Wealthy people are abandoning the suburbs? Can Google save our lifestyle?

One of my pet theories, supported primarily by the fact that housing prices in Cambridge, Boston, and Brookline remained high while the farther-out suburbs of Boston have never recovered from their 2005-6 peaks, is that as the transportation system in the U.S. collapses due to congestion, people who value their time at more than $5 per hour will abandon the suburbs. Anecdotally this is supported by reports from my friends who are regular commuters: “The reverse commute is now just as bad as the standard commute”; “What took 35 minutes in 2010 now takes 1:15”; “I used to have to get to the Weston tolls by 6:55 to avoid Mass Pike traffic but now I have to be there by 6:40.”

Today’s New York Times carries a story about how suburban poverty in the New York City metro area is growing while the central cities are “prospering.”

The typical house in a Boston suburb was built between 1950 and 1975, when the highways were new and the commute time was a predictable 20-30 minutes. During peak traffic periods, which now may include weekends, what had been a 20-30 minute trip is now a 45-150 minute trip and there is no way to predict which end of the 45-150-minute spectrum will prevail on any given day. Travel times get longer every year as car ownership and use increases. What’s the value of a house from which it might take hours to get anywhere?

What do readers think? Are the suburbs finished because we’ve melted down our transportation system? Or will Google’s computer-augmented cars save the suburbs by making much more efficient use of existing roads? (And if we haven’t mustered the political will to establish congestion pricing or to tax older high pollution cars so that people have an incentive to buy cleaner new cars, how will we ever muster the political will to mandate semi-automatic cars that can cluster efficiently on highways?)

25 thoughts on “Wealthy people are abandoning the suburbs? Can Google save our lifestyle?

  1. Why are low house prices seen as a bad thing? Only debt-fueled speculators who view houses as fungible financial instruments rather than places to live benefit from escalating house prices.

  2. Tom: I did not mean to imply that a low house price was “bad”. I mention house prices because they are an indicator of demand. For example, a townhouse in Manhattan is more expensive than a townhouse in Detroit. We can infer from this that more people want to live in Manhattan than want to live in Detroit. Similar, if suburban house prices are falling while the U.S. population is growing we can infer that fewer people want to live in the suburbs.

  3. The number of miles driven per year have flatlined since 2006. The per-capita vehicle miles driven per year has declined significantly since 2006 (population has increased). http://dc.streetsblog.org/2013/05/14/u-s-pirg-the-driving-boom-is-over-but-the-road-building-binge-continues/

    I hope that more people start living in urban environments. The biggest impediment to that is zoning laws which are very pro-car (minimum parking requirements, street widths that accomodate on-street-parking, set back minimums). With coming driverless cars, I would look to buy in close-in suburbs with poor public transit that have difficult parking. These neighborhoods will flourish.

    I don’t think driverless cars on their own will make us much more mobile. There will be some benefit from better traffic flow via co-ordination, but that could be screwed up by one regular driver. The real benefit of driverless cars will come from shared car ownership. Shared car ownership will almost completely eliminate parking requirements, it will also allow for smaller cars. Why be driven around in a 4 seat car when it is just you? When you need to travel with friends, summon a 4 seater. Single seat cars could greatly increase car density on our highways. Removing parking allows for great density increases and more travel lanes.

    Another people driving rich people to move into cities is that the poor people are leaving. As the poor people move to the suburbs, the suburbs will become unattractive. Crime has gone down greatly in urban environments over the past 20 years, I’m sure that helps too. I don’t know what it will take to get people to give up their idea that they need to be far away from their neighbors to feel safe.


  4. Will only get worse when petrol prices reach the ~$10/gl already seen in Europe. Perhaps that will be a wake up call to build denser residential areas, making public transport actually feasible. Unless the new US city centres will turn into Hong Kong.

  5. Fiance and I want to move out to a farm sometime in the next few years. I’m adamant that we keep the Arlington, MA house. I don’t know if S&P 500 shares are going to be a better or worse investment than shotgun shells and canned food, but no matter how things play out over the next 10 to 20 years, I think people will always want a 10 minute commute to Cambridge / Lexington / Waltham / Woburn. I personally enjoy my 1.9 miles from one end of Arlington to Arlington Center.

  6. In a trip to Austin recently, I was shocked seeing first hand the insanely low residential density even a few blocks from downtown (I have only ever visited New York and Boston outside of Europe and Asia).

    I didn’t have a car for the trip and struggled to do anything without getting a taxi. Even getting a bus downtown was an arduous process due to the lack of sidewalks.

    I initially thought that the US simply needed to invest more in public transportation, but with population densities as low as that no project can be viewed as economically viable on its own merits. It would have to be on the presumption that the urban space would change to build higher densities round it, which is a much more difficult case to make, especially with a voracious anti-transit lobby.

    I therefore can’t see a solution. I think many/most US cities and suburbs will radically change with increased congestion and rising oil prices. I am surprised how many people think self driving cars would solve anything. They may be slightly more efficient but to deliver reliable commutes for large amounts of people you need rail service on its own right of way.

  7. It seems unlikely to me that Texans will want to move in to the center of cities in large numbers. Austin, a big blue dot in Texas has had a bit of success by encouraging rich (mostly childless) people to live in downtown condos, but in percentage terms the numbers are small.

    I think telecommuting, fracking, and electric and hybrid vehicles will keep driving costs fairly affordable.

    We Texans will give up the keys to our cars when you pry them from our cold, dead fingers! 😉

  8. Jim: Fracking will keep driving costs “fairly affordable”? The point of my original posting was that cars and fuel could be free and yet the cost of driving remain extremely high. If you are a doctor who earns $300 per hour doing procedures, your cost of sitting in a traffic jam for two hours is at least $600. If you have to sit in traffic two hours per day for 250 days per year, that is $150,000 per year that you are spending on commuting, even if the hospital has given you a free car to drive. The $150,000 in pre-tax income could fund a home mortgage of staggering dimensions or $6,250 in monthly rent (after tax, assuming a 50% combined federal, state, and local tax rate). Here in Boston you get a pretty nice apartment for $6,250 per month.

  9. Phil,

    The traffic in the last three months just went insane. I don’t recall traffic being this bad since 2008. This is Sudbury-Framingham area; it is now 50-80% more congested (time lost).

  10. That’s one factor making the city more appealing than it was in the past. Another main factor is declining crime rates. Rising gas prices too, but that’s probably dwarfed by the other two factors. Overall cities look a lot better than they did 20 years ago.

    However, it’s kind of an exaggeration to say the suburbs are “finished” because so many people live there now that they clog up the roads. We’re heading towards a pattern where the rich live in cities and the poor live in suburbs, which is how it’s always been in most countries, probably due to the fact that they never had the appallingly high crime rates we had in the 60s-90s.

  11. The popularity of any given suburban region will depend on the nearby amenities that suburb enjoys.

    If people can do most of their shopping, entertaining and other recreational activities nearby, the suburb will continue to proper, but for suburbs that are purely bedroom communities where residents have to drive considerable miles just to do basic shopping or to go to a nice restaurant or movie theater, those suburbs are going to suffer as traffic congestion gets worse.

  12. I’m in NH and rarely drive into Boston, but when I do I have found the same issue you have with the variable commute times, even on weekends. It’s enough that I wouldn’t take a job in the city without moving there.

    I agree entirely with you on the real cost of commuting. I suspect the higher income earners will either move closer to their jobs, or find jobs closer to home at a slightly reduced salary, but higher hourly rate when you factor in the commute time. As such I would expect poverty to rise in the suburbs, just as we are now seeing. But telecommuting may also increase. It’s also possible that more companies will move branch offices into the suburbs to provide cheaper housing for their workers. I suspect the market will even the prices out, but it might take a while.

    I doubt autonomous cars can entirely alleviate the issue, but I suspect they can remove some of the variability. But even at the low end I wouldn’t want to commute 2 hours per day.

  13. You enjoy observing the growth of government, so here’s an easy big government improvement: free buses, and lots of them. Finance it with bonds to be paid by our grandchildren. The buses themselves will be somewhat faster if they don’t have to wait to collect fares, but the real advantage is the emptier roads for the people who can afford to ignore “free”.

  14. I’m not in the “wealthy” category, but still I wouldn’t dream of moving back from the suburbs into the city. I feel safer raising my children in the suburbs. We live in a small neighborhood, with lots and streets big enough to support kids at play. We live in a 2000 sq ft colonial that would cost a king’s ransom if we were to live in the city.

    Perhaps, moving in to the city makes sense if you’re an empty nester with a good income, to afford a nice house in a good locality (e.g. John Kerry, Jack Welch in Beacon Hill). For younger families, its a tradeoff that I am not sure would be made in favor of the city.

    There are other options for those working in the suburbs that many companies are exploring. Working from a home office for a certain number of days per month is one. Another is working staggered hours (e.g. 7 AM to 3 PM). And if one were lucky enough to be near a commuter rail line on both ends, that would be a very welcome alternative.

  15. Jagadeesh: I think your comment supports the original posting. To you, the difference in cost between 2000 square feet in the suburbs and the same 2000 square feet in the city is “a king’s ransom”. In the Boston area the difference in cost might be at most $300 per square foot or $600,000 total. The original posting concerns people for whom $600,000 is not an unreasonable sum to pay in order to escape a daily multi-hour round-trip commute. Assuming a 5 percent cost of capital, that’s $30,000 per year (tax deductible if spent on mortgage interest, thanks to the miracle of government subsidies to rich homeowners!) or roughly $120 per commuting day (250 days/year). If the move saves two hours per day for one worker that’s buying back time at $60 per hour so it makes sense for someone earning $120,000 per year. If it is a two-career household, time is being purchased for $30 per hour. There may be additional time savings from, e.g., being able to walk to a grocery store, restaurant, or cultural attraction. Also, the city center is usually closer to the train station for trips to other cities and, depending on the suburb, may be closer to an airport with commercial service (downtown Boston is just a 10-minute taxi ride from Logan or 20 minutes by Silver Line bus).

    The original posting does not suggest that the suburbs will empty out, only that they will be increasingly occupied by those whose time is worth less than $60 per hour, for example.

  16. “Fracking will keep driving costs “fairly affordable”?”

    I was thinking more in terms of the net wealth that fracking brings to workers at all levels, but fracking certainly acts to hold down the price of gasoline.

    It might surprise you to know that there are oil tradesmen making closing to $300/hour in the fracking fields. There’s a big demand for rotor wing pilots if you ever need a change of scene.

    Unlike Boston, and despite the desires of the soon-to-be replaced very liberal city council of Austin, many moderately priced nice houses with yards are available within an hour’s commute to central Austin.

    Here in central Texas $100,000 buys a nice tract house with a garage and yard in a safe neighborhood. $500,000 buys a near mansion in a gated community.

    We can afford to drive our cars.

  17. Phil: One thing you should never do when talking about middle class or rich, mostly salaried workers is turn hours saved or lost doing some task into dollars via their nominal hourly rate. Since they are salaried, they can’t recover these dollars in reality by working more. Some people will value their outside of work time more than others. Additionally, most of us in this bin clearly value it less than the nominal rate since we work so much more than 40 hours per week without additional compensation.

  18. “Are the suburbs finished because we’ve melted down our transportation system? Or will Google’s computer-augmented cars save the suburbs …”

    No, the suburbs aren’t finished. The idea of a collapsing road system in the US (and elsewhere) has been around for several decades. Average commute times in the developed world, however, have not changed all that much in the past 30 years and are around 25-30 minutes and fairly stable in most countries, including the US.

    The global data tends to support the theory that people budget a set amount of time for commuting. If their commute time expands too far, they look for another job or move house. The system is more self-correcting than we have been taught to expect. More from the University of Minnesota: http://www.lrrb.org/media/reports/200124.pdf

    If this theory is true, here’s one amusing corollary: when those self-driving cars start to cut commute times, people will react by gradually moving further away, because they have been given the opportunity to combine their acceptable commute time with a cheaper and/or better housing environment. The result will be that while people are better off (in their cheaper, nicer houses with larger yards), commuting conditions will barely change and people will complain (incorrrectly) that self-driving cars did no good. Again, the system has a bunch of invisible self-correction mechanisms.

    The most likely explanation for the congestion you’re reporting is that you are taking about problems local to Boston (or parts thereof) and generalising to the entire US (or perhaps the developed world, but you seem to be fairly focused on the US). The flip-side is that traffic problems increase disproportionately with economic activity, so all that reported congestion may be signalling an economic revival in Boston. Traffic problems also increase when the density of particular areas rises, so if a lot of people are moving into your inner-city environs, you may suddenly see more local congestion than you’re used to. Or maybe Boston has just not been growing its road network very well.

    Public transport users are over-represented in newspaper readership, and perhaps for this reason newspapers tend to over-dramatise transport problems of all sorts. Newspapers have every incentive to overlook any self-correction effects. “Things are changing a bit, but it will work itself out” has never sold newspapers, and I doubt it will drive many clicks or finger-presses either.

  19. David: http://www.usatoday.com/story/news/nation/2013/04/23/traffic-congestion-us-highways/2106217/ says that congestion is getting worse nationwide! The estimate is that it costs Americans $121 billion per year in time and fuel. And to the extent that those 5.5 billion wasted hours were wasted by high income people, the $121 billion would be an underestimate.

    http://abcnews.go.com/US/story?id=94064&page=1#.UZt4LbW1F8E (unclear from what year; could be any year between about 1998 and the present) says that “congestion is the worst it has ever been” (but maybe this doesn’t contradict what you say about things being the same since 30 years ago since the population has grown and there are more people to contribute to the total number of wasted hours).

    The idea that traffic congestion today is no worse than in the 1960s, when the 8-lane highways were new and the suburbs were just being filled in, doesn’t make sense to me. You’re saying that things haven’t changed much in the past 30 years takes us back to 1983. I can see how that might sense, but even if congestion was equally horrible in 1983 it wasn’t viable to move back to the city center due to crime and urban blight (see above comments on this subject).

  20. Phil, I suggest separating short-term cyclical effects from the sort of longer-term effects that would be needed to drive wholesale abandonment of the suburbs. I also suggest relying less on papers written by gloomy journalists and sold by desperate newspaper owners with every incentive to tell commuters: “Traffic is awful, and getting awfuller!” (Disclosure: I have worked many years as a journalist.)

    Your first cited story from USA Today describes a one-year trend that it notes follows “nearly two years of sharp declines”. (The sidebar refers to “several years of sharp declines”, showing a regard for precision that does not bode well for that newspaper’s reliability on reporting of numbers generally.)

    The ABC story cites no time-series data at all, only big numbers and some reasoning (more drivers and cars, not much more road, so there must be more congestion, and the hell with real data that the reporter couldn’t find before deadline). My regard for ABC News as a source is not bolstered by the blurbs next to and below the story, which point to such breakthrough reporting as “Arizona Man’s Runny Nose Caused by Leaking Brain Fluid”.

    Your second USA Today story, if true, would suggest that population densities will increase in existing suburbs. I don’t think this is a mortal blow to your theory, though. I suspect this story is again taking a cyclical effect (not much new housing built since the GFC) and incorrectly trying to extrapolate a long-term trend.

    The US Fed system’s researchers have better standards than the US newspaper system’s researchers. So the Boston Fed paper talks carefully about sprawl and resists generalisations about traffic congestion. Sprawl is perfectly compatible with lower congestion, and indeed as a resident of a higher-density part of my city (Melbourne, Australia) I almost always find I can drive much more quickly in outer suburban areas. But overall the relationship between sprawl and congestion is extremely complex, as the Boston Fed paper suggests. The cited University of Minnesota paper suggests some reasons why that might be so.

    My recollection is that the average US commute time has risen from about 22 minutes in 1980 to 25 minutes in 2011. I can’t find the source right now, although I note that this article uses the same figures: http://persquaremile.com/2012/08/22/commute-time/

    Traffic trends vary from place to place. As best I can tell, central London is easier to drive about now than it was 160 years ago. Traffic issues are really, really complex.

    I’d still like more information about where you think people are going from the suburbs – out or in. For that matter, at some point we ought to try to define “suburb”.

  21. Commute around grater NY area looks the same to me for the past few years, even somewhat less congested recently. Probably alternative work arrangements play role in congestion not increasing linearly with population growth. Another factor may be that most of new immigrants settle in inner cities.
    Two big factors in road congestion: 1. Repair/maintenance including re-pavement of perfectly good roadways for some reason 2. Sudden increase in business activity. Looks lie there is a category of temporary employees that get hired/fired with cash flows in the financial sector.

  22. Phil, different people assign different monetary value to different things, not everything expressed in dollar/hours. For example you like to live in Cambridge, but I personally would hate to live in such busy, noisy, cramped city. I value nature and quiet environment much more than extra 30 minutes I spend in traffic. Dollar wise probably impossible to put value too. Besides there is long term force that always nudges me to find work closer and closer to where I live. Decent schools is another variable which is very significant for people with children.

  23. When the jobs are in the suburbs, demand for the ‘burbs are high. Here in Los Altos, where the commute to Google, Facebook, LinkedIn is short, housing is more than $1k/ft^2. On the other hand, many of these employees live in San Francisco, and ride the Google bus to work, WiFi-equipped so their work time is not impacted.

    My son’s reasoned to me that the self-driving car will eliminate car ownership because a self-driving car operates as a taxi – no reason to park it. If that were to come to pass, car-sharing (as opposed to clustering) could substantially reduce required road capacity. I think this will only happen when taxis can be stratified by social class – the Google bus provides this feature built-in as only Google employees are on it.

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