Development
Why can't we build enough housing?
This is the fourth in a 5-part series about how the Washington metropolitan area can provide housing options for its growing workforce. Read part 1, part 2, and part 3.Almost everyone would agree that we have an affordability problem here in the Washington region. We have argued that localities are neither planning for, nor facilitating, a sufficient supply of housing at all price or rent levels. What are the obstacles keeping us from getting enough affordable housing built?
Photo by thisisbossi on Flickr.
Demand for housing in the region continues to grow. More than 80,000 households moved into the region last year. Home prices continue to escalate; they are up 8% regionwide in October. We need to build nearly 40,000 new units each year until 2030 simply to keep up with job growth, yet we're only on pace for about 15,000 new units in 2012.
Why? There are dozens We suggest 5 here, and look forward to reading your discussion of these and others: Burdensome local processes: The local process for getting residential projects approved and built is complex, costly, time-consuming, and uncertain. Fees and proffers can add between $30,000 and $50,000 to the cost of a housing unit.
The developer also is required to provide many "extras" that may not specifically have been among the items demanded by the buyer. The most recent buyer ends up paying for amenities that the entire neighborhood enjoys Contrary to popular belief, it is not necessarily the developer who pays; the extra costs usually are incorporated in the final sales price or rent amounts. If the cost is more than what the market will bear, the project simply won't get built.
Neighborhood opposition: As the nature of housing demand changes to favor more urbanized areas served by transit, development of new units often is confronted by massive opposition from existing residents. Understandably, they are concerned about a change to their way of life and are not eager to invite potentially more traffic to their neighborhood. They haven't always received enough information to understand that new development, when designed properly, may actually lead to less traffic and more community-serving amenities.
When demand is already being felt in an area, but the locality's comprehensive plan and zoning haven't been updated, an individual development proposal encounters the strongest headwinds. It may take 18 to 24 months for a new neighborhood or sector plan to be prepared, and to overcome opposition.
When zoning has not been recently reviewed or updated, it effectively prevents newer housing designs by requiring obsolete lot sizes, unit sizes, and configuration of parking spaces; and mandates too much parking, doesn't allow enough height, doesn't allow retail under residential units, and a multitude of other "don'ts." Often densities are too low in areas where local leaders and staff agree that mixed use development or mid- to high-rise housing development is desirable.
All this means a good project can be prevented or delayed until the appropriate zoning framework is in place. By then, time has passed, costs have increased, and the market window may have closed. The needed housing units are not built.
Demand: Strong job growth and high wage earners push housing prices up across the region. Proximity to jobs, access to transit and other transportation, high-quality housing construction, and diverse neighborhood amenities are all associated with relatively higher housing costs. We know that income growth has not kept up with the increase in housing costs; however, we live in an area where many households have very high incomes. Higher income households that can afford to pay more put upward pressure on rents (and home prices) in high-demand neighborhoods.
As a result, lower income households Federal and state regulations: In addition to local regulations, a variety of state and federal regulations relate to new home construction. States have transportation and environmental regulations that apply to new projects. for example, a requirement to conduct traffic impact analyses when traffic is expected to be over a certain threshold, and the power to deny curb cuts or access to state roads.
At the federal level, water quality regulations are controlling runoff to local watersheds, pre-empting local decision-making on the right location for new housing units. The developer has to work not only with local planning staff, but often also with a range of state and federal agencies and reviewers during each development application.
As there is no one who can coordinate agencies at different levels of government or unify their comments on a development application, there is the potential for prolonged back and forth on certain requirements where different governmental levels have regulations that conflict with those of other levels. Regional non-coordination: A lack of regional coordination has exacerbated the housing supply problem in the Washington region and has contributed to an inefficient geographic allocation of housing. Each local jurisdiction employs its own process for approving new housing developments. Not only are the processes complex, they vary widely from jurisdiction to jurisdiction. In all cases, local elected officials focus assiduously on the desires of their constituents and the impacts of new development on their current residents.
Jurisdictions across the region constantly compete with each other The problem of a lack of coordination is heightened in the DC metro area, where we have three state regions There is no regional governing body with the authority to coordinate efforts to plan for and get constructed a sufficient supply of housing, of the right types and in the right places. Virginia and Maryland have some combined coordinating bodies, for example the Northern Virginia Regional Commission and the Maryland National Capital Park and Planning Commission, but these don't cover all the jurisdictions in the metropolitan area.
The Metropolitan Washington Council of Governments and other organizations convene groups of local leaders to discuss regional issues, but without legal or regulatory authority. The regional discussion tends to culminate in the signature of "compacts" which are broad philosophical agreements, but true coordinating action in housing or transportation is hard to come by.
All this adds up to big problems
These, as well as other issues not highlighted here, are obstacles to providing a sufficient amount of housing and the appropriate types of housing this region will need to support population and job growth.
Local officials are well aware of these issues, but in the daily travail of meeting their budgets, maintaining their bond ratings, and satisfying their constituents, they are hard-pressed to focus on long-term regional goals, instead meeting challenges as they arise, one at a time. This is exhausting for all concerned Is it possible to step back, and take concrete steps that would help us achieve our regional housing goals? In our next post, we will present some initial solutions.Household income Estimated # households Maximum monthly rent* Less than $50,000 546,000 $1,250 $50,000-$99,999 605,000 $2,500 $100,000 or more 896,000 n/a Median household income of $87,653 $2,191
* Assumes a maximum of 30% of gross income spent on rent.
Lisa Sturtevant is Deputy Director of the Center for Regional Analysis at George Mason University. Dr. Sturtevant's primary areas of research include housing, demographics, and economic development. Prior to working at the GMU Center for Regional Analysis, she spent four years as County Demographer in the Arlington County Department of Community Planning, Housing and Development. 
Agnès Artemel became interested in revitalizing cities after growing up in France and Germany, where livable and walkable have always been the norm. She is a founder of the Northern Virginia Streetcar Coalition and Alexandrians Delivering smart growth Around Metro (ADAM). Her professional focus is on market and feasibility studies, real estate development approvals, and economic development partnerships. Agnès has a Masters in urban and regional planning.
Comments
@ggwash
- Bikeshare is a gateway to private biking, not competition
- Latest Metro map drafts add Anacostia parks and other tweaks
- Short-term Washingtonians deserve a voice, too
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- Public land deals have both benefits and pitfalls
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Again, the height limit in DC isn't mentioned. Amazing. I am pretty sure it is the only thing that is preventing the second coming of Christ.
Too much conflating of the region vs. DC. And no talk about financing. The biggest driver of rental housing is the inability of many families -- because of low credit scores or scattered employment -- to get mortgages.
That may be the new normal, and i'll grant you it is easier to built multi-unit rentals than single-family rentals.
by charlie on Dec 6, 2012 10:43 am • link • report
The process is burdensom, but if prices are so high, I'm not sure these fee's are holding any developers from making their profit margins, although the process needs to be simplified for everyone's sake.
As to nimbyism,
That goes back to the government and not having the spine to enforce by-right zoning, meaning besides arguing about style like in a historic neighborhood, there should be no neighborhood opposition that impeads builing.
As to demand,
That's where moving forward with the street car network would greatly help by making other neighborhoods accesible by reliable transit. What's through the roof? Transit neighborhoods. Why? Not enough of them. The ensuing density will bring more amenities and so rolls the ball.
I hope you're successful in improving the situation. The immediate thing we could do is improve the security at the various neighborhoods that do have metro access. Years ago when DC saw Logan Circle being gentrified, they brought in the Police (on my old R street block) in force. Basically, set up night after night and chased the drug dealers away. Why did they wait for heterosexual yuppies to move in before creating a safe environment for the residents?
I wish you all the luck in your efforts.
by Thayer-D on Dec 6, 2012 10:54 am • link • report
Again, the height limit in DC isn't mentioned. Amazing. I am pretty sure it is the only thing that is preventing the second coming of Christ.
[Deleted] none of the height limit opponents are claiming its repeal would be a silver bullet. Likewise, [deleted] opposition to the height limit is an attack on the most obvious symbol of restrictive zoning.
[Deleted] How about this passage?
When zoning has not been recently reviewed or updated, it effectively prevents newer housing designs by requiring obsolete lot sizes, unit sizes, and configuration of parking spaces; and mandates too much parking, doesn't allow enough height, doesn't allow retail under residential units, and a multitude of other "don'ts." Often densities are too low in areas where local leaders and staff agree that mixed use development or mid- to high-rise housing development is desirable.
by Alex B. on Dec 6, 2012 10:55 am • link • report
My reading of that line about height limit's didn't trigger a skyline full of skyscrapers, but rather more height in outlining neighborhoods, unless we're still talking about all density needing to be ontop of the downtown core.
by Thayer-D on Dec 6, 2012 10:59 am • link • report
I think the issue of regional cooperation is most interesting.
by AWalkerInTheCity on Dec 6, 2012 11:06 am • link • report
by David on Dec 6, 2012 11:10 am • link • report
by goldfish on Dec 6, 2012 11:35 am • link • report
Preventing development in your neighborhood is no guarantee of keeping traffic stable. Besides we're talking about marginal additions to most neighborhoods. If the addition of one building is the final straw for a neighborhood's traffic then the actual problem was reach long before that building was proposed.
by drumz on Dec 6, 2012 11:45 am • link • report
So, to be clear: removing the congressional height limit might lower the cost of new residential housing in a 15 year timeframe in one small part of the metro area (albeit a growing one). Wow. Talk about milking a unicorn.
by charlie on Dec 6, 2012 11:47 am • link • report
That being said, if there were more jobs accessible to the southern and eastern area, there is enough underdevelopment and underutilized infrastructure to offer huge opportunities for additional housing, and at least for a while, somewhat affordable because of lower up front property values and little need for expensive developer funded amenities.
Everyone wants to live and work in the DC core, or along the 66, 267 and 270 corridors (and some extent, 95 in both directions). We, and more specifically jurisdictions in the less preferred southern and eastern areas need to really figure out how to attract and retain employment and better distribute where the demand for new housing will be, lowering pressure on the north and west.
by Gull on Dec 6, 2012 11:47 am • link • report
Couldn't agree with this more. We have a substantial amount of underpriced and underutilized housing in the eastern half of this region - not to mention a solid transit network, and insist on pouring more housing and jobs into the western part of this region (ie, Arlington, Fairfax, and NW DC) irrespective of the historic core of this region that has already been built up!
by AA on Dec 6, 2012 12:38 pm • link • report
by Randall M. on Dec 6, 2012 12:47 pm • link • report
That's why they ought to be working out how to make more attractive and safe environments in the eastern and southern parts of the city that have metro. Using re-located or soon to be government institutions like the FBI would hopefully provide the catylist that developers seem hesitant to do. The kicker seems to be that we lack the political will. That's where I love this site, they put their influence (however much they have) towards advancing these issues.
Draw a new McMillan plan for DC and let's have this debate in the open. Present the various options, Houston, Vancouver, Paris, and let's vote.
by Thayer-D on Dec 6, 2012 12:55 pm • link • report
by andrew on Dec 6, 2012 1:10 pm • link • report
That's because of the uncomfortable truth that the poor residents will likely be displaced by any improvement of their neighborhood's condition (just like they were in Logan Circle).
It's the renter's paradox: Without rent control, renters actually have strong incentives to give their neighborhoods a poor perception among outsiders, as that keeps the rent down.
by andrew on Dec 6, 2012 1:12 pm • link • report
And therein lies the problem. There is no housing shortage in DC. There is a housing shortage, and thus high prices, in the more desirable parts of DC.
by dcdriver on Dec 6, 2012 1:32 pm • link • report
Two things: first, what's "affordable" is calculated using gross, not net, income. That's more or less the standard.
Second, that's because $1,250 is what a $50,000 family can afford. They took the top of the income bracket and calculated max monthly rent. The same thing happened with the $50,000-$99,999 bracket. No way a household making $60,000 can reasonably afford a $2,500 rent. The chart misrepresents what households can afford as a result.
Just an example: using the 30% gross threshold for "affordable" housing, $32,000/year income works out to $800 monthly rent.
by Birdie on Dec 6, 2012 1:40 pm • link • report
Sending more yuppies east of the river might relieve the housing shortage for yuppies in WOTR DC, but it won't really address the regional housing shortage.
by AWalkerInTheCity on Dec 6, 2012 1:42 pm • link • report
Yep, that pretty much says it all
by HogWash on Dec 6, 2012 1:49 pm • link • report
Yes. And in many of those, tenants might qualify for housing vouchers.
by HogWash on Dec 6, 2012 1:51 pm • link • report
by Birdie on Dec 6, 2012 2:25 pm • link • report
by drumz on Dec 6, 2012 3:00 pm • link • report
by Tom Coumaris on Dec 6, 2012 3:41 pm • link • report
In DC that's certainly true. But Smart Growth has a set of design and build standards that is meant to literally replace a lot of our architecture that is influenced by sprawl. It's a design aesthetic first then a general growth principle.
by drumz on Dec 6, 2012 3:54 pm • link • report
by drumz on Dec 6, 2012 3:54 pm • link • report
by AWalkerInTheCity on Dec 6, 2012 4:01 pm • link • report
by AWalkerInTheCity on Dec 6, 2012 4:02 pm • link • report
Our housing policies are as badly out of whack as our education policiies.
by Redline SOS on Dec 6, 2012 4:20 pm • link • report
by Gray's The Classics on Dec 6, 2012 4:28 pm • link • report
Judging by who posted that, I'm going to assume he means "take home" after he pays a ridiculous amount on student loans, and puts some more into a 401k, etc.
by MLD on Dec 6, 2012 4:39 pm • link • report
Why aren't there caps on $100K rents?
Because housing is a product just like everything else. Price controls don't work, never have, never will. Good things that many people want cost money. Things that are not as good and that people don't want cost less.
My takehome is $2200 a month.
There are people who through talent, hard work, or plain old luck make more than you. They get to buy nicer things. There are also people that make less than you. You get to buy nicer things then they do. Welcome to the world. Life isn't fair.
I would really love to purchase one of those rides on a private spacecraft but just can't swing it on my salary, perhaps the government should subsidize my trip?
A two bedroom takes half my monthly rent
So get a one bedroom, or move to a less expensive place. Again, not everyone can afford everything they want.
and doesn't take into account student loan payments.
This has nothing to do with housing. You have student loans, other people have other expenses. Again, you have a certain amount of money each month, how you chose to spend it is up to you.
Our housing policies are as badly out of whack as our education policies.
I have a nice place that I can afford. I also got a very good education with minimal debt. So for me both our housing and education policies are great. See what happens when you try to fix society to make only your life better?
by dcdriver on Dec 6, 2012 5:15 pm • link • report
Nevermind that $50k is only just below DC's median income.
We're not doing a good job of providing affordable housing, and it's insane that we're setting 30% of gross income as a target, rather than a firm maximum.
by andrew on Dec 6, 2012 5:15 pm • link • report
because the cap was for the income at the TOP end of the range in each row. The last row, 100k and above has no top of the range, ergo, no cap was shown. You can easily calcultate it however.
by AWalkerInTheCity on Dec 6, 2012 5:19 pm • link • report
Huh? I really don't get this posturing on housing. Ultimately, the amount of housing built will be determined by the market, by supply and demand. It's that simple. Yes, it is. Of course there's a myriad of factors affecting the construction of new housing, and the article touches on several. But the core marketing principle of more demand equals more development is nearly inviolable.
Just look around. DC, Arlington, and Alexandria are experiencing a housing boom. Developers, both big and small, are gearing up. Moreover, dozens of projects, if not hundreds, are ready to go or are in the planning stages. Merrifield is hopping, and dirt is being turned in Tysons, Reston and Dulles. Then there's Bethesda, Silver Spring, Rockville, all of which are seeing a burst of activity.
For what's happening on the development front, check this out: http://dc.urbanturf.com/pipeline/
Of course the number of units built in the last few years is down. Didn't we just pass through a significant economic upheaval, the, um, "great" recession. Ah, yes. But with the sharp downturn now easing, developers are busting at the gut to get going with their projects throughout the region. And they will keep building and building until demand slackens. And the various municipalities that make up the GGW region will undoubtedly keep on approving said projects because it means growth and prosperity and greater tax revenues on all fronts, income, sales, and property. DC's plan is to boost its population to 700,000.
It's no secret our little place in the world is increasingly popular. We all know this. It's been steadily growing for many, many years. Although there are a few low-laying clouds obscuring the near future, the upcoming years and decades look promising.
Of all the people and businesses who are in tune with what's been happening, it's housing developers who are most keen. When demand blossoms, they build; when it slackens, they don't. If people keep coming, it's inevitable housing developers will respond to meet their needs, whether it's apartments, condos, townhouses, single-family residences or massive mansions.
Is the region's housing market under pressure at this particular moment. Oh, very much so. Rents are pushing higher. And house prices are once again climbing. But with the new product coming online--and there's lots of it--we're likely to see the market stabilize soon, undoubtedly a relief to many.
Isn't it better to live in a region with a robust housing market than one that's not? In the long run, the market will sort itself out. Demand will dictate how much housing is built and of what type. Are we building enough housing? I'm not sure this is something we should be worrying about.
by Sage on Dec 6, 2012 5:30 pm • link • report
by mike on Dec 6, 2012 5:39 pm • link • report
The post outlines several constraints on supply that are quite real and add to the delivered price of housing.
We have constraints on supply - we have high prices. I think its the working hypothesis has to be that the constraints are driving the high prices.
Maybe there are other factors slowing the delivery of new units and the return to an equilibrium where housing prices are closer to the cost of construction. But meanwhile, what harm is there in examining the constraints to see if they make sense - if they can pass a cost benefit test?
by AWalkerInTheCity on Dec 6, 2012 8:12 pm • link • report
This suggests a market that is not functioning properly.
"Isn't it better to live in a region with a robust housing market than one that's not? "
A market this overheated? It depends. If you own one of the units in scarce supply, than sure. If you are looking to buy one, not so much. If you are having trouble saving to buy because of what you pay in rent, not so much. If you are an employer who must pay a premium for labor, making you less competitive in national markets, not so much. If you are a federal agency having difficulty attracting top talent, not so much.
by AWalkerInTheCity on Dec 6, 2012 8:15 pm • link • report
good point. we are talking about a few units affordable to folks at 50k. To be affordable at less than 50k, subsidies/vouchers are needed. And some of those units are probably in poor condition, not walking distance to metro, or in locations where crime is a very real problem. And unless prices stabilize immediately, it will get worse.
Policy changes that make sense on their own terms can help address the problem. As a side benefit they can help people like Redline SOS, whose problems, though real, are not about affordable housing in the same sense as those faced by families earning 50k or less.
by AWalkerInTheCity on Dec 6, 2012 8:24 pm • link • report
That's great because I'd always assumed they did increase costs.
by Tom Coumaris on Dec 6, 2012 10:51 pm • link • report
by SmrtGrowth on Dec 7, 2012 12:30 am • link • report
Also, I don't think IZ is a "big constraint" on market-rate housing. It depends on what you compare it to. I think lots of the projects in DC get to include extra market-rate units over what they would have been allowed, so in reality IZ allows for MORE market rate units to be built than would otherwise be allowed by right.
by MLD on Dec 7, 2012 8:30 am • link • report
by Alan B on Dec 7, 2012 12:36 pm • link • report
Of course it ignores the idea of taking housing and transportation costs together in figuring out where "affordable" places are.
by MLD on Dec 7, 2012 2:05 pm • link • report
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