Scarce and increasingly expensive rental properties in Calgary have been making the news lately. Mayor Nenshi took advantage of the issue to ignore basic supply and demand principles while trying to label Calgary landlords as being greedy and gouging.
It is no secret that Naheed Nenshi is a very ideologically dedicated to increasing urban density within Calgary by any means possible such as Calgary’s virtual suburban development freeze. While hindering and freezing outward growth in a city will indeed lead to increased urban density it will also inevitably lead to a higher cost of living, particularly in the rental market. This makes it understandable as to why Nenshi wants to distract people from the consequences of his development policies with a baseless and divisive attack on landlords within Calgary. It would be rather difficult for Nenshi to sell his density mantra if more people realized just how hard those density policies end up impacting low and middle income Calgarians.
The vast majority of people simply do not want to live in crowded downtown situations. That is why when the market is allowed to develop naturally, cities will grow outward to fill demand and it will keep real-estate and rental properties within the bounds of proper market price. When outward growth is hindered by obstacles such as an ocean or ideological city council, higher urban density along with greatly inflated housing costs soon follow.
Don’t just take my word for it though. The numbers tell the tale and the very direct correlation between urban density and high rent is very easy to see.
Below I have listed American cities in order of declining density based on people per mile square and then have the average monthly rent for a one bedroom apartment in US dollars next to it.
New York City 27,778 people per sq. mile Average rent: $2,933
San Francisco 17,867 people per sq. mile Average rent: $3,413
Boston 13,340 people per sq. mile Average rent: $2,080
Chicago 11,864 people per sq. mile Average rent: $1,628
Miami 11,765 people per sq. mile Average rent: $2,049
Seattle 7,774 people per sq. mile Average rent: $1,402
Cleveland 5,107 people per sq. mile Average rent: $635
Portland Oregon 4,375 people per sq. mile Average rent: $1,106
Houston 3,662 people per sq. mile Average rent: $1,191
Dallas 3,645 people per sq. mile Average rent: $1,090
Phoenix 2,797 people per sq. mile Average rent: $776
Las Vegas 1,659 people per sq. mile Average rent $766
The pattern is pretty stark. While variables such as local economy, taxes and desirable real-estate have an effect, it is clear that the higher the urban density you have, the higher the rent.
Even with a strong economy and an incredible landscape, the hipster’s Mecca of Portland Oregon keeps rents reasonable through outward growth and low urban density.
Houston and Dallas are commonly demonized by density proponents for their evil “sprawl” but they clearly offer a great standard of living as they both have strong economies and low rents. Phoenix and Vegas have all sorts of space to grow outwards and it shows with their very low density and their associated low rents. Calgary has plenty of room to grow outward too if we would just allow it.
Keep these numbers in mind as Mayor Nenshi continues to promote high urban density and constant tax increases. While Nenshi may indeed create his high-density utopia but it will come at a very heavy price for people with low or fixed incomes as rents inevitably continue to rise quickly. High density and low rent simply does not happen in the developed world.