Understanding Affordability to Improve Resiliency: Linking Housing Costs, Transport Costs and Foreclosures

Purpose - As mobility is inextricably linked to housing location, the relationship between transport costs and housing costs is a component of neighborhood-level economic condition and resiliency. A number of studies and policy tools have mapped combined transport and housing costs, but these largely rely on affordability thresholds of income-to-housing costs developed in the 19th century (Hulchanski). For example, the Housing + Transportation (H+T) Index displays location costs and defines neighborhoods above the thresholds as 'unaffordable' (CNT). Notably, the H + T Index and similar analyses do little to link these costs to neighborhood outcomes.Methodology - This study seeks to address this gap by using a regression model to evaluate the joint effect of housing costs and vehicle ownership costs on foreclosure rates.Findings and Limitations - The model reveals that both vehicle costs and housing costs are important factors in neighborhood-level foreclosure rates. In interpreting the results of the analysis it must be kept in mind that it is relevant for the neighborhood level not the household level, having some degree of aggregation. Further, high transport costs may be indicative of other spending behaviors that are the actual factors in increased foreclosure rates. Despite these limitations, the finding that transport costs are an important influence on foreclosure rates raises questions about what the true affordability ratio is for housing, and whether high housing prices and nontraditional mortgages can fully explain the dramatic rise in foreclosures.Value - The study has value for regional planners, providing evidence that transport planning and programs are an important component of neighborhood-level economic conditions, thus lending support to integrated programs. The findings can also help refine definitions of affordability so as to better align programs with policy goals. For the transport sector, the model could be used to assess benefits and costs of potential transport investments. For housing developers, the analysis suggests that marketing messages highlighting affordability could be enhanced by including information about transport costs.