This Trend Is Threatening the Entire Housing Market — And It's Becoming Impossible to Overlook Super commuters are reshaping the U.S. economy by choosing lower-cost living in distant areas, which impacts both housing markets and urban rental demand.
By Sergii Starostin Edited by Micah Zimmerman
Key Takeaways
- Super commuters are increasingly opting for distant, affordable living to save on housing costs.
- This trend is leading to decreased rental demand and lower rent growth in major U.S. cities.
Opinions expressed by Entrepreneur contributors are their own.
Super commuters, who travel over 90 minutes each way to work, have emerged as a growing trend in the United States, saving money by living in desirable, distant locations while impacting the U.S. economy.
In 2012, a paper from NYU scholars Mitchell Moss and Carson Quing argued that "the twenty-first century is emerging as the century of the 'super-commuter.'" Anticipating workforce shifts that have since accelerated due to the pandemic and the rise of remote work, Moss and Quing pointed to internet and mobile communications advances along with sharp differences in housing costs between rich and lower-cost cities.
Super commuters can take advantage of higher salaries in one region and lower housing costs in another, using commuting corridors.
Sydney Bennet, a Senior Research Associate at Apartment List, presented data that suggests super commuting is becoming increasingly common: the share of super commuters increased 15.9% from 2.4% in 2005 to 2.8% in 2016. The share of super commuters is highest in expensive metros with strong economies — New York, San Francisco, Washington, D.C., Atlanta and Los Angeles — and in their surrounding areas.
Related: Super Commuting Is on the Rise, Here's Why and How It Works
Thousands are choosing the long haul to work
If we divide the super-commuters by their income, we will also reveal that they are more likely to come from middle-class backgrounds (less than $40,000 per year) than individuals in the local labor shed. In each of the ten major central commuting counties, high-income individuals (earning more than $40,000 per year) represented a smaller proportion of super commuters than the entire workforce.
Using more up-to-date data, we can address a list of the states with the highest percentage of super commuters using 2018 five-year estimates from the U.S. Census Bureau. States are ranked by the percentage of workers with a 90-plus-minute travel time to work.
Thus, New York City is the commuting capital of the country. Just 5% of American commuters take public transportation, but in New York City, more than 30% opt for subways, trains, and ferries. Every day, commuters from the city's outer boroughs, as well as from New Jersey, Long Island and Connecticut, double Manhattan's population for the day.
One of the roots of this constant travel lies in the higher cost of living, mainly seen in cities such as New York, which recent data ranked as the least affordable. To be comfortable living in New York, a family of four must have an annual income of $318,406. However, a single New Yorker without kids needs to make at least $138,570 annually to sustain a comfortable lifestyle. The research shows that just to cover necessities alone, a single New Yorker needs an estimated $70,000. However, just over the border line in New Jersey, you can find places for around $2,310, and in Connecticut, it's even cheaper at roughly $1,816. Thus, super commuting saves money on housing.
Besides the economy, another big reason for super commuting is a better way of living. Let's say a worker is expected to be at the workplace three times a week. By commuting two fewer days, one can live 40 minutes farther from the office than one used to. That extra radius gives a lot more options. For example, if you work in downtown San Francisco, you could choose someplace near a Napa vineyard instead of living in the suburbs of Novato.
Americans are willing to pay for their rent, sometimes even extra, but their perfectly reasonable desire is to get more comfort for a higher price, not the other way around. Therefore, they choose better properties farther from the city instead of renting ridiculously small units downtown.
Related: 'Supercommuter' Travels From Ohio to New York Office Weekly
A looming threat to the American real estate market
Now, let's look closer at how commuters impact the real estate market. For example, the price of a studio in NYC three years ago was around $2,225, and in 2023, it increased by 57.3% ($3,317). One year later, this growth was only 5,53% of the already-mentioned average of $3,550. Demand drives the real estate market, just like in any other market.
Similar patterns appear in major cities around the country. For example, in Los Angeles, an estimated 300,000 super commuters from surrounding counties contribute to an annual rent loss of more than $10 billion (roughly), with an average monthly rent of $2,800. Rental rate growth decreases by about 10.69% from $3,135 in January 2023 to $2,800 in January 2024.
Related: Watch These Swiss Commuters Float Down a River to Work
Super commuters in Washington, D.C., contribute to an annual rent loss of around $2.5 billion, assuming an average rent of $2,500 and an estimated 83,000 super commuters. This year's annual rent has decreased by 1.91% compared to the previous year.
Therefore, it's logical to conclude that demand is decreasing. As the recession gains traction, more people are reorganizing their budgets, and one of the easiest ways for them to save money is by ditching exorbitant rent in favor of more affordable options.
