Housing Affordability Measures Must Include Transportation Costs

by devteam October 19th, 2012 | Share

Sixrnyears ago the Center for Housing Policy (CHP) and the Center for NeighborhoodrnTechnology (CNT) published a study, ArnHeavy Load:  The Combined Housing andrnTransportation Burdens of Working Families, which looked at the trade-offsrnthat moderate-income households make between their housing and transportationrncosts and encouraged policymakers to consider both costs in decisions relatedrnto either.  The two organizations havernnow updated that report with a new one titled Losing Ground:  The Struggle ofrnModerate Income Households to Afford the Rising Costs of Housing andrnTransportation. The Institute of Transportation Studies at UC-Berkeleyrnalso participated in the study. </p

CHPrnis the research affiliate of the National Housing Conference and CNT is anrnaward-winning innovations laboratory for urban sustainability.  LosingrnGround was written by Robert Hickey and Jeffrey Lubell of CHP and PeterrnHaas and Stephanie Morse of CNT.</p

The study included renters and homeowners in households earning between 50 and 100 percent of each metropolitan area's median income.  Housing costs as defined for the study include rent and utilities for renters. rnFor homeowners costs include mortgage payments, property taxes, home insurance, utilities, and where applicable, home equity payments, condo fees, mobile home costs and home care assistance for most, take care of a financing program.   Transportation costs include all trips made the household in their daily routine including commuting and errands.   For transit riders it is the cost of the fare, for car owners it includes gas, insurance, car payments, insurance, an nmaintenance.</p

Thernauthors found that six years after the original study it remained as importantrnas ever to consider both housing and transportation costs in measuring an area’srnaffordability.  The study cites thernexample of Houston where housing prices as a share of income put it in eighthrnplace for affordability, but when transportation costs are added it drops to 17th</supout of 25.  The opposite occurs when highrnhousing costs in San Francisco, Boston, and New York are moderated by relativelyrnlower costs of transportation.</p

Thernstudy found that the housing and transportation costs problem is gettingrnworse.  Both rose faster than incomernduring the 2000s, increasing the burden that the costs had already placed onrnhouseholds.  While the severity varied,rncosts outstripped income in all of the 25 largest metropolitan areas.  Even considering households without arnmortgage, housing and transportation costs together consumed an average of 48rnpercent of household median income by the end of the decade. </p


Thernburden is borne disproportionately by moderate-income households.  For persons earning under the median, 59rnpercent of their income goes to housing and transportation costs and the growingrncosts of these categories are leaving little for other expenses such as food,rneducation, healthcare, or saving for retirement.   It isrneven worse in areas like Miami and Los Angeles where the local prevailing wagernis low even as costs are moderate as opposed to areas like Washington, DC whererncosts are high, but wages are also above average.   In areas like the former, costs burdens forrnmoderate-income houses have average burdens ranging from 65 to 72 percent ofrnhousehold income.</p


Inrnsome metro areas where average cost burdens are relatively affordable thernauthors still found pockets where housing and transportation costs are veryrnhigh.  Philadelphia was cited as an examplernwhere costs in some neighborhoods reach as high as 90 percent of income.</p

Thernstudy found that homeowners with moderate incomes have a heavier cost burdenrnthan renters.  Homeowners with mortgages facernaverage costs equaling 72 percent of income while renters pay 55 percent.  Even so, in some metro areas moderate incomernrenters are still having trouble making ends meet.  In Los Angeles, for example, housing andrntransportation costs consume 61 percent of income for renters.  This would suggest that such households arerneither cutting corners on essentials such as food and health care or are accruingrndebt.</p


The report points to several areas where changes in public policy could reducernthe burden on moderate-income families.  </p

    • The authors state that while these policy changes arernstate and local issues, the federal government could provide incentives tornencourage the needed steps.  As anrnexample, the Federal Transit Administrationrnhas proposed modifying its procedures for allocating the New Starts grants that help fund new and expandedrnpublic transit lines to create incentives.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of is prohibited.

About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

See all blogs


Leave a Comment

Leave a Reply

Latest Articles

Real Estate Investors Skip Paying Loans While Raising Billions

By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

Late-Stage Delinquencies are Surging

Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

Published by the Federal Reserve Bank of San Francisco

It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...