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"The “Housing + Transportation Index” and Fair Housing,"

by Philip Tegeler & Hanna Chouest July/August 2010 issue of Poverty & Race

With their comprehensive “Housing + Transportation Index,” The Center for Neighborhood Technology (CNT) has developed a useful tool for estimating the combined cost of housing and transportation—the two largest shares of most family budgets —for homebuyers in 337 metro areas. The index can be used to move land use and development decisions away from sprawl, and to inform individual family choices by emphasizing the transportation costs associated with lower-priced exurban homes.
However, the index is inappropriate as a tool for siting new low-income family housing. To be fair, CNT has indicated that it intends the index to be consistent with fair housing goals, but without a strong fair housing overlay, the index has the potential to (once again) steer low-income families into more segregated, higher-poverty neighborhoods. Such a use of the index would reinforce separate and unequal development patterns that are the opposite of smart growth.

The H+T Index does not reflect the true cost of housing location for low-income families:
For purposes of siting new assisted- housing units for low-income families, we agree that it makes sense to look not just at the cost of the housing, but also the other costs and benefits associated with a proposed location. In order to expand choice and access to opportunity, policymakers should consider all costs—not just transportation—in making location decisions. In particular, the overall costs of living in higher-poverty vs. lower-poverty communities should be considered.

Direct costs: Groceries
Research has shown that families living in poor neighborhoods pay more for the same groceries than those living in wealthier communities, due to a lack of large chain grocery stores in low- income neighborhoods, which leaves small stores lacking the range of products or the large economies of scale that help drive down prices at chain stores. Groceries can constitute a large portion of a low-income family’s household budget (one study suggests 17%). Thus, when calculating the cost of living in a particular neighborhood, ignoring increased food costs could lead to inaccurate assumptions about affordability.

Direct costs: Financial Services
Low-income residents living in disadvantaged neighborhoods pay more for basic financial services such as check-cashing, short-term loans, tax preparation and money transfers than higher-income households. A low-income family can spend thousands of dollars more in extra costs for these services, depending on the extent to which they use them and the types of services they use. These high-cost options are much more densely concentrated in disadvantaged neighborhoods, where prime lending institutions remain underrepresented.

Direct costs: Cars and Car-Related Products
While the H+T Index does account for transportation costs, it does not reflect the fact that many low-income families pay a higher purchase price for a car than higher-income families, and often pay higher insurance rates, depending on where they live. Low-income consumers can pay on average $500 more for the very same car than a higher-income person. Other car costs that are generally higher for low-income consumers living in cities include car loans and car insurance.

Indirect costs: Access to quality schools, employment, safe and healthy neighborhoods
Indirect costs, while difficult to quantify, are important to take into consideration when evaluating neighborhood costs and benefits. Indirect factors impacting the cost or “value” of a particular neighborhood include: graduation rates, resources, and overall quality of local schools; access to employment opportunities geared to individuals with a high school diploma or an associate’s degree; exposure to environmental hazards; exposure to crime; quality of health care resources in the community; availability of fresh foods; access to quality recreational facilities; access to different types of social networks; quality of local municipal services; and overall neighborhood health outcomes. When added up, these factors suggest that new low-income family housing be sited in lower-poverty, opportunity-rich communities. They are also a reminder of the need to dramatically improve services and outcomes for low-income families living in neighborhoods where the government has located low-income housing in the past.

Overall, the H+T Index provides a comprehensive tool that can be used to estimate the cost of housing in a particular neighborhood. However, because it does not take into account fair housing considerations and it misses many of the other costs associated with housing location, it should be used cautiously as a factor in siting low-income family housing. A better approach is proposed in a new report from the Urban Institute and the NYU Furman Center (cited in the p. 13 resources box). This report combines opportunity metrics with access to transit and walkability to show how low-income families can benefit from smart growth policies without being further marginalized.


Center for Neighborhood Technology, Penny Wise, Pound Fuelish: New Measures of Housing+Transportation Affordability (March 2010),

Annie E. Casey Fdn., Pursuit of the Dream: Cars and Jobs in America (2008), Initiatives/ FamilyEconomicSuccess/PursuitoftheDream.aspx

Vicki Been, et al., Building Environmentally Sustainable Communities: A Framework for Inclusivity, Urban Inst. and Furman Ctr. for Real Estate & Urban Policy (2010)

The Brookings Institution Metropolitan Policy Program, From Poverty, Opportunity: Putting the Market to Work for Lower Income Families at 20 (2006)

Jason Reece and Samir Gambhir, The Geography of Opportuinty: Review of Opportunity Mapping Research Initiatives, The Kirwan Institute (Sept., 2008).

Phillip R. Kaufman, et al., Do the Poor Pay More for Food? Item Selection and Price Differences Affect Low-Income Household Food Costs, (Food and Rural Economics Div., Economic Research Service, U.S. Dept.of Agriculture. Agricultural Economic Report No. 759, 1997)

Rachel Garshick Kleit, “Neighborhood Segregation, Personal Networks, and Access to Social Resources,” in Segregation. The Rising Costs for America at 237-60 (James H. Carr & Nandinee K. Kutty, eds., 2008)

Deborah McKoy & Jeffrey Vincent, “Housing and Education: The Inextricable Link,” in Segregation. The Rising Costs for America at 128 (James H. Carr & Nandinee K. Kutty, eds., 2008)

Fiona Scott Morton, et al., Consumer Information and Price Discrimination: Does the Internet Affect the Pricing of New Cars to Women and Minorities? Working Paper 8688, National Bureau of Economic Research (2001);

Claudia Williams, et al., Low-Income families’ Spending Patterns: Implications for Health Policy, Kaiser Commission on Medicaid and the Uninsured (2004).

Philip Tegeler is Executive Director of PRRAC.
Hanna Chouest is Law & Policy Fellow at PRRAC.

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