3 Good (and 3 Not-So-Good) Uses for HUD’s New Data on Location Affordability

Posted by Jeffrey Lubell on November 25, 2013

HUD and the Department of Transportation recently released the Location Affordability Portal, a new website designed to share information on the combined costs of housing and transportation. The site includes a wealth of data on housing and transportation costs in different communities and for different household configurations and two creative applications for accessing the data.  It also provides a series of “vignettes” designed to illustrate how one might use the data.  But—perhaps to reduce controversy—it stops short of providing clear guidance on the strengths and weaknesses of different policy applications of these data.

This is a critical gap I would encourage the field to fill. To get the conversation rolling, I present six initial ideas on how to use (or not use) the information in the Location Affordability Portal. I’ll look forward to readers’ feedback on how to expand and improve this working guidance.

Three Ways to Use Data from the Location Affordability Portal to Inform Policy and Practice:

1. Understand the “complete costs of place” of a proposed affordable housing development. If we really want to deliver housing that is affordable, we need to focus not only on the costs of rent or a mortgage, but also on the costs of heating / cooling the home and getting to and from work and around town—collectively, the “complete costs of place.”  A home that offers low housing costs but requires residents to spend all the savings on higher transportation costs is no bargain.  While cost is not the only relevant factor in siting affordable housing (see below), it is an important one, and developers can increase the odds that a home with low housing costs is truly affordable by using the Location Affordability Portal to estimate a site’s transportation costs and factoring that into an estimate of the complete costs of place.

2. Target transportation investments to places with low housing costs but high transportation costs. There are two main ways of ensuring that the combined costs of housing and transportation are affordable to low- and moderate-income households: reduce the housing costs of places where transportation costs are already low (see item No. 1 above) or reduce the transportation costs of places where housing costs are already low. The Location Affordability Portal can help communities identify places where transportation investments—such as car sharing, improved commuter bus service, and improved pedestrian infrastructure—are needed to help improve affordability for low- and moderate-income households that have relatively affordable housing costs but high transportation costs.

3. Compare communities and regions. Sometimes policymakers, advocates or researchers find it useful to compare housing costs across regions—for example, to identify places with policies we may wish to emulate. If these analyses consider only housing costs but ignore transportation costs, they may well give us distorted results.  For example, in an analysis of the housing and transportation costs of the 25 largest metro areas, we found that Houston had the eighth most affordable housing costs (as a percentage of income).  But when we considered housing and transportation costs together, Houston dropped to 17th, making it one of the less affordable regions.  The Location Affordability Portal provides useful metrics for comparing the combined costs of housing and transportation costs across jurisdictions.

Three Ways NOT to Use Data from the Location Affordability Portal to Inform Policy and Practice

1. Consider housing and transportation costs as the sole criterion for the siting of affordable homes.  Affordability is obviously important, but it’s not the only factor we should be considering in determining where to put affordable homes. Other key factors include: quality of schools (for family housing), neighborhood safety, environmental justice and other fair housing concerns.

2. Use housing and transportation as the basis for setting rents in subsidized housing. As the Location Affordability Index shows, the estimation of a household’s transportation costs is sensitive to numerous individualized factors, including the location of one’s employment, the cost and number of one’s cars, and the size of one’s household.  It’s hard enough already adjusting for utilities in the rent calculation. Adding transportation costs would either make the subsidized rent calculation hopelessly complex or lead to dramatic under- or over-subsidizing of specific households.  A better approach would be to improve transportation options for ALL households in subsidized housing.

3. Let the housing and transportation equilibrium blind us to distributional inequities.  Research suggests that the development or expansion of public transit will often (though not always) lead to increased demand for housing near new transit stations, driving up housing prices and rents. Looking at data in the Location Affordability Portal, one might be tempted to shrug and consider it a wash, since rising housing costs will largely be offset by lower transportation costs.  In my view, this would be a huge mistake, since it fails to consider the potential for rising housing costs to push out low- and moderate-income households, reducing equitable access to transit.  It would also be a critical missed opportunity since the introduction of effective housing policies could help keep housing affordable to existing residents as higher income households move in.

(Photo by @abrunvoll CC BY-NC-SA)

About the author more »

Jeffrey Lubell is Director of Housing Initiatives at Abt Associates. To stay in touch, follow him on Twitter @JeffreyLubell.

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