Housing Prices: A Downside to Global Cities

CHICAGO—Over 50% of the world's population lives in cities, and experts predict that this percentage will increase to about 66% by 2050. This and many other challenges were addressed by urban planners, corporate executives, and non-profit leaders at this week's inaugural Chicago Forum on Global Cities, hosted by The Chicago Council on Global Affairs and the Financial Times. And yesterday afternoon, at a panel on urban infrastructure, a group of experts grappled with how the world's increased urbanization would affect housing prices, livability, aging infrastructure, transportation and many other issues.

Moderator Simon Kuper of the Financial Times pointed out that although global cities were successful in attracting new residents, most were also experiencing steep increases in the price of housing, and asked the panelists what could be done.

“Most people don't think of housing as infrastructure,” replied Henry Cisneros, the former secretary of the US Dept. of Housing and Development and current chairman of CityView, a Los Angeles-based real estate developer and investment management firm. “When they think of infrastructure, they think of roads, water systems and power systems.” However, “we need to think about housing as infrastructure; great cities need a mix of housing types so that people of different incomes can live near each other and, very importantly, live near the places that workers are needed.”

The failure to do so sometimes becomes apparent “when there is an emergency and it's not possible for workers to get in and do their jobs.” For example, Cisneros said that there was a series of bad rainstorms in Seattle a few years ago that knocked down numerous trees and power lines, but the only places that most power workers could afford were outside the high-cost urban core. As a result, “the city was paralyzed for several days as it took the workers that length of time to get in, report to work and get the work done.”

“Employers require workers near the core,” he added. Some global cities have made extraordinary progress in building up the type of housing infrastructure needed. “I'm very impressed, for example, with the work in New York City," where developers can get incentives and concessions from the city as long as they agree to keep 20% of their new units low-cost. "Mayor Bloomberg, and now Mayor DeBlasio, have set very clear goals of tens of thousands of units, hundreds of thousands units cumulatively, of affordable housing.”

“I'm very excited about this time for cities,” Cisneros concluded. “I think we are actually living through a moment of renaissance in cities globally, and certainly the major gateway cities in the US,” but the escalating housing prices and the impact that has had on workers and even the middle classes presents a challenge. “We need to be attentive to that downside.”