City life: Cheaper than the burbs? (© Digital Vision/Getty Images)

Could you save more money buying a nice, affordable house in the suburbs and making a long commute to work each day, or by purchasing a pricey city apartment with your job only a couple of subway stops away?

A recent study by the Center for Housing Policy in Washington, D.C., says trading a cramped city apartment for a suburban existence doesn't always add up. The report concludes that for lower-income people, the combined costs of housing and transportation are about the same in most major metropolitan areas across the country. But it doesn't just apply to households earning between $20,000 and $50,000. Aside from the very wealthy, who can afford to commute how and when they choose, moving from the city to the suburbs no longer makes as much sense financially as it used to.

The report, entitled "A Heavy Load: The Combined Housing & Transportation Burdens of Working Families," focuses on the burdens of households with income levels between $20,000 and $50,000, but the findings also hold true for middle- and high-income households. While the give-and-take between housing and transportation is consistent for all income levels, higher-income households typically pay below-average shares for both expenditures.

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Using data from Virginia Tech and the Center for Neighborhood Technology in Chicago, researchers quantified the number of households paying below-average shares of their income on both housing and transportation, above average for transportation, above average for housing, and above average for both housing and transportation in 28 U.S. metropolitan areas.

In every one of the 28 cities cited in the report, middle- and higher-income households spent more on housing, while the main cost for working families varied by city. Of households with incomes between $50,000 and $250,000, the three cities with the highest combined shares of housing and transportation expenses in the report were San Francisco, Seattle and Chicago, at 34.4%, 33% and 33% of incomes, respectively.

Car culture comes at high cost
San Francisco households have by far the most stratified expenditures, with 21.7% of residents' incomes spent on housing and 12.7% spent on transportation. This can be attributed to pockets of wealthy neighborhoods close to employment centers, where some of the most expensive properties in the country sit less than 10 miles from downtown. These suburbs have the effect of pushing working-class families farther from the city, increasing traffic congestion for the whole system.

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Frequently, families that move away from cities such as San Francisco fail to prepare for the high cost of the car culture they enter. "Transportation means not only going to work, but if you're living in one of the outlying suburbs, it means you need a car to do absolutely everything," says Barbara Lipman, the research director for the report. "I think it's important to consider your total costs."

The Transportation Research Board also looked at transportation spending by income level and found that upper-middle-class consumers spend the highest share of income on transportation, 20.56%, while lower-class consumers spend the lowest share, 17.23%.

See BusinessWeek's slide show, "The 10 most expensive commutes."

By Douglas MacMillan, BusinessWeek