Wednesday, January 11, 2017

The Disconnect Between Housing Prices and Commuting Radiuses

According to real estate site,, “renters across the nation are currently spending almost 19 percent more of their incomes on rent than they did in the pre-bubble period between 1985 and 2000. In fact, in some parts of the country such as Los Angeles, Miami and San Francisco, the average household would need to spend over 40 percent of their income to rent the average home.
With house/condo prices at new highs, homeownership has become elusive for most people who do not already own a home. According to (April 13th): “Apartment List recently conducted a survey of more than 30,000 renters across the United States, asking questions about their plans for homeownership, affordability, and savings for a down payment. Our research indicates that the vast majority of millennial renters (79%) want to purchase a home, but that affordability is the biggest obstacle that they face. The issue is particularly acute on the west coast: more than 80% of millennials in Portland, Seattle, SF, LA, and San Diego say they cannot afford to buy.
“Worryingly, we find that millennial renters in expensive metropolitan areas significantly underestimate the amount they need to save for a down payment, in many cases by 50% or more. Using data on starter home prices and millennials’ average savings rates currently, we estimate that many renters will need a decade or more before they can afford a 20% down payment on a home.” The entire notion of housing affordability has been turned on its head.
According to a the Department of Housing and Urban Development (online, December 27th), “Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. An estimated 12 million renter and homeowner households now pay more than 50 percent of their annual incomes for housing. A family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States.
So what happens when, between the cost of buying or renting a home, you cannot afford a reasonable home where you want to live… and where you are not ensconced in public housing? You move to the closest safe area where you can afford a home or, if you are single, live with roommates. This cost issue is forcing increasing numbers of Americans to move farther and farther away from where they work.
As Bruce Upbin reveals in a December 21st study (Five Maps That Reveal New Truths about America's Megaregions) of American commuting patterns, for the first time in recorded history, too many Americans are violating the time/distance-from-work rule that has governed most of humanity for all of recorded history. “For most people commutes are dictated by Marchetti’s constant, a sturdy observation that humans since the Paleolithic Era have always lived roughly 30 minutes from their work even as transport tech evolved from bare feet to carriage to train to automobile. Commuting rings just kept expanding outward. But Marchetti's Constant has broken down in most big cities. New data collected from the public transit app Moovit shows average round-trip commute times are now 93 minutes in Philadelphia, 77 minutes in San Francisco, and 86 minutes in Boston and Chicago. A third of the people in Los Angeles, New York and Philadelphia say they commute more than two hours each day.
Public transportation to and from these more distant reaches has been generally woefully lacking, and new funding to create these needed links is very difficult to come by given the national proclivity towards fiscal austerity. Even President-Elect Donald Trump faces fierce resistance to the infrastructure funding he seeks from his own party, which controls and will continue (at least for the next few years) to control both houses of congress. The story repeats itself in those states (the majority) where the GOP controls the passage of legislation that could produce the needed state-funded infrastructure expansion and repairs.
Not only is the quality of life degraded as more people spend more time commuting, cutting sorely into personal or family time and reducing discretionary (taking into account housing and transportation costs), but the entire commuting structure falls rapidly apart should there be a significant rise in prices at the pump, which experts tell us is inevitable. Doesn’t augur well for the environment either. Our inability to plan for the obvious, our political tendency to kick cans down the road or defer big problems to future generations, could easily be our undoing. But then leadership does mean bucking trends and, well, leading.
I’m Peter Dekom, and we live in society that is reliant on the infrastructure investment from past generations without making continuing and necessary additional infrastructure investments for our own present and obvious future needs.

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