Could Your Rent Pay For More Transit?

Christian Madera's picture

An acquaintance of mine is trying to decide whether to move to Los Angeles or New York. Having spent most of her life in the Northeast, New York is a familiar city where she has good friends and job connections. However, she can't help but feel the draw of the West Coast, and on a recent visit to Los Angeles, she was rather keen on settling down in Southern California, especially when she was comparing the rents in L.A. to those in New York. While rents in New York are increasingly stratospheric, L.A.'s are just exorbitantly high.

However, several friends pointed out that since most people in Los Angeles consider a car a necessity, she would need to factor that into her cost of living. Once she did, she realized that living in Los Angeles would actually be more expensive than living in New York. Certainly, it is possible to live in Los Angeles without a car (and many do, including myself). However, as someone who's also lived in a very transit-friendly city (Hong Kong), I'll also be the first to admit living in L.A. without a car is not easy. In New York, the question is sometimes even asked in reverse – why would you want to deal with the hassle of owning a car?

All this got me thinking – how much are the higher rents in New York connected to the fact that you don't need to pay for a private vehicle? And are L.A.'s property owners and landlords losing out on income potential because they and their tenants feel the need to own cars? If so, there seems like a good economic argument for convincing property owners to pay for more transit.

Of course, the idea of financing transit improvements using tax increment financing on property within easy access of improved transit service isn't new. Los Angeles tried this itself when the first stretches of the city's subway were built – establishing benefit assessment districts in and around its downtown. However, these were limited to commercial properties, which stunted their potential. Carefully applied to residential properties, either through property taxes or rents, this concept might be able to capture some of the value that likely is created when investments in transit are made.

Christian Madera was managing editor of Planetizen from 2006 to 2008.



Owning a car costs about

Owning a car costs about $6,000 a year all expenses included, for a small car. That is about $500 per month. Subtract about $100/month for transit expenses ($76 for a metrocard in NYC, plus occasional cabs and other forms of transit; of course this may vary widely from person to person). Thus you can immediately discount NYC rents by $400.

A studio in a vibrant neighborhood with good transit access and safe streets at all hours costs about $1600. Discount that to $1200 - still expensive, but comparable to many other desirable metros.

Actual Cost of Transit

Yes, and how much of transit costs are hidden by higher taxes? Fares pay only a small minority of transit system costs.

Actual Cost of Transit

...because we all know there are no hidden taxes in the road and highway system.

Actual Cost of Transit

...and because we all know there are no other hidden costs to the freeway system, like time spent in multi-hour traffic jams each day... yep... none at all -_-

Josh Stephens's picture

Cars=Much Higher Rents

There's no doubt that nearly obligatory car ownership pushes the cost of living in L.A. higher than that in NYC. It's the one city in which the trade-offs of driving vs. rent just don't pencil out.

A friend just got an apartment in Manhattan only $200 more per month than my own in West L.A., but she's going to be doing a lot better without the $50 per week in gas, $1000+ in insurance, and on and on.

The tough part about L.A. is that even if you don't need a car for your commute (if, say, you live near Wilshire Bl.), you still need one for incidental trips like to restaurants and parties and everything else that we do beyond the working hours, so even if you can cut down on mileage, you still have to carry the fixed costs of car ownership.

in general, I think it's shocking how seldom people are willing to calculate their driving costs. I think every rental and for-sale residential unit needs to come with an "estimated driving expense" that calculates distances to CBDs, schools, retail, etc. so that people can know what they're actually paying.

Housing and Transportation Affordability

I would like to give a heads-up to anyone interested in this topic. There was a report on this very topic by the Center for Housing Policy called "A Heavy Load: Combined Housing and Transportation Burdens of Working Families"

According to the report (pg 11), working families in New York spend 56% of their income on housing-and-transportation. This puts the region as tied for 16th place out of 27 metro regions, lower than the median, and yes, lower than Los Angeles. (The San Francisco Bay Area has the highest cost burdens)

Of course, keep in mind, this measures the cost burdens for "workers," a group we planners may or may not consider ourselves a part of, and measures housing-and-transportation costs as a percentage of income, not as an absolute. For example, one counter-intuitive conclusion is that areas with a lower housing cost burdens tend to be wealthy areas with higher housing prices, because in these areas people spend a lower *percentage* of their income on housing.

Another report by the Brookings Institution called the "Housing and Transportation Affordability Index" measured these costs in a different way. Unfortunately, the link given on their website is dead. The abstract is here If you are interested, please bomb them with requests to put it back up because I have been trying to access it for a while. Anyway, as I remember, all of the transit-oriented metropolises that are regularly excoriated for high housing costs (SF, NYC, Boston) ranked beyond number 10, while the top ten was full of sunbelt and California sprawlopolises (Atlanta, San Diego, LA, Florida cities, etc).

Found the report

For those interested, the Brookings report is here.

Christian Madera's picture

Car-Sharing Can Be An Option For Some

For those who living in easy access of a Flexcar (or similar group in other cities), car-sharing is one option you can use to avoid the fixed costs of car ownership for incidental trips.

Factor in Salaries

I've thought about the whole LA vs. NY cost of living comparison myself, since its a situation I'm facing. So typical LA costs: $800 apt, $500 transportation - $1300/month. NY: $1200 apt, $100 transportation - $1300 month. It's about even in terms of housing and transportation. The question isn't which one is more or less expensive to live. I've come to the conclusion it's about equal. The question comes down to how much does a planner make in NY vs. LA. NY planners start at $45K. In LA planners make $55K. The next question is what lifestyle do u prefer? NY is better for day to day becuz there's so much to offer in the city, but hell to get out. LA has better weekend options - lakes, mountains, beaches, wine valleys, but the day to day is a bit of a bore. I don't know which to choose.

That's a little bit of a simplification

As with anywhere you go, you will soon find that LA has plenty to offer on a day to day basis. Griffith Park is one of the most amazing urban parks in the country. Plenty of great areas to walk around in (Downtown/Chinatown/Japantown, Venice Beach/Main Street, Vermont St., LACMA/Miracle Mile, Melrose). Great restaurants and bars. And you may find that you're not running off to Big Bear, and Santa Barbara quite as often as you thought you were going to be doing. As with anywhere you end up when you are young, you will quickly make friends and the day to day will be whatever you make of it. "Wherever you go, there You are." Also I'm not sure where you got the $800 for an apt figure, because that will get you a room to share, or a teeny tiny studio in a pretty run down building.

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