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Posted at 02:11 PM ET, 05/09/2012

What’s going on with the D.C.-area housing market?

Our local housing expert, assistant research professor at George Mason University’s School of Public Policy and the Center for Regional Analysis Lisa Sturtevant, was online Wednesday to answer questions about local housing. Here are some highlights from the chat:
New townhomes in the Marlboro Ridge development off of Ritchie Marlboro Road in Upper Marlboro.

Q: One of the fundamental tenets of the comprehensive plans in this area (at least in Fairfax) is to preserve neighborhoods at current levels of density. With that kind of institutional bias against increasing density, how do you see the path forward for remaking the region for the inner suburbs? Can the technical issue be addressed in an open manner without simply being shut down by savvy communities at their planning commissions or town/county boards?

A: You raise a really good point about the tension between neighborhood preservation and density. Increasing the supply of housing overall is a necessary step for ensuring enough affordable housing in the region. Given that the amount of land is constrained, increasing density is the only way to increase housing supply. And increasing densities in neighborhoods that are currently or soon-to-be served by transit is part of many localities’ planning efforts, including Fairfax. I think there is more openness to targeted increases in densities than there used to be. Pointing to successful examples (e.g. the Rosslyn-Ballston corridor — increased densities, thriving nearby single family neighborhoods) will help to make the case.

Q: I believe that due to the current rate of housing growth, which is restrained by current zoning, the price of homes is inflated. To a fair extent, this is a simple supply and demand curve in which the supply is suppressed, demand continues to rise, and the price of housing accordingly increases. Is it possible to calculate the “premium” that current comprehensive plans add to the cost of housing? If so, it could be a useful index by which to attempt to persuade policymakers toward more affordable-housing-oriented land use decisions.

A: Well, rising home prices and rents in many parts of our region has been due to strong demand and historically low levels of residential construction (with some notable exceptions of multi-rental construction in D.C. and other close-in locations.) The ability to secure financing and the risks developers are willing to take are factors in the production of housing units. Local land use policy is definitely also an important factor. The Center for Regional Analysis will be publishing a report later this month on the process and regulatory costs associated with building housing in Montgomery County, to show how these costs impact the ability to build housing. We hope to release similar reports for the rest of the region’s jurisdictions later this spring.

Q: Are you including PG County in your discussion? There are plenty of affordable homes in PG County.

A: Housing in Prince George’s County is affordable. (Although average home prices look like they’re up for the first time this month in the county.) Prince George’s county also has really good transit and highway access. So why aren’t people flocking there? Some of the reasons, I think, is a reputation the county can’t shake. There are lingering issues related to schools, crime and transparency in government that affect people’s decisions. For people looking for walkable, mixed used neighborhoods, there aren’t too many in Prince George’s though that could be changing. I’m thinking of Hyattsville.

Q: Does D.C. have parking minimum requirements for housing? If so, wouldn’t that encourage bigger homes and make a dis-incentive toward affordable housing?

A: I don’t know D.C.’s specific parking requirements, but I do know that there is at least one recent project that has had no (or very little) parking. This is a building with very small unit sizes, too, around 300-500 square feet per unit. Definitely targeted for singles, not families.

Q: Isn’t the term just a misnomer since what may be affordable to a family making $100,000 per year is far out of reach to someone making the median salary of $35,000? With that said, why is $350,000 considered affordable? I know that my wife and I make over six figures and cannot afford anything over $500,000, with two kids, no credit card or student loan debt, and reasonable retirement and educational investments. Therefore, if someone is making less than half of what we do ($40,000-$50,000), they could not afford anything over $250,000, which eliminates virtually every property in this region aside from the slums and stuff 30-40 miles away from the city.

A: That’s a good point. Affordability is different from households with different incomes. And it’s different for renters versus buyers. The $350,000 cut off was a little arbitrary — the median home price in the Washington region is about $380,000 so it was a cut off to be able to talk about below and above the median. Home prices have fallen in many parts of the region, but, as you suggest, it is very difficult for many households to buy a house close to their jobs. Increasing the supply of homes near existing and growing employment centers is important for trying to keep housing affordable for the whole spectrum of households.

Q: Which neighborhood in D.C. is most in demand in terms buying a home that is still relatively affordable, convenient to downtown and in an up and coming neighborhood (e.g. Petworth).

A: There is a lot of potential for increasing demand in up-and-coming neighborhoods. We have a fairly transient population here in the D.C. region. And as the city is changing, many newcomers don’t have preconceived notions about different neighborhoods. So places like NoMa, Petworth and others can attract newcomers — or certain kinds of newcomers — given the amenities you suggest.

Q: Until we invest more heavily in transit and roads, there should be no way that we increase density. Our traffic is the worst in the country and we spend hours every day away from either being more productive through work or spending more time at home with families and friends. Increased density without corresponding increase in money toward Metro and new roads will only make a bad problem worse.

A: Housing, transit and transportation and quality of life (along with our region’s economic well-being) are all closely intertwined. We can’t talk about housing without talking about transportation, and vice versa. Where we do have opportunities for increasing densities — for example, around new Metro stops — we should take advantage. And if we don’t have a sufficient supply of housing in the region, traffic is only going to get worse. Right now, about a quarter of a million commuters work in our region but commute in from other places — West Virginia, Baltimore, Richmond, Eastern Shore. If we don’t produce enough housing to keep up with job growth, that number of in-commuters could be 700,000 by 2030. We could never have capacity for that level of commuting. So we need more housing closer to where people work.

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By  |  02:11 PM ET, 05/09/2012

 
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