Housing Power, the Future of Spending Power? Consequences for Transport

05.03.23 | Blog | By:

“Give back housing power to the people” is a nice motto, in this new era of high interest rates, of obscene real estate prices in inner cities, and more than a decade after the subprime crisis. A difficult challenge, though. Besides the affordability of a decent dwelling, a basic need, the mere definition of the ideal type of dwelling comes right behind, especially after the painful lock-downs endured during the pandemic, which created for some a flight from the cities toward the rural areas.

Renewing the interest for the individual house, semi-detached at worst, but with a garden, the middle-class dream of the post-WW II period in the West, against the vision proposed by some 21st century architects and urban planners, dictating humans have to live in vertical and large cities to fight climate change (note that 20th century economists claimed living in large cities favored employment and revenues, times change).

Such visions from above may please the urban elites, the “anywhere”, and the eco-radicals, but the silent majority, the “somewhere”, may disagree and vote with their feet when it comes to where they want to raise a family. Even regulations like Net Zero Artificialization, to prevent further housing and commercial expansion on existing agricultural land, may face opposition by local authorities, willing to develop their territory by attracting new residents and thus get back some basic public services, a school, a post office.

And former urban dwellers may find comfort for their decision to move to more bucolic environments from a recent study, published in February 2023 by France Stratégie, the French Prime Minister strategic planning unit, publishing extensive data on the arbitrage between housing and transport costs for typical territories, urban centers of various sizes, their suburbia, rural areas.

Gross figures of aggregated housing and transport costs do show large deviations between territories, but are mostly explained by the social categorization of households. Eliminating this bias does show a more balanced picture.

For housing, average expenses only vary by 10% between living in a rural environment and living in the zone of influence of a major city, up to 700000 inhabitants: it would be 40% if dwelling sizes were similar but, of course, living in a remote territory allows to indulge in a larger house. Arbitrage.

Of course, transport cost variations go in the reverse direction. On average, this variation amounts to 20% between those living in rural areas and those living downtown.

But the expenses for housing and transport are not similar in monetary terms. On average, the transport cost is three times cheaper than the housing cost, reflecting the different momentum taken by the real estate market and the industrial sector, automotive in this case, in the last forty years. In other terms, the neo-liberal transition to reward capital rather than work, but this is another debate altogether.

Breaking down the transport cost further shows the fixed part of car ownership, relative to amortization, insurance, maintenance, far outweighs the variable part, the fuel, by a factor three, again. Which means that belonging to the motorist club, whether you are an urbanite or a die-hard- or neo-rural, has a significant up-front cost, regardless of the usage, daily commuting or occasional, for the week-end or for the holidays. Of course, only relying on public transport is far less expensive, definitely when it comes to daily travel, and is today a decision many citizens of large metropolises consciously take, though not only for climate or environmental reasons. But those are still a minority, for the time being anyway, as commuting between home and work is still mostly relying on driving (65 %), public transport a distant second (22 %).

Coming back to the majority, this study hints that the flight to the rural, less densely populated, areas is unlikely over, which implies that the transport of everyday will persist in the long term. The good news is that mitigation measures have bloomed in the recent past, like home-working, car-sharing, local re-industrialization, the growing need for services to seniors, all of the above limiting the traditional commuting, typical of the suburban lore of the second half of the 20th century.

Remains the carbon footprint of daily commuting for those, living in remote areas and obliged to travel to urban centers, for many, cumulative, reasons:

The above-mentioned study notes the correlation between the distance between home and work and the low level of education, low level of revenues, reflecting a significant drop in real estate prices if you go far enough. Which implies the likelihood of a physical presence at work, for instance for jobs in construction or health or retail services. Which may not become easy to get to if Low Emission Zones become active in every large city, banning older cars. A true problem as:

Next: remoteness from urban areas also means the unlikeliness to find a decent offer of public transport.

Finally, household revenues are less likely to allow the replacement of their thermal mode of transportation (usually, at least two vehicles) by a low-carbon alternative, which up-front cost is prohibitive.

It becomes common knowledge that the energy transition will not come cheap, which raises the issue of acceptance by the citizens in any democracy, thus of the social justice measures politicians will have to take to succeed in this systemic change. If free choice of housing remains a standard feature of our future, one such social justice priority measure will then be to help those in living in remote areas to switch to low-carbon mobility, or generalize the use of low-carbon fuels for those who do not wish, or just cannot, switch to zero-emission vehicles.

Philippe Marchand is a Bioenergy Steering Committee Member of the European Technology and Innovation Platform (ETIP).

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