Cars are Real Estate

Cars. The modern way of transportation that, as of the early 21st century, almost everyone can now afford.

Is this a good thing?

There have been a lot of arguments made both for and against, which I'm not going to repeat here. The topic of this post is more focused: we might be forgetting about the rest of the iceberg.

Some numbers

Let's take an American suburb. For example, Mountain View, home of Google and a bunch of other tech companies.

As per some government data, it has 34,516 households, with a total of 81,785 people. As per this other data source, typically, households have two cars. (We are keeping Fermi estimate vibes here, so we won't care about a few tens of percents difference.)

As per the city plan, about half of Mountain View's area is dedicated to housing (vs. commercial & other types of zoning, this doesn't detail whether this is a road or a building). With this being 2910 acres, we have roughly 3,500 square feet of land occupied per housing unit.

Or so goes the very superficial analysis. These areas include parks, roads, etc. If you squint at the map, there's a lot of roads and parking lots. As per GPT 4 (told you, vibes), about 25-35% of the total area is buildings, vs. 30%-ish is covered by roads and parking lots.

If this seems a lot: for larger cities (not suburbs), this number comes out to over 50%, as per Old Urbanist. Intuitively, regardless of what the actual number is, it's probably more than 15% and less than 70%.

Let's divide up that 3,500 square feet between roads and apartments. Simplifying a little bit, apartment buildings are about a thousand square feet per household, versus the roads come up to... well, it's roughly the same.

(It kind of makes sense: the average household, gardens included, is probably bigger than a thousand square feet, but there is multiple floors involved sometimes.)

Now, while you can argue that we would need roads anyway, even without cars, it is hard to see why we couldn't get away with about half as much road surface if we didn't have to accommodate them. (Roads with two lanes each direction are very common, while even low-traffic side roads are pretty wide to allow parking, too.)

As for the cars this was being built for... of course, some of them are from outside of the area. It is a reasonable estimate, though, that the amount of cars going out is roughly equal to the amount coming in during the day. (A typical argument against higher housing density is that we can't fit any more cars on the roads anymore.) So to recap, each apartment itself uses 1,000 square feet, while its two cars need, on average, about 500.

4 cars or an apartment, that is.

With the median unit of housing going for 1.8 million.

(That's... $450k per car.)

Tradeoffs

I am, hopefully obviously, not arguing for converting all the available road surface to apartments, especially not by government mandate. It would not go well.

It does help putting things into context, though, how the entire system of car-based transportation has most of its value in real estate. Most of it is owned, maintained, or at least mandated by the government, and is generally free for use by personal cars. (Tax on gas and registration fees only make up for a tiny fragment of this; compare a couple hundred dollars to what you'd pay, yearly, for renting a $450k apartment.)

It is, in fact, a project of public transportation, and an extremely grandiose one at that.

We can relatively safely ignore the private part (the cars themselves) as a small minority of the value. (Just like most of the value of a public telephone system is in the infrastructure, not in the phone equipment owned by the subscribers themselves.)

Viewed through this lens, it is suddenly more understandable why cars are so compelling. If you buy one, the government will, free of charge, provide you with, on average, half a million dollars worth of real estate to drive it on. You don't have to care where this land is coming from, so you can waste it all you want.

It would be a very different trade-off at market prices. People clearly do not value parking lots and road surfaces as much as they do apartments or office space, despite both of them using up the same kind of land. You can even observe this in practice: some people will live in RVs on the street, which is still so much cheaper than market price apartments that cities have to actively ban the practice. (It's just an attempt to use some of the government-provided free land for something proportionally more useful.)

Given this, it is not especially surprising that the "traffic" situation is somewhat reminiscent of how most things behaved in the Soviet Union: "goverment-supplied product that is priced low but never has enough supply & you need to stand in line to get any of it".

So... fewer roads?

All that we would need to do is introduce some market mechanisms in how cars and roads interact.

Singapore is a good example: in order to own a car you also need to buy a license, worth about $100,000. It's still a question of how subsidized this still is, but at least this way, you own some of the infrastructure that you are using.

On first sight, this might look like a crazy tax. In fact, it's likely just a lack of subsidy for roads.

Given the choice, quite a few people would take the bus if they were paid a couple hundred thousand dollars for it. This would result in more buses, which convinces even more people to accept the money instead.

There are people for whom driving is still worth it. This is not an argument against driving: for a lot of situations and a lot of people, it is the best choice possible, for reasons already thoroughly elaborated upon in other sources. There are reasons though why, for example, rent control is widely considered harmful: prices (as a measure of people's preferences) do exist, even if they're not allowed to express them. This is the same reason why the US is doing so much better than the Soviet Union (... and why, at some point, Soviet central planners started using U.S. prices as their guidelines.) In fact, at some places, a market mechanism might result in better and more roads in some places, whenever it's a better tradeoff than "more housing".

The end result might end up looking a lot more efficient though.