Moving Into Debt: Impacts of Housing Affordability and Transportation Access on Consumer Credit Outcomes

As housing costs in urban areas have risen sharply over the past decade, many residents face a difficult choice: remain in increasingly expensive central urban neighborhoods, or move to places on the suburban and exurban fringes that offer more affordable housing options but that are also more auto-dependent and located further from jobs and amenities. In addition to the direct costs associated with these tradeoffs between housing costs and transportation costs, decisions concerning where to move may also impact individuals via their reliance on consumer debt. This article examines the consequences of intra-regional moves for the consumption of mortgage and auto loan debt, focusing on the impact of neighborhood housing costs and spatial accessibility within large urban regions in California. Applying a two-stage neighborhood selection modeling framework to consumer credit panel data reveals the significance of suburban and exurban neighborhoods with low housing costs, which provide a crucial source of affordable homeownership for groups with limited access, but which also increase reliance on auto loans. These findings reveal an important consequence of the growing divides between urban and suburban housing markets, highlighting the possibilities—and risks—of using debt as a mechanism for overcoming regional affordability challenges.