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:
At the end of 2014, Fourth Economy in partnership with Pfaffmann and Associates and Fourth River Development Company, completed a downtown housing market study and redevelopment plan for the City of Altoona in central Pennsylvania. This is another action plan being fully implemented by local stakeholders. Several buildings were targeted as part of this study for redevelopment into market rate urban style apartments, condominiums and destination retail. Programmatic and financing strategies were also identified. Continue reading “New Investment and Programs Follow Altoona, PA’s Downtown Housing Study and Development Plan”
It has been a busy year here at Fourth Economy. Many projects have kept us hard at work, traveling across the country and meeting great folks. A theme among these projects has been a growing desire and recognition for all places, communities and towns to reinvent themselves – transform, reimagine, pivot – all in order to attract new investment and the talent that fuels it. And within this theme is a common recognition that without quality options to live, sleep and interact, it is tough to attract that talent. Housing and the context that surrounds a community’s housing stock is (or should be) a cornerstone to any competitive and sustainable economic development strategy. Continue reading “Forget the Smokestacks…Chase the Housing: A Case Study in Smaller City Reinvention”
In recent months our Fourth Economy team has been hard at work on several town-gown development projects. It’s time to share a few lessons learned. First, if you live in a smaller town and are fortunate enough to have an institution of higher education close by, don’t squander the opportunity to build upon this high value asset – embrace it, leverage it, and cultivate it.
While the many positives associated with town-gown partnerships may be obvious to most of us, surprisingly those positives often need to be clearly identified, communicated and tactically acted upon. Continue reading “Small Towns, Great Gowns, Big Opportunities”
Mitt Romney lost the election but some of his fiscal ideas may survive. Mitt Romney’s comments on an Iowa radio station re-ignited the debate about the mortgage interest deduction (MID) that has been simmering since at least 1984. Romney’s plan calls for a $17,000 deduction budget that effectively caps and may even kill the MID:
As an option you could say everybody’s going to get up to a $17,000 deduction. And you could use your charitable deduction, your home mortgage deduction, or others — your health care deduction, and you can fill that bucket, if you will, that $17,000 bucket that way. And higher income people might have a lower number.
The MID inspires deep passions. It is also not likely to be received by the public with any objectivity. The National Association of Home Builders (NAHB) released a poll showing that the MID was supported by 77 percent of Republicans, 71 percent of Independents and 71 percent of Democrats. Real estate lobbyists have been arguing for some time that eliminating the MID while the housing market is weak would further destabilize housing. However home prices and interest rates are so low right now that the benefit that the deduction provides to buyers has been significantly minimized. As a result, there are new calls that now is exactly the right time to restructure the deduction. Continue reading “Debating the Mortgage Interest Deduction”
Governor Chafee Announces Next Action Step in Development of an Integrated Plan to Mobilize State and Community Assets for a Better Rhode Island
January 14, 2013 (Providence, R.I.) – Governor Lincoln D. Chafee today announced the next action step in a multi-agency effort over the next two years to develop an integrated approach for the state to land use, transportation, housing, and economic development. Through an open Request for Proposals (RFP) issued November 7, 2012 by the Rhode Island Economic Development Corporation (RIEDC), in collaboration with the Division of Planning’s Statewide Planning Program, Rhode Island has selected a consulting team to compile economic data, analyze the state’s regional performance, and identify strengths and possible ways to improve Rhode Island’s economy. Continue reading “National Firm Selected to Perform Economic Data Analysis on RI’s Competitive Strengths, Areas of Improvement as Part of Sustainable Communities Initiative”
The Fourth Economy team has been busy with several planning and community evaluation projects. I find it very useful to step back for minute, take a few notes and share some observations. Here are four points that emerged from these recent projects to keep in mind if “winning” (attracting-retaining) new investment is a goal:
1) Remember the Human Element
Businesses are not robot-like monolithic entities (although we may feel at times some do qualify as such). They are people, working in a systematic approach to achieve common goals. The things that motivate each of us also influence business decisions. The human element applies to both physical connectivity (transit, parks, walking etc.) and social connectivity (social media, blogs, chats etc.). At our core, we are social beings – we like to share ideas, communicate, connect with others and move about a town. Facilitating these connections with smart infrastructure planning, amenities and through the use of social media encourages community building and civic engagement. Increasingly these factors are helping to attract new investment, making many communities more competitive.
2) Find Your Value
It’s not only about how much it costs to live and do business. It is about the value of a location. I have seen first hand businesses choose to invest in high-cost locations in order to ensure they have access to a qualified workforce, research support, quality infrastructure and customer base. Communities that can provide and promote high value resources, whether they take the form of a university research center, recreational amenities or existing industry network, can remain competitive despite a higher cost structure. This is especially true as companies become more technologically dependent, smaller and require less space.
3) Housing is Fundamental
Don’t confuse affordable housing with quality marketable housing. Without a solid and diverse housing stock (single family, condos, townhomes, apartments), it is very difficult to attract and retain a qualified and professional workforce. As a result, businesses may pass you by. Overall housing values, quality and availability are more important now to the potential buyer, renter or investor and will likely remain so for the foreseeable future, than the cost of housing alone. If your community has an older poor quality housing stock, take steps to reinvent, form public/private partnerships to prepare sites, rehab and reinvest.
4) Education – The New Natural Resource
The analogy = Talented people are to today’s businesses as coal was to the steel and railroad industry. Educational attainment levels as a percentage of the overall population continues to remain a top consideration in the modern investment decision process. If your community does not compare well in this category, it likely won’t change overnight. Look for concentrations of talent within your community or highlight the fact that you may be trending in the right direction. Promote any strategies you have in place to facilitate future change in this area.
We all know that competition for new business investment and residential base is fierce. It’s being played out on a global playing field. These four insights may serve as a reminder or a new tidbit of information to consider as part of a “winning” strategy development.