Matthew Sussman, Center for Neighborhood Technology
The Center for Neighborhood Technology (CNT), a Chicago-based “think and do” tank that has promoted urban sustainability for more than 30 years, has launched a web tool that offers a new and comprehensive way of thinking about the cost of housing. The Housing and Transportation (H+T) Affordability Index reveals the impact that transportation costs have on a household’s economic bottom line. The traditional measure of housing affordability used by planners, lenders, and most consumers maintains that housing should cost no more than 30 percent of area median income. But this measure ignores the cost of transportation, which has grown from just 3 percent of a typical household budget in the 1920s to 18 percent today. The H+T Index fills this information gap by offering detailed data on transportation costs at the neighborhood level for 337 metropolitan regions in the United States.
The Index calculates average costs based on six neighborhood and three household variables. The H+T Index and Abogo, a companion tool, give planners the data they need to ensure that regions grow more sustainably and provide consumers with information to keep their costs manageable. The H+T Index covers 161,000 neighborhoods containing 80 percent of the nation’s population. The Index will eventually expand to rural areas, providing neighborhood transportation costs for the entire country.
CNT’s research reveals that transportation costs are largely determined by community characteristics, including residential density, walkability, transit access, and proximity to jobs. Depending on these characteristics, average transportation costs vary dramatically, from about 15 percent of income in compact urban areas to as much as 30 percent in low-density communities on the periphery of metropolitan regions. While transportation costs average 18 percent across the nation, CNT recommends that communities aim to keep their transportation costs at no greater than 15 percent of an area’s median income. Combined housing and transportation costs should not exceed 45 percent of average household incomes.
CNT’s analysis has demonstrated that the number of affordable communities shrinks significantly when transportation costs are taken into consideration. While nearly seven in 10 communities (69 percent) appear affordable under the traditional definition of housing costs at 30 percent of income, just four in 10 (39 percent) remain affordable using CNT’s more holistic approach. Using the 45 percent affordability benchmark, 48,000 communities become unaffordable for a typical family. The outlook is even bleaker for lower-income households that are already squeezed by a limited affordable housing stock.
Neighborhoods that remain affordable under the more comprehensive housing-plus-transportation cost measure are typically in central locations with convenient access to local job centers, shopping, entertainment, and other amenities. They also tend to be served by public transportation. Access to transit and proximity to daily destinations allow households to get by with fewer cars and to drive significantly less than people who live in transit-poor neighborhoods with fewer amenities. Dense, transit-rich communities are “location efficient” because they connect residents to shopping, work, and play with minimal delay while limiting the strain on pocketbooks, public infrastructure or natural resources. Location efficient neighborhoods may have comparatively high housing costs when considered alone, but their comparatively lower transportation costs often make these communities a truly affordable option from a household’s point of view and a more sustainable option from a regional perspective.
Regions and cities nationwide have incorporated the H+T Index to ensure that planning efforts will deliver affordable and sustainable results. At the federal level, the Department of Housing and Urban Development (HUD), the Department of Transportation (DOT), and the Environmental Protection Agency (EPA) have created an Interagency Partnership for Sustainable Communities that is dedicated to integrating housing, transportation, water infrastructure, land use planning and investment. One of the partnership’s stated goals is to redefine affordability to include the cost of transportation. In this spirit, HUD and DOT included H+T Index performance measures as indicators to be tracked by applicants for Sustainable Communities Regional Planning and Community Challenge grants.
As part of CNT’s attempt to shift the affordability paradigm with our H+T Index, our ideal policy outcome is that evaluating the costs of housing and transportation together will result in affordable housing developments that include more transportation options and lower transportation costs for residents of all incomes. Additionally, we hope that governments of all levels will use this new measure to target economic development incentives to communities to create more places that have the right mix of jobs, housing, and transportation.
Much work remains to be done, but today we are closer than ever before to instituting policies that will strategically link housing and transportation investments, provide affordable housing in locations where residents have access to jobs, services and amenities, and build communities that link citizens to opportunities and to each other.
Please visit the Housing and Transportation Affordability Index Tool at http://htaindex.cnt.org/