How Affordable Is HUD Affordable Housing?

Abstract

This paper assesses the affordability of HUD rental assistance properties from the standpoint of transportation costs. HUD housing is, by definition, affordable from the standpoint of housing costs due to limits on the amounts renters are required to pay. However, there are no such limitations on transportation costs, and common sense suggests that renters in remote locations may be forced to pay more than 15 percent of income, a nominal affordability standard, for transportation costs. Using household travel models estimated with data from 15 diverse regions around the U.S., we estimated and summed automobile capital costs, automobile operating costs, and transit fare costs for households at more than 18,000 HUD rental assistance properties. The mean percentage of income expended on transportation is 15 percent for households at the high end of the eligible income scale. However, in highly sprawling metropolitan areas, and in suburban areas of more compact metropolitan areas, much higher percentages of households exceed the 15 percent threshold. This suggests that locational characteristics of properties should be considered by HUD when establishing eligibility for rental assistance subsidies.

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“…They also find lack of accessibility and viable public transit ultimately added to the financial challenges of the residents. In comparison, Hamidi, Ewing and Renne (2016) show that as urban areas become more compact and dense, transportation costs decrease, lowering overall household expenditures.…”

Are They Neck and Neck in the Affordable Housing Policies? A Cross Case Comparison of Three Metropolitan Cities in China

“…To work out solutions to housing affordability problems, the HUD, defines affordable housing as "the housing that costs no more than 30 percent of a household's monthly income." [4,25] In addition, HUD utilizes the indicator of Area Median Income (AMI), the median household income for a selected area, to determine whether households are eligible for some specific public programs [26,27]. Thus, affordable housing policy places a focus on low-income groups (<50% AMI) to moderate-income families (80% to 120% AMI) who are suffering from housing affordability problems [16].…”

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