Driving to the poorhouse?
“How long is your commute?”
There goes 25% of my budget, and 20% of my waking day.
Isn’t that always the question you ask a new acquaintance after discovering where he or she lives?
At some instinctive level, we all know that house prices and commute times are reverse-correlated: the price of a short commute is a high home price, and the cost of a low home price is a long commute.
Our lives normally shuttle between home and work as the twin poles of our daily existence, so we should have little surprise that our financial profile can be defined by these two poles, and the commuting bridge between them:
Homes on the left, jobs on the right
Left lane, right lane, fight fight fight!
In policy terms, much is made [including by you! — Ed.] of housing’s high cost in strong-economy urbanizing areas (jobs attract people, and people need housing), and much is also made about the burden, in transportation infrastructure, of growing economies, yet surprisingly little statistical or quantitative (as opposed to anecdotal) research has been done on the linkage between the two.
You mean housing and transportation costs are connected?
Until now: the National Housing Conference’s Center for Housing Policy has put out a user-friendly, focused study A Heavy Load: The Combined Housing and Transportation Burdens of Working Families (link in .pdf), that puts all this into a statistical context, starting with its remarkable headline:
Together [housing and transportation] account for almost 48% of all household income. For working families, the figure is 57%. (Page 1)
(”Working family” in this study means an income between $20,000 and $50,000 annually.)
Think about that just a moment.
Well, for the AHI blog, actually …
Roughly 60¬¢ on the income dollar is spent on these two essentials. Food comes in third at 15¬¢, and health care at 8¬¢, so a total of 80¬¢ on the working family’s dollar goes out in the basic necessities of American life.
Even more striking that the absolute amount is the correlation between housing costs and transportation; for working families (that is, people with ordinary jobs), you must pay one or the other:
Although these combined costs range from a low of 54% in
Housing costs include mortgage payments, operating costs and utilities for homeowners, and contract rent and utilities for renters; transportation costs include the cost of owning and operating a vehicle and the cost of public transit. (Page 1)
Remarkably, the percentages are tight despite the wide variance in metropolitan median incomes (of the study’s profiles of 28 metropolitan areas from
As I’ve previously posted, housing costs rise and fall with economic earning power of home buyers, and land value is the net residual of that change in home prices.
Further, the variance in combined (housing and transportation) costs (9 points, from 54% to 63%) is less, in absolute and even more in relative terms, than the variance in housing costs (13 points, from 22% Pittsburgh to 35% San Francisco).
Job at one end, home at the other, in between — jam?
The linkage could not be clearer: if you want a shorter and cheaper commute, you pay for it in home price, and vice versa:
Nationally, for every dollar a working family saves on housing, it spends 77 cents more on transportation. (Preamble)
Every time you save one of these …
You have to spend these
This reflects the tradeoff working families make in balancing these costs. In 17 of the 28 metro areas, average transportation costs for working families are as high as or higher than housing costs. (Page 3)
As the study puts it:
“Drive ’til you qualify” is an option used by many working families seeking affordable housing by moving to far-flung suburbs.
And the operative word is ‘drive’.
I’m here twice a day
The study finds that well over 80% of working families drive to their jobs. The outliers are
The better the grid, the higher the house prices
Others, by necessity, live in inner-city or inner-suburban locations where affordable housing is located but access to suburban jobs is limited. (Page 5.)
Further, the increasing bite being taken by housing and transportation, two sides of the same home-to-work coin.
The report also suggests that:
1. Housing and transportation costs are rising faster than incomes.
2. Faster job growth is occurring in the suburbs.
3. The
4. Gas prices are on the rise. (Page 17)
Connect those four dots and it leads to the inescapable conclusion that, because affordable housing is essential to modern cities, housing and transportation policy deserve greater government assistance. They are likely to be the constraining factors in
Cuts down your mobility, doesn’t it?
