"Promoting housing affordability by combating exclusionary housing policies"

  

             UPDATE #1: 2017

 

To keep our friends current, here is a summary of EHI-related

news since our last Update (in November). The headlines are:

 

  • Ø EHI expands involvement in major housing planning in Loudoun County, Virginia—an outer suburb of Washington, DC
    • EHI President joins Loudoun’s Housing Advisory Board
    • New Loudoun County Housing Needs Assessment and public employee poll show future need for much more housing than County has planned to date
    • Loudoun Board of Supervisors puts Metrorail-area housing and commercial development issues on slower track
  • Ø Wage increases are nearing rent increases nationally;  DC area continues its relatively low rent increases
  • Ø National and DC region housing supply and for-sale home data presented at “Economic Summit”
  • Ø Trump Administration proposes dramatic reductions in funding for many housing programs
  • Ø EHI website now has secure SSL encryption
  • Ø EHI donors come through once again in 2016

« « « » » »

EHI expands its involvement in major housing planning in

Loudoun County (Virginia)—an outer suburb of Washington, DC

Loudoun County, Virginia, may have the greatest opportunity currently to increase the supply of housing for its residents and workforce, compared to other jurisdictions in the Washington, DC, region. EHI has been actively advocating such improvements in Loudoun for more than two years.

Much progress has been made during that period. EHI continues to work to overcome unnecessary obstacles to a sufficient housing supply for Loudoun’s low- and moderate-income residents and workforce.

EHI’s President joins Loudoun’s Housing Advisory Board

In early February, EHI President Tom Loftus was nominated for an at-large position on Loudoun’s Housing Advisory Board (HAB). That nomination was approved by the County’s Board of Supervisors at its February 23 business meeting.

The HAB advises the Board of Supervisors on a full range of housing opportunities in Loudoun County, with a focus on housing affordability, workforce housing, relevant supply and demand issues, and funding options for affordable housing. The 13-member HAB meets monthly. It receives regular reports on the County’s housing programs and policies, and it provides input on ways to enhance them.

Under the leadership of this year’s Chair, Brent Campbell, the HAB has pursued an increasingly ambitious agenda. For example:

  • Housing Needs Assessment: The HAB reviewed and helped mold the recently completed Housing Needs Assessment commissioned by the County, as part of an interdepartmental review team (see further discussion below).
  • Public Sector Employee Housing Needs Survey: The HAB provided input on a new Public Sector Employee Housing Needs Survey conducted by the County’s Dept. of Family Services. Loudoun County’s public employees (school teachers, police, fire, and other employees) were polled via an online Survey Monkey poll regarding their housing needs (see further discussion below).
  • Revised Bylaws with expanded scope statement: The HAB is redrafting its Bylaws, and has accepted the broader statement of its scope proposed by Mr. Loftus—that the HAB advises on matters affecting “housing affordability” for low- and moderate-income people generally, across the full range of housing options. The previous Bylaws had stated the HAB’s purpose as dealing with “affordable housing”—an older term that has acquired a very limited connotation, and some unfortunate baggage, over the decades in the eyes of some sectors of the public.
  • Coordination with County’s economic development efforts and comprehensive plan revision: The HAB increased its coordination with the County’s Economic Development Authority and Advisory Committee. There is an increasing realization that housing for the workforce is key to attracting the kind of new business the County seeks. The HAB also has a representative on the County’s new Comprehensive Plan Stakeholders Committee, which is advising the County government on “Envision Loudoun”—the first full-scale revision of the County’s Comprehensive Plan attempted in more than 15 years.


New Loudoun County Housing Needs Assessment and public employee poll show

future need for much more housing than County has planned to date

Housing Needs Assessment

Loudoun County’s consultants, the George Mason University Center for Regional Analysis (GMU CRA) and Lisa Sturtevant & Assoc., LLC, presented the final version of their Housing Needs Assessment (HNA) to the County Board of Supervisors on February 23, 2017. The HNA reports a likely shortfall of 18,300 housing units by 2040, based on the tremendous demand that will be created by new workers in the businesses Loudoun hopes to attract, compared to the amount of new housing that can be accommodated under current County land use planning and zoning.[1]

 

[1] HNA at 8, 9 and Figure A-6. Sydney Kashiwagi, Loudoun housing report met with skepticism from supervisors, Loudoun Times Mirror, March 1, 2017 (online edition). 

According to the report, the county faces a potential demand for nearly 64,000 new housing units between now and 2040. However, under current plans Loudoun only has the capacity for 46,500 new homes, due to current zoning constraints, according to the report.

The data in the HNA is extraordinarily robust, including more than 100 detailed tables documenting current housing-related conditions and forecasts for future conditions in the County by 2040. The 267-page HNA also includes a 90+ page narrative summary of its findings, and a 45-page explanation of its methodology.

GMU is the Washington, DC, region’s leading source of economic, demographic and housing market research, and it is relied on by local jurisdictions throughout the region. Dr. Sturtevant is a former Deputy Director of the CRA and Associate Research Professor at GMU’s School of Public Policy.

Public Sector Employee Housing Needs Survey

That online survey (mentioned above) got responses from 22% of Loudoun government employees. Among the salient findings: 73% of those employees who rented their housing in Loudoun felt the amount they pay for rent and utilities is not affordable. Only 15% considered their housing costs affordable. And only 1% said that housing affordability was a reason they lived in Loudoun.

By contrast, only 44% of those employees who rent elsewhere feel that the amount they pay for rent and utilities was not affordable. Housing affordability was by far the leading reason those respondents gave for living outside of Loudoun (69% of responses included that reason). (The poll did not ask about whether any of the respondents got government housing assistance.)

As to Loudoun government employees answering the survey who own their homes, 58% of those who live in Loudoun said their housing costs were not affordable, whereas 63% of those who live elsewhere felt their housing costs were affordable. About 86% of the responding homeowners who live outside Loudoun gave housing affordability as a reason why they do—by far the leading reason given.

Some 74% of the respondents who rent in Loudoun said they want to buy a home there at some point, but 81% thought they could not afford to do so. Some 70% of respondents who rent said they would purchase a home in Loudoun that offered an affordable sales price, even if there were controls on the gain they could realize on future sale of the home (as with Affordable Dwelling Units).

Also, more than 60% of respondents favored increasing the supply of affordable housing units through government action, and/or by letting the laws of supply and demand determine the mix of housing and costs in the real estate market. EHI advocates a combination of those approaches—action by the Loudoun County government to end the unjustified zoning restrictions on the supply of housing, which interfere with normal supply and demand balances in the housing sector, to the detriment of low- and moderate-income Americans.

 

Loudoun Board of Supervisors puts Metrorail-area housing

and commercial development issues on slower track

PHOTO/MAP

Aerial view and map of Metrorail Silver Line Phase 2 extension under construction to

Dulles International Airport and two stations in Loudoun County (Loudoun Gateway

and Ashburn), from Reston and Herndon in Fairfax County

After years of intensive County planning for large-scale development around the future Loudoun County, Virginia, Metrorail (commuter rail) stations, the Board of Supervisors (BOS) deferred a decision on the development issues generally, in the current proceedings. Rather, the Board voted at its June 22, 2017, meeting to move the residential and non-residential development issues generally from the current “Silver Line Small Area Plan” track to the slower, County-wide Comprehensive Plan (CP) revision track (termed the “Envision Loudoun” process).

Loudoun’s plans for development near its Metrorail Silver Line commuter rail stations (Loudoun Gateway and Ashburn), which are scheduled to open by 2020, will have an important impact on housing costs and supply for Loudoun residents. They also will have a significant impact on people living elsewhere in the Washington, DC, region. EHI started providing input to the County on that planning more than two years ago (see, e.g., LOUDOUN METRORAIL-AREA PLANNING UPDATE--JUNE 2016).

At the June 22 meeting, several Supervisors said that more input on the Metrorail-area planning should be obtained from Loudoun residents. Supervisor Ron Meyer (R-Broad Run District), whose district includes the future Ashburn Station—near which the bulk of the new housing was being planned—said the plan does not reflect the will of the people in his district. They “would say this is shocking.” He added: “If people knew that signing up for thousands and thousands and thousands . . . of residential units” would be necessary to bring Metrorail to Loudoun, “people would have wanted to say no to Metro.”[1]

Supervisor Letourneau (R-Dulles District), who made the motions passed at the meeting, and whose district includes the other future Metrorail station (Dulles Gateway), stated that the plan was too similar to a zoning ordinance in its specificity as to the types of development that would be permitted on different lots. Several other Supervisors echoed that sentiment.

Supervisor Letourneau also argued that the Envision Loudoun process affords a better opportunity for the public to focus on density, housing affordability, transit-oriented development, and related issues.

However, the Envision Loudoun process would not reach the BOS until at least March 2018. And when it does, the BOS would refer that massive, draft comprehensive plan revision to the Planning Commission (PC) for its full review process. Only after the PC issues its recommendations would the BOS be ready to make decisions on that revision. Thus, the Envision Loudoun process might not be concluded until at least 2019—even if it concludes successfully.

The only CPAM-related issues the BOS decided on June 22 were to approve certain roadway projects in the Silver Line area and attempt a full-fledged (and probably lengthy) new airplane noise study with MWAA, to try and be more precise about current noise levels throughout the Silver Line area. (The latest MWAA study was done in 2005, and the last full-fledged study was completed in 1993.)

The Metrorail-area planning effort actually has invited and received a large amount of public input at each stage, for more than two years. There have been four public planning workshops, two public hearings before the PC, and one before the BOS—all well-attended by members of the public. Thus, there actually seem to have been at least the normal number of opportunities for members of the public to provide input during the Silver Line CPAM process.

Failure to permit enough new housing near Metrorail, in order to balance the number of workers to those who are expected to join Loudoun’s workforce, would seem to us to be “penny foolish” as well as “pound foolish.” The Loudoun County Dept. of Management and Budget continues to reaffirm that net County tax revenues will increase greatly if ample housing is permitted in the Metrorail areas.

And the advisable place for those housing units generally is as close as reasonable to those jobs. A contrary approach would seriously aggravate the many problems inevitably posed by increasing the workforce—such as increased traffic congestion, loss of open space, higher and more volatile housing prices, increased poverty and homelessness, and lost economic development in the County. For more, please click on LOUDOUN METRORAIL-AREA PLANNING UPDATE--JUNE 2017.

 

Wage increases are nearing rent increases nationally;  

DC area continues its relatively low rent increases

National rent picture

The gap between wage and housing rent increases narrowed greatly in the year ending in March 2017. Wage increases (or “growth”) amounted to about 2.5% nationwide during that period. As EHI learned in a Yardi Matrix webinar unveiling Yardi’s Spring 2017 multi-family outlook, the comparable rent increase (or “growth”) averaged 2.8% during that period.  (Yardi Matrix, a major, online commercial real estate research and data firm, tracks multi-family housing in 124 metropolitan housing markets.)

Rent increases nationally averaged about half what they had been for the previous 12-month period, when rent growth was well above the historical average. A major reason, as Yardi notes, is that new housing supply has moderated rents. Construction of new units is peaking now, at the highest rate in a decade. Yardi’s 2017 forecast is for a 2.8% increase in the multi-

According to Yardi, the widespread reduction in rent growth is “nothing to worry about” for multi-family builders, if the economy’s fundamentals remain strong. Multi-family investment (some of it

Lower rent growth is especially helpful to low- and moderate-income people, because most of them rent, and housing costs generally consume much more of their incomes. For background on recent rental cost trends in DC and nationwide, and on EHI’s role, please click on EHI HELPS ITS HOME REGION TO MUCH-IMPROVED RENTAL HOUSING COST RECORD and DC-AREA RENT INCREASES CONTINUE MODERATE THROUGH OCTOBER 2016.

DC region rent picture

In the DC Region, wage increases averaged 2.8% during the year ending in March 2017, well ahead of rent increases, which grew only 1.4% overall. However, non-luxury apartments had rent increases averaging 2.8%--far more than luxury units, for which rents increased an average of only 1%. The non-luxury segment has less construction and more demand. The DC Region is forecast to add multi-family units at almost the national average (13,443 new units—a 2.7% increase) in 2017.

The fundamentals for rental investment are still strong in the DC region, as in most major United States markets. The DC region’s occupancy rate remains high (95.6% of units were occupied, as of February 2017), and the number of jobs in the region increased about 2.2% in the year ending in February—above the national average of 2.1%. Plenty of multi-family capital continues to flow to the region. As in the nation as a whole, a major moderating factor in the region’s rent growth has been the robust amount of recent housing construction. Yardi expects rent growth in the DC region to continue relatively low, at about 1.9% overall this year.

The DC-area trend toward lower rent growth, now in its fifth year, is gratifying to EHI, because that region is where EHI has concentrated its local advocacy. For details and sources on this article, please click on RENTAL COSTS 2017.

National and DC region housing supply and

for-sale home data presented at “Economic Summit”

EHI’s President attended an “Economic Summit” hosted by the Dulles (Virginia) Area Association of Realtors® on March 24, 2017. Among the presentations were: 

  • A comprehensive summary of the nation’s economic and real estate market outlook was given by Lawrence Yun, Ph.D., Chief Economist for the National Association of Realtors® (NAR);
  • Key data on current home building activity, nationally and in the DC region were presented by Robert Dietz, Ph.D., Chief Economist for the National Association of Home Builders (NAHB); and
  • Major real estate trends in the DC region were discussed by Mark C. White, Ph.D., Deputy Director of George Mason University’s Center for Regional Analysis.

Dr. Yun presented the NAR’s current figures and its forecasts for the near-term future. The NAR predicts continued, robust growth of 4% in the median price of homes for sale in 2017, and ongoing growth of 3.2% in 2018.

Dr. Dietz said the DC Metropolitan area, and Northern Virginia, are doing quite well on new home construction, compared to the nation overall. He identified four “supply-side headwinds” in the real estate market: “Lots, Labor, Lending, and Lumber” (the newest one).

  • Lots: Dr. Dietz identified exclusionary zoning as a major, ongoing restraint on the number of new houses coming on the market. He added that other regulatory costs of home building have risen about 29% over the past five years. As we have reported, a May 2016 NAHB report concluded that those other regulations (see note 3, below), imposed by government at all levels, account for 24.3% of the final price of a new single-family home built for sale.”[1] For more on those regulations, click on TRUMP ON REGULATORY BARRIERS TO HOUSING DEVELOPMENT.
  • Labor: It has become more challenging for home builders to hire all the construction workers they need, with the nation’s unemployment rate dipping below 5% and wage rates rising.
  • Lending: The controversial credit restrictions of the Dodd-Frank Act still are in place, for example, limiting the amount of home mortgage activity.
  • Lumber: That market has tightened recently, as Canada is exporting less of it to the United States. Lumber is not a commodity subject to NAFTA (the North American Free Trade Agreement).

As to DC region real estate trends, Dr. White of GMU (which is the leading regional source for DC Metropolitan area housing and economic data) said that the inventory of homes for sale in the region was down almost 10% for the year ending in February 2017. The median house sales price in the Washington MSA has risen steadily at an annual rate of roughly 3.5% for the past three years.

Dr. White noted that Loudoun County has had the greatest household growth rate in the region in recent years, and its home sales prices are going up. Its active listing of homes for sale was down 22.2% for the year ending in February 2017. The median number of days on the market for homes for sale dipped almost 70%, compared to a year earlier (to a fairly minimal 17 days on market, compared with 58 days in February 2016).

For more, please click on HOUSING SUPPLY AND HOME BUILDING 2017.

Trump Administration proposes dramatic reductions

in funding for many housing programs

On May 23, President Trump released his first full-year federal budget request. It covers fiscal year (FY) 2018. The budget for the Dept. of Housing and Urban Development (HUD) would be cut by nearly 15% ($7.4 billion) in FY 2018. Overall, that budget request would reduce federal non-defense discretionary (NDD) spending by more than 2% per year for the next 10 years—a total of $1.4 trillion over that period.

The Trump budget calls for a $1 trillion infrastructure package, with $200 billion of that being federal spending. The infrastructure package may include some investments in affordable housing. However, the fate of that infrastructure package is unclear as yet.

The President’s failure to divest his business assets or place them in a blind trust—the ways in which previous Presidents generally have avoided charges of conflicts of interest regarding their budget and policy proposals—may complicate his effort to sell his budget requests. For example, a notable exception to his HUD budget cuts leaves intact a type of federal housing subsidy which reportedly provides the President millions of dollars of gross income annually.

That subsidy is paid directly to private landlords, under HUD’s “project-based rental assistance program.” One of those landlords is Trump himself, who earns millions of dollars each year as a part-owner of Starrett City, the nation’s largest subsidized housing complex. Trump’s 4 percent stake in the Brooklyn complex earned him at least $5 million between January of last year and April 15, according to his recent financial disclosure, according to an investigative article by the Washington Post. The President’s income from a federal program for which he seeks funding poses a conflict-of-interest question. For more, please click on TRUMP ADMIN. FY 2018 HOUSING BUDGET REQUESTS.

The uncertainty of governmental funding levels for housing aid to low- and moderate-income Americans underscores the importance of effective action to eliminate regulatory barriers to housing development and affordability (“exclusionary housing policies”). Doing so does not require governmental spending. It merely requires governments to cease any unjustified constraints they have placed on the private production of housing (through excessive zoning and other regulatory restrictions), for the benefit of low- and moderate-income income people.

Those regulations (mostly local and state, but now subject to federal prohibition under the Commerce Clause) are arguably the primary culprits in the shortages of housing affordable to low- and moderate-income Americans. For more on this issue, please click on ECONOMIC EFFECTS OF EXCLUSIONARY HOUSING POLICIES; INTERSTATE EFFECTS OF RBHAs (2014).

Regulatory barriers to housing development

EHI focuses on regulatory barriers to housing development and affordability. The Trump Administration has not yet announced an initiative to address those issues generally, although Mr. Trump vowed action on them, as a Presidential candidate. For more on his statements as a candidate, please click on TRUMP ON REGULATORY BARRIERS TO HOUSING DEVELOPMENT.

However, Congress is moving toward repealing at least some of the credit restrictions of the Dodd-Frank Act of 2010, with the President’s full support. He and many members of Congress consider Dodd-Frank to have created regulatory barriers that unduly limit the number of Americans who can obtain home mortgages. For more, please click on TRUMP ADMIN. FY 2018 HOUSING BUDGET REQUESTS.

EHI website now has secure SSL encryption

Thanks to a very kind donation of time and expertise by Bo Tembunkiart, a nephew of EHI’s President, EHI now has a secure, SSL  website (https:// encryption) through its excellent ISP (SiteGround)—as well as numerous other improved computer operations. Mr. Tembunkiart, a rising sophomore at Carnegie-Mellon University, has a strong background and interest in computer technologies and intends to make his career in that field. Thanks so much, Bo!

Thanks, too, to EHI’s ace website developer Don Cranford of Katalyst Solutions, for repairing several glitches on our website in June. Don went ahead and fixed all the issues without even requesting compensation. He’s another EHI friend in need!

 

EHI donors come through once again in 2016

EHI supporters backed EHI very strongly again in 2016. A total of $5,565 in donations was received during the calendar year (EHI’s second highest annual total). Since EHI’s 2016 Year-End Appeal, EHI has received a total of $5,065, including $870.00 in 2017.

Thank you very much, once again, for your continued, strong support! Those donations will allow us to maintain our website and key research subscriptions, as well as meet our other operating costs, as we spread the word about how to expand housing opportunities in the right locations, for low- and moderate-income Americans. 

 

[1] Paul Emrath, Ph.D., Government Regulation in the Price of a New Home, p. 1 (NAHB Housing-Economics.com, May 2016). Those costs are NAHB’s estimates of average fees and other regulatory requirements nationwide on home builders during:

  • land development (such as the costs of seeking zoning/subdivision approval, of complying with changes in development standards, and of land the developer feels constrained to give away to the local government (“dedicate”) for public uses (roads, parks, etc.) in order to facilitate development approval; and
  • construction (such as permit, hook-up, impact fees, and changes in building and housing codes and standards over the past 10 years).

[1] Sydney Kashiwagi, Loudoun supervisors put Metro area plan on hold, send it to Envision Loudoun process for work, Loudoun Times-Mirror, Jun. 23, 2017.