Tuesday, December 18, 2007

Studying Urban Centres

I suppose I was getting boring for my readers and I really had to spice up the beloved BLOG! So, for a little while, I will write about cities, etc.

I recommend that you visit Richard Florida's weblog. Today he is discussing property value at different urban centres.

Richard Florida is a business professor at Rotman School of Management at University of Toronto. However, he has written a few books on the Creative Class. But, when you get to the bottom of it, his specialty is "Urban Development" or "Urban Centres" and not economics or creative class. He is a big admirer of Jane Jacobs (I suppose that explains why he has relocated to Toronto).

He lists the top ten metros on housing price to income ratio:

1. Los Angeles, Ca. 10.5
2. San Francisco, Ca. 9.8
3. New York City, NY. 9.4
4. Orange County, Ca. 9.2
5. San Jose, Ca. 9.2
6. San Diego, Ca. 8.8
7. Miami, Fl. 8.5
8. Riverside, Ca. 6.7
9. Boston, Ma. 5.4
10. Sarasota, Fl. 5.4

He argues that housing prices are becoming disconnected from regional productivity and wages. Overall, the connection with income is stronger, but we also that measures of amenity and openness have a strong association with housing prices. His guess is that real estate prices in many of these markets are being driven by accumulated wealth rather than income per se.

Looking at Canadian cities, I am not sure if his theory really applies. My understanding is that the real estate market generally follows "supply and demand". In Calgary, where there is no sign of amenities, the prices have gone through the roof, because of job creation and immigration. In Vancouver, the same thing has happened because of the 2010 Olympics. However, in Toronto, good economy has made it possible for the young middle class to buy 10 years earlier than the previous generation. Again, I believe it is all supply and demand, whether that demand was generated by good economy ("because I can") or job creation ("because I have to").

The 3 major Urban centres that I named in Canada, all have their own positive characteristics that could keep the prices rather high (not as high as 2007) for a while. Vancouver is beautiful and has a "resort-like" climate. Toronto is the political/economic/cultural centre of Canada and has great amenities such as public transportation. Calgary, being the centre of oil and gas, will always generate revenue and attract professionals that need jobs.

But at the end of the day, the question is which location is really worth the money that you pay for it? What determines that worth? Climate, amenities or jobs?


At 1:03 p.m., Blogger Jackal said...

if you feel you have to live in a metro area, allow me to introduce LONDON !!!

but if you can really afford to, go to the english country, somewhere like cotswald, or cambridgeshire ;)

At 1:16 p.m., Blogger The City Gal said...

:) It is very subjective.

What do you want to pay for?

At 6:08 a.m., Blogger Jackal said...

you need to want that kind of life style, having a few acres of land, perhaps an stable with a horse and a pony, drive a land rover, and go to watch old folks playing cricket on a sunday morning, etc etc

i literally meant financial affordability. you need a well paid freelance job or perhaps a high position in a financial institute with a considerable annual bonus to afford to live in the english countryside.

but if you can bring yourself down to live in a semidetached house, and no horseback riding, there are other close enough alternatives available. like living in a small town or village within 1-2 hours commute distance from an urban area where you could have a normal job (as opposed to high a flyer). i may suggest south west London, Oxford, Cambridge, Bristol, Plymouth, or Norwich.

further ideas:
live in southern portugal or spain. cost of living is fairly low so you can have a well paid seasonal job elsewhere (offshore), or an average paid freelance job.

At 9:57 a.m., Blogger Jackal said...

An elderly Scotsman lay dying in his bed.

While suffering the agonies of impending death, he suddenly smelled the aroma of his favourite biscuits wafting up the stairs. He gathered his remaining strength, and lifted himself from the bed.
Leaning on the wall, he slowly made his way out of the bedroom, and with even greater effort, gripping the railing with both hands, he crawled downstairs.
With laboured breath, he leaned against the door-frame, gazing into the kitchen.
Were it not for death's agony, he would have thought himself already in heaven, for there, spread out upon waxed paper on the kitchen table were literally hundreds of his favourite biscuits, freshly baked.
Was it heaven? Or was it one final act of love from his devoted Scottish wife of sixty years, seeing to it that he left this world a happy man?
Mustering one great final effort, he threw himself towards the table, landing on his knees in crumpled posture. His aged and withered hand trembled towards a biscuit at the edge of the table, when it was suddenly smacked by his wife with a spatula .........

"Fuck off" she said, "they're for the funeral."


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