Why is it more expensive to live in a city?

April 26, 2006 1:04 PM

Why is it more expensive to live in a city? Is it simply supply and demand? Bonus points for relevant references and data.
posted by koenie to work & money (19 comments total)

Some aspects are cheaper -- you use a car less, for instance. Are you speaking just about rent?
posted by occhiblu at 1:30 PM on April 26, 2006

Pretty much. Less space, more people. Plus, since money tends to concentrate in urban centers, people HAVE more money... so landlords can charge more and still find renters.
posted by Malor at 1:30 PM on April 26, 2006

A corollary to Malor: because cities offer more ancillary services (restaurants, entertainment) those who choose to live there will often accept less in terms of creature comforts, and at a higher price.
posted by holgate at 1:36 PM on April 26, 2006

A corollary to holgate: people in cities will also spend more money using such services, hence it appears that the "cost of living" is higher but it's really just people choosing to spend their money on things that they could forego if they wanted to.

Also, cities sometimes have higher taxes in order to pay for the city services which are used by, but not paid for by, people who come to the city from elsewhere to work or frequent businesses.
posted by OmieWise at 1:40 PM on April 26, 2006

Cities also concentrate high-paid skilled white collar workers resulting in greater disparity between the rich and poor. That of course raises the average wage for the city.

And cities are expensive in absolute terms. In relative terms, there's an equilibrium between salary and cost-of-living in successful cities. So while my apartment in the SF Bay Area is expensive compared to the same-size apartment in LA, I still consider it "affordable" due to my SF salary and lifestyle.
posted by junesix at 1:41 PM on April 26, 2006

I don't think it's a flat-out truism that cities are "more expensive." But "more expensive" is pretty vague...what do you mean by that?
posted by desuetude at 1:57 PM on April 26, 2006

I would ask if you're begging the question. Why do you assume it's more expensive? Or are you asking about specific costs, like housing?

The Canada census has a lot of data on income levels, but nothing on cost of living. Stats Can only breaks down the consumer price index by province, which doesn't address your question.

The only thing I could google discusses urban vs rural CPI in Malaysia. I think.

The US Dept of Labour says that you cannot use its CPI data to compare the relative cost of living between regions.

So before we can answer your question, I think we'd need some data to verify that your assertion is actually true.
posted by GuyZero at 1:57 PM on April 26, 2006

Not all cities are more expensive. Camden, Trenton, and most of Philadelphia are cheaper than the surrounding suburbs. Cities are more volatile. When a city is undesirable, it tends to be very undesirable. Likewise, neighborhoods can go from being undesirable and cheap to much sought after in only a few years. The reverse is also true.
posted by malp at 2:04 PM on April 26, 2006

Cities are more volatile.
Perhaps in the US case where increasingly you have wealthy suburbs and exurbs and inner city concentrations of poor, but in Europe you often have the opposite, with poorer neighborhoods being in the 'burbs--the latest demonstration of this being the recent riots in the Parisian suburbs, which didn't touch the core.
posted by donovan at 2:12 PM on April 26, 2006

As OmieWise noted, cities also levy taxes to pay for common services.

You wanted some data. Here's a chart that shows the tax burden for the 50 largest cities in the US. In the case of my fair city--Seattle--we pay a sales tax of 8.8% on purchases, a portion of which is a city tax (which is likely to be increased soon by 0.1% to help pay for additional buses). This is more than those who live in rural areas nearby pay.
posted by donovan at 2:19 PM on April 26, 2006

I live in a house on a lot in a small town. Some things I spend money on are: 1) payments on two cars so we can both work, 2) gas and insurance and repairs for same, 3) home maintenance, we need to replace the roof soon for example, about a $8k job, and the sewer line, $1500, 4) various implements of destruction to maintain the lawn and house, a couple grand invested there, 5) plants for the garden, 6) the opportunity costs of the weekends I spend mowing the grass and fixing stuff. So perhaps living a city is a pretty good deal.
posted by LarryC at 2:22 PM on April 26, 2006

The problem of services being used by commuters who work but don't live in cities is sometimes "solved" (well, unsatisfactorily addressed) by forcing surrounding areas to trasfer some tax revenue to directly the city each year.

All of the suburbs around Toronto continually complain and threaten to rebel against the province forcing them to "subsidize" services they "don't use" in the big bad evil city, but this underlying logic is meant to make sure the poor (and not-poor) in the core don't foot the bill for white-collar suburban commuters.
posted by onshi at 2:28 PM on April 26, 2006

I live in Chicago. Some reasons I can think of, that make it costlier for me to live here:

-My garage spot for my car costs $150/month. Since I like owning a car for many reasons, I view this is a necessity. Given the abundance of parking tickets in this city, it's entirely possible I'd spend more on those than my spot, per month. Gas costs more here, and it costs way way more to insure a car in any major city. If you don't own a car, you can use public transit, but you could still be spending quite a bit on that with daily train/bus fares and pricey cab rides.

-A big reason is that, for the most part, cities are built-up. They have limited open stock, and generally unless something is torn down, more cannot be built. This drives supply down, and therefore prices up. My condo was $350ish/sqft. Compare that to a suburban home. Chicago is a big job market, and a lot of people like living close to work.

-Chicago is pretty hefty on taxes and funding for public programs. So if you own property, you pay for it. If you rent from an owner, you help them pay for it.

-Though for NY and SF this has always been the case (being a desirable metro city to live in), there's been a strong trend towards urbanization. Culture, diversity, nightlife, etc being the key draws there.

But hey.. I can walk down the block and get some Thai food for $5, or awesome tacos for $4.
posted by ninjew at 2:49 PM on April 26, 2006

Supply and demand. There is a greater demand to live in the city than in the country and housing is limited. Hence the price rises. This is also true for commercial property so that commercial rents are higher in cities which means a greater mark-up on prices of goods and services. This is potentially offset by the increased incomes available in the city.
posted by patricio at 2:56 PM on April 26, 2006

Don't forget some of the non-monetary expenses of those who live in city, suburb, or country... When I lived in San Diego I had co-workers who commuted two hours one-way from Riverside County or even lower Orange County. They had not only the direct cost of commuting but also the very real cost of giving up those extra hours of the day to sit in traffic, the stress, the effect on home, family, community life, etc..

As for me, back then I lived in a relatively poor inner city neighborhood. My cost of living, in numbers, was less than if I lived in the suburbs -- but I had the "cost" of more noise (I lived under an airport flight path), more crime, more social ills (I once found a drugged out homeless person sleeping in my garage), fewer stores (I had to choose between a teeny corner store or driving a few miles to Ralphs or Vons) and so on.
posted by Robert Angelo at 3:02 PM on April 26, 2006

The "city life" is now more desirable. More of the urban hipster types with more disposable income. Rents go up, people happily pay them.

A lot of it has to with the 'lifestyle' but I suppose that some of it has to do with being close to your job. Although, I know very few SF dwellers that actually work in SF. They like it for the young urban lifestyle. Seriously.

NY & SF are both geographically limited, too. Less land to build on = higher premium on the land.
posted by drstein at 3:02 PM on April 26, 2006

Same reason the grass is always greener on the other side of the fence.

I'm living in a country town now. I used to live in the city. I'm spending more now than I ever did then. YMMV.
posted by flabdablet at 4:51 PM on April 26, 2006

I'm living in a country town now. I used to live in the city. I'm spending less now than I ever did then. YMMV. :-)

Total Non-federal/state taxes are 1/5 (yes 1/5) of what they were, which more than pays for commute to the same job which is in a town JUST out of the city.

Same housing costs on a home twice as big.
posted by sandra_s at 6:51 PM on April 26, 2006

Someone should ask this guy.
posted by LarryC at 6:57 PM on April 26, 2006