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Builders' Speaker Cites Housing Deficit

GMU study focuses on region's, Loudoun's housing needs.

Loudoun County is among several jurisdictions in the Greater Washington region facing a housing deficit, a deficit that needs a regional solution, according to John McClain, keynote speaker at the March 27 meeting of the Northern Virginia Building Industry Association (NVBIA).

"We are an inter-regional economy," said McClain, senior fellow at George Mason University’s Center for Regional Analysis. "We need to look as a region to build more housing where it makes more sense."

In 2000, the region had a deficit of 43,200 housing units that is expected to increase to 218,100 units by 2025, according to a study McClain and Stephen S. Fuller, also of George Mason University, conducted on the region’s housing supply.

The study, which was carried out over a six-month period in 2002 and released in December 2002, examines the region’s future economic and housing projections and determines whether the availability of housing can meet economic demand. The region’s housing supply is expected to increase by 756,000 units from 2000 to 2025, a projection based on the market’s anticipated response to local master plans, zoning ordinances and developmental policies. The supply level could result in a potential economic loss of 288,400 jobs by 2025, the study said.

THE "INADEQUATE housing supply" will force housing prices to increase and force out the availability of affordable housing, McClain said. Residents will end up moving further from employment centers and take longer, more congested commutes at odd hours, adding to the region’s existing transportation problem, he said. The end result will be diminished economic growth and fiscal capacity at the local and state level.

"As an association, we had heard this anecdotally from builders over the years that it was harder and harder to find lots," said Calli Schmidt, director of communications for NVBIA. "As lots come harder to come by, it will squeeze the cost of housing. … The lack of housing lots will make housing more expensive even before you correct for inflation."

Already, the Washington region ranks first in 2000-02 among the top 10 metropolitan areas for an increase in the housing price index, compared to seventh in 1980-85, the study shows. The index increased 33 percent in the last two years.

"The cost of housing increased more here than in other places," Schmidt said.

The study shows that the region compared to the top 10 metropolitan areas ranks in the middle for the ratio of housing values to income level. The region is less affordable than Philadelphia but more affordable than Boston, Los Angeles, New York and Chicago. Affordability occurs when the average salary can afford the average-priced home or the median salary, the median priced home, according to the NVBIA. In Loudoun, less than 50 percent of county residents can afford to buy the median-priced home. Twenty-five percent of homeowners in the county have an income of $100,000 or more.

"Right now, looking at the income for the area and the price of housing for the area, we’re not too bad. We’re expensive but we’re not too bad," said Jim Williams, executive vice-president of NVBIA, adding that a lack of lots for future building will cause housing prices to escalate and in terms of affordability, push the region to second place under New York.

THE MEDIAN HOUSING value ranges from $145,600 to $262,400 in the 12 jurisdictions in the region with a population of 100,000 or more, according to the study’s use of 2000 census data. The overall median housing value is $179,800 with Loudoun’s median value at $200,500, placing the county sixth for the region.

"Why is this happening? Loudoun County is a very desirable place to live," said Jim Williams, executive vice-president of NVBIA about the study results. "There’s a shortage of lots available to build on and there’s a shortage of land that’s being approved for new housing development. When you have this shortage and the demand continues to increase, you have an escalation in the prices."

Governmental policies can affect the housing supply in terms of availability and affordability. "Local government has been on a collision course with affordable housing for a number of years. Local government has the NIMBY attitude," Williams said.

Williams encounters the NIMBY, or not in my backyard, attitude at public hearings and at Board of Supervisors and Planning Commission meetings, especially in Loudoun, Fairfax and Prince William counties. Residents are telling government officials they do not want to see additional housing in their counties while complaining that the counties do not provide enough job opportunities, he said.

"All the money we’re going to invest in economic development is going to waste," Williams said. "We are not advocating unconstrained development. What we are advocating is a job-housing balance, so when you create the jobs, you create the housing opportunities for the workers."

The governmental policies that limit building additional housing in a county are the same policies that can increase sprawl and congestion, Williams said.

IN LOUDOUN, the number of commuters in the past decade has increased along with the area’s population. In 1990, 47,300 people lived in the county and commuted elsewhere or commuted into the county, compared to 94,900 people in 2000. The number of people living and working in Loudoun also nearly doubled but at a lower number from 21,400 in 1990 to 38,300 in 2000, according to the study. Loudoun’s population is more than 200,000, compared to the region’s total population of 4.92 million people.

"It’s difficult to think of the issue at the local level [considering] how much we commute across jurisdictions," McClain said.