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HUD Location Affordability Index

HUD Location Affordability Index

The U.S. Department of Housing and Urban Development (HUD)’s Location Affordability Index consists of multi-source, multi-year estimates which investigate the “true cost” of housing. CARPC staff are working with these data to see what implications transportation costs have on housing affordability in southcentral Wisconsin. Our initial look indicates that considering the cost of transportation in a budget can mean the difference between affordable and unaffordable accommodations across the region.

“Affordability” is commonly expressed as a threshold of no more than 30% income for housing costs. The Location Affordability Index builds on this notion. As the saying about real estate goes, “Location, location, location.” In some cases, housing may be more expensive because it offers easy access to goods, services, and employment. Conversely, housing far removed from concentrations of goods, services, and employment can cost less. The Location Affordability Index uses an affordability threshold of 45% of income for the combined cost of housing and transportation to account for this tradeoff. For working individuals and median-income families, including transportation costs means ownership throughout almost all southcentral Wisconsin is unaffordable. Renting is unaffordable outside of central Dane County for these same households.

Stay tuned as we dig deeper into these data. We plan to release a longer analysis of the issue as well as an interactive dashboard in a future newsletter installment!