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Home Prices Outpace Area Wages, Study Says

Affordable Housing Shortage Worsens

By D'Vera Cohn
Washington Post Staff Writer
Thursday, December 9, 2004; Page B01

The region's home prices are rising faster than its wages, worsening the affordable housing crunch, especially for low- and moderate-income workers such as parking attendants and firefighters, according to a report released yesterday by the Fannie Mae Foundation and the Urban Institute.

Compounding the problem, the report said, is that the Washington area's population is growing more quickly than the number of new housing units. That long-standing gap has widened since 2000.

Housing and Wages
_____Live Discussion_____
Transcript: Area Growth: Washington Post staff writers D'Vera Cohn and Peter Whoriskey were online to discuss the growing distance between housing and jobs.
_____Growth and Development_____
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The region's wages rose 9 percent on average from 2000 to 2002, the report said, but median home prices went up 37 percent during that time. The share of homes selling for $400,000 or more is rising, and the share selling for less than $140,000 is falling.

The report said that the region has a solid economy, with the lowest unemployment rate among the nation's large metropolitan areas, but that it is not housing workers close to their jobs. That leads to lengthy commutes and less time at home for employees, the report said, as well as worsening congestion and pollution that could make the area less attractive to prospective employers.

"Unbalanced and uneven growth is creating conditions that threaten our quality of life," Stacey D. Stewart, the foundation's president and chief executive, said at a news conference, where the "Housing in the Nation's Capital" report was released. The numbers also reveal a "widening gap between the haves and those who have less," she said.

The region's traffic jams and residential sprawl increasingly are becoming a local political issue, producing endless debates and growing stacks of position papers, but the report said there is not enough regional cooperation. It noted that "no other U.S. metropolis has yet tackled this full range of problems successfully."

The lack of affordable housing is squeezing people at the low end of the wage scale, whose incomes have risen more slowly than those in affluent households, the report said. And there is a mismatch between the locations of jobs and affordable housing, with plenty of moderately priced housing in Prince George's County and much less in Fairfax County.

Home sale prices have risen more sharply this decade in Washington than in the nation's metropolitan areas on average, the report said -- a boon to people who already own homes but a hardship for those who do not. Rents in the region have risen, too, though they did not go up on average nationwide.

Robert Lang, director of the Metropolitan Center at Virginia Tech and a student of such trends, said in an interview that the report offers an alarming portrait of the region at mid-decade that could be duplicated elsewhere as the nation climbs out of a recession that has held down housing prices in many places.

"It would be the profile for what you would get to by mid-decade for the rest of the country, which is worrisome," he said. "A hot regional market like Washington is a harbinger of a lot."

The report does have some good news: The homeownership rate is rising faster here than in other parts of the country, though people are expending burdensome chunks of their income for housing. By some measures, local traffic congestion is not as bad as in San Francisco or Los Angeles, and air pollution is less severe than in Houston.

x The report recommended that localities promote dense development, which is less controversial than it once was, and require that affordable units be built in the most popular housing markets. It also urged regional leaders to cooperate in steering more high-wage jobs to Prince George's County and the eastern part of the District, where housing is affordable. Most high-paying jobs are in places with hot housing markets, especially Fairfax and Montgomery counties and affluent parts of the District, and interest in living close to those jobs forces housing prices even higher, the report said.x

Margery A. Turner, an Urban Institute researcher who co-authored the report, said the recommendations will be difficult to implement because they require people to "reach across lines of race, class and political jurisdiction." The report makes the point that residential segregation, with African Americans concentrated in the District and Prince George's County, is echoed in the pattern of job location.

Barbara B. Lang, president of the D.C. Chamber of Commerce, said at the news conference that the chamber wants to promote affordable housing in the city. But she noted that another barrier to attracting middle-class workers to the District -- lack of a good public school system -- also needs to be addressed.

John D. Lesinski, a realty company executive who serves on the Greater Washington Board of Trade's housing task force, said the business group supports the report's conclusions. But he warned that it will take work to persuade business leaders, who prefer to locate where others are, to put employment centers in Prince George's County or other "emerging markets."

"It is going to take a lot of courage for the business community to explore markets they haven't explored before," he said.

© 2004 The Washington Post Company