Insight: Wealth in Suburbia – is Uniformity a Bad Thing?

In this MPI Insight, we continue our analysis of suburban Ontario. The first in the series demonstrated the distribution of population in the selection Census Metropolitan Areas (CMAs) of Kingston, Kitchener-Waterloo, London, Windsor, Hamilton, and Oshawa across areas defined as downtowns, inner suburbs, and outer suburbs. This revealed how heavily population is weighted toward the outer suburbs. The second suburban Insight illustrated when these cities experienced housing growth, and how that is manifest in housing and neighbourhood design. In this — the final in the series — we undertake an income analysis across the three categories in the regions studied.

The first trend to note, as displayed in Exhibit 1, is that outer suburban households consistently show higher median incomes than downtown or inner suburban areas. In fact, in every region, the median income for outer suburban households met or exceeded the national and provincial median income, whereas downtown and inner suburban median incomes fell short. Oshawa’s outer suburbanites are the wealthiest of the regions sampled, with a median household income of $76,902. Oshawa’s downtown dwellers are also the wealthiest across the downtown category, earning a median household income of $51,013. Overall, there is a higher concentration of relatively high income households in the outer suburbs of these regions.

Exhibit 1: Median household income

Exhibit 1: Median Household Income

This point becomes more fascinating when we compare those income statistics to the average dwelling values. As expressed in Exhibit 2, while median income in the outer suburbs may top the national and provincial median, dwelling values rarely reach the national and provincial averages.(1) Also noteworthy is the relatively higher performance of downtown dwelling values when considering the median incomes of downtown residents. In fact, in four of the six regions studied, the average value of downtown dwellings came within $35,000 of the average outer suburban dwelling (or outperformed in Kingston’s case), and in all cities, the percent difference in median income between downtown and outer suburbs is far greater than the percent difference in dwelling value between downtown and outer suburbs. Housing values are a reflection of amenities and desirability, met with the realities of supply and demand. As demonstrated in earlier Insights, there are fewer downtown properties available which puts upward pressure on the housing prices if demand exceeds that supply. Following our discussion in the previous Insight, there is growing demand for the high amenity lifestyles that downtowns can offer, which would explain a premium on downtown housing.

Exhibit 2: Average value of dwelling

Exhibit 2: Average value of dwelling

There is more to the story though. Exhibit 3 uncovers the spread of income distribution in each category. The values in the chart represent the percent difference between median and average incomes. The significance of this measure lies in skewed income distribution. For example, in Kingston, we see that average income is 32.5% higher than median income in the downtown category. This suggests the average is inflated by a small portion of residents with considerably high income and that the difference between the highest income earners and lowest in the downtown category is great. When we remember that Queen’s University is situated downtown and the area is likely populated by both professors and students, this becomes very believable. Indeed, the same may apply to the downtown University of Windsor. On the other end of the spectrum, in Oshawa’s outer suburbs, the average income is only 11.5% higher than median income, suggesting a smaller spread from the poorest to wealthiest residents and a lack of wage diversity. Kitchener-Waterloo, Hamilton, and London display greatest income spread in the inner suburbs. While this could be a classification error, it could also be indicative of a North American trend. For many reasons, like centrality, heritage homes, and pedestrian friendliness of grid-pattern streets, some inner suburban neighbourhoods are (or are becoming, due to gentrification) very expensive places to live, especially as baby-boomers age and increase demand for this type of lifestyle.(2) These are juxtaposed to other inner suburban neighbourhoods stuck in a vicious cycle of poverty and decline.(3) The difference is often as simple as when homes were built. The so-called ‘streetcar suburbs’ of the prewar years have performed much higher than the early postwar-1970 suburbs that characterize much of the inner ring. The namesake represents transportation innovation that allowed wealthy downtown residents to escape to greener, quieter, larger properties. Whether horse-drawn or electric streetcars, or even early automobiles, ease of transportation made it possible for elite urbanites to carve out properties adjacent to downtown in the green. As an example, two historic streetcar-suburbs in London — Old North and Old South — have some of the more expensive real estate in the city, and are responsible for skewing the average income and dwelling value because they account for mixed income in the inner suburban category.

Exhibit 3: Income disparity (% gap between median and average income)

Exhibit 3: Income disparity (% gap between median and average) incomeExhibit 4 displays two inner suburbs in London, built at different times and exhibiting vastly different housing values.

Exhibit 4:  When housing was built (by category)

Exhibit 4: When housing was built (by category)In all cities except Kingston, (4) the outer suburbs displayed the lowest income spread. From this we can gather that the outer suburbs not only have higher median incomes (as displayed in Exhibit 1), but that they demonstrate greater economic consistency than other city regions. Some may consider this a great attribute, indicating comfortable living and relative income equality. Others may take issue with a lack of diversity in residents, or exclusionary forces (5) involved in creating such consistency. In any case, this Insight reveals that municipalities across Ontario are like microcosms of the dynamics at play in the GTA. We see that disparity is greatest downtown and in inner ring suburbs, just as we see disparity between Moss Park and Yorkville and between Islington and High Park or Scarborough and Riverdale. Whereas, when you get out to Pickering, Markham, or Richmond Hill, it’s unlikely to see very low income areas knit into the outer suburban neighbourhoods that sprawl outside of Toronto.

However, just as cramming low income residents into particular pockets of Toronto has undesirable consequences, the same can be said for CMAs elsewhere. Regional economic uniformity defies the advice of the famous Jane Jacobs who argued that more diversity of buildings, activities, and people makes for better neighbourhoods. Consider Jacobs’ own former home in the Annex, where the mixing of low-income, high-income, office, retail, park, and public buildings has created one of Toronto’s most beloved neighbourhoods.

Applying the same logic to suburban areas, changing the urban form to accommodate lower income residents and affordable housing, in addition to high income households, would arguably make them better places to live. This will be a challenge for an emerging generation of practitioners and politicians to ensure that Canada’s suburbs, which house over half the population, will not become obsolete or inaccessible to prospective buyers looking for an authentic urban environment. Creating affordable housing in the suburbs is perhaps an early priority for this transition.

This Insight is based on a report written by a former MPI intern Gracen Johnson. For more information please contact Gracen at gracen@uoguelph.ca.

Notes:

  1. One can expect that national and provincial averages are inflated by extremely high housing values in urban centres such as Toronto,Montreal, and Vancouver.
  2. Leinberger, C.B. (2011, November 25). The death of the fringe suburb. The New York Times. Retrieved from http://www.nytimes.com/2011/11/26/opinion/the-death-of-the-fringe-suburb.html
  3. Lucy, W. and D. Phillips (2000). Suburban decline: The next urban crisis. Issues in Science and Technology 17.1 [WWW document]. URL http://www.issues.org/ 17.1/lucy.htm (accessed 21 October 2008).
  4. Kingston only had one census tract in the inner suburb category, therefore minimal income spread is unsurprising considering all inner suburban census respondents would be living in the same neighbourhood.
  5. Municipal zoning laws for suburban areas have been rife with exclusionary conditions such as minimum lot sizes, excessive minimum house sizes, prohibition of multifamily housing, and so forth. This codifies the segregation of the poor from suburban areas. Davidoff, P. & Newton Gold, N. (1970). Exclusionary zoning. Yale Review of Law and Social Action, 1, 56–63.

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The Martin Prosperity Institute at the University of Toronto‘s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors — location, place and city-regions — in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential.