As cities shrink, location affordability diminishes too

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In late 2013, the Department of Housing and Urban Development (HUD) launched the Location Affordability Index (LAI) Portal. Its purpose: to estimate housing and transportation costs at the neighborhood level.

The tool is meant to help consumers and communities understand the combined costs of housing and transportation associated with living in a specific neighborhood.

NITC’s newest report evaluated the LAI, particularly its applicability to previously dense urban areas that have experienced significant population loss, also known as "shrinking cities."

The report shows that the LAI overestimates housing costs, and confirms this through a household survey in Cleveland, Ohio. The report also issues a caution regarding the LAI’s transportation cost estimates. 

Final report: What do we know about Location Affordability in U.S. Shrinking Cities?

The project was headed up by NITC researcher Joanna Ganning, with co-investigator J. Rosie Tighe of Cleveland State University. Ganning had previously studied affordability and transportation access in shrinking cities under a NITC small starts grant completed in 2015. 

This project had two phases. First, the research team took stock of the LAI. The first section of the report provides an under-the-hood view of the LAI and how it works. Through a multi-tiered, data-driven analysis, the researchers found that the index falls short of being reliable and replicable, especially in transportation cost estimates. On the housing side, this quantitative analysis found that the LAI overestimates costs by between 5–20 percent, with the higher end of this range reserved for metropolitan places and especially for renters. 

"These datasets are really important. They influence a range of policy programs. We absolutely need to advocate for better funding, particularly on the transportation cost estimate side of things," Ganning said.

The second phase of the research is survey-based, and supports the first. The team gathered household-level data from 12 census tracts in Cleveland, Ohio, and surveyed residents to estimate housing and transportation cost burdens and gain a clearer sense of budget trade-offs.

"We asked people, if they could save money on transportation, where would they put that money? The vast majority of people said things like, 'I would pay all my bills rather than some,' or 'I would buy more groceries, or diapers for my grandson.' These are households really trying to make ends meet and the costs of transportation can go a long way for them," Ganning said.

The particular difficulty with the shrinking city context is that as urban sprawl continues unchecked, the rate of land consumption grossly outpaces the rate of population change. As jobs move out from the city center toward more suburban locations, there is very little population growth to support funding that would enable transit agencies to get people to those jobs.

"Urban core neighborhoods, especially, have lost so much population—but it’s difficult to run efficient transportation systems with declining population density and shifting job locations," Ganning said.

The report provides policy recommendations to help transit authorities overcome these obstacles, including ridesharing and van pools, bike share programs, and better bicycle and pedestrian infrastructure.

What seems necessary is greater connectivity between all modes of transportation. However, for transit authorities to respond to the needs of diverse communities, they must have accurate information. 

This work has shown that while the LAI itself cannot be reproduced, its estimates likely significantly overestimate transportation costs for households. Even if this were not the case, its estimates are difficult to interpret, as they are based on household types that seldom exist in reality.

For more details about the findings, visit the project page or download the final report.

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