Sep 4, 2019

D.C.'s growing low-cost housing gap

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Adapted from Turner et. al, 2019, "Meeting the Washington Region’s Future Housing Needs"; Chart: Axios Visuals

The Washington D.C. region already has a severe shortage of affordable housing, and that deficit will widen over the next 10 years, according to a new report out today from the Urban Institute.

Why it matters: The lack of affordable housing means many low-income families, especially renters, have high cost burdens, live further away from their jobs and have long commutes — or end up leaving the region altogether.

  • Without affordable housing, employers have to pay more to attract and retain workers. Washington is the 5th-largest employment market in the U.S., and recent employment has grown fastest in the low- and high-wage jobs.

What's coming: The Washington, D.C. region needs 374,000 additional housing units by 2030, according to the economic growth rate projected by the Metropolitan Washington Council of Governments.

  • 40% of those additional units would need to be in the middle-cost range, and another 38% would need to be low-cost units to match projected needs. Low-income employment is expected to grow faster than the number of high-paying jobs.
  • D.C. Mayor Muriel Bowser has set a goal of building 36,000 new housing units, including 12,000 affordable units, by 2025.

The problem: Overall, the D.C. region's building has not kept pace with its population growth. Since 2010, it has added housing units at only 56% of the rate produced during the 2000s.

  • Most of the region's new housing development has occurred outside of the District of Columbia. And every jurisdiction had shortage of lowest-cost units, according to Urban Institute's analysis.
  • There's also significant competition for the existing low-cost housing units: The report found most households in the lowest-cost units could actually afford to pay more for rent — meaning they're squeezing out the households who really need the lowest rents.

The big picture: Due to the high cost of development in the area, the market doesn't incentivize the creation of more lowest-cost housing units without significant subsidies. But it's unlikely that federal funding for public housing and vouchers will increase anytime soon.

  • Affordability commitments will end for more than 80% of today's affordable units by 2035, raising worries that owners may choose to redevelop it to fetch the market rate when that time comes.
  • Only 6.7% of the region's vacant lots are zoned for multifamily housing.

What's next: Urban Institute researchers recommend that the local governments make targeted investments that preserve existing affordable housing units, while also incentivizing developers to build more in the low- and middle-cost ranges.

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