Tag Archives: Spain

Obama on Columbus

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The Landing of Columbus at San Salvador, October 12, 1492

Here is how President Obama commemorated Columbus Day last year in his Presidential Proclamation:

In October of 1492, Christopher Columbus completed the first of his expeditions that would land him on the shores of North America. Sponsored by Isabella I and Ferdinand II, Columbus embarked on a 10-week voyage he had hoped would lead to Asia. But when his ships instead landed in the Bahamas, a new story began to unfold. The spirit of exploration that Columbus embodied was sustained by all who would follow him westward, driving a desire to continue expanding our understanding of the world.

Though Columbus departed from the coast of Spain, his roots traced back to his birthplace of Genoa, Italy. Blazing a trail for generations of Italian explorers and Italian Americans to eventually seek the promise of the New World, his voyage churned the gears of history. The bonds between Italy and the United States could not be closer than they are today — a reflection of the extraordinary contributions made by both our peoples in our common efforts to shape a better future. Across our Nation, Italian Americans continue to enrich our country’s traditions and culture.

As we mark this rich history, we must also acknowledge the pain and suffering reflected in the stories of Native Americans who had long resided on this land prior to the arrival of European newcomers. The past we share is marked by too many broken promises, as well as violence, deprivation, and disease. It is a history that we must recognize as we seek to build a brighter future — side by side and with cooperation and mutual respect. We have made great progress together in recent years, and we will keep striving to maintain strong nation-to-nation relationships, strengthen tribal sovereignty, and help all our communities thrive.

More than five centuries ago, one journey changed the trajectory of our world — and today we recognize the spirit that Christopher Columbus’s legacy inspired. As we reflect on the adventurers throughout history who charted new courses and sought new heights, let us remember the communities who suffered, and let us pay tribute to our heritage and embrace the multiculturalism that defines the American experience.

Comparing Rental Housing Across the Atlantic

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photo by Tiago Fioreze

The Harvard Joint Center for Housing Studies has released a working paper, Rental Housing: An International Comparison. The abstract reads,

This report compares rental housing in 12 countries in Europe and North America, using individual records from household surveys. Differences in housing characteristics, conditions, and costs across countries reflect a number of factors, including demographics, geography, culture, and government policies. A lack of comparable data can make international comparisons difficult to execute, but such analysis is valuable for understanding and contextualizing differences in affordability and other characteristics of renter households and housing.

The analysis revealed the US, along with Spain, as notably unaffordable for renter households, based on a number of measures. The greater apparent cost burdens reflected a variety of factors, including differences in characteristics of the housing stock and differences in tax burdens, as well as measurement problems.

However, two major influences – differences in the size and availability of housing allowances and the degree of income inequality – emerged as the main drivers of differences in housing affordability. The effects of supply-side factors such as the extent of social housing supply, supply subsidies, and rent controls were unclear, due to problems with the identification and description of below-market rentals in the household survey data. (1)

The housing stock and political context is so different among countries, but this type of analysis is still very useful and can offer valuable lessons to the United States:

One factor that appears to contribute to the pervasive affordability problems in the US is the degree of income inequality. That is not a feature of the housing market per se, but there may be opportunities to address the consequences of income inequality through appropriate housing policies.

Other countries have devoted more resources to ameliorating the problems of unaffordable housing. The US provides fairly generous housing benefits to only a small share of needy households. In the UK, a broadly available system of housing allowances offsets what would otherwise be a much more severe affordability problem than exists in the US. In other countries, affordable rental housing supplied by governments or nonprofits helps to address affordability issues, although the efficiency of that practice, relative to the provision of housing allowances, has been questioned, as it has been in the US. The EU-SILC data used in this analysis did not adequately identify or describe below-market-rate housing, making it impossible to adequately assess the effects of such housing.

The somewhat larger size and perhaps higher quality of units in the US rental stock also affects relative affordability, although relative quality and its effect on cost differences are difficult to assess using the available data. The large share of single-family detached rentals in the US reflects preferences, the demographic mix among renters, land availability, etc., but it could also reflect zoning and other regulations limiting the supply of less expensive multifamily rentals. It is hard to imagine that regulations are more stringent in the US than in some of the more dirigiste nations of Europe, but regulations elsewhere may dictate, rather than constrain, density and cost reductions. The size and quality of the housing occupied by low-income renters in the US reflect the fact that most of those units were originally built for owner occupancy or for higher-income renters. That’s probably true in other countries as well. Whether the extent of such filtering is greater or less in various countries is perhaps worth exploring in the future. (37-38)

Income inequality, housing subsidies and land use reform — the report hits on a trifecta of key issues that housing policy should be dealing with. While I do not see much of an appetite for major reform of the first two items in today’s political climate, there might be support for some loosening of land use restrictions on housing construction. I wonder if there is some room for movement on that third front. Can local jurisdictions be incentivized by the federal government to build more housing?

Craziest Real Estate Windfalls

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"Le Voyage dans la lune" by Georges Méliès - Roger-Viollet

Realtor.com quoted me in A Brief History of Crazy Real Estate Windfalls. It opens,

Real estate is one of those things where it’s hard to differentiate between a once-in-a-lifetime deal or an epic bomb without the benefit of hindsight. Want proof? Let’s take an invigorating jog down memory lane and view a few of the land swaps that are considered the most lopsided in history—windfalls for one side, colossal blunders on the other. Let’s crack open the history books!

Proof that Portugal needs better maps

The historical highlights: In the 15th century for the Treaty of Tordesillas, global superpowers Portugal and Spain sat down with a map of the world (as they knew it in the 1400s) and drew a line down the middle. Portugal got everything on the left, Spain on the right. Even Steven, right? Not quite. Once they decided to actually look at their new “empire,” Portugal found it basically had nothing (well, besides Brazil), while Spain had pretty much the entire world (you know, Europe, Asia, Russia…).

It taught Portugal a harsh lesson: Approaching land deals the way the kids in “Family Circus” deal with sharing toys is not a viable global expansion strategy.

Real estate update: Granted, Portugal botched this deal at the table, but it’s not quite as bad as it sounds. According to David Reiss, a professor at Brooklyn Law School and research director for the Center for Urban Business Entrepreneurship, the treaty was “heavily modified afterward” to give Portugal more land to the west, including control over most of the Indian Ocean.

Still, in the end, no one won: Both empires eventually shrank back to the size you see today. If Spain won anything, it’s the language war: Most of Central America speaks Spanish, while only Brazil parlays in Portuguese.

America goes through a major growth spurt

The historical highlights: In 1803, America made its historic Louisiana purchase, buying 828,000 square miles of land from France for $15 million—roughly the catering budget of an “Avengers” flick today. That territory gave the fledgling nation a hell of a growth spurt, adding land that would become 15 Midwestern states from Arkansas to, of course, Louisiana.

Real estate update: It was a lot of land, and it cost a lot at the time. But it was totally worth it. “You got New Orleans, so right there it was a good deal,” says Reiss. “If you look at the home sales in New Orleans today, $15 million is the price of just the top four most expensive houses combined.”

The Alaskan ‘oil rush’

The historical highlights: In 1856, Russia negotiated with U.S. Secretary of State William Seward to sell Alaska for about 2 cents per acre, or $7.2 million. The purchase was derided, and the American people quickly dubbed Alaska “Seward’s Folly.”

Real estate update: Most people think that the measly $7 mill we spent on Alaska is pocket change compared to the gushing vats of cash funneling into the U.S. through the Alaska oil pipeline, right? Not exactly.

“We think of Alaska and its pipeline, and we think it’s a great deal,” says Reiss. “But economists have deduced that the pipeline earns the government less than it costs to govern Alaska, so it’s a net loss. Calling it ‘Seward’s Folly’ makes sense.”

$24 for … Manhattan?

The historical highlights: It’s one of the oldest stories in our history—Savvy Dutch settlers, preying on the naiveté of the Canarsie Indians, bought all of what would become Manhattan for $24, less than the price of a sweater from a Times Square Forever 21.

Real estate update: True, New York City is estimated to be worth $802.4 billion today, and Manhattan is its busiest hub. However, before you express outrage about those poor Indians, consider this: It was the Dutch who got conned. You see, the Canarsie Indians who brokered the deal didn’t live in Manhattan. Sure, they’d hop over there to party with the Manhattoes tribe, but it wasn’t their home and they certainly had no right to sell.

“The common story is that the Europeans swindled the natives,” says Reiss. “But it does look like the other way around.” (The Manhattoes, however, are another story.)

*     *     *

Man sells the moon

The historical highlights: In 1967, the United Nation Outer Space Treaty stated in regard to our moon: “No nation by appropriation shall have sovereignty or control over any of the satellite bodies.” In 1980, a Nevada resident named Dennis Hope came to the conclusion that the treaty forbade nations from owning the moon but not individuals. So he wrote a letter to the U.N. saying he was taking ownership and that it should contact him if it had any issue with that. The U.N. did not respond, and he’s been selling moon acreage ever since. Hope claims to have sold over 600 million acres, with the largest going for over $13 million.

Real estate update: If he really has those checks in hand, then Hope is a genius and this is indeed a very lopsided deal—he’s selling uninhabited land that will be completely inaccessible in the lifetimes of the buyers. Not that we should necessarily applaud him for it.

At worst, “I’d classify him as a huckster,” says Reiss. “And it appears his interpretation of the law is incorrect. The fact that the government hasn’t responded to his letter doesn’t give him rights to the land.” So, even if he does have all that money, it could get him in a whole lot of trouble.

Housing in Smart Cities

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I attended an interesting research seminar led by Anthony Townsend yesterday at NYU’s Center for Urban Science and Progress (conveniently located in downtown Brooklyn). Professor Townsend is affiliated to NYU’s Rudin Center for Transportation Policy & Management. He discussed his recent book, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia. Townsend argued that the 21st century will be defined by two global trends – urbanization of the world’s population, and ubiquitous computing. He traced the origins of the “smart cities” movement, its goals and the problems it faces.

As noted on Amazon, the book argues that

cities worldwide are deploying technology to address both the timeless challenges of government and the mounting problems posed by human settlements of previously unimaginable size and complexity. In Chicago, GPS sensors on snow plows feed a real-time “plow tracker” map that everyone can access. In Zaragoza, Spain, a “citizen card” can get you on the free city-wide Wi-Fi network, unlock a bike share, check a book out of the library, and pay for your bus ride home. In New York, a guerrilla group of citizen-scientists installed sensors in local sewers to alert you when stormwater runoff overwhelms the system, dumping waste into local waterways.

While Townsend’s talk did not apply his thesis to urban housing and his book only touches on it, it is certainly worth thinking through how Big Data can help provide more housing and better housing in big cities.

Housing is as “unvirtual,” or perhaps as “real,” a good as a good can be. But businesses such as Airbnb show how the virtual and the real can combine into something quite new. Obviously Airbnb does not solve many housing problems for residents of cities, but it does demonstrate that there is a brave new world ahead. Housing policymakers should try to discern what it is going to look like and how it can be harnessed as a force of civic good.