Californians like to be #1 at everything — from college sports (Go Stanford!) to wine. But this excellence is double edged; the state also has the dubious honor of being #1 at long commutes and unaffordable housing.
Taken together, these two factors create a population of super commuters: workers who regularly travel long distances or hours to their workplace.
One-way commuter champions
While average travel time to workplaces has increased nationally most years between 2006 and 2019, Golden State workers won’t be outdone. Average one-way commutes in California’s largest metropolitan areas tend to surpass the record-breaking national average commute time of 27 minutes, according to a 2019 Census report.
The average one-way commute for California workers is:
A lack of affordably priced housing options near job centers forces lower- and medium- wage workers to live far from work, leading to longer commutes, according to a 2022 UCLA study.
This is a worrying trend in light of research suggesting long commutes have serious negative health effects. Just a 10-mile one-way commute is associated with a greater risk of heart disease, according to the American Journal of Preventive Medicine.
Moving out of cities, often due to unsustainably high housing costs, also limits the economic mobility of workers. Low-wage workers who live near job centers are more likely to experience upward mobility for themselves and their children than low-income super commuters, according to a Department of Housing and Urban Development study.
The impacts of long commutes are doubly concerning for real estate professionals, who spend a significant amount of time driving as part of their work.
The UCLA study underscores the need to protect and expand housing supply in job-rich areas, especially long-term rental housing, to curb the adverse effects associated with longer commutes.
The tradeoffs of commuting
The UCLA study observed three income categories for workers: lower-wage, middle-wage and higher-wage. The researchers then measured and compared the adequacy of housing with the wages of local workers to determine affordability.
The traditional theory is that higher-wage workers travel longer distances from the suburbs to jobs in and around metro areas. Lower-wage workers, on the other hand, typically live in close proximity to job centers, permitting shorter commutes.
The study supported the anecdote that higher-wage workers commute further distances. Lower-wage workers commuted on average about 11 miles, while higher-wage workers commuted over 14 miles — 32% longer.
However, the study also tempered this picture by stressing a lack of housing options for lower-wage workers. While higher-wage workers do commute further, they are afforded this choice through higher wages, comparatively lower-cost housing and other neighborhood amenities — such as highly-rated school systems and more open space. These benefits are often treated as a trade-off for longer commutes.
But the affordable housing options located near job centers are not likely to meet worker demand, especially from lower-wage workers. Only 4% of lower-wage workers (making less than $1,250 per month) worked in neighborhoods with affordable housing units located near low-wage jobs.
Meanwhile, 77% of higher-wage workers (making over $3,333 per month) worked in neighborhoods with cost-appropriate housing relative to jobs.
In other words, it is difficult for lower-wage workers to afford to live in the neighborhoods where they work. They are instead funneled into long commutes, without the positive tradeoffs traditionally associated with commuters.
High-income earners may have their pick of as much as three-quarters of housing units near their workplaces, while about 95% of rental units will be out of reach for a low-income earner — unless they want to be cost-burdened by renting.
Addressing the housing crisis
Limited housing options for low-income workers in urban areas is coming to a head, forcing California legislators to step up their housing crisis response.
Both workers and employers are moving out of California’s most expensive coastal regions in favor of other states, where they are less cost-burdened by housing. 300,000 Californians left the state between 2020-2021.
To address California’s inventory deficit, long-term solutions will be needed. A few common-sense strategies to achieve this include:
- creating and maintaining housing units dedicated to low-income earners;
- loosening outdated zoning restrictions;
- facilitating higher-density and infill development;
- encouraging the construction of accessory dwelling units (ADUs);
- incentivizing transit-oriented communities; and
- actually building new housing units, of course.
Crucially, long-term rentals will enjoy great demand in the current housing environment. This is especially true in California’s expensive coastal cities, where renting remains a popular (and often, necessary) choice.
California property investors, seeing the demand for housing coupled with unaffordable prices, are bankrolling new suburban build-to-rent housing in the form of long-term rental communities. By adding build-to-rent to their portfolios, cash-heavy investors secure a steady stream of income from priced-out first-time homebuyers hoping to wait out the seller’s market.
As those who choose to rent increasingly find they have competition from renters-by-necessity, residential rental properties will dominate California’s housing market. [See RPI e-book Real Estate Economics, Chapter 6.2]
Real estate professionals seeking to expand their offerings amid the second half of the double-dip recession might consider adding property management to their list of expertise. Click through firsttuesday’s Recession Survival Guide for more agent resources.
Want to learn more about renting and owning trends in California? Click the image below to download the RPI book cited in this article.