The Location Efficiency of Urban Neighborhoods

Where and how you live is one of the most important investment decisions you’ll make – and driving costs increase the need to invest smarter

After a mortgage, owning and driving vehicles is the second highest household expense, and people who live in a walkable neighborhood near shops and schools can save serious money each year. That makes the “drive ‘til you qualify” mindset as outdated as buying a gas-guzzling SUV.

For years, the impacts of neighborhood form and location on transportation costs were often overlooked as people made decisions on where to live. But volatile fuel costs — and better tools for understanding how transportation costs vary across metro areas – are making these differences impossible to ignore.

There are a few core issues at the heart of location efficiency -- urban form, proximity to work hubs and other regional destinations, and quality of transit service. The simplest way to understand the issue is to focus on this: Sprawling communities are designed so that houses and the destinations people need to reach for their daily needs are widely dispersed so cars and trucks are needed for every trip.

Traditional urban neighborhoods bring a wide range of housing types together — apartments, lofts, townhouses, homes — and actively mix uses, so schools or shops may be located around the corner or even downstairs from where you live. Walking, cycling or taking transit now become convenient and money-saving options.

A mixed-use urban neighborhood such as Harbor Town in Memphis, Tenn., offers many convenient (and cost-saving) ways to get around while a place like Oakbrook Terrace, outside Chicago, requires people to use cars and trucks to get almost everywhere. Even crossing the street is generally done with an automobile in many cases.

How much money can a household save? The Housing and Transportation Index from the Center for Neighborhood Technology (CNT) is an excellent resource for exploring this question in 52 metropolitan areas. Based on detailed peer-reviewed studies that correlate odometer readings and federal household transportation surveys with factors such as neighborhood density, street grid complexity and availability of transit, CNT’s interactive maps estimate the amount of driving and transit use households average in neighborhoods across these metro areas, along with how these patterns affect household budgets.

The index generates some eye-popping comparisons.

In sections of Dacula, an Atlanta exurb with a number of fast-growing golf course communities, the average household drives 22,993 miles.

But with a home near the MARTA rail station in walkable inner-ring Decatur, a purchaser buys into a neighborhood where households average 12,250 miles driven, according to the Housing and Transportation Index created by CNT and found at htaindex.cnt.org.

The variation in driving distances between Decatur and Dacula means a difference of more than $275 per month in transportation costs, according to CNT.

In the Twin Cities, it shows the wisdom of shopping for home in the leafy urban neighborhood of East Isles next to Lake Calhoun, where the average household drives 9,420 miles per year. That compares to 21,684 miles per year you’ll find in exurban Rosemount. Transportation expenses run to $1,036 per month in Rosemount compared to $620 per month in East Isles – a savings of $415.

The Pearl District near downtown Portland is one of that region's most popular for new housing, near the heart of urban life and extremely convenient to get around. So convenient, in fact, that the average household there travels just 1,522 miles per year (while 41 percent commute to work by transit), according to the CNT calculations. Transportation costs run just $255 per month. Compare that to the $982 per month spent by households in Washougal, WA, a sprawling Portland exurb. That's a $725 per month difference.

Use the Housing and Transportation Index to compare average transportation expenses yourself in 52 metropolitan areas. The index is found at htaindex.cnt.org. To compare details such as driving miles per year and transportation costs per month, choose a metro area, open a map and then choose the "advanced" screen.

Invest smart, invest urban.