How Land Use Decisions Affect Transportation Costs

Transportation costs are the second highest household expenditure after total housing costs. Housing, including utilities, operations, and furnishings in 2004 was on average 32.1 percent of household expenditures, with utilities consuming 6.7 percent of this total. Transportation, for the same households surveyed in the annual Bureau of Labor Statistics Consumer Expenditure Survey, was another 18 percent of expenditures.

Perhaps contrary to popular belief, how much households spend on transportation is not solely a function of income or household size, though these play a role. Even more of a factor in determining costs is urban form characteristics like households per residential acre average block size and distance to job centers. 

Transportation costs are not just about the price of gas, though even modest rises can imperil households already having a hard time trying to make ends meet, an annual increase from $1,000 to $2,000 per year means an extra $100 per month. It is the price of gas that has been getting much attention in recent months, but what really drive transportation costs is how many cars a household needs in the first place, and secondarily, how much they need to drive them. This is where the urban form characteristics come in.

In two studies using detailed individual survey responses from the Consumer Expenditure Survey, the Economic Policy Institute and Public Policy Institute of California found low income households paid from between $440 per year and $2800 per year on transportation. The difference was whether the household was predominantly a transit user or a vehicle user. If auto ownership is highly correlated with density, as the LEM study showed, then so is transit. Hence, urban form— particularly when it supports transit plays a large role in transportation expenditures; a $2,400 a year difference for these sampled households.

A key relationship among different neighborhoods are the push and pull factors of housing prices and housing quality and convenience based on their locations and the level of investment in the area.

Households moving to high transportation places are often in search of good housing and schools, and recognize they’re trading off housing for convenience; they’re not necessarily seeking long commutes and to be 30 or more miles from the central city. Improving the housing affordability in central cities and the housing quality in inner-ring suburbs will help lower and moderate income households looking for more housing choice to stay closer in and therefore have lower transportation costs, contribute less to sprawl, and consume less gasoline and oil.

The proliferation of high transportation cost neighborhoods is in essence the proliferation of sprawl and inefficient development because of a lack of affordable and moderately priced new construction in developed areas, just as the maintenance of high expenditure neighborhoods, as a percentage of incomes, in inner-ring areas is the maintenance of disinvestment and concentrated poverty and a missed opportunity for realizing more efficient development.

Fueled by congestion, gas prices, and more and more households seeking convenience, a shorter commute, and more livable communities, in the last decade or more, transit has been in a building boom and ridership is on the rise. The presence of transit stations, and households living in the ½ mile zones around them (transit zones) are a hopeful sign and a strategy worth promoting. The travel behaviors and the housing density are much more sustainable and affordable than neighborhoods outside these zones.

Commuting to work by transit is significantly different for transit zone households than for all households in regions: 45 percent of workers in transit zones commute by transit compared to 14 percent of workers in the regions, and in many zones the difference is even greater. Households in transit zones also own very few cars: over three-fourths of households have one car or less. This could be attributed to lower incomes and smaller household sizes, which are characteristics of many transit zone households, but not completely. The households in the transit zones are not three-fourths low income, so many moderate and high income households are getting by without a car, or just one car. Additionally, households of one or two working adults, demographics that are common in transit zones, often own one or two cars, respectively, if they are not living near transit but these same households often own 0 or 1 car if they live in a transit zone.

Investing in transportation options that allow residents to not rely on vehicles for transportation and commuting would save residents money and allow them to use these savings to stimulate the local economy through the purchase of goods and services.  It would also reduce greenhouse gases and air pollutants, improving air quality and reducing the impact of climate change.

Resources:

Growing More Affordably: Connecting the Dots on Housing, Energy and Transportation Costs