Are We There Yet: The High Cost Of H+T
Editor's Note: Saving on transportation costs can be critical to household budgets staying in the black. This has never been more true than today, when many people are struggling to make ends meet. To that end, this excerpt from Are We There Yet? discusses both the importance of providing more housing choices near public transit and in walkable and bike-friendly communities, and the need to ensure that public transit actually connects people to the places they need to go such as jobs and educational opportunities.
Housing costs have grown far faster than income over the past 50 years, and the share of households that struggle to pay their rent or mortgage has increased dramatically over the past decade, according to a recent study by Harvard’s Joint Center for Housing Studies. The 2012 study found that well over one-third of U.S. households paid more than 30 percent of their income for housing in 2009, while almost 26 percent spent more than half their paychecks, the highest level in half-a-century. Renters, with their generally lower incomes, are more than twice as likely to spend more than half on housing.
Household debt surged from 65 percent of disposable income in 1980 to 133 percent in 2007, William Galston writes in The New Republic in 2011, largely because of the enormous escalation in mortgage indebtedness. As a result, the rental market has been flooded not only with families who lost their homes to foreclosure but also with higher-income families who are also struggling to make ends meet. As a result, vacancies are down and rents are up. In the Western U.S. — where the shortage of affordable housing is greatest — the National Low Income Housing Coalition estimates that there are only 53 units available for every 100 very-low-income families.
Add to this the fact that rising gas prices have increased household transportation costs, and household budgets are really stretched. Transportation is the second largest household expenditure after housing according to the Bureau of Labor Statistics, and the American Automobile Association (AAA) estimates that the cost of owning and maintaining a car increased 1.9 percent in 2011 to $8,946 in 2012. As a result, homebuyers and renters are increasingly factoring in transportation costs when making housing choices.
Cody Helgeson, who moved with his wife from their home in the suburbs of Phoenix to an apartment downtown, tells the Arizona Republic, “Now we’ve got it down to one vehicle and we are able to go one whole month on a tank of gas because we walk everywhere. When we lived in [the suburb of] Queen Creek we were budgeting about $500 a month for gas.” Moving downtown, he notes, also boosted their social life.
Indeed buying a house on the far fringes of a region might seem less expensive until the hidden costs of transportation are figured in, and then what appears to be a deal isn’t — a fact made clear by the “Housing + Transportation Affordability Index,” which expands the idea of “affordability” to include transportation costs in addition to housing. The “H+T index” was developed by the national nonprofit Center for Neighborhood Technology, which has now created a version that will be used by the U.S. Department of Housing and Urban Development to help renters and homebuyers make more informed housing choices and investment decisions.
“Affordability is much more than just paying the mortgage, it involves other costs like transportation, gas, and utilities,” says Shaun Donovan, Secretary of the U.S. Department of Housing and Urban Development. “The availability of a national affordability index will provide consumers better information about the true costs of a home by accounting for that housing’s proximity to jobs, schools and other services. Our goal with the creation of this housing and transportation index is to provide American families with a tool that can help them save money and have a better understanding of their expenses and household budget.”
MOBILITY VS. ACCESS
Complete communities are key to reducing the cost of H+T. “Access” is central to the idea of complete communities, and access is predicated on reducing the distance, and the time and money we have to spend on getting where we need to go. In other words, explains Todd Litman of the Victoria Transport Policy Institute, “Mobility is how far you can go in a given time. Access is how many useful or valuable things you can do in that time.”
Complete communities, and the opportunity areas upon which they are built, are the places where people can take care of their daily business on foot or on bike, and longer distances can be traveled by bus or rail, which means that households can own fewer cars. Complete communities are also the best places for older Americans, younger Americans and the disabled, who can maintain their independence because they don’t have to rely on others to get around.
These rising transportation costs are a significant driver of the upswing in demand for housing in downtowns and close-in neighborhoods, and as demand increases more of these neighborhoods will be built and existing neighborhoods will be retrofitted. In Houston, Texas, for example, the construction of a transit line and station in University Place — an urban neighborhood near Rice University with small blocks, walkable streets and a mix of uses — turned the neighborhood into a more complete community by making it easy and convenient for residents to walk and bike in the neighborhood and rely on transit to get to destinations outside.
In suburban Hillsboro, Oregon, a master-planned New Urbanist village was built on a very large tract of undeveloped land near a station on a rail line connecting Portland to its suburbs. The developer built housing, stores and commercial space on small blocks connected by walkable streets, with the result that the people who live there walk, bike and take transit more than the average resident in the region.
Transit access increases the potential of opportunity areas to become complete communities — since the goods and services that people can’t access on foot or on bike can be accessed via transit. America is already headed in this direction. Reconnecting America’s research shows that 58 percent of all transit stations are located in opportunity areas.