Penny Wise, Pound Fuelish
Penny Wise, Pound Fuelish: New Measures of Housing + Transportation Affordability Scott Bernstein President and Founder
Peter Haas, Ph.D. Chief Research Scientist July 20, 2010
Center for Neighborhood Technology – CNT • 30+ year old Chicago-based non-profit • Promotes economic development that is environmentally sustainable through: – Research – Advocacy – Demonstration projects
• Co-developer of the Location Efficient Mortgage SM • Partner in the CTOD • http://www.cnt.org
How Housing Affordability is Usually Calculated—Then and Now • 19th century ideal: “A week’s pay for a month’s rent” • Today: affordability defined housing costs are less than or equal to 30 percent of household income
What’s it Used For? • • • • • • •
Describe a typical household’s housing expense Analyze trends & compare different HH types Administer rules defining who can have subsidies Define housing needs for public policy purposes Predict the ability of a HH to pay rent or mortgage Select HHs for a rental unit or mortgage Counsel a household on goals for reducing the cost of living
Why Is This Not Good Enough? • Doesn’t include transportation costs • Low income housing may be inconvenient and expensive to get to and from • Families seeking “affordable housing” are blind to transportation costs • Promotes sprawl – spreading out in the name of affordability is like belt-loosening to fight obesity
Effect of ‘Drive ‘til You Qualify’: Transport Costs Can Exceed Housing Costs
Rethinking Affordability • The standard measure of affordability is percentage of income on housing – e.g. no more than 30% should go for housing
• But transportation costs are directly tied to the location of housing and truly affect cost of living: – Housing and transportation costs are typically >50% of income for low and moderate income households
U.S. Household Expenditures • Housing • Transportation • Both costs driven by location. • How do these vary? • National number are not good enough! http://www.bts.gov/publications/pocket_guide_to_transportation/2009/html/figure_05_02.html
Source: U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey, 2007; and personal communication as of November 2008.
Housing + Transportation • U.S. average is 18% - but costs vary by place: • What drives the difference in transportation costs?
Housing + Transportation Affordability Index • The “H+T Affordability Index” finds overall affordability with a single number • Modeled transportation costs • Reported housing costs and income Affordability Index Equation Affordability = (Housing Costs + Transportation Costs) Income
Costs of Transportation • The median income U.S. household in 2003: – 19% of household budget on transportation (BLS)
• U.S. is 19% - but costs vary by place: – Baltimore was 14% – Chicago was 16% – Houston was 21%
• What drives the difference in transportation costs?
Costs of Transportation
Scope • • • • •
All metropolitan regions By Census Block Groups ~162k Used national data sets where possible No national data for transit access No national data set for driving
Transportation Cost Model
Auto Ownership & Use vs. Where
Auto Ownership & Use vs. Who
Dependant Variables
Dependant Variables Census 2000 Block Groups • Auto Ownership – Census 2000 – Available autos per household (HH)
• Auto Use – Vehicle miles per household from Mass. DOT aggregated up to block groups
• Transit Use – Census 2000 – Percent of commuters using transit
Autos per Household
Miles Driven per Household
Percent Commuters Using Transit
Household Independent Variables
Household Variables Census 2000 Block Groups • Household Income – Census 2000 – Median household income
• Household Size – Census 2000 – Household population/HH
• Commuters per Household – Census 2000 – Workers*(HH Pop./Total Pop.)
Neighborhood Independent Variables
Household Density Census 2000 Block Groups • Residential Density – Household per residential acres • Household from Census 2000 • Residential Acres = Sum of area of block within block group that have gross household density >= 1 hh/acres
• Gross Density – Household per acre
Block Size - Walkability Census 2000 Block Groups • Use size of Census Blocks in Block Group – Similar to: • Intersection density • Block face length
– Measures Connectivity of Street Grid
Transit Census 2000 Block Groups • Transit access and level of service • Use transit level of service where we can get it – Measure ½ mile around rail station – ¼ mile around bus stops and/or routes
• Proportion of land in block group covered by these buffers (scaled by frequency of service)
Transit Access
Transit Connectivity
Employment Access Census 2000 Block Groups • Measure of jobs • Also measures access to “stuff” • Use gravity model to calculate proximity of employment in entire region...
n
pi E≡∑ 2 i =1 ri
Journey to Work (J2W) Census 2000 Block Groups • Not as interesting as one might think • Use 3 measures – Average time transit commuters – Average time of “other” commuters – Average time of all commuters
Model Calibration • Use rational function (i.e. ratio of polynomials for each variable) • Use sum of these to model dependant variables
(Ci1 × X i + Ci 3 × X + Ci 5 × X ) Y = a+∑ 2 3 i =1 (1 + Ci 2 × X i + Ci 4 × X i + Ci 6 × X i ) n
2 i
3 i
Auto per Household Result
Auto per Household Result
Auto per Household Result
What Determines Driving? Variable
R2 Contribution
Gross Household Density
67%
Residential Density
58%
Block Size
58%
Employment Access
55%
Transit Connectivity Index (without frequency)
55%
Median Household Income
28%
Commuters per Household
23%
Household Size
22%
Per Capita Income
21%
Average time for Journey to Work
5%
All Variables in Combination
84%
Costs • Auto ownership cost ~$5000/Auto • Driving costs ~$0.09/Mile with 2000 gas prices • Transit cost – Based on regional transit revenue data
The Housing + Transportation Affordability Index
http://htaindex.org • • • •
Redefines housing affordability Educates consumers Influences policy makers Informs planners
What Next? • Developing More Tools • http://www.htaindex.org – continuous improvement • http://abogo.cnt.org – adding features • H+T Toolkit for regional planners – needs feedback
• • • • •
What to do about rural and micropolitan areas? Land use mix? Can we get ubiquitous transit data? More VMT data? Auto costs improvement?
What Did We Learn • Place matters – Urban environment drives transportation costs more than household makeup. • Small metros show the same trends as big ones. • Policy makers are desperate for this information.
The Challenge Ahead – Widespread Application
•Inter-Agency Partnership for Sustainable Communities- Redefining Affordability •HUD—New Office Of Sustainable Communities •USDOT—Likely New Program in Livable Communities •Congress—Livable Communities Act will make funds available •Congress—GREEN Act will codify Location Efficient Mortgages •New Funds Will Be Regionally Focused and Competitive
Contacts • • • • •
Peter Haas – [email protected] Scott Bernstien – [email protected] Website – http://www.cnt.org Facebook – Center for Neighborhood Technology (CNT) Twitter – http://twitter.com/CNT_tweets
Peter Haas, Ph.D. Chief Research Scientist July 20, 2010
Center for Neighborhood Technology – CNT • 30+ year old Chicago-based non-profit • Promotes economic development that is environmentally sustainable through: – Research – Advocacy – Demonstration projects
• Co-developer of the Location Efficient Mortgage SM • Partner in the CTOD • http://www.cnt.org
How Housing Affordability is Usually Calculated—Then and Now • 19th century ideal: “A week’s pay for a month’s rent” • Today: affordability defined housing costs are less than or equal to 30 percent of household income
What’s it Used For? • • • • • • •
Describe a typical household’s housing expense Analyze trends & compare different HH types Administer rules defining who can have subsidies Define housing needs for public policy purposes Predict the ability of a HH to pay rent or mortgage Select HHs for a rental unit or mortgage Counsel a household on goals for reducing the cost of living
Why Is This Not Good Enough? • Doesn’t include transportation costs • Low income housing may be inconvenient and expensive to get to and from • Families seeking “affordable housing” are blind to transportation costs • Promotes sprawl – spreading out in the name of affordability is like belt-loosening to fight obesity
Effect of ‘Drive ‘til You Qualify’: Transport Costs Can Exceed Housing Costs
Rethinking Affordability • The standard measure of affordability is percentage of income on housing – e.g. no more than 30% should go for housing
• But transportation costs are directly tied to the location of housing and truly affect cost of living: – Housing and transportation costs are typically >50% of income for low and moderate income households
U.S. Household Expenditures • Housing • Transportation • Both costs driven by location. • How do these vary? • National number are not good enough! http://www.bts.gov/publications/pocket_guide_to_transportation/2009/html/figure_05_02.html
Source: U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey, 2007; and personal communication as of November 2008.
Housing + Transportation • U.S. average is 18% - but costs vary by place: • What drives the difference in transportation costs?
Housing + Transportation Affordability Index • The “H+T Affordability Index” finds overall affordability with a single number • Modeled transportation costs • Reported housing costs and income Affordability Index Equation Affordability = (Housing Costs + Transportation Costs) Income
Costs of Transportation • The median income U.S. household in 2003: – 19% of household budget on transportation (BLS)
• U.S. is 19% - but costs vary by place: – Baltimore was 14% – Chicago was 16% – Houston was 21%
• What drives the difference in transportation costs?
Costs of Transportation
Scope • • • • •
All metropolitan regions By Census Block Groups ~162k Used national data sets where possible No national data for transit access No national data set for driving
Transportation Cost Model
Auto Ownership & Use vs. Where
Auto Ownership & Use vs. Who
Dependant Variables
Dependant Variables Census 2000 Block Groups • Auto Ownership – Census 2000 – Available autos per household (HH)
• Auto Use – Vehicle miles per household from Mass. DOT aggregated up to block groups
• Transit Use – Census 2000 – Percent of commuters using transit
Autos per Household
Miles Driven per Household
Percent Commuters Using Transit
Household Independent Variables
Household Variables Census 2000 Block Groups • Household Income – Census 2000 – Median household income
• Household Size – Census 2000 – Household population/HH
• Commuters per Household – Census 2000 – Workers*(HH Pop./Total Pop.)
Neighborhood Independent Variables
Household Density Census 2000 Block Groups • Residential Density – Household per residential acres • Household from Census 2000 • Residential Acres = Sum of area of block within block group that have gross household density >= 1 hh/acres
• Gross Density – Household per acre
Block Size - Walkability Census 2000 Block Groups • Use size of Census Blocks in Block Group – Similar to: • Intersection density • Block face length
– Measures Connectivity of Street Grid
Transit Census 2000 Block Groups • Transit access and level of service • Use transit level of service where we can get it – Measure ½ mile around rail station – ¼ mile around bus stops and/or routes
• Proportion of land in block group covered by these buffers (scaled by frequency of service)
Transit Access
Transit Connectivity
Employment Access Census 2000 Block Groups • Measure of jobs • Also measures access to “stuff” • Use gravity model to calculate proximity of employment in entire region...
n
pi E≡∑ 2 i =1 ri
Journey to Work (J2W) Census 2000 Block Groups • Not as interesting as one might think • Use 3 measures – Average time transit commuters – Average time of “other” commuters – Average time of all commuters
Model Calibration • Use rational function (i.e. ratio of polynomials for each variable) • Use sum of these to model dependant variables
(Ci1 × X i + Ci 3 × X + Ci 5 × X ) Y = a+∑ 2 3 i =1 (1 + Ci 2 × X i + Ci 4 × X i + Ci 6 × X i ) n
2 i
3 i
Auto per Household Result
Auto per Household Result
Auto per Household Result
What Determines Driving? Variable
R2 Contribution
Gross Household Density
67%
Residential Density
58%
Block Size
58%
Employment Access
55%
Transit Connectivity Index (without frequency)
55%
Median Household Income
28%
Commuters per Household
23%
Household Size
22%
Per Capita Income
21%
Average time for Journey to Work
5%
All Variables in Combination
84%
Costs • Auto ownership cost ~$5000/Auto • Driving costs ~$0.09/Mile with 2000 gas prices • Transit cost – Based on regional transit revenue data
The Housing + Transportation Affordability Index
http://htaindex.org • • • •
Redefines housing affordability Educates consumers Influences policy makers Informs planners
What Next? • Developing More Tools • http://www.htaindex.org – continuous improvement • http://abogo.cnt.org – adding features • H+T Toolkit for regional planners – needs feedback
• • • • •
What to do about rural and micropolitan areas? Land use mix? Can we get ubiquitous transit data? More VMT data? Auto costs improvement?
What Did We Learn • Place matters – Urban environment drives transportation costs more than household makeup. • Small metros show the same trends as big ones. • Policy makers are desperate for this information.
The Challenge Ahead – Widespread Application
•Inter-Agency Partnership for Sustainable Communities- Redefining Affordability •HUD—New Office Of Sustainable Communities •USDOT—Likely New Program in Livable Communities •Congress—Livable Communities Act will make funds available •Congress—GREEN Act will codify Location Efficient Mortgages •New Funds Will Be Regionally Focused and Competitive
Contacts • • • • •
Peter Haas – [email protected] Scott Bernstien – [email protected] Website – http://www.cnt.org Facebook – Center for Neighborhood Technology (CNT) Twitter – http://twitter.com/CNT_tweets
