Moving On Out

It's clear that, roughly speaking, when you move farther away from an urban core your housing costs go down but your transportation costs go up. But that still leaves the question as to whether or not it all balances out in the end. Well, via Ryan Avent it turns out that it more or less does:

That graph's taken from this National Housing Center report arguing that we need to think of affordable housing issues as much more tightly linked with transport/congestion issues than has traditionally been the case.

Comments

If you're living 0 miles from work, why are you still spending ~25% of your income on transportation? Are downtown shoes that expensive?

Posted by Klug | December 8, 2007 11:49 AM

What I can't figure out is why most folks don't also factor in the cost of their time into the calculation. In congested major metropolitan areas like where I live (SF Bay region), a 30 minute commute driving is roughly an hour behind the wheel each way. If you value your time at $25/hr, that works out to a thousand a month, which is more than a quarter of an average income, no?

But no one thinks in those terms. The only plausible answer as to why that I've heard is that many people actually like being stuck in traffic a couple of hours each day because it's the only "alone time" they get.

Posted by Jeff S. | December 8, 2007 12:07 PM

Nevermind that it makes absolutely no sense to use % of income as the dependent variable unless you're trying to understand why people live where they do. But this is discussion of the cost of living out in exurbia, and given the selection bias (high-income white folk instead of low-income black folk) it makes sense that it would cost the same...people tend to budget a certain amount of their income for transit and housing.

It doesn't balance out in the end. You only move out there if you make more money. That's different. The bottom line is that it is much more expensive to live further from the city. Plus, you're also paying with your time (as Jeff points out) and you're imposing an environmental cost on all the rest of us who would rather you didn't burn four gallons of gasoline every day so your kid can have a backyard he sees from the comfort of his videogame chair.

Posted by Vincent | December 8, 2007 12:12 PM

What I can't figure out is why most folks don't also factor in the cost of their time into the calculation. In congested major metropolitan areas like where I live (SF Bay region), a 30 minute commute driving is roughly an hour behind the wheel each way. If you value your time at $25/hr, that works out to a thousand a month, which is more than a quarter of an average income, no?

If yo uare salaried rather than hourly, the marginal cost of your time is $0/hr.

Posted by Glaivester | December 8, 2007 12:18 PM

Not necessarily true, Glaivester. If your salary also has a performance-based bonus structure and your employer has clients that it charges by the hour, then your time still has value to you. I would guess a pretty sizeable percentage of those who engage in this location debate with themselves fall into that employment class.

Posted by jhupp | December 8, 2007 12:31 PM

There's no accounting for equity in this chart. If you're housing cost is higher far away, but you recoup some of the money spent on housing in equity, you come out far better than the larger proportion of rent-payers in a city. I understand that Matt and the Gang want to make city living and mass transit more attractive to people, but that won't happen by pretending it already is. It isn't, relatively speaking. Mass transit should cost a lot less, and driving a car a long distance every day should cost a lot more. You should get a big break for living close to work and walking or taking public transportation. Right now you don't, although you do get a (pretty mild) social stigma, and wet socks and pant legs when it rains/snows. Therefore, this chart is pretty stupid.

Posted by MSB | December 8, 2007 12:31 PM

It'd be nice if they labeled the y-axis. And who are they sampling? Urban workers or just everybody?

But if it does cost ~10% of a worker's overall income to live outside the city than in it, that seems pretty significant to me.

Posted by southpaw | December 8, 2007 12:46 PM

Right now you don't, although you do get a (pretty mild) social stigma

Meh. Growing up in the NY-metro area, I found that pretty much all the suburban families are kind of jealous of the 1 or 2 families that managed to stay in NYC.

And I never found that anyone acquired any social brownie points for living in Germantown.

MattY consistently makes the point that, regardless of the relative preferences of Americans, in absolute terms, more people want to live in a city/downtown area than there are housing spaces available, so this should become a development priority . Arguing that there isn't much demand to live in denser areas is like claiming that no one wants to eat at Per Se since most Americans eat at diners.

Posted by Tyro | December 8, 2007 12:51 PM

It is hard to dollarize the cost of congestion, but from what I see the people who is in exurbia and fring communities pay a huge cost in congestion.

Also, MSB thinks we are excluding the value of home equity. Home equity is not free - you need to put your own money at risk or put sweat into your property (an often ignored cost of "returns" to homeownership) sure we've all seen people who've gotten pennies from heaven in windfalls on home ownership, but that can happen from owning a flat in the city as easily as from owning a suburban hellhole/moneypit.

Posted by Jozef | December 8, 2007 1:00 PM

Hey, no problemo! Just tax cigarette smokers more to pay for whatever it is you need (e.g. transportation subsidies). It's the moral thing to do.

Posted by Quiddity | December 8, 2007 1:37 PM

The report looks at housing costs and transportation costs, but it doesn't factor in the value of time spent in transit. So then, why do working class families move to the exurbs, when they could be spending the same amount of money for transportation plus housing, and spend less time driving?

Maybe they believe that their houses will appreciate in value (oops-- for a lot of them, that turned out to be a bad guess). Maybe the ones with children believe that the schools are better in the exurbs than in cities. Maybe they believe the quality of life is better in the exurbs. I hope the people who did this study do a follow-up answering those questions.

Posted by Cardinal Fang | December 8, 2007 1:48 PM

Southpaw: The y-axis is percentage of household income -- in MY's scan, he cut out the y axis label. Problematically, this is the only graph in the report that seems to come without much background.

Posted by Klug | December 8, 2007 2:35 PM

I can't believe anyone would defend this chart as being very meaningful. The issue of valuing time spent commuting is just one of many problems, (and notice that the value of this time will be different for every person).

Another issue: lots of people decide they want to live in (say) a 2,000 square foot house. For many people this is simply impossible without moving far away from work...nobody would give you a mortgage. So the cost of equivalent housing close to work is essentially infinite.

Posted by ed | December 8, 2007 4:20 PM

As an aside, it's worth pointing out that this chart only represents the cost to the individual for living further from their job. There are also environmental costs, which in most cases the individual doesn't bear.

Posted by Frank | December 8, 2007 4:23 PM

If yo uare salaried rather than hourly, the marginal cost of your time is $0/hr.

I'm gonna use that argument the next time I tell our salaried staff they have to work overtime. "But you don't get paid by the hour! So you're still breaking even!"

People's leisure time has value for them too, otherwise they'd spend their weekends and vacations working at McDonalds.

Posted by cminus | December 8, 2007 5:34 PM

I agree with MSB, especially about the mild social stigma.

I live right in the center of a largish city, and commute against the flow to just outside the city limits. Lots of people are bewildered by the fact that I generally ride my bike for this 7-8 miles or so, rather than drive. (Although since I started about a year ago, I have gone from just about the only one, to having to find a place to fit on the bike rack.)

Posted by Kolohe | December 8, 2007 5:40 PM

Re: But no one thinks in those terms.

Because no one would actually get that money if they weren't sitting in traffic. Hence it's irrelevant. If someone offered to pay people for shorter commutes that might make a difference.

Re: MattY consistently makes the point that, regardless of the relative preferences of Americans, in absolute terms, more people want to live in a city/downtown area than there are housing spaces available, so this should become a development priority .

As usual everyone ignores the fact that many (most?) workplaces are not in some downwtown city area-- and that has been true for quite some time. Factories were never located downtown, but rather on the city outskirts, or even farther out. And suburban office parks have been a reality for years too now. Now, there aren't many factories or office parks in the far exurbs, but if you look at places like Southfield MI (outside Detroit) or Independence OH (outside Cleveland) or Boca Raton FL (midway bwteen West Palm and Lauderdale) you'll find a lot of people work in these communities which are also places where people live. The big question is why more people don't also live in the towns where they work? I
am not sure of the answer, but housing costs are not always the reason (in Boca they probably are, but not in my other two examples). Of course one problem is that workplaces tend not to stay put. Too many of them move to a new office park, sometimes many miles distant, as soon as the five year lease is up and it is unrealistic to expect to expect people to have to move every five years.

Posted by Jonf | December 8, 2007 6:57 PM

Why the hell does it look like someone accidentally singed the right side of the graph with a poorly-placed cigarette?

Posted by CKT | December 8, 2007 7:39 PM

Some years ago I put a lot of study into this and found that when you calculated the cost of driving the cost of the housing and transportation was just about a constant. What you saved on the house you paid for the drive.

But the big difference was that it was very easy to figure out which neighborhood in the city would be a good one, and very hard to figure out which neighborhood in the country would be good.

For example, when I finally bought in Seattle I was two blocks from a university, two blocks from the water, four blocks from an arty neighborhood, and less than three miles from five major employers in my field.

For a very reasonable price, I even had a 'view'- the people who would park in front of my house and read a book or listen to music or take a nap, presumably their 'alone' time.

Of course, some people who buy in the country simply need a lot of space- to park all their cars.

Posted by serial catowner | December 8, 2007 7:45 PM

If you're living 0 miles from work, why are you still spending ~25% of your income on transportation? Are downtown shoes that expensive?

Because, aside from Manhattanites, most Americans own expensive cars, and most American families own more than one car, even if they live next door to work.

One assumes that the 25% of income includes car payments, insurance, maintenance, gas, etc.

Posted by Kent | December 8, 2007 9:38 PM

But the big difference was that it was very easy to figure out which neighborhood in the city would be a good one, and very hard to figure out which neighborhood in the country would be good.

For example, when I finally bought in Seattle I was two blocks from a university, two blocks from the water, four blocks from an arty neighborhood, and less than three miles from five major employers in my field.

Let me guess...Wallingford? When I lived in Seattle I was attending UW and working at NOAA at Sand Point. I found a place in Ravenna/Bryant next to the Burke Gillman Trail about equidistant between the two by bike. Worked out perfectly

As for which neighborhoods in the country are good? Easier than you think to figure out. In most cities, the desirability of suburban/exurban neighborhoods comes down to the quality of the schools. In most cities, measures like SAT scores correlate almost perfectly with property values. Frankly that's why most people move out to suburban/exurban areas. If I was still single or childless I'd never contemplate the burbs. But with 3 daughters the lifestyle becomes much more attractive.

Posted by Kent | December 8, 2007 9:50 PM

oops, 2nd paragraph above was also supposed to be italics. Those are serial catowners's words not mine.

Posted by Kent | December 8, 2007 9:52 PM

The one thing that makes that whole graph pointless is that many (most?) people base their residence on the availability of decent schools, and then consider distance to work to see if its practical. They will easily spend an extra hour or two a day - or more - to get their kids into a better school system.

Posted by Kenny | December 9, 2007 3:48 PM

They will easily spend an extra hour or two a day - or more - to get their kids into a better school system.

I understand why people do this, but it's always seemed crazy to me. That's an hour or two a day less your kids have to spend with you. I can understand making that choice if the alternative is a good school versus a really horrible, unsafe one. But if there are any even mediocre schools available in closer neighborhoods, it would seem to me that the kind of professional, educated parents who'd move to get their kids into better schools, might get better results by staying put and using the time they would have spent commuting, to build relationships with their kids and provide their own academic enrichment.

Posted by flippantangel | December 10, 2007 11:21 AM