Bacon's Rebellion

Democracy Thrives in Sunlight

An Updated Metric for Housing-Transportation Affordability

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by

James A. Bacon
in ,

by James A. Bacon

One of the most important insights of the Smart Growth movement is that the household costs of housing and transportation are intertwined. You can buy a less expensive house if you are willing to live far from the urban core with its more desirable location and higher property values. But you lose a lot in additional transportation costs and commuting time.

In 2008 the Center for Neighborhood Technology (CNT) developed a Housing + Transportation Index show how the true cost of a housing location varies considerably if you incorporate transportation costs into the calculation. Now CNT has partnered with the Department of Housing and Urban Development to update its methodology and generate more data.

Among the more interesting data points is the “Transportation Costs for the National Typical Household” for metro regions with populations of one million or greater. Here are the numbers for Virginia’s Big Three Metropolitan Statistical Areas:

transportation_cost

Comparing regions, it is interesting to note that the Washington region, known for its unaffordable housing, offsets those prices to some degree with lower transportation costs. Not that it makes much difference. NoVa remains unaffordable. What the new index does is show that other Virginia regions are unaffordable as well.

Here’s the “housing affordability” map for Virginia. Yellow areas show where the regional typical household makes enough money to dedicate less than 30% of its income to housing. Blue areas show where they pay a higher percentage.

housing_affordability

The map below looks at housing and transportation together. Yellow marks areas where the typical household pays less than 45% for housing and transportation combined, blue where they pay more.

housing+transportation

Yikes! Affordability has almost disappeared!

Drill deeper into the data with this tool and you can see that that the picture looks more variegated on a metropolitan level. The situation is bad but not as grim as the map makes it appear. 

While the index is useful for households making decisions where to live, it is less than authoritative. For instance, it leaves out the time cost of travel, which can be every bit as important as the out-of-pocket cost of driving or taking the bus. Also, it omits the cost of public subsidies. Roads, highways, rail and buses all depend upon taxpayer-funded subsidies (over and above fares, tolls and user fees) for capital and/or operating costs. But if nothing else, the index highlights the regional variability of housing and transportation affordability and provokes discussion on how to improve the mix.

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12 responses to “An Updated Metric for Housing-Transportation Affordability”

  1. larryg Avatar
    larryg

    very neat tool! there are additional layers available such as annual VMT or Cost per household – which is interesting to see in exurban commuting counties.

    over and over, when I talk with people who commute from NoVa jobs to Spotsylvania homes – I get this answer : ” I have no choice but to commute”.

    so if you gave them this tool – they would ask ” what is this for – it does not apply to me?”

    😉

  2. reed fawell III Avatar
    reed fawell III

    Several points come readily to mind.

    1/ We seem now to grossly undervalue lost (wasted) time consumed by commutes. At base time is the most valuable thing we possess. Every minute lost is irretrievable. Yet, commuters often value their commute. Why? Does the answer lie in how low they value the rest of their lives. If its a great tragedy of the modern world that our fellow citizens now live in.

    2/ It used to be that every dollar invested (rather than spent and/or wasted) today would be worth perhaps $8 by the time we retired. This principle has eroded over time for a wide variety of reasons, some reflecting reality, some reflecting pernicious cultural illusion. Another great modern tragedy.

    3/ The growing explosions (exponentially) of subsidized cost of roads and rails infrastructures that are now wasted and/or invested at extremely low returns and/or simply magnify problems and future costs of solutions.

    When you tote up all of this enormous waste, and all of the immense (indeed incalculable) harm that it does to our citizens (their spouses, kids, extended families, health, education, recreation, environment, etc.), ONLY THEN, when your appreciate all of this, do you begin to understand the great benefits that will accrue by bringing mixed land uses into balance with far more efficient transportation infrastructures and options that root out our systemic problems instead to magnifying those problems.

  3. larryg Avatar
    larryg

    Reed – why is housing so expensive in NoVa?

    is it due to a shortage of land for standard 1/4 acre subdivisions

    or it it due to zoning restrictions?

    people commute to the exurbs as far as I can tell because they want a home in a 1/4 acre (or larger) subdivision and over and over, I get told that they cannot find that in NoVa for less than 500K to a million dollars.

    1. reed fawell III Avatar
      reed fawell III

      I suspect this is more complicated than it first appears. I figure the general dynamic is as follows.

      The primary cause is the inflexible zoning restrictions that hem in dense mixed use development. Most particularly this includes urban single home subdivisions that over time have proven to be highly resistant to necessary change.

      Despite this resistance, the B/R corridor and Connecticut Ave. DC for decades have remained the in town haven for the young worker and middle class worker. In substantial part the pressure here was relieved by the explosion of residential growth into the outer suburb. Recent dilution of this latter trend combined with the growth of the reverse trend back into denser urban areas is now driving up rents in B/R corridor and Connecticut Ave. and their ilk. Fortunately, to a degree these higher prices can be absorbed by the wealth these mixed used communities spin off and the affluence of those younger citizens it attracts. But, unless these mixed use areas are allowed to grow as they should, we will have a crisis on our hands.

      The question of lack of shortage of 1/4 lots is likely more complicated. I am not up to speed on what its going on here. But, obviously this housing is skyrocketing in prime areas, including those nearby the dense successful mixed use areas, and established high rent residential neighborhoods. I strongly suspect that it is lagging, in some cases severely, in other close in residential areas, including those interspersed with old style strip retail.

  4. larryg Avatar
    larryg

    The people down my way – say they cannot afford the subdivision houses on the market in NoVa.

    they can get twice the house for 1/2 the money down this way and that makes it a simple financial decision – except for the monster commute.

    The folks down this way say they cannot afford a house to raise a family in – in NoVa – that only the folks who have lived there a long time – and their sons/daughters who inherit – can afford to live there.

    The dollar costs of commuting to the Fredericksburg area is chump change compared to the price of housing – if what you are looking for a the standard subdivision home.

    the commute would have to cost around $50 a day for 30 years of daily commuting to match the difference in housing costs.

    the “time” factor is considered “necessary” and no dollar cost is put on it by most.

    A very large number in a recent poll.. I think over 60% said that if they could find a local job that payed similar – they’d take it.

    In fact, the hottest economic development idea down this way is to attract one or more Federal agencies to relocate here – e.g. the FBI going to Quantico.

    the second hottest idea is to extend METRO down I-95 to Fredericksburg!

    😉

  5. reed fawell III Avatar
    reed fawell III

    “In fact, the hottest economic development idea down this way is to attract one or more Federal agencies to relocate here – e.g. the FBI going to Quantico.”

    Is this solution simply another way to spread sprawl?

    Or might it be done in ways to jump-starts denser mixed use development in your community, flooding it with a host of other mixed uses that serve to reduce sprawl while it vastly shortens commutes, and drives the creation of even more jobs and opportunities of all different sorts?

    1. larryg Avatar
      larryg

      I don’t know that there is a whole lot of thought about it other than bringing Fed govt agencies down here will make it easier for them to live here -and work here.

      It’s not about mixed-use.. they want their subdivisions.

      we are in the final stages of building a new VRE station. The planners have designated the area around it as mixed-use.

      the developers are questioning if it is viable since man, if not most, VRE riders live in subdivisions.

      what the developers have committed to is some level of commercial – appropriate to people on their way to or from a VRE train.

      here we have the issue of whether the county should be designating the uses and development plan – or developers… the developers are saying that you can’t make it something just by designating it as so – there has to be a market demand for it

  6. reed fawell III Avatar
    reed fawell III

    ” the developers are saying that you can’t make it something just by designating it as so – there has to be a market demand for it.”

    This might be true here, but it well might not. There is a dirty little secret in real estate. Even bad real estate developments often make markets, however short term and counter productive in the long term they may turn out to be.

    The counterpoint here is that great developers or a very good ones often can see what others do not see or want to see. This is particularly true when some altogether new opportunity is added to the mix. Here they can grow that thing in new unexpected ways that create a boom market creating a plethora of new opportunities that otherwise would never have happened.

    So where a “big deal” comes to town, folks should step back and try their best to see the big picture. Must we do this the short easy way, one that gains short quick profits but leaves a whole lot of potential benefit on the table? Or can we use this “big deal” as as spark plug that drives a far bigger engine of long term self sustaining benefits.

    For example, think of Arlington County’s metro subway as a big deal. Conventional wisdom said to it the quick, very cheap, easy way – put it above ground in the center of the I-66 right of way. Arlington did the reverse. It it the subway the hard and expensive, but creative way – digging that subway for miles through their downtown. And meantime it worked very hard and creatively to develop a land use plan that used that subway to fuel urban growth that’s been spinning off huge wealth ever since. The county now has more money than it knows what to do with.

    I am not suggestion your “big deal” matches a subway. But every big deal can often a wealth of new opportunities if all concerned have the leaders to take full advantage of all opportunities, so that 2+2=8 (instead of 4). The of course requires leaders of all sorts, including planners and politicians.

    This reminds me of discussion of how to fix shoreline development. The same general principles might well apply. See https://www.baconsrebellion.com/2013/08/the-stroadification-of-the-south-atlantic-coast.html#comments

  7. larryg Avatar
    larryg

    ” the developers are saying that you can’t make it something just by designating it as so – there has to be a market demand for it.”

    This might be true here, but it well might not. There is a dirty little secret in real estate. Even bad real estate developments often make markets, however short term and counter productive in the long term they may turn out to be.

    okay, I do not disagree.

    The counterpoint here is that great developers or a very good ones often can see what others do not see or want to see. This is particularly true when some altogether new opportunity is added to the mix. Here they can grow that thing in new unexpected ways that create a boom market creating a plethora of new opportunities that otherwise would never have happened.

    but are most, the majority of developers looking at things beyond their own direct interests?

    So where a “big deal” comes to town, folks should step back and try their best to see the big picture. Must we do this the short easy way, one that gains short quick profits but leaves a whole lot of potential benefit on the table? Or can we use this “big deal” as as spark plug that drives a far bigger engine of long term self sustaining benefits.

    what is govt’s proper role in this? how does the public know that the govt is being competent and why would we expect govt planners to be competent in this situation if we also say they are not in other planning decisions?
    ( playing devils advocate here).

    For example, think of Arlington County’s metro subway as a big deal. Conventional wisdom said to it the quick, very cheap, easy way – put it above ground in the center of the I-66 right of way. Arlington did the reverse. It it the subway the hard and expensive, but creative way – digging that subway for miles through their downtown. And meantime it worked very hard and creatively to develop a land use plan that used that subway to fuel urban growth that’s been spinning off huge wealth ever since. The county now has more money than it knows what to do with.

    isn’t this the same govt that has been accused of malfeasance in bus stations?
    Did they not attempt to do the same thing with the bus stations as they did with METRO? i.e. invest for the longer term?

    but at the point you mention – govt is involved in planning – and spending money – the very same govt – we have little faith in other times….and circumstances..

    I am not suggestion your “big deal” matches a subway. But every big deal can often a wealth of new opportunities if all concerned have the leaders to take full advantage of all opportunities, so that 2+2=8 (instead of 4). The of course requires leaders of all sorts, including planners and politicians.

    devils’ advocate again – define “big deal” in terms of govt and the private sector.
    what is the “big deal” exactly … compare and contrast to a “bad” big deal.

    This reminds me of discussion of how to fix shoreline development. The same general principles might well apply. See https://www.baconsrebellion.com/2013/08/the-stroadification-of-the-south-atlantic-coast.html#comments

    yes. clearly there are numerous examples of what private-sector development “vision” looks like. many more, in fact.

    Many govt planners will tell you that you cannot dictate what the market wants and that the people who know best what the market wants are the people who have to be able to provide what the market wants – at a profit.

    there is no similar requirement for govt planners. they think in terms of available funding – not ROI… right?

    Down our way – the planners meet regularly with the development community to see their input on zoning and land-use designations.

    one of the things it led to was the designation of wider-scope land-use designations that allowed the developer to configure the interior with different kinds of subordinate uses – as long as they stayed within the top level use.

    developers like that much better because it allows them to phase – and adjust to meet market dynamics… and stay in business…not get locked into something that
    puts them on the edge of profitability.

    big devils advocate question for you:

    would real developers be better government planners?

  8. CNT Press Mentions November 2013 : Center for Neighborhood Technology

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  9. reed fawell III Avatar
    reed fawell III

    Larry, you asked a series of questions. I will try to respond to each one in turn.

    Earlier I said “… that great developers or a very good ones often can see what others do not see or want to see. This is particularly true when some altogether new opportunity is added to the mix. Here they can grow that thing in new unexpected ways that create a boom market …”

    You replied, “but are most, the majority of developers, looking at things beyond their own direct interests?”

    Yes, all truly successful developers must look at things beyond their own interests. This is critical to their success. Why? Because their primary task is to build things that meet the deepest needs of those people who will use and must benefit from what they build. Absent this, their projects will never be a real success, even if it manages to make a short term profit for other reasons unrelated to the quality of their product. But meeting these deep needs of people while also meeting their ability to buy such quality also demands excellence in vision and execution on the developer’s part.

    Here is the challenge. And the fine developer always steps up to it. For, like all people who demand excellence of themselves in what they do, serious developers take great pride in what they do, want to earn their excellence, and be remembered for it. Quick easy on the fly money that leaves a mess behind (their project that fails their customer) is not their game. Its a cheap game of fraud they refuse to play. This is not naive on my part. This is what makes excellence work. And its why in all walks of life those who demand excellence of themselves are those who build it into their work daily, and who will accept nothing less.

    In describing the qualities on a fine developer in earlier article, I said:

    “… With all this said, developers to succeed must be humanists. Only then do they have a good shot at creating what serves in all its many aspects the deepest and most fundamental needs of those who use what they build. People who will for many years live there, work there, commute there, raise families there, learn there, shop there, make friends and find spouses there, play there, grow up, grow old and die there with memories worth living …”

    This is only one critical ingredient of truly successful developers. For the rest, see: https://www.baconsrebellion.com/2013/04/millennials-cars-and-smart-phones.html#comments

    Other comments on your comments will follow today.

  10. reed fawell III Avatar
    reed fawell III

    Larry, you asked:

    “what is govt’s proper role in this? how does the public know that the govt is being competent and why would we expect govt planners to be competent in this situation if we also say they are not in other planning decisions? … For example Arlington County’s metro subway as a big deal … isn’t this the same govt that has been accused of malfeasance in bus stations? Did they not attempt to do the same thing with the bus stations as they did with METRO? i.e. invest for the longer term?”

    My Answer:

    One important roll of the government is planning. Here let me quote briefly from my comment in an earlier article, “..Its my fervent desire also to have a government so competent and efficient that it can play a critical roll in building the playing field on which private enterprise can join with the community to build a wealth and (health) creating communities that are build for everyone’s benefit who live here (and for miles around.)”

    And, even within the planning process alone, there are many ways a highly competent government builds such “playing fields”, and also there are many ways that an incompetent one fails to fulfill its obligation to do this.

    Fortunately there are many tell-tails signs of a government’s successes and its failures. Numerous earlier articles on this website have dealt with these issues in detail. Perhaps the latest such article is found at:

    https://www.baconsrebellion.com/2013/11/why-conservatives-hate-smart-growth.html#comments

    For starters, and in particular, see my last three comments within this above referenced article for examples of good and irresponsible government.

    Tomorrow, I’ll elaborate on these issues and the others you raised, Larry.

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