In survey, Washington’s real estate industry sees “severe” affordable housing shortage


Local representatives of the building industry say the region has a severe affordable housing shortage. (Mike Groll/AP)

The real estate industry has been known to fight against new provisions requiring them to build affordable or subsidized housing. Such was the case when District officials proposed what is now its inclusionary zoning rule (modeled after a similar policy in Montgomery County), which generally requires eight percent of units in new buildings to be offered below market rate.

Builders opposed the rule forcefully before it passed in 2006 and an April report by the D.C. Department of Housing and Community Development found that some companies are erecting buildings with nine large units in them — ostensibly in order to fall below the 10-unit threshold that triggers the provision.

But there are signs that the industry locally is changing its tune. A recent survey by the local chapter of the Urban Land Institute, an international real estate research group, found that 89 percent of 117 respondents regarded the region’s affordable housing problem as “very severe” or “somewhat severe.” Only 11 percent chose “not severe.”

A majority agreed the main reason for bringing down housing costs is because workers are being forced to live further and further from their jobs. About 55 percent of respondents chose that response over other options presented to them in the survey, far more than those who cited a lack of socio-economic equity (16 percent), possible negative effects on business attraction (12 percent) and limited housing choices in safe neighborhoods (9 percent).

To be sure, ULI’s members include firms that rely on or specialize in affordable housing, perhaps giving them an incentive to see more of it built. But Lisa Rother, executive director of ULI Washington, argued the survey demonstrates that members of the development industry see housing affordability as a risk to their own bottom lines. She noted that three-quarters of those who responded said the business community had a role to play in making changes.

“We view it as an economic development issue, and we are encouraged that such a high number of survey participants are willing to participate financially in finding a solution,” Rother said in a statement.

David Flanagan, president and principal at Elm Street development, said the trend of people moving back toward the urban core has driven up the cost of housing near job centers dramatically.

“That’s been the biggest trend in the last 10 years, people being willing to live a little bit closer, both the Millenials and the empty nesters” he said.

In 36 years of business, McLean-based Elm Street has built a variety of housing types in the Baltimore-Washington area, from 10-unit apartment buildings to 3,000-home planned communities in the ex-urbs.

But he said so much of the region’s workforce — those who aren’t executives, lawyers, lobbyists and the like — is getting pushed out beyond the Capital Beltway that it’s bad for business.

“The displacement is occurring every day,” Flanagan said. “Just look at [Interstate] 95 every day, down to Stafford County and Fredericksburg. To some degree, it’s the same as any city but now that closer-in is more acceptable, and it’s safer and all the other things, it’s gotten much worse.”

Flanagan lamented the fact that the local business community has been unable to bring elected leaders together around a regional affordable housing strategy. “We suffer in the Washington region in not having the business industry involved in discussions about any of that stuff,” he said.

Nevertheless, he said he is optimistic that a coalition could be formed of businesses, environmentalists and advocates for the working class that would be willing to support more aggressive development of housing in the city’s close-in neighborhoods, adding supply and bringing down costs.

“Everybody sort of likes the idea of [building more housing closer in],” he said. “The only people who don’t like it are the people who are living next door to the projects you’re about to build.”

Follow Jonathan O’Connell on Twitter: @oconnellpostbiz

Jonathan O'Connell has covered land use and development in the Washington area for more than five years.
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