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Commuting Costs Outweigh Savings From Remote Housing
For low- and moderate-income families, the money that’s saved by moving further from work can be equaled or exceeded by the extra money that needs to be spent on transportation, according to a new study from the Center for Housing Policy, the research affiliate of the National Housing Conference.
The combined cost of housing and transportation for working families averaged 57% of annual income and was fairly consistent across the 28 metropolitan areas that were studied, according to the report, “A Heavy Loan — The Combined Housing and Transportation Burdens of Working Families.”
Nationally, the study found that for every dollar a family saves on housing by moving further out, it spends 77 cents more on transportation.
“Working families are increasingly moving further from their jobs to find affordable housing,” said Jeffrey Lubell, executive director of the research group. “Yet, we found that many of these families end up spending more on transportation costs than they save on housing. Ultimately, these findings emphasize the importance of coordinating the development of housing and transportation policy, as well as expanding the supply of affordable housing close to both central city and suburban job centers, improving public transit in areas with lower housing costs and reducing the costs of commuting by car for working families.”
In 17 of the metro areas studied, the average transportation expenses for families with annual incomes from $20,000 to $50,000 are actually higher than their housing costs, the study found. Overall, working families spend an average of 28%, or $9,700, of their incomes on housing and nearly 30%, or $10,400, on transportation. The transportation costs include auto ownership, auto use and public transportation, and take into account the cost of commuting as well as traveling for school, errands and other daily routines.
The combined costs of housing and transportation ranged from a low of 54% of income in Pittsburgh to a high of 63% in San Francisco, but 25 of the 28 areas were within three percentage points of the average combined burden of 57%.
The report found that the vast majority of the working-family commuters — more than 85% — drive to work in private vehicles. Where public transit alternatives are most prevalent, higher shares of workers use them: 31% in New York, 14% in Chicago and 13% in Washington, D.C. An average of 12% of commuters are riding public transportation to work in Boston, Honolulu, Philadelphia and San Francisco.
Among trends identified in the study:
- Of the 20 fastest growing counties in the U.S., 15 are located 30 miles or more from the closest central business district.
- Housing and transportation costs are rising faster than incomes. From 2000 to 2005, housing costs were up by 15.4% and transportation costs rose 13.4% in the Consumer Price Index, compared to a 10.3% increase in median income.
- Faster job growth is occurring in the suburbs. In a study by the Department of Housing and Urban Development of 77 metro areas for the period 1991-96, jobs grew 3% in the central cities compared to 14.2% in the suburbs.
- A rising share of the U.S. population is living in the suburbs — growing from 55.1% in 1970 to 62.1% in 1996, according to the HUD study.
- Gas prices are on the rise, increasing from $1.42 per gallon in the second week of June 2002 to $2.86 for the same week in 2006, according to the Energy Information Administration of the U.S. Department of Energy.
The research center made several policy recommendations to address the issues raised in its report:
- Consider housing and transportation policies together. “Building affordable housing near existing and planned transit hubs is one example,” the report says. “Targeting public transportation improvements on areas with large numbers of moderate-income working families with long and expensive commutes to common work destinations is another.”
- Encourage infill development. This includes ensuring that a substantial portion of the homes being built as part of redevelopment of inner city and older suburban neighborhoods near job centers are affordable for working families. Increasing densities in these locations can help add to the ridership base for public transportation, the study says.
- Target employment. “Targeted job development in low- and moderate-income neighborhoods in central cities and inner-ring suburbs would help raise the incomes of households living there and reduce their overall housing-transportation burdens,” according to the report. “In the long run, it also could help reduce transportation costs and alleviate congestion elsewhere in the region by reducing the number of commuters from these neighborhoods."
- Contain/connect areas of sprawl. “Substantial and visible” improvements are needed to provide “good quality and reliable” public transit to enable workers to commute from suburb to suburb as well as from the outer suburbs to the central city.
- Reduce the cost of commuting by car. “Policies to encourage car sharing or make car ownership more accessible and affordable (through subsidized loans or insurance, for example) could go a long way to reducing the transportation burdens of working families,” the study says.
- Preserve choice but revisit existing policies and incentives. “Public opinion surveys consistently show that American households are split 50-50 between those who would prefer to live in a smaller or more costly home in order to have a shorter commute and those who would prefer to endure longer commutes for a less expensive or more spacious home,” the report says. “They key is providing choice — something that many working families presently are lacking.”
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