APTA | Passenger Transport
April 12, 2010

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Report: Transportation Costs Affect Affordability

Only two in five American communities—or 39 percent—can be termed affordable for typical households when their transportation costs are considered along with housing costs, according to a new analysis by the Chicago-based Center for Neighborhood Technology (CNT).

CNT’s Housing + Transportation (H+T) Affordability Index and its accompanying report, Penny Wise, Pound Fuelish, released March 23, demonstrate the affordability of 337 metro areas across the country—encompassing 161,000 neighborhoods and 80 percent of the U.S. population.

“By factoring transportation into the housing affordability equation, the H+T Index reveals that the current pattern of sprawling development and lack of public transportation options is neither affordable for a large number of families nor environmentally sustainable,” the center stated in releasing the index and report.

The traditional definition of affordability is when a household spends 30 percent or less of its income on housing; however, when the definition of affordability includes transportation costs as well as housing—at 45 percent of income—the number of communities affordable to households earning the area median income decreases significantly. Nationally, the number of affordable communities declines from 70 percent, the figure when taking into account housing alone, to 40 percent (with transportation costs added), resulting in a net loss of 48,000 neighborhoods.

For many families, transportation is the second largest household expense. Further, the new analysis shows that families moving to a more remote location because of lower housing costs may find that unexpectedly high transportation costs cancel out any possible savings.

The index shows a range of transportation costs, from 12 percent of household income in efficient neighborhoods with walkable streets, access to transit, and a wide variety of stores and services to 32 percent in locations where driving long distances is the only way to reach essential services.

“In recent years, we have seen foreclosures increasing faster in outer suburbs than in central cities,” said Scott Bernstein, president and founder of CNT. “When gas prices peaked in 2008, families in many regions saw their transportation costs soar by $3,000 per year or more. When communities have few transportation options and require driving long distances for basic necessities, already stressed household budgets are very vulnerable to spikes in gas prices and rising transportation costs. The H+T Index gives a reliable estimate of each neighborhood’s average household transportation costs, a strong move toward a ‘no surprises, no sticker shock’ home buying or renting experience.”

More information on the H+T Index and the text of Penny Wise, Pound Fuelish are available online.

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