Workforce Housing Shortage Persists In Employment Hubs Throughout Washington Metro Area, Finds New Research From ULI Terwilliger Center For Workforce Housing

WASHINGTON, D.C. - November 2, 2009 - (RealEstateRama) — Housing that is close to major employment centers remains unaffordable to a large portion of workers in the Washington, D.C. area, despite the sluggish housing market experienced in many parts of the region over the past couple of years, according to new research published by the Urban Land Institute (ULI) Terwilliger Center for Workforce Housing.

Priced Out: Persistence of the Workforce Housing Gap in the Washington, D.C. Metro Area examined the availability of for-sale and rental housing near six major employment hubs to workforce households, or those with incomes ranging from 60 percent to 100 percent of the area median income. Approximately 23 percent of the metro area’s two million households fall in this income range (according to 2007 data, the latest available). The analysis was based on housing within an approximately 30-minute commute of  the employment centers of downtown Washington, Reston/Herndon, Alexandria (including Crystal City and Pentagon City), Tyson’s Corner, Bethesda and Rockville. 

The report found that while the Washington metro area has one of the highest median incomes in the country (defined by the U.S. Department of Housing and Urban Development as $92,400 for a family of three, $102,700 for a family of four), there is currently a shortage of 40,000 housing units affordable to workforce households near each of the six employment cores. The problem is most severe among “family households” or those with at least three people living together.

About 40 percent of the area’s workforce consists of households with at least three people; and while these have traditionally been defined as a couple with one or more children, larger households are increasingly made up of one parent with children or multigenerational members. This group, notes the report, has the most difficulty finding appropriate housing within reasonable distance of the area’s key employment cores.  As a result, for-sale housing that is affordable to the workforce tends to be that which is geographically concentrated on the periphery of the metro area and located farthest away from both job centers and transit, the report found.

Within the resale market, almost half the metro area’s homes are now priced at more than $400,000, which is well outside the affordable home price range for most households with incomes of 60 to 100 percent of AMI. Moreover, during the recession, homes near employment centers and transit connections have been more apt to hold value or gain value, while those on the periphery have tended to decline in value.

The report also looked at the availability of rental housing, which currently is more accessible to workforce households proximate to these employment centers.  Unfortunately, the rents that workforce households can pay are not high enough to support new high-rise or mid-rise construction – the product types that even today’s reduced land prices require to be economically feasible. As a result, the availability of high-quality rental housing for workforce households will continue to decline.

Priced Out, prepared for the ULI Terwilliger Center by RCLCO/Robert Charles Lesser & Company in Bethesda, was published by the center as part of its efforts to measurably increase the supply of workforce housing in high-cost markets throughout the nation. The center was established in 2007 by former ULI Chairman J. Ronald Terwillliger, chairman and chief executive officer of Trammell Crow Residential, headquartered in Atlanta. The research underscores the persistent need for moderate-cost housing that is closer to jobs, Terwilliger said. “In high-cost markets, workers are being pushed far away from employment centers in search of housing they can afford, and which adequately meets the needs of their families. This is adding to traffic congestion and sprawl, cutting into family time, and straining the economic and environmental well-being of our urban areas,” he said.

By documenting the shortage of workforce housing through research such as the Priced Out study, the center is aiming to encourage public policies that will provide incentives for private-sector construction of housing that is close to jobs. Without pubic incentives, the gap cannot be closed either through for-sale or rental construction, as both land and construction costs are prohibitively high to justify building workforce units that are owner-occupied or leased.

The report notes that as the economy improves, the workforce problem will get worse. The Washington metro area, buoyed by the presence of the federal government, has weathered the recession better than many U.S. urban areas, leaving it well-positioned for a recovery in both the housing and job markets. While this is positive news, the increase in housing demand – and land and construction costs – will add to Washington’s workforce housing shortage, necessitating public sector involvement to offset the rising expenses. The report cites an estimated need for an additional 5,000 new for-sale homes regionally to meet workforce housing needs over the next 20 years.

The six employment centers analyzed in the report account for more than one-third of the metro area’s total employment, and have all experienced both employment growth and rapid housing appreciation in recent years. Specifically, the study looked at the availability of affordable housing that is located within a 20-minute, congestion-free drive (generally equating to a 30-minute rush hour commute) from each employment core for workforce households ranging from one member to four-plus members. The report notes that nearly every profession includes employees who fall into the workforce housing income range, including those who work in the fields of public service;  professional, scientific or technical services; health care and social services; construction; retail; administrative support; finance and insurance services; and education.

The analysis showed that in only one category – that for one-person households — there is a balance or an oversupply of workforce housing in the downtown Washington, Bethesda, Tyson’s Corner and Alexandria employment cores. In the Reston/Herndon and Rockville employment cores, an undersupply exists for one-person households. The analysis of two-three- and four-person households indicates that a profound shortage in workforce housing exists in all six employment cores for each of these household sizes.

“The bottom line is that in today’s relatively softer housing market, workforce households with at least three people offer a deep, relatively untapped market segment in close-in locations,” says Priced Out. “Creating these housing opportunities can reduce the overall carbon footprint of our metro area, reduce congestion, allow easier access to transit, and improve the competitiveness of the entire Washington D.C. metro area as an attractive place to live and work.”

The report notes that addressing housing needs of workforce households near major employment cores and transit-accessible locations is aligned with the goals and visions of many local jurisdictions. Such goals include:

• Reducing congestion and traffic;
• Reducing the amount of public spending on auto-dependent infrastructure, improvements and repairs;
• Creating true mixed-income communities and providing housing opportunities for local employees; and
• Reducing overall environmental degradation.

“Creating viable housing options will make the metro area’s employment cores more competitively positioned for future growth,” Priced Out concludes. Click here for a copy of the report.

About the Urban Land Institute
The Urban Land Institute (www.uli.org) is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has nearly 34,000 members worldwide representing all aspects of land use and development disciplines.About the ULI Terwilliger Center for Workforce Housing
The ULI Terwilliger Center for Workforce Housing was established by J. Ronald Terwilliger, chairman and chief executive officer of Trammell Crow Residential, to expand housing opportunities for working families. The mission of the Center is to serve as a catalyst in increasing the availability of workforce housing in high-cost communities by harnessing the power of the private sector.

For more information, contact Trisha Riggs at 202-624-7086; email: mailto:">

 

 

 

USGBC - U.S. Green Building Council

HUD - U.S. Department of Housing and Urban Development

NAR - National Association of REALTOR

RealtyTrac

FHFA - Federal Housing Finance Agency

Freddie Mac

MBA - Mortgage Bankers Association