A "Back to the Future" Solution for a "Back to the Future" Need

Years ago, people lived in multifamily houses in dense urban neighborhoods and used sidewalks and streetcars to go to back and forth to work places, factories, offices, stores, schools, churches, etc. But these urban neighborhoods eventually gave way to new single-family homes in rapidly expanding suburbs where new roads and highways made it easy for people to drive to new shopping centers, movie theaters, and workplaces in more remote places.  Well, housing researchers suggest that urban-style "back to the future" is back in vogue, but the supply of such housing is limited, writes Atlantic's Christopher Leinberger in 2010.

Stan Humphries, the chief economist for Zillow, an online housing research firm, saw that metropolitan area declines in housing values masked local differences when he plotted these trends on satellite maps. Looking at the Washington DC metro area, Humphries saw that "in densely built inner suburbs like Arlington, Virginia, and in the walkable urban neighborhoods in the District of Columbia, prices typically dropped about 20%. Housing on the suburban fringe, on the other hand, lost about half its value."

Humphries' analysis suggests a pent-up demand for walkable, urban-style housing. But creating such housing requires a big investment in new bus and rail systems. Who's going to pay for this very costly infrastructure? In the old days, "real estate developers, sometimes aided by electric utilities, not only built the [rail] system but paid rent to cities for the rights-of-way," Christopher Leinberger wrote.

Are developers going to foot the bill for rail systems as they did in the old days? Leinberger doesn't really say, but Connecticut, on a project-by-project basis, has allowed developers to fund housing infrastructure by creating special taxing districts authorized to issue government bonds backed by future property taxes. Leinberger thinks residents in existing neighborhoods might be willing to pay extra property taxes for the infrastructure because it would boost property values.