Driving down and gasoline revenues down too

Interesting article in the Wall Street Journal describing how changes in driving habits are affecting tax revenues:

An unprecedented cutback in driving is slashing the funds available to rebuild the nation's aging highway system and expand mass-transit options, underscoring the economic impact of high gasoline prices. The resulting financial strain is touching off a political battle over government priorities in a new era of expensive oil.

A report to be released Monday by the Transportation Department shows that over the past seven months, Americans have reduced their driving by more than 40 billion miles. Because of high gasoline prices, they drove 3.7% fewer miles in May than they did a year earlier, the report says, more than double the 1.8% drop-off seen in April.


The cutback furthers many U.S. policy goals, such as reducing oil consumption and curbing emissions. But, coupled with a rapid shift away from gas-guzzling vehicles, it also means consumers are paying less in federal fuel taxes, which go largely to help finance highway and mass-transit systems. As a result, many such projects may have to be pared down or eliminated.

...

As debate revs up, the retreat from the roads shows how consumers are altering the transportation equation. With driving down, the number of people riding Amtrak has risen 11% this year, and mass-transit systems in many areas, including Seattle and South Florida, are experiencing ridership increases of 30% or more, according to the American Public Transit Association.

APTA President William Millar rides Washington's Metro rail each weekday between his home downtown and Falls Church, Va. He used to be able to find a seat at some point on his trip, but these days, he said, "I can't even squeeze onto the train" during the afternoon rush.

Earlier this year, the House passed legislation that would provide an additional $1.7 billion to transit agencies over two years. Both chambers have passed bills that would significantly boost Amtrak funding.

In other non-driving news, a New York Times article talks about the benefits of living in an older (i.e. more walkable) neighborhood.

Can where you live play a role in how much you weigh? A new study finds that it can, and reports that people who live in older neighborhoods appear less likely to be overweight.

The key, the researchers say, is walkability. Older communities are more likely to encourage people to drive less and walk more, which can help keep weight down.

...

With each extra decade of a neighborhood’s age, the researchers said, the risk of obesity was 13 percent lower for men and 8 percent lower for women.

There are several reasons older neighborhoods are more walkable, said the lead author, Ken R. Smith of the University of Utah: better sidewalks, trees to provide shade and intersections at shorter intervals.

But older neighborhoods have something even more basic when it comes to luring someone into heading out on foot.

“You always want to have something to walk to,” Dr. Smith said. And unlike many modern residential areas, older communities may have stores and other businesses near houses.

America's Most Fuel-Efficient Neighborhoods

From Forbes magazine:

Owning a home in walkable neighborhoods saves residents $300 to $400 a month, up to 4,800 a year, on gas expenses alone, according to research by the Congress for the New Urbanism. Kicking the car habit yields larger consequences: Traffic congestion sucked $78 billion from the economy in 2005, added 4.2 billion hours in commuter time, and wasted almost 3 billion gallons of gasoline, according to a 2007 Urban Mobility Report by the Texas Transportation Institute.

We asked the Center for Neighborhood Technology to help identify cheap rides in America's largest metropolitan areas. It classified a neighborhood's low transportation costs as the metro area mean transportation costs minus one standard deviation.

Guess who made this list? Koreatown! Can Downtown be far behind?

Exurbs in trouble

From the blog Calculated Risk:

Last week I mentioned that 15% of the homes in Temecula, CA were REO or in foreclosure. Temecula is a fairly isolated town (see map), and the city is very dependent on construction and/or long commutes. The combination of the housing bust, plus high oil prices, is hitting exurban towns like Temecula very hard.

From Bloomberg: Wealth Evaporates as Gas Prices Clobber McMansions, SUV Makers

``At $4 per gallon gas, $125 per barrel oil and $10 per million Btu natural gas, a lot of activity becomes uneconomical,'' says Mark Zandi, chief economist at Moody's Economy.com ...

The lifestyle of the exurban commuter may be one casualty.

Emerging suburbs and exurbs -- commuter towns that lie beyond cities and their traditional suburbs -- grew about 15 percent from 2000 to 2006, nearly three times as fast as the U.S. population, as Americans moved further out in search of more affordable houses or the bigger ones that are sometimes derided as McMansions.

``It was drive until you qualify'' for a mortgage, says Robert Lang, director of the Metropolitan Institute at Virginia Tech in Alexandria, Virginia. ``You can't do that anymore. Your cost of transportation will spike too much.''

Assuming the price of gas stays around $4 a gallon or spikes higher, places like the Antelope Valley and Inland Empire may be looking at a permanent contraction. Meanwhile, Downtown's gentrification is likely to continue or accelerate, despite the downturn (though I don't see condo sales recovering anytime soon). Of course, Downtown isn't for everyone, but communities with good access to public transportation and that are close to employers are positioned to do better in the long term. Density is a dirty word for a lot of Angelenos, but for better or worse, it looks like suburban sprawl simply isn't economically sustainable for the average family.

I've used maybe half a tank of gas in the past month and that plus the decrease in rent means I'm feeling pretty happy about moving down here.

Why We Moved Downtown (and why everyone else may follow)

The main reason was space. My husband (hereafter known as My Boy, or MB) is a computer consultant who works from home. He also has a lot of hobbies and loves to fix watches, collect and use old cameras, rehab motorcycles--basically, take things that aren't working and get them up and running agin. So he needs room for a workbench and tools. Plus just over a year ago we added a charming redheaded baby to our family and Kidlo needs his own room.

We'd been living in Silverlake and needed to move in a hurry (landlord poisoned our air conditioner--don't feel like getting into the details), but all of the places in our price range were tiny--700 sf or less for a two bedroom. We looked at houses but a) they were expensive and b) we were worried that we'd rent a house and then get kicked out a few months later when the owner defaulted on the mortgage (more on that later). We thought of buying but we didn't have enough of a down payment saved up (the days of no-money-down mortgages are over).

So basically we were screwed. Until MB saw an ad on craigslist for downtown lofts.

I work on the west side of downtown and we'd been going to Art Walk for a few years, plus we love going to Little Tokyo for conveyer belt sushi. So we knew the area and liked it a lot, plus MB and I grew up in New York (me in the Bronx, him on the Upper West Side), so we're city kids at heart. We decided to take a look at new lofts on Spring Street and holy shit, they wuz cheap. Crazy cheap. Like $1600/mo for almost 1,000 sf cheap. We were paying almost $2100 for our shithole in Silverlake, so when we saw those prices we did the Tex Avery eyes-bulging-tie-spinning routine. We would have to pay for parking, but even with that we were looking at saving almost $300 a month.

So we went for it. And here we are.

There have been a few things to adjust to. Having the car a block away is a pain in the ass when you have the baby and groceries and other shit to haul around. And the neighborhood is definitely still on the gritty side (though a helluva lot better than it used to be). Seeing drug dealers on 5th did not make me a happy mama.

The good part is that our loft is unbelievable. Brand new kitchen, two bathrooms with deep tubs and marble floors, dark wood (well, Pergo) floors and huge windows. We even have a patio! We're having a wall put in to section off the baby's room and still have enough left over to fit in MB's work area and a writing desk for me.

Plus the creative vibe in the neighborhood is amazing. Our next door neighbor is a DJ, the Japanese guy across the hall is a dealer in vintage vinyl, a woman on the 5th floor runs a dressmaking business. And it's a real city, so I walk down the street and overhear people's conversations (Today's example: "Women, money and drugs they didn't pay for!"). And Broadway reminds me so much of the Bronx. I love how whole families turn out to shop, Abuela, Mami y Papi, Tia and all the kids. I love how you can see some big tough cholo with baggy jeans and tats cradling his baby cousin in his arms.

Financially, living here is an incredible bargain. It's not just the cheap rent--not driving every day is going to save us a huge amount of money. And here's where I get to the "why everyone else will follow" part...

Because the condo market has collapsed and condo buildings are being converted to rentals, the rents have dropped and are going to keep dropping. It's just flat out cheaper to live here than in Los Feliz, Silverlake and even Echo Park (which is ridiculously overpriced). Cheaper rents = what I'm seeing in my building, which is an influx of young artist types who are no longer priced out of the neighborhood. The more creative people who flood in, the more retail we'll see, the streets will get safer and that in turn will attract even more people.

Also, the price of gas is going to keep going up--China and India want gas too, which means the days of cheap gas are over. Mass transit ridership is booming. Downtown is where all the transit lines for the region converge, so you can live downtown and take the Rapid to Santa Monica...or the red line to the Valley...or the gold line to Pasadena...you get the picture. Or if you're like me and work downtown, you get to walk, get some exercise and completely eliminate your commuting cost.

(As an aside, places like the Inland Empire and Antelope Valley which have long, expensive commutes, high rates of foreclosure and no local employment are fucked).

Of course, there have been artists moving into downtown for more than ten years, but what you're seeing now is the second wave--people weren't willing to deal with hard core skid row or couldn't afford to buy a luxury condo, but are now getting pulled in by the Art Walk vibe and the cost of living.

Downtown has gone over the tipping point, so now it's just a matter of watching the people flood in.