Let me look at the big questions for for

my talk today is really
about demographic change.

How does it shape housing
preferences in a new construction.

And then the big question everybody's mind
is what's normal or what's the new normal

is when we come out of this recession and
I think we can get some insights on that.

And what's the implications for
cities and for housing for planning.

And then being a planning a planner who
has taught planning theory for twenty

years or so I'm always interested in how
do you get agreement about things a social

scientist study it and try to find out
the facts and say here's the facts.

If you're as some kind of administrator
you can try to implement some of your

information in a plan and try to enforce
it through the ministry of action.

But if you're a planner especially for

an academic planner you've
got no power at all.

All we can do is have information and
try to be persuasive and

the biggest problem America today is that
nobody's willing to be persuaded anything

is totally polarized totally fragmented
total breakdown nobody's on the same page

and I'm not a mission to try to
get him back on the same page and

I mean you'll see I'm using demographics
is my key arguing point and

I like to beat up on economists which
I can do easily probably in this room.

It's harder in some other rooms and I say
economics as an aside comes to it later.

I think but you can always
is the most important thing.

It really is.
I mean you can't buy

a house you don't have money interest
rates are really critical all that.

Trouble is you cannot predict any
of those things three years ahead.

You don't know interest rates you
don't know incomes demographers or

all knowing we know that in ten years
time everybody in the room here will

be ten years older and
there was some certainty and so

with that one fact you can begin to build
some understanding about things for

them or their houses their existence
they will also be ten years older and

they'll be a new housing being built
to meet the needs that had been under.

In term.

So it's all kind of fits together here and

I think a demographic view adds a lot
to the real estate understanding.

But we like to get this future knowledge
in the minds of the public because

ultimately you have to have
these citizens who are voting or

who will support elected officials.

If the citizens don't get it then
the plans aren't going to work so

you really have to figure out
how to get agreement with you.

So there's big problems in
grasping the future and

I like to always emphasize that
plan is about the future we're

supposed to be a specialist in
the future and yet we don't do enough.

There are some really big issues and
here's the classic way that political

scientists look at it that there is you
know individual versus the community and

it's a struggle.

You know it's in the sea that in the all
the political rhetoric in the campaign

right now the Tea Party people are way
over here on individual side and

then other folks are trying to argue for
more public goods and

other resources that are community
oriented left and right back.

Or if you like a right left and right.

But that's that's that's how
the world looks at it but

as to how players look at it.

Players actually think this way.

It's actually present versus future and

in reality these two dimensions
are combined like that so

that they're not really separate and
many people live in a world of present

individual isn't very short sighted
they're focused on today and

they're self centered and that's where
they live all the decisions are there and

planners are up here trying to future
community and this is not a good argument

to try to make people a much more
focused and present individual ism and I

published a chapter on this in a in a like
Institute book on a vision in the future.

And I'm going to show you a diagram
that came from that chapter.

So I just I just copied
it right out of there.

And in essence that lower right
hand quadrant is really the market

all the individual decisions
are supposed to add up the hidden hand

adds up to public wellbeing.

It's all these different
things about property and

pleasure of self-satisfaction.

It's all in in the present and
all that is totally known and

agreed about because everybody knows what
they want they all know what what's today

they think they know today and they all
agree on that the planners are arguing for

something up here in the future that
has two big problems number one.

It's totally uncertain hasn't happened yet
can't be proven.

And number two is not agreed on so
they are trying to argue for

something that it's a losing cause.

And you know the future will happen anyway
if you have an accidental future or

plan future.

And you know that all these things we
want we want sustainability we want

you know urban visions
of a better community.

We want all that stuff.

How do you get people on the same page for
that and a big struggle and so

the big issue is how do you
get any kind of certainty.

You want to build a bridge to bring
people from their self centeredness

across to this community of vision but

where is your proof how do you get them
to believe in what you're talking about.

That's the that's the central struggle so
I think all the data that we collect

ultimately is playing some
role in this diagram.

It could be data about self-interest in
the present or it could be data about

the future but it has to be did it
mean something to the people and so

I've really I'm going to contrast
two different approaches.

Just quickly here.

One is are technical means
of getting this proof and

we use these projections
as from any Symons work.

About projection forecast and plan.

And so that's our technical means but

really that's not has not proven adequate
because people keep ignoring the plans.

So there's another approach
that we also need to do.

We need to be more persuasive
about these technical insights.

And there are certain principles that I
think people are green with more and more

of what planners are advocating doesn't
line up of folk knowledge going north.

You have to figure out how to tie it
into what people already believe.

And it's useful as planners to be
much more optimistic and hopeful.

I mean I'm getting some recognition in
California right now for the simple

fact that I mean God is the only optimist
in the room and people tell me that.

And so I say well I don't know if
it's going to work but I see a play.

We can make the play.

You got what you see the play.

You got it.
You got to try to make the place.

Believe me there's people who are
interested in finding some solution and

most people have no solutions
in California in this time

it's pretty discouraging around the whole
country but players do have hopes and

dreams that they can advocate in and
there's a hunger for

that if we can make it credible doesn't
have to be you know to prove it.

We have to make it credible.

And the other approach is the fear.

This is classic approach used by lots
of people in the political world.

You get people's attention.

But then they retreat and they go back
to self-interest in the present and

they run away from the future.

So how to make them not experience
how to use fear a little bit.

Not too much but
mainly stick to optimism but

then show a pathway to the future so

that some background here and I'll just
leave you a couple quotes here on this.

I like Throckmorton's
quote that plan is and

then how it is that the only ones I found
three different planners who said this now

about hope planning being
the organization of hope and

it's always useful to
bear that in mind too.

So in the real world today.

Are stories being told about the future
and I'm going to this quickly mention

two stories and
then get to my story and I say that

because I have to I know that my story
has to compete with the other stories.

So here's one that you probably heard
about it's a story of the future.

It's about resisting big government and

this is the dominant story today in
fact this is the austerity story.

Also there's all these problems here.

Freedom is being denied is too many
taxes in there's an unsustainable fiscal

deficit.

In my book immigrants and boomers I
was arguing against a deficit back

in two thousand and five when I wrote
it it was a different game now and

people now other people are getting on
the deficit problem saying well where

were you before I mean we needed you to do
this before and before you didn't care.

Now you care where you
got it backwards now but

I won't go into the details on this but
this is a big story about the future.

That's driving many people and blinds
them to thinking about anything else so

I just put it there and
we'll come back to IN THE CONCLUSION.

A second story you've likely heard
about is that we need to build

a sustainable city and
that's required because of peak oil.

The idea that energy
resources are limited and

it's also required because
of climate change and

most of it in this room probably
believes the story here and

I'm going to argue that whatever I'll
tell you is totally consistent with this.

It's not about the environment
that lines up really nicely.

Isn't that fortunate we
can be on the same page.

I'll come back to the conclusion because
what I really want to talk about is

a different story of the future which is
a demographic story about how do we have

our demographic future is totally focused
on the people and the kinds of housing

that they need in demand as they
go forward in their life cycles.

And what this means for land use patterns
from a housing perspective of the people.

So those are three different stories.

Before I can get to those stories.

I really.

To go through just one quickly going
is big bust right now people are really

depressed about it.

So I have just one slide of I shrank
this to just one slide for the for this

presentation I stole this off the website
of Robert Shiller It's a great Web site.

Update this monthly and he has also cities

as Bill is showing the some cities but
this is off his website and

when chiller published this graph
originally it stopped in two thousand and

five when the how the home prices
were at the very peak and he said.

Look at this this is way out of line
with historical precedent this.

This can't go on this
is way out of line and

then sure enough it took
a dive to the bottom.

Now this stops actually in
two thousand and eight and

since then it's gone sideways pretty much.

But you know there was two other
little blips when prices went up.

There's one here in the late seventy's and

the other one in the late eighty's was
a is a national data little blips you

see them especially in California and
those are a little more pronounced.

But the big one here is really
the most there is down me but

the thing I really want to emphasize
out of this is really the population

variable includes population.

This is straight off his website These
are his colors population is a pink line.

It's a straight pink line.

There's not much variation going on there.

He says population hasn't changed much.

Not a factor can explain the bubble.

Well yeah well I haven't gone the Gail yet

to present this but you know and
I haven't written and

asked them Do you want me to come and
talk to you about the stuff I haven't.

So it's only been published in been
ignored by real estate economists because

the finance people because
it's not in their journals.

They only read very narrowly and it's
not in their journals it doesn't exist.

So they don't know about the demographic.

Factors but you will if I'm down here so
whether demographics.

It's more than just population.

There's a traditional stuff in fertility
migration which I actually don't deal

with much.

I am doing a fertility study
right now by coincidence but

I really don't deal with that much.

I'm more interested in the integration
of the demographics with all the urban

activities.

All these things are involved people
you know the people are the ones that

migrate between the cities they live
in the houses they ride the buses

pay taxes in that they vote
they have preferences.

All that's going on.

And there are immigrants are also
exceptional in the way they handle time.

If you want to deal with the future
the future is a concept in time.

That means you have to have some
sense of the trajectory in time

which means you probably have to also
deal with the history also if you don't

know the history in how it
leads up to the present.

You can to cells and say well.

I think in the future.

It's going to do this.

I mean there's a continuity that goes on.

So we need a structure that.

And demographics are really useful for
that because all the units of

measurement in demography are all
about time ages in years.

Your duration in a status is in years.

Cohorts are measured by your position
in time we look at things across

periods of history.

Everything's in time and economics things
are all in units of of currency of

dollars and geographies and
units of space.

So if you want to deal
with the future demography

is a really useful means for getting there
because of all the data available in

the temporal structure
that's brought to bear.

I'm going to confess to before
economics are important.

I agree that but my manifesto
the demographics are the people and

they're also the main effects economics
only modifies the demographic factors.

So highly significant but it's a.

Modifier that's totally hostile to
the economic paradigm which of use

economics as the universe as the as
a central the in demographics or

built environment are only
modifiers of economics.

As viewed in the economic paradigm so
in this economic arena.

As I said we can forecast
demography better.

OK.

So with that background.

Let me give you the details of how bloody
This can get this is like taxes and

spending California the heart of all
of all governments the heart of all

politics really is taxes and all the
battles over this and people arguing over

this is like a like a religious value and
they're not looking at the specifics so

the specifics are different people
pay different amounts of money and

get different services and
it's all based on age.

It's entirely demographic
the tech schedules are income

schedules but who gets the benefits and
who pays the benefits.

It's highly biased.

This is the state of California and
you see middle aged people that there's

a maximum tax payers they have the highest
incomes and they pay the most taxes.

And where is all the money go to all that
money goes to these young people over here

who suck up all the other resources and
this is a contentious issue

because the older people tend
to be spending quite and

the younger people are Latino and
the older whites figure they don't have

any kinship with those young Latinas
are not their children or grandchildren.

And who invited these
people the first place.

I am paying for politics in California

now at the federal level that
the spending is different.

Instead of spending on kids
this take that red line and

reverse it all the spending goes to
all people so Security and Medicare.

And so it's still the middle aged people
here at least the middle aged people say

you know what I'm paying a lot for those.

I believe that you know what one
day I'm going to get there too.

I'm going to get mine.

The trouble of the kids is that is that
the taxpayers are past that stage.

They're not going to go back to
being kids and so they have no hope

they'll go back and get the benefits
themselves so they are willing to pay for

the elderly because they're going to
go that direction themselves later.

So that the federal
level to all different.

So but yeah but

these aren't their kids and

they don't have kids you
know not in California.

You know.

As I say here.

So the key thing about the state
level is that that's what really

drives plenty is all the all
the legislation in favor of planning for

supporting plan is state legislation.

And this is state local picture is really
critical to the plan environment and so

this is especially important.

So I'm going to once you
recognize this disparity.

Then the thing to do is
how you respond to it and

there are some people respond to it.

So we need more equity more equity
you know it's a plaintive plea.

It doesn't.

I don't know if it sells or working on
stretches to make it come back to those.

But I have to give you the political
picture here is how it gets so

messed up here is the racial
breakdown of the whole population and

see that whites are a forty two percent
minority in California already but

whites are a bigger share of
people who are citizens and

over age eighteen eligible to vote.

And there were a bigger
share of the actual voters.

And so you see the disconnect there.

Majority of voters even though
a minority population and

they're in extreme minority
of the high school kids.

So there is this disparity here and
we just have to talk about it more and we

can help people once they see it on paper
they can understand what's in it for the.

So you know what my punchlines I
was given to now is is going to be

in my presentation today really
simple if you'll remember this.

I'm told by major developers this is the
one thing they like best of all my work.

Yeah.

Who's going to buy your house and

I think they said to me with
your finger pointing at me.

Yeah.
By your house.

They love it.

Because it.

It speaks to the actual partnership across
generations there are older people.

Yeah but you know ultimately
you do have to sell your house.

And when you sell your house you need
a buyer that you can like join up with and

who's that going to be
welcome back to that.

So here the housing land use questions
because I want to give you the future.

I had to be able to give
the bigger picture here.

So how the demographic factors how they
come together in housing and land use and

then what's the longer
view on turning points.

And then how do the demographics
square with the ideas in feeling

compact development and
what does it mean when we have is

a gene dominated housing market
because of some of the baby boomers.

So these are all questions
to be addressed and

you know even a presentation I guess I get
you know it's a research presentation but

it's also a survey of things
I've done previously.

And this is one thing that came up
with a link Institute ten years ago.

Nobody's kind of ignored it.

But it's so fundamental you know
there's consumer sovereignty.

The idea that you know consumer
choice not really not in housing.

It's a minority dictatorship.

Because you look at it there's only
like one percent of households that

actually live in a new unit and
who developers build housing for

they build it for new home
consumers that's their clients and

it's one percent who
drives with gets built.

It's not the other ninety
nine percent the rest of you.

I know where you're all living right
now you all live in an existing

house you know.

You're all living hammy down the way
here live in a first time owner of

a first time occupant of a new unit.

So OK so you guys dictators.

They built for you.

The rest of everybody else isn't a hand
me down and so it was the point.

So this this concept here is
a certain moral importance but

more but more specifically.

It suggests that there is a lot of levers
that one percent is a lot of leverage

they can they shape the entire built
environment everybody else to inherit for

decades ahead and is the McGrath exchange
I will argue that one percent changes and

so the fluctuations in demographics
are driving that one percent and that one

percent can have enormous effect more than
you would think it's only one percent but

that's all they have in the market so
I'll come back to the graphic again.

So let's look at some age ways because
this is a way of thinking about

change over time.

Here's the total population of the United
States from one hundred fifty to twenty

thirty S projected this is not a pink line
but it's a pretty straight grain climb.

Isn't it.
Not much variation going on there.

I just see population growing in total.

It's bigger.

Well that's not a good way to look at
it we need to break it down by age

and so I just give you this
summary of the same data and

as you can see it's not
a straight line at all and

there are these patterns here
like here's one hundred fifty.

It was loaded towards young people.

If you were all people and
you can see the gaps between the lines so

that you can see in some decades is
bigger in some decades smaller and

now you can't really do that math in
your head so I've done the math for you.

I didn't subtraction is for you and
let me just take the same data and

present it differently.

Let's look and see what happens in terms
of the growth the increment in population

each decade by age group and

see how different the patterns are so
here we have.

Just the broad age categories.

I think fifty's seventy's ninety's in
two thousand and ten second decade.

I'm skipping every other decade just
to make it simpler every twenty years.

This is a growth experience in the U.S.

in the one nine hundred fifty S.
That's the baby boom generation.

Those are the kids.

And it was fifteen million people
the previous decade they added like

half a million people in the age group.

So you go from no growth a huge growth and
it's a story about overflowing schools and

everything else you've all heard that.

And in the rest of the age groups hardly
any change at all and very importantly is

this age group twenty five thirty force is
going to be the prime prime age group for

my story because those are the entry
level homebuyers and the like.

And they're the ones who are the new
parents the new voters or

new tax payers new workers
the really important.

They're the most and many of you are in
that age group are going to be there and

it's very important age group in
the fifty's were losing people

absolute net loss of young people and
that led I'm going to argue well

you know my story here that led to all
kinds of problems in housing in cities.

But we were focused on
that boom going on there.

So then twenty years later.

Where is the growth.

Well.

Miraculously those kids are twenty years
older and so the growth moves up a notch.

It's now in a just twenty five
thirty four total reversal

where before we had losses of people now
we had this massive growth of the adults.

Conversely back here in the hole again but
that is a matter for housing so much.

What matters is appear explosive
growth in one hundred seventy S.

And I maintain that is what started
the housing bubble in America

just broke it started then that's
what started gentrification.

That's what started everything
because we had all these new housing

consumers slammed into the housing
market in the seventy's overflowing all.

All the neighborhoods that are supposed
to live gentrifying everywhere and

then they move up the letter so
twenty years later they're now.

Miraculously twenty years older and now
they're moved up to the age bracket where

they're in the prime executive housing
the big houses the big boxes in

the ex-urbs massive growth in developers
just building as fast as they can keep up

with this demand may well have been back
in the twenty five thirty four bracket

collapse total collapse
in the twenty's and

that is what the combination of
this collapse and this surge

is what really pushed urban sprawl the way
we we knew it the last twenty years.

And it's not going to continue
because continuing with the story.

Now the surge has moved on and we have
a net loss in those prime executive

age brackets and we have a resurgence

again at age twenty five thirty four and
all those former

baby boomers who used to be in the pink
category are now in this black category.

At the end of the lifecycle.

Overflowing ages sixty five and older and
we don't know what they're going to do

now want to come back to that but that's
what they're going to know whatever it

is going to be a really really important
because their growth so dominates.

I mean where is the rest of the growth in
the in the story here is that growth in

children is growth in young adults
there is not much else going on.

It's all older people and so

they're one percent choices are going
to dictate what gets built.

Now the put that sixty five plus
category into perspective just how

devastating it does dominate
everything in the presidential campaign

just nobody talks about it.

And there's a reason why
they don't talk about it.

That's something I learned as a planner
watching local city council meetings and

you know just reading the newspapers
about what the mayor has to say today and

local politicians will never acknowledge
a problem unless they already have

a solution in their pocket to pull
out until they have a solution.

They don't talk about it because they're
afraid that the local paper will say

Well Mayor Bob what you can do about
that and where Bob can't say Whoa.

I don't know you can't say it.

And so this won't say anything about
the problem until he has a solution and

how crazy the solution and
the problem with his eighteen business.

Nobody has a solution.

They don't know what to do about it and
so they won't talk about

it even though that's what's driving
all the problem getting him my story.

So this was driving the problems
now is also an issue that

in dealing with the future.

I think the key principle is that
people always look backwards and

that's how they figure out what the future
is and so whatever it's been going on.

It's normal.

They kind of assume that going forward and
here is normal.

Well that's us.

Here's California.

Every state's pretty much the same.

This is the ratio of older people divided
by working age twenty five to sixty

four prime working age.

And that ratio has been constant about
twenty four seniors per hundred working

it's constant for for forty years forever
and I think it's constant is invisible.

It's not a factor.

I mean no articles been published.

No books been written about it.

No no one no white papers no blue
ribbon commissions no it's not an issue

and we forgot about going to sleep totally
gonna sleep even though it's totally

predictable demographers have been talking
about it and regular ministration actually

did acknowledge it and then said Well it's
a long time away and I worry about it.

But let me show you the next twenty years.

So the ratio goes up basically like
seventy percent in California and

sixty four percent in the US the state
that has the slowest increase

is fifty percent that's Oregon.

That's the lowest of all the states.

And so
whatever this means the senior ratio.

It's going to go whacko right now and
it wasn't before and so

we have no capacity to deal
with this Don't think about it.

So here's some of the consequences
that is you know raining down on you.

Seems before you've heard
about these before I mean so

Security Medicare the most attention but
there's a whole workforce

economic development issue where
you can get workers from for

oil going to places retirees and you need
more taxpayers too because all these guys

are going to get all these
entitlements now and

I didn't get your infrastructure funding
was it was ever such a funny going to come

from because we spent all the money on the
old folks forget the transportation stuff.

And by the way who is
going to buy your house.

So there's a balance of all
the folks who sell houses and

they move to they downsize
investors downsize or

they move to retirement homes and
ultimately after age ninety they die.

So the homes do turn
over who buys the houses

almost always as a younger generation.

So they were in balance to say this
ratio was used to this balance thing

about that is out of whack and
I used the expression.

You know for this thing I call this.

Sometimes I label this
a baby boomer tsunami and

that's as it kind of a trite phrase people
used to Mommy and I mean these big not

necessarily tsunami is there's actually an
engineer at U.S.C. who studies tsunamis.

So he taught me this
one thing about us and

I mean so incredible is not the height
of the wave oftentimes a tsunami wave

might is not even necessary
higher than the ceiling here and

we feel it weighs a lot in California if
I'm not in the water and I see a way.

Coming you hyperventilate but

you know if you can get out to
the way you can dive under it.

Get out on the bottom and

then come out the other side in
the backside like who was a big one.

And you're safe tsunami you can't
do that because the tsunami

the power of it is it backs up from
the beach a mile to a mile and a half.

It doesn't break it's just keeps coming
and coming and coming doesn't break.

That's the baby boomers first one
born in one thousand nine hundred six

last when one thousand nine hundred four.

There's eighteen years when
the first boomer hits the beach.

It keeps coming for eighteen years.

That's powerful.

It's not the height of
the wave it goes on so long.

So it's going to dominate for
twenty years.

It's really it's very very frightening.

So we've got to deal with it but
we're not.

And so as planners we we can think
ahead help people deal with this so

likely responses Here's
a everybody agrees those responses

all the economists agree pretty much
is going to be reduced growth in G.D.P.

because that depends on growth of labor
force and it's going to be depressed delay

retirement very likely to do sth benefits
very likely higher taxes inevitable.

No politician will admit it but
it's inevitable greater reliance of

immigrant workers already happening and
the good news in a story right here.

I painted green because it's good news no
one's thought about this really that much

rediscovery of neglected minority youth
people we didn't think we needed before

every kid is precious
more than ever before.

Now this is really huge.

So it plays out all of this
in the housing market.

I'm just going to show
you briefly immigrants.

Because Homer who knows.

Homer Hoyt's name.

Homer avoid a very famous land of commerce
he was smart nine hundred forty he

figured this out before we were to figure
out was going to have an immigration.

We cut back immigration in one
nine hundred twenty four and so

the percentage of the population that was
new immigrants took a dive to a low point.

And then slowly began recovering
after nine hundred fifty and

Homer in one thousand nine hundred you
wrote a press an article in economics

where he talked about.

The consequences of having no immigrants
coming into cities because always

before the immigrants came into the cities
and then they got up in the mobile and

they moved out to the suburbs the new
wave came into the cities and

they moved to the suburbs but they were
still moving to the suburbs and they

weren't coming in anymore and he predicted
they were going to have a collapse of

inner cities a spread of gray areas which
afflicted New York badly in the fifty's.

He foresaw all this stuff because that
there were going to be new people

coming into the city and so
I was impressed when I found that.

So the fact that immigration
has researched is

a great benefit said in
this show you just quickly

is a quick some nation of some data
I didn't show the slide yesterday.

Latino immigrants are new they're
oftentimes they're very poor and

they're low homeownership but
after they've been here for thirty years.

Sixty percent are homeowners so they have
this power they bring into the housing

market this inner G. the Latino immigrants
the poorest immigrants very very powerful.

And here is the upward surge of new
arrivals in one hundred seventy.

The longer they're here
look at happens there.

Homeownership rate.

And I check these for different decades
and they all start off at the bottom and

they move up this is
occurring in every state.

They're all the same upward upward
energy from immigrants is enormous power

to be tapped and we need it right now at
this moment in our housing market and

it will be a major source
of recovery turning points

can all be played out of
these things I've given you.

So let me just remind you that
only takes one percent and

that can be highly leveraged.

And I'm.

Suggests that there are at least four
different episodes in urban condition I

publishes an article in the annals of
the American Academy of political and

social science and

there are these four main episodes the
band in a period of nine hundred fifty S.

because there were no immigrants in
it because the loss of young people.

And then if acacia in
the long boom that started

with the baby boomers hitting the housing
market in the seventies as I've described.

And then I want to go in more
detail now episodes three and

four which are about the collapse of
multi-family revival multi-family.

And then the baby boomers sell off and
in the kind of unknown what happens next.

Little bit unclear.

But let me just show you this one
graph here that is really useful for

seeing that population is not a pink line.

It's a wiggly green line.

This is the growth annual growth and
number of people.

The bottom line here is native born so
babies and

they add twenty five to their age.

So this is babies turning twenty five and
so they turn twenty five in one thousand

and ten and on top of that is the extra
increment of immigrants who arrived.

And so you see the total growth in
the in the population is totally

uneven unlike those steady
gray bars this is more reality

says young people entering the housing
market and the fluctuations line up.

So here.
The first one here is the downturn

in the fifty's.

After a big surge in
growth loss of people and

into that the city's
young people's housing.

And then the boom that occurred after nine
hundred seventy S. the baby boomers hit.

Young adulthood.

And then the current
collapse of young adults and

what that means for apartments and
then going forward in the future here

this graph doesn't speak to all
people especially young people.

So we'll have to go to different graph.

So the point being.

It's not a steady green steady
pink line or steady gray climb.

It's on the multifamily Why is it so
important.

Ups and downs.

You see here is that the black
zone here is a multifamily

housing very very common but not recently.

Not in the ninety's that really dried up
as a person there's a number of housing

units and as a share of all construction
from one thousand nine hundred to

two thousand and ten.

You see how it's it's very low a lot.

There is a big boom in the sixty's and

seventy's in part because of the universe
and it's really slumped more recently

really badly in that recovered
California bit of a puzzle about.

The California being single family houses
don't you picket fences look at this back

in one nine hundred sixty S.
the good old days.

Forty eight percent of all the
construction was apartments in California

and in every decade forty
eight forty six percent.

Until recently just cratered.

And the big paradox was why is it
cratering now in the ninety's.

We're now is when we're
talking about urban sprawl.

Now's the time we're worried
about affordable housing.

Now so how do you want to partner more
than ever and we have fewer of them.

What is going on and so some regional
players in L.A. kind of figured out.

It's about young people the loss
of young people young people.

Turns out are critical for as tenets
of new construction new apartments.

Here's two different lines one for
nine hundred eighty one for two thousand.

Just to show you two different
periods in history and

the tenants in these new apartments
are disproportionately young people.

If you take out young people
you take out new tenants.

Now you might say there's always
poor people don't poor people always

in the apartments.

Yes can poor people pay for

new construction know so who can pay for
new construction middle class people.

But why would Miller class people
want to live in apartment with

a to live in single family houses
because they're only twenty five.

That's how it works.

You need to have middle class people
to pay for new construction but

they have to be young enough and not have
kids and they want to have a single family

house and so that's why the tenants
are stacked up this way and

it leads to further problems why
are all the apartment so small.

Why they are one bedroom two bedroom.

Why is this three bedroom apartment
because poor families need three bedrooms.

Why are they ones in twos or studios.

Because twenty five year olds don't have
kids twenty five year olds only want

one better.

Or maybe two and so
that's how construction gets built and

everybody else.

Listen to him he downs but
it's being built going through the adults

and it's been a big change over
history that we showed you on this.

This is just a permit data show it's
happening everywhere the dotted line is

for the U.S. and here it is for
different different metros Atlanta.

Here is the gold colored metro in this
one here so it's there's a rebound

happening right now is driven by
the resurgence of young people and

this is important to the state because
everybody else thinks there's a new value

and new preferences of people want
to go back to the city because they

discover the cities are a good idea and
there are opposed to global warming.

So you want to live in the city
is a little bit of that but

the real muscle behind this movement is
that there's more young people and so

you can use that that quantity
of young people to advantage.

They're there they can pay for
construction use them and

build the right kind of
stuff that will last for

decades ahead take advantage of it now but
recognize where it's coming from.

It's a resurgence of young people and

so it's everywhere in
the nation which is me and for

that sprawl Well you know
I'm going short time.

So you all know the story on sprawl but
I think sprawl is it's days are numbered.

Because the demographics are being
pulled out from under it and

preferences it turns out were never as
monolithic as we thought they were this is

a great California survey asked
people about tradeoffs between

different kinds of housing and I won't
have time to go through these for you now.

But here's the results here the
preferences really aren't that monolithic

overall that people say
that eighty four percent.

You know overall want a single
family detached house that they own.

But if you ask them tradeoffs would you
rather have a smaller single family with

a shorter commute or a denser single
family and smaller lots but with parks and

Greenbelt you want to have this suburban
single family with a big backyard and

a long commute which one you want and

you see only forty two percent
actually want a long commute.

And there's many many more
people who would prefer one of

these other alternatives.

So it's not as monolithic
as it is made out to be and

it is it is entirely demographic
here I mean the people want

to live far out in the suburbs want to
better schools and see the importance of

schools in this homebuilder data
the dash line at their schools.

But what happens the preferences for
schools dives after age forty five.

How come no one cares
about schools anymore.

They're over age forty five
their kids are grown up and

now they're what they care about.

Now they care about location close to
shopping and all that supports infield

development doesn't and supports
you know more compact development.

And by the way people over forty five this
is a twenty five year olds are critical

for apartments people over forty five are
critical for high amenity well developed

expensive infill construction
Why is that because people

over forty five have all the money
they have the highest incomes and

they have equity they've accumulated and
they're the one percent.

They can drive development.

So it's all about segments that are
growing and that's a growing segment now

here's another example here from
home builders of townhouses.

Versus single family house
which one do you prefer.

And the preference rises with age
people over fifty five much more likely

to say they prefer the townhouse and they
had the money to act on their preferences.

So the baby boomers are moving into
this high townhouse age bracket and

so that supports development
that direction as well.

So the one percent.

Here is changing.

Now the problem we have here is
the baby boomers sell off so

the move to a townhouse
like I sell my house.

OK And just to remind you.

There's a little bit of imbalance here and
who's selling who's buying.

So here's the actual data I
published in A.P.A. Journal.

None of this is from the book.

Actually it isn't a book
First rate of buying

on an annual basis piece earlier and
then even these older folks

I was amazed like one percent
are still buying houses each year and

older ages that must be buying a different
kind of house but they're still buying.

But selling takes off and out and
out ways buying after age sixty five.

It varies around the country.

Some parts of the country
like in the West.

There's a certain.

Gosh this is like Nevada here and

you can't close to you can't see it here.

I can see it.

There's a few winners South Carolina
in the south is a major

winner in Florida of course my home state.

But this is sixty five sixty nine and

the rest out there believe how fast
they're out of here in the northeast.

They're going to Florida really quickly so
that it does vary.

Around the country but sooner or later.

Everybody sells get religion
about this earlier we all sell

and will supply cut back if there's
a shortage of demand will supply cut back.

Well in one thousand nine hundred
one was the last big recession.

And of all the sales that were
made These are realtor sales

of all existing homes and
these are new construction and you see and

then in two thousand and five is the boom.

And you see that in all periods
the majority of homes being sold three

quarters or eighty five percent
are existing homes not being sold by

a professional but being sold by me and
people like me individuals who are selling

because of health reasons or because
they will be close to the grandkids or

something related to being over age
sixty five and you can't stop it.

It's a title.

It's a tsunami is coming.

They're going to sell and so too so
well here's California projection.

Here's the sellers and sellers by
ethnicity or some of those who are older

also but mostly older whites and whose
buyers buyers half of them are Latino.

So we're all wondering OK.

Can they pay the price I want for
my house.

They're trying to figure this out.

It's a major social policy issue.

How do you cultivate the next generation.

So they can pay us what we deserve.

And so I think you need to invest
some money on the front and

get paid off later so that's my political
position hasn't been adopted by anybody

that it will happen and we had this.

This is a published in a second to be
in this is a graphically put on it and

I have a title I invented for

this graphic called housing market
links older white young Latinos.

But here's my new title I just thought
of it yesterday or two days ago.

I don't think the old I don't think
the young folks are making it up to

their dream houses but

the older folks need to help them
because you can't sell your house or

they can't make it up the ladder is there
is a great little subdivisions in the sky.

I don't know this this is a political
cartoon it's really pretty good

and share it with you.

So my conclusion on this is a.

This younger generation we really have to
both come up because they have to carry

more weight a lot more
weight than we thought.

And there is potential here for

immigrants to help as well but
the conclusion for the future.

This is from Lassie

you might be in trouble unless you can
find a place he's got to make a play to

get out of this box he's in.

So I think there's things we can do.

I mean what a family is the new normal.

No matter what pushback you might
get in local political scenes.

It really is the critical thing
that's needed the housing

norms of the sixty's and
seventy's eighty's or history.

But we're going to try to
return to some of them and

what we're going to return to is not
a fantasy but what if and it was normal.

Back then more than just today and
we need to figure how to showcase better

designs to make multifamily romantic and

attractive and there are lots of examples
of occurred in the last decade we

didn't have those ten years ago people
thought it was for motorcycle riders or

didn't have good news about it.

But then we had this problem of
the sell off we had to figure how

to fight the rising senior ratio.

So you could try to make the old
folks not sell by making local

communities more elder friendly so that
people will want to stay in place have

more mobile services that come to them and
have parks that are.

They're accessible and that you know make
it a friendly supportive environment.

People are prone to want to stay where
they are anyway help them do it help them

do it and include adaptive designs

we call universal design in bathrooms and
the like.

So the more accessible for everybody.

You can also work for.

By tracking more young people.

If you can find them.

There's a shortage of young people.

Well you know the way
it takes to find them.

Maybe you need a creative class on
your side and you could also go

after a really mobile immigrants and
try to patch them together too but

this is all battling over a fix pie
in me some to me is going to lose.

So what's it mean for the three
stories is to wrap up my talk here

to close the circle three stories one
being resisting big government building

a sustainable future housing a demographic
future is the big government means

spending less money on young people and
I think that's not smart.

I think we need to invest more in
young people and that's been less so

that's my only comment I'm
resisting big government.

In terms of sustainable lifestyle.

You know the well first the broader
solution is for defying the younger

generation and
I think that is educators we all agree

on this but the public at large
somehow thinks it's a luxury or

things that and many don't realize
is in the sense that it pays back.

But the stronger connection
is on the sustainable front.

I get entirely a demographic argument
really a social policy argument and

a dove tail so nicely with what's really
needed on the environmental front as well

that sustainable cities are being
served by this fortunate

confluence the demographic future
lines of really well with the pursuit

of reductions in energy emissions which
are being pioneered in California

by this three seventy five in S.B.
A.B. thirty two.

So the compact development
serves the people

serves the environment and therefore
also serves the people that way as well.

All this I think leading to
a conclusion that sprawl is done.

The demand isn't there to support
the support outer development.

There's a lot of it has to be absorbed
no want to compete against it

the way that one percent wants to
live is is in what's unmet today and

there are plenty of exurban
development today to choose from.

So what's unmet So we need to invent
new communities that are attractive

to older people that aren't isolated
retirement homes like we know today but

something new something where I can
have the Rolling Stones being played or

you might one of the Grateful Dead but
also not just sitting by yourself.

But interacting maybe with other young
people as opposed to just older folks but

whatever it is there's
going to be opportunity for

a diversity of different
kinds of elderly communities.

Those will sell because those
can't be found already.

And so
that's what people will will go for and

so final conclusions population
is not a flat pink line.

And you know it's all pretty
obvious at this point I hope.

Although it may not been obvious for
a start speaking and

I think we need new plans for
a better twenty first century.

So thank you.

Try

that one hundred eighty six code.

It started turn up.

Though in well it started
turning up in two thousand and

four when home loans were easiest to get

a group at that way.

There's

a I

don't disagree.

The fact that these things overlap and
time is what makes it invisible the people

I'm biased because I
knew about this in one

thousand in seventy eight there was a book
written by a Harvard grad school design

Professor Robert Schaefer called the
suburbanization of multifamily housing and

at that time he predicted there
was going to be a collapse of.

Rental construction in one
nine hundred eighty seven and

a resurgence in two thousand
I think in two thousand and

seven and he based entirely on them or
people kids were born in different years

and when they would arrive at a certain
age and everybody else dismissed

them as being well that's irrelevant and
how do you know that.

So we asked how could I possibly be true
and he didn't get tenure at Harvard.

But I I'm calling his name that now I

say to my publication that it's
pretty amazing that you know.

Actually he was a bit off
on the resurgence but

he was dead on the collapse which
coincided with the tax code chain.

No.

I think what happened the tax
code is that people then

excel the way the construction
plans a year early.

So you get an extra high peak and
then there was actually wasn't

any demand in the morning and
they just didn't recover for a long time.

But anyhow so
there are like confounding elements.

Yes all multi-family combine with that.

Yeah but more recently it
could be you could be kind of

yeah well interesting on that point

townhomes and and mobile homes are really
disparaged back in the eighty's

they were viewed as very poor
investments they had held up right.

But then townhomes did
in condos The great for

a period there and
then that but under fire.

There's like the least
desirable in the loose.

Actually the two categories of housing
that are most vulnerable in a crisis

a collapse are condos and

far exurban cheap single family because
that those are those are built to

serve the one percent who
are have to drive to qualify.

So these are the most marginal buyers and
so they've gone way out into

the boonies and they bought a house on
a small lot in a lousy development but

it was the cheapest they could find.

And those people most like.

They go belly up in a written a crisis and

so and who want to drive out there anyway
so the least desirable houses can fill and

this happened in California in the one
thousand nine hundred recession as well.

We saw the far exurban areas that
were just much more devastating

downturns the close in neighborhoods
have been more resilient in L.A.

and maybe decline ten percent in value.

Whereas out there it's it's it's
over sixty percent declines.

I don't know how so sizes has been
a distraction people look at it.

If I was going to include household
size of ever write my book on it and

have a chapter on household size.

There's one interesting paradox is
that through the entire post-war

period the sizes of houses have been
growing in the one nine hundred forty S.

the average house was like I think
under a thousand square feet and

then the fifty's is twelve hundred and
then they go to four hundred and

they get to twenty six hundred square feet
on average and the whole time the rising.

Household size has fallen these after nine
hundred seventy puzzle size was falling

and so the paradox was why is the average
house in America getting bigger and

bigger and the average household
size again smaller and smaller

as a paradise in the explanation is that
because different age groups are doing

different things that really that doesn't
the average isn't tell you anything.

And another explanation I always
say is children don't buy houses.

It's adults and buy houses and they
might buy them with the kids in mind but

these days people buying big houses four
bedrooms and there's only two people in

the couple why they doing it a serious

explanation is that I think there's a
cultural value we established as a bigger

houses were better but the cultural
value was rooted in the demographic

trends of the one hundred fifty S.
and sixty's will be we thought that.

Each newer wave of housing was bigger and

we just associated bigger housing with
better Quality Inn and more modern and

we kept that value even when it
wasn't supported by any needs.

And now.

The homebuilders are turning around and

they're experimenting with really
small houses again for the first time.

I mean large sized houses.

Well yeah.

Right now.

Well.

I believe you.

Well I mean your your argument
supports my larger point which is that

all the growth is that older ages and what
have those people want they can afford and

they may still want that I was
my point about the home builders

shifting to small that they wouldn't
build anything small but can be homes.

I talked to the head of Katie Holmes and

he told me who's really
proud of who we're doing.

Now and that was like two years ago and
that may have been a successful.

And he may be the only one
doing it doesn't California.

Yeah they're desperately
trying everything but

how the household size is a distraction.

It doesn't actually seem to correlate and

it's not the driver the driver is
more just strictly age and as effort

simplification but obviously as more
than age involves many many things but.

Yeah OK All right.

All right.

So you hold

your goal when you know

there's a time where
you're going to move over.

You know so so they had a backlog
of unmet demand to begin with and

then this is going to play out.

That this surge should be
over in about ten years but

you but
you basically are building the city and

whatever's built will last hopefully for
eighty years or so.

So it's a moment in which you remake
a city using the current demand

in the current fuel that's available and
you tap into it.

So it's usually so they're there
to try to make money off it but

designers can be making
a city working with

developers or

years or

thirty

years or right

or for

us

or

me whole.

Well that's pretty extreme.

I mean you could advocate but

you want people to dismiss you after
all we voters the majority by far.

Homeowners and
we will kill you but but I think

there's a reasonable case for capping
these tax incentives it's ridiculous.

It's open ended and I think I think buying
a home is still a valuable thing for

for the government to encourage but you
want to encourage people of their starter

home or encourage them at a modest level
not encourage them beyond a million and

two million dollars You know that if you
want to spend that they can do it on

their own dime and I think you can sell
that in today's climate and you're right

about rolling over capital gains exemption
as you know in California we actually do

that for a sport you live in a house until
you've got half a million appreciation and

you by the way I've bought three
houses in the last fifteen years and

then I don't know I never thought about
it as being the reason why I moved but

surely it must be part of what I'm
in that's really not necessary.

Right.
I mean what is couple gains is that

fifteen percent tax.

I could probably afford that.

Yeah yeah I want to vegetate regular tax
rates I mean you're not taking money.

We've over overprivileged it.

No question and
in fiscal environment like this you can.

Now's the time is ripe to trim things back
but if you go for the whole enchilada.

They'll reject you.

Yeah yeah yeah yeah.

And that and I know real estate economists
who are public mind support you in that

but that is not traction.

Politically it's amazing how slow
people are to wake up to reality and

you know we're in a fiscal crisis and

where you can spend your money
on you should spend your money.

All I would say all the tax savings you
get out of the home sales stuff I would

turn it around plug right back
into education because every every

every every college educated Latino
pays a sixty four percent higher

price than a high school educated Latino
when you come knocking on your door and so

you plowed back into home buyers and
I think you can keep it that way.

Keep it in the housing sphere and it but
transferred across generations you could

make an argument for
that it might sell that way they

have to sell what they have to sell so
you have to help them sell.

So we're going to take your money and

give it to the younger kid that
way you can help you sell.

That's not that's my pitch.

I

say

yeah.

All

good question.

Well.

So immigrants do desire home ownership in
home ownership is easier to find with lots

of small like one nine hundred fifty S.
and sixty's houses and so in California.

Those are the suburbs that were
moved into by Chinese Taiwanese

home buyers and
the first suburban Chinatown

in Monterey Park was a close in suburb and
then they moved in they moved outward but

in an odd way they leapfrog over
to better school districts.

Those are big magnets for
Asian immigrants and

so they leapfrog to the better school
districts and even paid higher price for

those districts and
kept moving outward in a quarter so that

moving in a ring around all the suburbs
are moving in pockets and corridors.

So if you don't have a lot of immigrants
you can't fill up your suburbs but

in California we do have a lot and
so we are in

the process of filling up to
a large degree that everybody under

age forty five could be either
of Mexican origin or Indian.

In origin or a Chinese but
in different communities.

So I think that that's our movement is
been true of African-Americans as well.

Everybody goes outward because ours is
a direction towards newer newer and better

and lower density traditionally and then
the question is how far out do you go.

Do you.
I mean the far out suburbs are really

a long way out and even there there are
there is they call it the eastern district

the Chinese do in L.A.

County it's it's it's a whole leapfrog
way out to the into the county.

I don't mean Ben they're so far out but

there's a whole eastern
district that's been populated.

So I think that they're not going to come
into the say the city is being reclaimed

by kind of whites.

White young people or have rediscovered
a love for the central city and

that's an interesting twist.

So the so
the upshot of all this is that metro areas

are becoming more integrated
in a broad sense.

Traditionally we had an inner
city that was more minority and

in the suburbs were all white.

Well that's not true.

More now it's more of a permutation
both ways with different age groups and

different races living in different places
and still somewhat segregated at the local

level but
not as grossly segregated as before and

that's interesting and
it will continue as a dynamic.

I haven't

seen it

was

like.

It was very culturally different.

Well preference.

Well to a large area but
when you have newcomers coming in that

they come with their cultural preferences
from their homeland and they do buy homes.

You know within ten years before
they've had time to converge

and one thing is different about Asian
immigrants in particular is that they live

in larger groups of where their
kids live with the parents and so

that that supports demand for these larger
houses that would otherwise evaporate so

they're especially important for
large houses Asians seem to also

like newer houses probably whether
moving so far out and I say.

Like I've never asked them that question
but I look at the age of housing and

they're disproportionately
concentrated in newer housing.

So they're

going to be living in
the excerpts of Washington D.C.

They're going to be living well but
there's not enough of them.

Philip suburbs.

So support some of the some pockets

that survive yeah you know other pockets
that will you know they have smaller

houses will will not because my
house will bring poor people and

Asians are very status conscious as
as I guess everybody else is too but

especially their status conscious but when
you go to the better school districts and

so that has poor people
living there that they won't.

They'll turn off that market.

Completely.

Much more opportunistic and they'll take
whatever affordable housing they can find

wherever it is they fill in all
the interstitial everywhere

because there's much bigger and
that but they move up.

So there's a portion who move up
to more middle class housing but

the poor people are buying houses
to which is what so astounding.

Because they're so poor but

they're buying really the bottom houses
and there's no advantage in California.

Nothing no benefit and
that's good news so.

So there's that convergence I've
nothing to say about Asians it's

really interesting demographic
twist that you know that in reality

the African-American homeownership rate
is higher than Asian homeownership rate

in reality appears in the data that
Asians have higher homeownership.

But as I tell my students.

It's because Asians cheat and
the reason they cheat.

Is that the young people live at home
with the parents until they're ready to

buy a house as opposed to going
out into the apartment market.

They want the apartment market their
homeownership rate would be lower and so

they stayed home and also reckons
they become a homeowner overnight.

Whereas African-Americans are out of
the house right away and renting and

so that keeps their
homeownership rate lower but

in terms of number of homeowners per
thousand people actually African-Americans

can be in some circumstances which I
think is an interesting little curiosity

and all humor because it has it really
is a way that I think everybody

should sheet the system the same way but
that would reduce our rental demand and

raise everybody's homeownership rate.