Because efficient is not the same concept as cheap.
Worse, you are likely looking at the costs of single family home purchasing, without considering cost of upkeep and transportation. Not to mention efficiency of getting work done.
That is all to say, because it is complicated. Scale fundamentally makes things hard to reason about. And cost discussions typically micro optimize a single factor.
Because efficient is not the same concept as cheap.
It is not precisely the same concept as cheap, but I think you are mistaken about efficiency. Economic efficiency means that goods are produced at the lowest possible average total cost.
They have a lower unit cost per item to the individual. Sometimes. But typically only if you ignore transportation and storage costs. And often infrastructure costs are effectively billed to society.
Consider, I can literally walk to the grocery to buy beer. I suppose I have to replace my shoes from wear, but no upkeep or gas on my car. No miles of road that need maintenance to subsidize my trip to the store.
Now, yes, there are miles of road to subsidize getting the store supplied. But that is shared for all people supplied by the store. Same is true, of course, for the trips to the store, but again, my side of that equation is zero. Which is all part of what makes me argue it is more efficient.
And again, complicated with general scale making most observations necessarily simplistic.
Somewhat of a real scarcity, as far transport takes money to build and going beyond 1h commute is very problematic, more so if you have kids to send to daycare, preschool or school.
Some of it is alleviated by hub and spoke transport plus extra parking places, but not all. At some point, transport costs split the city into a conurbation, even without the sprawl, you end up with towns linked by capacious public transportation and roads.
Or terrible congestion.
There are limits to density after all. Even with walking and bikes and underground and tramways and double decker busses.
exactly. it's almost a catch 22. most great jobs are in the cities, because all of the great talent is mostly located in urban areas, and all of the great talent is mostly located in urban areas because all of the great jobs are there.
and the extreme prices are just a natural byproduct of supply/demand.
here's a theory. shoot it down: work and cash are more abundant and salaries are higher in urban areas and this causes demand-pull price inflation.
why are salaries higher? because the labor pools in high density urban areas have, in some sectors, a more highly developed set of skills and capabilities than the comparable labor pools in other areas have (e.g. Wall Street bankers and quants, NYC chefs and restaurant workers, SV programmers and capital managers, San Diego life sciences and biotech, etc). IOW, agglomeration economies.
The cost of living has very little to do with the true cost of you living there. In the city, people are willing to pay for convenience, so you can sit in the middle of the transaction and use the added efficiency to increase your profit margin. People that own real estate in a major city are probably making a pretty good return on their investment.
Why would someone pay for convenience? Probably because it's the only affordable way to buy more time. You could pay someone to do your errands for you while you commute. You could fly a helicopter to work everyday instead of driving. Those things are way more expensive than just living in a smaller apartment closer to everything, though. That is what sets the upper bound on how much profit can be extracted from real-estate. If teleportation existed, I'm guessing a lot of urban landlords would lose a lot of money. But it doesn't.
Meanwhile, the suburbs are intrinsically less efficient, but subsidized from the urban revenues. Think about the laws that require phone companies to provide service to rural areas, or the USPS to deliver mail to rural areas, or your taxes buying roads to those rural areas. You, the city dweller, are paying for all of those things.
The TL;DR is that efficiency is not related to the price you pay to live somewhere. It's much more complicated.
Sort of. If you don't have roads out to those rural areas you can't bring food into the city. If you don't have power infrastructure out to the sticks, you can't produce food nearly as efficiently. The modern city can't exist without a rural infrastructure.
There are a large number of Suburban areas now, that began as smaller towns and cities grew into and filled the gaps between. Those primarily existed as local concentration points to facilitate rural infrastructure at one time.
Worse, you are likely looking at the costs of single family home purchasing, without considering cost of upkeep and transportation. Not to mention efficiency of getting work done.
That is all to say, because it is complicated. Scale fundamentally makes things hard to reason about. And cost discussions typically micro optimize a single factor.