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Transportation Almost as Expensive as Housing in the Twin Cities

The annual cost getting around Minneapolis–Saint Paul may soon exceed rent.

By David Peterson

The cost of just getting around town is threatening to push right past the cost of a roof over your head in the Twin Cities area.

And the sudden narrowing of the gap between those two bills is catching even well-informed analysts off guard.

"We've long known that's true of low-income folks," said Hilary Reeves, of the advocacy group Transit for Livable Communities. "But for a wider demographic as well? Wow!"

In 2007, the annual cost of housing was $3,173 more than annual transportation costs. By 2012, the gap had shrunk to $462.

The shrinking gap between the cost of transport and that of owning or renting is twice as pronounced in the Twin Cities area as in the nation as a whole, according to the U.S. Bureau of Labor Statistics's Consumer Expenditure Survey.

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That could be partly because housing is relatively affordable here. New U.S. Census Bureau data being released Thursday find that despite some slippage, the Twin Cities area has emerged from the recession with the highest homeownership rate among the nation's top 50 metro areas. And logic suggests that a median home price that is $100,000 below Seattle's isn't hurting.

But rising transport costs may also be due in part to our sprawling development patterns, leading to lots of long and congested single-motorist drives.

The notion of understated transportation costs as a hidden contributor to sprawl has been a big issue for sprawl fighters for years. For some, the new data underscore the importance of more close-in urban development and transit. But conservatives and homebuilders counter that "sprawl" helps cut housing costs and promotes the area's exemplary homeownership rates.

From 2007 to 2012, the new data show, the annual cost of housing for a household in the Twin Cities has fallen from $12,802 to just over $10,359, or about 20 percent.

The cost of transportation fluctuated, dipping to about $7,900 in 2010 before jumping 26 percent to nearly $9,900. Nationally, that compares to an 11 percent drop and an 11 percent rise.

The rise in transport costs, Reeves said, is all the more remarkable given the recently arrived results of the Metropolitan Council's once-every-10-years Travel Behavior Inventory.

That study, covering the period from 2000 to 2010, shows that transit use is up strongly, though still not to the massive numbers compared with driving. Meanwhile, the number of miles driven dropped.

"The AAA says the average cost of owning a sedan is $8,946," she said. "The annual cost of riding transit is around $1,500, depending on the fare. Even if you add some money for taxis, the savings is pretty significant."

Look at commuting costs

There's also lots of anecdotal evidence that commuters, especially those with long trips, have taken many steps to throttle down their transportation costs.

Kelly Ebner of Roseville, for instance, bought a more gas-sipping car within the past few years to cope with the costs of her commute to an education job in Cambridge, Minn.

The drop this fall in the cost of gas, plus her ability to buy gas more cheaply in Cambridge than closer in, is probably saving her $100 a month, she said -- a small sign of just how deeply gas costs cut into many budgets.

When the federal government calculates transportation expenses, it includes not only the purchase of a new or used vehicle (net of trade-in value), but also finance charges, gas, oil, maintenance and repairs, insurance, licenses, registration costs, parking fees, towing charges and tolls. It also includes transport for vacations, and in that sense it would dip and rise with the economy.

Gas prices have eased visibly in recent weeks, even as home prices have risen. It isn't obvious what the long-term prospects are for either.

'Big house, big yard'

The new data arrive as the federal government unveiled this week a new websiteaimed at making the sometimes-veiled cost of transportation more transparent.

"As we thought about foreclosures and other problems, we realized that we needed to make the investment to get this kind of data out to folks, and it's a flagship investment," said Salin Geevarghese, acting director of the Office of Sustainable Housing and Communities of the U.S. Department of Housing and Urban Development.

Asked what federal housing people think that trends will look like, Geevarghese said simply: "Good question. Many people we talk to, including in the Twin Cities, believe, looking at demographic trends, that the preferences of consumers are changing," he said. "We hear that folks are asking, 'Is that big house and big yard something I need, or would I actually choose a more urban place?' It's well documented that people are making very, very different choices."

That said, he stressed, a website that encourages home buyers to consider transportation costs is not meant as a sprawl-fighting tool.

"If that's your lifestyle and that makes sense for you, fine; but let's make educated decisions. Housing costs are usually fixed and predictable, but many people find they didn't know what transportation costs looked like."

In the Twin Cities, one backdrop to the debate is the gradual movement of a DFL-dominated Met Council toward a new set of forecasts of future growth. Preliminary estimates suggest a strong movement into closer-in places and far less growth at the outskirts, though the estimates seem likely to be ratcheted back some.

Still the Met Council's move is a concern to many civic leaders, not just homebuilders, said Wendy Danks, spokeswoman for the Builders Association of the Twin Cities. "We have a lot of employment centers scattered around," Danks said. "People live in Elk River and work in Rogers or Maple Grove. We're responding to customer needs as much as anything else. Where are the demographics going? Will millennials really want to live in high-rises downtown or in south Minneapolis when they start having children?"

That said, she added, some of her group's members are eager to get in on higher-density development.

She herself could not have dreamed, when she bought an exurban lot many years ago, what would happen to the price of gas.

(c)2013 the Star Tribune

Daniel Luzer is GOVERNING's news editor.
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