Transportation Costs Tip the Affordable Housing Equation: Whether You Buy or Rent, Housing near a Busy Urban Job Center Is Generally Expensive in Most Areas. That's One Reason So Many Americans Choose to Live in the Suburbs' More Land, More House, Less Cost

Article excerpt

It seems like an obvious call, right? The farther you live from the center of town, the closer you can come to affording your dream home. Maybe not. Recent research is challenging this conventional thinking.

The Center for Neighborhood Technology (CNT) has created a new tool to gauge the true affordability of housing by considering not only the price of a home or an apartment, but also the transportation cost associated with living there. Using the "Housing and Transportation Affordability Index," researchers have discovered a potential financial challenge lurking behind that suburban dream house: the increased cost of transportation for commuting to job centers swallows up the money saved by choosing a home on the urban fringe. CNT is hoping its research will change federal, state, and local housing and transportation policies to account for the true costs of housing.

Challenging old assumptions about who commutes

A Brookings Institute study conducted by CNT in collaboration with the Center for Transit-Oriented Development uses the Index to look at housing affordability in various metropolitan regions. The first phase of the two-phase "Affordability Index" study was an in-depth analysis of the St. Paul-Minneapolis metropolitan region.

Surprisingly, the study found that transportation demand is not necessarily determined by household income and size. Previous assumptions supposed that larger, more affluent families owned more cars and drove further distances than smaller, less affluent families. However, CNT's research reveals that neighborhood characteristics are the dominant force influencing transportation demand, not household income or size. Density, walkability, availability of quality transit, and access to amenities like grocery stores, schools and employment centers strongly influence the number of cars owned by a family and the miles they drive, regardless of family size or income.

Perhaps this finding should not come as a surprise after all. It seems reasonable that living far from employment and shopping centers in neighborhoods without sidewalks and public transportation would make it necessary for each adult living in the household to own and drive a car. Therefore, those considering the cost of renting or buying a home should consider living in a "location-efficient" neighborhood that can reduce the cost of transportation and thus alter the affordability range of housing.

Unfortunately, standards currently used to calculate housing vouchers, Low Income Housing Tax Credits, and even most home loans do not account for these living costs. Individuals and families can be placed in houses they should be able to afford, but not necessarily into neighborhoods they can afford. CNT is working with the Urban Land Institute's Terwilliger Center for Workforce Housing to create an individual H+T calculator to address the issue. This web-based calculator will make it possible for prospective renters and homebuyers to enter an address to determine the transportation costs associated with living there.

Transportation costs alter affordabiiity picture

The second phase of the Brookings study gauged the housing affordability of 52 metropolitan regions in the United States. Traditionally, a home is considered affordable if payments consume no more than 30 percent of a family's income. The new measure of affordability includes the cost of transportation. According to the Index, housing is affordable when housing and transportation payments together consume less than 48 percent of a family's income.

Adding transportation costs to the calculation dramatically shifts the affordability landscape. …