Preserving Affordability

Over the past 18 months, the Center for Transit-Oriented Development (CTOD) has engaged in several initiatives to better understand the obstacles and the opportunities involved in creating diverse and equitable neighborhoods around transit. Changing demographics and traffic are boosting the demand for housing near stations, with demand expected to more than double in the next 25 years. This is good news for all who are concerned about sustainable growth and global climate change, but the increased market interest could drive up prices and drive existing low-income residents out of transit-oriented neighborhoods. Research by our Center for TOD has shown that station areas are currently more diverse economically and racially than the region as a whole.

Our research also suggests that transit-oriented development can be an important affordability strategy for regions and for households. While families used to be able to find cheaper housing in the suburbs, a recent Center for Housing study found that for every dollar that a household saves on suburban housing, it spent 77 cents more on transportation to get to that suburban house – nearly wiping the savings out. Location matters a great deal when it comes to affordability. While the average family spends roughly 19 percent of the household budget on transportation, households with good access to transit spent just 9 percent.

That savings can be critical for lower-income households that need to make every dollar count. Our research has also shown that transportation costs as a percentage of total household budget varies greatly according to income: Transportation costs consume an average of 9 percent of the household budget for high-income families, but for very-low-income families transportation costs can consume 55 percent of the budget or more.

We’ve studied the topic of affordability and transit-oriented development from different perspectives with different sponsors. All of our research supports the claim that TOD is a sustainable, low-cost solution to a host of problems including housing affordability:

We have just published the results of an 18-month effort to examine the strategies being employed to preserve and create mixed-income TOD housing in five regions – Boston, Charlotte, Denver, Minneapolis and Portland. The report, titled "Realizing the Potential: Expanding Housing Opportunities Near Transit," discusses the importance of ensuring that housing at stations serve a mix of incomes, and concludes that TOD housing can be an important housing affordability strategy. There are recommendations on proactive strategies that can be used by all levels of government. The report urges better coordination of land use and transportation planning and funding, and details innovative strategies in these five diverse regions with very different housing markets. Both the executive summary and the full report are downloadable here:

In January of 2006, we worked with the Brookings Institution to create a tool to measure the impact of transportation costs on housing affordability. Researchers have long known that affordability is not just about the cost of housing but also about the cost of transportation. Our Affordability Index quantifies the combined cost as a percentage of income in order to make clear that there’s a trade-off: cheaper suburban housing may come with increased transportation costs, while housing in “location efficient”and transit-rich communities near transit, shopping, schools and work provides a big savings. Our paper on the Affordability Index

The Center for Neighborhood Technology, a partner in our Center for TOD, worked with the Center for Housing Policy and the Institute for Transportation Studies at the University of California-Berkeley used the Affordability Index to calculate the combined cost of housing and transportation in 28 metropolitan regions. The report concluded that as lower-income families are pushed out of the central city by rising housing prices, their increased transportation costs negate their savings on housing. This report, “A Heavy Load: The Combined Housing and Transportation Burdens of Working Families,” is available on the National Housing Conference website.

At the end of 2006 the Center for TOD completed a report for the Ford Foundation about the considerable demand for housing near transit expected to come from low-income and very-low-income households. Our research showed that neighborhoods near transit are currently more economically and racially diverse than the regions in which they are located, which makes the problem of gentrification particularly compelling. The report also describes the benefits of diversity and TOD to maintaining the health of neighborhoods and regions, and recommends policies that can help regions meet the increased demand for TOD by providing more housing for all incomes.