Monday, April 19, 2010

Making Sense of the Cost of the Commute


Economists have revealed that living in the exurbs costs more, when you count in commuting, than you might save in cheaper housing. A study by the Urban Land Institute shows that exurban commuters in the Boston area pay as much as twice what close-in workers pay in tranportation costs. "The report shows "affordable housing" in the exurbs really isn't--if it also means unaffordable transportation," says an ULI researcher quoted on NECN, a local news channel.

In the Boston area, commuters spend 35 percent of their household income on housing and 19 percent on transportation. But transportation costs range from more than $14,000 in communities along the I-495 beltway, like Billerica and Franklin (above, in a photo by shersteve) to $6,540 for workers hopping across the Charles River from Cambridge.

The Urban Land Institute argues that the difference, put toward a mortgage payment, could allow workers to afford a house worth $40,000 more in Cambridge, say, than, Franklin. One problem with this argument is that the median price for a home in Cambridge is more than $80,000 higher than a home in Franklin, according to Trulia.

Let's say for the sake of argument, however, that a homebuyer can find a place in Cambridge equivalent to a place in an outer-ring burb for just $40,000 more. The economists tells us that, taken as a group, we're all rational actors, even us suburbanites. There must be some reason some Boston area residents prefer coughing up a quarter of their income to sit on a commuter train, which, money aside, takes its own toll in hassle. (The institute has done a similar study on San Francisco that yielded similar differentials, and yet some folks are choosing to commute by air from Portland, Oregon, to beat the Bay Area real-estate prices.)

Do people not do the commuting vs. home price math for themselves? Or is there something else driving people out into the burbs and beyond? The answer to that mystery may be more illuminating than identifying the phenomenon itself.

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