Housing News Roundup: June 8, 2015
Terwilliger: New Housing Crisis Calls for New Federal Policy
The nation could be heading toward a new housing crisis that will look very different than any crisis of years past. Approximately three-quarters of new households became homeowners in the 1990s. However, today, and probably into the future, new households have lower incomes and less wealth, meaning fewer and fewer renters can afford to own. Current trends would put the homeownership level at 62% in 2020 and 61% in 2030, the lowest level since the rate started being tracked in 1965. The increase in renting will likely drive up prices, further crowd out lower income households, and keep the housing market stalled. According to Ron Terwilliger, increasing government spending on housing may not be realistic at this time, so the federal government needs to focus on using our current funds to better assist lower-income households.
Source: Wall Street Journal
When 'Affordable' Isn't Really
Despite the term “affordable housing,” apartments offered at reduced rents are often not affordable to build. Developers in the Twin Cities of Minnesota say that the complexity of financing, urban land costs, regulations, and policymaker priorities make it as expensive (or even more) to build new low-income housing than other types. For example, low-income apartments in St. Paul’s Green Line Hamline Station are being built for $400,000 each, twice the purchase price–let alone construction cost–of a median-priced home in the city. A willingness to consider lower-cost options, such as manufactured housing, and efforts to reduce financing complexity could help get more affordability at the same cost.
Source: St. Paul Pioneer Press
How Housing Policies Impact the Broader Economy
Protectionist housing policies don’t just keep many potential new homeowners out of Silicon Valley — they also hurt the U.S. economy. A recent study on wage dispersion looked at what would happen if housing regulations in major metro areas were lowered to that of a median city. “If workers were able to cross over from low-wage cities to high-wage cities — that is, if New York, San Francisco, and San Jose were to lower barriers to new housing and let them in — then GDP could rise by 9.5 percent.” According to the study, regulations that keep the housing supply low in major metro areas are slowing both GDP and wage growth across the country.
Source: City Lab
Turning the Problem of Affordable Housing Into a Game
“Sorry, your choices make it impossible to achieve your target rent.” If your construction costs run too high in a new online game from the Citizens Housing & Planning Council in New York City, expect to see the same message. “Inside the Rent” allows users to model the development of apartment buildings in 14 city neighborhoods while attempting to achieve a target rent. The interactive tool is designed to spur thought about what’s needed to deal with New York’s chronic housing shortage. When costs are too high to achieve the target rent, users have the option to add government subsidies or raise the rent.
Source: Next City
Boston On Track to Increase Housing Supply
In order to attract and retain young professionals, Boston has set two new transit-oriented sites for workforce housing–with 15 more expected. The announcement is part of the city’s first quarterly report on the Boston 2030 housing initiative, which has the goal of building 53,000 housing units by 2030, 20,000 of which will be made affordable. The city is intentionally looking at underutilized areas that are close to public transportation. In order to attract students, Boston also plans to increase the supply of student housing.