Episode Summary

  1. Electric cars aren't even the most popular type of electric transportation. And it's because electric cars are still cars. They rely on the same infrastructure that a car does and have the same cost of ownership. It's just kinda better for the environment.
  2. A migration pattern that's emerging is the donut effect with people moving away from city cores but still living in proximity to the city. This is likely a result of higher educated, white collar workers seeking more space and taking advantage of lower interest rates.
  3. Is our world getting uglier? Or have we stopped making timeless buildings in favor of cheapest material of the day? Form does follow finance.

America's best selling electric vehicle (1 min read)

The donut effect and the future of work (36 page research paper, 4 min read)

Survivorship bias and our beautiful old buildings (6 min read)

Episode Transcript

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

The value proposition of this show? You don't have a lot of time and I find interesting stuff related to our cities and summarize it here. Giving you the next secret weapon, the knowledge bomb, to drop in the meeting.

My own goal, is if I truly study this stuff long enough, patterns will emerge and I'll be a better developer, consultant, coach, neighbor, and citizen. And that's what this podcast is. My studies, shared and summarized for you.

Welcome to the patterns of development. This week, our big fact, the big number, is the best selling electric vehicle in the United States. If you thought Tesla, GM, Ford, or Rivian. You're wrong. In fact. If you combine all those brands together you're still wrong. The most popular EV is the electric bike.

According to the Light Electric Vehicle Association 790,000 two-wheelers were imported to the United States in 2021. Hardly a sales number but the thinking goes that imports = sales, potential demand. The e-bike market isn't as regulated so as far as I can tell actually sales numbers aren't available.

We do know Electric Car sales however. That total was 652,000 in 2021 and includes plug-in hybrids according to data from Bloomberg.

Next question is this a fad? Is this just a COVID thing?

Electric Cars and Bikes were essentially tied in 2019. 2020 E-bikes took the lead and continue to outpace electric car sales.

There's so many things to talk about here. I'd love to get into Rivian, GM, Ford and how they're all copying the playbook of Tesla to use story telling and EV to get access to cheap capital but as always that is a different show.

I believe what we have here is people generally don't need to drive as much. To get around the neighborhood you can buy 20 bikes for the prices of a Tesla not the same type of signaling, your neighbors probably won't think you're as cool, but you don't have insurance.

People don't need to drive as much because how we work continues to change. And as we continue to grind through the pandemic into the new year people are still working from home and people are still making predictions. 2 professors from Stanford, Arjun Ramani and Nicholas Bloom have written a paper called "The donut effect of covid-19 on cities."

Here's the abstract to their paper...and yes...it's related to cars and e-bikes:

"Using data from the US Postal Service and Zillow, we quantify the effect of Covid-19 on migration patterns and real estate markets within and across US cities. We find two key results.
First, within large US cities, households, businesses, and real estate demand have moved from dense central business districts (CBDs) towards lower density suburban zip-codes. We label this
the “Donut Effect” reflecting the movement of activity out of city centers to the suburban ring.

Second, while this observed reallocation occurs within cities, we do not see major reallocation across cities. That is, there is less evidence for large-scale movement of activity from large US cities to smaller regional cities or towns. We rationalize these findings by noting that working patterns post pandemic will frequently be hybrid, with workers commuting to their business premises typically three days per week. This level of commuting is less than pre-pandemic, making suburbs relatively more popular, but too frequent to allow employees to leave the cities containing their employer. "

So the donut effect, you've got your city core and everyone appears to be moving just outside of it. But if you used to live in the city and you've got a little more space and e-bike might just be that perfect hybrid transportation for your hybrid life style...

Last up!

An article by Samuel Hughes, in what I believe is his own blog, newsletter thing, Work In progress. He asks how come we don't see old buildings that are old?

The obvious explanation is survivorship bias.

I like the description that Mr. Hughes put together for explaining survivorship bias so I'll quote his article,

"The canonical story of a survivorship bias occurred during the Second World War, when the US military was analysing the damage its bombers had sustained from enemy fire. The statistician Abraham Wald pointed out that the Air Force’s records only included damage to bombers that had survived, meaning that all damage to the more vital parts of the planes had gone unrecorded. Paradoxically, therefore, the parts of planes which most needed armouring turned out to be exactly the ones with least recorded damage.

The survivorship bias theory about buildings starts from the premiss that people are less likely to demolish beautiful buildings than ugly ones, all else being equal. This will be partly because people like beauty, but also because the property owners who could afford to invest in beauty could also afford to invest in build quality. Thus, as the stock built in a given period ages, its uglier members will be demolished at a greater rate than its beautiful ones, leading to the proportion of beautiful buildings rising over time."

But Mr. Hughes continues that survivorship bias might be the easy answer. Looking back at photos from 1850-1900 urban centers you don't see ugly buildings.

We've all heard the expression..."they don't build them like the used to..." But is that even true?

He continues to wonder about churches, war damage, and poverty...

But I think the most important observation is the last, "There is another kind of bias theory, which seeks to explain it in terms of a bias in the observer, saying for instance that every generation is disposed to find recent buildings uglier than older ones, and that this is why recent buildings seem so to us."

I'd like to submit my own observation. If you can tell exactly when the building was made, it's ugly. 20 years from now we're going to point at the mid rise project in town and say, "that is so 2020." Is it, if it's not timeless, it's ugly? Food for thought...

And leads us to our patterns of development:

  1. Electric cars aren't even the most popular type of electric transportation. And it's because electric cars are still cars. They rely on the same infrastructure that a car does and have the same cost of ownership. It's just kinda better for the environment.
  2. A migration pattern that's emerging is the donut effect with people moving away from city cores but still living in proximity to the city. This is likely a result of higher educated, white collar workers seeking more space and taking advantage of lower interest rates.
  3. Is our world getting uglier? Or have we stopped making timeless buildings in favor of cheapest material of the day? Form does follow finance.

That's all for this week and I'll talk to y'all soon.