How Commuting Costs Can Drive Up Housing Costs

August 11, 2017 | by Katie Claflin

Categories: Affordable Housing, Homeownership
Tags: pew charitable trust, city observatory, center for neighborhood technology

Housing affordability is generally measured as a percentage of income spent on housing costs.  According to the US Department of Housing and Urban Development, a household is considered cost-burdened if it spends more than 30% of its income on housing.

But Joe Cortwright, Director of City Observatory, argues that traditional measures of affordability do not consider other related costs, particularly transportation, when calculating whether a household’s housing is affordable. 

He offers the following example:

Consider two otherwise identical households. One lives in a suburb, owns two cars, and drives most places. They spend 30 percent of their income on housing and 20 percent of their income on transportation. The second household lives in a city and owns one car. Their house is more expensive than the suburban one, so they spend 40 percent of their income on housing, and just 10 percent on transportation. Is it really accurate to describe the second (city) household as any more “cost-burdened” than its suburban peer?

Instead, he recommends using the Center for Neighborhood Technology’s H+T Housing and Transportation Index to determine the true affordability of an area. This tool uses census data on income, housing costs, commuting patterns, car ownership rates, and public transit options to calculate affordability.

In many cases, the index finds that areas with higher housing costs are actually more affordable than areas with lower housing costs when the costs of transportation are included.

The Rise of Supercommuters

The link between housing and transportation costs is also evident when examining another factor—the increasing number of “supercommuters”. Supercommuters are defined as those who commute more than 90 minutes to work each way.

Citing data collected by the Pew Charitable Trust, a June 2017 article in curbed.com highlights that the number of supercommuters in America skyrocketed between 2010 and 2015. Texas ranks #3 on the list of states with the largest percent increase in supercommuters (39.9%), behind only Massachusetts (45.4%) and California (40.3%). 

Quoting Phil Lasley, transportation researcher at the Texas Transportation Institute, and a report by the Center for Housing Policy titled Losing Ground, the article emphasizes how the rise of supercommuters is likely a result of the increase in housing costs, particularly in urban areas.  It also underscores the importance of factoring in transportation costs and trends when determining true housing affordability.

The Benefits of Home Buyer Programs

Home buyer programs, such as those offered by TSAHC, can provide home buyers with grants and tax credits that can make buying a home more affordable. These programs also give home buyers more purchasing power to help them better afford a home closer to where they work. 

To learn more about the grants and tax credits offered by TSAHC, visit www.readytobuyatexashome.com

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