The (Un)economics of Motordom

From Matt Foulger:

There’s a fascinating story at Atlantic Cities right now about some very compelling new data:

An exhaustive analysis of 37,000 mortgages on multifamily rental properties has found that, when other factors are appropriately controlled, those properties in smart locations are substantially less likely to incur default on payments than those in average locations.

Specific locational factors found to reduce the risk of default include reduced commute time, use of rail transit, walkability, the presence of retail uses, the integration of affordable housing, and proximity to parks and open space. Proximity to a freeway was found to increase the risk of default, as was increased commute time.

It looks like the motordom lifestyle is objectively impoverishing people. As you know, housing prices tend to be cheaper out in the exurbs near freeways, but excessive commute times and poor access to services make for an expensive lifestyle. This data might partially explain why, as we found out last month, more poor people live in American suburbs than in urban areas. As that study showed, it’s not just a case of the poor fleeing to the burbs, but long-time suburb dwellers getting pinched by the housing collapse and other factors.

But is this true in Canada?

t osborn
June 27, 2013 at 2:29 pm

This may also speak to the phenomenon of “drive till you qualify.” In recent years, new home buyers have been moving to the edges where more affordable housing can be found, but these home buyers are also likely to overextend themselves with the financial obligations of property ownership. There’s a reason the maxim IS NOT, “Drive till you qualify, then drive until your household budget is safe from unexpected crises.”

Kyle
June 27, 2013 at 3:11 pm

“Is this true in Canada?”
>80% of Canada’s population lives in Urban Areas, yet much of the “Urban Areas” are still suburb. Take Surrey, one of the lower income cities in Metro Vancouver. Surrey would be classified as an urban area, though it is more a Suburb.
So to your question: No, because the vast majority of Canadians live in so-called “Urban” Areas.