Connecting state and local government leaders

Seattle, Baltimore Take on the Housing Affordability Crisis

Baltimore, Maryland

Baltimore, Maryland Patrick Semansky / AP Photo

 

Connecting state and local government leaders

The former has houses selling for $820,000 on average, while the latter is saddled with about 16,500 boarded up homes.

BOSTON — The average home in Seattle costs $820,000 and one-bedroom apartments rent for $3,700 a month and rising as tech companies push people—particularly communities of color—outside city limits, Mayor Jenny Durkan said.

Speaking at this weekend’s U.S. Conference of Mayors annual meeting forum on housing affordability, Durkan called it “the crisis facing Seattle.”

The home of Microsoft and Costco grew more than 100,000 residents in the last seven years, with Amazon alone employing about 40,000 people. And not even the middle class is immune to displacement in a housing environment that saw rents increase 57 percent over the past five years.

“I’m worried that we’re building the next decades of segregation because we are building deeply affordable housing—and it is primarily for people of color, who are impoverished—and we’re building it in neighborhoods where there are people of color who are impoverished,” Durkan said. “And I think we have to break that mold and have conversations about it as a nation.”

Seattle isn’t alone.

In 1960, a quarter of all renters nationally were “cost burdened,” and that number has jumped to just under half of all renters in 2018, said Chris Herbert, Harvard Joint Center for Housing Studies managing director. The private sector struggles to provide affordable housing for renters in the $15,000-a-year income bracket, 80 percent of whom are cost burdened, a situation that the federal government defines as paying more than 30 percent of income on housing.

Age 25 to 34 is typically when people buy their first home, but that age group has seen long-term lows in homeownership since the 1990s boom. High rents and student loans are to blame, as are stagnant incomes and climbing housing prices—fueled by low interest rates of around 4.5 percent, Herbert said.

“We’re not building entry-level housing right now,” he added.

Mayors should prioritize development of apartment housing, plan for diversity within it and partner with their local apartment associations, said Robert Pinnegar, president and CEO of the National Apartment Association. Right now, developers in many cities face a three-year timeline to begin development and may miss the market, which leads them to pitch the most expensive project feasible—outside the range of affordability.

Current NAA estimates show 4.6 million apartment units are needed by 2030, or 384,000 units a year. In 2017, developers only built 325,000 units, and that was a good year.

“Because of that push through, now we’re seeing a bit of a slowdown,” Pinnegar said.

Baltimore found its developers sought tax increment financing most of the time, so the city mandates 20 percent of all housing developed be affordable.

Charm City has about 16,500 boarded up homes in areas plagued by crime, and there’s a tendency to avoid redeveloping them.

“You can’t leave those neighborhoods untouched,” Mayor Catherine Pugh said.

City Hall now offers first-time home buyers tax credits to live in particular areas and is creating a $55 million neighborhood investment fund dedicated to affordable housing and housing leveraged with developers. The Maryland Economic Development Corporation would lease several city-owned parking garages and issue bonds for the $55 million, paying investors back through parking fees.

Pugh also has plans for a $1 billion investment fund backed by the private sector and spent over four years on Baltimore’s poorest neighborhoods.

Seattle has had to get creative as well. Residents passed a housing levy in 2016 and the city made $100 million in investments leveraged into more than $200 million in starts for affordable housing.

The city is also looking at rezoning to build density in neighborhoods and making it more accessible for families to build additions like mother-in-law suites on their properties.

“The hardest nut for us to crack in Seattle is single-family zoning,” Durkan said.

“I think you’ve got to use all the tools; you’ve got to really look at all endpoints and make sure that, in all parts of the city, you’re making it accessible for everybody—regardless of their economic status and their race.”

Dave Nyczepir is a News Editor at Government Executive’s Route Fifty and is based in Washington, D.C.

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