HUD to develop national affordability index

WASHINGTON – Aug. 31, 2011 – The U.S. Department of Housing and Urban
Development (HUD) announced that it will create a nationwide reference tool for
homebuyers that lists all local housing and transportation costs: the Housing
and Transportation Affordability Index.

The initiative will cost $3.2
million, and a private contractor – The Manhattan Strategies Group, LLC, and its
subcontractor, the Center for Neighborhood Technology (CNT) – will create the
database.

“Affordability is much more than just paying the mortgage. It
involves other costs like transportation, gas and utilities,” says HUD Secretary
Shaun Donovan. “A national affordability index will (give homebuyers) better
information about the true cost of a home by taking into account its proximity
to jobs, schools and other services.”

Donovan says HUD is creating the
index to help homebuyers understand the true cost of homeownership.
Transportation costs, for example, are not included in most current
affordability studies, even though transportation is usually a household’s
second-most significant expense.

“Unfortunately, many people believe that
to qualify for a mortgage, they have to buy a house far away from their work …
but the transportation costs could end up making their total costs more
expensive in the long run,” says Shelley Poticha, director of the Office of
Sustainable Housing and Communities at HUD.

According to a recent study
of 28 metropolitan areas done by the Center for Housing Policy and CNT, the
average household pays 27 percent of its income for housing and 20.2 percent of
its income for transportation. For working families earning $50,000, those two
costs account for 57 percent of the household income.

Manhattan Strategy
Group (MSG) says it will work for the next two years to create the Housing and
Transportation Affordability Index Tool, which HUD will also use to analyze the
impact of programs in HUD-supported communities.

© 2011 Florida
Realtors®