreed.

Perputal economic growth is a fool's game anyways, and is by definition "unsustainable". We should be focusing our efforts on making the city as livable as we can for its residents, whether or not that means ecnomic growth.

People in Miami spend 72% of

People in Miami spend 72% of their income on housing and transportation?? That's insane. I spend a little bit more of my income on housing than I should--about 37 percent of after tax income--because I live in the city and don't own a car.

The problem with statistics like these are that so few Americans are capable of thinking about a world where you don't have to own a car and drive ten minutes through four traffic lights and a six acre parking lot to buy a stick of gum. The underlying issue isn't that transportation costs are high, it's that people think they have to have a car! There are different lifestyle choices you can make. Let's stop invading Middle Eastern countries/carving out the middle of Canada to keep suburban costs down.

Land use is, as always, the most important variable.

Hear hear!

Hear hear!

A few random thoughts

Nick Magrino’s last sentence is quite correct, and crucial to making other variables survivable, or not.

Unfortunately, while I certainly agree with the philosophy implicit in his second paragraph, the practicalities don’t work out so well. We don’t all get to live in idyllic mixed-use, mixed-income communities, so when Mr. Magrino disparages those who get in their cars to drive to get a stick of gum, let me politely suggest that he’s unfamiliar with my inside-the-city-of-Minneapolis neighborhood, where there is zero commercial activity unless you need commercial printing done. There are NO stores of any kind in my neighborhood, so when I want that proverbial stick of gum, it’s either a 30-minute walk (one-way, about 1.3 miles on my car odometer), or get in the car. I’d argue that people in my neighborhood either have to have a car, or be able to devote several hours of the day to running a single errand using the amazingly inconvenient Metro Transit bus service.

Not being here for the “good old days,” I can’t speak to how the housing bubble worked in the Twin Cities metro, but otherwise, I find little to argue with in William Lindeke’s comment. Sprawl is unsustainable, socially, economically and politically, and its extent was among the disappointing realizations of moving here more or less blind in 2009.

There’s also little to argue with in Paul Udstrand’s acerbic comment about the “bubble.”

All three metro areas in which I’ve lived are in the top 10 on the chart, and offhand, I’d say the differences of a couple percentage points one way or the other in a given “bar” on the chart makes a noticeable difference in how it feels to live in a particular place. I’m speaking, of course, as someone whose annual income has never reached the statistical median for the area where I lived, including this one.

St. Louis never felt expensive to live in, perhaps because I never had the money to live in any of its equivalents to Edina, and housing costs remained relatively stable in the much-less-fashionable area where I lived during the (many) years I was there. By contrast, Denver always seemed expensive, even in my similarly unfashionable residential area. My guess is that that impression was derived primarily from the difference in housing costs between St. Louis and Denver. The chart says the difference is only 5%, but it felt like much more than that, and the difficulty of building or finding affordable housing seemed more of a Sisyphean task there than it ought to have been, and more than it ought to be here.

Speaking strictly for myself, so far, at least, and even with far higher tax rates on both real property and income, The Twin Cities metro is significantly less expensive to live in than metro Denver, and it’s been so long since I lived in metro St. Louis that I have no day-to-day experience recent enough to use as a basis for comparison. The best answer for “Why?” that I’ve come up with so far is the difference in housing costs – enough to offset the higher tax rates.

I’d suggest that – at least if the figures and proportions quoted from the study are correct – “Losing Ground” seems an accurate title for the paper from the Center for Housing Policy. Marlys is being far too gentle – some might say disingenuous – when she notes that housing and transportation costs combined have risen nearly twice as rapidly as income in the decade from 2000 to 2010, and concludes that “…families are struggling to keep up.” It would be closer to the truth to say that, at least from median income on down, families either are not, or cannot, keep up.

This is a potentially-disastrous policy dilemma that likely won’t see nearly the attention it ought to get at either/both metro and state levels, in large part because the people most directly affected are those from the median income on down. They’re too busy trying to keep their nostrils above the financial water line to attend policy-related meetings or write op-eds for the ‘Strib.

Your neighborhood not having the amenities

is not a result of "not every neighborhood being idyllic," but more the way it was constructed (or, reconstructed) in the post-WWI car-dependent era. This era also established the unquestionable shared goal, the American Dream - homeownership, with the drive that owning property, single family homes was also not enough, but that one should strive for bigger, farther, and more space to the maximum that one could afford. I'm not saying single family homes are wrong or bad, or that owning property is bad. But a dream predicated on growth out has left many neighborhoods nearly unlivable and our cities and states unable to maintain them.

And, as I say this, I'm living in a single family home in the middle of nowhere. And I hate it. I will do anything I can to get back in to an area where I can make 90% of my trips by foot or transit, and own a car (not 2 or 3) for the rest.

Disagree

"To keep housing and transportation costs low for moderate income families, the report suggests preserving and creating affordable housing options in "location-efficient areas." That recommendation has particular salience for the Twin Cities, where the billions of dollars we are investing in mass transit may boost in-town property prices, putting housing out of the reach of the families who most need it. I would add: create and preserve affordable housing where the jobs are growing; then we'll need fewer huge outlays for public transit."

A strong, healthy network of public transit may increase property values, particularly directly near the stations for rail, but overall a "location-efficient area" will reduce total expenditure on housing and transit. Transit expenditure up front per mile may cost slightly more than freeway and road miles do, but the long-term costs, monetary capture, and maintenance is much lower. Adding capacity is much more efficient and inexpensive, as well (to the taxpayer). Walkable neighborhoods close to transit, shopping, and work not only increase quality of life but will reduce direct transportation cost burden on families by not requiring a car (or a second one) with the insurance, (rising) gas costs, loans, and maintenance associated (per-car yearly ownership is averaged at $9,500 in the TC - goes a long way towards public transit and housing expenditures). This says nothing about the long-term environmental effects.

The part to remember here is areas dense enough to support efficient transit and local economy will REQUIRE smaller homes and the use of more shared space - something that will be a difficult shift for Americans, that bigger is not always better and large gains in efficiencies and costs come not from recycling that wrapper or can but not using it in the first place.