For residents, living in location-efficient neighborhoods requires less time, money and greenhouse gas emissions to meet everyday travel needs. These savings from location efficiency can really add up for households and communities. Transportation costs can range from 8% of household income in location-efficient neighborhoods to over 26% in inefficient locations. Greenhouse gas emissions also fluctuate, depending on household reliance on costly, carbon-intensive automobile travel.
The term location efficiency was coined by John Holtzclaw in a 1994 paper written to garner support for Location Efficient Mortgages (LEM)1. Holtzclaw and colleagues measured the reductions in automobile use and household transportation costs that result from different neighborhood characteristics. The study looked at the effect of residential density, neighborhood shopping, transit accessibility, and pedestrian accessibility on auto ownership and use in 27 neighborhoods in four California metro areas.
Location Efficient Mortgages were developed by CNT, the Natural Resources Defense Council, and the Surface Transportation Policy Project and were backed by Fannie Mae. A LEM is a type of mortgage that increases the amount of money homebuyers in urban areas are able to borrow by taking into account the money they can save by living in neighborhoods where they can rely less on cars, and as a result spend less on transportation. The program was designed to encourage the development of location-efficient communities.2
Building off the work of Holtzclaw, CNT began to study the relationship between transportation costs and the built environment. A 2006 report with the Brookings Institution found that location can affect the true cost of housing when transportation costs are factored in3. This research led to the development of the Housing + Transportation (H+T®) Affordability Index4. There have been several iterations of the H+T Index, with expanded geographic coverage, an improved model, and advanced website functionality.
CNT’s Location Efficiency Hub showcases ideas, tools, development strategies, and policies while broadening the efforts to explore urban sustainability through location efficiency.