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.
Glad to see CNBC tackling issues like this. Their videos tend to go pretty mainstream.
The more people talk about zoning and land use on platforms like Reddit and Twitter, the more likely traditional outlets will continue to put out pieces like this. Glad to see the conversation going more mainstream. Can't imagine how depressing it was 10-20 years ago when urban planners were some of the only people who even recognized there was a problem with US/Canadian zoning.
Edit - 11:50 "Another study found that changes to the code in Sao Paulo, Brazil improved the quality of life for renters with college degrees, but those changes also greatly sank home prices, affecting landlords." I don't really see why the narrator was making the latter effect seem like a bad thing.
Hey! I'm the producer of this piece. Just want to explain how I came up with this story. I've covered city development since 2017. This video came as a natural extension of that. Last year, while making a video on rent inflation, I learned that housing starts for single-family homes were up big time. That was my first sign that sprawl and zoning were entering the news cycle. Then I came across new peer-reviewed research on suburbanization. All of these factors gave the story timeliness, which is a core news value. If you want to read the papers I reference, here are a few links:
https://www.nber.org/papers/w29440 - Zoning reform in Sao Paulo
https://www.nber.org/papers/w28841 - Suburbanization in the U.S. 1970-2010
All that said, I'm a huge fan of both Strong Towns and u/notjustbikes and I encourage everyone to share their stories too! - Carlos W (www.cdwaters.squarespace.com/about)
Yes , small business is very hard to establish in sprawl
In more ways than one. Not only are they a waste of public resources, they are also a waste of private resources. The expensive building pattern leads to expensive living habits.
As a city dweller, I think the economy of most American cities have already been ruined by suburban sprawl, starting in the late 1940s. Yes, there were some cracks in the fabric before then, what with trolley suburbs, but cities continued to dominate and do fairly well. It was the formalization that American cities were to be the perpetual retainer of the poor, esp non white poor. Then there was the appropriation of infrastructure, which were necessary for the suburbs to be financially feasible for those who were accepted to be part of the new America. They could not support all the costs required to take water, sewer, electricity, roads, etc farther out. It was the co-opting of these resources which continues to weaken cities.
Full disclosure: I'm a former city dweller (lived in Chicago for ~10 years) that still loves the city and mixed used urban areas but moved to the suburbs after the city was just no longer practical for me and my family.
I love these types of videos/breakdowns but one thing that it makes me think is, what are individuals supposed to do? And what I mean by that is, a person can recognize the flaw of the burbs and even want to remain in a more urban/mixed use area but often times it seems like the city loses practicality as you age/start a family (I'm 35). Maybe that question isn't the right one because it's not supposed to be solved by individuals?
My wife and I felt basically forced into the suburbs post kid due to just the insane cost of everything (amoung other reasons). We do enjoy aspects of the burbs (the quiet, the safety) but we probably would have remained in the city if it was financally viable. And we have a half dozen friends our age who have said similar. But the cost of housing and child care in major US cities means you either need to make bank to afford a decent place or you leave and go where you can afford both.
Ruining? Or ruined?
Exactly! Increasing density in areas that are already developed for housing is the best approach, especially for the environment. California made a step in the right direction with SB 9, but it's facing so much opposition. There are petitions going around to try to reverse it, claiming that it wrenches control away from local governments. But these local governments haven't been doing anything to address the housing crisis! Just bending over backwards to accommodate the NIMBYs.