Revisiting location efficiency: strategies to graduate thinking on mortgage policy

ABSTRACT

In recent years, mortgage credit has become scarce, especially for low-to-middle income (LMI) individuals, including the working class and minorities. This has limited the ability of many of these individuals to purchase in sustainable, transportation accessible urban locations. This paper explores location efficient mortgages (LEM), their effectiveness in encouraging home ownership in highly connected urban locations with access to non-motorized transportation, and their viability in urban markets in the US. Cases are evaluated using inferential and descriptive statistics to evaluate potential opportunities for LEMs and building on these cases, additional strategies are suggested and discussed that could increase the efficacy of LEM tools. These included: 1) integration of shared responsibility LEMs; 2) utilizing local tax structures; and 3) exploring community-based finance programs. These tools could be useful in allowing LMI buyers purchase in sustainable and high-cost, urban environments.

KEYWORDS:

• Mortgages
• transportation
• location efficiency

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. Zillow estimated the median prices as $1,076,500 in San Francisco and $537,400 in Los Angeles in July 2015.

2. It is worth noting that some of the same critiques of LEMs were originally offered for energy efficient mortgages (e.g., complicated formulas and difficulty in implementation despite the broader public good and potential environmental benefit.

Additional information

Notes on contributors

William Riggs

William Riggs is an assistant professor at University of San Francisco focusing on quantitative community analysis and urban planning policies, and a strategic advisor for OppSites.com. His primary research areas include transportation, land use and environmental planning, housing and economic development, and technology. Dr. Riggs has over 15 years of experience in consulting and public service in the US and abroad, including work in Europe, Latin America, India and Africa. He was a National Science Foundation Fellow and University of California, Transportation Center Fellow, and served for 4 years on the City of San Luis Obispo, Planning Commission.