As I discussed in my December 17 post, I am starting a series of quarterly blogs discussing trends and key data from the 2016 Change in Motion Report. This is the first in that series.
Did you know that homes near jobs, shopping, and downtown areas tend to be more expensive, but lower transportation costs can at least partially offset higher mortgage and rental rates? Similarly, homes in the suburbs are usually more affordable, but are further from jobs and other amenities, so more of a person’s income is spent on transportation to get to and from work, school, and shopping.
Nationally, housing and transportation costs combined take up more than half of the average household’s budget; however, most home buyers and lenders only look at housing costs when deciding what they can afford.
Communities in Motion 2040 sets goals for the cost of housing (alone) as percentage of household budget (housing affordability index) and housing and transportation (combined) as a percentage of household budget (location affordability index).
The maps to the right show what a significant difference the addition of transportation to housing costs can make. The green areas are the most affordable and the red areas are the least. As you can see, when looking at housing alone (right), much of the valley is green, yellow, or light orange – on the more affordable side of the spectrum. However, when you look at housing plus transportation (below), you’ll see virtually no green or yellow and significantly more red and dark orange as compared to housing alone.
Our 2016 Change in Motion Report compares housing and location affordability index data for 2013 and 2015 to 2040 goals. While two data points do not constitute a trend, we do see some interesting results.
For housing alone (housing affordability index), we appear to be on track. In both 2013 and 2015, housing accounted for an average of 27.8% of household budgets in the two counties. The goal is to remain under 28%.
However, for housing plus transportation (location affordability index), we appear to be slipping. The 2040 goal is for the two expenses combined to take up less than 50% of the household budget. In 2013, the region averaged 49.1%, but by 2015, this had increased to 53.3% -- not only moving in the wrong direction, but exceeding the goal of less than 50%.
So….why does this matter?
First, we must remember that we are only looking at a change between 2013 and 2015; as I said above, two data points do not constitute a trend. We will continue to monitor the data to determine if location affordability is truly decreasing in the Treasure Valley.
Regardless of the trend, why are we monitoring housing and location affordability in the first place? First, they impact our transportation system. When people live far from their jobs, it increases the pressure on our transportation system. Second, it affects the quality of life of our residents. Higher housing costs mean less discretionary income, and longer commute times mean less time with family. By monitoring these types of trends, we can make decisions to ensure we retain the high quality of life the Treasure Valley is known for.
In the end, isn’t that what long-range planning is all about?