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Study Finds Transportation Costs Make Most of America “Unaffordable”

| Thursday March 25th, 2010 | 0 Comments

A few weeks ago I drove up into the mountains near Los Angeles to go skiing with a friend. We were luckily headed against traffic, but across the median, pointed towards Los Angeles, was one endless stream of cars. I expected it, but it was still astonishing to see: we had been driving away from LA for 45 minutes at 60 or 70 miles an hour, and the traffic was still stop-and-go going the other way.

These xtreme “drive till you qualify” homesteaders — ie, drive away from the metro center until you can afford the real estate — seemed, at first blush, completely insane to my friend and I, both urban apartment dwellers. But neither of us have families, or that primal urge to have our own house and backyard. What did we know? Maybe it’s worth it.

Now a comprehensive new study (PDF) from the Center for Neighborhood Technology (CNT), analyzing data in 337 metro regions, suggests that in 6 out 10 communities it isn’t.

What is and isn’t “affordable”

CNT evaluated affordability by comparing the Area Median Income (AMI) of the people living in a certain area, like Chicago or Lancaster, CA, with the cost of living there. A traditional benchmark has been 30 percent: you should spend no more than 30 percent of your income on rent or mortgage.

Under that definition, 69 percent of communities covered by the study (most major and minor metro areas in the nation) are “affordable” for the people that live there.

It’s not just housing anymore

But given the rise of the exurban sprawl, the 3 hour commute, and the $4 gallon of gas, affordability is no longer just about the cost of rent or real estate. It’s about transportation too.

Using the data they gathered, CNT set a similar limit on the percentage of income that should be spent on transportation – gas, car payments, insurance, etc. –  at 15 percent. So, to be considered affordable, it should cost no more than 45 percent of your paycheck (30 percent for housing plus 15 percent for transportation) to live where you live.

All of a sudden the number of affordable communities in the U.S. went from 7 out of 10 to 4 out of 10 (39 percent). In other words, fewer than half of neighborhoods in the U.S. are really affordable for the people that live there, according to the study.

The rising cost of transportation

Transportation costs have risen in the last century from 2-3 percent of income to as high as 28 percent of income in many parts of the country, the study reports.

These costs are not just financial. More miles driven means more CO2 in the atmosphere, and more pollution in general. They also mean less time spent with loved ones, or doing something else, whether work or play.

These statistics do not consider intangibles like the added space and comfort of owning a home, or the pleasures of living in a quiet, safer neighborhood, or the benefit of a home as an investment.

But recalling that endless line of cars slowly making their way towards the metropolis 40 miles away, I am happy to find evidence to back up my gut instinct: it’s not worth it.


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