Evaluating the Concept of Location Affordability: Recent Data on the Relationship Between Transportation,Housing, and Urban Form

The concept of location affordability holds that housing affordability should be augmented to include transportation cost as a related and substantial household cost burden. The recent United States foreclosure crisis of 2006–2008 offers an opportunity to evaluate location affordability as a concept for policy and practice by investigating the relationship between transportation cost burdens and negative housing outcomes. This article contributes to the growing literature on location affordability and the recent crisis with an analysis of default and foreclosure data for 70 metropolitan areas. The analysis includes transportation and housing cost burdens and demographic data, as well as multidimensional measures of urban form. High rates of automobility are associated with increased foreclosure. The urban form variables yield mixed results, suggesting the relationship between urban sprawl and affordability is complex. However, across a range of specifications, high levels of development intensity are associated with increased foreclosure rates. The results have implications for both the housing and transportation sectors and lend support for the notion of location affordability.     

Searching for Affordability and Opportunity: A Framework for the Housing Choice Voucher Program

Abstract

Affordability, a key factor in the housing search process, becomes critical when locating rental housing in opportunity-rich areas. The Housing Choice Voucher (HCV) program accommodates low-income households searching for housing and encourages recipients to reside in low-poverty areas. Affordable neighborhoods that are accessible to public transportation are often found in distressed areas, and not all HCV recipients succeed in locating qualified housing. To address these challenges, a housing search framework is developed to assist HCV households in the housing search process. This framework builds on the methodology of the U.S. Department of Housing and Urban Development (HUD) for the Location Affordability Index and Affirmatively Furthering Fair Housing assessment tool by creating multivariate indices that incorporate housing supply, accessibility to opportunity, and neighborhood conditions. The framework serves as a foundation for an online housing search application for public housing authorities to further fair housing goals, HCV recipients to locate qualified housing units, and local governments to assess affordability and opportunity.     

Transportation Access,Rental Vouchers,and Neighborhood Satisfaction: Evidence From the Moving to Opportunity Experiment

The Housing Choice Voucher (HCV) program is designed in part to expand the neighborhood choices of assisted households, thereby enabling assisted households to find a living environment that simultaneously meets their housing and neighborhood preferences. While several studies have examined the impact of rental subsidies on neighborhood satisfaction, few have examined whether access to adequate transportation enables HCV recipients to locate housing in more desirable locations. This article relies on data from the Moving to Opportunity experiment to examine the impact of transportation access, rental housing vouchers, and geographic constraints on neighborhood satisfaction. We find that access to both vehicles and public transit positively influences neighborhood satisfaction, and the influence of vehicle access varies with transit proximity. These findings point to the importance of transportation in helping low-income assisted renter households locate housing in more desirable neighborhoods.     

It’s Good but Is It Right? An Under-the-Hood View of the Location Affordability Index

In 2012, the U.S. Department of Housing and Urban Development (HUD) released the Location Affordability Index (LAI) as an online portal and downloadable data set. The LAI has elevated the U.S. conversation on affordability to include transportation and access to opportunities, and has been used in state and federal programming, by researchers, and by private households. However, although some researchers have noted concerns with and potential limitations of the data, none has provided practitioners and researchers with an under-the-hood view of the data, analysis of its reliability or validity, or its conceptual limitations. This article recommends methodological improvements dealing with issues of variable construction, aggregation, and modeling. A recreation of the LAI at the census-tract level suggests the LAI overestimates both costs and cost burden, but especially among renters, and especially in metropolitan areas. On the transportation side, model recreation requires partnership and resourcing to both gain access to restricted data and to develop a reliable database on transit supply and use.     

Moving to Location Affordability? Housing Choice Vouchers and Residential Relocation in the Portland,Oregon, Region

Abstract

Location affordability measures a household’s combined cost of housing and transportation. Low-income households have the most to gain from housing with lower transportation costs. This research analyzes whether Housing Choice Voucher Program households—participants in a program designed to provide low-income households with a greater degree of housing choice—are able to choose housing that lowers their transportation costs in a metropolitan region with a compact, vital urban core. A mixed-methods approach is used to investigate the differences in location affordability and efficiency among 2,026 voucher recipients who moved within the Portland, Oregon, region during 2012–2013. Location mattered to movers, but in some unexpected ways. Urban movers relocated to less location efficient areas, whereas suburban movers’ location efficiency remained stable. In tight housing markets, voucher holders may be edged out of location-efficient neighborhoods and thus incur increased transportation costs.     

Quality of Life,Transportation Costs,and Federal Housing Assistance: Leveling the Playing Field

Abstract

Federal housing subsidies are allocated without regard to spatial differences in the cost of living or quality of life. In this article, we calculate housing subsidy payments for participants in the Housing Choice Voucher (HCV) program and demonstrate that these subsidies are significantly related to metropolitan quality-of-life differentials. We then estimate amenity-adjusted subsidies and compare these estimates with data from the U.S. Department of Housing and Urban Development’s Location Affordability Portal. Our analysis yields three insights regarding the relationship between federal housing assistance payments (HAP), metropolitan quality-of-life differentials, and transportation cost burdens. First, HCV HAP show a strong inverse correlation with household transportation expenditures, and this is particularly pronounced for low-income households. Thus, HAP do not address location affordability because those living in high-transportation cost metropolitan areas receive the lowest housing subsidies. Second, we present evidence that HAP are positively related to metropolitan quality-of-life differentials. This suggests that high-amenity metropolitan areas also tend to be the most affordable from a transportation cost perspective. Third, our proposed amenity-adjusted HAP strongly reduce the inverse relationship between HAP and transportation cost burdens.     

Who Buys Foreclosed Homes? How Neighborhood Characteristics Influence Real Estate-Owned Home Sales to Investors and Households

Abstract

This study examines the trajectory of real estate-owned (REO) sales in the Chicago metropolitan statistical area from 2009 to 2013, roughly the first few years of the housing market recovery. Using a data set of property transactions, it tracks property sales to investors and owner-occupiers, and examines the neighborhood characteristics that contribute to an investor’s decision to purchase an REO property. Neighborhood characteristics include social and physical variables as well as housing and transportation affordability variables. Findings are consistent with previous studies in that investor activity is high in neighborhoods with higher proportions of African American and older residents. In addition, investors are more likely to purchase homes in neighborhoods that offer more affordable transportation options. Our findings can help planners identify areas where they may need to target programs that help reduce barriers to REO sales, particularly to owner-occupiers. By understanding the neighborhood-level determinants of REO dispositions, planners can help promote an equitable recovery and affordable homeownership for low- and moderate-income families.     

Hidden Costs and Deadweight Losses: Bundled Parking and Residential Rents in the Metropolitan United States

There is a major housing affordability crisis in many American metropolitan areas, particularly for renters. Minimum parking requirements in municipal zoning codes drive up the price of housing, and thus represent an important potential for reform for local policymakers. The relationship between parking and housing prices, however, remains poorly understood. We use national American Housing Survey data and hedonic regression techniques to investigate this relationship. We find that the cost of garage parking to renter households is approximately $1,700 per year, or an additional 17% of a housing unit’s rent. In addition to the magnitude of this transport cost burden being effectively hidden in housing prices, the lack of rental housing without bundled parking imposes a steep cost on carless renters—commonly the lowest income households—who may be paying for parking that they do not need or want. We estimate the direct deadweight loss for carless renters to be $440 million annually. We conclude by suggesting cities reduce or eliminate minimum parking requirements, and allow and encourage landlords to unbundle parking costs from housing costs.     

Addressing the Affordable Housing Crisis for Vulnerable Renters: Insights From Broward County on an Affordable Housing Acquisition Tool

South Florida is experiencing an affordable rental crisis that is especially burdensome on those most vulnerable in society, low-income households. Rapid urbanization has resulted in inequitable land-use patterns that are a barrier to housing for the poor. As a solution to the crisis, local housing agencies seek to expand their affordable housing stock for vulnerable renters in opportunity-rich neighborhoods, but there is no standard framework for identifying properties for acquisition. Broward County serves as a case study to develop a housing acquisition tool. Using a combination of spatial statistics and principal components analysis, neighborhoods in which housing agencies may consider acquiring property are identified through the creation of an affordability surface in ArcGIS. Affordability is overlain by an opportunity surface derived from neighborhood quality and accessibility rankings. The results identify neighborhoods in Broward County that are both affordable and opportunity-rich, to better serve the county's most vulnerable renters.     

Last in line: Housing assistance for households with children

Abstract

This article examines the relationship between receipt of different types of rental housing assistance and housing outcomes for households with children. We rely on the 1989 American Housing Survey (AHS) and a special data supplement that attempted to accurately categorize every assisted renter‐occupied address in the AHS sample as either public housing; privately owned, federally assisted housing; or certificates and vouchers. Housing outcomes examined are physical condition of the unit, crowding, affordability, perceived neighborhood quality, and crime. We analyze three research questions: (1) Do the characteristics of households enrolled in housing programs differ by program type? (2) Do housing outcomes differ with the type of assistance received? (3) Do differences in household characteristics account for observed differences in program outcomes?

The analysis suggests that the housing assistance system channels different types of households with children into different housing programs. The least disadvantaged households are most likely to end up in privately owned assisted stock, while the most disadvantaged end up in public housing. The most notable interprogram difference in housing outcomes relates to neighborhood quality. In contrast to other forms of rental assistance, residence in public housing is associated with a decline in neighborhood quality. This result holds even after controlling for household characteristics and geographic location of the unit.     

Transit-Induced Gentrification: Who Will Stay,and Who Will Go?

Abstract

Transit-oriented development (TOD) has been promoted by planners and policy advocates as a solution to a variety of urban problems, including automobile traffic congestion, air pollution, and urban poverty. Since the enhanced accessibility offered by transit proximity is often capitalized into land and housing prices, many express concern that new transit investments will result in the displacement of the low-income populations likely to benefit most from transit access, a phenomenon which we term transit-induced gentrification. Whereas policy advocates have proposed a variety of interventions designed to ensure that affordable housing for low-income households is produced and preserved in areas proximate to transit stations, little is known about the effectiveness of these policy proposals. This article relies on an integrated land use/transportation model to analyze how TOD-based affordable housing policies influence the intraurban location of low-income households. We find that affordability restrictions targeted to new dwellings constructed in TODs are effective tools for promoting housing affordability and improving low-income households’ access to transit while simultaneously reducing the extent of transit-induced gentrification.     

How Affordable Is HUD Affordable Housing?

This article assesses the affordability of U.S. Department of Housing and Urban Development (HUD) rental assistance properties from the perspective of transportation costs. HUD housing is, by definition, affordable from the standpoint of housing costs due to limits on the amounts renters are required to pay. However, there are no such limitations on transportation costs, and common sense suggests that renters in remote locations may be forced to pay more than 15% of income, a nominal affordability standard, for transportation costs. Using household travel models estimated with data from 15 diverse regions around the United States, we estimated and summed automobile capital costs, automobile operating costs, and transit fare costs for households at 8,857 HUD rental assistance properties. The mean percentage of income expended on transportation is 15% for households at the high end of the eligible income scale. However, in highly sprawling metropolitan areas, and in suburban areas of more compact metropolitan areas, much higher percentages of households exceed the 15% ceiling. This suggests that locational characteristics of properties should be considered for renewal when HUD contracts expire for these properties, based on location and hence on transportation affordability.     

Untangling Housing Cost and Transportation Interactions: The Location Affordability Index Model—Version 2 (LAIM2)

Abstract

It is now accepted that to have an understanding of housing affordability one must consider not only housing costs, but also the transportation costs associated with that household location. To make this information readily accessible to the public, the United States government created an Internet resource, the Location Affordability Portal – Version 2 (www.locationaffordability.info), to provide housing and transportation costs for every neighborhood in all 50 states and the District of Columbia. Although the statistical model at the heart of this resource was designed for predictive accuracy, its design and parameter estimates can provide additional insights into the interaction of housing cost and transportation choices (and thus its cost). This study describes the development and explores the policy implications (and limitations) of this structural equations model, the Location Affordability Index Model – Version 2 (LAIM2).     

Preserving Neighborhood Opportunity: Where Federal Housing Subsidies Expire

Abstract

Rent burdens are increasing in U.S. metropolitan areas while subsidies on privately owned, publicly subsidized rental units are expiring. As a result, some of the few remaining affordable units in opportunity neighborhoods are at risk of being converted to market rate. Policy makers face a decision about whether to devote their efforts and scarce resources toward developing new affordable housing, recapitalizing existing subsidized housing, and/or preserving properties with expiring subsidies. There are several reasons to preserve these subsidies, one being that properties may be located in neighborhoods with greater opportunity. In this article, we use several sources of data at the census tract level to learn how subsidy expirations affect neighborhood opportunity for low-income households. Our analysis presents several key findings. First, we find that units that left the project-based Section 8 program were – on average – in lower opportunity neighborhoods, but these neighborhoods were improving. In addition, properties due to expiry from the Section 8 program between 2011 and 2020 are in higher opportunity neighborhoods than any other subsidy program. On the contrary, new Low-Income Housing Tax Credit (LIHTC) units were developed in tracts similar to those where LIHTC units are currently active, which tend to be lower opportunity neighborhoods.     

The housing and neighborhood conditions of America's children: patterns and trends over four decades

This paper uses national and metropolitan area data from American Housing Surveys over four decades to examine the patterns and trends in the housing and neighborhood circumstances of children. Children across the income distribution have experienced dramatic improvements in the physical adequacy of their dwellings and in crowding but significant deterioration in housing affordability. Poor children are often in greatest jeopardy, with the rate of complaints about crime 25 percent higher in 2005 than in 1975, and the rate of school complaints twice as high in 2005 than 1975. Poor children also experience little payoff from residential mobility in terms of physical dwelling adequacy, crowding, affordability, or adequacy of schools, though moves are associated with fewer complaints about crime. However, it is the near poor – those between 101–200 percent of poverty – and not the poor who appear to be most affected by the tightness or looseness of the housing market.     

Beyond Neighborhood Quality: The Role of Residential Instability,Employment Access,and Location Affordability in Shaping Work Outcomes for HOPE VI Participants

Abstract

This article examines the relationship between neighborhood quality, residential instability, employment access, location affordability, and work outcomes among individuals relocated as part of the Boulevard Homes HOPE VI redevelopment in Charlotte, North Carolina. We found that, contrary to expectations, relocation to private-market units with vouchers, as compared with public housing, did not always result in better neighborhood outcomes. Whereas voucher holders relocated to better quality neighborhoods, relocatees who moved to other public housing lived in neighborhoods with better employment access and lower costs. We also found a positive correlation between locational affordability (housing + transportation costs) and work outcomes.     

How Vehicle Access Enables Low-Income Households to Live in Better Neighborhoods

ABSTRACT

Transportation influences residential location choices generally, but low-income households often face unique constraints because of a lack of access to automobiles. This article examines how vehicle access influences the type of neighborhoods in which low-income households are able to secure housing following a move to a new neighborhood. We rely on data from the Moving to Opportunity program to estimate locational attainment models, including a wide range of variables capturing various dimensions of neighborhood opportunity. Our findings suggest that auto access enables low-income households to secure housing in neighborhoods that exhibit a wide range of positive neighborhood attributes, including lower poverty rates, lower housing vacancy rates, higher median household income, higher labor-force participation, and higher adult high school graduation rates.     

The Reconcentration of Poverty: Patterns of Housing Voucher Use, 2000 to 2008

In theory, housing choice vouchers provide low-income families with increased neighborhood options. However, previous research is mixed regarding whether the program promotes integration. Examining the 50 most populous U.S. metropolitan areas, I find that households using vouchers are more economically and racially segregated than an extremely low-income comparison group. However, voucher households in areas with source-of-income protection laws are less racially segregated than voucher households in areas without such laws.     

Rental Housing Assistance and Health: Evidence From the Survey of Income and Program Participation

Interest in the health impacts of renter housing assistance has grown in the wake of heated national discussions on health care and social welfare spending. Assistance may improve renters’ health by offering (a) low, fixed housing costs; (b) protection against eviction; and (c) access to better homes and neighborhoods. Using data from the Survey of Income and Program Participation and econometric analysis, I estimate the effect of receiving assistance from the public housing or Section 8 voucher programs on low-income renters’ reported health status and spending. Assisted renters spent less on health care over the year than unassisted low-income renters did, after controlling for other characteristics. This finding suggests that assisted housing leads to health benefits that may reduce low-income renters’ need to purchase health services. Voucher holders’ lower expenditures are influenced by their low, fixed housing costs, but public housing residents’ lower expenditures are not explained by existing theory.     

Introduction to session 2: Magnitude of the crisis: The fiscal and human costs

Abstract

Many are looking to California and its state housing law for advice on how to deal with the affordability challenges affecting many metropolitan areas throughout the nation. It is thus critically important to go beyond the laws themselves and examine how state and municipal governance structure affects affordability, supply, and production. Some states give broad freedom to localities to develop policies that can potentially meet a range of goals and objectives. Others directly undermine those efforts by limiting local ability to pursue policy reforms while simultaneously failing to engage on the state level.

The redefinition of federalism on the national level, coupled with continued resistance to growth from some localities, establishes the state as at least an equal partner in dealing with housing supply and affordability issues. Understanding these distinctions is important, and the housing community needs to take them into account as it moves on the state front.