The U.S. Department of Housing and Urban Development (HUD) has awarded a management consulting firm and its subcontractor a $3.2 million contract to establish a national housing and transportation affordability index.
The firms – Manhattan Strategies Group and subcontractor the Center for Neighborhood Technology (CNT) – will create an index that provides potential home buyers with a true estimate of both housing and transportation costs that HUD says can help consumers make informed decisions.
"Affordability is much more than just paying the mortgage – it involves other costs like transportation, gas and utilities," says HUD Secretary Shaun Donovan. "The availability of a national affordability index will provide consumers better information about the true costs of a home by accounting for that housing's proximity to jobs, schools and other services."
Traditionally, affordability indices have not factored transportation into their equations. HUD's index will not only consider transportation costs, but will also help officials analyze the impact of HUD programs on the combined cost of housing and transportation in HUD-supported communities, the agency says.
According to a recent study of 28 metropolitan areas done by the Center for Housing Policy and CNT, the average household spends 27% of its income on housing and 20.2% of its income on transportation. For working families earning $50,000, these costs account for 57% of the household income.