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Moving to a Cheaper Neighborhood Doesn't Always Pay

Posted by: Peter Coy on October 11, 2006

Interesting report out today from the Center for Housing Policy, which concludes that most of the savings that moderate-income families get from moving to a neighborhood with cheaper housing are eaten up by higher transportation expenses. And the problem seems to be getting worse: 15 of the 20 fastest-growing counties in the U.S. are 30 or more miles from the nearest central business district (where a lot of the jobs are). The center defines “working families” as ones with incomes of $20,000 to $50,000 a year.

San Francisco comes out worst in the study, with working families spending about 35% of their income on housing and another 27% on transportation, which rounds up to 63% combined. Pittsburgh comes out best, but not a whole lot better, at 22% for housing and 33% for transportation, which rounds down to 54%.

Reader Comments

Brandon W

October 12, 2006 8:16 AM

And we wonder why the middle class and the poor are struggling, why more and more families have needed two incomes to survive, why parents are never home and why we have a deterioration of families and communities? This is a good part of the answer. Politicians on both sides of the aisle need to focus their attention on this issue instead of bickering, fingerpointing, and engaging in middle-school rhetoric.


October 12, 2006 11:39 AM

We need a transportation policy, we need new transportation infrastructure. We need trains, commuter trains and inner/outer city trains.

Henry Jordan

October 12, 2006 5:10 PM

It's also a matter of choice. Having been in the same situation, I learned the hard way that it's better to buy a smaller, older house close to work than to opt for a larger, newer house further away.

Many people do not realize that whatever they save or whatever they think they're gaining by getting "more" house further out is eaten up in transportation costs and the stress of the commute.

Don't blame the demise of the family on peoples' inability to make good financial tradeoffs.

Nigel S

October 12, 2006 5:24 PM

As the American population rapidly approaches 300 million people, housing issues like this are only going to increase. Housing either moves further away, or becomes more dense. Both of these options certainly have their drawbacks.

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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