The New York Times recently reported that the cost of owning a car has never been higher.
In June the average purchase price for a new car topped $48,000 for the first time, due to inflation and ongoing supply chain issues. The average monthly payment for a new car is now approximately $700, due to higher car prices and rising interest rates as the Federal Reserve battles inflation.
Used car prices have also climbed. These cost pressures are compounded by the record-high price of gas, which recently topped $5 per gallon; it’s now come down somewhat, but significant uncertainty remains. In a related trend, electric vehicle purchases have doubled in the past year, now representing 5.6% of the market, with an average purchase price of $66,000.
There is significant focus, appropriately, in Utah and nationwide on housing affordability, with rapid increases in home prices and rental rates. But to really understand overall household affordability, it’s critical to consider the two largest standard household expenses together: housing and transportation, or H+T.
Traditionally, a home is considered affordable when rent or mortgage costs consume no more than 30% of household income.
But this measure misses a key cost: transportation. How much does it cost to travel to and from everyday destinations?
The combined costs of housing and transportation offer a more comprehensive view of housing affordability. When transportation costs are added to the equation, a home is considered affordable when it consumes no more than 45% of household income. The Center for Neighborhood Technology has an H+T Index with the ability to enter specific geographies and evaluate H+T costs, and it reveals that many Utah households are over this 45% threshold.
What this suggests for transportation policy and investment in Utah is that we need to continue providing transportation choices to our residents, which is a core strategy of Utah’s Unified Transportation Plan.
If people have the option to take the train or bus, bike and/or walk from home to their key destinations, such as jobs, school, shopping and places of worship, it may make it viable for them to drive less and even to own one less car per household.
This matters to household affordability, as well as traffic congestion, air quality and access to opportunities. A well-functioning and efficient state and local road network needs to be complemented by a robust transit system, as well as safe and comfortable options for people to bike and walk.
Providing transportation choices — and coordinating transportation investments with housing, economic opportunity, and parks and public spaces — can improve overall household affordability and quality of life.
Andrew Gruber is the executive director of the Wasatch Front Regional Council.