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March 22, 2012

Housing Future Workers: The Region’s Economic Vitality Depends on It

Lisa A. Sturtevant, PhD is Assistant Research Professor at George Mason University School of Public Policy’s Center for Regional Analysis.

Every day, nearly a quarter of a million workers commute in the Washington DC Metro area.  They drive the length of I-66 from Winchester and head south on I-70 from Hagerstown.  They take MARC in from Baltimore and ride I-95 from south of Fredericksburg.  At the same time, hundreds of thousands of other workers in the region commute between jurisdictions within the metro area.  This dependence on non-resident workers and the volume of jurisdiction-to-jurisdiction commuting has made the Washington DC region #1 in terms of traffic congestion and delays, according to the Texas Transportation Institute.

Our traffic problems have more to do with an inadequate supply of housing than with insufficient transportation infrastructure.  And if we don’t build sufficient housing in the coming decades, not only will our traffic problems get worse, but our economic vitality will be at risk.

Over the next 20 years, the Washington region will add slightly more than a million net new jobs.  We will need 733,000 new housing units in order to accommodate these new workers.  That’s a big number.  It amounts to about 38,500 new housing units built each year, every year between now and 2030.  We have been far from this rate, reaching an average of only about 28,600 new housing units annually over the past two decades.  And this pace of housing construction is only what is needed to accommodate new workers.  There will also be 1.8 million jobs that will need to be filled as a result of turnover and retirement.  These replacement workers will also need a place to live.

So we need to increase the supply of housing in the region.  In addition, we will also need to build different types of housing for future workers.  Right now, about two-thirds of the housing stock in the Washington area is single-family and one-third is multi-family.  New workers, who will be younger and will be more likely to be single or childless, will demand more multi-family housing.  The housing needed for new workers over the next two decades will be roughly one-third single-family and two-thirds multi-family, the inverse of the existing stock.  Furthermore, given the mix of jobs coming to the region and the changing demographics of the labor force, there will be a need for lower-priced housing, particularly rental housing.

The need for housing is a regional one, and having an adequate supply of housing is critical to the economic growth of the Washington area.  But decisions about land use and development are made by individual jurisdictions.  The following are policy recommendations for local policymakers:

  • Housing should be included as part of a locality’s broader economic development strategy.  All jurisdictions want to attract jobs to their communities.  Employers have choices about where to locate, and having a sufficient supply of housing that is affordable to the full spectrum of workers will be an increasingly important part of the decision about where to locate.
  • Local governments should work with non-profit and for-profit residential builders to understand the market forces, regulatory requirements and other factors that shape the development process.  All parties should come to the discussion with a common objective of increasing the supply of housing that is affordable to the workforce and with the commitment to finding strategies to increase the availability of multi-family and rental housing near transit and employment centers, particularly for households with moderate incomes.
  • Like transportation, housing needs in the Washington area should be discussed in a regional context.  While development activity is controlled at the local level, it is important to understand the needs at a regional scale, as people and jobs will continue to move and locate throughout the region.

Results from the Center for Regional Analysis’ research on housing demand in the Washington area can be found at cra.gmu.edu.

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