Hacker News Reader

Comment by fovc | Hacker News Reader

Why is it that suburban living is so much cheaper? It's never been clear to me why that should be the case (from first principles).

With the greater density (3x according to [1]), you'd expect lower utilities, transportation, etc. costs. "Shelter" (i.e., housing minus utilities, furniture, etc.) is typically only a bit more than transportation as a category of spend, and about 1/5 of total annual expenditures.[2]

I've read claims that suburban property taxes are artificially low (mainly on articles on HN, but can't seem to find any right now) and obviously funding highways and commuter rail out of general taxes subsidizes sprawl.

I wonder how this cost comparison would look from a balance of system perspective as is, and then what a higher land tax would do. Has anyone seen or done anything like this?

[1] http://www.demographia.com/db-intlsub.htm [2] https://www.bls.gov/news.release/cesan.nr0.htm

View on HN

It's not cheaper. It's just that people don't factor in the dramatically increased transportation costs.

Metro Vancouver studied this and found that when transportation costs were factored in, car reliant outer suburbs became more expensive than "pricy" downtown and inner suburbs.

http://bc.ctvnews.ca/suburbs-pricier-than-vancouver-when-tra...

I think that depends on how well the transportation is in the city. Me and my wife would have no reason to have cars in New York City, but we lived in Atlanta for a few years and public transportation is not a viable option unless you are willing to take an hour or two to get anywhere not directly on one of the few train lines so transportation costs are less than $100 more for the gas to go into town from the burbs.

That study assumes a lot (suddenly you have a 2 car household if you live in the suburbs vs 0 cars in the city?), looks at averages, analyzes two things that people spend money on, and only considers Vancouver and its suburbs.

That's not quite enough to support the blanket statement "living in the suburbs is not cheaper than living in a city."

As someone who's in this situation right now, I can guarantee you that moving out of my city is the frugal option.

The article mentions two car household etc but the actual data comes from the national census where people simply report how much they spend on transportation. There's no assumptions made about what people's commutes are or what their transportation mode is. People just spend more on transport in the suburbs.

The reason is for this is because many of these suburbs are wholly designed for the car and that's the only viable transportation option for anything and the car is the most expensive form of transportation.

Anecdotally: I moved from Midwest suburbs into a coastal major city. I sold off my car when I did so. Even with the raised prices on things like rent, food, etc, I still couldn't figure out why I had so much money left over. I thought I was forgetting to pay a bill. Turns out, owning a car was much more expensive than I'd realized. I ended up saving quite a bit more by living in the "expensive" city.

But most of the major cities that I've been to in the US don't have a decent public transportation system. If they would fix this, then people could become less reliant on cars.

North Shore, one of the areas the article calls "more affordable", is shown to be more expensive before factoring in transportation.

Maybe you should add "supply and demand" to your list of first principles.

Well, sure, but supply of what and demand of what? Housing? Like I said, that's only about 20% of the average American's spending. But why does demand outpace supply so much in cities? Is it that building apartments and condos is so much more expensive than building suburban homes? And if so, by how much (seeing as it's only 20% of the total)

>But why does demand outpace supply so much in cities?

Some cities. (And, more specifically, some parts of some cities.) I'm sure it's not hard to find inexpensive housing in many areas of Detroit, to give one example.

It really boils down to demand and land value, which is a particular problem in cities that can't just spread out further.

>Housing? Like I said, that's only about 20% of the average American's spending.

BLS estimates on average its more like 33%. And urban areas are significantly higher than the suburban areas. https://www.bls.gov/regions/west/news-release/ConsumerExpend...

When you consider how little the average family is saving, then you'll see why there isn't a lot more extra money to throw around.

The 33% includes utilities and furniture. 20% is the actual building

why do you think there's massive traffic going into cities during rush hour, not out? that's where jobs are.

Suburbs are a Ponzi scheme.

http://www.strongtowns.org/the-growth-ponzi-scheme/

You can devise the cost of real estate based on two main factors outside of square footage in the US. The average income of nearby employment and quality of schools.

Suburbs are much, much, much cheaper than urban areas when they are not near high income employment or have quality school districts. Suburbs near(meaning commute time) high income employment and quality schools are as expensive, if not more expensive as urban areas when controlled for square footage.

Is transportation really less? If you can take public transit (including walking) it is. However most people live with some sort of family (traditionally husband and wife and 2.5 kids). That means dad and mom both needs to have jobs accessible by public transit, and the schools need to be good enough. If any of the above fails your transit is more expensive: you have to pay for parking for your personal car(s) which is not cheap.

> Why is it that suburban living is so much cheaper?

Because density costs a lot of money.

Density raises land values, which costs residents more money. Density requires better construction and better construction materials, which costs residents more money. Density allows for better serviced neighborhoods (closer to retail, closer to public services, closer to amenities), which are more desirable, which costs residents more money. Transportation becomes more expensive (once you factor in opportunity cost) which costs more money. Taxes are higher, to support extra services suburbs don't have or need, which costs residents more money.

Density has lots and lots of great positive benefits, in terms of land use and environment and such. But it has a huge cost drawback, that most people ignore, and which drives much of the development of sprawl.

It's not that suburban living is cheap. It's just way cheaper than urban living, which is crazy expensive (even in "low-cost-of-living" Midwest cities, urban living is usually 2x to 3x the cost of the suburbs).

We could make living far out in the burbs less attractive by making commuting more expensive. However, at least here in Germany, people get tax breaks for commuting. I find that weird.

Transportation (highways) is highly subsidized. In some places; sewer/property taxes are less because they are built to never be dense. (ie septic instead of swer)

Mortgage interest is tax deductable in the U.S., which subsidizes suburban homeownership.

But it it's also deductible on urban condos

The problem is the American ideal of what a home looks like - detached from other buildings, front lawn, backyard, large kitchen, large living room.

Given the density in cities that you mention, properties like that simply don't exist or are outside of the reach of most people. Arguably, that's how it should be - most people shouldn't be able to live in expansive homes and work in urban environments, but that's the baseline we've setup for two generations now.

property value is much higher in cities than burbs due to supply/demand

Quality of life.

Reply on news.ycombinator.com