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Improve the Commute

October 22, 1989

Your article, "The High Cost of Housing" (Oct. 1), properly identified the high cost of land as the culprit. That answer, however, merely raises another question: Why does land cost so much here?

Land prices reflect supply and demand. Limits on the supply side of the relationship distinguish Southern California from other areas and explain much of the differential.

Because of traffic congestion, commuting ranges--the distances that one can travel in a given time during rush hours--rank among the lowest anywhere. Commuting ranges determine the area in which workers can live, and this area fixes the supply of housing for them.

As commuting ranges decrease, the area in which people can live decreases. As the area decreases, the supply of housing does, too, and prices go up because fewer sellers compete against each other.

As commuting ranges increase, the area increases, and commuters have more choices for housing. More sellers compete against each other, the supply increases, and prices decrease.

In New York, Chicago, Boston, Toronto, and, to a lesser extent, Washington and San Francisco, and in all major cities of Western Europe, commuter rail systems move many of people over long distances. By increasing commuting ranges and spreading people over a larger area, these systems increase the supply of land suitable for housing for urban workers and reduce the price of it. Southern California has no comparable systems and, consequently, relatively higher housing costs.

To make housing more affordable here, we must increase the efficiency of our transportation system. Land costs, housing prices, and transportation efficiency are inextricably linked together.

As long as public policy here and in Washington ignores this linkage and does little to increase transportation efficiency, the housing affordability crisis will continue unabated. The solutions coming from some quarters--greater FHA mortgage limits, using IRA savings for down payments and other demand-increasing schemes--will only boost demand and increase prices.


Los Angeles

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