Housing Costs and Commuting Distance

Publication Date

October 2015

Author(s)

Kevin A. Park and Roberto G. Quercia

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Overview

Households face a trade-off between housing costs and community costs. Using a database that connects residence and workplace neighborhoods in eight larger metropolitan areas, researchers model the difference in housing costs as a function of estimated commuting distance.

They find that, consistent with economic theory that higher-income workers have a higher shadow value of time that increases commuting costs, these workers were found to have steeper value and rent gradients. Meanwhile, public transportation involves a fixed cost but lowers the marginal effect of commuting distance.

The results have important implications for housing policy, mortgage underwriting and property appraisals.