Manhattanization is a term we’ve become accustomed to in Miami. It‘s existed since at least the 1960s to describe cities from San Francisco to Santiago, but it became a prominent buzzword in the 2000s to describe the rapid transformation of downtown Miami and Brickell. Now that the building boom is back in full swing, so is the term. And along with it comes the debate about whether what we’re seeing unfold in Miami is actually a step towards a Manhattan-esque urban environment.
Whether downtown Miami is beginning to resemble Manhattan is debatable. Certainly, our skyline is growing. It may not be as tall, as dense, or as diverse as the Manhattan skyline, but it is taking shape as an expanse of skyscrapers that stretches for miles. Our love affair with the skyscraper has built a skyline that is far larger than those of cities twice our size and it has become a point of pride for us. We’re also seeing more amenities typical of other great urban metropolises: more restaurants and cafes, parks and shops, museums and galleries, etc. Granted, the differences between a Brickell streetscape and just about anywhere in Manhattan are still pretty stark, but the increased options and vibrancy are important steps towards a more urban Miami.
But there’s one area where Miami has unequivocally achieved Manhattanization: cost of living. It now costs as much to live in many parts of downtown Miami as it does to live in Manhattan. I’m not referring to Miami’s luxury condo market. In fact, that is one segment where we’re not yet like Manhattan – Miami condo prices can reach $10 million or more; it’s high, but it doesn’t begin to nip at the heels of New York’s $100 million market. Rather, downtown Miami is becoming as expensive as Manhattan is for the everyday citizen. Manhattan still has far higher housing costs than downtown Miami and Brickell, but that gap is closed when factoring in Miami’s much higher transportation costs.
This point is now more clearly made thanks to the new Location Affordability Index (LAI). The LAI, unveiled earlier this month, is the work of a joint venture between the U.S. Department of Housing and Urban Development and the U.S. Department of Transportation. It’s a tool that allows the public to calculate what it costs to live where they live, and how they could possibly save money by moving or by changing their transportation habits. The LAI is based on the philosophy known as “Housing + Transportation” or “H+T.” H+T asserts that knowing just the cost of housing isn’t enough to get a full picture of cost of living. You also need to know how much it costs to get from your home to other places, like your workplace and your family and friends. In other words, you need to know the cost of transportation.
Cost of transportation is harder to calculate and harder to keep track of in our heads when we think about how much we spend. For most people, housing expenditures occur in one monthly payment, either a rent check or a mortgage payment. Those amounts may include a variety of costs, like loan principle, interest, taxes, insurance, etc., but it’s still just one payment, one amount. Transportation is different, particularly if you drive a car. There’s the purchase price of a car, which may occur in monthly payments or if you paid up front, would need to be prorated over the life of the car. Insurance is paid separately, either monthly, annually, or biannually. Gas and parking costs are paid sporadically. The result is that most people never think about the full cost of transportation, and when they do, they usually underestimate.
AAA estimated that the average cost of car ownership in the United States in 2012 was roughly $9,000 for all cars and as much as $11,000-$12,000 for larger cars and SUVs. But that’s the average for the entire country. Costs can be far greater in places like Miami where insurance rates and parking costs are higher. The difference between a couple owning two cars and a couple that commutes by train or bicycle can be over $20,000 per year. That’s an additional $1,500-$2,000 per month that can go towards rent or a mortgage. And that’s the reason why living in downtown Miami and Brickell can be as costly as living in Manhattan.
To demonstrate the point, I put some addresses into the LAI:
- A typical household living in West Brickell owns 1.2 cars (average), drives 11,000 miles, and takes 350 transit trips each year. They spend just shy of $23,000 annually on housing and transportation. That’s 47 percent of their total income. Housing costs account for $17,000 approximately; transportation costs amount to $7,000.
- Meanwhile, a typical household on the Upper West Side in Manhattan owns 0.3 cars, drives 2,000 miles, and takes 2,000 transit trips each year. They spend just over $27,000 annually on housing and transportation. That’s 43 percent of their total income (the LAI factors in average wage differences between metro areas. On average, wages in NYC are 30 percent higher than in Miami). Housing costs account for $23,000 approximately; transportation costs amount to less than $4,000.
- A typical household in the heart of downtown Miami owns 1.1 cars, drives 11,000 miles, and takes 250 transit trips each year. They spend $19,000 annually on housing and transportation. That’s 38 percent of their total income. Housing costs account for $12,000 approximately; transportation costs amount to $7,000.
- Meanwhile, a typical household in the East Village in Manhattan owns 0.5 cars, drives 3,500 miles, and takes 1,500 transit trips each year. They spend just shy of $20,000 annually on housing and transportation. That’s 31 percent of their income. Housing costs account for $16,000 approximately; transportation costs amount to $4,000.
New York City is the embodiment for unaffordable living, but that’s largely based on an incomplete picture. The extra amounts that New Yorkers spend on housing are made up for by cost savings from cheaper transportation options. Miami, on the other hand, has relatively cheaper housing, but getting from place to place means additional costs stemming from car ownership.
There are a lot of implications here. Most obvious is that we can decrease cost of living and improve quality of life for Miamians by investing in better transportation options. One cause for optimism is that housing costs and transportation costs are only indirectly linked. Decreasing transportation costs by building more transit and better bike lanes will not directly increase housing costs (although, countless studies show that such infrastructure increases property values because it makes neighborhoods more desirable), so we can make real reductions in the cost of living.
There are also implications here for the brain drain and the future of our economy. When Miami competes with Manhattan for talent, it cannot make the argument that downtown Miami has a lower cost of living than New York. Lower cost of living has traditionally been the truest arrow in the quiver of cities seeking to steal talent from New York, but when we consider H+T, we see that for many cities, including Miami, that’s actually not the case. There isn’t much money to be saved, if any at all, by choosing downtown Miami over Manhattan. And for those who decide to look outside of New York because Manhattan is just too expensive, they’ll likely find that downtown Miami and Brickell are too expensive as well. Rather, they may end up in cities that offer a true lower cost of living with similar urban amenities, like Chicago, Philadelphia, and Baltimore. That talent is now revitalizing those cities the way it revitalized Manhattan in the 1990s when lower cost of living – from cheaper housing AND cheaper transportation – allowed thousands of educated young professionals to flood the city.
But all of this changes if we take the automobile out of the equation. If you can manage a car-free life, suddenly Miami becomes really affordable. The difference is that Manhattan is expensive because it has to be (although zoning changes under Bloomberg may help mitigate these high costs by generating more supply). But Miami is expensive because we’ve made it that way. The takeaway should be this: We can fix it and we know how to fix it. The average Miamian need not cough up half of her income on housing and transportation. As housing costs continue to rise, we must make extra efforts to reduce transportation costs by offering better options. We must give Miamians the same options that New Yorkers have: to own a car if we want one, but to live comfortably and with dignity without one.
For more reading, check out this article from last year on Streetsblog, which reviewed data from the Center for Neighborhood Technology and determined Miami to be the least affordable metropolitan area for moderate-income renters and homeowners. The most affordable? Washington, DC.
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