Jonathan H. Todd

Finance, Investing, Economics

Category: Urban Policy and Urbanism

On Real Estate Finance: How Pension Plan Investments Make Savers Choose Between Today and Tomorrow

Pensions are big providers of real estate finance. But what happens when portfolio managers must choose between returns and beneficiaries livelihoods?

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Rent Regulation and the Travails of the New York Real Estate Developer (And I Don’t Mean Donald Trump)

Rent regulation and restrictive building policies have long been two qualities of New York real estate. But if you eliminate one, you can eliminate both.

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Vancouver Housing Is More Affordable Than You Think – As Long As You Don’t Mind Renting

Vancouver is one of the most expensive cities in the world to buy a home. But that doesn’t put living there out of reach for many potential residents.

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Calling A Private Equity Manager To Fix A Leaky Pipe: How Financialization Is Skewing The Housing Market

The financialization of real estate have been a winner for investors, but what does it mean for the long-term health of the economy?
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Why Cities Are The Solution To The Populist Wave

Simon Kuper wrote an excellent commentary this weekend on why journalists need to get out of their city bubbles and talk to real citizens who represent more typical life experiences. As he notes, “Today, most remaining journalists live in metropolitan enclaves such as Brooklyn, north London and central Paris, and look like the elites they cover.” It’s difficult to understand how a voter in Iowa feels if you live/work/play all within two miles of Fort Greene.

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Income Inequality in Manhattan: Which Neighborhoods Have the Biggest Income Gaps?

Income inequality is one of the biggest topics in economic and political discourse, and New York is often viewed as the poster child of inequality. Billionaire towers and private helicopter service to the Hamptons are only a few of the examples used to  describe New York’s tale of two cities.

While overall Manhattan is an incredibly unequal place, what are the most unequal neighborhoods? Using the same American Community Survey data, I have mapped 278 Manhattan Census Tracts to determine where the biggest income gaps exist, by comparing median incomes to mean incomes. The higher the ratio of mean incomes to median incomes, the more unequal the neighborhood.

For example, in the Upper West Side, between 97th and 100th, and Amsterdam Avenue to Central Park, median incomes are $94,297, while mean incomes are $123,864. From these numbers, I’ve created an Inequality Ratio. In this case, the ratio is 1.31 ($123,864/$94,297).

This ratio of 1.31 is relatively low, compared to other parts of Manhattan. The median ratio across 278 Manhattan neighborhoods is 1.56, while the maximum ratio is 2.78. That is, in the area around Sara D. Roosevelt Park in the Lower East Side, the mean income ($112,361) is 2.78 times the area’s median income ($40,433).

This is perhaps the most striking fact – unequal distributions of incomes affect the very highest and some of the very lowest incomes. This Lower East Side neighborhood’s median income of $40,433, for example, is well below the median of all median incomes, across all neighborhoods ($79,257).

The problem isn’t just “the 1% vs. the 99%,” it’s also equally impactful at the bottom of the income scale. Among the 70 most unequal neighborhoods (the top quartile of Manhattan inequality), 25 have median incomes that are in the highest quartile, and 22 have median incomes in the lowest quartile. This means that a full two-thirds of the worst inequality in Manhattan affects those at the extreme ends of the income spectrum.

Millionaire’s Row (but add a zero)

Many of the most unequal neighborhoods have relatively high incomes; for example, the Upper East Side, along Central Park, has some of the most unequal neighborhoods in the entire city.

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In the area between 84th and 86th, and Central Park and Park Avenue, the mean income of $348,901 is 2.65x the median income of $131,484.

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The neighborhood at the southeast corner of Central Park has a mean income of $366,814, or 2.44x the median income of $150,125 (fun fact: this area includes Trump Tower).

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This trend could reflect the phenomenon that Emmanuel Saez and Gabriel Zucman described in their recent paper, “Wealth Inequality in the United States since 1913,” of not only a growing divergence between the top 1% from the top 10%, but of the top 0.1% from the top 1%. Even in the wealthiest Manhattan neighborhoods, where families at the median income would be firmly established in the top 1%, those at the very top 0.1% are leaving everyone else behind.

Tale of Two Cities

Some of the most interesting parts of Manhattan are neighboring pockets of extreme inequality, but on opposite sides of the income scale.

Some of the most glaring examples of income inequality in Manhattan are at the very southern tip of the island. For example, Tribeca and the Lower East Side have some of the most unequal income distributions in Manhattan, and are at the opposite ends in terms of income. For example, one Tribeca neighborhood’s median income of $202,153 is more than 13x the median income of $15,652 in one Lower East Side neighborhood.

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Manhattan is surely not representative of the rest of the country, as income inequality has been growing in most American cities in recent years. The island does, however, provide a clear and telling example of the divergence between rich and poor, and between the rich and the super-rich.

How Will Urban Policy Affect Emerging Market Economic Convergence?

Urban policy is essential to future emerging market growth, forced by a shift toward city-based knowledge industries and services, away from manufacturing.

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