My friend Evgeny published a great blog post today called, On Car Ownership And The Future Of Transportation.
And in it he made the argument that instead of buying a car and an expensive downtown Toronto parking spot (average price: $40,000 - 60,000), most of us urbanites would be better of just taking a taxi or Uber.
This got me thinking: At what point does it really make sense to completely forgo owning a car? (Full disclosure: I own both a car and a downtown parking spot.) So I decided to dig into the numbers a bit more and compare 4 mobility options:
Owning a car ($25,000 upfront) + downtown parking spot ($40,000 upfront) and driving yourself everywhere
Taking a regular taxi exclusively ($3.25 base + $1.75 per km)
Taking an UberX exclusively ($2.50 base + $1 per km)
Or, taking a futuristic driverless car everywhere (here I assumed $1.50 base + $0.25 per km)
With the above numbers, I then assumed 15,000 km traveled per year and an average trip length of 15 km (so 1,000 trips per year). The trip length and number of trips per year matter because of the “base fare” that is charged when you take a taxi or Uber.
I also assumed that the cost of owning a car is $0.60 per km (estimated from this Globe and Mail article) and that there is an opportunity cost to NOT renting out your downtown parking spot ($200/month). That is, every month that you spend driving yourself around and parking your car, you are forfeiting parking revenue.
Finally, I looked at a 10 year time horizon and then “discounted” all the costs back to today’s dollars so that I could compare each mobility option.
So what did I find?
What this says is that if you’re driving 15,000 km per year (average trip length 15km), then you’re better off taking UberX everywhere, as opposed to going out, buying a car and parking spot, and driving yourself around.
But does this hold true at different travel distances?
Based on my model, once you hit around 18,000 km per year, then you’re better of with option 1 (owning a car). That’s because the per km savings associated with driving yourself around are enough to offset the upfront costs of the car and parking spot.
On the flip side, when you drop below 7,500 km traveled per year, even a regular taxi starts to make sense. That’s because you’re simply not traveling enough to reap the benefits of owning a car/parking spot. Again, high upfront costs; lower per km operating costs.
Of course, there are a number of things I didn’t consider in my model. For one, most people finance their car and parking spot (it is bundled into their home mortgage). So I’m sure there are ways that you could change the above outcomes using leverage.
At the same time, I didn’t account for the fact that when you’re being driven around (as opposed to driving around) you have the flexibility of doing work, responding to emails, and so on. If you want to attach a value to your time, then the scale would tip back in favor of taxis and Uber.
But all of this was really just to make one point: look how cheap it could be to ride around in a driverless car. When that becomes the reality in our cities, which it will, it’s going to completely transform our current beliefs around cars, parking, and many other things.
I guess that’s why General Motors just invested $500 million in the peer-to-peer ridesharing company, Lyft. They know the shit is coming.
Today, myself and a few others spent the afternoon urban exploring Hamilton, Ontario with Thomas Allen of the blog, Rebuild Hamilton. If you don’t read his blog, you should. Since he started writing about 3 years ago, he has really emerged as the online voice of Hamilton’s urban resurgence.
If you’re from Toronto, you’ve probably been hearing rumblings about good things happening west of the city. Rumblings about people leaving overpriced Toronto for greener and more affordable pastures in Hamilton, and even that it was destined to become the Brooklyn of Toronto. That basically means Millennials, trendy coffee shops, and beards. (For the record, Thomas’s beard is very nice.)
With all this talk of affordable housing and beards, I decided that it was time to make a pilgrimage. Below is a short photo essay of what we saw.
We started the day east of Hamilton where we found this beauty along the waterfront. I don’t know who designed it, but it’s called the Cube House and it was construction managed by Toms + McNally Design. You’re going to want to click through to their website to see the interior photos.
We then made our way downtown to Jackson Square. Jackson Square is one of two downtown malls (the other is the post-modern City Centre Mall). It has seen a lot of investment in recent years and I was impressed to find a thriving grocery store.
Then came a taco and craft beer pit stop at The Mule. I would definitely recommend this spot if you happen to find yourself in the area.
Following this, we walked James Street North, which we were told has only really come up in the past 5 years or so. And alongside with this resurgence has come the slogan: Art is the new steel. This, of course, is responding to the fact that Hamilton is the steel capital of Canada, but that the industry is facing many challenges. I think it’s a neat slogan.
On James Street we stopped in at Saint James Espresso Bar & Eatery, and it was everything we had hoped for and more. It was more because not only was it a cool space with great coffee, but they had some fancy thing called steam punk coffee.
After James Street, we then drove around checking out some of the other areas in the city such as Kirkendall and neighboring Dundas.
All in all, this afternoon was a great reminder that we are truly living in an urban century. It’s not just the Toronto’s, Berlin’s and Shanghai’s of the of the world that are laying down bike lanes, investing in art and culture, and generally reimagining their city centers. It’s also happening in smaller and mid-sized cities such as Hamilton. And that’s really exciting.
I was reading through PwC and ULI’s 2016 Emerging Trends in Real Estate report this evening and a handful of charts stood out to me. They’re not all related to each other, which is why this blog post is called what it is. But I think you’ll find them relevant to many of the things we talk about on this blog.
1. Average home size by country
With all the interest today in “small urban spaces” it’s interesting to see that the average home size for half the countries on this list is somewhere between 500 and ~1100 sf. It’s also amazing to see Hong Kong hovering just below 500 sf.
2) The decline in homeownership in the US
I like to follow home ownership rates because there’s a lot of debate around whether or not this obsession with homeownership – which has been so central to the ethos of countries like the US and Canada – is at all falling out of a favor. This chart shows some pretty significant drops from previous highs.
3) Average home prices and the price to income ratio in major Canadian cities
Not surprisingly, Vancouver and Toronto are the top of this list with the highest average home prices and the highest price to income ratios (i.e. the worst affordability).
4) Drivers as a percentage of all commuters in the US
This chart is similar to what you would see if you looked at vehicle miles traveled. I’ve heard some people say that driving is now once again on the rise, but for the past decade and a half it’s been on a slow and steady decline.
5) Countries buying US real estate
Canada is a big buyer of US real estate. But with the dollar where it is today, I am sure that number is headed downwards.
