CNT In the News

At City Observatory, we’ve long been dissatisfied with commonly used measures of describing housing affordability. There are lots of reasons to believe that a single, fixed percentage of income standard [like the 30% of income that is most often used as a benchmark for “affordable” housing costs] does a poor job of reflecting whether housing is priced appropriately, and whether households are being asked to spend too much. We’ve explored some of these issues before, but today we want to focus on one key issue: the tradeoff between cheap rents and costly transportation.

What this means as a practical matter that you can’t judge whether an individual household’s living situation is affordable just by looking at whether they spend less than 30 percent of their income directly on housing. Consider this example: two otherwise identical households. One lives in a suburb, owns two cars, and drives most places. They spend 30 percent of their income on housing and 20 percent of their income on transportation. The second household lives in a city and owns one car.  Their house is more expensive than the suburban one, so they spend 40 percent of their income on housing, and just 10 percent on transportation. Is it really accurate to describe the second (city) household as any more “cost-burdened” than its suburban peer?

This is the essential insight behind the Center for Neighborhood Technology’s “H+T” Housing and Transportation Index, which quantifies the approximate costs associated with housing and transportation in different neighborhoods. They’ve used census data on income and housing costs, and estimates of commuting patterns, transit available and car ownership to estimate what fraction of a household’s income gets spent on housing and transportation in different locations. They show that some neighborhoods with high housing costs are actually more affordable than lower rent areas, once you add in the savings in transportation costs.