The apparent high cost of living in a dense transit oriented neighborhood, measured mainly by the monthly cost of housing, is significant barrier to building support for density.

Yes, all this density is wonderful, but, as the NIMBY and naysayer will always say, “it’s too damn expensive.” The right response to that argument is, of course, to ask them a question: “compared to what?” Compared to driving every day, damaging lakes and streams with sprawling pavement, and changing the planet’s climate, density is a bargain, even a steal.

But when monthly rents seem high, those prices are the only number people can associate with new growth and change. Monthly housing prices become the sticker price of sustainability, and the shock associated with rents is one of biggest barriers (along with the perception that city schools are bad) to getting wider and deeper support of new growth in Seattle.

How do we account for all the other values lost and gained when new development changes a neighborhood? How does a policy that promotes more supply account for the loss of the corner store, support a neighborhood school, or offset somehow the noisiness of a healthy, vibrant neighborhood.

The answer, I think, is redefining how we measure affordability.

Today we have a wholly inadequate way to describe affordability. Nobody actually enters the housing market planning to spend exactly 30 percent of her monthly income on housing. A person, of any income level, in the housing market considers a number of factors along with price. Proximity to affordable day care, good schools, even having a yard are all things that get considered by someone in the housing market. But we don’t consider the price of those goods when we talk about affordability.

To paraphrase Shakespeare, there are more things to an affordable neighborhood, urbanists, planners, and housing advocates, than are dreamt of your measure of affordability. The Center for Neighborhood Technology (CNT) has already suggesting considering transportation costs when determining housing affordability.

Why not include a variety of essentials in calculating neighborhood affordability. Housing isn’t the only cost a person or family must assume. If other things cost less, then maybe housing can use a bigger share of income. One model for measuring housing affordability is the Residual Income Model which defines affordable as a price that once paid, still allows for the purchase of other important things, like food, child care, health insurance, and transportation (you can check out a presentation I did on the Residual approach and read this blog post written about the same time).

But why stop there? Redefining how we measure housing affordability could lead to an Urban Affordability Index, an even broader measure that could give a better and more accurate assessment of the costs and benefits to a family of living in the city.

Today there are many costs of living that are externalized. That big “free” highway people use to commute into the city for work, free day care from parents that live in the suburbs, the ability to walk to work and not own a car, are all examples of costs and benefits of place that we don’t adequately measure quantitatively.

An Urban Affordability Index could put a price on all those things, account for the dollars saved, and provide a better picture of what it truly costs to live in the city when compared to the alternatives. Putting those numbers together would be far more persuasive than the Residual approach all by itself.

Clearly such a measure would be far more complicated, even messy, to implement at first because of the number of different variables that would need to be considered. Clothing, food, and other items might make sense to include, but what about entertainment or child care. Considering the price of all those other things and whether they are essential enough to include in the measure would be a challenge. All those things would have to be considered, and regional differences in prices would have to be factored in as well.

The resulting measure, however, would help people making a decision about where to live figure out whether living in the city would be more affordable for them than living somewhere else. And policy makers could have a better set of options to implement policy changes to intervene where it would matter most in terms of making the city a transparently more affordable option. Here too, at first, the interventions would be complicated to devise and implement; but considering the bluntness of the current tools, it would be worth it.

And what if we found that living in the city really is more expensive? An Urban Affordability measure would allow us intervene more effectively, not just with housing subsidies, but increased supply of housing, reduced regulatory barriers, and more parks, and more and better schools in our densest neighborhoods. Making life affordable in the city is about much more than monthly housing cost compared with income; it’s about accurately telling the whole story of why city living can be a better deal for families.

43 Replies to “Time to Dream Big on Measuring Affordability”

  1. Yes, all this density is wonderful, but, as the NIMBY and naysayer will always say, “it’s too damn expensive.”

    (Bashes head against wall)

    Of course it’s too damn expensive! The NIMBY and naysayer won’t let us build as much of it as the market wants!

    We can navel-gaze all we want, but it won’t change the fact that if housing is too expensive the simplest solution is to build more housing.

      1. We already have an oversupply of that, as demonstrated by the relative prices of huge mansions in Snoqualmie Ride and small two-bedroom condos downtown.

      2. I think Bernie said earlier that downtown and downtown-adjacent units will be intrinsically more expensive disproportional to demand, because there’s a limited amount of space so close-in. That may be true, but the answer then is to densify other neighborhoods (both urban and suburban) and extend excellent transit to them, so that people will have “pretty good” places to go besides the downtown-adjacent neighborhoods. That may not give the same quality of life, but it would give a lot better quality of life than what’s currently available in Ballard, Othello, Renton, and Kent, one which would suit people who don’t want to pay the downtown-adjacent premiums.

  2. not only is transportation not considered when calculating affordability, but neither is the value side if the equation. What if paying 35% of AMI in proximity to walkable amenities is a better deal than paying 30% in the burbs.

  3. I’m not sure what you’re proposing. How will you fit free child care from suburban (grand)parents into an index?

    1. Agreed. It sounds more like Roger is advocating for a family budget than an index. With an index, you are necessarily constrained to a small number of commonly applicable variables which, to balance with usability, are necessarily insufficient to measure with high accuracy and precision, each individual’s costs.

      1. Well, a budget makes sense anyway. Why do we need an “index” to measure affordability anyway? Aren’t the only things measured prices which are all the same? I’m not entirely clear on this.

    2. That’s not really a factor because it’s equally possible the (grand)parents live in the city on a good bus line. The factors here are those that are intrinsically different between cities and (low-density parts of) suburbs. For instance, in cities there probably is a convenience store within walking distance and people typically do so. In suburban residential areas, you have to drive even to get to a convenience store.

  4. Let’s talk about the other side of “affordability”: the ability to earn enough money to buy what we need. For the last thirty years at least, the people of this country have been increasingly forced to borrow, at interest rates that were formerly illegal, the money we should rightfully have earned free and clear.

    When we have a clean, healthy labor union movement that can assure working people their fair share of the wealth they produce, and a medical care system that puts the health of our people ahead of the profits of private industry, and an education system that leaves people with first-world skills instead of third-world debts- it’ll be amazing what we can afford.

    Mark Dublin

      1. Yes. Look up student loans (now not dischargeable in bankruptcy!)

        It used to be, during the halcyon era of the 40s-50s-60s, that people could afford to go to a good college. Tuition was relatively low and could be paid for with blue-collar wages, which were relatively high. And college? Well, you didn’t necessarily need it.

        Now a college degree is treated as a prerequisite for many jobs which don’t really need it — credentialism. Meanwhile the price of college has skyrocketed to the point where only the children of the rich can afford it without massive loans. (Well, or the miniscule tiny minority so brilliant they can get full grants to cover the full costs.)

        And finally, median real wages have actually gone down since the 1970s.

        Basically, everyone who isn’t superrich has been screwed.

      2. And don’t get me started on our health care non-system, which is basically designed to bankrupt people *while* preventing them from getting health care. In the 1950s it hadn’t gotten this corrupt yet (though it was already on this path, headed this way).

      3. Basically, everyone who isn’t superrich has been screwed.

        Median household income for Washington in 2010 was $54,888. Median income 1980, $18,367; adjusted for inflation that’s $47957.99. Jealous much of the tiny minority so brilliant they can get full grants majority that’s competent enough to earn a median income? There should be a new feature on this blog to supplement the News Roundup, News From Lake New Urbana to cover the alternate reality where so many transit “advocates” live.

    1. The wealth has severely shifted toward the top since 1980. Boeing has been making billions in recent years but the workers aren’t getting a proportional share, and the same in other industries. The difference is the cash they would have had for a house, a car, and college education. The whole mid-century American Dream taught them that these things should be attainable. Of course, we can see smarter ways to fulfill them now with a non-detached house and a transit pass, but the general principle remains. It’s not “forced” in the sense that somebody put a gun to their head and made them take out a loan, but all the tax policies and union-busting have necessetated loans for even reasonable things, especially among those who could only afford even the smallest condo or cheapest car or community college only with a loan. And healthcare has become a major cost to those who have serious diseases and no insurance. When the hospital bills you $10,000 in installments, it’s essentially a loan even if it isn’t called that.

      1. “Income inequality aside, how much of that mid-century American dream was just floating on oil fumes? ”

        The “car in every garage” part.

        The rest of the mid-century American dream was fueled by the union movement and the elites’ fear of communist revolution. It would work just fine powered by solar energy.

      2. Good thing some of those Carter White House solar panels are gracing the Solar Science and Technology Museum in Dezhou, China. Nothing better to inspire the people’s workers with, especially after a bad fumble by your competition.

  5. It won’t work. All the variables that might go into your “Urban Affordability Index” will have varying priorities to the people in the housing market. School quality and daycare availability doesn’t matter particularly to people with grown children or young singles. Transportation costs depend upon where you’re trying to get to and how you intend to get there. Other things that people value like view or waterfront can’t be captured in such an index because they’re dependent upon the particular property you’re looking at.

    Most people when they’re looking for real estate need to figure out what their needs and priorities are, how much they’re willing to pay, how far and by what mode they intend to commute and all the variables that involve children, friends and family. Tools like Walkscore can help evaluate a neighborhood once you’ve norrowed down to a general location, but its value also depends upon how you value the ameneties included in the score.

    1. Even if a single index is too general, there’s room for several indexes targeting different kinds of families, or even partial indexes measuring just some variables. And yes, Walkscore may be the most useful index so far. Even if it’s not an exact guide, it’s good for vaguely determining which locations are worth a closer look.

  6. Individuals do take all these factors into account when they calculate the affordability of a residence. I know many people who live close enough to work to walk and don’t own a car. Those were big factors for them. But, of course I also know many people who live in houses in the ‘burbs and commute every day. These factors should certainly be used to entice people into high density properties, but I don’t know that any “index” is going to capture the tradeoffs.

    1. Well, I live in the largest walkable area I could find, and the closest to all the downtown bus routes, because those two factors are important to me. But I commute an hour to work on two buses because that’s the tradeoff. (At least it gives me a dedicated time to read.)

  7. I do not understand the premise of this blog most days. Is it to discuss the challenges and goals of the transportation system we have or is it to demonize the suburban dwellers and their lifestyle. If it was such a terrible way to live, the other 2/3rds of residents in the Seattle/Tacoma/Bellevue/Everett Metro area wouldn’t live there. While I’ll agree that individuals that drive 30 miles in traffic each way to a job in Seattle where they have to pay $15 to park their SUV need a bit of a reality check, its unreasonable to expect everyone to sell their car tomorrow and move from a nice home in the burbs into a smaller condo in the city. That too is reality, people live in the burbs because they want to and could just as easily accuse those that live in Seattle and commute to Microsoft or other eastside businesses as being just as short sighted when it comes to choosing where to live etc.
    ST just put out their Draft 2013 SIP and I saw nothing on this blog about it. There are a few major changes and several routes performing marginal at best. I think there could be some really great discussion about how to improve those routes WITHOUT bashing the park and rides they connect.

    My 2 cents.

    1. Chop, chop all you unpaid volunteer bloggers! You should have taken time off to speed read through 200 pages of info and hammer out a thoughtful blog post by now!

    2. “I’ll agree that individuals that drive 30 miles in traffic each way to a job in Seattle where they have to pay $15 to park their SUV need”…

      …their head examined.

    3. Most of the substance of this sort of post is not bashing suburbanites (although commenters sometimes do), it’s complaining that the suburban lifestyle is given unfair advantages when compared to the city lifestyle. Those include:

      – Land use rules punishing market-desired density
      – Allocation of transportation resources that is poorly correlated with actual use or demand, usually in favor of suburban users
      – Excessive deference to existing residents at the expense of potential new residents who would bring economic growth

      I don’t think anyone has a problem with suburbanites. What you hear is resentment about how the above make city living unnecessarily difficult and expensive.

    4. Some people in the suburbs want a house with a large yard, and they enjoy driving everywhere, and they agree with The Brady Bunch that it’s the best way to live. But others would like to be able to walk more places or have better transit choices. They live in the burbs (or in low-density parts of the burbs) for a variety of reasons, not necessarily personal preference.

      Many of them think walkability was completely erased in the 1960s and can never come back. Of course they know it exists in New York City or downtown Seattle or a Bellevue skyscraper, but they can’t afford those sky-high prices or they don’t want that much density.

      The point is twofold. First, the demand exceeds supply for medium-density neighborhoods like Capitol Hill with great walkability and transit (or at least what passes for great transit in Seattle). The demand is shown in the rent premiums, and have been for thirty years. We can’t put everybody in Capitol Hill but we can upgrade neighborhoods elsewhere so that there’s not so much pressure to move to just a few neighborhoods.

      The second point is, better walkability is possible in the suburbs without turning them all into Crossroads. The reason walkability is so bad is government policies over the past sixty years. Single-use zoning, cul-de sacs, setbacks, one- or two-story limits, schools with an attached stadium, large surface parking lots with the stores behind them; all these have made the suburbs pedestrian-hostile and hard to serve by transit. The mid-century change is so old that many people have never experienced anything different, or think that walkable suburbs are forever gone, but that’s not true. It just takes a change in priorities. The “streetcar suburbs” of the 1920s are the best examples we have. For instance, one principle is that houses should be within walking distance of a store, a post office, and a school. Another is that houses should be arranged close to main transit streets, not hidden behind cul-de-sacs. Another is that mandatory setbacks create dead space, which may be worthwhile in some cases for gardens, but is excessive when every building is set back. Some of these can’t easily be changed; i.e., we’re not going to be bulldozing down. But some features can be changed, as when a block is being redeveloped anyway or a new school is built or remodeled.

      1. Streetcar suburbs are awesomely nice. Even when the streetcars have been removed, but they’re even nicer when the streetcars are still there.

        Of course, there are so few of those left now, that they have become very expensive; they’re so attractive that rich people preferentially live in them.

    5. “goodluck,” this blog is only tangentially about transit. Its main purpose is to pump out propaganda for the real estate shysters.

  8. Too expensive compared to what? Compared to earlier times. In 1950, the average household spent about 22% of their income on housing. Today it’s about 43%.

    1. This, right here, is spot on. Cost of living has skyrocketed while wages have remained stagnant. The cost of a SFH in the city far exceeds what you can find in the suburbs, and if you have kids SFH is your real only option, as no one builds 3 and 4 bedroom apartments in Seattle outside of the U District.

      1. A quick search at apartments.com turns up 124 3 bedroom and 55 four bedroom apartments for rent today everywhere from Lake City to Downtown to Greenlake. For reference only 53 studio apartments.

  9. Put me down as one who thinks this is a great post. I went through a process similar to what Roger Valdez outlined while deciding where to live. (I am a single man, no kids who works downtown). My conclusion was that the high cost of purchasing a condo in the downtown area was more than offset by commuting costs, including the value of time. I have a 25 year old vehicle with less than 60k miles on it. Vehicle payments in the last 25 years–$0. Operating costs for commuting–minimal. Time spent commuting–difficult to quantify since I do not know where I would have purchased, so average time to walk to/from work/day–30 minutes.

    Just based on vehicle costs. I estimate I conservatively save about $6000 per year in costs. Based on a dozen years of this situation. Total savings is $72,000. Cost of living downtown was a one time cost of about $30,000.

    Yes, there are lots of other things to consider, but anyone that doesn’t at least look into affordability calculations is doing themselves a disservice.

    1. You did exactly what anyone buying real estate should do. You evaluated what’s important to you and the costs of your choices to make a decision. How exactly would your process have improved by having an “index” of affordability?

      1. The same way I used walkscore’s apartment finder to find my place? There are a lot of housing units out there. Having an index to narrow it down (like walkscore) can be quite useful even if in the final call I use my very specific needs to make the decision.

      2. An index would be useful by scoring options such as housing prices, transportation costs, and other items listed above. It’s along the same line as a Cosmo quiz or one of those dating website questionnaires. It won’t be the final answer, but it would be a useful tool to get people to really think about their options.

    2. The average commute time in Pugetopolis is around 30 minutes regardless of mode, so that’s one way to look at it. Unless you do something extraordinary like live a block from work, a 20-40 minute commute is probably inevitable. An hour starts pushing the boundaries of tolerability, and two hours is only a small number of people. So if a 30-minute commute is a given, the question becomes, which 30-minute commutes are more attractive than others, and how important is that factor compared to other factors (walkable neighborhood, house size, transit frequency, fixed locations like relatives’ houses or a few potential job sites, …).

      1. A 30-minute commute is not some kind of inevitable given, it’s just something people tend to choose or end up with. Plenty of people choose shorter commutes than that, plenty of people choose longer ones for various reasons, and plenty of people end up with longer commutes when their jobs move.

        Specifically when you’re looking at places to live, a 30-minute commute is far from a given. Commute times and modes will vary widely from one housing choice to another.

      2. By the time you’ve gotten to a bus stop and the bus arrives, or by the time you get your car out of the garage and get to the boulevard or freeway, ten minutes have already passed. It’ll be another ten minutes from the destination bus stop or freeway exit to your office door. So that’s 20 minutes already. That leaves ten minutes for full-speed travel, which will only get you to the next neighborhood or suburb (e.g., Wallingford to U-District on the bus, or Lake Hills to Redmond in a car). So already that’s 30 minutes for what most people would consider a “short commute”. Of course, there are really short commutes like a 10-minute walk or 5-minute drive, but that’s already shorter than average and not feasable for most people.

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