Location Efficiency and Mortgage Risks for Low-Income Households

Abstract

Household energy expenditures, especially for transportation, are fairly inelastic. Their effects on low-income households may be significant, due to the potential for energy consumption to displace other types of consumption when energy prices rise. Using accessibility as a proxy for lower transportation costs, we test the hypothesis that low- and moderate-income residents are less likely default when they are located in more accessible places. We find that regional accessibility has almost no effect on risks of default, but local job diversity has moderate mitigating effect.

Keywords:

• Affordability
• low-income housing
• mortgage risks
• location efficiency

Acknowledgments

We thank the Ford Foundation for funding the Community Advantage Program [Grant 0150-0118].

Notes

1. (http://www.cnt.org/projects/location-efficiency-hub)

2. This study is limited to Federal Housing Administration (FHA)loans in Chicago, Illinois.

3. A higher Walk Score indicates more pedestrian accessibility characterized by pedestrian amenities and short distances to destinations. The score is scaled from 0 to 100.

4. The four employment types are retail, office, service, and entertainment.

5. Results are not shown, but are available from the authors upon request.