The Hidden Costs – and Opportunities – of Commuting

Commuting. Everyone detests it; in fact, people hate commuting so much that it ranks in studies as the most unpleasant common activity. Nevertheless, people remain stuck on the traffic issue, figuratively and literally, with the average American’s commute recently reaching a historic high of over 50 minutes per day.

The plight of commuters is especially dire in the Bay Area. In a recent study, the area ranked as having the fifth-worst commute in the nation. Moreover, traffic has only gotten worse. A 2015 study found that traffic rose 18 percent in 2013, a 15-year record for the Bay Area. Outstanding employment growth would certainly appear to have a hand in this; the San Jose-Sunnyvale-Santa Clara metropolitan area claimed the prize in 2014 for best employment growth in the nation, at 5.2 percent.

The costs of commuting— social, physical, and emotional— are well-documented in numerous facets of everyday life. Swedish researchers have discovered that having at least one partner commuting more than 45 minutes a day increases a couple’s risk of divorce by 40 percent. In addition, an NIH study found that every hour spent commuting is associated with a 22-minute decrease in time spent with a spouse and an 18-minute decrease in time spent with children.

Commuting takes a physical and an emotional toll as well. Every hour spent commuting is associated with a 13-minute reduction in sleep time, and the number of miles traveled by vehicle is more strongly correlated with obesity than any other factor, even physical activity. Long commutes are also associated with higher levels of anxiety, blood sugar, cholesterol, blood pressure, and depression. Finally, every 10 additional minutes spent on commuting decreases social connections—a key determinant of happiness and fulfillment—by 10 percent.

In fact, the deleterious effects of longer commutes are quantifiable. Economists have calculated that every additional hour on the road would need to be accompanied by a salary increase of 40 percent to compensate for the additional time on the road and associated costs. Few commuters, however, make 40 percent more than their noncommuting colleagues, demonstrating the ubiquity of underestimating the pain of commuting.

Economists find an analogous effect in real estate. Studies have shown that people tend to undervalue the cost of commuting and instead overvalue having a large house. Many homebuyers have a choice of either buying a larger house while enduring a longer commute or selecting a smaller home closer to work. For example, the same $700,000 that buys a 900-square-foot condo in Mountain View could purchase a 4,000-square-foot single-family house in Antioch. However, this begs the question: is it worth owning a large house that seldom gets to be enjoyed? Or is it better to enjoy a smaller home with more family time?

The benefits of purchasing homes closer to work are not limited to the physical, lifestyle, and emotional benefits of shorter commutes. Cities closer to major employment hubs have seen much faster appreciation than cities farther away (see table), reflecting the increased demand for living closer to work. Real estate in these cities is also much more resilient to economic downturns. Consider the comparison between Mountain View condos and Antioch single-family homes over the same period of time (see chart).

Thus, despite the plight of commuters, traffic congestion actually provides an opportunity to optimize not only real estate decisions, but also the rest of our lives. Homebuyers can obtain more value by prioritizing shorter commutes over larger homes that they will spend little time in. Therefore, they will not only tap into additional appreciation and equity opportunities offered by core areas, but also reap the rewards of better emotional and physical health and more family time—a true win-win opportunity. Talk to your DeLeon buyer specialist today about strategies to optimize both your lifestyle and your real estate choices, all at the same time.