Montgomery's Economic Divide Growing

County Study Shows East-West Split in Income Levels and Housing Costs

As Montgomery County's housing market flourished in the past decade, the dream of homeownership slipped from the grasp of many county residents, a new study shows.

Their eroding buying power had a ripple effect across the county: It helped widen the economic divide between east and west, mirroring school system data showing a similar geographic gap in academic achievement.

In western neighborhoods such as Bethesda and Potomac, income levels stayed stable or rose along with housing costs. On the east side, in neighborhoods such as Aspen Hill, Silver Spring and Takoma Park, income declined as housing costs soared, the study said. The findings of the county's planning staff will be discussed by the five-member planning board today.

"Montgomery County has a reputation for fair housing and for avoiding residential segregation. These statistics would call that into question," County Council member George L. Leventhal (D-At Large) said. "This has relevance for affordable housing policy and for who gets to live in what neighborhoods."

The information is part of an ongoing study of the county's housing patterns aimed at helping policymakers determine how and where the county should grow and where to place affordable housing.

County Executive Isiah Leggett (D), who campaigned in 2006 on a promise to increase affordable housing, said he was intent on resolving issues highlighted in the report.

"It will be difficult," Leggett said. "I did not pursue a commitment to affordable housing with any false illusions that increasing it will be done with ease. There is no quick fix. We have to be as creative as possible and stay with it until it's done."

When a family spends more than 30 percent of its income on housing, federal, state and local officials say that is too high. In Montgomery, that means that an "affordable" monthly mortgage or rent is about $2,363, the equivalent of a mortgage on a $346,500 house. The median price of a new house in Montgomery recently topped $1 million.

In 2005, the county median income was $83,880, up 2.4 percent from 1997, the study said. In 2007, the area median income for a family of four in Montgomery was $94,500, according to the planning department. In many neighborhoods where the housing and income gap was widening, income levels were far below the county median.

Roselle George, who is leading the planning department's housing study, said the data "help us to show where the neighborhoods are that might need some help, where people are living for whom the housing burden is too great."

Among the neighborhoods where the data suggest a widening gap is Takoma Park, which experienced the largest increase in homeowners' costs -- 28 percent -- while the household median income decreased 15 percent from 1997 to 2005, the study said. Another gap was found in an area known to planners as Upper Rock Creek, which includes Derwood and neighborhoods along Muncaster Mill Road. In that area during the same eight-year period, renters' housing costs increased 21 percent and homeowners' costs rose 6 percent, while the median income decreased by 14 percent.

Other neighborhoods where income was declining and housing costs rising include Aspen Hill, where income fell 11 percent from 1997 to 2005 and average housing costs rose 12 percent for homeowners and 13 percent for renters; and the Gaithersburg area, where household median income dropped 4 percent and housing costs rose 18 percent for renters and 5 percent for homeowners.

Other gaps were evident in the Colesville/White Oak area of Silver Spring and the Fairland area near Burtonsville.

George cautioned that further analysis is needed to draw firm conclusions about neighborhood conditions. She said the planning staff will continue to study the data this year to determine other trends and patterns about income and housing.