Are the Suburbs Really Cheaper?
Smart Growth America released a report this month called Measuring Sprawl 2014. It’s an update to a report they did back in 2002 and it’s worth a read if you’re into urban planning. You can download it here.
The report looks at 221 metro areas in the US and develops a “sprawl index ranking.” The higher the number, the more compact the metro area. Not surprisingly, New York tops the list with San Francisco coming in second. But more interesting are the correlations they discovered. As you go up their sprawl index ranking (that is, as the cities become more compact), they found the following:
- People have greater economic opportunity in compact and connected metro areas.
- People spend less of their household income on the combined cost of housing and transportation in these areas.
- People have a greater number of transportation options available to them.
- And people in compact, connected metro areas tend to be safer, healthier and live longer than their peers in more sprawling metro areas.
If you’re a follower of smart growth, then some of these will sound familiar. But they’re worth repeating and I’d like to focus on the second one for a minute (not to undermine the importance of living longer). Conventional wisdom dictates that as you sprawl out from the center of a city, the cost of housing drops. And indeed, that’s what they found. There’s a correlation between density and housing costs, and more compact cities generally have more expensive housing.
However, they also found that the percentage of income spent on transportation is much less in compact metros:
Each 10 percent increase in an index score was associated with a 3.5 percent decrease in transportation costs relative to income. For instance, households in the San Francisco, CA area (index score: 194.3) spend an average of 12.4 percent of their income on transportation. Households in the Tampa, FL metro area (index score: 98.5) spend an average of 21.5 percent of their income on transportation.
But here’s where it gets interesting: they found that transportation costs dropped faster than housing costs increased as metro areas became more compact. Meaning if you consider both housing costs and transportation costs in aggregate, it’s actually cheaper to live in more compact areas. From what I can tell, they’re also only considering direct transportation costs and not indirect costs such as the time people waste sitting in traffic.
Either way, it’s something to consider the next time you’re thinking about where to live and how much you should be willing to spend on housing. That cheaper suburban home may not be as cheap as it seems.
Photo by Aythami Perez on 500px
Brandon Donnelly is a real estate developer, internet entrepreneur and blogger based in Toronto. His passions are cities, real estate, design and technology.
He presently works at TAS, where he oversees the development of mixed-use condominium projects. He’s also cofounder of condo review site Dirt (thedirt.co). Prior to this, he worked in the development group of Morguard Investments on ...