Having a sufficient supply of housing that is affordable to the workforce is critically important for attracting and retaining workers and supporting robust local and regional economic growth. Diverse housing options at a wide range of price and rent levels creates a competitive economic advantage for a community. Businesses and local government leaders around the country are recognizing the importance of housing and quality of life. Decisions about where to locate or expand a business increasingly are coming down to housing availability and affordability.
LSA has developed and refined a housing demand model that links anticipated job growth in a region to the amounts, types and prices/rents of housing that will be needed to accommodate future workers. Like other housing forecasts, our model is designed to help communities plan for a sufficient supply of housing. Unlike more traditional demographic-based forecasting models, however, we explicitly tie housing to job growth. By approaching housing demand forecasts this way, it is easier to engage a broad range of stakeholders—including employers, chambers of commerce, economic development agencies—in the conversation about making land use and zoning changes necessary to expand and diversify the housing supply.
Our employment-driven housing demand model is organized around four questions:
- How much housing will be needed to house a region’s new workers? The forecasts estimate the number of housing units that will be needed to house a region’s net new workers over some period (e.g. 10 years, 20 years).
- Where should this housing be located? The housing demand forecasts link the location of needed housing to the locations of new jobs, at the county and/or municipal level.
- What types of housing units will be needed? In addition to understanding the overall amount of housing needed, these forecasts assess the demand for detached single-family homes and multifamily housing (i.e., townhomes, apartments and condominiums), as well as the demand for owner and rental housing.
- What prices and rents will new workers be able to afford? The housing available to a region’s future workforce must be priced at levels that are affordable. The forecasts take the wages of new jobs into account, along with assumptions about household composition and workers per household, to forecast housing demand at different price and rent levels.
We’ve completed housing demand forecasts for the Washington DC, Indianapolis, and Des Moines regions. Our most recent projects was in the Minneapolis-St. Paul region. We’re hopeful that this work will help local officials engage with the business community on the important issue of housing availability.