Tuesday, October 12, 2010

Using Metro's Method, Appears that Housing/Transportation Cost Burden Declined from 2005-2009--Should Food Stamps Really be Counted as Income When Measuring Affordability?

On many occasions I have taken exception to the one off method that Metro uses to calculate cost burdens for housing plus transportation expenditures. I have taken exception to the lack of documentation of the method as well as the use of after tax income and housing expenses not used in national H+T index or in any affordable housing program.

In my most recent infrastructure comments to Metro I pointed out Metro had no stated plan to update their Housing Transportation cost index data, and there was no documentation of the method they used, including public access to the underlying data.  I also pointed out that new national Consumer Expenditure Survey data was scheduled for release in October.

New 2009 Consumer Expenditure survey data HAS now been released, so using national data (from CES Excel table 7 for 2009 and 2005) I prepared the table HERE, that compares after tax income to expenditures reported for housing and transportation. 

Some observations:
  1. Average renter income reportedly increased by 11%; this likely occurred because certain transfer payments, including food stamps are counted as income. (See CES income definition HERE).
  2. Average rents also increased by 20%. (I have no ready explanation; it is possible that former homeowners converting to renters was a contributing factor?).
  3. Average transportation expenses decreased by 10% (Higher unemployment was likely the most significant factor).
  4. The net impact of these changes, applying the method that Metro apparently uses to national data, would mean that the [renter] housing/transportation cost burden index declined by 1.4% , from 49.3% to 48.6%.
  5. Short version: Renter "income" increased by 11% while renter combined housing and transportation cost increased by only 10%.
  6. It is entirely possible that Metro does not include some of the expenditures rolled up by CES into housing costs; it is impossible to know this as Metro has not provided the underlying methods or data for public review. Note also that Metro takes the national data, adjusts for local circumstances, and then carries their income and expenditure calculations down to the census tract level, using methods (aka "secret sauce") that have never been fully explained to the public. 
  7. I continue to see the Metro method of calculating housing and transportation cost burdens as fatally flawed, and the inclusion of food stamps as income (not done in ANY other affordable housing program) is another good reason that the Metro method needs greater public transparency and modification to more closely match the national H+T method. 
Originally created and posted on the Oregon Housing Blog.

1 comment:

  1. On point 1, remember, in addition to transfers other possible factors for the rise in income of renter households include higher income people choosing (or have the choice made for them) to rent, the size of renter households growing to include more wage earners (shacking or doubling up) or the lowest income households no longer being able to rent on their own (and doubling up or becoming homeless). Of course, may be their incomes just rose... doesn't seem likely.

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