Washington area is short 40,000 homes affordable to average earners
Families are being priced out of the Washington-area housing market. Or at least they’re being driven to the far edges of the region and forced into long commutes to and from the area’s employment hubs. That’s the message in a new report about to be released by the Urban Land Institute’s Terwilliger Center for Workforce Housing.
It’s not exactly news to anyone of average income looking to buy a home in the area — or to drivers stuck on clogged local roads. But the Terwilliger Center report quantifies our misery — and says things are likely to get worse if someone (ahem, government) doesn’t do something to make it profitable for developers to build more affordable homes. Those homes would accommodate families earning between 60 and 100 percent of the area's median income and be located close to jobs in the region’s six employment cores: Alexandria (including Crystal City and Pentagon City), Bethesda, downtown Washington, Reston/Herndon, Rockville and Tysons Corner.
In the Washington area, 60 to 100 percent of the median represents a healthy paycheck. For a single person it’s $43,140 to $71,900; for a couple, $49,320 to $82,200; for a three-person household it’s $55,440 to $92,400; for four people it’s $61,620 to $102,700, and for five it’s $66,540 to $110,900. Almost a quarter of Washington-area households--what the report defines as the “workforce”--falls into these income ranges.
We now have a shortage of about 40,000 for-sale homes within a 30- 45-minute commute of those employment hubs that are affordable to people earning these incomes, according to the report. The report predicts that the shortage of affordable for-sale homes will grow by 5,000 units per year between 2010 and 2030. And recent declines in area home prices haven’t helped much, the report says, because housing close to those employment hubs took less of a hit than homes farther out in the suburbs.
What about all that housing development that has sprung up around Metro stations? Convenience makes them expensive — and much of that housing is geared toward singles, not households with children. The report says we have a balance or an oversupply of for-sale homes for singles in this income range in downtown Washington, Bethesda, Tysons Corner and Alexandria. However, they say there is not enough affordable housing for singles near jobs in Reston/Herndon and Rockville.
There’s some irony in the fact that this declaration that the close-in homes are unaffordable for a large swath of the population comes from the development industry itself--ULI is funded by urban planners and developers. But J. Ronald Terwilliger, founder of the Terwilliger Center and chairman of Trammell Crow Residential, the giant apartment developer, says the private sector can’t build homes for this market without government intervention. The land is simply too expensive to make the finances work for private-sector developers, he says.
“The problem, of course, is an economic one,” Terwilliger said in an interview. “You can either mandate it, or you can incent it.”
He’s proposing the mortgage-interest deduction as a source of revenue that could offset the cost of government incentives. “Eliminate the deduction for second homes, which includes boats, and restrict the ability to deduct interest,” he said. “That would be a way to pay for a tax credit for the workforce.”
October 29, 2009; 6:00 AM ET
Categories: Buying , Neighborhoods , New construction , Statistics , The economy , The market
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