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Housing Affordability Presentation


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Housing Affordability

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Housing Affordability Presentation

  1. 1. Housing & Transportation Affordability Index: A New Tool for Measuring the True Affordability of Housing Choice CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  2. 2. Presentation Overview Background and Purpose of the Index Model Overview and Methods Using the Model: Twin Cities Pilot Results and Implications for Individual Households Proposed Uses and Benefits CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  3. 3. Background & Purpose Affordability is about housing costs and other associated costs of living associated with location, especially transportation costs Due to development patterns and lack of transportation choice: Transportation is the 2nd highest expenditure after housing For working families, housing and transportation consume > 50% of household budgets Photo Credit: CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  4. 4. Background & Purpose While local housing costs are known, household transportation costs, by neighborhood, were not—until now. ---This new “Affordability Index” models transportation costs by neighborhood Knowing transportation costs provides another tool in the strategies to improve affordability for households; the Affordability Index helps to answer: Where to build or live? What to build? Who benefits, and by how much? CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  5. 5. Background & Purpose The H+T Affordability Index is based on the “location efficiency” research we began in 1994. The key findings were: Neighborhoods are “location efficient” when they have convenient and accessible transportation and include or are proximate to jobs, services, retail, schools, and other needs Households who live in “location efficient” neighborhoods--regardless of household size and income--own fewer vehicles and drive fewer miles, and therefore have lower transportation expenditures CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  6. 6. Background: Comparison of Location Efficient Value & H+T Affordability Index Location Efficient Value H+T Affordability Index Limited to 3 metro areas Validates LE study, but uses widely available data in order (San Francisco, L.A., Chicago) to easily replicate and update Used data sets that were Available for 42+ metro areas hard-to-get and very large (Vehicle odometer readings) Focused on economic implications of findings Difficult to calculate, replicate Explicitly links transportation Primarily one application: planning to housing mortgage underwriting, e.g. affordability Location Efficient Mortgage® CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  7. 7. Model Overview and Methods
  8. 8. Model Overview The H+T Affordability Index adds known housing costs to modeled transportation costs to identify the percent of income that households spend on “H+T:” Affordability = (Housing Costs + Transportation Costs) Income CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  9. 9. Reported Housing Costs The model uses existing values for housing costs: Home Ownership Costs: Census reported “Selected Monthly Owner Costs” Rents: Census reported “Gross Rents” CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  10. 10. Modeled Transportation Costs MODEL INPUTS 9 Independent Variables HOUSEHOLD “T” 7 Local Environment: COSTS: Households/residential acre 3 Dependent Variables Household/total acre Avg. block size in acres Model Auto ownership Transit Connectivity Index + Distance to employment centers Auto usage Job density (jobs per square mile) + Access to amenities Transit usage 2 Household Total Transportation Costs Household income Household size CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  11. 11. Independent Variables Variable Source Model Use Census 2000 Provides a measure of density which Households/ residential influences auto ownership and use acre Census 2000 Provides a measure of density which Households/ total acre influences auto ownership and use Census/ TIGER/Line® Block size contributes to walkability of the area, Average block size in which influences auto ownership and transit acres use FTA 1995 Bus Routes Availability and extent of transit influences Transit Connectivity Index Transit DB, transit agencies transit use 2000 Census Transportation Distance to nearby jobs influences auto Distance to employment Planning Package (CTPP) ownership and auto use centers Jobs and locations from Number of nearby jobs influences probability of Job density- jobs /sq.mi. CTPP 2000 working at the nearby employment center Service jobs in CTPP 2000 Access to services in walking distance Access to amenities influences auto use and ownership, as well as transit availability and use Census 2000 Influences auto ownership and use Household income Census 2000 Influences auto ownership and use Household size CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  12. 12. Dependent Variables Variable Source Modeled from independent household Auto Ownership Costs and local environment variables (vehicles per household) Modeled using the 2001 National Auto Use Costs Household Transportation Survey (annual miles driven per household) reported VMT fitted to the independent variables Modeled from independent household Transit Costs and local environment variables (rides per day) CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  13. 13. Model Mechanics Used multiple regression modeling to “fit” each dependent variable to the independent variables and then controlled for household size and income “Fit” Example for an Fit of HH Variable Controlling for Independent Variable Local Environment Variables Residual of Auto Ownership Residuals from Auto Ownership Residual ofSubtracting the Average 1.00 Household At 8 HH/Acres 1.00 Variable 0.50 auto ownership reduced by 1 car 0.00 0.00 Controlling for -0.50 Local Environment -1.00 Variables -1.00 0.00 10.00 20.00 30.00 Households /Residential acre 0.00 50000.00 100000.00 150000.00 Median HH Income Median Household Income CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  14. 14. Comparing Affordability Indices Where can a 3-person household earning 80% of the Twin Cities AMI afford to live? Considering Housing Prices and Considering Only Housing Prices Transportation Costs CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  15. 15. Model Summary The total transportation costs can now be: Mapped by neighborhood Combined with housing costs and mapped together by neighborhood Studied to see how development patterns and investments in transportation choice impact household transportation costs CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  16. 16. Using the Model: Twin Cities Pilot Results & Implications for Households
  17. 17. Background on the Twin Cities Developed around street cars and had one of the best systems in the country But transportation choice diminished with the demise of the street cars: Bus service declined and highway development and auto ownership flourished New growth areas “opted out” of transit tax, and low density development couldn’t support quality transit The result: By 2003: 50% of Twin City households spent > $9,200 on transportation, and 40% earned < $45,000 CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  18. 18. Monthly Transportation Costs Throughout the Region Midway, St. Paul: Farmington: $561/month $941/month $6,732/year $11,292/year How Transportation Costs Stack-up in Four Twin-City Communities $1,600 Monthly Transportation Costs auto ownership auto use transit $941 $1,200 $741 $715 $561 $800 $446 $400 $0 Farmington Fridley Midway Longfellow/ 7-County Seward Region Fridley: 7-County Region: $715/month $741/month $8,580/year $8,892/year CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  19. 19. Cost of Living in 3 Twin Cities Neighborhoods Household Budget for a Family of 3 Earning $56,690/yr Midway Neighborhood Fridley Neighborhood Farmington T = 16% of expenses T = 19% of expenses T = 24% of expenses CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  20. 20. Cost of Living in 3 Twin Cities Neighborhoods Single Person Household Budget Earning $16,830/yr Midway Neighborhood Fridley Neighborhood Farmington T = 37% of expenses T = 43% of expenses T = 54% of expenses CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  21. 21. Proposed Uses and Benefits
  22. 22. Proposed Uses Community Groups Use in campaigns for transit, community reinvestment, affordable housing, and smart growth Business Groups Common cause between community groups, government, and business for making better choices about development and public investment New tool for realtors and bankers to understand, market and capitalize on relative affordability of different neighborhoods CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  23. 23. Proposed Uses Transit Agencies Savings benefit to households could support requests for funding Determine the impact of service cuts Promote transit ridership with savings campaigns Government Agencies Legislate alignment between and across government jurisdictions: state, MPO, counties, cities Cost of living influences state housing plans and transportation investment decisions Support changes to local ordinances that would better support transit use, e.g., parking requirements, building heights, density, etc. CENTER FOR TRANSIT-ORIENTED DEVELOPMENT
  24. 24. Benefits of H+T Affordability Index Fosters Transportation Choice Lowers household transportation costs Increases job accessibility Reduces congestion Channels growth to transit-served areas Avoids road and sewer construction Builds Wealth For households, by lowering costs For regions, by reducing infrastructure costs and inefficient development patterns CENTER FOR TRANSIT-ORIENTED DEVELOPMENT