betacity


drive till you qualify
September 24, 2011, 5:30 pm
Filed under: betaCITY, Cities, density | Tags: , , , ,

Drive till you qualify is the maxim used by America’s real estate agents.  Here’s how it works (or doesn’t, depending on your perspective).

You get a brand new job in downtown Chicago and then realize you need somewhere to live so you call a real estate agent.  With your criteria spelled out – space, light, fixtures all for a maximum price – the two of you get in a car outside your office and drive to a nearby apartment.  It’s too small, so you drive further.  The next one’s too dark, so you drive farther.  You don’t like the fixtures in the next one, so you drive further.

Eventually, you find yourself about an hour from your downtown office in a large, bright place with nice fixtures and you put your money down and move in.  You settle into your job and at first the hour commute seems like a small price to pay for the extra space and light and stuff.

Above is a map of foreclosures in the Chicago area.  The white region at center right of the image is downtown Chicago including it’s businesses, institutions, and expensive apartments and homes.  The dark blue ring that circles the downtown, is where you ended up living, about an hour’s commute from your job downtown.

The map shows that the majority of foreclosures in Chicago – and other American cities – since the housing bubble burst in 2008, are in this dark blue patch of inner ring suburbs.  Presumably people who live in these suburbs are the ones who lost their jobs and haven’t been able to pay their mortgages.   Their jobs were less stable, or they were the part of the workforce that were expendable, or their mortgages were priced in ways that were unsustainable over the long term.  For whatever reason, this ring of life is struggling more than other areas in the typical American metropolis.

I like to think about how we got here and the way forward.  People in cities live in less space, use less energy, are overall better stewards of space and environment.  But they pay way more for their environments because of ‘demand’:  it’s desirable to live downtown so landlords and sellers keep prices high.  As a ratio of income over the past half century, these ‘demand’ based prices have skyrocketed, while incomes have flatlined.

From the point of view of land and energy use exurban homes and apartments should be more expensive than inner city homes and offices.  But because of the arbitrary nature of ‘demand’ and markets, the opposite is true and we are forced to commute further out of our cities to try to find affordable living space.

H + T Affordability Index

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