The Financial Benefits of Living in Transit-Friendly, Walkable Areas

Families who choose the right neighborhoods have been shown to save real money



The neighborhood you live in can have a huge effect on your ability to spend or save, do the kind of things you really want to, and navigate the ongoing economic crisis.  The chart below, from a new report by The House Democratic Livable Communities Task Force (via Grist) shows the real financial consequences for American families that stem from living in three different kinds of neighborhoods.


The average American family spends roughly a third of its income on housing and another 19 percent on transportation, leaving just a little less than half for everything else.  Families living in especially sprawling, auto-dependent suburbs devote six percent more of their income to transportation. But families living in "mobility-option" neighborhoods--those with transit options and walkability--can reduce their transportation costs to just 9-16 percent less than families in auto-dependent neighborhoods and 10 percent less the typical American family.

The study highlights the role that neighborhood choice can play in changing a family's financial picture:

In the long term, individuals can reduce their transportation costs by choosing residential locations with flexible transportation choices, including transit and services within walking distance. Families that live near work places, schools, churches, grocery stores, and other services, will be more apt to make their outings on foot or in combined short car trips. Households located within transit accessible neighborhoods take fewer vehicle trips overall--about 25% fewer according to the National Personal Transportation Survey. ...households in the core of Washington DC spent 30% of household income on combined housing and transportation whereas those in the car dependent suburbs spent over 40%.

At its press conference last Thursday, Task Force Chair Rep. Earl Blumenauer (D-Ore.) noted that far too many Americans have too few options:

Unfortunately, about half of the American population doesn't have an environment that they live in that provides those choices. Too much of America is dependent on a pattern that imagines that we will always have an unlimited supply of inexpensive gasoline, and government policies in housing, in road transportation, reinforce that.

These findings mirror those of a 2005 study by Statistics Canada, which tracked the spending patterns of Canadian families across nearly two decades, 1982 to 2001, before the onset of the crisis (and before the housing bubble burst). One key difference between spenders and savers, the study noted, was car expenses.  By 2001, spenders were devoting a staggering 54 percent more of their incomes for car expenses than savers were--which was often enough to push them into the red. They dished out more for housing as well. The days of gas guzzlers and endless commutes to McMansions are over for most families who desire a more financially secure and meaningful future.

Car costs were a key factor in pushing homeowners into foreclosure according to a 2010 NRDC study. The study, which tracked 40,000 mortgages in Chicago, Jacksonville and San Francisco, found that the probability of foreclosure rose alongside the number vehicles owned per household in a neighborhood, even after controlling for income and mortgage characteristics such as debt-to-income ratio, credit score, loan-to-value ratio, fixed or variable rate loan and others. According to the study, living in "location-efficient" neighborhoods -- that are denser and more compact; have shorter travel distances, concentrated cores and mixed use development; provide access to transit and make it easier to get around on foot or by bike, while reducing vehicle ownership -- makes it much less likely that families will face foreclosure.

There remain some pundits and politicians who continue to believe that we need to get housing back to its former levels. But that won't work this time. The old Fordist housing-auto-energy economic model which helped bring on the crisis in the first place has reached its sell-by date. Our continued commitment to (and massive subsidizing of) it will only further erode the financial situation of middle-class and working families and hold back the recovery.

It's becoming increasingly apparent that the typical tools of monetary and fiscal policy are proving insufficient to sustain the recovery. Our future prosperity requires that we to begin to shift precious resources from houses, cars and energy toward investments in new skills, technologies, and industries that can generate higher paying jobs and improve overall living standards.  And that in turn requires a new geography built around denser (more innovative and productive), more walkable, transit-oriented (more efficient) communities.

If American families and policy-makers don't see being green or sustainable as reason enough to change the way we live, perhaps seeing the very tangible financial rewards that accrue to those who do will help them change their minds. As the poet wrote, "You must change your life." The numbers speak for themselves.