This is an important chart from a recent study commissioned by Greater Wellington, New Zealand. The study looks at the cost benefits of urban intensification and the above chart shows the relationship been density and infrastructure costs. For this study, they specifically looked at the costs that local governments face in providing road, public bus transport, and "three-waters infrastructure." I hadn't heard this latter term before, but it refers to drinking water, wastewater, and stormwater.
What they obviously found was that there are real economies to higher densities. More density lowers the per dwelling cost of delivering infrastructure. In the case of three-waters infrastructure, it doesn't even really matter if you're proximate to reservoirs or treatment plants. The bulk of the cost lies in the local connection pipes. So what matters most is how many dwellings you can service off of the main lines -- even if these lines need to be upsized.
Smart Growth America released a report this month called Measuring Sprawl 2014. It’s an update to a report they did back in 2002 and it’s worth a read if you’re into urban planning. You can download it here.
The report looks at 221 metro areas in the US and develops a “sprawl index ranking.” The higher the number, the more compact the metro area. Not surprisingly, New York tops the list with San Francisco coming in second. But more interesting are the correlations they discovered. As you go up their sprawl index ranking (that is, as the cities become more compact), they found the following:
People have greater economic opportunity in compact and connected metro areas.
People spend less of their household income on the combined cost of housing and transportation in these areas.
People have a greater number of transportation options available to them.
Over the past decade, Toronto has seen a proliferation of condos across the city. And while I do think this intensification is a great thing, we’ve been much better at building towers than anything else. We’ve neglected medium density development and it has bifurcated our housing market: you’re either in the market for a condo or for a house.
And since we’re not really building anymore of the latter, Toronto has become accustomed to bidding wars and multiple offers. Every young couple I know is in the market for an “hip fixer-upper in the city.” Problem is, that’ll cost you $700,000 or more and you may still need to gut it.
At this point, it’s not realistic to expect that we’ll be building anymore single family homes in the city—at least not at any sort of significant scale. We’re tapped out. But what we can reasonably expect is more medium density development. I’m talking about midrise developments along our avenues, laneway houses in people’s backyards and other creative infill solutions that sit somewhere between a house and a highrise.
If we’re concerned about creating equitable housing opportunities, then we’re going to need relieve some of the pressures on low rise housing. We’re going to need more diversity in our product offerings.
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This is an important chart from a recent study commissioned by Greater Wellington, New Zealand. The study looks at the cost benefits of urban intensification and the above chart shows the relationship been density and infrastructure costs. For this study, they specifically looked at the costs that local governments face in providing road, public bus transport, and "three-waters infrastructure." I hadn't heard this latter term before, but it refers to drinking water, wastewater, and stormwater.
What they obviously found was that there are real economies to higher densities. More density lowers the per dwelling cost of delivering infrastructure. In the case of three-waters infrastructure, it doesn't even really matter if you're proximate to reservoirs or treatment plants. The bulk of the cost lies in the local connection pipes. So what matters most is how many dwellings you can service off of the main lines -- even if these lines need to be upsized.
Smart Growth America released a report this month called Measuring Sprawl 2014. It’s an update to a report they did back in 2002 and it’s worth a read if you’re into urban planning. You can download it here.
The report looks at 221 metro areas in the US and develops a “sprawl index ranking.” The higher the number, the more compact the metro area. Not surprisingly, New York tops the list with San Francisco coming in second. But more interesting are the correlations they discovered. As you go up their sprawl index ranking (that is, as the cities become more compact), they found the following:
People have greater economic opportunity in compact and connected metro areas.
People spend less of their household income on the combined cost of housing and transportation in these areas.
People have a greater number of transportation options available to them.
Over the past decade, Toronto has seen a proliferation of condos across the city. And while I do think this intensification is a great thing, we’ve been much better at building towers than anything else. We’ve neglected medium density development and it has bifurcated our housing market: you’re either in the market for a condo or for a house.
And since we’re not really building anymore of the latter, Toronto has become accustomed to bidding wars and multiple offers. Every young couple I know is in the market for an “hip fixer-upper in the city.” Problem is, that’ll cost you $700,000 or more and you may still need to gut it.
At this point, it’s not realistic to expect that we’ll be building anymore single family homes in the city—at least not at any sort of significant scale. We’re tapped out. But what we can reasonably expect is more medium density development. I’m talking about midrise developments along our avenues, laneway houses in people’s backyards and other creative infill solutions that sit somewhere between a house and a highrise.
If we’re concerned about creating equitable housing opportunities, then we’re going to need relieve some of the pressures on low rise housing. We’re going to need more diversity in our product offerings.
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Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
The goal of this study is to enable more support for smart growth within the Wellington region:
Regional councillor Thomas Nash says the report should give councils confidence to press on with plans that support compact mixed-use development in and around city centres and connected by high quality public transport.
“Regional growth needs to be smart growth. This report clearly shows that the best bang for our buck is to focus on upgrading existing water, public transport and local roading infrastructure so that we can build better quality, compact residential form, with improved amenities within our cities and towns,” Cr Nash says.
Of course, this doesn't just apply to Wellington. Every city should read the study.
And people in compact, connected metro areas tend to be safer, healthier and live longer than their peers in more sprawling metro areas.
If you’re a follower of smart growth, then some of these will sound familiar. But they’re worth repeating and I’d like to focus on the second one for a minute (not to undermine the importance of living longer). Conventional wisdom dictates that as you sprawl out from the center of a city, the cost of housing drops. And indeed, that’s what they found. There’s a correlation between density and housing costs, and more compact cities generally have more expensive housing.
However, they also found that the percentage of income spent on transportation is much less in compact metros:
Each 10 percent increase in an index score was associated with a 3.5 percent decrease in transportation costs relative to income. For instance, households in the San Francisco, CA area (index score: 194.3) spend an average of 12.4 percent of their income on transportation. Households in the Tampa, FL metro area (index score: 98.5) spend an average of 21.5 percent of their income on transportation.
But here’s where it gets interesting: they found that transportation costs dropped faster than housing costs increased as metro areas became more compact. Meaning if you consider both housing costs and transportation costs in aggregate, it’s actually cheaper to live in more compact areas. From what I can tell, they’re also only considering direct transportation costs and not indirect costs such as the time people waste sitting in traffic.
Either way, it’s something to consider the next time you’re thinking about where to live and how much you should be willing to spend on housing. That cheaper suburban home may not be as cheap as it seems.
The goal of this study is to enable more support for smart growth within the Wellington region:
Regional councillor Thomas Nash says the report should give councils confidence to press on with plans that support compact mixed-use development in and around city centres and connected by high quality public transport.
“Regional growth needs to be smart growth. This report clearly shows that the best bang for our buck is to focus on upgrading existing water, public transport and local roading infrastructure so that we can build better quality, compact residential form, with improved amenities within our cities and towns,” Cr Nash says.
Of course, this doesn't just apply to Wellington. Every city should read the study.
And people in compact, connected metro areas tend to be safer, healthier and live longer than their peers in more sprawling metro areas.
If you’re a follower of smart growth, then some of these will sound familiar. But they’re worth repeating and I’d like to focus on the second one for a minute (not to undermine the importance of living longer). Conventional wisdom dictates that as you sprawl out from the center of a city, the cost of housing drops. And indeed, that’s what they found. There’s a correlation between density and housing costs, and more compact cities generally have more expensive housing.
However, they also found that the percentage of income spent on transportation is much less in compact metros:
Each 10 percent increase in an index score was associated with a 3.5 percent decrease in transportation costs relative to income. For instance, households in the San Francisco, CA area (index score: 194.3) spend an average of 12.4 percent of their income on transportation. Households in the Tampa, FL metro area (index score: 98.5) spend an average of 21.5 percent of their income on transportation.
But here’s where it gets interesting: they found that transportation costs dropped faster than housing costs increased as metro areas became more compact. Meaning if you consider both housing costs and transportation costs in aggregate, it’s actually cheaper to live in more compact areas. From what I can tell, they’re also only considering direct transportation costs and not indirect costs such as the time people waste sitting in traffic.
Either way, it’s something to consider the next time you’re thinking about where to live and how much you should be willing to spend on housing. That cheaper suburban home may not be as cheap as it seems.
