Houston's Market-Oriented Opportunity Urbanism Model of Development is Leading to Economic Growth and a Higher Degree of Income Equality Than Centrally-Planned Cities


By Joel Kotkin (10/05/2014)

 "Houston has added more than 10 percent more jobs since 2008, almost twice the increase in the [San Francisco] Bay Area. Since 2000 Houston’s employment figures have shot up 32 percent, while the Bay Area has grown by barely 4 percent. And it’s not just energy that’s driving things—Houston is now the nation’s largest export port and boasts the world’s largest medical center. It has also become, by some measurements, the most ethnically diverse region in the country. In the last decade, for example, Houston increased its foreign-born population by 400,000, second only to New York and well ahead of much larger Los Angeles."

"'Houston is the Chicago of this era—like the old Chicago,' remarks David Peebles, who runs the Texas office of Odebrecht, a $45 billion engineering firm based in Brazil. 'In the ’60s you had to go to Chicago, Cleveland, and Detroit. Now Houston is the place for new industry.'”

"Houston, rather than being a southern city of duller wits, actually ranks second in engineers per capita. If the Bay Area is master of the digital economy, Houston ranks as the technological leader of the material one; it is the capital for the energy-driven revival of U.S. industry, not only in Texas but throughout the old industrial heartland. Revealingly, Houston actually has seen far more rapid growth in both college educated and millennial population since 2000 than the Bay Area, as well as New York, Chicago, and Los Angeles."

Rival Approaches to Urbanism

"The Bay Area, for all its vaunted progressivism, increasingly resembles a 'gated community' whose high prices repel most potential newcomers, particularly families. Already by far the nation’s least affordable city—only 14 percent of current residents can possibly afford to buy a home —it represents a growth model that is by definition exclusive, almost a throwback to medieval forms where the rich clustered inside the city gates.

"High housing prices, notes economist Jed Kolko, account for the fact that, despite the boom, population growth in the Bay Area remains well below national averages. From 2000 to 2013, the region lost approximately 550,000 million domestic migrants. Despite sizable immigration, the regional population growth rate has fallen below the national average.

"In contrast, Houston is among the fastest growing regions in the country, with rapid increases both in domestic migrants and newcomers from abroad. This stems from both lower housing prices and a growth model that is far more amenable to higher paid blue collar and middle management positions. Since 2000, Houston’s population has grown by 30 percent compared, three times that of the Bay Area.

"Ironically, Houston’s growth has been more egalitarian than that of the notionally super-progressive San Francisco region. A recent Brookings report found that income inequality has increased most rapidly in what is probably the most left-leaning big city in America, where the wages of the poorest 20 percent of all households have actually declined amid the dot com billions.

"This inequality has a distinct racial element. The Bay Area gap between white residents (who dominate the tech economy) and minorities is among the highest in the nation while, during the boom, income has fallen for Hispanics and African-Americans, according to Joint Venture Silicon Valley.

"This racial divergence is far less pronounced in Houston, while the growth of poverty since 2000 has been slower, increasing at one third the rate of New York and San Francisco, and half that of Los Angeles. The Texas city may lack the great views of San Francisco, but Houston has turned out to be a better city for middle class minorities. Homeownership among African Americans stands at 42 percent and for Latinos at more than 53 percent; this compares to 32 and 37 percent in the Bay Area.

"Perhaps the biggest differences can be seen in families. Of the nation’s 52 largest metropolitan areas, the Bay Area has the lowest percentage, 11.5 percent, of people ages 5 to 14. In Houston, 23 percent of the population fits this age category. In particular San Francisco is notoriously inhospitable to families, with the lowest percentage of kids of any major city.

"The two regions also reflect very different urban forms. The Bay Area’s leadership has opted to favor dense 'in fill' growth and sought to restrict suburban development. Houston has taken a different tack. As its population has expanded, so too has the metropolitan area. This includes the development of many planned communities that appeal to middle class families and many immigrants. In 2013, Houston alone had more housing starts than the entire state of California.

"But it would be wrong to dismiss Houston’s model as merely 'sprawl.' Instead it is better seen as simply expansive. In fact, arguably no inner ring in the country has seen more rapid growth, with high-rise, mid-rise and townhouse development in many long neglected districts. The increase in high-density housing tracts (more than 5,000 per square mile) since 2000 has been almost ten times higher than the Bay Area."