If there’s a positive from the recession, it’s been the fact that U.S. households are lowering their debts and getting their finances back in order.
What hasn’t changed is that the majority of a family’s income still goes to covering housing costs. But the affordability of where you live doesn’t always equal the amount you pay in rent or on your mortgage — it’s often times higher. The problem is that when you buy a house, for example, an hour from where you work, the true cost of housing has to include the cost of commuting — after all, that’s the total cost of where you live. It’s the consequence of, “Drive until you qualify.”
According to the Center for Neighborhood Technology, a sustainable communities think tank, under the traditional definition of housing affordability (30 percent or less of household income spent on housing), seven out of 10 U.S. communities are considered “affordable.” Not too bad.
So when the definition of affordability includes both housing and transportation costs, the number of “affordable” communities in almost all metro regions of the country decreases significantly to 40 percent.
STRETCHED TO THE LIMITS
Look no further than the American Southwest: If you live in the greater Phoenix–Mesa, Arizona, area, you’re probably spending more than 45 percent of your income on housing and transportation. In most parts, at least 20 percent of your monthly income is going to cover filling up your gas tank alone.