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Even
though most Americans take transportation costs for granted, these
expenses take a big bite out of the family budget.
In addition, those costs vary significantly depending on where you
live. STPP and the Center for
Neighborhood Technology worked together to analyze daily transportation
costs, and revealed new links between land use, transportation choice, and
how much the average family spends to get around.
It turns out that sprawling areas with few travel options turn
driving from a convenient choice into an expensive necessity.
Transportation
Is Expensive
For
most Americans, transportation
is an expense second only to housing.
The average American household devotes 18 cents out of every dollar
it spends to getting around. In
some metro areas, households are spending more on transportation than on
shelter. The vast majority of that spending, 98 percent, is for the
purchase, operation, and maintenance of automobiles.
Most American families spend more on driving than on health care,
education or food.
And the poorest families spend the most—sometimes more than
one-third of their income goes to transportation.
For
this analysis, the authors used several data sources, including the
Consumer Expenditure Survey performed by the US Department of Labor, and
auto-cost modeling based on a variety of databases, to take a close look
at transportation expenses: What transportation costs, where
transportation is more expensive than average, and, most importantly, what
drives up transportation costs. (This analysis focuses on local transportation expenses, so
does not include air fare or cruise ship expenses.)
Where
Transportation Is Most Expensive
Consumer
Expenditure Survey data show that in 1997 and 1998, households devoted the
highest portion of their budget to transportation in Houston, Atlanta,
Dallas-Ft. Worth, Miami, and Detroit.
The average Houston area household used 22 cents out of every
dollar it spent on transportation, spending well over $8,800 each year to
get around, or $2,528 more than the national average.
The three least expensive metro areas in the survey, Honolulu, New
York, and Baltimore, spent almost one-third less: Honolulu households used
less than 15 cents out of every spending dollar on transportation,
spending $6,136 annually.
Sprawl
Drives Up Transportation Spending
An
analysis of socio-economic, land use, and transportation factors in these
communities finds that the most powerful source of differences in
household transportation spending is the spread-out development pattern
commonly called sprawl. Less sprawling places with more efficient land use
tend to cost people less. In places with more characteristics of sprawl,
households use more of their spending power to pay for transportation. To
document this linkage, we measured sprawl through a multi-variate analysis
of a composite of land use characteristics.
Households in places with a higher degree of sprawl use more of
their spending dollar on transportation.
Altogether,
28 metro areas were studied. In
the one-third of these metro areas that were found to be most sprawling,
households devote 20 percent more of their spending dollar to
transportation than do the one-third of metro areas with the fewest sprawl
characteristics. In the places with the most sprawl, households spend more
on buying automobiles, buy more gasoline, and spend more on miscellaneous
automobile expenses. As a result, the average American family living in a highly
sprawling area pays roughly $1,300 more per year in transportation
expenses.
This
is not a function of higher income; in fact these areas actually had
slightly lower average incomes than less sprawling places.
In addition, while the high price of gasoline or car insurance has
been a target of consumer outrage, our analysis on Consumer Expenditure
figures showed these factors had little effect on overall transportation
expenses.
The
most expensive places for transportation in the Consumer Expenditure
Survey also provide little transportation choice, as measured by the ratio
of transit service to roads. Places
where road systems dominate have higher transportation expenses.
In
metro areas with large transit systems, such as New York, families pay
higher taxes to support these systems.
But these taxes do not come close to outweighing the almost $2,900
less than New Yorkers pay for transportation than the average Houston
family. In New York, public spending on transit costs about $400 more
per household per year than it does in Houston, but even after accounting
for this difference, Houston families are still paying $2,500 more per
year to get around.
The
Impact of Sprawl Within a Metro Area
Wide
variations in transportation costs are also clear within metropolitan
regions. A sophisticated automobile cost model based on federal census
data and state automobile records allowed us to look at differences in
automobile expenses between neighborhoods within a few metropolitan areas.
This analysis shows that households in some parts of a metro area
spend well over twice as much on owning and operating vehicles as
households in other areas.
In
detailed maps of automobile costs in Chicago, San Francisco, and Los
Angeles, the higher cost areas tend to be in outlying neighborhoods where
sprawling development means everything is far apart and other
transportation options are few. The lower cost areas tend to be
near active transit lines, where neighborhoods are walkable and
destinations are close by. For
example, an average family living in Chicago’s Edgewater neighborhood
spends $4,000 yearly on automobiles, while the average family in
Schaumburg, Illinois spends $6,800. These
differences are only partially explained by varying income levels; some of
the neighborhoods with highest incomes also have the lowest transportation
spending.
Fewer
Choices Mean Higher Costs
Sprawl
increases costs by making automobile travel a necessity.
Sheer distance often precludes the most inexpensive forms of
transportation, walking or bicycling.
Metropolitan areas dominated by a uniform spread of subdivisions,
office parks, and strip malls are harder to serve with transit and
necessitate driving between every destination.
While
the government builds the roads, private individuals buy, fuel, and
maintain the automobiles that are needed to drive on them. Transportation
takes a big bite out of household spending as families end up owning small
fleets of vehicles. These
high up-front expenses make it difficult to economize on travel.
According to the Federal Highway Administration (FHWA),
three-quarters of all automobile expenses stem from the fixed cost of
simply owning a car, regardless of how much it is driven. These patterns
show how government decisions about community design and transportation
investments affect personal pocketbooks.
Taxes are just one way government decisions cost people money.
Decisions about transportation infrastructure and growth have a big
effect on family budgets too.
Road
Building Contributes to Rising Transportation Expenses
Government
investments in road building may be contributing to an increase in
transportation expenses. Between
1990 and 1998, the portion of household budgets going to transportation in
the metro areas surveyed grew by an average of eight percent.
Both expenses and road building grew far faster in the top ranked
areas - Houston, Atlanta, and Dallas.
Spending in these areas grew by an average of 17 percent since
1988, while highway mileage per person increased by 21 percent.
In the metro areas with the smallest portion of household budgets
going to transportation, (Honolulu, New York, and Baltimore), the highway
mileage per person dropped slightly over the decade, and the percentage of
household expenses going to transportation actually fell — by almost 9
percent. (See figure, this
page.)
High
Transportation Spending Hurts Family Finances
High
transportation costs can have a significant effect on families’ long
term financial outlook. Spending on vehicles erodes wealth, while spending
in the other major household category–housing–can build it. For
example, over ten years, for every $10,000 invested in a home, the
homeowner can get a return of over $4,730 in equity.
For every $10,000 invested in an automobile, a car owner receives
equity of less than $1,000–just $910. Automobile loans are the largest
category of household debt outside of home mortgages, and such debt
obligations can stand in the way of qualifying for a mortgage.
The
impact of transportation expenses on housing generally goes unrecognized. New houses in new subdivisions far from central cities are
seen as a “good deal,” but their high transportation expenses are not
accounted for. Conversely,
the lower expenditures made possible by living in a convenient, walkable
neighborhood with good transportation choices are not taken into account
in mortgage lending decisions, putting such homes out of the reach of many
buyers who could actually afford them.
Just as determining a home’s energy efficiency helps homebuyers
gauge heating and cooling costs, determining an area’s “location
efficiency” helps homebuyers gauge future transportation costs.
Taking this “Location Efficient Value” into account
shows that in selected cities, home buyers can expect to save
between $100 and $500 per month if they choose a home in a convenient
location. For a household
with an income of $50,000 that qualifies for a Location Efficient MortgageSM,
those savings can qualify them for an additional $36,000 to $48,000 in
mortgage debt, giving them more housing options.
(see article on page 7 for more on the relationship between
transportation costs and home ownership.)
Recommendations
This
report shows how sprawling metro areas with limited transportation choices
cost people money. In light
of these findings, we make the following recommendations:
1.
Invest in Transportation Choice
Governments
should invest in public transit, bicycle facilities, and walkable
neighborhoods as strategies that can help families save money, and should
stop investing in sprawl-inducing highway expansions that are shown to
cost families more money.
2.
Grow Smarter
Developers
should build according to principles of smart growth, and include a
variety of affordable housing options so everyone can benefit. Cities should revise their building and zoning codes to make
this easier.
3.
Offer Location-Efficient Mortgages
Banks
should offer Location-Efficient Mortgages and other programs that take
into account the savings possible by living in a transportation efficient
location.
4.
Give People a Chance to Save by Driving Less
Businesses
and government should encourage programs that help reduce the high fixed
costs of driving, such as pay-as-you-go auto insurance, and car-sharing
programs.
5.
Collect Better Information
Federal,
state, and local governments should collect and analyze more detailed data
about the personal costs of transportation, including expanding the
metropolitan level survey beyond the 28 areas currently surveyed.
The
full report from which this article is derived is available from STPP.
Driven to Spend: The
Impact of Sprawl on Household Transportation Expenses can be
downloaded from http://www.transact.org
. A paper copy can also be
ordered for $12.00 plus shipping and handling.
Please call (202) 466-2636 for more information about ordering.
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