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HUD Launches Development of a National Housing and Transportation Affordability Index

Press Release

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Date:
Location: Washington, DC

The U.S. Department of Housing and Urban Development (HUD) today announced it has awarded The Manhattan Strategies Group, LLC and its subcontractor the Center for Neighborhood Technology (CNT) a $3.2 million contract to create a national Housing and Transportation Affordability Index. The groundbreaking index will provide potential homebuyers with a true estimate of both housing and transportation costs that can in turn help them make a more educated decision.

"Affordability is much more than just paying the mortgage, it involves other costs like transportation, gas, and utilities. The availability of a national affordability index will provide consumers better information about the true costs of a home by accounting for that housing's proximity to jobs, schools and other services. Our goal with the creation of this housing and transportation index is to provide American families with a tool that can help them save money and have a better understanding of their expenses and household budget," said Shaun Donovan, Secretary of U.S. Department of Housing and Urban Development.

Traditionally, affordability indices determined cost of living by factoring the percentage of a family's income devoted to housing and dividing the average housing costs by the median family income. Transportation, which is usually a household's second most significant expense, has not been part of this equation.

"Unfortunately, many people believe that in order to qualify for a mortgage they have to buy a house far away from their work. People may think they are saving money by buying a house that is cheaper, but the transportation costs could end up making their total costs more expensive in the long run," said Shelley Poticha, Director of the Office of Sustainable Housing and Communities at HUD.

According to a recent study of 28 metropolitan areas done by the Center for Housing Policy and CNT, the average household pays 27% of its income for housing and 20.2% of its income to transportation. For working families earning $50,000, these costs account for 57% of the household income.

"Manhattan Strategy Group (MSG) is pleased to partner with HUD to develop and test a Housing and Transportation Affordability Index Tool to build greater transparency into the true cost of housing," stated Shezad Habib, Director of MSG. "Over the next two years we will work collaboratively with HUD and our partner, the Center for Neighborhood Technology (CNT), to enable HUD programs, affordable housing and transportation practitioners, policy-makers, developers, and the public-at-large to make informed planning and land use decisions and investments. We commend HUD on this initiative which is aimed at helping local housing and transportation officials develop, implement, and improve the delivery of affordable housing in their jurisdictions."

"Transportation costs are the second largest expense in a household budget, but they are often not considered when people choose where to live or developers choose where to invest," said Kathryn Tholin, CEO of the Center for Neighborhood Technology (CNT). "The H+T Affordability Index helps make those costs transparent so people and policy makers can make more-informed housing choices and investment decisions. CNT is excited to work with the Manhattan Strategy Group to assist HUD in exploring how to incorporate this metric into its work."

The creation of a national housing and transportation affordability index will also help analyze the impacts of HUD programs on the combined cost of housing and transportation in HUD-supported communities and assess the feasibility of improving outcomes and making programs and policies more efficient. The contract announced by HUD will build upon previous work done in this research area, but also establish a peer review panel of federal and industry stakeholders. HUD is committed to ensuring a transparent and rigorous process of developing a national housing and transportation affordability index, and ensuring comprehensive input regarding potential policy applications.


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