"Promoting housing affordability by combating exclusionary housing policies"

 

CFC # 41863 (Combined Federal Campaign) 

 

 

            “Housing is a necessary of life.”

United States Supreme Court

Block v. Hirsch, 256 U.S. 135, 156 (1921)

(per Justice Oliver Wendell Holmes, Jr.)

 

Despite the general recognition of the crucial importance of a good home to human development, tens of millions of low- and moderate-income Americans do not have the opportunity to buy or rent decent housing in wholesome neighborhoods. 

Among the biggest barriers to those opportunities are exclusionary governmental housing policies (“regulatory barriers to housing affordability”), such as exclusionary zoning. "State and local regulations are among the principal culprits behind the nation’s persistent affordability problems,” according to the Harvard University Joint Center for Housing Studies.

Examples of exclusionary zoning are the widespread requirements for large lots and home sizes in American suburbs—where most jobs now are located, and where almost all new urban jobs are being created. Other exclusionary housing policies include costly, high-end building, housing, and subdivision code requirements that are unnecessary for health and safety; and protracted, unduly expensive permitting procedures.

Such regulatory barriers often nullify reasonable efforts to increase the supply of moderately-priced housing. In other cases they increase the cost of that housing tremendously. Rigorous economic research has found that such barriers have caused prices for basic houses to be 40-50 percent above the costs of construction in most of the major metropolitan areas studied, across the United States. In certain high-opportunity metros (including Pacific Coast metros such as Los Angeles, San Francisco, and Seattle), prices exceed construction costs by several times that amount. For more, click on ECONOMIC EFFECTS OF EXCLUSIONARY HOUSING POLICIES.

Similar problems with unjustified regulatory barriers pose the biggest obstacles to housing affordability worldwide. For more, click on McKINSEY REPORT ON MEETING GLOBAL HOUSING AFFORDABILITY CHALLENGE.

The Equitable Housing Institute (EHI) is a charitable organization that focuses on eliminating exclusionary housing policies in the United States, in order to reduce homelessness and poverty. EHI is the only national organization focused primarily on removing those barriers for all low- and moderate-income Americans.

EHI’s primary tools are education and public policy advocacy. During its first five years (2008-2013), its advocacy was a catalyst in the addition to local housing plans in its home county of more than one additional affordable unit per day, and more than eight additional housing units per day overall (on average). (EHI’s headquarters is in Fairfax County, Virginia, in the Washington, DC, region).) For more, click on ABOUT EHI. 

Nationally, EHI’s website provides information on many aspects of exclusionary housing policies and ways to remove them. EHI also has advised people in various regions of the United States regarding specific issues in their areas.

EHI “holds one of the keys [to] the goal of more integrated communities and schools,” and is an “obvious candidate for funding,” according to Inside Philanthropy magazine.  “With its detailed research on housing law, and its ability to help municipalities take a hard look at their assumptions and priorities, EHI has an important role to play in the fight for fair housing.”  For more, click on Inside Philanthropy urges funders to support EHI.

 

RECENT EHI ARTICLES

 

Wage increases are nearing rent increases nationally;
DC area continues its relatively low rent increases
 

The gap between wage and housing rent increases narrowed greatly in the year ending in March 2017. Nationwide, wage increases (“growth”) averaged about 2.5%, and rent increases (“growth”) averaged about 2.8%, during that period. Rent increases averaged about half of what they had been for the previous 12 months (according to Yardi Matrix, a major, online commercial real estate research and data firm).

According to Yardi, that reduced growth is “nothing to worry about” for multi-family builders, if the economy’s fundamentals remain strong. Robust, recent housing construction is largely responsible for the lower rent growth. 

In the DC Region, wage increases averaged 2.8% during the year ending in March 2017—well ahead of the average rent increase, which was 1.4%. However, non-luxury apartments had rent increases averaging 2.8%--far more than for luxury units, which averaged only a 1% increase. The non-luxury segment has less construction and more demand.

The fundamentals for further rental investment are still strong in the DC region, as in most major United States markets, according to Yardi. The DC-area trend toward lower rent increases, now in its fifth year, is gratifying to EHI, because that region is where EHI has concentrated its local advocacy. (Most low- and moderate-income people rent their housing.)

For more on recent rental trends in DC and nationwide, please click on RENTAL HOUSING COSTS 2017For background material, please click on EHI HELPS ITS HOME REGION TO MUCH-IMPROVED RENTAL HOUSING COST RECORD and DC-AREA RENT INCREASES CONTINUE MODERATE THROUGH OCTOBER 2016.

 

National and DC region housing supply and for-sale

home data presented at “Economic Summit”

EHI’s President attended an “Economic Summit” hosted by the Dulles (Virginia) Area Association of Realtors® on March 24, 2017. Among the presentations were: 

  • A comprehensive summary of the nation’s economic and real estate market outlook, given by Lawrence Yun, Ph.D., Chief Economist for the National Association of Realtors® (NAR); 
  • A summary of key data on current home building activity, nationally and in the DC region, given by Robert Dietz, Ph.D., Chief Economist for the National Association of Home Builders (NAHB); and
  • A discussion of major real estate trends in the DC region, given by Mark C. White, Ph.D., Deputy Director of George Mason University’s Center for Regional Analysis.

Dr. Yun predicted continued, robust growth of 4% in the median price of homes for sale in 2017, and ongoing growth of 3.2% in 2018. Dr. Dietz identified four “supply-side headwinds” that are constraining new housing construction and pushing up production costs nationwide. Those factors are: “Lots, Labor, Lending, and Lumber.”  

As to lots, Dr. Dietz identified exclusionary zoning as a major, ongoing restraint on the number of new houses coming on the market. He added that other regulatory costs of home building have risen about 29% over the past five years. (Among those costs are development costs to gain zoning/subdivision approval, and construction-related costs such as impact fees, and frequently-changing building and housing code requirements.)

Those other regulatory costs account for 24.3% of the final price of a new single-family home built for sale, according to the NAHB. For more on those regulatory costs, click on TRUMP ON REGULATORY BARRIERS TO HOUSING DEVELOPMENT.

Dr. Dietz said the DC metropolitan area generally, and Northern Virginia specifically, are doing quite well on new home construction, compared to the nation overall. Dr. White said that, nevertheless, the inventory of homes for sale in the DC region was down almost 10%, for the year ending in February 2017, compared to the preceding year. The median house sales price in the Washington MSA has risen steadily at an annual rate of roughly 3.5% for the past three years.

Loudoun County has had the greatest household growth rate in the DC region in recent years, and its home sales prices are going up, according to Dr. White. Loudoun’s active listing of homes for sale was down 22.2% for the year ending in February 2017. For more on the presentations at the “Economic Summit,” please click on HOUSING SUPPLY AND HOME BUILDING 2017. 

 

Trump Administration proposes dramatic reductions
in funding for many housing programs

On May 23, 2017, the Trump Administration released its first full-year federal budget request, covering fiscal year (FY) 2018. That proposal would reduce outlays for the Dept. of Housing and Urban Development (HUD) by nearly 15% ($7.4 billion). Overall, that proposal would reduce federal non-defense discretionary (NDD) spending by more than 2% per year for the next 10 years—a total of $1.4 trillion over that period.

The Trump FY 2018 budget requests include a $1 trillion infrastructure package, with $200 billion of that being federal spending. The infrastructure package may include some investments in affordable housing.  However, the fate of that infrastructure package is unclear as yet.

The President’s failure to divest his business assets or place them in a blind trust—the ways in which previous Presidents generally have avoided charges of conflicts of interest regarding their budget and policy proposals—may complicate his effort to sell his Administration’s budget requests. For example, a notable exception to the proposed HUD budget cuts leaves intact a type of federal housing subsidy which reportedly provides the President millions of dollars of gross income annually. For more on the Administration’s budget, please click on TRUMP ADMIN. FY 2018 HOUSING BUDGET REQUESTS. 

 Regulatory barriers to housing development

EHI focuses on regulatory barriers to housing development and affordability. The Trump Administration has not yet announced an initiative to address those issues generally, although Mr. Trump vowed action on them, as a Presidential candidate. For more on his statements as a candidate, please click on TRUMP ON REGULATORY BARRIERS TO HOUSING DEVELOPMENT.

However, Congress is moving toward repealing at least some of the credit restrictions of the Dodd-Frank Act of 2010, with the President’s full support. He and many members of Congress consider Dodd-Frank to have created regulatory barriers that unduly limit the number of Americans who can obtain home mortgages. For more, please click on TRUMP ADMIN. FY 2018 HOUSING BUDGET REQUESTS. 

The uncertainty of governmental funding levels for housing aid to low- and moderate-income Americans underscores the importance of effective action to eliminate regulatory barriers to housing development and affordability (“exclusionary housing policies”). Eliminating them does not require governmental spending. It merely requires governments to remove any unjustified constraints they have placed on the private production of housing (through excessive zoning and other regulatory restrictions), for the benefit of low- and moderate-income income people.

Those regulations (mostly local and state, but now subject to federal prohibition under the Commerce Clause) are arguably the primary culprits in the shortages of housing affordable to low- and moderate-income Americans. For more on this issue, please click on ECONOMIC EFFECTS OF EXCLUSIONARY HOUSING POLICIESINTERSTATE EFFECTS OF RBHAs (2014)

 

EHI expands involvement in major housing

planning in Loudoun County (Virginia)—

an outer suburb of Washington, DC

Loudoun County, Virginia, may have the greatest opportunity currently—compared to other jurisdictions in the Washington, DC, region—to increase its supply of housing for residents and workers. A major County planning effort is ongoing for major residential and nonresidential development near Loudoun’s two future Metrorail Silver Line (commuter rail) stations, which are scheduled to begin service in 2020. 

There also will be a third Metrorail station nearby, at Dulles International Airport (IAD). That station, which is being planned by the federal government, predictably will increase business at the airport and in Loudoun County. 

The amount of housing the County plans for, near those stations, will have an important impact on housing costs and supply for Loudoun residents, as well as a significant impact on people living elsewhere in the Washington, DC, region. Unless a sufficient amount of housing is planned, to balance and absorb the expanding workforce, there will be seriously aggravated traffic congestion, increased pressure on open space elsewhere in the county, higher and more volatile housing prices, increased poverty and homelessness, and lost economic development in the County.

EHI has been advocating for enough housing in Loudoun’s Metrorail-related planning to accommodate the tremendous job growth that is anticipated there. See, e.g., Loudoun County’s Metrorail-Related Housing Needs (2015).

In February 2017, EHI’s President, Tom Loftus, was appointed as an at-large member of Loudoun County’s Housing Advisory Board (HAB). The 13-member HAB advises the Board of Supervisors on a full range of housing opportunities in Loudoun County, with a focus on housing affordability, workforce housing, supply and demand issues, and funding options for affordable housing. The HAB receives regular reports on the County’s housing programs and policies, and it provides input on ways to enhance them. 

This year, the HAB has pursued an ambitious agenda. Among other things, it has:

  • Reviewed and helped mold the recently completed Housing Needs Assessment commissioned by the County (see further discussion below); 
  • Provided input on the new Public Sector Employee Housing Needs Survey conducted by the County’s Dept. of Family Services (see further discussion below); 
  • Increased its coordination with the County’s Economic Development Authority and Advisory Committee (there is an increasing realization that ample housing is key to attracting the kind of new business the County seeks); and 
  • Continued its representation on the County’s Comprehensive Plan Stakeholders Committee, which is advising the County government on “Envision Loudoun”—the first full-scale revision of the County’s Comprehensive Plan attempted in more than 15 years.

For more on recent steps in Loudoun’s consideration of housing needs, please see the articles below.

 

New Loudoun County Housing Needs Assessment and public employee poll show future need for much more housing than County has planned to date

Housing Needs Assessment

Loudoun County’s consultants, the George Mason University Center for Regional Analysis (“GMU”) and Lisa Sturtevant & Assoc., LLC, presented the final version of their Housing Needs Assessment (HNA) to the County Board of Supervisors on February 23, 2017. That report forecasts a likely shortfall of about 18,300 housing units in the county by 2040. 

That shortfall reflects the difference between the tremendous housing demand that will be created by new workers in the businesses Loudoun hopes to attract; and the amount of new housing that is permissible under current County land use planning and zoning. For more, please click on LOUDOUN HOUSING NEEDS SURVEYS 2017. To access the full report, please click on Loudoun County Housing Needs Assessment 2017. 

Public Sector Employee Housing Needs Survey

Loudoun County’s Dept. of Family Services is finalizing the results of a new Public Sector Employee Housing Needs Survey. Although the final version was not available as of June 2017, the preliminary version (presented at the May 10 meeting of Loudoun’s Housing Advisory Board) indicates that 22% of Loudoun government employees answered the survey. According to the preliminary report: 

  • 73% of those responding, who rent their housing in Loudoun, feel the amount they pay for rent and utilities is not affordable. Only 15% consider their housing costs affordable. And only 1% said that housing affordability is a reason they live in Loudoun. 
  • By contrast, only 44% of those who rent elsewhere feel that the amount they pay for rent and utilities is not affordable. Housing affordability is by far the leading reason those respondents gave for living outside of Loudoun (69% of responses included that reason). 
  • Among homeowners, 58% of those living in Loudoun said their housing costs are not affordable, whereas 63% of those living elsewhere feel their housing costs are affordable. About 86% of the responding homeowners who live outside Loudoun gave housing affordability as a reason why they do so. That was by far the leading reason given. 
  • About 63% favor increasing the supply of affordable housing units through government action, and/or by letting the laws of supply and demand determine the mix of housing and costs in the real estate market.

EHI advocates both of those approaches—action by the Loudoun County government to: (1) end unjustified zoning restrictions on the supply of housing; and thus (2) allow the laws of supply and demand to operate more freely and reduce housing costs. For more on the public employee poll, pleaseclick on LOUDOUN HOUSING NEEDS SURVEYS 2017

 

Loudoun Board of Supervisors puts Metrorail-area

housing and commercial development

issues on slower track

After years of intensive County planning for large-scale development around Loudoun County’s future Metrorail (commuter rail) stations, the County’s Board of Supervisors (BOS) has deferred a decision on the residential and nonresidential development issues. Rather, at its June 22, 2017, meeting, the Board moved those issues from the current “Silver Line Small Area Plan” track to the slower, County-wide Comprehensive Plan (CP) revision track (termed the “Envision Loudoun” process). 

At the June 22 meeting, several Supervisors said that more input on the Metrorail-area planning should be obtained from Loudoun residents, before deciding the residential and nonresidential development issues. Hopefully, the numerous public planning workshops, public presentations, and public hearings that already have been held on those issues will help inform the Envision Loudoun proceedings. 

The Envision Loudoun process may be delayed by a year or more by the addition of the Metrorail-area issues, however. (Even before that Board action, the Envision Loudoun report was not expected to reach the Supervisors until at least March 2018. Then, there would be an extensive review process, first by Loudoun’s Planning Commission, and later by the Board.)
The Metrorail-area planning issues the BOS decided on June 22 were to: (1) approve certain roadway projects in the area, and (2) attempt a new, full-fledged airplane noise study with the Metropolitan Washington Airports Authority (MWAA), which is quite concerned about residential development near the flights paths at Dulles International Airport (IAD). 

For more on recent events in Loudoun’s Metrorail-area planning, please click on LOUDOUN METRORAIL-AREA PLANNING UPDATE--JUNE 2017.

 

MORE EHI ARTICLES

 

  • 2016 Obama Administration Housing Development Toolkit addressed devastating impacts of regulatory barriers (primarily local exclusionary zoning and housing policies), on housing adequacy and affordability in America. It also discussed various action steps that states and local jurisdictions can take to reverse those impacts. For more, please click on 2016 WHITE HOUSE TOOLKIT.
  • U.S. Supreme Court ruled in 2015 that the federal Fair Housing Act prohibits housing practices that have a disproportionately adverse effect on members of minority groups—unless those practices have a justifiable purpose and properly limited scope. For more, please click on SUPREME COURT DISPARATE IMPACT DECISION.
  • HUD issued Affirmatively Furthering Fair Housing Rule (July 2015), requiring greater consideration of exclusionary and other discriminatory housing conditions by federal housing fund recipients. For more, click on HUD issues AFFH Rule. To read the Rule itself, you may click on HUD, Affirmatively Furthering Fair Housing (AFFH): Final Rule, 80 Fed. Reg. 42,272, 42,352 (July 16, 2015)
  • Major report by McKinsey Global Institute finds that overcoming exclusionary housing policies is the most critical step in providing affordable housing--in the United States and around the world. For more, please click on McKINSEY REPORT ON MEETING GLOBAL HOUSING AFFORDABILITY CHALLENGE.
  • EHI memorandum summarizes how exclusionary housing policies aggravate housing problems that have been linked to increased developmental problems among low-income children. Among those problems are children's health (physical, mental and emotional), safety, educational achievement, and general cognitive and behavioral development.. For more, please click on CHILDREN'S DEVELOPMENT & XHPs
  • Inside Philanthropy urges funders to support EHI’s efforts to break the grip of exclusionary zoning and other exclusionary housing policies on housing opportunities for low- and moderate-income people. For more, click on Inside Philanthropy urges funders to support EHI
  • Washington Post articles highlight serious, adverse effects of local housing and land use policies: For more, click on ROGER LEWIS ON REGULATORY BARRIERS, and AFFORDABLE RENTS FADING AWAY IN D.C. EHI has expressed similar views in letters printed by the Post. For more, click on EHI LETTERS IN WASHINGTON POST
  • EHI analyzes whether Congress has Constitutional authority to prohibit unwarranted state and local regulatory restrictions on housing supply, if those restrictions affect interstate commerce—as a number of recent studies indicate they now do. For more, click on INTERSTATE EFFECTS OF RBHAs (2014)
  • EHI responds to Wall Street Journal article on new exclusionary policies in certain suburbs of Phoenix and Denver. For more, click on WSJ on new exclusionary policies.
  • One affordable housing unit per day is added to plans in EHI's home county, following EHI's advocacy, during its first five years (2008-2013). For more, click on EHI's FIRST FIVE YEARS.

 

Equitable Housing Institute

P.O. Box 1402

Vienna, VA 22183