Where Transportation Makes Affordable Housing Unaffordable

Andrew Keatts | @andy_keatts | May 23, 2016

Image via flickr/Prayitno.

Image via flickr/Prayitno.

Affordable housing isn’t always affordable, once its residents need to pay for transportation.

In many parts of the country, federal low-income housing programs place poor families in locations that force them to spend on transportation all the money – and in some cases, more – that they saved on housing, according to a newly published study.

In a report published in Housing Policy Debate in February, researchers found that U.S. Housing and Urban Development programs, overall, tend to put people in homes that keep them from paying overly burdensome shares of their annual income on both rent and transportation.

But there’s a caveat. Those savings vary from region to region, and in some places, families living in government-subsidized units end up without much benefit at all because transportation costs eat up all their housing-based savings.

The study was conducted by Shima Hamidi, a planning professor at University of Texas – Arlington; Reid Ewing, a planning professor at the University of Utah and John Renne, an associate professor at Florida Atlantic University.

The government standard for housing affordability is that households pay no more than 30 percent of their annual income on rent or a mortgage. Likewise, transportation costs are considered affordable if they’re less than 15 percent of annual income.

So together, households shouldn’t spend more than 45 percent of their income to live in a house and get around.

HUD’s low-income housing programs are structured to ensure the housing affordability component falls within that threshold.

Tenants pay 30 percent of their income on housing. The government makes up the difference to landlords between that amount and the fair market rent.

And the researchers learned that the typical low-income household receiving federal housing aid spends 14.65 percent of its income on transportation-related costs – car payments, gas, insurance, maintenance and transit fares. That’s within the affordability standard.

But those numbers differ wildly between regions. A typical low-income family in Los Angeles, for instance, pays just 3.5 percent of its budget on transportation, while one in Wheeling, West Virginia – where, ostensibly, a family would have a harder time relying on public transportation – spends 28 percent of its budget on transportation costs alone.

Article continues below the charts. 

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One clear takeaway from the research: transit matters to overall housing affordability.

“Across the United States, cities with good public transit service such as Portland have, in general, lower transportation costs particularly in downtown areas,” the researchers write. “Properties in auto-oriented cities such as Las Vegas and Orlando have high transportation costs even for housing units in downtown areas.”

Their research also confirmed the intuitive point that transportation costs increase as homes get farther from downtown.

Forty-four percent of properties in the sample housed a family that was expected to spend above the transportation threshold.

In regions like Memphis, Orlando and Las Vegas, transportation costs for every subsidized property were considered unaffordable.

“Not surprisingly, these and other metropolitan areas … are found to be among the most sprawling (metropolitan areas) in the country in a previous study,” the researchers write. “Conversely, the more compact metropolitan areas are found to have the highest number of affordable rental assistance properties.”

Those regions were San Francisco, Denver, Los Angeles, Portland, New York and Washington, D.C.

But the researchers were quick to note that this finding should not be taken to mean that sprawling regions shouldn’t be eligible for housing subsidies. Instead, they say, those subsidies could have the greatest impact if they were used only in neighborhoods that make it easier to get around without driving a personal automobile.

The research could also imply housing subsidies need to be greater in sprawling areas, to account for their larger transportation costs.

“Our findings can be generalized,” the researchers write. “They suggest that HUD subsidies, in general, should go to more compact, walkable, and transit-served locations.”

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3 Comments

  1. Plentiful research suggests low income families can break cycles of poverty by moving to high-opportunity areas — often areas with higher transportation costs by mere spatial dynamics in American metropolitan areas. The problem with focusing on the 2-dimensional housing + transportation angle is that low income families would be steered to mostly low-opportunity areas (the proverbial concentration of poverty). Ideally, urban areas should place both more affordable and market-rate housing in high-opportunity areas with low-transportation expenses to hit all 3 policy goals (housing + transportation + quality education) — areas which are often costlier per unit and neighborhoods which often resist the placement of affordable housing in their backyard. And because demand is so high for affordable housing, especially in high-growth cities, it challenges the calculus by decision makers when opting to either build as many units as possible to meet demand in lower opportunity areas/higher transportation costs (status quo) versus building in higher opportunity areas with political resistance that will slow projects down and provide less units all together. Ahh, wicked problems…

  2. Really useful information. Thanks for the info, you made it easy to understand.

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