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The cost of housing is tearing our society apart

For the better part of a century, home ownership has been the foundation of the average American’s growth in net worth and the cornerstone of the government’s housing policy. But 70 years of consistent appreciation in housing values, combined with stagnant real wage growth, has caused a nationwide crisis of affordability in major cities, and an intensification of wealth and racial inequality.

In just two generations, homeownership in the United States has improved by 20 percentage points, according to US Census data. But young people now are struggling to afford the same homes their parents could afford at their age. In cities such as San Francisco and New York, a consistent 2.5% annual appreciation above inflation in housing prices and rents has resulted in a quadrupling of housing costs since 1950 and homelessness rates not seen since the Great Depression.

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Housing, like student loans and health insurance, has fallen into a free market trap. There’s an inelastic demand – everyone needs housing, an education and to be healthy – and people will pay almost anything to acquire these basic needs. In 1950, the median home price was 2.2 times the average yearly income. In 2013, a few years after the worst housing market crash in a century, median home prices had already risen to 3.7 times the average income. Largely, this inflexible cost has been paid for with greater private debt. Between 1949 and 2018, mortgage debt as a percentage of GDP grew from 15% to 80%.

As with higher education and preventive medicine, those with the earliest headstart and least barriers to entry reaped the greatest rewards. While homeownership rates among white Americans have increased from 50% to 70% since 1950, African American homeownership has only risen from 30% to 40%. As a result, the median white American family’s net worth is now 12 times that of the median African American family, with two-thirds of that net worth attributable to home equity. And the racial wealth gap is growing: by 2053, African Americans will see their median household wealth fall to zero, just from being on the wrong end of housing appreciation.

The real world consequences of racial income inequality are playing out in San Francisco, where African Americans represent 34% of those experiencing homelessness, while only making up 6% of the city’s population.

Mr. D, an African American Bay Area native, worked in construction in one of San Francisco’s booming neighbourhoods. He built a life and a family in the city, but in 2015 he lost his job due to a leg injury. As is often the case, a combination of unemployment and the mounting costs associated with an injury soon depleted his savings and saw him evicted from his apartment. At 55 years old, he found himself with no home to call his own, living between shelters and sometimes sleeping in cars or friends’ garages as far away as Sacramento.

During this difficult time, Mr. D never lost hope. He went through a series of job training programmes, started a catering business, ran for office and volunteered with homeless community organizations. But after failing to find affordable housing for three years, he decided to pack up and move back to Texas, leaving his children and grandchildren in California.

The two institutions with the most to gain from housing appreciation – banks and the government – have fuelled the private housing market since mortgage terms were rewritten following the Great Depression. Banks have adeptly parlayed the human need for a stable home into trillions of dollars worth of profits. In the US, more than 90% of homes are purchased with a mortgage, and the average mortgage is worth 90% of the home.

For banks, the monopoly of the mortgage 9 market has allowed them to create a home-value arms race – the higher the value of the property, the higher the interest payments and potential profit. Even after the collapse of housing bubbles, government bailouts and favourable bankruptcy rules have limited the risk that banks face from limitless home value appreciation.

Governments, especially local governments, have a vested interest in maximizing property values. A booming homeownership market means rising net worths of the population and a steady source of tax receipts. For local and state governments, property tax is more important than income tax. In San Francisco, property tax accounted for 29% of the city’s general fund in 2017. By restricting redevelopment, building market rate apartments and condos, and allowing thousands of below-market units to be converted to market rate units, property tax receipts have ballooned.

Case Study: San Francisco

ShelterTech is a San Francisco-based non-profit that connects people experiencing homelessness with housing and human resources. They are building digital tools for underserved communities and have been studying the city’s housing crisis since their founder experienced homelessness firsthand in 2014. House prices, as well as median rents, in the city have been growing fairly steadily at 6.6% for the past 60 years—2.5% when adjusted for inflation.

For Mr. A, an advisor for ShelterTech and lifelong San Franciscan who was recently living on the streets, that means the three-bedroom apartment he used to rent with a roommate in 1980 for $750 a month now goes for $6,476, an 182% increase in 38 years after adjusting for inflation. Now that he’s 63, retired and living on his social security income, he’ll be moving into a subsidized housing unit that costs 58% of his monthly income. For him, however, this is still an upgrade from the conditions at the temporary housing and shelters where he had been living.

Pro-development advocates argue that massive new market rate housing development is the key to alleviating the housing crisis. It’s true: housing development hasn’t been keeping up with population growth at a regional level. But for San Francisco, the population in 2010 was only 3.85% greater than in 1950, while housing costs are nearly 400% greater. Housing costs have continued to increase regardless of the number of units built in a year or the fluctuation in the population.

Put simply, appreciation and inflation alone are such powerful drivers of the cost of housing that San Francisco would need to double the number of new units added per year to keep housing costs flat, ignoring population growth, wage increases, lower unemployment, and other factors that raise housing costs. To return to 1981 housing costs, the city would need to add an additional 200,000 new units or suffer a 51% drop in employment or 44% drop in median wages.

Another issue not addressed by market rate housing development is extreme income inequality, which is exacerbated by the relative inflexibility in rental costs. In San Francisco, the poorest 5% of the population earn just $650 per month, while the bottom 5% of rents is still $1500 per month. The city has built about 6,500 new affordable housing units in the last 10 years, but also lost over 4,000 affordable units due to owner move-ins, evictions, demolitions and conversions. In 2017, the city conducted affordable housing lotteries and received more than 85,000 applications for just 1,210 units.

Where do we go from here?

Improving renter protections, expanding social housing and more tightly regulating the mortgage market would slow down housing appreciation. Cutting down on short-term rentals and vacation homes also has a dramatic impact on housing affordability. In a recent study, MIT, UCLA, and USC found that for every 10% growth in Airbnb listings, a zip code’s average rent increased by 0.4%.

Another solution would be to limit foreign investment and speculation. When Vancouver passed a 15% tax on all sales to foreign home buyers, the price ofsingle family property dropped 20% before rebounding, giving housing appreciation a short-term respite.

A more dramatic intervention would be to reverse the trend of corporations getting into the housing market and reintroduce public land ownership. From 2013 to 2015, corporations purchased almost $2 trillion worth of land and buildings in the world’s top 100 cities. Middle and lower-class families aren’t able to compete with corporate property investors, but local governments and community organizations could use collective buying power to play an active role in repurchasing large quantities of housing stock.

The Dutch constitution has a provision for providing adequate housing to its residents. As a result, the Netherlands currently has the highest share of social housing in the EU, accounting for about 32% of the total housing supply and 75% of the rental market. As the largest housing supplier, the Dutch public housing system is well-positioned to set market rates and address the country’s growing housing needs. It is an interesting example of a functioning large-scale social housing system in a developed country.

Source: Derick Fidler, Hicham Sabir

REDAN, others establish National Real Estate Data Collation and Management Programme

Real Estate Developers’ Association of Nigeria (REDAN) in collaboration with the Central Bank of Nigeria, the Federal Ministry of Power, Works and Housing and other eleven institutions has established the National Real Estate Data Collation and Management Programme (NRE-DCMP).

The programme is to ensure comprehensive collation and management of data for planning, pre-construction, construction and post construction in the sector.

President and Chairman of Council for REDAN, Ugochukwu Chime disclosed this at a national workshop organised by the Association of Housing Corporation of Nigeria in Abuja.

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Chime, who spoke on “Real estate as an agent of economic recovery and growth”, said the sectoral information would help in policy formulation for the development of the industry and unleash the potentials in the sector for employment generation, inclusive socio-economic growth, and shelter provision in the country. He stressed the need for effective collaborative efforts among stakeholders to ensure that risks and rewards in the built industry could be redistributed with the aim of enhancing organisational efficiency.

Lamenting that the country is yet to realize the sector’s potential, he said effective demand needs to be enhanced and the impetus to create steady supply must be put in place. He emphasized that addressing the housing deficit will have a game-changing impact on the society and our communities.

He posited overtime, that there has being a paradigm shift in housing delivery approach from individual efforts to mass housing suppliers (developers) which he said, is an impetus to increasing the quantum of housing as globally acclaimed.

According to him, the development of residential housing and other forms of real estate have direct bearing on the wealth of the citizenry and their comfort as well as social status.

Also speaking, the Director-General/Chief Executive Officer of Nigerian Building and Road Research Institute, Prof Danladi Matawal said the demand for shelter is so pressing in less developed countries that it can only be met by “informal” housing often self-built, usually illegal, and almost always lacking basic infrastructure.

Such housing he said, is estimated to account for 20-30per cent of urban growth in the largest cities in developing countries which could be as high as 60-70per cent of the population of most Nigerian cities, except Abuja, live in informal housing.

Matawal also called for investment in capacity building and skills development for the existing community housing sector, particularly in governance, development financing and project management skills while governments in Nigeria need to go beyond the provision of land and the policy framework to granting incentives in the form of import duty wavers on imported building materials and construction equipment and tax relief.

“The introduction of realistic building regulations and the removal of restrictive legislations such as the Land Use Acts of 1978 should be considered and partners in Public Private Partnership housing provisions may consider converting some percentages of their equity holdings and profits into the provision of low-income housing as part of their social responsibilities”, he said.

N80bn proposed for railway projects across the country, FG

In continuation of its railway modernization drive and to connect all state capitals to railway, the Federal Government has proposed N80bn for seven railway projects across the country.

The N80bn is for counterparts funds for ongoing and new projects recently approved by President Muhammadu Buhari.

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The projects include Lagos-Kano (ongoing); Calabar-Lagos (ongoing); Ajaokuta-Itakpe-Aladja (Warri) (ongoing); Port Harcourt-Maiduguri (new); Kano-Katsina-Jibiya-Maradi in Niger Republic (new); Abuja-Itakpe and Aladja (Warri)-Warri Port and Refinery including Warri New Harbour (new) and Bonny Deep Sea Port and Port Harcourt and other rail projects.

This was contained in the 2019 budget proposal presented recently to the National Assembly by the president.

The Federal Executive Council in 2017 approved the new railway project including the Kano-Katsina-Jibiya-Maradi which passes through Daura, the president’s home town in Kastina State. The project cost about $16bn.

The Lagos-Kano project has already commenced with the Lagos-Ibadan section which has reached more than 50 per cent completion stage.

If the budget is approved by the National Assembly on time and the counterpart funds paid to the contractor, China Civil Engineering and Construction Company (CCECC), there are indications that the project might commence this year.

Minister of Transportation, Mr. Rotimi Amaechi, had explained the rationale for the approval of the new railway projects covering the Eastern flanks and dismissed insinuations that the president deliberately favoured his area.

Ambode to complete Airport Road, Oshodi interchange, other projects

There were strong indications that the Governor Akinwumi Ambode administration will deliver most his signature projects, especially the 10-lane Airport Road, the Ikeja Bus Terminal and the iconic Oshodi interchange before he leaves office on May 29 this year.

The State Commissioner for Information and Strategy, Kehinde Bamgbetan gave this strong indication in an interview recently.

Other projects he listed for completion in the life of this administration are the Abule-Ijesha Jetty, Oshodi-Abule-Egba road, among others

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Bamgbetan said the government’s determination to ensure the completion of the projects before May 29, 2019 were central to the formulation of the 2019 budget. He said, “taking into cognizance the fact the 2019 budget is technically half year for the administration, it had to take stock of all ongoing projects with the view to determining the one that must be completed before this administration leaves office and the ones that could be left for the incoming administration to complete.”

He specifically disclosed that the administration’s Bus Reform Initiative has not been suspended or abandoned, saying the phase 2 of the Ikeja Bus Terminal commissioned by President Muhammadu Buhari, during his visit to Lagos State last year, the wing that will house the Mall, is on-going and will soon be completed.

“There is a second phase of the project that is already going on day and night. The plan is to activate the phase 1and 2 at the same time.

 

“What we are doing with such iconic projects is to make them people centered. We as a government in Lagos believes that such facilities that handle large mass of our people should be made to be of the highest standards, aside that, these facilities when completed will add to the aesthetics of the state,” he said.

He also said that the initial 820 environmentally-friendly high capacity buses being imported in the first phase of the bus reform initiative have already arrived and would be deployed once the facility is ready.

During the unveiling of the Ikeja Terminal by President Muhammadu Buhari last year, the Lagos State Governor, Akinwumi Ambode, had said that the terminal signposts the commitment of his administration to reform public transportation infrastructure and management in the state, adding that the vision remained the provision of a functional, efficient and integrated transport system to support the populace and facilitate commerce.

He said: “In the last three years, we have committed to revamping and providing a new integrated transport system to support our growing population. We have initiated and completed the provision of infrastructure that are scalable and would support the daily needs of our people to meet their connectivity and mobility needs.

“The Ikeja Bus Terminal is one of our flagship transport infrastructure under the State Bus Reform Initiative. The first phase of this programme will see 13 new Bus terminals introduced including major terminals at Oshodi, Yaba, Ojota, Agege and the already completed Tafawa Balewa Bus Terminal.

“We have commenced the introduction of 5,000 new buses into the Lagos economy in the next 3 years. We will inject 820 environmentally-friendly high capacity buses in the first phase of this reform by September 2018, 300 New Bus Stops, 3 Bus Depots, and Intelligent Transport System which will aid Lagosians to plan their journeys on our public transport system.”
Source: Paul Ogbuokiri

China still borrows billions in low-cost loans from World Bank, as Trump administration pushes back

China is borrowing billions of dollars each year from the World Bank, despite its position as the world’s second-largest economy, according to a study released Thursday.

The Center for Global Development found that the World Bank’s International Bank for Reconstruction and Development loaned China an average of $2 billion a year, totaling more than $7.8 billion, since the country surpassed the bank’s income threshold for lending in 2016.

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The IBRD lends to middle-income and creditworthy low-income countries. It uses resources from those loans to help boost poorer countries. But tension has developed as China is lending billions of dollars of its own to developing countries under opaque terms as part of its “Belt and Road” initiative to build infrastructure.

The administration of U.S President Donald Trump has been critical of lending to China that squeezes out loans to other countries. But cutting off China from World Bank funding could remove a useful tool to influence policy.

“If we want China to be a more responsible lender in the world, then let’s use the World Bank to help them along with that,” said Scott Morris, a senior fellow at the Center for Global Development and lead author of the study.

The study looked at the type of loans granted to China and found that $3 billion, or about 38 percent of the total, went to things that provide benefits beyond China’s border, such as pollution controls and green infrastructure projects.

World Bank Group President Jim Yong Kim, who announced his resignation on Monday, listed approval of increased funding for the IBRD as one of his accomplishments. As part of the agreement for increased funding, the bank agreed to limit loans to wealthier countries and require them to pay higher interest on their loans.

The bank defends its lending as a way to give technical assistance to middle income countries in a way that nations can share knowledge globally to reach common goals. “The World Bank Group supports projects in China that reduce poverty, strengthen institutions and make major contributions to global public goods, such as the environment,” said a World Bank spokesperson in a statement.

The Trump administration is working to get the World Bank to rein in China’s borrowing and to ensure that its own lending is transparent in its terms.

“China is absorbing decades of financial know-how into its institutions in a few short years, a similar pattern to its absorption of manufacturing technology,” Deputy Treasury Secretary David Malpass said in testimony to the Senate Foreign Relations Committee in November. He went on to say that the U.S. is working with allies so it does not appear development lending “is an endorsement of China’s political ambitions.”

Some lawmakers want China reined in. “We must end the World Bank’s lending to China, especially at a time when Beijing itself is saddling developing countries with predatory debt on unfair terms. Growing the Chinese economy is not the World Bank’s job,” said Brad Sherman, D-Calif., a member of the House Financial Services and Foreign Affairs committees.

The study showed China enjoys a discount rate of over 1 percent on World Bank loans versus the 10-year Treasury. That leaves room for the bank to charge higher rates. Morris says charging higher rates could keep China from turning away from the World Bank and focusing more on its own institutions, such as the Asia Infrastructure Investment Bank.

“If they are feeling less and less welcome at the World Bank they will be more motivated to pursue those channels,” said Morris.

Source: Stephanie Dhue

The top 10 US cities where you could buy a home for under $100,000

Buying a home isn’t usually cheap. In San Francisco, the median home costs more than $1.3 million. In New York City, it goes for nearly $700,000. Even the national median is just over $222,000.

In certain areas, though, it’s easier to find housing that’s more affordable.

Financial website 24/7 Wall Street, using data from the U.S. Census Bureau and Realtor.com, “reviewed the median home value in all census-designated places, cities and towns, with at least 100,000 residents,” to find the places with the most single-family homes valued under $100,000.

Based on the data, here are the top 10 U.S. cities with the most homes under $100,000, as well as their median home values, home sizes, household incomes and five-year population change.

Detroit, Michigan

Median home value: $42,800
Share of homes worth less than $100,000: 85 percent
Median home size: 5.6 rooms
Median household income: $27,838
Five-year population change: -5.8 percent

Dayton, Ohio

Median home value: $66,500
Share of homes worth less than $100,000: 78 percent
Median home size: 5.3 rooms
Median household income: $30,128
Five-year population change: -1.2 percent

Cleveland, Ohio

Median home value: $67,600
Share of homes worth less than $100,000: 76.5 percent
Median home size: 5.2 rooms
Median household income: $27,854
Five-year population change: -2.3 percent

Lansing, Michigan

Median home value: $77,100
Share of homes worth less than $100,000: 71.1 percent
Median home size: 5.2 rooms
Median household income: $38,642
Five-year population change: 0.6 percent

Buffalo, New York

Median home value: $77,800
Share of homes worth less than $100,000: 61.6 percent
Median home size: 5.6 rooms
Median household income: $34,268
Five-year population change: -0.9 percent

Toledo, Ohio

Median home value: $78,600
Share of homes worth less than $100,000: 66.5 percent
Median home size: 5.5 rooms
Median household income: $35,808
Five-year population change: -2.8 percent

Rochester, New York

Median home value: $79,400
Share of homes worth less than $100,000: 66.2 percent
Median home size: 5.2 rooms
Median household income: $32,347
Five-year population change: -0.7 percent

Akron, Ohio

Median home value: $80,100
Share of homes worth less than $100,000: 67.9 percent
Median home size: 5.5 rooms
Median household income: $36,223
Five-year population change: -0.9 percent

South Bend, Indiana

Median home value: $81,100
Share of homes worth less than $100,000: 64.2 percent
Median home size: 5.6 rooms
Median household income: $37,441
Five-year population change: 0.6 percent

Brownsville, Texas

Median home value: $85,900
Share of homes worth less than $100,000: 60.3 percent
Median home size: 5 rooms
Median household income: $35,636
Five-year population change: 3.9 percent

Many homes on this list are located in areas that “have had slower-than-typical population growth in recent years,” the report says. Cleveland, Detroit and Buffalo, for example, “have had declining populations for decades.” That reduced demand could explain why home values in these areas are lower.

On a national scale, after all, housing is getting more expensive: U.S.home values have gone up nearly 8 percent over the past year, according to Zillow, and are predicted to rise over 6 percent within the next year.

So if you do find a home for sale that seems like a steal, approach with caution.

“Bargains definitely exist, but buyers should go in with their eyes open,”says Realtor.com chief economist Danielle Hale. In some areas, she explains, “$100,000 can buy a pretty decent home that maybe needs a little bit of updating.” In other places, however, “it might be a home that needs an awful lot of work and might be in not-yet-up-and-coming neighborhoods.”

If you’re looking to buy a home, take these steps to be sure you’re ready to transition from renting. And check out these budgeting hacks and other ways to save more money.

Source: Shawn M. Carter

Smart city experts should be looking to emerging markets. Here’s why

From the crowded markets of Dakar and Karachi to the informal settlements of Addis Ababa and Rio de Janeiro, urban technology seems to be thriving everywhere. Whether used for hitching a ride and navigating grinding traffic or buying coffee and finding a date, smartphones and apps are ubiquitous. To many people living in the world’s low and medium-income metropolises, tech companies like Waze, Uber and their local equivalents seem entirely native.

But there’s a catch.

Many foreign technologies, companies and start-ups are still failing to address the most pressing needs of the majority of city residents in the so-called global south. Despite widespread adoption, they only really serve the needs of the elite, while leaving most of the urban poor in Africa, Asia and the Americas still struggling with basic issues ranging from safety to sanitation. This is not just a problem for low-income city dwellers. It is also a conundrum for the urban tech sector and global cities more generally.

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There are several reasons why ‘smart city’ technologies rarely address the most important challenges of low and medium-income cities. For one, the overwhelming focus of the first generation of smart city vendors was on wealthy cities in mature economies. Early smart city champions like IBM and Cisco, two US corporations, focused initially on North American and European cities before spreading to fast-growing urban centres in East and Southeast Asia.

More recently, smart city technologies are being developed even more rapidly in emerging markets. Homegrown urban tech companies in fast-growing cities across China, India and Singapore, while less numerous, are adopting a similar approach to those of the US and Western Europe. This is not surprising: large Asian cities have the wealth, capacity and determination to take advantage of the latest innovations. They are also home to a surfeit of creative people thinking about how to solve municipal problems.

Not surprisingly, influential groups ranging from the Economist to McKinsey & Company routinely designate global cities like New York, London, Paris, Singapore and Seoul as the ‘smartest’ when it comes to the deployment of technology. The focus of most companies investing in smart city technologies, then, is on a narrow selection of between 300 and 600 developed cities driving the global economy.

The fact that smart city technology is purpose-built for wealthy cities partly explains why it is often criticized in the developing world. City officials and citizens in poorer cities (or in poorer neighborhoods of better-off cities) are frequently saddled with expensive systems supplied by foreign vendors. More often than not, these products are ill-suited to local realities. In some cases they can reinforce digital divides – benefiting the privileged minority with access to regular internet access.

More fundamentally, the traditional focus of urban technology companies on the wealthiest cities restricts the ambition and creative potential of smart cities. Technologists regularly espouse a focus on first principles as the basis of creative problem-solving and designing solutions. And yet technologies targeted exclusively for rich urban consumers may in fact be more evolutionary and less radical than widely assumed. This is because they are designed for and constrained by existing infrastructure, rigid institutions and a level of risk aversion that comes from citizens who generally have it pretty good.

By contrast, urban technologists designing solutions for emerging market cities could potentially change the game. Why? It´s simple: more pressing needs create better conditions for radical innovation and rapid scale. And the scale is breathtaking: more than 90% of all future urban population growth through 2050 will occur in Africa, Asia and Latin America, precisely those areas least serviced by today’s urban technologies. It is reasonable to believe that the next generation of ideas and products in urban technology will emerge from companies and think tanks solving complex problems in the cities of the global south.

 

The idea that a mature global industry could find fresh ideas in lower-income cities is hardly novel. Urbanists and urban planners have been here before. Take the case of Bus Rapid Transit (BRT), arguably the single biggest innovation in public transportation in a generation. BRT realizes the benefits of light rail transit at a fraction of the cost. Yet BRT is an innovation imported from Curitiba (Brazil) and further refined in Bogotá (Colombia). For decades, BRT was denigrated among western planners as a ‘poor man’s subway’. But today, from Los Angeles to Jakarta, BRT is regarded as an elegant and efficient way to do more with less – a demand facing every mayor.

There are limits to what technology can accomplish. Poverty, inequality, weak institutions and crumbling infrastructure cannot be solved by dashboards, sensors and apps. So how might we determine where the urban tech sector can make the biggest difference? We could do worse than take a fresh look at familiar urban priorities and solutions – but notice how approaches in one setting can mask very different needs, constraints, and potential solutions for others.

Consider the following sectors:

Urban transit: Western cities are struggling to pay for their overburdened transit systems, to attract new customers and to mitigate the distortionary effects of ride-sharing. They generally view decentralized, private services with suspicion. Yet most low-income cities already rely on informal paratransit solutions that are financially self-sufficient and highly responsive to demand. Known by various names – matatus, combis, or peseros – these often complement fixed transit systems, reaching excluded and marginal neighborhoods. The problems they confront – safety risks, poor conditions and corruption – are also familiar to regulators in the global north. A company that developed a technological solution to organize and integrate informal transport in Africa, Asia and the America (a good example is the Digital Matatu project in Nairobi) could also help resolve microtransit challenges in wealthier cities (as groups like Chariot and CityMapperare attempting to do).

Walking and biking: Pedestrians and cyclists are still largely invisible in traffic management systems. Some wealthy cities have adopted a ‘vision zero’ plan to promote greater safety for pedestrians and cyclists. Even so, they are still far from systematizing the management of pedestrian and cycling traffic in the same way they apply to vehicular traffic. In low-income cities, this is an even more urgent issue. Take the case of Nairobi and Lagos, where more than 40% of the city’s residents are on foot or use a bicycle. Yet the roads there are in no way managed to ensure their safe passage from one place to another. Well-designed technology could make a great difference here: a lattice of automated cameras and sensors could help generate data on pedestrian and cyclist mobility and build preventive measures to increase their safety, for example. In wealthy cities, this problem can be solved with adjustments to existing signal systems, as London is working on; but implementing such a solution in a low-income city will require easy-to-install, easy-to-operate and easy-to-maintain systems – unlike most modern signals.

 

Real estate transactions: Companies like Zillow, WeWork, and AirBnB have revolutionized real estate search and transactions across North America, Western Europe and parts of Asia and Australia. In scraping information from multiple sources and organizing it around existing listing services, they have dramatically reduced the frictions associated with finding property; these models have huge applicability in those parts of the developing world that are dependent on rental housing. But in large parts of Africa, Asia and Latin America, there are more fundamental problems when it comes to real estate – such as proving and tracking property rights in places with incomplete records and where informal settlements are the norm. Bitland, a company in Ghana, is one of several firms working to apply blockchain to property titles — which helps eliminate the risks of document fraud and poor record-maintenance. If successful, one of these companies could streamline the buying and selling of real estate by eliminating associated legal fees, unlocking markets everywhere from Accra to Los Angeles.

Construction: Developers everywhere struggle with the cost of construction, which is one of the industries least affected by technology over the last generation. While modular construction, for example, is widely discussed, it is seldom practiced on larger buildings and still carries a stigma in many wealthier markets. Building codes and customer expectations may make it difficult to innovate quickly in most American or European cities – but the imperatives of growth and cost reduction are many times greater in Africa, where up to 60% of a given city’s population may live in informal settlements. Companies like Mass Design are stepping up as an impact-driven architecture firm focusing on human-centered, participatory architecture, utilizing local materials and, above all, designing for the dignity of local residents. Innovators such as New Story are working on producing 3D printed homes in less than 24 hours for under $4,000 and, if successful, will need to navigate how to integrate with local construction industries rather than replace them.

Water supply: Virtually every city in North America and Western Europe has a functioning water supply that is sufficient to its task. Since they are costly to maintain, water departments in cities in North America and Western Europe see the need for innovation at the margins such as digital water metering, acoustic leak detection and repairing leaks in ways that reduce the need to tear up streets. But the needs of poorer cities are an order of magnitude greater. They suffer from water systems that are fundamentally under-sized due to breathtaking urban expansion rates; leakage rates in water mains can approach 50%; and the rapid replacement of public water supply with unregulated informal water distributors that create serious strain on local water tables. The development of new technologies such as sensors to track water use, robots to repair pipes from within, and the ability to safely decentralize the water supply even in arid conditions, holds great promise: once developed, these could easily be exported to the cities of North America, Europe and East Asia.

Security: Most city governments around the world are investing in a suite of new technologies – from real-time crime mapping platforms and predictive analytics to gunshot detection systems, AI-assisted biometrics and smart cameras – to improve public security and safety. Companies like Nest and online communities like Neighbor. l have found a domestic market in the US for increased surveillance. They are the 21st century equivalent of home security systems, but rely on responsive police departments and reliable legal systems for their impact. But in low-income cities, policing is often less reliable. The rich pay private security companies, while the poor pay local self-defense groups and even street gangs for protection in informal settlements. New approaches that use technology to provide physical safety would likely be readily adopted, and easily transferred. There is already an explosion of so-called ‘civtech’ in crime-affected cities of the global south. Because they are low-cost, secure and easy to deploy, many solutions such as CrimeRadar and ISPGeo in Rio de Janeiro or Monterrey´s Centro de Integracion Ciudadana have real potential in both upper and lower-income cities.

Corruption: While North American and Western European cities are hardly immune to corruption, the unfortunate reality is that it tends to be more pervasive in low-income settings than in wealthier ones. The move among police departments across the global north to deploy body cameras is driven largely by concerns with the excessive use of force and corrupt practices. Many of the first providers were large incumbent companies who provided expensive, purpose-built systems; but CopCast, developed in Rio de Janeiro in partnership with Alphabet’s Jigsaw, allowed a simple Android phone to be used, at a much lower cost than the usual hardware; it’s now in use in Florianopolis, Cape Town and Jersey City.

The potential to use technology to document how public officials perform their duties is tremendous, and it faces its greatest challenges in places where those officials are the most corrupt. Any technology that will document corruption, identify trends in bribe-taking and protect citizens from fabricated accusations and reprisals will have massive impact in local markets, but it will also find real applications in the global north. A great example of the latter is Brazil’s Detector de Ficha de Politica, an app that tracks corrupt elected officials.

So how might the world of urban tech turn its focus to these challenges, with the potential not only to address the developing world but also to throw up new solutions that could be relevant to the planet’s wealthier cities?

The reality is that large urban tech companies are unlikely to take the leap on their own. Incumbents will face what Clayton Christensen calls the innovator’s dilemma, since they have large and profitable product lines that are tailored to the circumstances (and budgets) of wealthy cities. Rich-world innovators may try to develop solutions for the emerging market cities, but they are unlikely to get it right: it’s hard to find product-market fit in Lagos or Dhaka from an office in London. Cities like Bogotá and Addis Ababa have local talent with great insight and experience, but these entrepreneurs often lack access to the talent, capital and global connections that their peers from Palo Alto to Singapore take for granted. And even when they are locally successful, their track record at scaling across similar cities is, thus far, disappointing.

More likely, successful urban tech innovation will emerge from a new hybrid model. Perhaps a venture capital fund will emerge in the US that focuses on urban tech in emerging markets; it would be a commendable use of some of the impact capital that funds and philanthropies are eager to deploy. It could also emerge as a loose network, inspired by (or perhaps associated with) groups such as the C40 Cities or Global Parliament of Mayors, inter-city networks focused on fostering urban innovation. Or it may be a series of investments and mergers, wherein large companies of the global north acquire start-ups in the south; or it may yet see the emergence of a few global south innovators who find ways to expand on their own into the markets of the north. It might start out of a think tank or a B Corp with a foot in Silicon Valley and another in Africa.

Whatever form it takes, technologists, investors, and philanthropists would do well to focus on the problems of the fast-growing, low-income, low-infrastructure cities sooner than later. They have an opportunity to nudge urban technology development toward the first principles of progressive urbanism. Freed from the constraints of powerful firms, existing infrastructure, and risk-averse stakeholders, urban technology may well discover its most profound innovations in the global south.

FG spends N2.7tn on infrastructure in three years

The Federal Government has invested about N2.7tn in infrastructure in the last three years, the Senior Special Assistant to the President on Infrastructure, Ms Imeh Okon, has said.

Speaking on Friday in Uyo, Akwa Ibom State during a High-Level Stakeholders Retreat on Public-Private Partnership, Okon said the government went back to the 25 years Master Plan on infrastructure development through Public Private Partnership.

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“The Federal Government has invested N2.7tn in infrastructure in the last three years and as you can see, some of the dividends have been the N100bn that we have injected into rail projects.

“What we have done as a government is to go back to the 25 years master plan on the rail sector. What you are seeing right now in terms of rail infrastructure is as a result of the master plan that was on the ground,” Okon said.

She, however, said over-dependence on oil revenue had been a great challenge to the government as a result of instability in the prices of oil in the last four years.

According to her, the challenge has necessitated “the partnership with the private sector to develop most of our priority infrastructure projects.”

Earlier in his remarks, the Acting Director-General, Infrastructure Concession Regulatory Commission, Mr Chidi Izuwah, said the partnership would enhance economic prosperity, development and growth.

He gave the assurance that the Ibom Deep Seaport, when completed, would decongest the Lagos seaports.

“Ibom Deep Seaport is a PPP project that is going to bring $2.5bn of investment and change the landscape of infrastructure in the country.

“It will have solutions to traffic congestion in the Lagos ports because those goods that normally go to Lagos will come here. This has been done in partnership with the ICRC.

“I can assure you that before April, the contract for Ibom Deep Seaport will be signed and the approved consortium will start immediately.”
Source: Patrick Odey

NRC demolishes 3500 houses to pave way for Lagos-Ibadan railway construction

About 3,500 public and private buildings have been demolished in Lagos, Ogun State corridor, as management of Nigerian Railway Corporation (NRC) continues to demolish buildings to pave right of way for laying of tracks in the ongoing construction of Lagos to Ibadan Standard gauge railway line.

100 corpses have been exhumed by siblings of deceased owners who had earlier vowed that railway line would never pass over their parent’s grave.

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As at yesterday, it was observed that bulldozers were demolishing houses at Lagos Agege railway station and its environ amidst a crowd of onlookers muttering various words.

It was gathered that prior to the demolition exercise, owners of buildings affected were paid compensation based on value of their various houses after assessment of their documentation by Valuers appointed by NRC.

According to reliable sources, Landlords who could not provide valid documents but have built structures on railway land were paid N1.6 million while those who provided valid documents of lease from the Corporation were paid various amount as compensation ranging from N3 million to N5 million and N10 million each depending on value of their building.

One of the aged Landlord whose building was demolished but could not find the documents that gave him lease to build structure on the land at Agbado Mr. Ismail Ojo commended government for deeming it fit to pay him N1.6 million especially now that things are difficult.

“I thank government for the compensation because where do you think I could have found N1.6 million to relocate especially now that my grown up Children are living from hand to mouth,” he said

12 mortgage power players to watch in 2019

Hugh Frater, Fannie Mae and David Brickman, Freddie Mac

What they do: Interim CEO of Fannie Mae; President of Freddie Mac

What to watch for in 2019: The CEOs of both GSEs announced in mid-2018 their impending departure from their respective posts. Brickman was promoted to president of Freddie Mac in September, and is an internal candidate forsucceeding Donald Layton when he leaves in the second half of 2019. Frater is the interim CEO at Fannie Mae, taking over for Tim Mayopoulos, who stepped down in late October.

The Trump administration has hinted at finally taking steps toward GSE reform, potentially removing Fannie and Freddie from conservatorship. But it appears there won’t be much progress until the new director of the Federal Housing Finance Agency is appointed.

Why it matters: The challenges facing whoever takes over Fannie and Freddie will be very different than what Mayopoulos and Layton inherited in 2012. While both GSEs remain under federal conservatorship, they are in a much stronger financial position. Still, there is considerable uncertainty about their future, and the oversight structure constrains the CEOs from shaping the GSEs’ destinies.

Robert Broeksmit, Mortgage Bankers Association

What he does: President and CEO of the Mortgage Bankers Association

What to watch for in 2019: “Bob” Broeksmit took over as president and CEO of the MBA in August, succeeding David Stevens. Can he keep the positive momentum of his predecessor going amid significant industry shifts? How will the trade group pivot its lobbying with a divided Congress? Will he ever join Twitter?

Why it matters: The MBA’s political action committee raised a record $2.1 million during the 2016-2018 election cycle, including $1.2 million in 2018 alone. That may prove valuable as the industry is bracing for considerable consolidation amid tight margins and low volume, which may pose challenges for the MBA’s membership, fundraising and lobbying efforts.

Kristy Fercho, Flagstar

What she does: President of mortgage at Flagstar Bank

What to watch for in 2019: Fercho came aboard Flagstar as executive vice president and president of mortgage in 2017. In June, Flagstar bought 52 branches of Wells Fargo in an effort to grow their retail mortgage presence and reduce their reliance on third-party originations. In August, the Fed lifted its regulatory order, freeing it for more activity and corporate functionality.

Why it matters: Origination volume is expected to continue facing difficulties. Seeing how Flagstar will navigate the market and handle its mortgage business will be interesting. Flagstar’s been issuing their own RMBS deals and will have more freedom in 2019.

Bruce Gross, Laura Escobar and Tom Fischer, Lennar Financial Services

What they do: CEO of Lennar Financial Services; President of Eagle Home Mortgage; President of North American Title Group

What to watch for in 2019: The lender market is condensing. Will Lennar look to make any more acquisitions to offset its shrinking mortgage margins?

Why it matters: The Lennar Financial Services umbrella provides everything for the homebuying process including title, mortgage and closing services. One-stop shops are becoming the trend as more mortgage companies face problems making profit.

Erin Lantz, Zillow

What she does: Head of Mortgage at Zillow

What to watch for in 2019: Lantz plays a critical role in directing strategy and execution. How will she help traverse the mortgage part of the business through the dark housing outlook for 2019?

Why it matters: Zillow Group transformed itself into a digital brand conglomerate of renting, buying, selling, financing, home improvement and data.

Brian Montgomery, FHA

What he does: Commissioner of the Federal Housing Administration

What to watch for in 2019: The FHA is expected to take steps to streamline FHA servicing requirements to align with industry practices. Montgomery has also said the FHA is considering extending the multifamily risk-sharing program.

What’s less certain is whether the FHA will heed industry calls to cut its mortgage insurance premium. Also unclear is how long Montgomery will serve as the acting No. 2 at the Department of Housing and Urban Development.

Why it matters: The GSEs’ 3% down payment loan programs have created new competition for first-time homebuyers, particularly given the high cost of FHA mortgage insurance. The multifamily risk-sharing program supports affordable housing development and allows state housing finance agencies to underwrite multifamily loans. HUD shares the effort of increasing the affordable housing supply, as well as aiding homelessness, enforcing fair housing laws, and disaster response.

Michael Nierenberg, New Residential

What he does: Board Chairman and CEO of New Residential

What to watch for in 2019: Under Nierenberg’s leadership, New Residential has become one of the most aggressive investors of mortgage-servicing rights. As themarket for MSRs becomes more active, look for the real estate investment trust to make opportunistic plays to build its portfolio — particularly given its recent $433 million stock offering.

Why it matters: Nonbank mortgage servicers must gear up to meet new secondary market requirements and make some tough decisions about whether to buy, sell or hold MSRs as they head into 2019.

Eric Schuppenhauer, Citizens Bank

What he does: President of Home Mortgage, Citizens Bank

What to watch for in 2019: After acquiring Franklin American Mortgage, Citizens Bank extended its base of customers and loan growth while boosting its earnings.

Why it matters: With the nonbank market share of mortgages rising, Citizens appears poised to make a contrarian play among bank mortgage lenders and expand its loan offerings.

Eric Stoddard, Wells Fargo Funding

What he does: Executive Vice President at Wells Fargo Funding

What to watch for in 2019: Stoddard oversees Wells Fargo’s massive correspondent mortgage channel, the largest aggregator of closed loans originated primarily by independent mortgage banks. Wells Fargo’s recent move to start acquiring electronic notes from its correspondents could be a watershed moment for the electronic mortgage movement.
What’s more, Wells Fargo’s correspondent channel may become an increasingly important aspect of its overall mortgage strategy, given the bank’s plans toseverely reduce its workforce over the next three years.

Why it matters: Small and midsize lenders often cite investor acceptance as one of the biggest impediments to e-mortgage adoption. With the largest correspondent aggregator — not to mention both GSEs — all buying e-notes, that obstacle is becoming increasingly less severe.

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