How Affordable are Accessible Locations? Housing and Transportation Costs and Affordability in U.S. Metropolitan Areas with Intra-Urban Rail Service

Abstract

Housing affordability is a major problem for many Americans. The increase in residential rents in the past few decades, alongside stagnant and even lower incomes, is forcing households to spend a larger share of their income on housing. The high costs of housing relative to income mean that some households cannot afford non-housing goods and services like food, healthcare, and education. Within the affordability debate, lowering transportation costs by using transit is often viewed as a potential solution to affordability problems. While housing might be expensive, if transportation costs are low, the overall costs of living in a specific neighborhood might still be affordable. Hence, housing and transportation advocates call for improving public transport options that allow households to access destinations without needing a private vehicle. In this dissertation, I examine housing and transportation costs and affordability in twenty-seven U.S. metropolitan areas with intra-urban rail systems. The objective of the study is to understand whether transit-rich neighborhoods, especially those served by rail, are affordable, with an emphasis on lower-income households. To this end, the dissertation adopts a multilevel approach to examining housing and transportation costs and affordability cross-sectionally and over time. Adopting a multilevel approach allows examining how neighborhood- and metropolitan-level factors interact with one another and affect housing and transportation costs and affordability. Neighborhoods (i.e., block groups and census tracts) are classified based on their proximity to rail and their built environments to examine how costs vary between different types of neighborhoods. Finally, affordability is calculated based on metropolitan-wide income levels to assess whether housing and transportation costs are affordable to households at different income levels. The results indicate that the majority of neighborhoods in the sampled metropolitan areas are affordable to median and moderate-income households. Moreover, transit-rich neighborhoods are found to be more affordable than auto-oriented neighborhoods, mainly thanks to lower transportation costs. Still, only small share of neighborhoods is affordable to households earning 50% or less of area median income. Even in transit-rich neighborhoods, the lower transportation costs typically do not translate into more affordable locations for very low-income households. This is because many households still rely on the private vehicle even in the most transit-rich neighborhoods. Housing in transit-oriented development is expensive, in part, due to the high levels of transit job accessibility these neighborhoods offer. However, housing costs in these neighborhoods are also high because of low long-run elasticities of housing supply. Despite an increase in the demand for compact walkable neighborhoods in recent decades, land-use regulations and local opposition direct denser development to rail-station areas. As a result, a higher supply of housing in transit-oriented development is associated with higher housing costs regionwide due to induced demand for these neighborhoods. At the same time, increasing the supply of housing in alternative pedestrian-friendly and transit-rich neighborhoods has a moderating effect on housing costs in transit-oriented development as it allows separating the demand for walkable urban form from the demand for transit accessibility. Hence, rather than focusing on developing more housing only in transit-oriented development, efforts should focus on expanding the housing options in a diversity of neighborhood types both near and away from rail stations.