Can Google Maps make cities affordable again?
... a property flagging idea for resident-led land assembly and densification
Cities struggle to upzone and build tall on the scale that is needed to make themselves affordable. We NIMBYs get the blame but the vast majority of us are quite conflicted. Certainly, we resist densification in the districts that are home to us. But would find other homes in other districts if offered enough money. ‘Enough money’ is, often enough, a generous share of the huge profits to be made by demolishing houses and replacing them with 10 or 20 apartments apiece. From which it follows that there exists a generous share of those huge profits at which 51% of my fellow NIMBYs would agree to evacuate our home district; a more generous share that a supermajority of 60% would approve; still more generous shares for 70%, 80% and so on. Such that supermajorities of my fellow NIMBYs could make offers to evacuate that are too good for cities to refuse.
But first we must have some means of signalling – both to each other and to the broader community – that we are open to those possibilities. Something like the own-side signalling that happens on Airbnb. Consider that, as an Airbnb guest, you access the host ratings provided freely by other guests. As a host, you access the guest ratings provided freely by other hosts. These own-side exchanges have informed and lubricated Airbnb’s matchmaking to the point of transforming travel and hospitality on a global scale. We NIMBYs need something like that.
I suggest that a new kind of property flagging service does the trick but I first need to sketch the urban scene. This minimalist version assumes a model city with employment concentrated in the core and downzoned suburbs. Rents and house prices fall with distance from the core, compensating for longer commutes.
Which districts are best placed to deliver supermajorities? Inner-city districts have the highest rents, are thus where it is most profitable to replace a house with 10 or 20 apartments, thus where volunteer evacuees get the most generous offers.
How much land? I reckon that, at least in low density cities of the developed world, cities can make themselves affordable by densifying something in the order of 1% of their residential footprints. Which means that relatively few NIMBYs will be on the receiving end of once-in-a-lifetime offers and, when they move, have 99% of the city to choose from. It also means that cities can make themselves affordable by applying a minimum of well-compensated compulsion to the fraction of 1% that holds out for more.
How quickly? It will take many years to close gaps of 10-20% in the stock of housing. Let’s say 10 years at a minimum, even with a construction boom, since housing growth cannot exceed population growth by much more than one percentage point per year. (Also, it gives most of the 1% plenty of time to organise their departures.)
Who holds the land in the meantime? Land banking is the practice of acquiring and holding land that is expected to rise in value, including by upzoning. Private investors and developers engage in this form of intermediation, also governments and non-profit organisations, variously bridging the years between landowner departures and construction. Land bankers may find themselves dealing with multiple landowners in joint-selling schemes, perhaps organised with the assistance of land assembly specialists.
Now suppose that somebody launches a property flagging service that invites the city’s landowners to register with a dedicated mapping platform and, if their upzoned land values look promising, to flag their properties for inclusion in a mass evacuation scheme that paves the way for densification. It’s a dedicated platform but, very importantly, also a public platform; the maps are for the entire city to see, not just for landowners to see each other. Here is my hopeful take on how this plays out.
The mapping platform is launched and, in hundreds of unaffordable cities around the world, landowners are invited to flag property. The launch includes whatever is needed to inform and animate public conversations about the upzoned value and transformative potential of well-located lots that are consolidated on a large scale.
Early flagging densities are highest around the core and fall systematically with distance from the core, reflecting the city’s rent gradient and the corresponding profit gradient for replacing houses with 10 or 20 apartments. (Also because everybody second-guesses how this plays out.)
Higher flagging densities improve the prospects for concentrated inner city upzoning, prompting land bankers to bid more aggressively for inner city properties as they come onto the market.
Land bankers flag their purchases, further raising flagging densities around the core and feeding back into the bidding at (3).
Stronger prospects for inner city upzoning are reflected in the price premium for inner city land. Some inner city landowners sell out to land bankers, frequently in joint sales. Others flag directly and hold, waiting for prices to rise further. Either way, flagging densities continue to rise around the core, feeding back into (3).
The 99% see this dynamic play out publicly on the mapping platform, tune into the public conversation and, sooner or later, realise that they are outside the 1%. But also realise that that, given increasingly credible prospects of inner city upzoning and densification, they can push back even more strongly on the densification of their own districts beyond the inner city. That gives land bankers another reason to bid aggressively for inner city lots, triggering further rounds of positive feedback at (4) and (5).
Land bankers also price in the economic and political upsides of rebuilding the inner-city on a scale that is measured in square kilometres – as opposed to contentious, fragmented and expensive rebuilding on dozens of small sites scattered throughout the city. Land bankers see that:
~ construction productivity improves very significantly as it gets back to scale and acquires valuable flexibility in respect of very consequential matters like construction hours, construction logistics and the deployment of machinery;
~ the greater distancing of NIMBYs relaxes the constraints on building heights, building uses and building for new technologies and new urban lifestyles;
~ there are significant payoffs for taxpayers, directly by including roads and footpaths in the assembled land, indirectly by replacing horizontal transport on public infrastructure with vertical transport on private infrastructure;
~ renters and prospective home buyers mobilize more convincingly in support of the one big upzoning and densification decision that will transform their lives, no longer forced to spread their political energy thinly across a multiplicity of housing projects in a multiplicity of local jurisdictions.Land bankers are further encouraged by reports of residential self-sorting into the 1% and the 99%, for example, home buyers that shun the disruption of the densely flagged 1% and confine their search to the 99%, the cancellation of renovation and like-for-like rebuilding in the 1%, the deferral of maintenance spending in the 1%.
Versions of this dynamic play out in dozens or hundreds of cities around the world. (In many of which the rebuilding task is many multiples of 1%.) Communities, cities and countries learn from each other; young people recognise the global nature of their predicament and sense their global power; there are lots of international conferences about rebuilding many many cities from the inside out.
The multiplicity of cities and countries means that property flagging is trialled in many different settings, increasing the odds of a breakthrough city that is the first to accept evacuation offers. Which it might do by declaring Land Assembly Districts[1] that empower supermajorities to, in effect, compel minority holdouts to take the money, join the exodus and make way for high density rebuilding.
Another reason for optimism is that self-sorting is what we humans do; we are adept at figuring out where we belong simply by observing each other in action. That’s how we self-sort into financial districts, fashion districts, tech hubs and ethnic enclaves, how we gentrify working-class neighbourhoods. And maybe how a city can sort itself into the 1% and the 99% – then come to understand that it grows by supermajority approval of evacuation schemes on either the urban fringe or on the fringes of the inner circle, slowly rebuilding itself from the inside out but leaving the vast middle ground in peace.
We also have high octane fuel for humanity’s self-sorting machinery, being the huge amounts of money to be made by replacing houses with 10 or 20 apartments. Strong evidence for which is that resident-led joint-selling happens spontaneously when districts are upzoned. A property flagging platform would simply empower residents to go one further, to collectively invite upzoning itself.
A final thought – very recent and very late – is that land assembly may be but one application of property flagging. More generally, on any matter of public interest, mapping platforms could invite people to ‘stand up and be counted’ by flagging their residence for all to see. Maybe that’s where property flagging gets its start.
Full disclosure: My NIMBY days are actually far behind me, having lived in apartments since moving to Sydney 30 years ago. Apologies for the fib but writing in the first person is so much easier.
[1] Heller, Michael, and Rick Hills. “Land assembly districts.” Harv. L. Rev. 121 (2007): 1465.
[1] Heller, Michael, and Rick Hills. “Land assembly districts.” Harv. L. Rev. 121 (2007): 1465.
I really like the mapping idea and think it definitely could happen. You should try pitch it to the Urban Developer or RealEstate.com.au / Domain - someone with an established platform and audience.