Ryan Avent points to this finding from a 2006 report from the Center for Housing Policy, which documents the share of income people devote to housing and transportation. It’s higher than you might think.
With annual combined housing and transportation costs at 39 percent of the median income of $87,398, Arlington County becomes the most effective when you use this formula. Next in line are Alexandria, with a median income of $80,510, and Fairfax County, with median income of $100,419. Both have combined housing and transportation costs at 41 percent.
These are not disadvantaged places we’re talking about, but some of the most affluent counties on the planet. Avent notes: “For residents of exurban Nova counties, like Prince William and Spotsylvania, total housing and transportation cost can be 50 percent or more of median incomes.”
How can we even imagine building an innovative, creative, and knowledge-based economy when housing and transportation costs eat up so much of household income? It would be like trying to build a modern industrial economy, say in the 1930s or even 1950s, but having food (that is the cost for agricultural products) consume half of all income. When housing and transport eat up this much on average, what’s left over to create effective demand for the industries, technologies, and business models of the future?
Before we can get out of this mess, housing and transport have to become a whole lot cheaper.