Transit-Oriented Developments Help Californians Save Money

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MTI researchers analyze how TODs can mitigate the affordable housing crisis by building more housing in transit-accessible neighborhoods
February 1, 2022
San José, CA

Could living in transit-oriented development (TOD) save on transportation costs and mitigate the state’s affordable housing crisis? New Mineta Transportation Institute (MTI) research, Can Californian Households Save Money on Transportation Costs by Living in Transit-Oriented Developments (TODs)?, examines how TODs could be an effective tool to ease the housing affordability problem by increasing housing supply and reducing transportation costs in transit-rich neighborhoods.  

According to the Federal Transit Administration, TODs include “a mix of commercial, residential, office and entertainment centered around or located near a transit station.” These environments translate to dense, walkable neighborhoods and vibrant communities. By utilizing the confidential version of the 2010–2012 California Household Travel Survey, this study evaluated the impact of TOD on household transportation expenditures by comparing TOD households with two control groups. 

Key findings from this research include:

  • When controlling for demographics, TOD households save $1,232 per year on transportation expenditures—18% of their total annual transportation expenditures. 
  • When controlling for both demographics and supportive neighborhood environment (e.g. one with higher land use density and mixed land use), TOD households save $429 per year—about 6% of their total annual transportation expenditures.

“The transportation cost savings have different implications for homeowners and renters living in TODs. Homeowners enjoy the double benefits of TOD: increased property values and savings in transportation costs. Renters, meanwhile, save money on transportation costs but may need to pay a rent premium to live in TODs,” explains the study’s author.

This study confirms that Californian households save money on transportation costs by living in TODs because they own fewer vehicles. About 35% (or $429) of the annual savings can be attributed to access to rail transit and the other 65% attributed to transit-friendly neighborhood environment (e.g. higher land use density) and location, which highlights the importance of integrating a rail transit system with supportive land use planning and neighborhood design. 

Although TODs cannot solve the housing crisis alone, by building more housing in transit-accessible neighborhoods, communities can shift the cost of housing and transportation and make major changes in the years to come. TODs may be an important tool in improving the circumstances of the housing crisis in California and the nation while moving toward a more sustainable future. 


At the Mineta Transportation Institute (MTI) at San Jose State University (SJSU) our mission is to increase mobility for all by improving the safety, efficiency, accessibility, and convenience of our nations’ transportation system. Through research, education, workforce development and technology transfer, we help create a connected world. Founded in 1991, MTI is funded through the US Departments of Transportation and Homeland Security, the California Department of Transportation, and public and private grants, including those made available by the Road Repair and Accountability Act of 2017 (SB1). MTI is affiliated with SJSU’s Lucas College and Graduate School of Business.

Dr. Hongwei Dong is a researcher in the MTI-led California State University Transportation Consortium and professor in the Department of Geography and City and Regional Planning at California State University, Fresno. His research focuses on housing and real estate, transportation and land use, and smart and healthy cities.


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