Unknown: Between remote work and the pandemic, more people in
businesses are moving to the suburbs
The urbanization trend, that's a real thing. People are moving
out of the city. They're buying bigger houses
We have seen that the housing market was incredible in 2021
The pandemic itself it has changed housing preferences and
location preferences.
America leads the world in suburbanization.
I think the US is distinctive in that suburbanization has been
particularly large in magnitude here in the United States.
And it's creeping up again, of course, but there's an
opportunity here to rethink some of those patterns and reset the
norm.
I think the way the suburbs were built was a big mistake. The
cities needed to get bigger, but they should have been built very
differently.
To combat the economic challenges of sprawl. Some
suburbs are building up rather than out
Where we build housing, where we don't build housing and what
kinds of housing we build have big implications for the
economy, for climate, and for patterns of racial and economic
segregation.
The roads in the sprawling suburbs contribute to the
nation's $1.2 trillion maintenance funding gap. How
else does suburban sprawl shape the US economy? Over centuries,
developers built many homes in a pattern that experts call
suburban sprawl.
The farther out you go from the center of the city, we tend to
build lower buildings, shorter buildings, more spread out and
more space, it gives a little bit more of the illusion that
you live off in the country far away from other people.
This style of housing is the foundation of the American
suburb, and the American dream.
The one thing it does enable people is to kind of escape the
city. So there's a benefit and a cost and individuals are
deciding based on their private benefits and costs and making a
decision they think is optimal. Sometimes that can have negative
externalities for the rest of society.
The New Deal in the 1930s, sped up suburban sprawl in the
states. The bill created a Federal Housing Administration,
which standardized neighborhood design, and made mortgages more
affordable
and Fairless Hills is typical of the growing new community.
The FHA guidelines made country style living a middle class
reality. They also created problems,
They prescribed rules to get an FHA loan, no sidewalks, curvy
streets, dead end streets, and made it hard to walk.
They also enforce a minimum lot size, which spreads people out
and inflates the scale of the suburbs.
If that's an expensive community with expensive land, it means
that the price of buying into the community is going to be
very high. That means automatically the only people
who can afford to move in there now are people who are pretty
wealthy, a large minimum lot size doesn't say no black people
or no Latinos can move into the neighborhood. But it turns out
that income and wealth are really strongly correlated with
race in part because of long standing discrimination.
Many suburban towns also separate land by use. As a
result, homes are generally far away from industrial and
commercial areas.
Local governments adopt this so that they have some control over
what gets built where but it also can make it difficult to
build the housing that people want to live in in places they
want to live.
These guidelines were formalized with zoning laws.
These are sets of regulations, there are subdivision codes, as
well, it's just regular zoning codes that exist in most
municipalities across North America that provide a framework
for what you can and can't build and these reuse planning tools.
Restrictive zoning codes have long limited the supply of land
for housing in cities like Minneapolis and San Francisco,
many workers in the cities haven't been able to buy or even
rent homes near their jobs, which slows economic
development. These old trends are still shaping development
today.
It was in the 1940s when the United States population crossed
that threshold from being predominantly rural, to
predominantly urban and all of the growth since then, has
really been a shift from rural to suburb.
And since the 1960s people have been trying to modify the zoning
to let people mix uses and have stores, apartments, offices all
mixed together, which is what lets you have these sort of
lively neighborhoods.
In recent years, neighborhoods outside of cities with large job
markets have boomed while the population in America's
heartland declines. As a result, the maintenance costs associated
with suburbia are adding up. When a suburb grows, the tax
base within the nearby city is expected to decline.
which reduces its ability to fund local public goods,
including schools, including policing, and so on. And so
those individual decisions even though they can be good at the
individual level, can have externalities for the city as a
whole.
So the spread out development that's typical of the suburbs,
it entails higher per capita and government costs relative to the
denser urban areas.
If You're building roads and sewers and all the houses are
located half a mile or a mile away from one another, you need
more asphalt more concrete and more pipes.
Suburban towns often struggle to finance their long term
infrastructure costs, and population growth nationwide has
slowed to 0.1%. A record low. That means that the financial
pressure on suburban towns is mounting.
All of the declining cities in the Midwest face this problem,
that they just don't have the income from their current tax
base to pay to maintain something that they built 50
years ago when they were three times the size
so new, so powerful. So revolutionary is this force,
that we have hardly been able to appraise its influence.
Federal spending can hide the true cost of suburbia,
local governments use property taxes in particular to pay for a
lot of these costs. So if you've ever wondered, why do we have
potholes on your neighborhood street and not potholes on the
interstate, it's because they're paid for by different levels of
government.
America has a $1.2 trillion funding gap for upkeep of roads,
bridges and tunnels. The American Society of Civil
Engineers says new spending in 2021 infrastructure bill helps,
but it doesn't cover the full costs. If further improvements
aren't made, the country's failing infrastructure could
cost each family over $3,000 a year by 2039. Another problem
people don't realize how much of their income goes to their car.
In the past, the suburbs became more popular as cars fell in
cost
Once you take account of inflation. And once you take
account of the rise in people's incomes, the real cost of car
ownership today is lower than it was. Of course, if you get a
frontier car such as a Tesla, which has features which weren't
available in the 1950s you can pay a lot of money and it can be
very expensive.
Since the 1990s, households have increasingly relied on credit to
finance their cars. AAA says the annual cost of vehicle ownership
has risen to nearly $10,000. Making matters worse, the 2008
recession has destabilized many suburban households. On average,
people in the suburbs are now employed at lower rates and have
declining incomes. Home prices have also been subdued when
compared to central cities. Some call it the suburbanization of
poverty.
There's typically a greater availability of land in the
excerpts and the land and housing that's on it also tend
to be more affordable.
Experts say remote work and tasteful planning could make the
suburbs better
New growth and density could be directed through redevelopment
and infill projects. There are so many of these surplus
properties out there.
Many of these infill projects, place residents closer to
commercial areas, which could create opportunities for
entrepreneurs.
If we focus on millennials, for example, they have things that
they really like. They have bars, restaurants, so some of
those preferences they carry with them. And so what that
creates, it creates opportunities for someone to
open up a business that caters to these needs.
And I think that sort of plays a big role in that shift of
employment to the suburbs.
Experts say the most affordable suburbs are often also the least
sustainable.
So for instance, a metro like Atlanta or Phoenix has managed
to keep housing fairly inexpensive over the last 30
years, because they just build a lot of housing, and they build
these huge subdivisions, 10,000 20,000 homes on very inexpensive
land, that's essentially you know, farmland that's
undisturbed. On the flip side, of course, we know that they're
terrible climate impacts from building so there really is a
tension
Then you can see that very clearly. In California
You see how close those flames are to these houses
Home prices in the large urban metropolitan areas were so
expensive, that people started moving out moving into the more
wooded areas and then you see these wildfires, and they're not
going away. In fact, they're getting much worse.
Meanwhile, suburban drivers on belt ways are shaping the
climate of the future.
It's really in the kinds of suburban settings that we would
characterize as sprawling separated uses, car dependent,
relatively low density. This is where we see a more extreme
emissions use.
Most US emissions come from personal cars, commutes
lengthened as the country sprawled in recent decades.
So going back to 1970, around 81% of residents lived in the
county where they worked, and that declined substantially over
time by the year 2000.
If remote work persists, it could take some drivers off the
road. Home appliances are another huge source of
emissions.
Definitely when you see more sprawl in the suburbs, you're
seeing much more carbon emissions out there than you
would in one large building in a city.
The US has committed to eliminating carbon emissions
from electricity by 2035. But in that time period, Researchers
expect US auto emissions to remain flat. That's mostly due
to suburban drivers.
But there's an opportunity here to rethink some of those those
patterns and reset the norm.
So what can be done to improve residential development in the
state? Many regions are tackling sprawl head on in Montgomery
County, Maryland outside of Washington, DC, 85% of the
available land has already been developed. The county revised
its master zoning code to increase the supply of homes
along a forthcoming light rail path.
This is a suburb to suburb rail line. You see them in other
countries Paris has an enormous project underway, but for the
United States, it is really one of a kind.
leaders hope the improvements will take 17,000 daily drivers
off of suburban roads. Experts say that expanding public
transit can make a community more equitable.
Traditionally, lower income communities have benefited
disproportionately from public transit options,
But funding and executing such projects is a feat. Residents
are paying for the $9 billion suburban DC rail project with an
increased tax on gasoline. President Biden's Economic
Council wants to encourage more changes like this. They have
called for a $5 billion grant program to fund communities that
abolish restrictive zoning codes.
One thing to remember is that every part of the country has
some walkable, mixed use places that feel like sort of the main
street and we don't have to invent this for real we've
already done this just recreate what we used to do.
And so that's where we are now that the kinds of beautiful
scenic small towns mixed use walkable streets that we
remember and we'd like to visit as tourists on pre accessed
zoning codes, and in many cases could not be rebuilt again if
you wanted to do it from scratch without significantly revising
the zoning.
Other parts of the world are experimenting with zoning reform
too.
There's been some very interesting work in the city of
Bogota, documenting how the rapid bus transit network had an
uneven effects on low and high income workers in that city.
Another study found that changes to the code in Sao Paulo Brazil
improve the quality of life for renters with college degrees,
but those changes also greatly sank home prices affecting
landlords. In America homebuilder stocks have wavered
as the Fed ways interest rate hikes.
A rising rate environment is going to be very difficult for
homebuyers just takes away from potential buyers purchasing
powers, it means they either can't buy a home or they can buy
less of a home. And we know that the entry level housing stock is
the leanest it has ever been.
Suburban sprawl will determine much about the American economy
for the foreseeable future. The development choices made today
last for generations.
So it seems as though over the medium term, the deck is
basically stacked in favor of the suburbs and against dense
urban cores.
Ultimately, people are making those decisions for a reason.
And it reflects a very kind of fundamental economic force that
you see in many places around the world in many different
institutional settings. You know,
it took really 50 or 75 years to make the problems of the suburbs
and it takes a long time to undo it.