Reconnecting America People * Places * Possibility

Are We There Yet? Priced Out & Pushed Out

Editor's Note: As Housing and Urban Development Secretary Shaun Donovan is quoted as saying in this excerpt from Are We There Yet?, “The cost of putting housing and jobs in the wrong place, relative to transportation, is huge - not just in environmental costs, not just because people are spending more on their commutes, but also because of the cost of this growth over the long term.” With that point in mind, this section of the report highlights the importance of understanding and proactively addressing potential displacement pressures in transit-oriented communities to ensure that the people that need transit the most, and use transit the most, can continue to live in those communities if they so desire. The suburbanization of poverty, the potential expiration of Section 8 vouchers near transit, and the loss of affordable market-rate rental housing near transit are all trends that add to the challenge of providing quality affordable housing in locations with good access to the regional economy.

Along with the growing demand for walkable neighborhoods near transit, though, is the potential for a disturbing consequence: The lower-income people who already live in these places — and who may use transit the most — can get pushed out as prices rise. Gentrification can bring investment to underserved communities and many historic urban core neighborhoods, but cities need the tools and capacity to manage the change so that people of all incomes can live in these places.

The threat of displacement tends to be greatest where the real estate market is active, or where new transit lines may activate an otherwise sluggish market because transit will make commuting to nearby job centers easier and faster — thereby increasingly the likelihood that more people will want to move in. CTOD’s National TOD database shows that while median income in the U.S. decreased by 5 percent during the past decade, income near transit increased 1 percent. See chart above: Top 5 regions with the greatest increase in median income near transit.

But the reasons may be different in each region: maybe people with higher incomes are moving in, maybe the people who already live there have begun making more money because there has been investment and more economic activity, or maybe low-income people are being displaced. Monitoring these changes will allow cities to determine whether displacement is occurring and if policy interventions are necessary.

During the go-go years of the housing boom many affordable units were upgraded for higher-income tenants or, in strong real estate markets, converted to condos. According to Harvard University’s Joint Center for Housing Studies, for every new affordable apartment built, two are lost to condo conversion, demolition or abandonment. But as more people get pushed further to the fringes they have less access to transit, and they will be living in places where there’s less chance that transit will ever be built.

According to a 2011 study by the Brookings Institution, at least 700,000 Americans don’t have cars and don’t have access to transit either, raising issues of social equity as well as economic concerns. The most vulnerable families, the report points out, live in the suburbs, and in suburban cities, including Dallas, Houston, Phoenix, St. Louis and Atlanta. Only 69 percent of Atlanta residents have access to transit, for example, compared to Los Angeles and New York, where 99 percent of residents have access to either bus or rail.

The authors of the report point to the rapid suburbanization of poverty, as well as “job sprawl,” as the two biggest factors putting carless families at risk. They also point out that the U.S. has built 655,000 roadway lane miles of highways since the 1980s, enabling development farther out and increasing distances between destinations — thereby making it even more difficult to serve people with transit.

Local and national leaders can respond to this crisis by encouraging the adoption of land use policies that promote denser development that is easier to serve with transit, as well as by expanding transit to underserved suburban downtowns. “The cost of putting housing and jobs in the wrong place, relative to transportation, is huge,” says HUD Secretary Shaun Donovan. “Not just in environmental costs, not just because people are spending more on their commutes, but also because of the cost of this growth over the long term.”


Investors are buying up empty suburban properties in part, as a 2011 Washington Post article noted, because of the steadily dropping home ownership rate and the foreclosure crisis – lenders have seized more than a million homes and it is estimated there are another 11 million foreclosures in the pipeline. These investors have started looking for renters not buyers, and they are eyeing the 2 million households with Section 8 vouchers — a government funding program that helps lower-income people find affordable housing.

Affordable Housing at Risk in the Southwest“It’s guaranteed money,” David Benham, a property owner who sells bank foreclosures to investors in 35 states, says in the Post. “I love Section 8. I wish every one of my properties was Section 8.” The Section 8 program helps expand the supply of housing that is affordable by subsidizing the difference between what lower-income people can pay — 30 to 40 percent of household income — and the rents landlords are charging.


HUD’s Section 8 program also provides funding for new construction or the rehabilitation of housing units that will be set-aside as affordable housing for 5 to 30 years, depending on the terms of the contract. Reconnecting America calculates that 40 percent of these units are in opportunity areas. However, the contracts on these Section 8 units are beginning to expire, as are contracts on other kinds of subsidized housing. Many of these “at-risk” affordable units were developed under federal, state and local programs created in the ‘60s, ‘70s and early ‘80s to promote the development of affordable housing by the private sector. The majority of these units were financed and assisted by HUD through below-market interest rates and rental housing subsidies and contracts that typically lasted 40 years.

Once the contracts expire these units can be rented or sold at market-rate prices, thereby significantly reducing the supply of affordable housing. Reconnecting America quantified the risk: Contracts on 58 percent of the federally subsidized units in opportunity areas are “at-risk” within the next five years, because these property owners could decide not to renew their contracts. The risk is greatest in the Southwest — especially in Texas, New Mexico and Arizona — where 80 percent of the contracts on housing in opportunity areas are due to expire by 2016. See chart on previous page: Affordable housing at risk in the Southwest.

At the same time, ensuring that housing stays affordable in urban neighborhoods near transit also poses a dilemma: It can be expensive to construct new affordable housing as well as to rehabilitate existing sub-standard affordable housing in neighborhoods where land values are increasing at a rate far above the regional average — which is the case in many metro areas.

Top 5 Regions With The Greatest Increase In Median Income Near Transit

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