Windfall or Burden? Two New Reports Focus on "Location Efficiency" and the Real Cost of Housing

Both Transform and the Urban Land Institute have recently released reports that look at the Bay Area from a perspective NRDC has been pushing in the public arena for some time: “location efficiency.”  Just as appliances can be more or less energy efficient, homes and businesses can be more or less location efficient, depending on where they are.  If you need to drive 10 miles for a gallon of mile, you’re not location efficient. If you can walk down the block for your milk and hop on a bus to get to work, you are.

We know that location efficiency has tremendous environmental benefits (if you’re interested in more, check out this post), but what these two reports tell us is that the way we develop has serious economic implications for American families. 

In most people’s minds, what makes housing affordable is how much it costs.  What the reports reemphasize is that we need to not only look at the cost of the housing, but the cost of everyday transportation to and from the house, when determining whether a home is affordable enough.  

Transform’s Windfall for All: How Connected, Convenient Neighborhoods Can Protect Our Climate and Safeguard California’s Economy covers the basics:  Transportation expenses tend to be highest for Bay Area households in areas without transit, while neighborhoods with very good access to transit spend significantly less (39% less, in fact) on transportation each year.  These households not only drive fewer miles (which saves money), but they own fewer cars, which is where I imagine the bulk of the savings comes from.  If we can expand transit service or create more compact communities near existing transit, there’s a huge potential to save households money. 

ULI’s Bay Area Burden, Examining the Costs and Impacts of Housing Transportation on Bay Area Residents, Their Neighborhoods and the Environment, provides even more information, offering detailed analysis of the Bay Area with respect not only to housing and transportation costs, but to area median incomes.  Some interesting bits:

• On average, Bay Area household spend 59% of their income on housing and transportation (H + T), but this percentage varies by what county people live in, and accordingly the contribution of each element varies.  For example, Alameda County residents pay 61% of their income in H + T, while San Franciscans pay 58%.  Sure, housing is more expensive in San Francisco, but transportation is more expensive in Alameda County.

• When H + T costs are compared to median incomes, some staggering facts come to light.  For example, even with relatively low housing and transportation costs, Oakland residents pay 69% of their income on H + T, due to their lower median income.  In Berkeley? 77%.  East Palo Alto? 75% In the small East Bay town of San Pablo?  81%!!

Both reports encourage better regional planning and more coordination between land use and transportation planning.  SB 375, the bill NRDC co-sponsored last year, is pointed to by both reports as the best vehicle for so doing. 

SB 375 is known primarily as America’s first legislative effort to link land use, transportation, and greenhouse gas emissions. What’s perhaps less well known is that it puts housing affordability into the equation as well (which was why it was supported by affordable housing advocates). These reports contribute to the already large body of study telling us that this is the way we need to go. The stakes are high not just for the environment, but for the economic livelihood of American families.