A Letter to Dear Abby about Affordability
First published December 22, 1995
Dear Abby:
Regarding the divorced woman who wonders how others make ends meet (No Money's Not Funny), your readers should know that over the past few decades, transportation has become an enormous household expense. How many of us know that the average car now costs about $4,000 per year to own and operate? [it was over $10,000 per year as of the 2000s] Even "cheap clunkers" have high operation and maintenance costs. To put this into perspective, such a cost is equivalent to a $40,000 home mortgage at 10 percent interest. In other words, a household owning 2 or 3 cars today (which is more necessary than in the past, when communities were less sprawled) is essentially paying expenses on the equivalent of 3 or 4 home mortgages. It's no wonder the average household expenditure for transportation has risen from 10 percent of all household expenditures in 1960 to 25 percent today.
It is a false economy to seek out "affordable housing" in areas remote from your place of work, where you shop, or where your kids go to school. Cheaper housing, when it is in a remote location, requires a household to own one or more cars. This high transportation cost negates any savings you get from finding a cheap house out in the suburbs.
Given this, how can people "make ends meet"? One way is to live in a location that is close to where you work, shop, and go to school. You will be more likely to walk, bicycle, ride the bus, or take the train. The less trips you are forced to make by car, the less cars your household needs to own. And each car you can avoid purchasing is another $4,000 per year that can be funneled into non-transportation household expenses like food, clothing, education, and medicine.
A few progressive banks and cities are starting to recognize this. They are tying "affordable housing" initiatives to what is now being called "location-efficient mortgages". Substantially reducing household transportation costs is not only possible, but is more effective than cheap housing or cheap suburban land in allowing families to make ends meet.
Dom Nozzi
Gainesville, Florida