We have recently moved the
Creative Class Exchange.

Please update your bookmarks with our new address at www.creativeclass.com

We look forward to your comments and discussion.

Thank you.

Posts by Author

  • Global Trends
  • Ask Rana: Advice on Work, Life and Play
  • Urban Digs, Creative Class Communities
  • Workplace
  • Entrepreneurship, Creative Class Strategies
  • Creative Class Research and Indicators
  • Architecture + Design

Video Interview

Watch a Speech

Hear a Speech

Speaking

Technorati

SiteMeter

June 26, 2008

Richard Florida

Time, Money, Location

« Cybercities | Main | Cost of Commuting »

The New York Times reports that the suburban model may have reached a tipping point:

Suddenly, the economics of American suburban life are under assault as skyrocketing energy prices inflate the costs of reaching, heating and cooling homes on the distant edges of metropolitan areas.

Across the nation, the realization is taking hold that rising energy prices are less a momentary blip than a change with lasting consequences. The shift to costlier fuel is threatening to slow the decades-old migration away from cities, while exacerbating the housing downturn by diminishing the appeal of larger homes set far from urban jobs.

In Atlanta, Philadelphia, San Francisco and Minneapolis, homes beyond the urban core have been falling in value faster than those within, according to an analysis by Moody’s Economy.com. ...

More than three-fourths of prospective home buyers are now more inclined to live in an urban area because of fuel prices, according to a recent survey of 903 real estate agents with Coldwell Banker, the national brokerage firm ...

“It’s like an ebbing of this suburban tide,” said Joe Cortright, an economist at the consulting group Impresa Inc. in Portland, Ore. “There’s going to be this kind of reversal of desirability. Typically, Americans have felt the periphery was most desirable, and now there’s going to be a reversion to the center.” In a recent study, Mr. Cortright found that house prices in the urban centers of Chicago, Los Angeles, Pittsburgh, Portland and Tampa have fared significantly better than those in the suburbs. So-called exurbs — communities sprouting on the distant edges of metropolitan areas — have suffered worst of all, Mr. Cortright found.

And here's the money quote from Phil Boyle, a Denver-area suburbanite: "Before it was ‘we spend too much time driving.’ Now, it’s ‘we spend too much time and money driving.’ ”

UPDATE:  Over at Freakonomics, economist Daniel Hamermesh reports on his recent research on the topic of time versus money:

The average human being will be substantially richer in 50 years, just as the average American today has a real income three times what it was in 1955. But the average human being will not have much more time in 50 years than today; and life expectancy has increased by only 10 percent in the U.S. since 1955, so for most people time has become relatively scarce compared to money ... So the next time you hear a wealthy person complaining about having no time, tell him/her that there’s a simple alternative — give away money. Of course, a person who does that will then complain that his/her income is insufficient. Time or money: one or the other is always relatively scarce and always generates complaints!

The paper is here.  Seems to me location is a critical piece in balancing the time-money equation and will become even more so in the future.

 

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d83451b7f569e200e5538ddc0b8834

Listed below are links to weblogs that reference Time, Money, Location:

Comments

Chris

So to combat higher gas prices (which average around $500 extra a year for a family) people are going to sell their house in the suburbs (to whom?) and then move to the city and pay a premium for that location? That math (ahem, economics) on that don't seem to work out.

Spend $300k to save $500.00?

Whitney Gunderson

In Europe, cities tend to have a more urban feel than in the United States, but the European country-side is also heavily populated. Especially in the Netherlands, Germany and Belgium. Fuel is more expensive in Europe and people still drive. So, while the price of fuel may have an urbanization effect in the United States, people will still live in American suburbs like they live in European ones. The Coldwell Banker survey says people are more inclined to live in urban areas, but it doesn’t detail mass movement. If cities in the United States don’t figure out how to urbanize, the inclination could wear off, and the time-money equation will lean towards cheap living like it always has; where-ever that may be, and a daily commute under 30 minutes.

Dave Atkins

I think, if gas hits $7/gallon as I heard predicted this morning, it will start to have an impact. But I find it hard to believe the money cost of fuel is more significant than the cost of time. People have been signing up for insane commutes so they could have their "dream home" 50 miles from work. Then, they swap war stories about their 2-hour commutes. I'd argue that at least in the short term, the high cost of fuel will simply create wage pressure which will exacerbate the commute problem. It is already impossible to find a job near your suburban home; now, to afford the increasing costs of living, you need to find a higher paying job which will likely be closer to the urban core. Or perhaps that will trigger a full scale relocation. There are so many variables at play and I think they cancel each other out in comparison to the big issues (that you describe in your book) that drive choice of place.

The fundamental drivers of choice of place will remain unchanged, but commuting costs may force prioritization. People will buy Priuses, stop paying landscapers to mow their lawns, and cut their cable TV service before they consider moving from the suburban place they have chosen. I base that on my own observation that while I would love to live closer to the city, at this stage of life, our location in a New England town on route 128 is ideal. I'm more inspired to think about how I can make our town more walkable and have more of the advantages of urbanity than I am to move into the city and think about enrolling our kids in private school instead of the great public schools here in Westwood.

There was an interesting article in the Boston Globe a few months ago about making Boston bike friendly--they compared the experience of Coppenhagen which, 30-years ago was nowhere near the cycling paradise it is today. The city transformed thanks to a concerted effort to promote cycling. It is hard to imagine that happening here...but I think it's a lot more likely than a massive migration of suburbanites into the city. The costs of commuting will make people think hard, but I think they'll find ways to adjust their lives to accommodate their existing choices.

Robby Saady

I'm excited by the increasing interest in urban living. I just hope that my urban neighborhood in Richmond, VA does not become unaffordable as so many other exciting urban 'hoods in Richmond and around the country have become. Maybe it is a good thing if suburbanization continues, at least until it's time for me to buy a house ;)

Michael Wells

I doubt that the suburbs will be abandoned, but many are too spread out for traditional large vehicle mass transit. I suspect we'll see creative approaches for feeding mass transit systems like mini-van jitneys, electric gypsy cabs, buses and trains with bicycle racks (have them in Portland), scooter and bicycle parking lots at transit stops, online carpool matching, probably things we haven't even thought of yet.

Also as has been mentioned in different posts, some of those MacMansions being converted into multi-family housing to increase density. Certainly more telecommuting, but I think Richard's right people are going to want to/have to be meeting fact-to-face.

Wil

Small inexpensive cities may be best for wealth creation, according to this article:
http://money.cnn.com/2008/06/30/real_estate/personal_wealth/index.htm?postversion=2008063019

Whitney Gunderson

Wil, in posting a CNN.com article, just cast Plano, Texas in a favorable light. Plano is a suburb of Dallas. That's fair game for suburb haters to bust on.

Wil

What about the other small cities mentioned in the article such as Minneapolis, and Omaha? The article points out how the cost of living in NYC, SF, and other big cities can ruin an individual's net worth. I have never lived in suburbia (unless you consider Berkeley a suburb), but I have lived in smaller cities and appreciate how low cost of living more easily allows the creation of personal wealth, while providing a high quality of life. We architects all love urbanism, but the American Suburb, and small city get a lot right too.

Wil

Try the cost of living tool in the sidebar of the article.

Michael Wells

There may be a point to the Money article, but I don't think it's small cities. High ranking Minneapolis (Metro area 3 million +) isn't very small, and low ranking Honolulu (Metro area 900,000) isn't terribly big.

Wil

Good observation Michael, Honolulu is small, and Minneapolis isn't. But urban favourites such as NYC, and S.F. did't fare so well in the analysis. It could simply be what is being studied, wealth creation or cultural experiences - in this case it was personal wealth creation, which seems to suffer in urban favourites.

Michael Wells

Numerous posts on this blog as well as Richard's writing talk about the downsides of the creative cities, high cost of living being one of them. The issue isn't size, but the number of affluent people who want to live someplace and drive up prices. There are several incredibly expensive small cities -- Carmel, Aspen, Jackson.

Money Mag is talking about the average person who works for wages and saves to create wealth. SF, NYC, LA, etc are creating much more wealth on the high end from people starting companies, inventing new products, building creative industries. Someone who wants to launch a new high-tech venture is going to succeed and create wealth faster in the SF Bay Area than they would by moving to Omaha.

Some of the differences may also be shorter term. A working person who bought a house in SF or Berkeley, or a condo in NYC in 1970 has accumulated much more wealth than if they'd stayed in Omaha and put their money in savings accounts.

Wil

If we are talking about commuting we are likely talking about people who on average work for wages. There is no doubt that a person would do much better with a startup in the Bay Area than Plano, provided they could afford the overhead costs.

The comments to this entry are closed.