From Point A to Point B, Expressed in Dollars and Sense

From Point A to Point B, Expressed in Dollars and Sense
Online Tool Examines the Economics of Where We Live in Relation to Work

The costs of transportation now approach or exceed those of housing for many working families, yet federal definitions of housing affordability fail to recognize their interdependence…. This [Location Affordability Portal] will serve to make transparent the costs of living in a given location and inform consumers and businesses about their choices in real-time, so they can make intelligent decisions about how to combine transportation and housing choices to lower their cost burdens.
– HUD Secretary Shaun Donovan

 

The Location Affordability Portal is an online tool that helps consumers, researchers, and policymakers better understand the impact of transportation costs on affordability. HUD’s decision to fund the development of this portal is based in part on what Secretary Donovan describes as the need “to provide American families with a tool that can help them save money and have a better understanding of their expenses and household budget.”

Although housing and transportation costs are major expenses on their own, the combined cost burden is often far more than many families bargained for. In recent years, the “drive till you qualify” approach to choosing a home has fueled explosive growth in the outer suburbs of many metropolitan areas. But with gas prices rising, the time we spend commuting, running errands, and engaging in social pursuits — much of it stuck in traffic — has become prohibitively expensive for many Americans. In addition to the high cost of fuel, increased vehicle maintenance expenses, accelerated vehicle depreciation, and higher car insurance costs must also be considered when taking the long way home is the only choice. For those earning low or moderate incomes, transportation expenses can have a chilling effect on the kind of home they can afford and, in some instances, whether they can afford a home at all. The Location Affordability Portal suggests a new way of thinking about where to live and allows users to make informed choices that can be more economically and environmentally sustainable.

The Location Affordability Portal provides a general view of combined housing and transportation costs in a given neighborhood or ZIP Code as well as the means to conduct a more detailed calculation of your own household’s anticipated (or actual) cost burden based on factors such as income, commuting distance, number of vehicles, and monthly mortgage or rent. The portal will also prove useful to planners, developers, governments, and other state and local officials who need to make data-driven decisions about local and regional planning and investment. Real estate agents and researchers will benefit from ready access to cost estimate data by census block group for all 942 metropolitan statistical areas covered by the Location Affordability Index (LAI).

The LAI provides an overview of the average per-household costs for housing and transportation in a given neighborhood. Calculations are based on data gathered between 2006 and 2010 and are expressed as a percentage of median household income spent on housing, on transportation, and on a combination of the two. The results are depicted on a color-coded, interactive map on which darker colors indicate areas where the housing plus transportation cost burden is particularly high. Users can select from various common household types (such as retirees, single professionals, low-income individuals and families, and dual-income households) and enter an address or ZIP Code to view cost burden data. Users can also click the map to quickly compare housing and transportation costs in different neighborhoods throughout the United States. As the portal’s developers note, “The LAI can [provide] a more complete understanding of the costs of living in a given location by accounting for variations between households, neighborhoods, and regions, all of which impact affordability.”

According to a recent article in Better! Cities & Towns, “When considering affordability of a place, households have tended to consider housing costs in isolation. But [the Location Affordability Portal] makes clear that transportation costs vary almost as much as housing costs — and in a more predictable fashion. In walkable places, the typical household often saves $6,000 to $7,000 per year in transportation costs compared to drive-only suburbs.” Users seeking a more detailed calculation of these costs based on their own particular circumstances can take advantage of a feature called My Transportation Cost Calculator. The calculator estimates the percentage of a family’s income that will likely be dedicated to housing, transportation, or a combination of the two in a given location. The calculation is based on such factors as actual or anticipated monthly mortgage or rent payments, car loan payments, monthly vehicle mileage, homeowners and auto insurance costs, mass transit expenses, and other common factors. The resulting estimates, also expressed as a percentage of the user’s household income, indicate how much a household would pay if they lived in a given block group between 2006 and 2010.

Having ready access to employment centers is another important consideration when choosing a place to live. According to the Bureau of Labor Statistics, the average worker stays just 4.4 years at each job before moving on, and for restless Millennials, that tenure tends to be even shorter. Living close to employment centers offers people residential stability to counterbalance the transitory nature of modern career paths.

Although living close to work is not a viable or preferred option for everyone, the combination of simple economics and quality of life issues — shorter commutes; access to mass transit; and enhanced cultural, sporting, and entertainment opportunities—is making higher-density neighborhoods increasingly attractive to many American families. The new Location Affordability Portal brings objective, quantitative measures to bear in the decision on where – and how – we choose to live.

The Location Affordability Portal was developed by HUD and the U.S. Department of Transportation (DOT) in collaboration with Manhattan Strategy Group; additional support was provided by the Center for Neighborhood Technology. Through the portal, HUD and DOT are exploring strategies to help ensure that federal funds are invested more efficiently and effectively, thereby advancing the agencies' goals of providing greater access to sustainable, inclusive communities, affordable housing, and transportation options. Housing and transportation data available through the portal cover approximately 94 percent of the U.S. population.