Redefining Housing Affordability

Scott Bernstein, CNT’s President, recently made a presentation about the need to redefine housing affordability at the Home Depot Foundation National Partners and Federal Government Officials Convening in Washington, D.C. When people shop for home or apartments, they don’t necessarily have the full knowledge of the true costs of a location. The current definition of housing affordability is 30% of income, which does not take into account transportation costs. Our research shows that for a working family, those earning $20,000-$50,000, housing takes 30% while transportation takes up to 27% of income, and in the exurbs, transportation can easily exceed housing costs.

CNT’s has been advocating for policy changes that would redefine affordability to include both housing and transportation costs so that consumers can make knowledgeable decisions about the impact of location and transportation costs when purchasing or renting housing. In his presentation, Scott outlined ways to redefine affordability, such as, lenders & Government-sponsored enterprises (GSEs) adopting the Housing +Transportation (H+T) Affordability Index; HUD modifying the Real Estate Settlement Procedures Act (RESPA) rules under current authority, and requiring labeling housing with neighborhood averages for either transportation costs or the sum of housing and transportation costs; and the Partnership for Sustainable Communities making H+T reduction mandatory for all applicants for demonstration funds.

In his conclusion of his brief presentation, Scott stated, “for 50 years, “drive ‘til you qualify” has been the rule, and it has helped put America at risk. Instead of a recovery goal of returning the market to where it was, we need build demand for a better situation, so that locating, riding and walking until you are financially secure becomes the norm.”

CNT co-developed with the Center for Transit Oriented Development (CTOD) the H + T SM Affordability Index which measures the true affordability of housing choice-by factoring in both housing and transportation costs in a neighborhood.

CNT’s research has been funded by The Brookings Urban Markets Initiative, Center for Housing Policy of the National Housing Conference, The Energy Foundation, Grand Victoria Foundation, The Joyce Foundation, MacArthur Foundation, McKnight Foundation, Nathan Cummings Foundation, Rockefeller Foundation, Searle Funds at The Chicago Community Trust, Surdna Foundation, and Wallace Global Fund.  CNT is working in partnership with the Home Depot Foundation on its Sustainable Cities Institute.

Read the full text of his presentation here.

Learn more about H+T Affordability Index.