Housing + Commuting Affordability Index – 80%

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In Virginia, over three-quarters of households have at least one household member who works. The vast majority of workers work outside the home, and housing affordability may be impacted by the location of the home and the work locations of household members. To better gauge housing affordability by location for working  households, we measure the average household cost of commuting to and from work and combine it with the median cost of housing. Travel costs associated with shopping, recreation, or other purposes are not reflected in the calculated costs.

The overall Housing + Commuting Affordability Index at 80% of median household income (in blue below) reflects the percent of household income required to occupy the median housing unit (both sold including the average household cost of commuting to and from work.

The sold component of the overall Housing + Commuting Affordability Index at 80% of median household income (in orange below) measures the percent of household income required for the median priced sold unit including Principal, Interest, Taxes, and Homeowner’s Insurance (PITI) and the a average household cost of commuting to and from work.

The rental component of the overall Housing + Commuting Affordability Index at 80% of median household income (in yellow below) measures the percent of income required for median gross rent (including utilities)  and the average household cost of commuting to and from work.

The Overall Housing + Commuting Affordability Index at 80% of median household income (in blue below) is the weighted average of the sold and rental components (each component is weighted by its respective share of the housing market; sold by the percent of owners and rental by the percent of renters).

For working households, adding commuting costs to the housing affordability index (the percent of income needed for housing) provides a more complete picture of housing affordability. When workers travel greater distances to work, adding commuting costs may show housing cost burden not indicated based on housing costs alone. We estimate that when incorporating commuting costs, about 4% should be added to the accepted  30% of income housing affordability norm for a total of 34%.For the Housing + Commuting Affordability Index, paying 34% or more of income for housing plus commuting would indicate cost burden.

For households making 80% of median household income, what percent of their income is needed to afford a typical home when commuting cost is also considered?

Virginia
Housing + Commuting Affordability Index at Median Household Income,
Minutes, Average Household Round Trip Commute To Work

 
Overall Housing +
Commuting Affordability Index
(at Median Income)

Percent Income Required
Housing  +
Commuting   =

(More than 34% indicates cost burden)

=

Homeownership + Commuting
 

Of Income Required
Median Monthly Housing Cost (PITI) +
 Average Monthly Commuting Cost =

Own cost
Based on Median Sales Price =
and commuting cost based on gasoline per gallon =

 

+

Rental +
Commuting
 

Of Income Required
 Median Monthly Gross Rent Cost +
  Average Monthly Commuting Cost =

Gross rent includes utilities and commuting cost based on gasoline per gallon =

 

Affordability from a Metropolitan Perspective (Not applicable for State): Replacing the jurisdiction 80% of median household income with the metropolitan 80% of median household income of NAresults in a revised Housing + Commuting Affordability Index of (with the sold component = and the rent component = ).

NA = Data not available.
Note: Owner costs are based on units sold in this quarter. If number of sales is small, view index with caution.
Sources: MLS Sales Data (Virginia Association of REALTORS®), U.S. Census, American Community Survey, Federal Transit Administration 2010, National Household Travel Survey (NHTS) 2009, Energy Information Association’s (EIA), Bureau of Transportation Statistics, national, 2010, http://www.epa.gov/otaq/regs/ld-hwy/cap2000/fact_sheet.pdf, http://http://www.dmvnow.com, http://www.Bankrate.com, https://ceps.coopercenter.org/va-local-tax-rates, National Association of Insurance Commissioner’s, and Virginia Tech Center for Housing Research.

For households making 80% of median income, how does the cost of commuting affect the affordability of the typical home?


Comparing Housing Affordability Based on Housing Cost Only Versus Housing + Commuting Costs at 80% Median Income

Housing Affordability Index Commuting Affordability Index  Housing + Commuting Affordability Index
Household Average Commuting Time to and from Work Based on Median Housing Cost Only

(without Commuting Cost)

Based on Commuting Cost Only Based on Housing + Commuting Costs
(Round trip in minutes) (More than 30% indicates cost burden) (4% norm) (More than 34% indicates cost burden)
Based on alone drivers and carpoolers, excludes public transportation commuters Overall HAI Percent Income Required Sold HAI Percent Income Required Rental HAI Percent Income Required Percent Income Required    = Overall Housing + Commuting HAI Percent Income Required Sold Housing + Commuting HAI Percent Income Required Rental Housing + Commuting HAI Percent Income Required

NA = Data not available.
Note: Owner costs are based on units sold in this quarter. If number of sales is small, view index with caution.
Sources: MLS Sales Data (Virginia Association of REALTORS?), U.S. Census, American Community Survey, Federal Transit Administration 2010, National Household Travel Survey (NHTS) 2009, Energy Information Association’s (EIA), Bureau of Transportation Statistics, national, 2010, http://www.epa.gov/otaq/regs/ld-hwy/cap2000/fact_sheet.pdf, http://www.dmvnow.com, http://www.Bankrate.com, https://ceps.coopercenter.org/va-local-tax-rates, National Association of Insurance Commissioner’s, and Virginia Tech Center for Housing Research.

Statewide Map of Overall Housing + Commuting  Affordability Index (at 80% Median Income)

This map, for the most recent quarter, shows the Virginia Counties and Cities with an overall Housing + Commuting Affordability Index of more than 34% (the affordability threshold when considering both median housing and commuting costs combined).  Jurisdictions highlighted in yellow had an overall Housing Affordability Index of more than 30% (the affordability threshold when considering only median housing cost). The yellow localities are where the cost of commuting contributed an additional cost burden to the already burdened typical household. Jurisdictions highlighted in orange had an overall Housing Affordability Index of 30% or less (not cost burdened) but had an overall Housing + Commuting Affordability Index more than 34%. The orange localities are where the cost of commuting was the contributing factor to housing cost burden.

 


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