Episode Summary

  • Sprawl affects us all. Our single-family psyche creates a tragedy of the commons and creates a difficult mental bias when trying to consider how to create affordable housing for all in our communities.
  • Micro mobility companies are expanding to smaller communities offering another option in a city's transportation portfolio.
  • Venture capital is likely done subsidizing your ride-sharing and delivery habits. Inflation and supply chain issues give these companies the perfect cloud cover to stop selling their services at a loss and adjust their pricing into profitability.

We love our single-family homes. (6 min read)

Micro mobilityexpands to smaller cities. (4 min read)

Venture capital is done paying for your trips and deliveries. (3 min read)

Episode Transcript

Episode 70 - Patterns of Development

Love, Expand, Done

This is patterns of development.

Hey everyone. I’m Kyle Gulau. On this show, patterns of development, we take less than 10 minutes each week to deconstruct what's going on in real estate, architecture, and urban planning.

And this week let's talk about our love for single family homes. It's the American dream. It has been built into our structures, social legends, our psyche as Americans.

The home with the 2 car garage, the nice big yard, with the fence for the kids to run around in. The image we're painting in our mind --  it's sunny, it's the summer, everything's green, it's not too hot, just right. Mm. It's a happy place.

Everyone wants it. Even if they can't afford it. Sprawl directly correlates to a higher cost of living. More recently, gasoline has been averaging about $5 a gallon nationally, if you've created your household in place where you need to drive 15 minutes to get anywhere your transportation cost just doubled.

An article in Time Magazine discusses our love affair with single family housing, how the solutions to provide affordable housing are possible, and yet people don't want to live in an apartment or share a wall with their neighbor.

In Steamboat Springs Colorado, Jason Peasley, representing the Yampa Valley Housing Authority, has a plan to solve the communities housing problem - use density. The article highlights the feedback Jason's getting from the community

"What about single family homes?" asked one.
"I would take a very, very small house." Spoke another.

Yampa Valley Housing authority recently got an anonymous donation of 536 acres to build affordable housing in Steamboat Springs. In theory, residents say they support density, but everyone wants their own single family home.

We discussed this in episode 65 a bit. Sprawl is a tragedy of the commons. All things being equal people want easy access to everything. And! All things being equal people want as much space as possible.

Unfortunately the paradox between those two points is that in pursuit of more space you naturally get less access to things because you're building things further away.

Back to Steamboat Springs, the article by Alana Semuels, highlights this very dilemma. To quote the article now,

"Even if he does convince Steamboat to embrace density, Peasley still has a long road ahead to make Brown Ranch a reality. Consultants have estimated that infrastructure on the site will cost around $400 million, which includes improvements to the local highway, water treatment plant, and sewer system, and roads, and trails in the development. Once that’s complete, the housing authority can start building homes. The city isn’t even sure how it will affordably house all the workers who are going to be flocking to Steamboat to build this affordable housing."

So. Big work ahead for Jason. But! If he's able to solve the space dilemma, if any community is able to solve the space dilemma, it unlocks new opportunities for people to get around. Transportation should be considered like a healthy investment portfolio - it should be diversified. Solve the space problem and you unlock new opportunities to diversify the transportation options for your citizens.

According to smart cities dive - micro mobility companies like Bird, Lime, and Lyft has rapidly expanded their services into small and midsize markets, defined as communities between 2,500 and 150,000 people.

Micro mobility options like e-bikes and e-scooters help ease congestion, and reduce transportation emissions. Also...it's just more fun.

Along with transit benefits, scooters have also been shown to increase the amount of spending in a city: in 2021, Bird estimated its users spent more than $100 million at local businesses.

These companies used to exclusively in big cities but as people being to move around, and as their businesses continue to demand growth it opens interesting opportunities and challenges for smaller communities.

Now these companies Bird, Lime, and Lyft are all juiced venture capital dollars. Other popular urban delivery and transportation services are too. Think Uber, Doordash, Grubhub.

An article by Derek Thompson in the Atlantic notes that with rising interest rates, inflation, and labor shortages your ride-sharing trip and your pizza delivery are now significantly more expensive. But there's a concept beneath the surface that adds another factor into the rising cost of these services.

Venture capital money has been subsidizing the services of all these platforms.

Over the last 5-10 years. Growth was the number 1 factor that indicated if your new-fangled app business was a good investment. To get growth companies tended to sell goods and services at a loss. That loss was covered by venture capital dollars. It wasn't about profitability. It was about growth. Growth first. Once you've dominated the market, then you focus on profitability. While it seems crazy, venture capital was fine doing it this way because they're looking for the next big win. So they'll take a loss on the first 14 in hopes that 15 hits big.

I love this quote from Derek's article, "if you woke up on a Casper mattress, worked out with a Peloton, Ubered to a WeWork, ordered on DoorDash for lunch, took a Lyft home, and ordered dinner through Postmates only to realize your partner had already started on a Blue Apron meal, your household had, in one day, interacted with eight unprofitable companies that collectively lost about $15 billion in one year."

Derek Thompson calls it the Millennial Consumer Subsidy. Macro economic factors combined with venture capital dollars getting more conservative likely means that the heavily discounted services offered for the last 10 years aren't coming back.

This leads us to our patterns of the week!

  • Sprawl affects us all. Our single-family psyche creates a tragedy of the commons and creates a difficult mental bias when trying to consider how to create affordable housing for all in our communities.
  • Micro mobility companies are expanding to smaller communities offering another option in city's transportation portfolio.
  • Venture capital is likely done subsidizing your ride-sharing and delivery habits. Inflation and supply chain issues give these companies the perfect cloud cover to stop selling their services at a loss and adjust their pricing into profitability.

That's all for this week. Talk to you next week!