Despite my pessimism regarding Tesla’s ability to compete with companies that have deeper engineering benches, e.g., Honda and Audi, I’m optimistic that the U.S. car and truck fleet will eventually be mostly electric. Even if this is economically inefficient, it will enable wealthy city-dwellers to push all of the noise and pollution associated with energy conversion into suburbs and exurban areas.
I’m wondering if this will further drive the trend toward urban real estate being more valuable than suburban. One of the drawbacks to city life has tended to be noise and most of the noise comes from cars and trucks. If there is no more diesel clatter, will the cities become dramatically more pleasant?
On the topic of suburbs being devalued by traffic congestion:
- Boston’s strange housing market (Arnold Kling, 2018): “I have a hypothesis about the cause of house price divergence [city up; suburbs flat] in the area. Boston has peculiarly bad transportation woes.”
- “Wealthy people are abandoning the suburbs? Can Google save our lifestyle?” (me, 2013): “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?”
The question is, where will the underclass people live? If urban voters are successful in using Section 8 and other incentives to physically relocate (and permanently keep) the underclass outside the city, then urban life will improve.
@paddy
Unlikely about the section 8 incentive improving cities. The number of people that qualify for section 8 is much higher than the number of section 8 slots. But I do agree, if the system was rational, all section 8 people would end up in South Dakota. Or in the 70s and 80s, we would say New York:
https://en.wikipedia.org/wiki/Escape_from_New_York
I had this idea for a REIT that would buy the real estate with the highest traffic noise in America to capitalize on EV rollout. Unfortinately 1) most traffic noise is actually Aerodynamic and wheel/road noise and 2) i was missing the las 149.970.000 dollars of equity I needed to achieve the minimum viable size.
Wasn’t improved telecommunications supposed to usher in an era of the virtual office, where commuting was unnecessary?
In New York, ultra high end real estate, which is most of new construction, is largely purchased by (mostly Chinese) foreign buyers as an investment. Actual resident homebuyers tend to look for good public schools. You see a big exodus of families into suburbs as far as Pennsylvania once the kids get to high school age, unless the kids get into a selective high school.
Regulatory restrictions make entry and continued compliance in the private school market difficult, but the largely unregulated tutoring and test-prep market is huge and growing. Also, public school teachers are so overpayed that it is hard for private alternatives to retain good talent.
And you still need a license to cut somebody’s hair.
Electrifying and automating transport will indeed make cities even more competitive. I wonder what becomes of real estate not in a city or on the coast. There is already a LOT of flyover/driveby country and its getting ugly. (I count the near-burbs part of a city.)
The way each generation is focused more & more on doing what they’re told rather than what they want, generation Z would move to the cities to chase higher prices, then follow the noise & pollution out of the cities while also chasing longer commutes.
Phil,
We vacation annually at Bald Head Island, off the coast of North Carolina near Wilmington. Bald Head is a beach resort with no autos allowed save emergency transport and utility vehicles.
Everyone on the island commutes by large golf carts that are battery powered. The noise result? Heaven.
As a lifelong city dweller, I’ve never heard someone cite noise and dirt from cars and trucks as a main reason they’re leaving the city. The reasons cited are more interior living space, better schools, larger yards, physical safety, and the ability to drive everywhere with relative convenience.
I don’t think eliminating noise and dust would bring a meaningful number of new people to the city. One might see a smaller valuation gap between lower and higher floors in skyscrapers as existing city dwellers make different choices.
Fully autonomous driving is a completely different story, and fleet-wide electrification may arrive alongside L5 autonomy.
1. Before electric cars will occupy big cities, electric grid must be completely rebuild. Each electric car draws as much energy, as few apartments.
2. Increasing population will make citi’s traffic worse. Boston’s curved streets were not designed for car traffic. Boston’s public transportation is really unreliable
What would make suburbanites like me want to move back into the city?
1. Better schools. Save 1 unaffordable city area (which is effectively a suburb in the middle of the city with it’s own school district and police force), the best schools are in the suburbs.
2. Better law enforcement. In my city, the crime rate is 10x in the city what it is in the burbs.
3. Better roads. The city is busy paying pensions so they can’t afford to pay to maintain streets even in the good parts of town.
4. Affordable Space. I still pay 1/2 per square foot in the burbs what a man pays in the city.
5. Better mass transit. And I am not talking commute into the city here, I am talking getting around in downtown and uptown without being begged to death for money, or assaulted. And nothing runs on time.
I live in Dallas and we are effectively becoming clusters of suburbs like Los Angeles. No one really loves downtown LA, they love Hollywood, or Irvine, or a beach area, or Pasedena, or Malibu.
There have been plans in Dallas to tear down limited access freeways and force people to drive on parkways again. Arguments are it will reduce noise, but I disagree. They could put the freeway “around” downtown like they did in San Antonio and Houston , and that works better for traffic and noise. In Dallas, they put Woodall Rogers right through the center of town. We did recently put some of the WR traffic underground’s and built Clyde Warren Park over it. And that helped a bunch with the noise. Electric cars may reduce noise, but they do generate heat, and accidents are hazmat scenes with fires that are very difficult to put out. Just ask Tesla. After spending a fortnight in Europe in about 10 cities, I love their rail and bus systems and they are well policed and everyone uses them. Why can’t we be more like Europe? Oh yeah, we have the Koch brothers and all the major airlines and car companies fighting mass transit every step of the way…