Affordable Housing Part 1: Do We Really Want More of It?
Call it “affordable” housing. Call it “workforce” housing. We don’t have enough of it. That causes big problems not just for those who need it, but for all of us (Photo by Tierra Mallorca for Unsplash)
I’ll never forget an encounter I had with a county manager in coastal northeastern North Carolina in 2003. I was working on an economic development project and was asking him where he found county employees.
“Well most of them commute in from other counties; they can’t afford to live here.”
“So what are you doing about affordable housing?”
“Oh we’re not doing that. Doesn’t make sense. I’ve run the numbers and anybody owning a house less than $100,000 (note: this was 2003) is costing us more in services than we are making on property taxes. We’ll let the other counties work on that one.”
Just to be clear, it wasn’t that his county (and the city, and the schools, and the businesses) didn’t need lower-paid workers – they depended on them. It wasn’t that those workers didn’t need a place to live. But the most important government official in the county had decided that finding a solution that would help the people who worked in his county live in decent, safe housing close to their job wasn’t his problem. Leave that up to the suckers from other counties.
The challenges of finding an affordable place to live have gotten bigger every year since. Over the past 40 years in the US, housing prices have doubled while household income has only increased by 20%.
Right now we’re in a particularly vicious cycle:
· People with affordable homes who want to move to larger places can’t, because getting a new mortgage at higher rates looks too expensive.
· That means fewer affordable homes are for sale, driving up prices for those that are on the market and making it harder for prospective first time home owners to buy (a study released this week by Redfin finds that we’ve gone from 50% of homes being “affordable” in 2022 (costing homeowners 30% or less of income) to 16% being affordable in 2023. In all, according to Harvard’s Joint Center for Housing Studies, some 2.4 million renters who could have bought at the beginning of 2022 no longer could by the middle of 2023.
· That means more low wealth families continue to rent, which drives down rental vacancy and drives up rental prices (even with a slight decline over the past year, rents are averaging $346 more per month in 2023 than in 2019 and 23% of renters are spending more than half of their income each month on rent).
· That means more families are becoming homeless. Studies show higher rents are directly linked to increases in homelessness; one rule of thumb suggests that for each 1% increase in rent, there is a 1% rise in homelessness.
So let’s go back to that county manager. He was asking, essentially, why he should care about the lack of affordable housing in his county. Well, there’s the moral responsibility a government has to support the health and safety of its citizens, of course. But there are also downstream consequences that hurt the larger community as well.
Economic development: Companies are less likely to move to or expand in communities that lack nearby “affordable workforce housing” for their workers, because it will be harder to recruit people with long commutes. Result: missed opportunities for job creation.
Smaller labor pools: Communities lacking affordable housing have fewer workers to choose from, as workers are more likely to take jobs closer to where they live. Result: increased employee turnover; reduced employee quality.
Less local spending: Communities that lack affordable housing miss out on the spending employees do after work; instead those workers return home. Result: decreased retail spending.
Education: Housing insecurity lowers academic performance – children living in unstable housing or homelessness do poorer in school. Result: fewer educated people available for jobs in the future.
Health: Parents and children with housing insecurity get sick more often and are more likely to develop long-term health conditions. Result: more missed school days for students, more missed work days for employers, more uncompensated health care at local hospitals.
Decreased community participation: Adults with longer commutes to work and less stability in their home have less time to volunteer, coach and beome part of the community. Result: lower attachment to the community.
Lower short-term income/tax payments: People who live in homes out of county pay property taxes where they live. If they live in less competitive areas, they are more likely to stay there and work, earning less. Result: lower earnings mean fewer taxes paid.
Lower long-term income/tax payments: Long-term studies show that those who remain in insecure housing environments throughout their childhood make about 30% less in income as adults than those who move to secure living arrangements. Result: foregone tax revenue.
Even if my favorite county manager doesn’t get the importance of housing affordability, most real people do: overwhelming majorities of Americans surveyed in a Bipartisan Policy Center poll in 2022 said it is important to address growing homelessness (83%) and high housing costs (82%). Some 74% polled by NeighborWorks America in 2023 said they were concerned about affordable housing in their community.
And, in a contrast to almost every policy issue in the US today, the support is strong across party lines:
People across the political spectrum “get” affordable housing.(photo Jacob Wackerhausen for Unsplash)
- 89% of Democrats and 77% of Republicans surveyed in October 2022 said it was important that the federal government address homelessness.
- Democrats and Republicans agreed that federal, state and local governments have a responsibility to ensure that families have safe, decent and affordable housing with the highest percentage (78% of Democrats and 59% of Republicans) believing that state governments are responsible.
- Some 71% of adults believe passing bipartisan legislation to increase the supply of homes should be a priority for Congress.
That kind of consensus is stunning. We shouldn’t squander it.
Figuring out how to build or rehab affordable housing is a deeply complex issue. But what an opportunity! And what a chance for politicians to show what can happen when we come together to solve big problems.
-Leslie
In future posts: What does the data show on the impact of affordable housing on surrounding property values – should NIMBY’s be YIMBY’s? And since almost everybody agrees affordable housing is a problem, what concrete steps can we take to begin fixing it? Stay tuned….
Notes:
Decline in housing affordability over time: https://fred.stlouisfed.org/series/FIXHAI
New housing construction slowing: https://fred.stlouisfed.org/series/HOUST
Change in rental prices 2019-2023: https://finance.yahoo.com/news/housing-market-2023-rent-prices-113043272.html#:~:text=May%20of%202023%20marked%20the,median%20rent%20price%20of%20%241%2C739and https://www.noradarealestate.com/blog/rental-prices/
Impact of rent increases on homelessness: https://www.pewtrusts.org/en/research-and-analysis/articles/2023/08/22/how-housing-costs-drive-levels-of-homelessness
Harvard on rent crowding out: https://www.jchs.harvard.edu/state-nations-housing-2023
Reports on impacts of lack of affordable housing on local economic issues: https://homeforallsmc.org/wp-content/uploads/2017/05/Impact-of-Affordable-Housing-on-Families-and-Communities.pdf and https://nlihc.org/explore-issues/why-we-care#:~:text=Increasing%20access%20to%20affordable%20housing%20bolsters%20economic%20growth.,in%20lower%20wages%20and%20productivityand https://www.habitat.org/costofhome/housing-affordability-and-economy
Links between higher rents and homelessness: https://www.pewtrusts.org/en/research-and-analysis/articles/2023/08/22/how-housing-costs-drive-levels-of-homelessness
American concerns about affordable housing: https://www.housingfinance.com/news/survey-74-of-americans-worried-about-lack-of-affordable-housing_o
Bipartisan support for action on homelessness and housing costs: https://bipartisanpolicy.org/blog/bpc-morning-consult-poll-housing-issues/
Strong national support for action affordable housing: https://www.neighborworks.org/Community/Monthly-Consumer-Surveys/Surveys-By-Month/October-Survey
Republican support for changes in affordable housing: https://thehill.com/opinion/finance/3872969-republicans-affordable-housing-isnt-just-the-democrats-issue/