In 2016, the homeownership rate for 25 to 34 year olds was 34.0 percent, down from 46.6 percent in 2006 and 41.0 percent in 2000. Rates of homeownership among Millennials households remain relatively low for a variety of reasons, some interrelated – uncertain economic prospects following the Great Recession, a tight mortgage market, rising student debt, lower rates of marriage and childbearing, low inventories of homes for sale that are affordable to first-time homebuyers. But there is still a lot of evidencethat younger households wants to become homeowners eventually. So what do we know about Millennial homeowners in the Washington DC region?

Approximately 41.1 percent of older Millennials are homeowners in the DC region, compared to 16.0 percent of younger Millennials. (Over 70 percent of households headed by someone over age 35 are homeowners.) Using microdata from the 2016 American Community Survey (ACS), I looked at the residential location patterns and characteristics of Millennial homeowners in the region. The maps below show the homeownership “hot spots” for older Millennials—27 to 35 year olds—and younger Millennials—19 to 26 year olds.

Homeownership “hot spots” are defined as places where homeownership rates for Millennials are more than twice as high as they are in the region as a whole. A “high proportion of homeownership” indicates places where the homeownership rate is between 20 to 50 percent higher than the regional average, and the “higher proportion of homeownership” indicates places where the homeownership rate is between 50 and 100 percent higher than the regional average. (Note: I used PUMAs instead of Census tracts because of sample size considerations.)

Despite the fact that Millennials are very concentrated in the region’s core, the pattern that stands out immediately in these two maps of Millennial homeownership is that Millennials are not buying houses in the core. The homeownership rates for Millennials are significantly lower in DC, Arlington, Alexandria and good portions of inner Montgomery, Prince George’s and Fairfax counties than they are more generally in the region.

There are no “hot spots” for homeownership (based on the definition above) among older Millennials; however, there are relative high proportions of older Millennials homeowners in the Olney/Clarksburg areas in Montgomery County, the Clinton/Fort Washington areas in Prince George’s County, much of Loudoun County, the Gainesville area in Prince William County and the Burke and Springfield areas in Fairfax County.

Among younger Millennials, there are striking hotspots of homeownership (e.g. where homeownership rates are three or four times higher than the overall homeownership rate for young Millennials) in Clarksburg/Olney, Frederick County, Charles County and Berkeley/Jefferson counties in West Virginia. Younger Millennials also tend to be concentrated as homeowners in the Wheaton/Glenmont portion of Montgomery County.

Therefore, young Millennial homeowners are very likely to be in more suburban and even exurban neighborhoods where home prices are lower and where there are more single-family homes (see below).

There does seem to be some evidence that younger Millennials are buying homes in closer-in neighborhoods than older Millennials are, particularly in parts of Fairfax and Montgomery counties. While homeownership may be out of reach in the closest-in neighborhoods, there may be a cohort of younger Millennials that have stronger preferences—and have the financial wherewithal—to buy homes in transit-accessible, more compact neighborhoods, and they are likely buying condos instead of townhomes or single-family detached homes. This pattern could also simply reflect the fact that this cohort is younger and less likely to be married or have children.

Among older Millennials homeowners, 14.8 percent live in a condominium in a multi-family building but that share is 19.8 percent for younger Millennials. Thirty-five percent of older Millennial homeowners live in a townhome, compared to 29.8 percent of younger Millennials homeowners. However, younger Millennial homeowners are just as likely as older Millennial homeowners to live in a single-family detached home. Half of Millennial homeowners in the region live in single-family detached homes (71 percent of older homeowners in the region are single-family home dwellers).

Housing Type – Homeowners in the Washington DC Region (2016)

This issue of financial wherewithal is really important. According to this ACS data, the median household income for older Millennials who are homeowners is $116,600 compared to just $78,500 for younger Millennials homeowners.

Future blogs will report out in more detail on the demographic and economic characteristics of Millennial homeowners and renters in the DC region. In the meantime, please don’t hesitate to reach out if you are interested in more information!

When Amazon set out to look for a location for its second headquarters, HQ2, it released a detailed RFP that made clear the type of community it felt would be best for supporting the growth of its company. Amazon specifically asked communities competing for HQ2 to clearly describe their quality of life, including information about “diversity of housing options, availability of housing near potential sites for HQ2, and pricing.” In essence, Amazon was saying that housing availability and affordability is important in attracting new businesses.

Over the past decade, the housing affordability crisis has worsened in communities across the country. Young professionals and working families alike increasingly have a hard time finding housing they can afford, particularly in neighborhoods that are well-connected to employment options, transportation, and other services and amenities. Rising housing costs, insufficient new residential construction and stagnant or slow-growing wages have led to the situation where teachers, police officers and nurses—as well as retail and restaurant workers, workers in creative industries, and entry-level technology workers—are forced to either commute long distances to find housing they can afford or double or triple up in shared housing to reduce housing costs.

When the local workforce can’t find housing they can afford, the entire community suffers. It has been well-established in the research that having access to affordable and stable housing in good neighborhoods is associated with positive health, education and economic outcomes for individuals and families. But having a sufficient supply of housing affordable to households all along the income spectrum is also critical to supporting vibrant and sustainable local economies.

There are several ways to think about how housing availability and affordability relates to a community’s economic health and prosperity. Lower-wage workers in the community will be among the first to feel the pressures from higher rents and prices if there is an insufficient supply of affordable housing. This can include workers in the retail and restaurant sector, the travel and tourism industry, and in many critical community serving occupation such as child care workers, nursing assistants and home health aides. In James City County, Virginia, for example, we found that the median wages in seven out of ten of the county’s largest employment sectors are not sufficient to afford the typical rent in the County, not to mention the typical price of a for-sale home. This includes many workers that are vital to the county’s tourism-based economy, including retail and restaurant workers and hotel front desk staff and housekeepers.

When there is not enough housing affordable to lower-wage workers, these workers are often forced to look for housing further out which creates longer commutes for those workers and more traffic congestion for everyone. Furthermore, as workers have a harder time living in the community, businesses have a harder time finding workers to hire. For example, in Asheville, North Carolina, restauranteurs are having trouble like never before in staffing their restaurants.

Workers in higher-wage sectors have more housing choices; however, even these households will face affordability challenges if there is not a sufficient supply of housing, at the right prices/rents and in the right locations in the community. Young workers are increasingly looking tomove out of high-cost areas. But even places with more affordable housing options are beginning to see the risks of not having enough housing to support their growing workforce. In the Des Moines region, which was named the 2017 Best Affordable Place to Live by U.S. News and World Report, elected officials and business leaders alike are beginning to recognize that the competitive advantage that their lower cost of living provides is not guaranteed. If the Millennials who have flocked to Iowa in recent years cannot find appropriate and affordable homeownership options, they are apt to leave to find the next best place to settle. And businesses will likely follow.

Even if workers do not leave the community, there will still be implications for the local economy of a lack of housing that is affordable to workers at all income levels. As workers are forced to spend more on housing, they spend less on goods and services in the local community. As a result, the local economy is less able to support diverse retail, restaurant, recreation and other amenity options.

As the Amazon HQ2 process illuminates, businesses are increasingly saying that they are looking at quality of life, economic diversity and cultural tolerance as they seek to locate or expand. A key component of that quality of life is housing availability and affordability for workers from the CEO all the way to the line worker or entry level salesperson.

If we can help you think about how to integrate your economic development and housing strategies, please don’t hesitate to reach out!

According to recent research from a collaboration of public policy, advocacy and economic research organizations, 23 states in the United States built 7.3 million too few housing units between 2000 and 2015. The biggest deficit was in California, where fast job growth has attracted millions of new residents and metro areas up and down the coast have failed to keep pace with housing demand. But housing shortages were documented all across the country, from the Sunbelt to the Midwest to the Northeast. As the authors note, “such a shortage restricts economic growth, raises rents and housing prices, hurts quality of life, and has negative impacts.”

If there is such a huge unmet demand for housing, then why aren’t we building enough housing? Several key factors limit housing availability. Land and labor costs can make it prohibitive in many markets to build all but the most expensive housing. However, state and local regulations and community opposition that has become part and parcel of the entitlement and development review process are the biggest reasons why we don’t have enough housing in the places where there is the most demand, particularly in the most economically productive regions.

The solution seems easy then. Change land use and zoning regulations to allow more housing. For example, allow four-plexes as of right in neighborhoods historically zoned for single-family detached homes like Minneapolis is considering. Intentionally plan for high-intensity development in areas well-served by transit, as exemplified by the Rosslyn-Ballston corridor in Arlington, Virginia. Create a process such that multifamily residential can be fast-tracked in areas that are not meeting housing targets.

But changing land use and zoning regulations to allow more housing is almost never easy, and there are lots of things that need to be considered above how to change specific language in a zoning ordinance.

It is critically important to understand and respond to community opposition to (and fear of) change.Bring together opponents to change–no matter how disparate the issues they represent–and provide an opportunity for dialogue. It is essential for there to be local political leadership willing to be out front.Policies and regulations to increase housing supply should be made jointly with decisions about transportation and transit, schools and economic development.Solutions must be consistent with a shared vision developed with broad community input.

Even if we know a key solution to the housing crisis is to change land use and zoning to allow more housing, the local process for getting to those changes will determine whether there will be sustainable impacts on housing availability and affordability.

What do you think? How important is process relative to policy? I’d love to hear from you!

The Local Solutions in Action series highlights strategies for expanding housing options and increasing housing affordability. The focus is on land use, zoning, financial and other regulatory tools that are available to cities, counties and towns that can be used to meet the housing needs of their residents and workforce.

New residential construction typically goes through a process that involves review and approval by multiple local government departments (e.g., planning, zoning, transportation). The review process can sometimes lead to the necessity of re-doing project plans or conducting additional studies to gain local support for the development.

Delays and unpredictability associated with project review, zoning, permitting, entitlement, and other approvals processes add to the final costs of new housing. Some of the specific costs associated with the review and permitting process include application and review fees, requirements for special studies (e.g., transportation management, tree preservation), explicit impact fees or proffers, and other negotiated conditions. These costs typically are passed on to the final occupant of the new building and make it more difficult to build housing affordable to lower-income households.

Expedited permitting can be one way of reducing costs to help promote the development of housing affordable to low- and moderate-income households. Fast-tracking review and permitting of affordable housing projects reduces the cost of building housing at no cost to local jurisdictions. A more streamlined review and approval process may also mean fewer opportunities for community input on proposed projects which could be a hard sell. It is important, therefore, to build trust and buy-in from the larger community to support an expedited permitting process for new residential development.

Montgomery County, Maryland implemented its “Green Tape Program” to provide a streamlined and expedited permit process for new commercial construction in state-designated enterprise zones and for residential or mixed-use developments that designate at least 20 percent of the total number of housing units for residents with income levels in line with the County’s Moderately Priced Dwelling Unit (MPDU) program. (The baseline MPDU requirement is 12.5 percent affordable units.)

Qualifying developments receive expedited application review and permit processing. The county has assigned staff to help facilitate the expedited process. The “Green Tape Team” is headed by a staff facilitator who assists applicants with the filing requirements, regulatory reviews, and inspections, including pre-design consultations and assessment inspections. The county facilitator also works with other county staff across departments to ensure, to the greatest extent possible, a seamless permitting and inspection process. The Washington Suburban Sanitary Commission and the Maryland National Capital Park and Planning Commission have signed onto the “Green Tape Program” to help with the faster review of eligible projects.

Through itsS.M.A.R.T. Housing Policy, the City of Austin, Texas provides an expedited permitting process, in addition to building permit fee waivers, for transit-oriented, affordable housing. City staff work with developers of single-family and multifamily housing, as well as mixed-use developments, to promote the production of housing that is affordable to households with incomes up to 80 percent of area median income (AMI). In exchange for providing housing affordable at this level, projects can be fast-tracked through the approval and permitting processes. The amount of fee waivers depends on the amount of affordable housing provided. Projects must meet a number of other requirements, including green building requirements, to qualify for fast-track review and fee reductions. Austin’s comprehensive S.M.A.R.T. Housing Policy has resulted in the production of more than 15,000 units affordable at 80 percent of AMI since its adoption in 2000.

Let us know if we can provide additional information on local housing solutions! Email lisa@lisasturtevant.com or call 703-598-1220.

Renewed interest in rent control in California and otherplaces is a reaction to growing housing affordability challenges across the country and in high-cost coastal markets, in particular. As rents continue to rise, rent control is being advocated as a mechanism to help mitigate the rental affordability challenge and make it easier for lower-income individuals and families find housing they can afford in high-cost regions.

I understand the instinct to create a policy to restrict rent levels. Regulating rents seems like a logical way to keep housing costs low for people who need affordable housing. However, there are pretty significant problems with rent control. Economists nearly universally agreethat rent ceilings reduce the quantity and quality of housing and that even more moderate forms of rent stabilization—which place limits on rent increases rather than rent levels—are inefficient and have negative housing market impacts.

There have been many empirical studies on rent control and rent stabilization programs. Many researchers have examined New York City’s rent control law, but others have taken a look at rent control in Washington DC, Boston, Los Angeles, San Francisco, and Santa Monica. In a recent research review and synthesis, I evaluated the findings from more than two dozen empirical studies of rent control.

Rent control and rent stabilization policies do a poor job at targeting benefits. While some low-income families do benefit from rent control, so, too, do higher-income households. There are more efficient and effective ways to provide assistance to lower-income individuals and families who have trouble finding housing they can afford.Residents of rent-controlled units move less often than do residents of uncontrolled housing units which can mean that rent control causes renters to continue to live in units that are too small, too large, or not in the right locations to best meet their housing needs.Rent-controlled buildings potentially can suffer from deterioration or lack of investment but the risk is minimized when there are effective local requirements and/or incentives for building maintenance and improvements.Rent control and rent stabilization laws lead to a reduction in the available supply of rental housing in a community, particularly through the conversion to ownership of controlled buildings. Rent control policies can hold rents of controlled units at lower levels, but not under all circumstances. Rent control policies generally lead to higher rents in the uncontrolled market, with rents sometimes substantially higher than would be expected without rent control.There are significant fiscal costs associated with implementing a rent control program.

Communities should understand the risks associated with rent control and rent stabilization policies and cast a wider net in terms of solutions for their housing affordability challenges.

A future blog will explore the question: If not rent control, then what?

If you need more information on the impacts of rent control—or research on any local housing policy—please contact me at lisa@lisasturtevant.com or call 703-598-1220!

I met my husband on Match.com. He is an awesome guy! But when you’re meeting people online, you can end up going on A LOT of less than awesome dates. Most of the time, the only fallout was an awkward hour over coffee or a drink. You usually don’t learn a lot about a person on a first date but you often learn enough. One experience I had really shaped how I now think about talking about housing affordability.

Over coffee, my Match.com date asked me what I did for a living and I talked a little bit about the research I was doing at George Mason University on the link between the Washington DC region’s economic development potential and housing availability and affordability. One goal of the project, I said, was to help local jurisdictions figure out ways to create more housing options so that lower-wage workers could find housing they could afford closer to their jobs. I mentioned that a sizeable share of service workers in our relatively high-cost area commuted an hour or more each way, every day to get to work. People like child care workers, housekeepers and bus drivers, and maybe even our barista.

My date looked confused. He said—exact words—“Well, shouldn’t it be hard to be poor?” He went on to rationalize that people who had to endure those long commutes would figure out a way to pull themselves up from their bootstraps so that they would earn more money and then could buy or rent place in his neighborhood. He had just bought a home and didn’t want an apartment building to be built nearby because he said it would bring down his property value.

Right then I realized, THIS is the guy that I need to keep in mind as I talked about local housing needs and strategies for expanding housing options. This is the guy that we’re going to want to try to bring into the conversation—not the housing advocates or nonprofit developers or even the local planning and housing. This guy—who could potentially go to a Planning Commission or County Board meeting and argue against new housing development because “shouldn’t it be hard to be poor?”

There are lots of reasons to help ensure that every community has housing options that are affordable to individuals and families of all income levels. Some reasons have to do with compassion and building a community that supports one another. Those reasons wouldn’t work with Match.com guy. But there is an economic case to be made for building housing affordable to lower-wage workers. Everyone benefits from less traffic congestion if workers commute shorter distances. Diverse retail and restaurant options can stay open if owners can find enough workers. And workers who live in our communities—all workers—also spend money in our communities which helps support the local economy.

I did not go out on a second date with him, but I actually think about that guy a lot as I do research on the links between local and regional economic growth and the availability and affordability of housing.

That apartment building did go up in his neighborhood and while I don’t know exactly which house was his, I do know that over the last 10 years, average home prices in his neighborhood have increased by more than 50 percent. Perhaps he realized he had been wrong about the impact of affordable housing on his property value.

If you’re interesting in learning more about how collaborate with local partners to develop strong communication tools and messages around housing affordability, please contact me at lisa@lisasturtevant.comor 703-598-1220.

Age matters a lot when it comes to predicting where someone lives. Looking at residential location patterns by age might help us predict future housing demand in different types of metros. A lot has been written about how Millennials are choosing to live in different places than earlier generations did and that Baby Boomers are downsizing and urbanizing at unprecedented rates. While few write about Gen X’ers—my cohort and the forgotten stepchild of demographics—it is important to understand their residential location patterns, too, if we want to understand the whole housing market.

Using microdata from the 2016 American Community Survey (ACS), I looked at the residential location patterns of three generations of residents in the Washington DC metropolitan area: Millennials (age 19 to 35 in 2016), Gen X’ers (age 36 to 51), and Baby Boomers (age 52 to 70). For each metro area, the share of Millennials, Gen X’ers and Baby Boomers in each area (defined by the Census Bureau’s Public Use Microdata Areas, or PUMAs) was compared to each generation’s share in the overall metro area population. Generation “hot spots” are identified as places where there is a relative high concentration of a particular generation. (Note: I used PUMAs instead of Census tracts because of sample size considerations.)

There are an estimated 6.7 million residents of the Washington DC metropolitan area, as defined in the ACS microdata. About a quarter of the region’s residents (23.8%) are Millennials, 22.7% are Gen X’ers, and 21.8% are Baby Boomers. (The rest of the population is made up by children age 18 and under and seniors over age 70.)

Not surprisingly, the hot spots for Millennials are in the District of Columbia, Arlington and Alexandria, along with the College Park area in Prince George’s County. However, there are also concentrations of Millennials in perhaps unexpected places around the DC region, including Manassas, some parts of Prince George’s County, Germantown and northeast Loudoun County (e.g. Sterling). Some of these younger adults in suburban neighborhoods may be living in their parents’ homes but others are part of the group of young adult residents that have sought out more affordable housing in the region.

Because Millennials span the age range from 19 (i.e. many still in school) to 35 (i.e. many married with or without children), it is helpful to look separately at Younger Millennials (age 19 to 26) and Older Millennials (age 27 to 35). In the Washington DC region, Younger Millennials tend to be more concentrated in the District, as well as in communities where colleges are located (e.g. University of Maryland, George Mason University, University of Mary Washington).

Hot spots of Older Millennials include South Arlington, Alexandria, and northwest DC, but also include neighbors in more suburban jurisdictions, including northwest Prince George’s County, Springfield, Annandale and the southeastern portion of Fairfax County; and the Sterling area in Loudoun County.

Gen X’ers are more likely to live in the suburbs than are either younger or older Millennials. Relative to their share in the overall population, Gen X’ers are relatively highly concentrated in the Ashburn and Leesburg areas of Loudoun County and in southeastern Montgomery County, including Takoma Park. To a lesser extent, there are concentrations of Gen X’er hot spots in the close-in areas of Alexandria and south Arlington, as well as in Prince William County (e.g. Dale City), and the Centreville and Reston areas of Fairfax County.

Finally, compared to Millennials and Gen X’ers, Baby Boomers in the DC region tend to be more likely to live in Montgomery County, as well as in areas further from the region’s center. Hot spots for Baby Boomers include Bethesda and Potomac, as well as eastern Montgomery County. To a lesser extent, there are concentrations of Baby Boomers in the northern and western sections of Montgomery County, parts of Frederick County; Bowie, Laurel and Oxon Hill in Prince George’s County; McLean and Vienna in Fairfax County, the Laurel area of Prince George’s County; and in the further out Northern Virginia suburbs around Fredericksburg.

The patterns of residential locations by generation generally conform with expectations about housing needs and preferences, with Millennials more likely to live in the city where there are more apartments, Gen X’ers in the inner suburbs where there are more townhouses and smaller housing options, and Boomers in the more distant suburbs where there are larger single-family homes.

The data on older Millennials may be instructive in thinking about where Millennials might live as they get older. Concentrations of older Millennials—those age 27 to 35—include some suburban neighborhoods where homeownership might be more attainable.

Future blogs will explore in more detail the housing and residential location choices of Millennials, Gen X’ers and Baby Boomers in the DC region and in other parts of the country. If you’re looking for data for your community, we’d be happy to help – please reach out!