Housing Affordability Tied to Transportation Costs, Study Finds

Household transportation costs vary greatly depending on where one lives and are an important factor in determining whether housing in a given neighborhood is more or less “affordable”, according to a new study published by the Brookings Institution. The study also highlights how increases in gasoline prices will have a significantly greater or lesser impact on consumers depending upon the location of their residence. An apartment in central New York City, for example, might seem more expensive compared to options in the suburbs which have long been considered a refuge from the high cost of city life. The Brookings study, however, may suggest, otherwise.

The study is based on an affordability index developed by the Center for Neighborhood Technology (CNT) in partnership with the Center for Transit Oriented Development (CTOD), which incorporates the cost of transportation into the cost of housing. The index uses census data on population, income, local availability of alternative transportation options, in combination with housing costs to determine a more complete and accurate accounting of the affordability of a given neighborhood.

The index can also be used to compare affordability among metropolitan areas. An interactive website for the index now includes 337 metro areas in the United States. When transportation is accounted for, New York, Chicago, San Francisco and even Los Angeles, for instance, rank as more affordable than Knoxville, TN. The website includes an analysis of implications of these differences on oil consumption and greenhouse gas emissions associated with transportation and motor vehicle use.

On average, transportation is the second largest expense for U.S. households after housing. Traditionally, affordable housing accounts for about 30 percent or less of the monthly budget, while transportation costs can range from 10 to 25 percent of the average household’s expenditures. Due to increases in the cost of gasoline, however, the gap is closing. Metropolitan regions with good mass transit can have a certain capacity to buffer the impacts of rising fuel prices, while auto-dependent neighborhoods will feel a more pronounced pinch from gasoline price hikes.

Deputy Secretary of the U. S. Department of Housing and Urban Development, Ron Sims, believes this new data will allow people to “make a better housing decision by having more information. People can make a much better decision as to where they live and what they can afford.” This information will also inform discussions with Congress and the U.S. Department of Transportation regarding federal transportation policy and the need to invest in infrastructure for transit, biking, walking, and other non-automotive travel options.