February 26, 2017 – More than half of the Tennessee communities where housing is currently considered affordable are actually unaffordable when transportation costs are factored in, according to new research from the Tennessee Housing Development Agency (THDA).
“Seven out of every 10 census tracts are considered affordable when you look at housing costs alone, but only about two out of every 10 census tracts would be considered affordable when transportation cost are included as well,” said Muhammad Yadudu, research advisor and author of THDA’s Transportation as a Key to Housing Affordability Issue Brief.
The effect is especially pronounced in rural areas of Tennessee and among low- to moderate-income households, according to the report.
The THDA Issue Brief explores a new definition of a “cost-burdened household” that includes monthly transportation costs in addition to monthly housing costs, as is recommended by the Center for Neighborhood Technology (CNT), a Chicago-based nonprofit focused on creating economically sustainable communities.
Under this model, the number of Tennessee census tracts where regionally typical households are cost burdened changes dramatically, from about 30 percent of the state to about 80 percent.
“A large number of areas currently deemed affordable to a regionally typical resident are not when viewed in the context of both housing and transportation expenses,” Yadudu said.
The new standard, as proposed by CNT and used by THDA in this report, considers a household to be “cost burdened” if it spends more than 45 percent of household income toward housing and transportation costs together. By the current standard, a household is considered “cost burdened” if it spends more than 30 percent of its total income toward housing costs alone.
“In rural areas of Tennessee, transportation costs actually eat up a larger percentage of the household budget on average than housing costs do,” said Yadudu. “Therefore, you see a large swing in rural areas when you include transportation costs.”
The report also find that median commuting times in the state have increased by 1.2 minutes over the past six years, translating into a loss of 15 million hours of productivity a year.
SOURCE: Center for Neighborhood Technology Housing and Transportation Index Data
“Transportation expenses have a big impact on low- to moderate-income families due to a greater scarcity of employment opportunities where they reside. This has important implications for housing and transportation policies that seek to improve access to affordable housing, as several traditional middle class households will be considered housing cost burdened when transportation cost is added to the determination of housing affordability,” said Yadudu.
Further, the report notes that income in Nashville is rising more slowly (+7.5 percent from 2010 to 2015) than rent is increasing (+20 percent). As a result, “challenges to housing affordability are starting to exert pressure on the finances of traditionally middle class households. For instance, firefighters ($40,410), police officers ($47,110), office and administrative support occupations ($36,810), and medical assistants ($33,400) will not earn enough to be immune from being considered housing cost burdened,” states the report.
The report includes descriptions of policy solutions implemented in other cities facing similar circumstances, including Transit Oriented Development (TOD) in Austin and Denver, housing and transportation agency partnerships in Atlanta, and improved “last mile” options in Atlanta and Dallas.
 The Regional Typical Household assumes a household earning the median income for the region, with the average household size for the region, and the average number of commuters per household for the region. https://htaindex.cnt.org/user-guide/