Development Policy Must Consider Housing AND Transportation Costs

Research

Many working families, defined by Center for Housing Policy as families with a household income of $20,000 to $50,000, seek to find affordable housing by moving away from city centers, but then only find that the transportation costs make this even more expensive.  Affordable housing is traditionally defined as 30% or less of a household budget.  However, a 2006 study by the CHP found that in most metropolitan regions of the country, the combined cost of housing and transportation is 45% or more of household budgets.  For each dollar saved on housing, $0.77 was spent on transportation costs.

The Center for Neighborhood Technologies conducted a study of six metropolitan areas and found that neighborhoods with the least number of commuting options had the highest percentage of workers leaving before 6:00 a.m.  The financial cost of transportation is not the only factor to consider, as increased commute times are a quality of life issue that should not be ignored.

When housing costs alone are considered, much more area is considered 'affordable' than when housing and transportation costs are combined. Click the image to go to an interactive tool that shows affordability in most US metropolitan areas.

Of the 20 fastest growing counties in the U.S., 75% are located 30 miles or more from the closest central business district.  Other trends that will likely continue are: housing and transportation costs are rising faster than incomes and gas prices are rising. One mitigating factor for these problems are statistics showing that job growth is rising fastest in the suburbs, which over time may allow even those in the suburbs to reduce their dependence on single car transportation.

Implications

The Center for Housing Policy has identified several possible solutions to finding this balance:

• Consider housing and transportation policies together.  Build affordable housing near existing and planned transit hubs.
• Encourage infill development.  Redevelop older neighborhoods near job centers or with good transportation centers.
• Target employment.  This could reduce transportation costs and help raise incomes.
• Contain/connect areas of sprawl.  Improvements in transit service are needed to achieve this.
• Reduce the cost of commuting by car.  Policies need to be created that encourage car sharing or make car ownership accessible or affordable.

The CHP found that public opinion is split about 50-50 between the two options of larger and/or cheaper housing with longer commutes and smaller or more costly home and shorter commute.

Citations

Center for Neighborhood Technology. Housing + Transportation Affordability Index. Accessed 08.11.10.

Lipman, Barbara J. “A Heavy Load: The Combined Housing and Transportation Burdens of Working Families“. Center for Housing Policy. October 2006.

MuniNetGuide. Transportation Costs Impact Housing Affordability.  26 March, 2010.