Todd Litman wrote this article in “Strong Towns” on March 16, 2018. The full text of the article can be found here.
The article discusses the concept of affordable housing, emphasizing the challenges and opportunities associated with housing unaffordability in attractive and economically successful communities. It highlights that many households spend more on housing and transportation than is considered affordable, which can hinder inclusivity and economic opportunity.
The author, Todd Litman, critiques the International Housing Affordability Survey (IHAS), which ranks cities based on housing affordability and has labeled Vancouver as the third most unaffordable city globally. Litman argues that the survey’s methodology is biased and serves a pro-suburban political agenda rather than providing objective analysis. He suggests that the survey’s authors, Wendell Cox and Hugh Pavletich, either lack research skills or intentionally misrepresent key issues.
Traditionally, affordability has been defined as households spending up to 30% of their budgets on housing. However, experts now recommend a broader definition that includes transportation costs, allowing for up to 45% of household budgets to be spent on housing and transport combined. This shift recognizes that low housing costs can be misleading if they come with high transportation expenses.
Litman identifies several structural problems in the IHAS analysis methods that lead to biased results. These include:
- Use of Median Multiples: The IHAS evaluates affordability using the ratio of median house prices to median household incomes, ignoring other shelter costs and transportation expenses. This method tends to exaggerate the affordability of urban fringe housing while underestimating the affordability of compact infill housing.
- Limited Housing Types: The survey overlooks affordable housing options like secondary suites, rentals, subsidized housing, and condominiums, which can lead to an exaggerated perception of unaffordability.
- Regional Sampling: The IHAS includes a limited set of regions, focusing on large, expensive cities in Asia, which skews the results and exaggerates unaffordability.
- Ignoring Regional Factors: The survey fails to account for factors such as population growth, income levels, and geographic constraints that influence regional affordability.
- Within-Region Variations: The IHAS measures entire regions without considering variations in affordability within those regions, often leading to misleading conclusions about housing costs.
Litman argues that a more comprehensive analysis reveals different conclusions about housing unaffordability and appropriate solutions. For instance, while the IHAS ranks sprawling cities like Atlanta and Houston as more affordable due to lower housing costs, these regions have higher transportation costs, making them less affordable overall.
The article also points out the benefits of living in walkable urban neighborhoods, which often provide better access to jobs and services, shorter commutes, and greater economic opportunities, especially for non-drivers. The IHAS’s claims that urban containment policies are the main cause of rising housing prices are challenged by Litman, who cites studies indicating that restrictions on urban infill are more common and costly.
Litman concludes that housing unaffordability results from a combination of population and economic growth, along with constraints on both urban expansion and infill. He advocates for policies that promote affordable housing in existing urban areas rather than suburban expansion, which incurs higher costs for residents and communities.
The article emphasizes the need for objective analysis and critical evaluation of research like the IHAS, which may misrepresent key issues and fail to adhere to professional standards. Litman calls for a focus on increasing affordable housing supply in walkable urban neighborhoods to create more inclusive communities and improve economic opportunities for all residents.