Including Transportation Costs in Location Affordability

There is more to housing affordability than the rent or mortgage you pay. Transportation costs are the second-biggest budget item for most families, but it can be difficult for people to fully factor transportation costs into decisions about where to live and work.

According to a  joint report  from the Center for Housing Policy and the Center for Neighborhood Technology, housing and transportation costs rose faster than income during the 2000s, increasing the burden that these costs placed on already squeezed household budgets.

Differences in housing and transportation costs vary widely among different household types. The Location Affordability Index (LAI), developed by the U.S. Department of Housing and Urban Development (HUD), is a user-friendly source of standardized data at the neighborhood (census tract) level on combined housing and transportation costs to help consumers, policymakers, and developers make more informed decisions about where to live, work, and invest.  

Housing and transportation costs affects different households differently

Compare eight household profiles developed by HUD which vary by household income, size, and number of commuters and see the impact of the built environment on affordability in a given location while holding household demographics constant. 

The eight household profiles. *National Poverty Level for one individual in 2016 was $11,880.

Variables used in  HUD's calculations  include 24 measures such as:

    • average household size
    • median number of rooms per housing unit
    • monthly housing costs (mortgage/contract rent as well as utility and maintenance)
    • number of cars per household
    • median commute distance
    • percent of trips taken on transit
    • street connectivity and walkability

What percentage of income do these household types spend on housing and transportation costs?

National and California averages for each of the eight household types.

These households are spending a lower percentage of their income on housing and transportation in California than households nation-wide. California is really expensive, how can this be? A few reasons:

  • Wages and salaries are higher in California.
  • California has a higher share of renters than the rest of the nation, and renters generally have lower monthly housing costs once utilities and maintenance costs are factored in.

National Maps

A gallery of eight different web maps (one for each household profile) symbolized the same way for easy comparison. Click the "Interact with website" button to explore the maps. 


Compare the Same Location for Different Household Types

Median-Income Families vs. Single-Parent Families

The Location Affordability Index assumes that the Median-Income Family has the area's median income, and 2 commuters whereas the Single-Parent Family has 50% of the area's median income, and 1 commuter.

Compare the maps for median-income families and single-parent families side-by-side. Click the "Interact with website" button (top right) to explore the synchronized pop-ups. Use the search tool to compare a different city.

Compare the maps for median-income families and single-parent families side-by-side. Click the "Interact with website" button to explore the synchronized pop-ups. Use the search tool to compare a different city.

Notice that most neighborhoods are less affordable for the single-parent family than for the median-income family, due to a mix of different incomes, different housing costs, and different transportation costs.


Compare Different Locations for the Same Household Type

Now, for the same household type (Median-Income Family), let's compare some different cities: Phoenix, AZ (a very car-dependent and sprawled place) vs. in Washington, DC (a dense urban place with a high area median income and great transit options).

Consider some of the many differences:

  • Transportation costs (generally higher in Phoenix)
  • Area median income (higher in Washington: $93,804 vs. $55,227 in Phoenix)
  • Average size of house (generally bigger in Phoenix)
  • Differences in utility costs (hello, air conditioning bill in Phoenix!)

Household Profile: Median-Income Family of 4 with 2 commuters.

For a median-income family, these types of differences make most neighborhoods in Phoenix actually more expensive than most neighborhoods in Washington!

Compare two locations of the same map (location affordability for median-income families): Phoenix, AZ vs. Washington, DC. Use the search tool to compare different cities.


Why Are Large Cities Perceived as Unaffordable?

There's a big difference in the percent of income needed for housing and transportation for households who own vs. households who rent. This difference is especially true in large cities. Let's take a look:

Story Map Series

The fact that households who own have to spend a much larger share of their income on basic housing and transportation needs than households who rent in these large cities may be forming the popular perception that these areas are so "unaffordable" - they're more affordable for renters than for owners.

The national renter rate has been increasing over the last decade:

Source: U.S. Census Bureau's American Community Survey 1-year estimates, Table DP04.


Promising Approaches to Improve Location Affordability

There are multiple, promising approaches available to local and state governments to help reduce the combined costs of place to more manageable levels, specifically for moderate-income households. According to a  report  from Reconnecting America, a few options centered around location-efficient areas (job centers, public transit stations, and other places where transportation costs are low) include:

  • Preservation of existing affordable homes in location-efficient areas
  • Regulatory reforms that reduce the cost of creating new housing in location-efficient areas
  • Incentives or requirements to include affordable housing within new development in location-efficient areas
  • Capturing a portion of the value generated by public investments in location-efficiency to and using it to support affordable homes in these areas
  • Improvements to transit service and walkability for compact areas where housing prices are already relatively affordable so residents can rely less on autos. 

Appendix: What's Missing from this Index

Data Limitations According to HUD

Some qualitative factors the Index does not take into account: quality/condition of housing stock, school quality, public safety, and natural amenities (e.g. a view of or proximity to a beach, river, forested trails).

A major quantitative factor not covered by the model is housing subsidies, either through the Mortgage Interest Tax Deduction or any form of rental assistance.

The models for autos per household, annual vehicle miles traveled, and percent of commuters using transit also omit common subsidies for transit and parking costs.

The transportation cost model also does not account for the value of time spent travelling. This is difficult to capture for at least two reasons. First, people value their time differently. Second, different travel types (e.g. commuting versus driving to the beach) and modes (e.g. driving versus biking versus taking the bus or subway) produce qualitatively different experiences whose values would be impossible to generalize.

Finally, the transportation cost model does not take into account the rising prevalence of telecommuting.


If you would like to do your own GIS analysis, a  feature layer  for this Location Affordability Index is available in the ArcGIS Living Atlas of the World.

Build a customized comparison app using Esri's suite of  configurable apps .

Thanks to Julianne Amores (intern during summer 2019) for assistance with the graphics for this project.

The eight household profiles. *National Poverty Level for one individual in 2016 was $11,880.

National and California averages for each of the eight household types.

Household Profile: Median-Income Family of 4 with 2 commuters.

Source: U.S. Census Bureau's American Community Survey 1-year estimates, Table DP04.