Amilda Dymi
Emerging market initiatives, long-term housing goals set forth by the Bush administration and data showing a growing affordable housing demand indicate that industry efforts to attract new business in 2005 will be challenged by factors such as changing immigration trends, average housing wages and transportation costs.
Experts say a combination of personal preference and economic factors nationwide, such as the fact that transportation is the second-largest household expense after housing will drive a higher demand for housing near transportation zones in the coming decades.
Findings by the "Hidden in Plain Sight: Capturing the Demand for Housing Near Transit" study funded by the Federal Transit Administration, indicate that over the next 25 years there will likely be a significantly higher demand for housing near transportation zones located within a half-mile radius of transit centers.
Addressing the "Connections Between Housing and Transportation" session at a recent National Housing Conference, FTA deputy associate administrator for budget and policy, Brigid Hynes-Cherin, said that at least a quarter of all new households could be looking for housing in these transit zones. This growing demand is expected not only in metropolitan areas like New York, Chicago, San Francisco, Boston and Philadelphia, but also in cities with growing public transportation systems such as Atlanta, Charlotte, N.C., and Sacramento, Calif.
And those who move to the 14 so-called emerging gateway cities have lower homeownership rates than households that move within a metropolitan area, according to a study by the USC Lusk Center for Real Estatecolor>. The USC study revealed that, while in the past immigrants came to the U.S. through one of the six gateway cities, now 14 cities are experiencing large-scale population increases from immigrants and domestic migration alike. And because 47% of immigrants have entered the U.S. through these cities in the past 10 years, "immigration has a greater impact on homeownership" in them because it takes new immigrants 10 to 15 years to get established, said one of the authors of the study, Gary Painter.
NHC roundtable panelist and president of the Surface and Transportation Policy Project, Anne Canby, noted that currently transportation accounts for almost 20% of the family budget and is rising, compared to less than 10% in 1935, while in some metro areas transportation costs more than a shelter.
Urban Land Institute senior resident fellow, Robert Dunphy, an expert in the relationship between commuting and housing, found that 50% of consumers nationwide have a preference for shorter commutes, even if it translates into a smaller home or on a smaller lot. He said that according to a 2004 national survey on smart community growth, "slightly more" than 50% of all Americans would rather live in a larger home, even if accompanied by a daily commute of over 45 minutes each way.
Panelists reported that especially residents from the country's main metropolitan areas prefer shorter and less expensive commutes. Families spending more money on transportation can save less for a downpayment on a house and accumulate higher debt, which affects negatively mortgage-approval rates.
All the above data highlight the need for more affordable housing and rental options especially in high-cost metropolitan areas.
Recent data however shows the so-called housing wage, or the minimum wage necessary to afford a fair-market two-bedroom apartment without exceeding 30% of income, in 2004 rose to $15.37 an hour, almost three times higher than the minimum wage.
"Out of Reach: 2004," a national study conducted by the National Low Income Housing Coalition, lists the 10 least affordable states, based on their housing wages, as follows: California at $21.24, Massachusetts $20.93, New Jersey $20.35, Maryland $18.25, New York $18.18, Connecticut $17.90, Hawaii $17.60, Alaska $17.07, Nevada $16.92 and New Hampshire $16.79. The least affordable metropolitan statistical areas are San Francisco, with a housing wage of $29.60, and Stamford-Norwalk, Conn., where the housing wage is $27.63.