Now that cities across the country have properly grieved the loss of the HQ2 they never had, and NYC pretty much dumped Amazon on their Valentine’s day date, we have some serious questions. How many communities have policies in place to handle an economic shock like landing an HQ2? How does plopping 25,000 new high paid tech workers in a city affect housing? This post will look at how Amazon HQ2 might impact housing in Washington, DC.
There are a few things we know:
- Washington DC is one of the most expensive housing markets in the US. The median rent is $2,146 per month.
- Speculation is rampant. The day of the official announcement there was a 435 percent jump in Zillow users viewing homes in Arlington compared to the same day a year earlier.
- If you already own a home, you’re lucky. But for those looking to purchase a home or rent, costs are expected to rise.
- Displacement may be an even bigger issue. As costs rise, those that can’t afford housing are pushed farther away from the economic opportunities found in city centers.
As we’ve previously written about HQ2, in places like Seattle, San Francisco, and Washington DC, the cost of living can rise beyond the reach of many non-tech workers.
Over the past decade, the median home price in Washington DC has risen more than 50 percent, from $365K in 2009 to $581K in 2019. Along with that, the cost of rentals has increased significantly, now requiring a minimum salary of $85,840 to afford a median-priced apartment in DC. Ouch.
An estimated 136,000 renters in the DC metro area now spend more than half of their income on rent.
Over the next decade, some policymakers are seeking to stabilize rent and construct new rental units. Communities surrounding HQ2 have promised to create and preserve 2,000 to 2,400 affordable and workforce housing units from 2019 to 2029. These policies will not be enough to both catch up with the past decades’ rising housing costs and adequately address the housing impact of HQ2. An estimated 136,000 renters in the DC metro area now spend more than half of their income on rent. The promised units would address less than two percent of the existing gap.
For communities watching from the sidelines, here are a few resources for thinking about an equitable housing strategy:
With much of our work revolving around Regional Economic Development, we decided to host a webinar about Regional Economic Development Collaborations – sharing insights and lessons learned with our panelists:
If you missed the webinar, it’s not too late! See the recording here.
Questions about this topic? Reach out!
The Community Index began six years ago as an effort by our team to document the key indicators of current and future vibrant communities. Fourth Economy takes a holistic approach to economic and community development. Our model considers a range of criteria to measure economic strength. The Community Index is made up of 20 indicators across five themes: Investment, Talent, Sustainability, Place, and Diversity. While we know there is no single recipe for economic success, we also know that these five areas are critical ingredients in vibrant communities everywhere.
From 10 to 1,837
Each year, we publish a list of the top 10 scoring counties. In 2018, we developed an interactive tool to allow others to see how our Index model ranks counties across the country. This year’s Community Index features data on 1,837 of the 3,007 counties in the United States, covering all counties with a population of 20,000 or more. Each benchmarks against all counties in the state, geographic region, and similar population size.
A great conversation starter
We debuted the Community Index tool at the International Economic Development Council conference in Atlanta. Our first users were inquisitive and had some great questions. Some of the most interesting questions we fielded include:
- What outcomes were unexpected?
We were glad to see that the model does not identify a specific recipe for economic success. Communities that score highly across our categories do not come in one mold, but many—from rural cultural hubs to small, developing cities to booming metro regions.
- What should I do with this tool? How is it useful?
We hope that people will use the dashboard to explore the economic strengths and weaknesses of specific communities, use the Index map to see who is doing well across the country overall and in specific metrics, and use the top ten to read about some particularly strong examples of regional economies.
- Why do all the counties with cities score so well?
Generally, more densely populated places have economic and cultural assets that more rural or suburban places do not, and the model picks up on this. So on one hand, it’s important to compare among similarly-sized places. That’s why we’ve organized the counties by size categories. So, when comparing large cities, it’s important to realize that a score of, say, 85 (as with Allegheny County, PA) is not as high relative to its geographic peers as a score of 85 for small communities. BUT, there are also many small communities that do well in our model. Look, for instance, at our top ten list for mid-sized counties. Or, look at the even smaller communities of Juneau, AK, or Wasatch, UT, for some high-scoring examples.
- Why didn’t we look at counties with fewer than 20,000 people?
Many of the indicators that inform the index model are population-based statistics that have been collected from sources like the US Census Bureau. For small populations, these data are less reliable (i.e., come with greater margins of error) and can be more significantly influenced by single contributors (e.g., a company opening or closing), so for that reason, we’ve chosen not to include small, rural counties in this version of the model.
- Why did you analyze at a county level?
We analyzed at a county level because of the data set availability. It’s easy for us to combine indicators and to do a multi-county analysis for a region. For specific projects, we could apply the index model to other types of geographies, or conduct or more nuanced analysis (for geographies that are either larger or smaller than counties), but that is not part of this tool.
We see the Community Index as a starting point for communities, providing them with a baseline to help understand where they are doing well and see where there is room for improvement. Many of our most interesting projects stem from conversations with communities about where they are and where they want to be. Do you have a question you’d like us to answer? Reach out!