Houston Will Eventually Recover, But Will It Change? – Conor Sen

(Bloomberg View) As Houston continues to grapple with the devastation wrought by Hurricane Harvey, the immediate concern of course is saving lives. But as rainfall slowly draws to a close and attention shifts to recovery, the question needs to be asked: Can Houston simply resume the growth model that has driven it in recent decades? Harvey may have changed the calculus.

There is no template for Houston’s recovery. The most recent urban devastation that comes to mind would be Hurricane Katrina. But the growth trajectory of New Orleans in 2005 is not a model for Houston in 2017. The population peak of New Orleans was in 1960, 45 years before Katrina. New Orleans is an important, iconic city for a variety of cultural and industry-related reasons, but it never adopted the model practiced in Houston, Dallas, Atlanta and other Sun Belt metro areas: sprawling, cheap housing and fast population growth. As New Orleans rebuilt, its task was primarily about fixing what had been broken rather than planning for endless population growth.

Houston’s different. While glitzy metros on the East Coast and West Coast, particularly their urban cores, may have gotten the spotlight since the end of the great recession, Houston in some ways has been the workhorse of the American economy. Since 2010, the Houston metro area has accounted for a larger share of U.S. population growth — six percent — than any other metro. It’s one of the most diverse metro areas in the country. Between the energy sector, health care and real estate development, it boasts an impressive mix of cyclical, countercyclical and non-cyclical industries, making it difficult to have an all-out bust the way more-concentrated cities can have.

And yet while Houston may be similar to Sun Belt peers like Atlanta and Dallas in that it has relied on cheap land and low regulation to drive business, what makes Houston different, as we’ve seen before but are seeing in an unforgettable way now, is how prone it is to flooding. It’s partly a function of its proximity to the Gulf Coast and partly the cumulative impact of decades of development that has paved over the land that used to absorb water.

Will Harvey be to Houston what the great recession was to Wall Street, a crisis that permanently changes the economic model? Now that the nation is so starkly aware of flood dangers, will this be the end of cheap construction in areas at risk?

Throughout American history, disasters have turned out to be catalysts in urban transformations. Think of Atlanta burning to the ground during the Civil War. The Great Chicago Fire of 1871. The 1906 San Francisco earthquake.

Harvey provides an opportunity for Houston to enact changes that might otherwise never occur. Hopefully, the vast majority of property that has suffered flood damage can get repaired as quickly as possible. But history suggests some percentage of properties won’t be worth salvaging, or their owners won’t be able to afford to salvage them. As they become vacant or sold, they create the possibility for redevelopment, perhaps large-scale redevelopment.

By comparison, undeveloped lots in the exurbs may be seen as less attractive, both for investors and for potential transplants. If laws or norms change to take flood risk into account, that raises the cost of low-density development, making higher-density development relatively more attractive. Harvey could push Houston away from sprawl and toward a more sustainable density.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.