Living in sprawl cost thousands extra per year

There’s no getting around the fact that it generally costs more to live where you have to do a lot of driving than it does in a “location-efficient” neighborhood — one that offers easy access to transit, jobs, and amenities.

The latest figures from the Housing + Transportation Affordability Index, the nation’s most comprehensive assessment of housing and transportation costs, show that the difference between living in a compact, well-connected place and living in sprawl rose significantly between 2000 and 2009.

Transportation costs increased by $1,400 a year for the typical household in a location-efficient neighborhood. They jumped by approximately $3,900 in locations heavily dependent on driving. The difference in transportation cost between neighborhoods where things are easy to get to and places that are more isolated grew by about $200 a month.

The figures were made public in late February when the Center for Neighborhood Technology (CNT) expanded the H+T Index to cover 874 metropolitanand “micropolitan” areas, encompassing 89 percent of the US population.

To get a deeper understanding of the situation, Better! Cities & Towns asked the Center to break out figures for 20 representative areas across the country. CNT did so, organizing the findings into three categories: households in locations that are the most transportation-efficient (one-seventh of the total); households in the one-seventh of locations that are least efficient; and the one-seventh of locations in the middle (those labeled “moderately location-efficient”). You can see the figures in the accompanying table.

The following findings stand out:

• In each of the 20 metro areas, the combined cost of housing and transportation goes up substantially as you move from places that are the most location-efficient to those that are the least efficient (from a transportation standpoint).
• Combined housing and transportation costs consumed between 33 and 51 percent of the area median income in the most efficient neighborhoods of the 20 metro areas. In the least efficient parts of those metro areas, by contrast, the combined housing and transportation expenses were far higher — 50 to 75 percent of the area median income. This attests to the heavy and growing burden of living in a place where everydayneeds are not close at hand or available through a good transit system.
• The cost disparity showed up in metro areas both large and small. In greater New York, average combined housing and transportation costs in the most location-efficient neighborhoods amounted to 34.4 percent of the area media income. They registered at 46.16 percent in the moderately location-efficient neighborhoods, and at 65.8 percent in the least efficient neighborhoods. In Grand Rapids, Michigan, the combined costs similarly rose across that spectrum — from 45 percent to 55.19 percent to 59.27 percent.
• In a few of the smaller metro areas, the pattern was less consistent. In Asheville, North Carolina, the expense burden went from 46.13 percent in the most-efficient locations to 59.51 percent in the moderately efficient locations, but eased slightly, to 55.87 percent, in the least location-efficient places. Nonetheless, in every one of the 20 metropolitan areas, the combined housing and transportation cost was higher in the least efficient locations than in the most efficient neighborhoods.
• Transportation costs can be remarkably low in the most efficient neighborhoods of big cities. The least expensive of the 20 metro areas in terms of transportation is New York, where the average annual transportation costs are just $5,053 in the most location-efficient neighborhoods. This may reflect the fact that people can walk, bike, or take a bus or the subway to many New York destinations. In Asheville, a family living in one of the most efficient neighborhoods pays $7,500 more a year for transportation than does the average family in an efficient New York location. The Asheville family also pays about $4,300 more a year than does a family in an efficient Boston or San Francisco neighborhood.
• The presumably lower cost of housing at the periphery of a region isn’t enough to offset the higher cost of transportation for the households living there. In fact, housing isn’t necessarily cheaper in the most car-dependent sections of metropolitan areas, according to the H+T Index.

The index shows that in 17 of the 20 metro areas, average annual housing costs are higher in the least location-efficient neighborhoods than in the most location-efficient places. This contradicts the old saying among homebuilders: “Drive till you qualify.”

How can this be? Peter Haas, CNT’s chief research scientist, says there could be several factors at work:

1. In a weak urban core, demand may be weak. Those with the financial wherewithal to buy a nice house may be choosing to live on the outskirts. That seems to be the case in Cleveland and Detroit, he says, though those two cities are not in the list of 20. It may be true of many others.
2. The outlying areas may have better schools, which are a major draw for families with children.
3. Racial sentiments, especially white resistance to living in neighborhoods with sizable minority concentrations, may be pulling quite a few households away from cities and close-in suburbs.
4. It generally costs more to own a home than to rent an apartment, and if the location-inefficient areas have a higher percentage of homeowners, that would tend to raise the housing costs there.

Another possible explanation: Many urban housing units are old and may lack features that today’s home-seekersdesire. Housing in the outlying areas may be newer and in better condition.

Combined costs strain finances

In any event, the combined costs of housing and transportation would seem to strain the budgets of many people in location-inefficient neighborhoods. The rule of thumb, said CNT President Scott Bernstein, is that people should not spend more than 30 percent of their gross Income on housing, and should not spend more than 45 percent of their income on housing and transportation combined. By the latter standard, the least-efficient places in all of the 20 selected metro areas are financially vulnerable, and so are all but one of the moderately location-efficient neighborhoods.

It should be pointed out that housing costs in the index are not based on current market values. Rather, they’re based on what the current residents are paying in housing expenses. Those expenses include mortgages written in earlier years, when house prices may have been lower — or higher. Many people who bought houses before 2008 paid more than their houses are worth now. This may also help explain why many of the outlying areas now register such high housing costs(measured against area median income); people are stuck with mortgages written when housing was booming and when prices were at the limit of what the residents could pay.

Despite the many questions that can be raised about the figures, the index upholds CNT’s chief point: that the impact of transportation costs and the potential savings from living in a location-efficient neighborhood should be weighed in the selection of a place to live. Haas says the most location-efficient neighborhoods tend to have smaller blocks, more frequent streets, higher housing densities, better access to transit, and a larger number of jobs nearby.

The index, in its latest iteration, covers nearly 180,000 neighborhoods. CNT says that between 2000 and 2009, approximately 86,000 of those neighborhoods became too expensive for the average family, given their combined housing and transportation expenses. Seventy-two percent of the nation’s neighborhoods are out of reach of families making the median income in their region.

Bernstein said the findings reveal the need for a change of direction: “Despite the clear benefits to people’s pocketbooks when living in location-efficient neighborhoods, we spent the first decade of the 21st century developing in location-inefficient places that put undue burden on household budgets, municipal offers, and the environment. ... We have to do better.”

The findings are extensively mapped at the index’s website, htaindex.cnt.org.