Future Housing Supply and Demand Analysis for the Greater Washington Region

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Future Housing Supply and Demand Analysis for the
Greater Washington Region
NVBIA Loudoun Chapter March 27, 2003
John McClain, AICP Senior Fellow, GMU Center for
Regional Analysis
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Purpose

• Examine future economic and housing projections
  and policies in the Greater Washington region and
  determine if anticipated housing supply can meet
  economic demand.

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Methodology

• Future Housing Household Forecasts
• COG Cooperative Forecasting Forecasts are
  expectations of market response to locally
  adopted master plans, zoning and development
  policies

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STUDY AREA
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Executive Summary

• Existing (2000) Deficit 43,200
• Long-term (2025) Housing Deficit 218,100
• Several counties will reach buildout long before
  what is currently anticipated and before 2025
  given the forecasts of jobs

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Executive Summary

• The cumulative policy constraints that are
  exhibited with 2000-2025 forecast growth in
  housing of 756,000 will mean potential economic
  growth will be less by 288,400 jobs by 2025

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Executive Summary

• NOW - Compared to top ten metro areas,
  Washingtons ratio of housing values to income
  puts the region in the middle slightly less
  affordable than Philadelphia, but considerably
  better off than Boston, Los Angeles, New York,
  Chicago
• By 2025 housing price increases resulting only
  from economic growth will place Washingtons
  housing affordability LA, exceeded only by NY
• This does not take into account price increases
  resulting from inadequate supply

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Housing - Current Trends andLast Decade
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PMSA Total Housing Unit Permits 1980 - 2001
Year
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PMSA Annual Job Change 1980 - 2001
Year
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2000 Median Housing Value (Jurisdictions w/
100,000 Pop)
000s
Source Census
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2000 Census Comparisons with Other Metros
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Total Population
Millions
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HH With Income gt 100,000
Per cent
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Median Housing Value
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Ratio of Median Housing Valueto Median Household
Income
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Summary of Forecasts
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Study Area Growth2000 2025
Millions
Jobs
Housing
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Average Annual Growth80-00 vs. 00-25
000s
Last 20
Next 25
Last 20
Next 25
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Employment Forecasts Study Area Change in
5-Year Periods 2000 - 2025
000s
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Household Forecasts Study Area Change in 5-Year
Periods 2000 - 2025
000s
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Population per HHvs. Jobs per HH
Forecast
P/HH
J/HH
Sources Census, NPA, CRA
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Assumptions for Analysis

• Relationship of New Jobs Per New Household
• 30-Year Ratio 1.67
• 1990s Ratio 1.44
• Assumed Ratio 1.60

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Housing Demand vs. Supply 2000 2025
Millions
Housing Demand
Housing Supply
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Deficit Supply of New Housing vs. Calculated
Demand for New Housing
218,100
139,800
86,500
66,200
43,200
43,200
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2000 2025 Deficit of Growth in Jobs Resulting
from Housing Supply Constraints
Unrealized Growth 288,400
FORECAST Of JOBS
JOB GROWTH SUPPORTEDBY FORECASTS OF HOUSING
SUPPLY
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Per Cent Work in Own County(Jurisdictions with
100,000 Pop.
Reg. Avg 49
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Loudoun County Commuting
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2000 Commute Locations
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Workers Commuting into Beltway and Central
Jurisdictions from Outer Counties 1970-2000
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Washington Rank Among Top Ten Metros in
Increase in Housing Price Index(Conforming
Mortgages)

• 1980 to 1985 -- 7th
• 1985 to 1990 -- 4th
• 1990 to 1995 -- 6th
• 1995 to 2000 -- 9th
• 2000 to 2002 -- 1st
• ( 33 in last 2 years)

Source Federal Office of Housing Enterprise
Oversight
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Housing Price IndexWashington PMSA3rd Quarter
Each Year
1995 Q1100
Source Federal Office of Housing Enterprise
Oversight
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Ratio of Median Housing Valueto Median Household
IncomeWashington Projected to 2025
Increase from 2000 Ratio of 2.84
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Inadequate Housing Supply will result in

• Increased costs of housing and even more
  serious for affordable housing
• Increased demand for housing further and further
  from employment centers
• Longer, more congested and odd-hour commutes
• Diminished economic potential
• Diminished fiscal capacity

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