Sprawl Isn’t A Dirty Word

The term "urban sprawl" remains a powerful and evocative term, often used to criticize suburban development patterns and advocate for more compact, urban forms.

The negative perception of "urban sprawl" is also fueled by its association with “unsustainable” development practices. Advocates believe it represents a departure from “traditional” urban forms that prioritize density, walkability, and mixed-use development.

The term "urban sprawl" has become synonymous with a range of negative outcomes making it a powerful tool for critics of suburban development patterns and a rallying cry for those advocating for more compact, urban growth.

But should “sprawl” be considered a dirty word as we face an affordability crisis in the United States and the Bay Area in particular?

The City of San Jose’s may be a poster child of the negative consequences of “urban sprawl” in planning circles, but it deserves a deeper examination.

A.P “Dutch” Hamann's was the architect of San Jose's rise to prominence. His policies have been vilified by many, but his legacy in San Jose is undeniable. He played a pivotal role in transforming the city and driving its economic growth.? Hamann's policies led to significant suburban expansion. This expansion made San Jose more affordable for many people, attracted the best and brightest from around world, preserved a high quality of life for its residents and drove Silicon Valley’s historic rise.

Background

The term "urban sprawl" has its roots in the post-World War II era, emerging in the late 1940s and early 1950s. It was initially used to describe the rapid expansion of suburbs surrounding cities, often characterized by low-density development, single-use zoning, and dependence on automobiles. ?

While the exact origin of the term is unclear, some sources attribute its first use to Earle Draper, a prominent city planner, in 1937. However, it gained wider recognition and usage after World War II, coinciding with the GI bill and suburban boom. ?

The term "sprawl" was specifically chosen to convey an uncontrolled and haphazard nature of outward growth, contrasting it with the more planned and compact development of cities. It carried negative connotations from the start, implying inefficiency, environmental degradation, and a decline in community life. ? Over time, "urban sprawl" has been largely disparaged in urban planning and environmental circles. However, there’s another side of the story that is less familiar and needs to be told.

A Different Perspective

Joel Kotkin is a leading voice and strong advocate for suburban development or “urban sprawl” and argues that it reflects people's preferences and aspirations, rather than a problem to be solved. He views attempts to curb suburban growth and force densification as elitist and out of touch with the needs of the majority, particularly families and the middle class.

Kotkin argues that the popularity of suburbs, particularly single-family homes, demonstrates a genuine desire for space, privacy, and a family-friendly environment. He believes that people vote with their feet, and the growth of suburbs is a clear indication of what they value. He emphasizes that suburbs are generally better suited for raising children due to larger homes, yards, better schools, and safer environments.

Kotkin believes suburbs are not static but constantly evolving, becoming more diverse and incorporating elements of urban living (e.g., mixed-use developments, town centers) as the evolve. While suburbs were once seen as lacking in amenities, many now offer a wide range of shopping, dining, and entertainment options, often within proximity to residential areas

He sees suburbs as crucial for economic growth, providing jobs, housing, and opportunities for a better quality of life. Kotkin has pointed out in various articles that many job gains in recent decades have been in suburban areas, particularly in sectors like professional and business services, logistics, and manufacturing. He often contrasts this with the narrative that cities are the sole engines of economic growth as espoused by city-centric thinkers like Richard Florida, Jane Jacobs and Edward Glaeser.

Kotkin views homeownership in the suburbs as a crucial pathway for upward mobility, particularly for minorities and immigrants. This stark difference in net worth between owners and renters highlights the wealth-building potential of homeownership even after controlling for factors like income and education. The data consistently shows that home equity constitutes a significant portion of household wealth, especially for middle-income families. This demonstrates how homeownership can be a primary driver of wealth accumulation lifting people out of poverty.

Homeownership is also associated with greater residential stability and can positively impact educational outcomes. Frequent moves, more common among renters, can disrupt schooling and negatively affect academic performance. Research has found a correlation between homeownership and higher levels of educational attainment, as well as better health outcomes and lower crime rates in neighborhoods with higher rates of homeownership. Children of homeowners are also more likely to graduate college than children of comparable renters.

Housing affordability is a major factor contributing to the appeal of suburban living and a key driver of suburban development. Published in December 2023, "The Future of U.S. Suburbs: Growing into Change" shows that for all the largest U.S. metropolitan areas, it is more affordable to buy a house in the suburbs than in a principal city. In New York, the median multiple in the principal city is 9.1, while in the suburbs it is only 5.3. In Los Angeles, the median multiple in the principal city is 9.8, while in the suburbs it is 6.7.

Here's a breakdown of how various factors contribute to lower housing costs and higher affordability rates in suburban environments compared to urban areas:

• Land availability: Suburbs typically have more available land for development, which drives down land prices compared to the limited and often highly sought-after land in urban cores.
• Lower construction costs: Building in suburban areas can be less expensive due to fewer regulatory hurdles, easier access to construction materials, less complex building typologies, lower construction risk and less expensive construction financing.
• Housing types: Suburbs tend to offer a wider range of housing types, including single-family homes, townhouses, and smaller apartment complexes, providing more options at different price points.

These factors combine to make suburban housing more attainable for many individuals and families in suburban areas, especially those seeking a diverse range of housing options. It's important to acknowledge that this affordability gap is contributing to social and economic inequalities. As housing costs rise in urban centers, lower-income residents are being pushed out to more affordable suburban areas.? Expanding suburban areas is crucial for creating equitable and sustainable communities.

However, despite the preponderance of evidence supporting suburban development and its benefits, there are many forces at work rallying against suburban development. One of the best examples of the forces at work is the story of Dutch Hamann and the City of San Jose from the 1950s until today.

Dutch and the Rise of Silicon Valley

A.P. "Dutch" Hamann served as San Jose's City Manager from 1950 to 1969, and his policies dramatically reshaped the city. He was a key figure in transforming San Jose from a small agricultural center into a sprawling suburban metropolis.

Dutch Hamann's legacy in San Jose is undeniable. He played a pivotal role in transforming the city and driving its economic growth.? Hamann's policies led to significant suburban expansion and this growth made San Jose more affordable for many people.

Hamann aggressively annexed surrounding land, expanding San Jose's boundaries and incorporating new suburban developments significantly increased the city's size and population. ?San Jose's population exploded under Hamann, growing from around 100,000 in 1950 to nearly 500,000 by 1970. This rapid growth transformed the city's demographics and character. The abundance of land in the newly annexed areas meant lower land prices compared to the existing city center. This translated to lower construction costs and ultimately, more affordable homes for buyers.

He encouraged large-scale residential development, facilitating the construction of vast tracts of single-family homes in suburban neighborhoods. He prioritized infrastructure to support suburban growth, focusing on roads, highways, and utilities to connect new developments to the city center. By annexing land and encouraging large-scale residential development, Hamann dramatically increased the supply of housing in San Jose. This influx of new homes, particularly single-family homes in the suburbs, helped to moderate housing costs, making them more accessible to a wider range of people. The rapid growth and economic expansion under Hamann attracted new residents to San Jose, many of whom were seeking affordable housing options. This influx of people further fueled demand for suburban homes, but the increased supply helped to keep prices in check.

The migration of highly educated workers to Silicon Valley from the 1960s to today is a major factor in the region's remarkable growth and its status as a global center for technology and innovation. The 1960s and 1970s saw a steady flow of engineers, scientists, and researchers, many with advanced degrees, migrating to Silicon Valley. They were attracted by job opportunities in the nascent semiconductor industry, defense-related work, and the growing entrepreneurial ecosystem. Compared to established urban centers, land in San Jose was also relatively inexpensive. This allowed developers to build and sell homes at prices that were within reach of middle-class families, including the growing number of engineers and scientists moving to the area.

Affordable housing gave the nascent Silicon Valley a competitive advantage in attracting talent. Companies could recruit engineers and scientists from other parts of the country, promising not just good jobs but also an attainable high quality of life. Lower housing costs meant that workers had more disposable income, which could be invested in further education, entrepreneurial ventures, or simply enjoying the California lifestyle. This contributed to a more vibrant and dynamic local economy. The ability of early tech pioneers to easily find housing and establish roots in the area laid the foundation for the long-term growth and development of Silicon Valley.

Hamann also fostered a business-friendly climate to attract industries and create jobs, leading to the growth of industrial parks and office complexes. ?San Jose's economy diversified and expanded beyond agriculture, with new industries and businesses driving job creation and economic prosperity. ?San Jose's economic growth from 1950 to today is a remarkable story of transformation from an agricultural center to the "Capital of Silicon Valley," a global hub of technology and innovation.

The 1970s witnessed the explosive growth of the semiconductor industry. Companies like Intel (founded in Mountain View in 1968), National Semiconductor, and Advanced Micro Devices (AMD) established themselves in the area. San Jose became a major center for chip manufacturing and design. The Santa Clara Valley was now being referred to as "Silicon Valley."

The development of the personal computer in the late 1970s and early 1980s further fueled the region's growth. Companies like Apple (founded in Cupertino in 1976) and numerous other hardware and software companies emerged, creating a vibrant tech ecosystem.

The rise of the venture capital industry on Sand Hill Road in Menlo Park provided crucial funding for startups, accelerating innovation and growth. ?However, access to human capital was and is the lifeblood of Silicon Valley today. Stanford University, under the leadership of Frederick Terman, actively encouraged the development of a local electronics industry. Terman's efforts to foster collaboration between academia and industry were instrumental in creating the ecosystem and supplying the human capital that made Silicon Valley possible.

While semiconductors and computers were the main drivers, the tech industry began to diversify into areas like networking, software, and peripherals. The late 1990s saw the rapid rise of internet-based companies, further boosting San Jose's economy. The subsequent dot-com crash in the early 2000s caused a temporary slowdown but ultimately demonstrated the resilience of the tech industry.

The mid-2000s witnessed the rebirth of Silicon Vally and the rise of social media giants like Google, Facebook, and many others. The growth of cloud computing and mobile technologies created new opportunities for companies in the region. Today, the tech industry continues to diversify into areas like artificial intelligence (AI), biotechnology, clean tech, and autonomous vehicles.

The Shift

Despite all its success over the last 5 decades, San Jose's growth and prosperity initiated under Hamann isn’t without its critics---even today. Critics point to increased traffic, environmental impacts, a loss of its agricultural heritage and long-term affordability challenges. However, generations of San Jose residents have benefitted from Hamann’s visionary leadership. San Jose remains one of the richest cities in the United States with unlimited opportunity and an unparalleled quality of life because of him.

As the tech industry took off in the 1970s and beyond, the influx of highly paid workers began to outpace the supply of new housing. Environmental concerns and a growing desire to preserve open space led to poor land-use decisions, stricter land-use regulations and limits on new development. These artificial constrains restricted the supply of housing and contributed to rising prices. By the 1980s, and certainly by the 1990s and 2000s, the affordability that had characterized the region in earlier decades had largely disappeared, replaced by the extremely high housing costs that define the area today.

It's important to remember that the narrative of Silicon Valley's rise often focuses on the later periods of rapid growth and wealth creation. Acknowledging the role of market-driven affordable housing in the early decades provides a more complete and nuanced understanding of the region's history. The story of Silicon Valley's early affordability offers valuable lessons for other regions seeking to attract and retain talent. A balanced approach to growth that prioritizes housing affordability alongside environmental protection and economic development is crucial for long-term sustainability and the financial security of residents.

Janet Gray Hayes served as Mayor from 1975-1983 and was a pivotal figure in shaping the city's development and is particularly remembered for her anti-sprawl policies. She came to power during the period of rapid growth that started shortly before Dutch Hamann’s death in 1977 in the largest air disaster in US history. Hayes became an alarmist increasing concern about the environmental and social consequences of unchecked suburban expansion. Her policies countered Hamann’s expansion and left a lasting impact on San Jose's urban form and the future meteoric rise in housing prices.

Hayes' most significant achievement was the strengthening and enforcement of the city's Urban Service Area (USA) and the establishment of the Greenline, a boundary beyond which urban development was severely restricted. The intent was to curb urban sprawl, preserve agricultural land and open space, and encourage denser development within existing urbanized areas. While effective in preserving open space, these policies, by definition, restricted the outward expansion of the city.

By the mid-2000s, home prices in San Jose were already out of reach for most residents. Chuck Reed who served as Mayor from 2007-2104. While he focused on fiscal responsibility and pension reform, his land use policies, combined with the aftermath of the Great Recession, contributed to constraints on housing supply and exacerbated affordability challenges.

Reed took office during the onset of the Great Recession which severely impacted San Jose's budget and the national housing market. Tax revenues plummeted, and the city faced significant budget deficits. Reed's top priority was addressing the city's budget deficit and unfunded pension liabilities. He believed that these issues were the biggest threats to San Jose's long-term financial health.

Cuts to the planning department and other city agencies likely slowed down the processing of development permits and approvals for new housing projects. This, combined with the economic downturn, contributed to a slowdown in housing construction during the early years of his tenure.? While Reed generally supported denser development in downtown and transit, his administration did not take major steps to significantly increase the overall supply of housing.

In fact, his land use policies were arguably even more detrimental to San Jose’s housing supply than Janet Grey Hayes. Without development on the periphery, the City would need to rezone underutilized property within city limits. Reed’s "no employment land conversion" policy, also known as the "industrial land protection" policy, was adopted in 2009. Its primary goal was to preserve land designated for industrial and commercial uses (employment lands) from being rezoned for residential development. By prohibiting the conversion of employment lands to residential use, the policy further limited the already scarce supply of land available for housing development in San Jose.

While intended to protect jobs, the policy, in practice, exacerbated the jobs-housing imbalance by making it even harder to build housing in a city that was rapidly adding jobs, particularly in the tech sector. With employment lands off-limits for housing, the pressure to build more densely in existing residential areas intensified, leading to more community opposition and political challenges. The policy also hindered the creation of mixed-use developments, where housing, jobs, and retail could be located in close proximity, a model often promoted by "smart growth" advocates.

Unfortunately, no San Jose Mayor, City Councilmember or City Manager since Dutch Hamann has made a concerted focus on increasing housing supply in San Jose. “Smart growth” advocates have pushed policies to promote development in San Jose downtown and urban villages, but the polices have failed due to the high land prices and construction costs. Today’s housing affordability stands in stark contrast to the wonder years produced by Dutch Hamann’s vision. San Jose's housing market is considered one of the least affordable in the United States. In December 2024, the median home price was $1.59 million compared to the national average of $400,000.?

The Threat

Housing prices are now a major threat to the region’s economic security and the risks are rising. Christopher Thornberg recently co-authored an article titled "Thornberg: Silicon Valley, Bay Area status as nation's tech center at risk" for the Orange County Register. In this article, he and his co-author, Jordan Levine, argue that the Bay Area's status as the nation's tech center is facing a serious threat due to a combination of factors. The Bay Area's notoriously high housing costs are now making it difficult to attract and retain workers, especially those with families. This puts the region at a disadvantage compared to more affordable areas. San Jose needs to adapt to the changing landscape, address its housing affordability crisis, and improve its quality of life to remain competitive.

“Bay Area leaders are right to fret about empty office buildings and declining tech employment, but they have yet to focus on the real problem and, thus, the real solution: a dramatic increase in housing supply. This problem has been acknowledged for years and is becoming increasingly critical. Housing permits in the region declined from 27,000 in 2018 to just 13,000 in the past year.? As the Bay Area waffles on this acute issue, states like Texas and Washington are eagerly waiting in the wings to take companies who might prefer to stay in California, but simply can’t due to the lack of an available labor force. More housing is the key to ensuring the Bay Area’s tech industry stays on top — and time is of the essence.”

Sprawl isn’t a dirty word. It’s lifted people out of poverty, helped secure higher educational achievement, attracted the best and brightest from all over the world, driven historic economic growth and contributed to a better quality of life. Let’s build some housing.