Housing Supply & Affordability
Markets work with housing much as they do with any other commodity: limited supply results in higher prices. Here in the DC Metro area, we have some of the highest housing costs in the country. Yet according to a 2011 study by the George Mason University Center for Regional Analysis, local jurisdictions aren’t planning for a sufficient number of residential units to house the estimated one million new workers expected by 2030. In Montgomery County, we expect to need about 100,000 additional housing units over the next twenty years. Due to changing demographics and declining household size, housing forecasts show that the greatest demand will be for multi-family housing. In order to combat sprawl and traffic, most of this new housing should be located within the urban core and near transit, jobs and amenities.
Slate writer Matthew Yglesias has written extensively on how market forces affect housing costs. However, affordable housing discussions usually center around the role of government in subsidizing housing or in requiring developers to provide below-market rate units as part of any new housing development (in an earlier post, we discussed what constitutes “affordable housing”). In Montgomery County, for example, any new subdivision with twenty or more housing units must set aside at least 12.5 percent of them as “moderately priced dwelling units.” The county then markets these homes and rental units to moderate-income households making 60-70 percent of the area median income.
Montgomery County’s MPDU program has been praised as a progressive effort to create mixed-income communities countywide and maintain the affordability of private rental stock. Combined with the county’s other affordable housing efforts, which include direct subsidies and other services and supports, the MPDU program attempts to address a serious lack of affordable housing.
But these “demand-side” efforts are insufficient to ensure enough affordable housing for Montgomery County residents, especially its young workers and seniors. We simply don’t have enough rental housing to satisfy the demand at all levels of the economic spectrum, especially in desirable locations near transit. Building more units, even at the high end, releases pressure on rental housing at the lower end. For this reason, artificially restricting the supply of multi-family units while lamenting the lack of affordable housing doesn’t make sense. In addition to pursuing traditional demand-side affordable housing policies, we need to focus on supply and make sure we build enough housing to meet the needs of all our residents.
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