Bettie Teasley Sulmers' presentation to the Middle Tennessee Mayors Caucus on the key considerations for a combined approach to transportation and housing policy.

1. Why Transportation Matters to
Housing – A Combined Approach
Bettie Teasley Sulmers
Assistant Director,
Research and Planning
www.thda.org

2. What is THDA?
Four major roles in housing across the state:
• Administrator
• Leader
• Resource
• Facilitator of Partnerships

3. Real Cost of Location
‐ Location, location, location
‐ Drive ‘til you qualify

4. Housing Affordability
• Housing should cost no more than 30% of income.
 If housing is greater than 30%, a household is housing
cost burdened.

5. % of Homeowners Cost
Burdened – Nashville MSA
 Cannon 30%  Rutherford 23%
 Cheatham 22%  Smith 17%
 Davidson 29%  Sumner 24%
 Dickson 23%  Trousdale 26%
 Hickman 22%  Williamson 22%
 Macon 27%  Wilson 22%
 Robertson 24%

6. An Understanding of Cost
Burden ‐ Buying a median priced home
Nashville MSA ‐ 2010
• Median Priced Home $165,584
• Monthly PITI $1,032
• Annual Payments $12,380
• Annual Income Needed $41,266
• Hourly Wage Needed $19.84

7. Nashville‐Davidson‐Murfreesboro MSA
Wages and Housing
$35.00
$30.00 $28.70
$25.00
$22.45
$19.50 $19.84 – Wages needed to buy
$20.00
$15.52 – Wages needed to rent $15.15
$15.00
$10.00 $9.25
$8.10 $8.10
$5.00
$0.00
Education Registered Police Wait person Cashier Retail All Occupations
Nurse Salesperson

8. Housing Costs, Housing Plus…
 Mortgage underwriting considers the cost burden in
making loans in setting standards for the debt‐to‐
income (DTI) ratios).
Debt to Income Ratios – Doesn’t include costs like:
 ‐ child care
 ‐ cell phones
 ‐ transportation
Center for Neighborhood Technology Housing +
Transportation Index
Examines combined impact of location on cost

10. Location Efficiency
 Location Efficiency measured by:
 ‐ Compactness of residential development
 ‐ Proximity of transit (or sometimes by range of
transportation options available)
 ‐ Mix of nearby uses and services
 Source: Henry & Goldstein (2010), NRDC

11. Mortgage Performance – Three Cities
 Study looked at 40,000 mortgages in Chicago,
Jacksonville & San Francisco
Two measures of location efficiency:
 Walkscore
 Average number of vehicles per household (controlling
for income)
In all three cities, probability for default increased with
increased number of vehicles.
Walkscore results were less reliable, varying by income
characteristics of the city (inner city is highly walkable)
(Rauterkus, Thall & Hangen, 2009)

16. Location Efficiency and
Mortgage Performance
 Increased location efficiency, decreased probability of
loan default (Rauterkus, Thall & Hangen, 2009)
 Location efficient households have reduced car and gas
dependency – creating buffer from gas price
fluctuations (Henry & Goldstein, 2010)
 Standard lending practices only take into account 9% of
car‐related transportation costs. (Henry & Goldstein, 2010)
 Positive correlation between walkability and home
prices (Cortright, 2009)

17. Implications of Transportation
Considerations in Housing/Mortgage
Lending
 Location must be seen in relation to neighborhood and
region.
 Location impacts cost – added dimension to what is
meant by cost.
 Smart Growth – Land and Home Values increase –
methods for ensuring affordability
 Location Efficient Mortgages
 Increase lending limits for location efficient mortgages
 Decrease lending limits for less location efficient homes?
 Policy Tensions

18. Housing Solutions at THDA
 THDA offers multiple programs addressing housing
needs for low to moderate income Tennesseans
 TNHousingSearch.org
 TNHousingResource.org
Center for Neighborhood Technology
 Housing + Transportation Index – www.cnt.org

19. Contact Information
Bettie Teasley Sulmers
Assistant Director, Research & Planning
bteasleysulmers@thda.org
(615) 815‐2125