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D.C. area is behind the curve on housing and jobs forecasts

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Even as the housing slump drags on, and it seems there are far more houses than anybody wants to buy, a new analysis warns that the Washington area doesn’t have nearly enough housing for the wave of new workers that will arrive in coming decades.

Researchers at George Mason University say the area is projected to add more than a million new jobs by 2030. With that growth comes a vexing problem: How do you house those new workers in ways that are both affordable and don’t worsen the soul-crushing commutes that already plague the region’s residents?

The study found that local communities have yet to plan adequately for the looming demand, leaving open the possibility of a housing shortfall that could hurt the region’s economy, lower the overall quality of life and drive away employers and employees.

“If businesses find they can’t have their workers live near where they can work, they’re going to go somewhere else. And the workers themselves might also go somewhere else,” said Lisa A. Sturtevant, an assistant professor at George Mason’s school of public policy, who co-authored the study with Stephen S. Fuller, director of the university’s Center for Regional Analysis.

Their research showed that the Washington area, defined by 22 counties and cities, is expected to add 1.05 million jobs through 2030. More than a third of those jobs will be in professional and technical sectors, but significant growth also is expected in administrative, service and health-related jobs that often pay lower wages. If those numbers hold true, that boom will require as many as 731,457 additional units to house workers in the jurisdictions where they work, the study found.

That means the region would need to produce about 38,000 new housing units per year, “an annual pace of construction never before seen in the region and below what local jurisdictions have accounted for in their comprehensive plans,” the study concludes. Data show that over the past 19 years, the region has averaged 28,600 building permits a year; last year, about 15,000 building permits were issued in the region.

In addition, much of the new housing needs to be multi-family units (to make efficient use of available land) and affordable rentals (to put it within reach of younger workers and those with lower salaries), George Mason’s researchers argue.

Fuller recently presented some of the findings to the Montgomery County Council, part of an effort to get local officials focusing more on meeting the long-term housing demands facing their jurisdictions. The study had nearly a dozen individual and corporate sponsors, including Bank of America and the 2030 Group, an association of local business leaders focused on regional long-term economic and population issues.

“He was very provocative,” said County Council president Valerie Ervin. “I knew we were not where we should be, but I didn’t know the extent to which that was a problem. . . . It’s an absolutely huge issue for the county.”

A long-term brake on growth

Like other counties, Montgomery has been exploring ways to create more walkable, denser developments out of once suburban areas. One example is an effort underway to redevelop the White Flint area of Rockville with a mixture of retail, office and residential space. Much the same idea is unfolding in Fairfax County with the massive transformation of Tysons Corner.

Forecasts show the majority of the job growth is likely to occur in Northern Virginia, particularly in Fairfax and Loudoun counties. In Maryland, much of the new housing demand is coming in Montgomery County. In the District, the study suggests that more than 120,000 new units will be needed to house more than 150,000 new workers.

Sturtevant said that failure to adequately bulk up the region’s housing stock could hinder the local economy over time. Already, she said, the Washington area has more “in-commuters” — workers who venture in from other areas such as Baltimore and Maryland’s Eastern Shore — than anywhere else in the country.

Some of that boils down to choice, with people preferring to live outside of urban areas or closer to family members. But much of the explanation comes from the fact that many workers can’t afford the higher rents and home prices closer to the city, leaving them instead to face long commutes that tax the region’s infrastructure and take money away from the local economy.

The result: More than 4 percent of the Washington region’s economic activity, or about $18 billion annually, gets transferred out of the region, Sturtevant said.

She said it’s not practical, or perhaps even possible, to merely build the number of roads and other infrastructure additions it would take just to keep congestion at current levels as the population rises.

Rather, she said officials must seek out a smarter approach to growth, finding ways to house more employees closer to where they work and closer to transit systems, or else risk losing employers and employees to other cities with shorter commutes and a more appealing quality of life.

“It’s going to require a lot more creative thinking,” said Conrad Egan, former chairman of the Fairfax County Redevelopment and Housing Authority. “If we’re going to grow jobs as predicted and match them up with the availability of land and transportation opportunities, we’re going to have to fundamentally rethink a lot of the assumptions upon which we’ve been operating. . . . It’s a wakeup call to the leaders of today so they can put in place policies and strategies to support the leaders of tomorrow, who are going to be dealing with these challenges.”

If commutes grow too onerous or housing remains too scarce or expensive, Sturtevant said, companies that traditionally have flocked to the Washington area for its wealth of highly educated workers could turn elsewhere, as could road-weary workers themselves.

“I don’t know where it is, but we’ve got to be close” to the tipping point, Sturtevant said. “Atlanta, Houston, Dallas — they are catching up to us, and they may be more attractive places [over time] because the quality of life is better.”

Spending cuts’ possible impact

So far, companies have continued to seek out the Washington area and its desirable workforce. Large U.S. employers such as Volkswagen, Hilton and Northrop Grumman have settled in Northern Virginia in recent years.

The growth projections, based on models from the economic and financial forecasting firm IHS Global Insight, are inherently inexact given current conditions. Sturtevant said the latest predictions call for 500,000 fewer additional jobs in the region by 2030 than were forecast before the financial crisis. The deep reductions to federal spending under consideration on Capitol Hill could further alter the projections, particularly if the Defense Department sees steep cuts.

“There is significant uncertainty about the jobs numbers, which determines everything else. When it comes to housing, there have been lots of changing demographics,” said Stewart Schwartz, executive director of the Washington-based Coalition for Smarter Growth. But he said there is clear demand for housing in the city and close-in suburbs, as well as new momentum for efforts to ramp up development near Metro stations in such places as Prince George’s County and in other nearby corridors.

“Thinking about the future and how we design communities has changed significantly,” said Schwartz, who advocates finding ways to maximize the capacity of mass-transit systems. “There’s no longer an assumption that we will just keep spreading out.”

Whatever the precise numbers, it seems clear that the Washington region will become a more crowded place in the decades to come. Accommodating that growth in a smart and comprehensive way seems critical to maintaining the region’s place as one of the most attractive economies in the country, but it won’t happen on its own.

“The new workforce is coming whether we like it or not. So our policies are going to have to reflect that,” said Ervin, the Montgomery council president. “We’ve got to get a lot more work done here.”

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