Transport costs, cancelling out suburban house savings

Urban Land Institute - Boston transport costs mapIt’s a phenomenon seen in many western cities, particularly in the past couple of decades as the gentrification of inner city suburbs made them more expensive. But are moves to areas with cheaper housing offset by higher transport costs – long driving commutes necessitated by limited access to public transport and walkable facilities?

It’s obviously a question that will change with price movements for crude oil and transport fuels, but a study of the Boston area, by the Urban Land Institute, suggests that many households are costing themselves more by favouring cheaper housing over transport proximity.

The yellow areas on the map show where households have higher costs because of their limited access to good transportation, meaning transport is a relatively high cost. The pale green areas are the opposite; they have lower costs primarily due to good access to transport. The darker green and orange zones are where household characteristics, such as income, affect transport costs.

The report is not exactly from one of the usual suspects, either – the Urban Land Institute is a non-profit organisation which says its 30,000 worldwide members are from the real estate development and “land use disciplines”.

There are a lot of complicating factors; the combined burden of housing and transport costs is a percentage of income, which in turn is partly a function of proximity to more and better jobs – usually central. Furthermore, the study points out that some mid-distance suburbs have a relatively high burden because they are too central to benefit from lower cost housing, without being close enough to benefit from better transport or proximity to employment.

However, the study strongly makes the point that some households are mistakenly trading off good transport access for cheaper housing; it uses the case study of a family that takes home $4,667 a month but and spends $2,430 on housing and $1,035 on transport. The family, says ULI, could make a net saving of about $200 a month by moving to an area with more expensive housing, but with better public transport and more ‘walkable’ access to facilities.

This taps into a bigger theme about rising energy costs that might be familiar to some readers. For example a paper written in 2008 [and cited by James Hamilton] pointed out that high oil prices correlated to falls in the house prices of outer suburbs in several big US cities.

So why are these costs not taken into account in home-buying decisions? John Lehrer wrote at scienceblogs.com recently looking at this question – although he focuses on why the unpleasantness, rather than the cost, of commuting is often underestimated. This is a phenomenon identified by a Swiss study, among others. The answers don’t seem especially clear, other than that the longer people deliberate over the size versus the location of a house, the more appealing the size becomes.

“People will think about this trade-off for a long time,” Dijksterhuis says. “And most them will eventually choose the large house. After all, a third bathroom or extra bedroom is very important for when grandma and grandpa come over for Christmas, whereas driving two hours each day is really not that bad.”

H/T The Boston Globe, via Stocktwits’ new daily energy email. Gregor MacDonald, who edits the email, has also written a lot on the connections between transport, infrastructure, oil prices and the wider economy.

Related link:

The next slum? – The Atlantic

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