Affordable-housing advocates are calling on local and state governments in the country’s 25 largest urban areas to address the rapid rate at which housing and transportation costs have risen over the past decade.
According to the findings of the new report, “Losing Ground”, the combined cost of housing and transportation within those metro areas increased by 44 percent between 2000 and 2010, while household incomes rose 25 percent during that same period.
Most notable was the impact the increase in costs had for “moderate-income” households, or those earning between 50 percent and 100 percent of their area’s median income. According to the report, those households spent, on average, 59 percent of their income toward housing and transportation expenses.
“What this means is that people's [incomes] have not kept pace with housing and transportation costs,” said Jeffrey Lubell, executive director for the National Housing Conference’s Center for Housing Policy, which co-authored the report. “American households have really lost ground in their ability to afford their cost of place and have enough income left over to meet basic expenses for food, clothing, education, healthcare, etc.”
According to Lubell, cities that were rated as the least affordable for moderate-income households, such as Miami and Riverside, California, had a combination of both lower median incomes as well as high housing and transportation costs, which meant those expenses ate up a larger portion of earnings each month compared to other places where incomes were higher.
“The three most expensive places to live in absolute-dollar terms for moderate-income households are Washington D.C., San Francisco and Boston,” Lubell said. “But incomes in those places are also higher, so as a result, as a share of income, these three metro areas are among the most affordable.”
Chicago was ranked 13th in affordability among the 25 metro areas studied, with moderate-income households, those earning between $31,539 and $63,078 a year, spending 58 percent of their income toward housing and transportation costs. This was in spite of the fact the area was deemed one of the least affordable places to live, having the eighth highest average monthly housing cost at $1,204.
In fact, housing costs alone take up as much as 32 percent of monthly earnings for a moderate-income household pulling in an average of $3,726.
Chicago did however rank fifth when it came to transportation costs, which at $959 a month made up about 26 percent of a moderate-income household’s earnings.
Perhaps surprisingly, the report found that moderate-income households who owned their own home were burdened higher when it came to housing and transportation expenses than those who rent, with homeowners on average spending 62 percent of their income toward those costs compared to renters who spent 55 percent.
“Renters are less burdened primarily because rent is less expensive and they tend to be in places where they end up spending less in transportation and housing,” said study co-author Peter Haas, chief research scientist for the Center for Neighborhood Technology. “Those who own a home spend a lot more on housing than those who don’t.”
In terms of solutions to the problem, some of the recommendations provided in the report include increasing the amount of affordable housing near public transit and job centers in each metro area as well as regulatory reforms that would help cut the cost of new housing construction. Also recommended were improvements to public transit and expanding the availability of low-cost transportations options, such as more bike paths and car-sharing programs.
“Lowering the combined costs of housing and transportation means that we must preserve and expand affordable housing in places where transportation costs are low and demand for housing is high,” said National Housing Conference President and CEO Chris Estes. “This is going to be where transit is happening or where major job centers are, and so we really have to intervene in the housing market in those areas to make sure folks have opportunities to live there.”
Although not talked about within the report, the increasing costs of housing and transportation has had an even bigger impact on low-income households, some of which do not earn enough income annually to meet their housing and transportation needs.
According to the U.S. Bureau of Labor Statistics’ September 2012 Consumer Expenditure Survey, households with an average annual income of $10,074 after taxes in 2011 ended up paying more in housing and transportation than they reported earning that year, spending $8,771 for housing and $3,256 for transportation expenses.