NewGeography.com blogs

A few days ago BusinessWeek released a list of the top 40 metropolitan economies based on data compiled at the Brookings Institution's Metromonitor project. But, as many old media sites tend to do, they've locked the list behind a slow-loading slide show in a cheap attempt to drum up page views. Many of the commenters to the original article couldn't even find the list.

So, in the interest of usability, here's the top 40 in boring list format:

Trends? Looks like energy economies, state capitals, university-heavy towns, generally affordable regions that avoided the housing boom, and a few old industrial centers that suffered the brunt of decline 25 years ago and now may be positioned for an up-swing.

Here's an explanation of the list methodology:

The Brookings Institution ranked the 100 largest metros by averaging the ranks for four key indicators: employment change, unemployment change, gross metropolitan product, and home price change. Employment was measured by the change from the peak quarter for each metro to the second quarter of 2009. The peak was the quarter in which the metro had the most jobs during the past five years. Unemployment was ranked by measuring the percentage-point change from the first quarter of 2009 to the second quarter of 2009. Gross metropolitan product was measured from the peak quarter to the second quarter of 2009. And the ranking of home prices compared the second quarter of 2009 to the previous quarter. The employment data were provided by Moody's Economy.com, the unemployment data were collected from the U.S. Bureau of Labor Statistics, and the home price index came from the Federal Housing Finance Agency.

Source: The Brookings Institution's MetroMonitor

The Empire Center for New State Policy has released “Empire State Exodus,” which details New York’s continuing loss of people and their incomes to other states. The report was authored by E. J. McMahon, senior fellow with the Manhattan Institute and director of the Empire Center and me.

Since the beginning of the decade, New York has experienced a net domestic migration loss of more than 1,500,000, the largest loss in the nation. The extent of this loss is illustrated by the fact that Katrina/Rita/defective dike ravaged Louisiana lost a smaller share of its population than New York, which also led in relative terms.

The report uses the latest Census Bureau and Internal Revenue Service (IRS) data to examine how many New Yorkers have left the state, where they have gone and how much income they have taken with them. It includes detailed breakdowns of population migration patterns at a regional and county level.

More than 85% of the domestic migration loss was from the New York City region (combined statistical area) of New York State and more than 70% of the loss was from New York City itself. The data shows a continuing exodus from the city, to the suburbs and to elsewhere in the nation.

The annual net loss of New Yorkers to other states has ranged from a high of nearly 250,000 people in 2005 to a low of 126,000 last year, when moves nationwide slowed down sharply along with the economy.

Households moving out of New York State had average incomes 13 percent higher than those moving into New York during the most recent year for which such data are available. In 2006-07 alone, the migration flow out of New York drained $4.3 billion in taxpayer income from the state. New York taxpayers moving to other states had average incomes of $57,144, while those
moving into New York averaged $50,533 as of 2007, according to the report.

“Even with its large domestic migration losses, New York’s total population has grown slightly since 2000, thanks to a large influx of immigrants from foreign countries,” the report says. “But New York’s share of U.S. population is still shrinking. A continuation of the domestic migration trends highlighted here will translate into slower economic growth and diminishing political influence in the future.”

The report is available at EmpireCenter.org.

It has been a bad media week for New Urbanism.

“The day that New Urbanism Died?” was the headline of the St. Louis Urban Workshop blog that detailed the Chapter 11 bankruptcy of Whittaker Builders, developer of the “New Town at St. Charles,” a premier New Urbanist community located in the St. Louis exurbs (beyond the suburbs).

The author notes that “New Town will not disappear, plenty of people are happy to live there, but its promise is gone. It's become just another suburban enclave and will face the same challenges as other suburban developments; lack of retail, long commutes, etc.” The blog’s headline is a play on a characterization by postmodern architect Charles Jenks, who referred to the demolition of the infamous Pruitt-Igoe public housing project as “The Day Modern Architecture Died.”

The Northwest Indiana Times detailed the failure of a new urbanist community (Coffee Creek) in an October 23 article. The article noted that the planned 2,000 home mixed use development, located in the exurbs 45 miles from Chicago’s Loop had attracted only 12 homes and an apartment building. Much of the empty land has been purchased by another developer, who indicated an affection for the new urbanism concept, noting however that it probably would not work here. The article notes that a more modest New Urbanist development is doing better, in nearby Burns Harbor, with 75 homes occupied out of a planned 300.

Perhaps the unkindest cut of all was a survey, reported by the Oregonian, to the effect that residents of Orenco Station travel by car to work nearly as much as people who live in the unremarkably conventional and sprawling suburbs of Portland.

Despite these unhappy stories, the death of New Urbanism is not imminent. True, to the extent that New Urbanism requires subsidies it is likely to prove unsustainable in the longer term, like its Pruitt-Igoe type predecessors. On the other hand, to the extent that New Urbanism represents a genuine response of architects, builders and developers to actual, rather than imagined demand, New Urbanism could be with us for some time to come.

Coming soon to a market near you: a bust in commercial real estate that will make the subprime mortgage crisis look like a picnic. The other shoe drops in 2010.

Federal Deposit Insurance Corporation Chairman Sheila Bair told a Senate committee on October 14 that commercial real estate loan losses between now and the end of 2010 pose the most significant risk to U.S. financial institutions. Although you can’t read it online, on October 7, 2009 Wall Street Journal reporters Lingling Wei and Maurice Tamman (Eastern edition, pg. C.1, Fed Frets About Commercial Real Estate) reported on a presentation prepared by an Atlanta Fed real-estate expert who is worried “about the banking industry's commercial real-estate exposure.”

Since July, the Federal Reserve has been pumping billions of dollars into commercial-mortgage-backed securities (CMBS, same things as the residential-MBS I’ve written about before in this space, only for shopping malls instead of houses). To accomplish this, the Fed uses the Term Asset-Backed Securities Loan Facility or TALF program. It is one of several alphabet-soup programs the Fed is using to pass a couple of trillion dollars to the stock market through private corporations (not just regulated banking institutions). For example, between March and July 2009, Harley-Davidson Inc. and other non-banks raised $65 billion in sales of bonds backed by everything from motorcycle loans to credit card debt. The Fed made $35 billion in TALF loans to investors buying those securities, which sparked a market rally. That market rally, however, is not in the commercial real estate market – it’s in the securities market. Since its inception, TALF has put between $2 billion and $11 billion per month into the securities market.

TALF lends money to anyone willing to buy CMBS (or student loans, car loans, etc.). The Fed reasons that, as long as banks can move loans off their books by repackaging and selling them as bonds, they will make more loans. So they justify giving money to non-banks to buy the bonds because the money will go to the banks. Get it?

Unfortunately, as vacancy rates rise, banks are increasingly reluctant to make new commercial real estate loans. This is obviously the case since Office of Thrift Supervision deputy director Timothy Ward told Congress this week that they will be issuing guidelines on doing loan workouts. A loan work out is what industry experts call “extend and pretend” – extend the terms and pretend like they are paying you. CRE loans, furthermore, are shorter in duration than home mortgages – typically 5 years instead of 30 years. That means a lot of loans will be coming due before the economy picks up enough to fill all those offices with rent-paying businesses. The value of commercial mortgages at least 60 days behind on payments jumped sevenfold in September – to $22.4 billion – or almost 4 percent of all commercial mortgages repackaged and sold as bonds. That’s about the same as the 90 day past-due rate seen for all residential mortgages (including those not sold off by the banks) in the first quarter of 2009.

As of October 14, 2009, the TALF balance is $43.2 billion and growing. From what we are hearing now, it may not be enough.

Climate change threatens popcorn prices, air planes, and outdoor hockey. And, in the latest tax-payer funded advertising from the UK, climate change will tell you bedtime stories of a drowning dog and the coming apocalypse:

From the Register, Britons spent £6 million in public funds for an ad campaign which Nature simply calls the Worst. Climate. Campaign. Ever. The advertisement depicts a father and daughter sharing in a bedtime story describing "a land where the weather was very, very strange." It continues with a sophomoric overview of the causes of climate change, and describes the consequences in a cartoonish overture. The Times reports that "the advertisement attempts to make adults feel guilty about their legacy to their children."

With all their various predictions of the Earth's demise – 100 months? 96 months? Four months? – and tons of carbon spent hauling scientists and politicians to climate change conferences all around the world – climate change campaigners still have the time to make us feel guilty for trying to make a modest living – all at the expense of the already deeply in debt UK taxpayers.

Is this movie about to get played on televisions here in the USA? After all, we have plenty of money to spend on propaganda here as well.