Rate Watch #1294 – The Effects of COVID on Work, Public Transit, and Housing
February 22, 2021
By Dick Lepre
The Effects of COVID on Public Transportation
The COVID pandemic has had a massive effect on public transit. Public transit usage in most cities was declining before 2020. Ridership had declined year/year for 5 consecutive years before 2020. Data released by the Census Bureau in September 2019 indicated that the nation had 6.3 million more jobs in 2018 than 2015, yet the number of people who took transit to work declined by 146,000.
Public transit survives on taxpayer subsidy. In 2018 this was $54.3 billion. Subsidy has become massive post-COVID: $25 billion from CARES, $54.3 billion from December's coronavirus relief bill, on February 10, the House Transportation and Infrastructure Committee approved $30 billion in emergency relief for public transit. The only way urban mass transit will survive in the near term is with massive Federal subsidy. Once this ends local governments will have to deal with these large public transit losses. This could have a devastating effect on some state and local governments many of which already had serious fiscal issues.
The ability of large cities to not suffer significant jobs and population losses depends on the public’s willingness to use mass transit. The Great Recession saw nationwide transit ridership fall through 2010, recover slightly for several years and then steadily fall since 2014 in almost every urban area despite a strengthening economy. Mass transit especially and especially underground rail transit are very expensive to operate and were suffering fiscally before the pandemic. Cities will, of necessity, approach this by eliminating routes deemed non-essential. Light rail transit has an enormous amount of built-in infrastructure and lacks adaptability. If cars are no longer needed to get people to their downtown jobs they cannot be deployed elsewhere. There is a basic difference between public transit and cars. Cars and their drivers have the ability to adapt. Public transit, especially rail transit, is not adaptable. When hurricanes are about the strike it is individuals and families in private cars that save lives. In addition as we saw last week in Texas the idea that states can mandate away the internal combustion engine and somehow have people get around in electric vehicles presumes a more robust electrical grid than either Texas of California has.
The past few years have seen much anti-car, pro-public transit policy. One anti-car policy happened in Paradise, CA. When a 2008 wildfire burned near Paradise, California the city realized it needed better evacuation routes. But public discussion instead saw the 4 lane road as a danger to pedestrians and instead reduced the road from four lanes to two. When a fire burned through the city in 2018, more than 80 people died, seven of these in their cars while they were stuck in traffic.
Public transit lacks economic versatility. If there is recession public transit still has the issue being labor intensive. Contrast this with highways.
If 10% of the people who used public transit each day to get to work now worked from home and no longer used public transit or even if most use it 2 or 3 days a week instead of 5 public transit will lose even more money.
San Francisco Bay Area rail transit agency BART had an average weekday ridership of 43,012 per day in January 2021 as contrasted with 388,922 in January 2020.
If people do not feel safe taking mass transit then cities which depend on it will have a difficult time retaining jobs. There are eleven cities in the U.S. where more than 25% of workers take mass transit to get to their jobs. Before COVID 5.1% of U.S. workers commuted regularly by public transportation.
One thing may do not understand is that massive cities are something relatively new starting in the second half of the 19th century and would not be possible without urban underground rail transit.
Solutions?
There is no easy solution here. The investment in non-adaptable light rail infrastructure failed to foresee that a disease might evaporate the public’s willingness to us it. It makes little sense to contemplate a solution until each agency sees what the effects of the pandemic are on its ridership. This could take another year or more. People are disinclined to wait to make decisions such as this and consequently more mistakes will be made.
Effect on Real Estate Values
Loss or diminution of public transit diminishes the value of real estate in the affected cities. According to the National Association of Realtors this “transit premium” can range from as little as a few percent increase to over 150 percent.
Dick Lepre
Senior Loan Advisor
RPM | MORTGAGE
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Alamo, CA 94507
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