American Dream

Ben Bernanke, the new chair of the President's Council of Economic Advisors, says that the current run-up in housing prices is market driven, not caused by speculators. He either doesn't know what he is talking about or he is trying to cover up the administration's lack of interest in this serious economic threat.

"While speculative behavior appears to be surfacing in some local markets, strong economic fundamentals are contributing importantly to the housing boom," says Bernanke. "For example, states exhibiting higher rates of job growth also tend to have experienced greater appreciation in house prices."

This is simply not true. Instead, places with high unemployment rates such as San Jose are still seeing rapid growth rates in housing. According to the Office of Federal Housing Enterprise Oversight (click on "1Q 2005 manipulatable data for the Metropolitan Statistical Areas" to download data file), San Jose prices grew by nearly 17 percent in the last year. By comparison, prices in the rapidly growing Atlanta region grew by less than 5 percent.

The increase in housing prices is taking place mainly in regions that have adopted smart growth or other growth-management regulations. Low interest rates and a shift in investors' interests from the stock market to real estate have caused a huge increase in speculation in these markets. The speculation can be seen in the high percentages of homes sold in these markets that are not owner-occupied and that are sold with interest-only loans (suggesting that the buyer expects to "flip" the property before it becomes time to pay the principle on the loan). These types of purchases are also predominantly in markets subjected to growth-management planning.

This poses a serious danger for the economy. At least a quarter of the nation's housing is in regions with housing bubbles, and a collapse of markets in these regions would have serious repercussions throughout the nation. Bernanke pooh-poohing this danger is as irresponsible as Bernie Ebbers trying to reassure investors a few weeks before WorldCom went bankrupt. And they say that Bernanke may succeed Alan Greenspan when the latter retires!

D.C. Court Is Urged to Force Property Sale

By Debbi Wilgoren
Washington Post Staff Writer
Tuesday, July 12, 2005; Page B04

Quotes:

The District's quest to bring sit-down restaurants and big-box stores to the shopping-starved neighborhoods east of the Anacostia River has entered a new phase -- eminent domain.

The National Capital Revitalization Corp., a publicly chartered economic development firm, is seeking permission in D.C. Superior Court to buy the 1940s-era Skyland Shopping Center and several additional acres of land, even though the owners do not want to sell.

The NCRC wants to replace the rundown strip of shops with a larger, more modern complex that would be anchored by a Target store and include other nationally known retailers and sit-down restaurants, commodities that are almost impossible to find in the District east of Capitol Hill.

The corporation, charged with bringing economic rebirth to struggling parts of the city, has signed deals to buy about five acres of the 18-acre site and is negotiating to purchase nearly two acres more. But owners of other parcels have vowed to fight the NCRC's attempt to take over their land and in some cases have already sued to prevent it.

"We've reached a point where we have to move forward," said NCRC chief executive Anthony Freeman. "We are implementing a city's vision here -- crafted by the residents, the council and the mayor."

District officials and community leaders say a new retail complex would provide a long overdue amenity to those who live in Wards 7 and 8, and would help recapture some of the $400 million those residents are believed to spend shopping in the Maryland and Virginia suburbs each year.

At Skyland, eminent domain "can be used for the good of the entire community," D.C. Mayor Anthony A. Williams (D) said in a statement yesterday. He said the project will create 300 jobs and $3.3 million annually in new tax revenue.

But the Skyland property owners, who in recent weeks proposed an alternative redevelopment plan that they would control, question whether the Kelo v. New London decision applies to their site.

Their attorneys note that, unlike the Skyland project, the properties to be forcibly taken in New London were 15 homes on 1.5 acres, wholly different than the 90-acre, mixed-use project being proposed. And because the town had not yet chosen a developer, no one private party stood to benefit.

Governor Linda Lingle of Hawaii had threatened to veto a bill allowing Honolulu to build an expensive rail transit line, but in a last-minute compromise she let the bill become law without her signature.

Lingle was never worried about the ridiculously high costs of rail, which would be paid for by a county sales tax. She just didn't want the state to have to pick up the tab for collecting the tax. When the legislature agreed to amend the bill to require the county to collect the tax, Lingle went along.

Honolulu has one of the most impressive transit systems in the country. It carries more than 5 percent of all regional travel, which is more than in any other U.S. urban area except New York. For comparison, Washington's is 4 percent, Portland's is about 2 percent, and San Diego's is less than 1.5 percent.

If the experience of other regions is a guide, building rail transit in Honolulu will ruin this success story. Transit's share of travel is likely to decline and the region pours its resources into the rail line and cuts back on bus service and raises fares. It is too bad pork barrel is allowed to ruin a good thing for low-income transit users.

See also articles on BaltimoreSun.com Route for ICC is selected; WashingtonPost.com Md. Officials Pick Southern ICC Route; the Gazette newspapers Ehrlich chooses southern ICC route; and a short video (broadband suggested) of Maryland Gov. Ehrlich's remarks (with an excellent, snappy comment directed at obstructionist groups and persons at the end - on a hot Maryland July afternoon).

Here's a really bad Washington Post story about the impact of the ICC on a community that was planned, platted and built under the assumption that the highway would run through it: In Md. Community, It's Fight or Flight - With Decision on Highway Route, Neighbors Consider Undesirable Options.

Additional stories in the Washington Post Once Politically Divisive, ICC Slowly Gained Favor - Marginalized Foes Promise to Fight On and Baltimore Sun ICC path to follow southern route plan - Proposal minimizes homes razed, but will disrupt environment.

Southern Route Chosen for ICC Project
Updated: Monday, Jul. 11, 2005 - 3:25 PM

ROCKVILLE, Md. - Saying the "voices of the past have been defeated," Governor Robert Ehrlich has unveiled the state's preferred route for the Inter County Connector.

With some protesters nearby, Ehrlich announced the decision to start the toll road at the intersection of Interstates 270 and 370. It will have limited exits including Layhill Road and New Hampshire Avenue, then end at U.S. One in Laurel.

The road linking Montgomery and Prince George's counties has been talked about for decades. But the governor vows his announcement is "one of the last milestones before we break ground."

Protesters standing feet away from Ehrlich insist the ICC will make traffic worse. Ehrlich says he respects dissent, but that the majority view is that the road must be built.

(Copyright 2005 by The Associated Press. All Rights Reserved.)

ICC Would Follow County's Proposal

Updated: Monday, Jul. 11, 2005 - 2:26 PM

Mitchell Miller, WTOP Radio
Colleen Kelleher, wtopnews.com

WASHINGTON - The proposed InterCounty Connector route that Montgomery County has had on the books for 40 years appears to be the choice of state officials.

"The vibes we have felt to date are for the master plan alignment," says Nancy Floreen, who heads the Montgomery County Council's Transportation Committee.

"I can't imagine a rationale that could justify a different alternative."

A 2:30 p.m. news conference is planned to make the announcement. The news conference will be held at Veirs Mill Road and Maryland Route 28.

The highway would link Interstate 270 in Gaithersburg and Interstate 95 in Laurel.

The state already owns much of the right of way for the southern alignment that's been in Montgomery County's master plan.

A number of planning and zoning decisions have been based on the master plan alignment for the ICC.

"The ICC has been shown in study after study to do more to relieve traffic on our local roads than any other project out there," says Richard N. Parsons, president of Montgomery County Chamber of Commerce.

The ICC would take traffic off Norbeck Road, Georgia Avenue and Route 198, Parsons says.

"Basically that trip from I-95 to I-270 would be reduced by about half an hour in each direction," Parsons says. "If you're making that commute every day, you're getting an hour back in your life every day that you're not stuck in traffic."

But Ben Ross, president of the Montgomery County advocacy group Action Committee for Transit, says building more roads won't unclog existing roads. He says Maryland is moving too slowly in studying more subway options.

He says the state is studying the idea of rapid buses from College Park to Bethesda as a substitute for building rail. He calls the idea a "joke."

"They would run on the same streets in traffic and they wouldn't even go by the most direct route, so they wouldn't be very rapid," Ross says.

"Things are moving very slowly. They're talking about having a report out in another year or so. But, the deadlines keep moving back."

Still on the drawing board is the idea of a subway from Bethesda to New Carrollton, but Ross says the governor doesn't want it to run past Columbia Country Club in Chevy Chase.

"We think that building rail will give people a way that they don't have to drive on the Beltway," Ross says. "The need is so overwhelming that eventually it will happen, but we don't want to wait 20 or 30 years for it."

Gov. Bob Ehrlich has said he wants work to begin on the ICC by fall of 2006.

WTOP's Neal Augenstein and Kristi King contributed to this report.

(Copyright 2005 by WTOP. All rights reserved.)

Official Maryland Department of Transportation ICC Web site

GOVERNOR’S PRESS OFFICE: GOVERNOR EHRLICH ANNOUNCES PREFERRED ROUTE FOR INTERCOUNTY CONNECTOR (Adobe Acrobat .pdf, 42 KB)
Benefits of Corridor 1 (Adobe Acrobat .pdf, 20 KB)
Map of preferred alternative (Adobe Acrobat .pdf, 143 KB)

[From the Frederick, Maryland News-Post.]

Demand through the roof

Publish Date: 07/10/05

By Ike Wilson
News-Post Staff

FREDERICK -- "It seems like the minute we open a building, people are lining up," said Clair Winings, who is overseeing construction of 144 new townhouses on Key Parkway.

Residential construction at both ends of Key Parkway offers one more example of a burgeoning Frederick County. The stretch could
win a prize for the highest number of new dwelling units that will soon be ready for occupancy.

And as the townhouses and apartments are built, sellers and renters have no problems filling them.

A 96-unit apartment building -- Residences at The Manor -- is the newest addition to the Horning Brothers' properties in the area and is the second phase of Baker Place, 208 apartments built four years ago at the west end of Key Parkway. Although the building
will not be completed until mid-September, 35 of the 96 apartments have been spoken for.

The new units join The Manor, an 18-year-old residential development of 279 apartments nearby. The Manor and Baker Place are 96 percent occupied, according to Sallie Hammond, community manager.

"The application process is absolutely wonderful," Ms. Hammond said, responding to a question about the number of people signing rental agreements. "So many apartments are new, but they don't have the ambiance that this community has. Our buildings are surrounded by 200-year-old trees."

"Occupancy stays up," she said. "People come and go in Frederick all the time. And popular attractions for us include a swimming pool
and a nine-hole golf course."

Ms. Hammond said many people who move into the area rent an apartment until they decide where they want to buy a home, and they may take a year to buy.

"Frederick has really developed, which is a good thing. You can't stop progress," she said.

Richard Carson, who calls himself a "contrarian planner," observes in Architecture! magazine that anti-sprawl efforts use "Orwellian doublespeak" to promote urban biases at the expense of rural residents and their economies. A "lack of empathy" on the part of urban residents has "led to a new 'tyranny of the majority' by nonrural interests," says Carson.

"the urbanists want their espresso bars, boutiques, and drive-throughs, but they want rural areas to remain a pastoral land museum, preserved for their visits by SUV," Carson continues.

"If we truly are seeking to improve livability for both humanity and animals, then let us do so by being intellectually honest about the social costs to all citizens—not by using some biased, urbanist propaganda against a minority of our citizens," Carson concludes. "It's time for the urban majority to pay its fair share -- or at least talk about how to make economic reparations to rural America."

Carson used to work for Portland's Metro, but now questions whether "smart growth" is practical. He currently works for Clark County, Washington, which -- thanks to its relative lack of land-use regulation -- is the fastest growing part of the Portland area. You can read more of Carson's essays on his web site.

The Portland area is growing faster than the U.S. as a whole, says this article, which tries to alarm people with just how fast that rate of growth is. To put it in perspective, Las Vegas is growing three times as fast as Portland and several other urban areas, including Raleigh-Durham and Phoenix, are growing twice as fast.

The main reason this article came out, I think, is because the latest Census Bureau population estimate for the city of Portland (as opposed to the Portland area) shows a decline from 2000 to 2004. Metro, Portland's regional planning dictatorship, doesn't want people to feel like growth isn't a problem, so it is raising alarm bells at the supposedly fast pace of growth.

"Over 1,000 people are moving to Washington County every month," says a smart-growth advocate in the final paragraph of the article. "Metro needs to figure out how we can accommodate their living, employment, shopping and recreation needs."

Now wait a minute. Why does Metro need to figure that out? Las Vegas, Raleigh-Durham, and Phoenix don't have regional planning dictatorships, and they are doing just fine regarding livablity, jobs, retail, and recreation. None of them, for example, were in the top ten most unemployed urban areas in the last five years, while Portland was number one for much of that time. I haven't been there lately, but I suspect you can find plenty of places to shop in Las Vegas. And, discounting the climate, in what way is Portland more livable than Phoenix?

I hear this over and over again: "Our region is growing and we need more centralized planning to figure out how to accommodate that growth." No, you don't.