Housing Affordability is in the Mind of Observer

The release of a recent report by the Center for Housing Policy highlights one of the themes of this blog — what does housing affordability mean. The report, entitled “Losing Ground: The Struggle of Moderate-Income Households to Afford the Rising Costs of Housing and Transportation”, looks at the combined cost of housing and transportation as a percent of income in the 25 largest metropolitan areas in the U.S. In general, the report finds that housing and transportation costs since 2000 rose faster than the increase in income, creating greater burdens for moderate income households. Interestingly, by including transportation costs as well as housing costs, the report finds that the metro areas with the highest housing costs do not necessarily have the highest combined burdens. For example, New York, San Francisco and Boston “are some of the least affordable regions for local moderate-income households when just housing is considered but are among the most affordable when housing and transportation costs are considered together.”

Despite the Report’s focus on overall rising housing burdens, the Wall Street Journal (WSJ) focused on a different angle headlining its press coverage of the report “Despite Pricey Image, New York Affordable for Middle-Income Families”. The WSJ honed in on the report’s finding that middle-income families across the country could spend as much as 69% of their income on shelter and transportation while New York middle-income families spent just over 50% of income on housing and transportation. The WSJ coverage also emphasized that New York would be the fifth least affordable place to live based on housing costs alone but jumps to the 10th most affordable when housing and transportation costs are counted together.

Of course, there are several other caveats that need to be considered in evaluating this study. First, the metro areas considered in this study are defined by the Federal government and contain much larger areas than we would generally consider. The New York metro area, for example, contains portions of New Jersey, Pennsylvania, and Long Island which means that the overall transportation costs measured are much higher than they would be for New York City alone. In other words, housing burdens in central cities with effective mass transit systems, such as New York City, are much lower than indicated by the metro area data.

Looking just at housing costs as percentage of income, it is worth noting that nine of the 25 metro areas have housing burdens of 30% or more of income. Only one metro area has housing costs of less than 25% of income. As I have previously noted, housing costs as a percent of income are rising and the 30% percent standard which is often used to evaluate housing burdens is quickly becoming a relic of the past.

Finally, the Report makes the point that the overall reported numbers do not apply to specific neighborhoods within the metro areas. In New York, for example, we know that affordable housing for moderate-income families is much more prevalent in the outer boroughs than it is in the Manhattan core. It is equally true that such overall findings apply to all moderate-income households. Some households may choose to pay more than they need to for rent to obtain the benefits of location or housing quality.

                                             – Jack Freund, Executive Vice President, Rent Stabilization Association 

(Views and opinions expressed are those of the author and do not necessarily reflect the policy or position of the RSA.)


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