Welcome to the Bellingham City Council. Town Hall

Transcription

1 Welcome to the Bellingham City Council Town Hall June 13, 2017

2 Affordable housing and homelessness June 2017

3 Affordability and homelessness Since 2012 What happened? Next steps

4 Housing prices are growing Washington State Source: values/

5 Housing prices are growing Texas Source: values/

6 Rents are growing Washington State Source: values/

7 Rents are growing Whatcom County Source: values/

8 Rents are growing Salt Lake City Source: values/

9 Rents are growing Dallas Source: values/

10 Rents are growing Vancouver, WA Source: values/

11 Washington s rental vacancy rates are below average United States 8.2% 6.8% 6.3% 5.9% California 5.9% 4.5% 3.9% 3.3% Massachusetts 5.8% 4.5% 4.0% 3.5% Oregon 5.6% 4.7% 3.6% 3.6% Texas 10.6% 8.5% 7.3% 7.0% Washington 5.8% 5.3% 4.2% 3.3% Clark County 8.2% 3.4% 2.4% 2.2% King County 5.2% 4.1% 2.5% 2.6% Pierce County 6.6% 5.4% 5.7% 3.3% Spokane County 4.0% 7.2% 5.5% 3.7% Yakima County 3.1% 4.5% 5.1% 3.6% Island County 6.7% 6.5% 0.9% 2.8% Whatcom 3.9% 5.5% 4.1% 1.8% Seattle 4.0% 3.5% 1.2% 2.7% San Francisco 4.4% 2.8% 2.5% 2.5% Houston 15.9% 11.2% 7.2% 7.7% Source: American Community Survey 1 Year Estimates

12 Vacancy rates and rent increases are inversely related 6.5% Vacancy rate 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Annual rent change 3.0% % Vacancy rate Median contract rent change Source: American Community Survey 1 Year Estimates

13 Rents are growing with the economy, but middle & low income growth lags % change inflation adjusted $ 20.00% 15.00% 10.00% 5.00% 0.00% 5.00% Median rent +18% Median income +3% Lowest quartile rent +13% % 15.00% Low incomes (bottom 20% of households) +0% Data sources: U.S. Census Bureau American Community Survey 1 Year Estimates; inflation adjusted using the Bureau of Labor Statistics CPI U.

14 Rents have grown faster than incomes in Whatcom County 35.0% 30.0% Rents 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Income Source: American Community Survey 1 Year Estimates, Whatcom County

15 Affordability what is too expensive? Cost burdened : >30% of income for housing costs Severely cost burdened : >50% of income for housing costs Affordable home ownership : <25% of income for mortgage using following assumptions: Source: State of Washington Housing Needs Assessment, January 2015 commerce.wa.gov/housingneeds

16 Cost burden is an issue throughout Washington

17 Affordability by income Source: State of Washington Housing Needs Assessment, January 2015 commerce.wa.gov/housingneeds

18 Home purchase affordability Source: Runstad Center for Real Estate Studies / University of Washington, Washington State s Housing Market

19 Affordability is a driver of homelessness Every $100 increase in rent is associated with: 6% increase in homelessness in metro areas 32% increase in homelessness in non metro areas This relationship between rent and homelessness means all things being equal in Washington +$100 in rent = 2,900 (+14%) more people experiencing homelessness at a point in time. Source: Journal of Urban Affairs, New Perspectives on Community Level Determinants of Homelessness, 2012

20 Change in homelessness accounting for population increases (per capita homelessness) Change in prevalance of homelessness 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 0.8% 0.4% % % 15.1% 15.9% 18.1% 23.8% 23.9% 27.4%

21 Since 2012 Rent appears to be the only significant driver of change in homelessness Other factors are stable or improving: Educational attainment/skills Family stability/structure (divorce, out of wedlock birth, teenage pregnancy) Overall alcohol and other drug dependence Percent of people employed (not recovered to 2006 level, but higher than 2012)

22 Why are rents increasing Combination of interplay between: Jobs/People moving into the state Very low vacancy rates statewide Construction industry hobbled by recession not capable of meeting demand Local land use and other regulations limiting the number and types of units that can be built Infrastructure not keeping pace with growth

23 Washington s economy is growing Real GDP 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 1% 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 WA +8.0% US +5.8%

24 Why are rents increasing WA #1 in GDP growth

25 Bellingham a leader in GDP growth

26 Growth in number of housing units lags job growth in Washington State + 1% Number of jobs (population) = 0.95% rent increase Change in number of jobs 9.7% +1% Incomes = 1.74% rent increase 4.3% 6.5% 3.6% 4.8% % 0.7% 2.5% 1.5% 2.5% Change in number of housing units Sources: WA OFM postcensal estimates of April 1 housing units, WA ESD Nonagricultural wage and salary employment, not seasonally adjusted

27 Rough estimate of key drivers of housing price increases San Francisco % Number of jobs (population) = 0.95% rent increase +1% Incomes = 1.74% rent increase +1% Supply of housing (number of units) = 1.70% rent decrease geography.blogspot.com/2016/05/employment construction and cost of san.html

28 Bringing incomes and rent back in sync Question: Is there enough leverage in local and state land use policy, other regulations, and infrastructure policy to keep median market rate rents in sync with median incomes over the long term?

29 Any supply helps Even expensive new buildings are critical: Rent depreciate in real terms about 1.9% each year Source: American Economic Review 2014, 104(2):

30 Today s expensive units are tomorrow s affordable units $709/month, 394 sqft Filtering works Year Rent depreciating at 1.9% annually Affordable rent, full time minimum wage 2016 $709 $ $696 $ $682 $ $669 $ $657 $ $644 $ $632 $ $620 $ $608 $ $597 $ $585 $675 in markets where the supply is adequate

31 Let the market build some of the low end again Supply of any kind helps with affordability, but a supply of small units helps more In most places it is illegal to build the affordable housing of 100 years ago small units

32 In the past, there were more unsubsidized housing options at the low end Duplexes could be build anywhere; built in 1901:

33 State Housing Affordability Response Team Draft recommendations to Governor 1. Provide funding and support to local governments to plan for housing at every income level, especially for lower income levels. 2. Provide funding to local governments to assess land capacity through buildable lands reports 3. Provide broad based education to assist communities to facilitate the development of more affordable housing.

34 State Housing Affordability Response Team Draft recommendations to Governor recommendations continued 4. Seek responsible changes to development related statutes and regulations to facilitate housing development. Small changes to statutes such as the Project Review Act, Subdivision Act, the State Building Code, impact fees, multifamily tax exemptions, community revitalization financing, and prevailing wage determinations could add up to make a difference. 5. Provide stable and dependable state funding for housing, by providing predictable funding to the Housing Trust Fund, making document recording fees permanent, and encouraging local adoption of local housing levies. 6. Ask public agencies to consider underutilized publicly owned property as an opportunity for affordable housing. 7. Continue this work into the future by finding opportunities to collaborate with existing work groups and projects to carry these ideas forward.

35 Presented by: Tedd Kelleher Managing Director Housing Assistance Unit