The Inefficiency of where people live

In reading the New York Magazine article on making New York (and cities in general) more affordable, I challenged myself to look outside of the scope of solutions being proposed, and to try to find some other critical elements to examine. While the debate surrounding housing affordability is enthralling in itself, in the context of sustainability, two major components of housing patterns are often cited.

First is the direct cost of all of the embedded and ongoing energy costs of housing. This is a heavily researched, discussed, and applied avenue of sustainability, with schemes from Energy Star to LEED and lifecycle analysis coming to mind.

Second is the transportation costs related to the location of the housing. Much of the argument for denser, transit rich development is predicated on the reduced impact of transportation. Policy and zoning to encourage people to build walkable, transit oriented development is an example of how transportation environmental impacts are being addressed.

This is where my thinking comes in. I believe that there is a third major role that housing plays, related to transportation, that is much less talked about. I am going to call this ‘housing friction and inefficiency.’

The economic idea of “friction” (that credit cards are simpler and easier to use than cash, and that both involve less “friction” in a transaction than trading actual goods) is often cited as one of the major impediments to efficiency. Here is an interesting NY times article on the subject of friction: http://www.nytimes.com. Housing, as I am sure most everyone has experienced, involves a ton of friction. Here are some major contributors:

  • Moving requires physically moving all of our stuff, something that most people avoid.
  • Selling or buying housing involves high transaction costs, dis-incentivizing people from buying or selling as frequently as they might otherwise.
  • Leases are regularly at least a year, making it difficult for people to move within the year.
  • School districts are tied to location, adding friction to a potential move for parents.

All of this “friction” within the housing market leads to an inefficient market, one where a lot of people are living in a subprime location given their needs, but find it too challenging to move. Bringing this back around to the discussion of sustainability, all of this inefficiency leads to a lot of unnecessary environmental impacts. People commute long distances to avoid the difficulty of moving. They live on one side of town but work on the other. They chose where to live based on a school district.

Reducing the frictional nature of our housing market would go a long way towards our sustainability goals. Making it easier for people to move around and relocated would help make the pattern of where people chose to live within a city a lot more dynamic, as people could more easily move to parts of town that more efficiently meet their needs.

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