Making the Case: Why Housing Access is an Economic Development Issue

June 7, 2019 Amie Collins

The past year or so has brought a slew of housing projects to the Camoin 310 office. And after Senior Project Manager Christa Ouderkirk Franzi’s recent presentation on housing to the New York Conference of Mayors, we heard from many Navigator readers seeking additional resources to help make the case why access to housing is an economic development issue. The purpose of this article then, is to further explain why housing is important in economic development efforts (now more than ever) and how you can approach this issue within your own community.

Framing the Issue

At its core, economic development is about jobs—creating high quality, meaningful opportunities for gainful employment. This includes service jobs, middle skilled jobs, high tech, and technical and soft skilled jobs. But who takes these jobs and what their preferences are (and what they can afford) is just as important as the job opportunities at hand. Read: cater to the desired workforce and you will cater to businesses at the same time. Since emerging from the financial recession of 2008, access to talent has become the top challenge identified by companies everywhere we work, across all sectors. Employers must now work to chase talent versus the other way around. Thus, business retention and attraction are dependent upon workforce availability.


Who is This Workforce, and What Do They Want?

At a macro level, demographics are shifting towards a need for housing for aging baby boomers who are downsizing and millennials who now make up the bulk of the workforce. That’s right, millennials aren’t the ‘future workforce’ anymore, they are in it!

Millennials are more racially and ethnically diverse than previous generations, and are delaying both marriage and children. They prefer higher-cost cites where quality of life is high, but housing options are tight. Education debt is a burden which is making it hard to save for a down payment. Their perception of real estate is also different than prior generations; millennials lived through the recession as kids and many felt its effects first hand. This experience has left a lasting impact.

Because of these characteristics, millennials are looking for smaller units (often rentals) with connectivity to transit options, walkability within the community, and that are amenity-rich (think gardens, fitness facilities, coffee shops, pet friendly establishments, and definitely high-speed internet). Talented people aren't looking for a job; they are seeking an environment that stimulates and inspires. More significant than these trends however, people want need housing they can afford.

The Affordability Gap

The rising cost of construction and land prices, undersupply of desired units coupled with rising prices and mortgage rates has resulted in an affordable housing crisis. The chart below outlines where home prices are affordable, indicated in green, or not, shown in orange, for average wage earners.

Add to this the stagnation of household income. While US home prices have gained almost 60% since March 2012, household income is up a little less than 30% in the same period.[1] This means a buyer with a $2,500 monthly housing budget has lost almost $30,000 in purchasing power. The figure below outlines this gap.

Change in Income vs. Change in US Home Prices

And this may not change any time soon. Those industry sectors that are growing fastest by 4-digit NAICS (restaurants and other eating places, individual and family services, and home health care services) offer low wages that do not allow for purchase of a median valued home.[2]  

To help quantify housing affordability in your community, here’s an analysis you can run. Given your area’s median household income and the median home value (both found here), see if 30% household income is sufficient to cover the mortgage cost of the median value of a home. (Note: No more than thirty percent is the general agreed-upon proportion of income that should be spent on housing. Also note that median household income is reported as gross income, so pulling out an estimation of state and federal taxes will give you a more accurate result of affordability).

Plug the median home value into a mortgage calculator—here’s one from Zillow—and the other metrics including tax rate, interest rate, and down payment. (We typically use 10%, as 20%, the traditional down payment amount, is becoming outdated.) You may also want to call a local realtor to assess if the median home value is congruent with the median home price, as price is driven by your local market. Change this as necessary and compare if the monthly mortgage payment can be met with 30% the median household income (divide income by 12 to get your monthly max). The resulting analysis will give you a very good indication of home affordability in your area, and help you communicate the story.

In addition to this housing affordability analysis, gathering additional data will help you better understand the housing situation in your community. The American Community Survey 2017 estimates from the US Census provides information on the age of your housing stock, type of housing, ownership versus rental rates, and more. This will paint the picture of housing in your area and better understand if it can meet the needs of the shifting demographics (both for millennials and baby boomers).  

Communicating the Need & Next Steps

Armed with workforce trends and an understanding of the housing picture in your community, what’s next? Here are some things we think about when engaging with communities around housing:

  • What efforts are already underway that could be supported to expand? Workforce is a regional asset (based on where people are willing to commute from) so in theory, efforts should be regional in nature.
  • Who is advocating for a range of housing options in your community? Warning: it might be several agencies, depending on the AMI (Area Median Income) targeted.
  • Develop housing priorities. Consider passing a non-binding resolution that supports a plan created or organization formed.
  • Understand and formalize your neighborhoods, as a way to talk about them and prioritize. Map them, give them some context (condition of buildings, resident demographics, amenities available). Basically, create a current assessment from which to identify actions.
  • Augment what is supported by the market to align with your area’s specific goals. Municipalities can provide extra incentive by establishing a fast-track permitting process, waiving of certain permitting fees, etc. that align with housing priorities.
  • Any systematic change will require a housing plan with strategic, measurable, realistic goals. Make sure to piggy back off the region-wide plans and efforts currently underway, then create a local task force, with its own action plan, to help implement recommendations.
  • Promote the formation of an entity (governmental or nonprofit, neighborhood level or region-wide) that exists to listen to the concerns of homeowners/landlords and address the need for high quality, accessible, and diverse housing stock. Ideally, have a municipal staff point person.
  • Engage local realtors in the conversation, frequently! Their on-the-ground knowledge is invaluable. Share plans, data, and get their input.
  • Be aware of the “G” word: Gentrification. This comes as a welcome to some but a means of displacement for many others. Is there a high vacancy rate in less-than-desirable houses? Or are people living there because that is what they can afford? How might your efforts to improve the housing stock hurt the most disenfranchised in your community? How can you prevent that from happening?
  • Note, this recent presentation has additional strategies, as does this article for more tourist-based economies. And watch and share this 3-minute video to understand the housing issue in one Massachusetts city.

Overall, to enhance economic development efforts in your communities you need the appropriate workforce to engage those efforts, and this workforce needs places to live. Good luck making the case for housing strategies in economic development, and don’t hesitate to contact us as you navigate this topic. While this is a quick overview of how to frame the problem, know that we can help further analyze your situation and help develop strategies.


[1] Bureau of Economic Analysis, S&P Corelogic Case-Shiller 20-City Composite Index.

[2] ACS US Census, 2017 Estimates