Transportation No Longer Matter Of Sense

For one reason or another, most people prefer to live as close to the city as possible, while still being far enough away to enjoy a little peace and quiet. But people often end up finding themselves farther and farther away from the city as home prices decline in deeper suburbs.

While those living in the suburbs may save thousands of dollars on a purchased property and up to a couple hundred per monthly payment, there are transportation costs to factor. Even though people know that gas is expensive and other transportation costs add up, it is not significant enough to consider paying a larger price tag to live closer to the city, right?

The article, “Miles Versus Mortgages” written by Peter G. Miller and posted in the October 17, 2006 edition of Realty Times, attempts to provide a solution as to the biggest money saver.

“A new study tells us something which seems very reasonable: Living in distant suburbs may reduce housing expenses, but ‘working households’ -- those who earn $20,000 to $50,000 annually -- may lose such savings to steep commuting costs. That's the essential conclusion of a study by the Washington-based Center for Housing Policy. Entitled The Heavy Load: The Combined Housing and Transportation Burdens of Working Families, the report says that cheap houses in distant locations may be more costly than believed.”

According to the report, people that have to commute to and from work at a distance of 12 to 15 miles may actually be spending more in transportation costs than that of the savings from living in a cheaper suburban home.

Now, transportation costs include an influx of varying details including auto payments, gas, maintenance and insurance. “‘Nationally,’ says the report, ‘for every dollar a working family saves on housing, it spends 77 cents more on transportation.’”

The key factor in this report is that is based upon working households, or adults with families. For example, according to the report all households in the U.S spend about 20.2 percent of their income on transportation compared to 29.6 percent for working households. There is a greater need for more frequent trips for food, clothing and recreational transportation.

“If you combine transportation costs with housing expenses then on average you can account for 57 percent of all income for working households. However, combined costs differ substantially by market from a low in Pittsburgh (54 percent) to a high in San Francisco (63 percent).”

So there are a variety of factors to consider when determining if high transportation costs are worth living in a more expensive place that will require less transportation. Location and personal situation are important. If you do not live near a major city with subway transportation or an efficient public transportation system, you will probably still need a vehicle even if you live in the city. That would defeat the purpose.

There are a couple of other, basic ways to lower transportation costs each day; “the use of more-efficient vehicles, work-pooling (sharing a ride to the same work site) and better maintenance which allows vehicles to be kept longer.”

The report also does not factor in transportation costs if you live in the city. You cannot take the subway everywhere. This report is just a nice reminder that you should not buy a home in a secluded place just to save a couple of bucks each month, because that’s what it might end up being.