The Future for Housing Affordability - Amazon S3...Values”, College of Urban, Labor and Metropolitan Affairs, Wayne State University, 2002. Affordable housing attracts unwanted tenants

The Future for Housing AffordabilityOR

“Who can afford a crystal ball?!”

Paul HenkelAsst. Director for Research, Planning and Technical Services

Misconceptions about affordable housing

NIMBY, “Not In My Back Yard”

• Is Unattractive• Drives down property values• Attracts only undesirable tenants• Only an urban/central city problem

Affordable Housing is Unattractive

Efficient planning and design can actually lower both construction and maintenance costs.

Quality design helps affordable housing to fit its context.

City Design Center, APA Website

Affordable housing drives down property values

Among working communities, the average value of owner-occupied houses is highest in those that have the most apartments. *,**

* “The Vitality of America's Working Communities”, Harvard University’s Joint Center for Housing Studies, 2003.** A working community is defined by having an average household income between 60% and 100% of AMI)


Tax Credit properties do not have a negative impact on property values, as long as there is a dispersal rather than concentration of properties.*

* “Low Income Housing Tax Credit Housing Developments And Property Values”, The Center for Urban Land Economics Research, Univ. of Wisconsin, 2002.


The impacts of federally assisted housing on area property values depend largely upon*:

1. Characteristics of the neighborhood2. Concentration of assisted housing units 3. Scale of the assisted housing facility.

* “A Review of Existing Research on Effects of Federally Assisted Housing Programs on Neighboring Property Values”, College of Urban, Labor and Metropolitan Affairs, Wayne State University, 2002.

Affordable housing attracts unwanted tenants

The shortage of affordable housing may be greatest in cities, because populations are larger and often more evident.

But rural and suburban areas also have a great need for affordable housing.

Affordable housing is an Urban Problem

RuralCounties(random)

HomeownershipRate

% of Low IncomeOwner Householdswith Cost-Burden

% of Renter Households with

Cost-Burden

% of Median RenterIncome Needed to

Afford 2-BR at FMRBledsoe 81.7% 45.30% 27.8% 77.0%

Clay 80.0% 49.20% 22.8% 106.0%

Crockett 74.9% 51.70% 32.7% 67.0%

Decatur 80.1% 41.80% 29.0% 80.0%

Fentress 79.1% 51.90% 31.1% 104.0%

Hancock 78.7% 37.50% 24.6% 170.0%

Houston 77.0% 62.20% 26.1% 96.0%

Jackson 80.8% 50.30% 20.8% 97.0%

Lake 60.0% 62.20% 29.7% 114.0%

Moore 83.7% 44.50% 21.0% 71.0%

Affordable housing is an Urban Problem

What does do we mean by“affordable housing”?

It means housing available to low and moderate income people at a monthly cost that does not exceed 30% of their gross income.

It means housing available to the local workforce.


It means closing the gap between local wages and salaries and the going rate for a decent home.


It means strengthening the community by building a strong and diverse economic and social base.


It means improving the quality of life for all members of the community.


General Population Patterns

Population of Tennessee by County, 2005

300,000 – 910,000100,000 – 299,999

50,000 – 99,99920,000 – 49,999

0 – 19,999

Projected Population and Housing Stock in Tennessee, 2006-2026

5,200,000

5,600,000

6,000,000

6,400,000

6,800,000

7,200,000

7,600,000

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

0

1,000,000

2,000,000

3,000,000

4,000,0002.24 persons per housing unit in 2006

2.00 persons per housing unit in 2026

Population

HousingStock

Counties with Slow Growth or Population Decline, 2005-2015

-1.0% to -9.0% Decline0.0% to 4.9% Growth

5.0% Growth or greater

Counties with Moderate to High Population Growth, 2005-2015

15.0% to 42.0% Growth5.0% to 14.9% Growth

Lower than 5.0% Growth

Metro and non-Metro Areas by Projected Population Change

2005-2015

15.0% to 18.0% Growth10.0% to 14.9% Growth

5.0% to 9.9% GrowthLower than 5.0% Growth

219,032

124,945

124,646

369,781

219,691

163,428

220,413

1,096,835

832,781

2,006,891

208,912

110,857

108,036

351,383

188,944

130,575

160,171

999,491

655,400

1,422,544

Kingsport-Bristol MSA

Jackson MSA

Cleveland MSA

Chattanooga MSA

Johnson City MSA

Morristown MSA

Clarksville MSA

Memphis MSA

Knoxville MSA

Nashville MSA

20052025

Populations are listed as total # of people

Metro Area Population Change, 2005-2025

571,343640,157

415,146

705,587769,756

416,112

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

East Tennessee

MiddleTennessee

West Tennessee

20052025

non-Metro Population Change, 2005-2025

Fatter Cats, 2005-2025

-1.7%-1.2%

-0.8%-0.5%

-0.1%-0.1%-0.1%-0.1%

0.1%0.1%0.3%0.5%

3.7%

-5.0% -3.0% -1.0% 1.0% 3.0% 5.0%

Memphis MSAWest TN non-MSAChattanooga MSA

Kingsport-Bristol MSAMiddle TN non-MSA

Johnson City MSAJackson MSA

Cleveland MSAMorristown MSA

East TN non-MSAClarksville MSA

Knoxville MSANashville MSA

Changes $ Allocationbased upon population

Changes weight ofpolitical pull

Components of Population Change

Components of Population Growth in Tennessee, 2001-2005

2001 2002 2003 2004 20050

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000Natural Increase

International Migration

Domestic Migration

Impact of Recent Movers by County, 2001-2005

Out-flow of Recent Movers0.0% - 2.9% Recent Movers3.0% - 5.9% Recent Movers6.0% or greater Recent Movers

Impact of Recent Movers by Metro and non-Metro Areas, 2001-2005

Out-flow of Recent Movers0.0% - 1.9% Recent Movers2.0% - 3.9% Recent Movers4.0% or greater Recent Movers

4,809,644

1,002,636

180,575

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Popu

latio

n

White Afr. American Hispanic

Tennessee's Population in 2005 by Race-Ethnicity

5,937,029

5,171,8945,561,427

1,136,690 1,288,668

1,442,746375,277779,913

1,506,508

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

One Scenario for Population Growth by Race-Ethnicity in Tennessee

Males

50,000 40,000 30,000 20,000 10,000 0

Females

0 10,000 20,000 30,000 40,000 50,000

<5 5-9

10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485+

African American Population of Tennessee by Age and Sex, 2000-2005

FutureElderlyHousingNeed

Hispanic Population of Tennesseeby Age and Sex, 2000-2005

Males

20,000 15,000 10,000 5,000 0

Females

0 5,000 10,000 15,000 20,000

<5 5-9

10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485+

NewHouseholdFormationPopulation

Growth

Trends in 1-person Owner Households in Tennessee, 1960-2000

20.80%18.60%14.90%11.00%7.40%0

200,000400,000600,000800,000

1,000,0001,200,0001,400,0001,600,0001,800,000

1960 1970 1980 1990 2000

Percent 1-person

Ow

ner H

ouse

hold

s

Owner-occupied Households1-person Owner-occupied

Trends in 1-person Renter Households in Tennessee, 1960-2000

13.70% 21.20% 32.30% 35.10% 37.60%0

100,000200,000300,000400,000500,000600,000700,000800,000

1960 1970 1980 1990 2000

Percent 1-person

Ow

ner H

ouse

hold

s

Renter-Occupied Households1-person Renter-occupied

Median Household Incomeby County, 2005

$55,000 or higher$50,000 - $54,999$45,000 - $49,999$28.700 - $44,999

Projected Household Income Changeby County, 2005-2015

+50.0% to +93.9%+35.0% to +49.9%+20.0% to +34.9%- 5.0% to +19.9%

Median Home Sales Price, 2005

$125,000 or higher$100,000 - $124,999$75,000 - $99,999$50,700 - $74,999

Median Home Sales Price Average Annual Rate of Increase, 2000-2005

8.0% or greater6.0% to 7.9%4.0% to 5.9%0.0% to 3.9%

Projected Median Home Sales Price Change, 2005-2015

+125.0% to +220.0%+100.0% to +124.9%+75.0% to +99.9%

0.0% to +74.9%

What makes housing affordable?

When the monthly mortgage (principle, interest, tax & insurance) or rent payment plus utilities comprise less than 30% of the household gross income.


If a household’s monthly rent or mortgage payment comprises 30% or more of the household income, the household is considered to be “cost burdened”.


Strictly limiting monthly mortgage or rent payments to less than 30% of income does not necessarily mean that the remaining income is sufficient to meet an individual family’s needs.

A Look at Income Sufficiency Using Montgomery County

Information on the chart to follow shows the income sufficiency of average annual salaries of various professions in Montgomery County.

Key to Understanding

The professions’ salaries shown would be single income households, and do not represent the innumerable variations in household earning and financial coping strategies.


Another Key to Understanding

While homes in more outlying areas (relative to a city center) are initially more affordable, monthly commuting expenses, both in money and time, can quickly reduce the relative “affordability” of these homes.


Median Price Existing Home$95,200

Median Price New Home$129,9002004

2004

Haird

ress

er

Cash

ier

Pres

choo

l Tea

cher

Reta

il Sale

sper

son EM

T

Nurs

e Aid

e

Medi

cal A

ssist

ant

Cons

truct

ion

Labo

rer

Socia

l Wor

ker

Bus D

river

s

Arm

y E-2

(2 yr

serv

ice)

Carp

ente

r

Polic

e Offi

cer

Elec

tricia

n

Real

Esta

te B

roke

r Teac

hers

Arm

y E-5

(8 yr

serv

ice)

Acco

unta

nt

Arm

y O-1

(2 yr

serv

ice)

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Ann

ual I

ncom

e

$0

$30,000

$60,000

$90,000

$120,000

$150,000

$180,000

Affordable Hom

e Price

Affordability of a Median-priced Homein Clarksville, TN

Median-priced, New Home in Montgomery Co.

$130,500, 3br/2ba, 1607 ft2

What constitutes anaffordable home in Montgomery Co.?

Hairdresser $42,099

Cashier $44,782

Preschool Teacher $47,273

Retail Salesperson $56,383

EMT $59,272

Nurse Aide $62,397

Medical Assistant $64,378

Construction Laborer $69,651

Social Worker $71,529

Bus Drivers $79,958

Army Enlisted $86,611

Carpenter $87,410

Police Officer $92,954

Electrician $96,860

Real Estate Broker $103,726

Teachers $121,034

Army NCO $125,790

Accountant $126,983

Army Officer $127,296

Median-priced, Existing Home inMontgomery Co.

$94,500, 3br/2ba, 1780 ft2

Police Officer $92,954

Hairdresser $42,099

Medical Assistant $64,378

Accountant $126,983

Existing Home affordable at <30% cost burden

$64,900, 3br/1ba, 1464 ft2$42,000, 3br/2ba, 891 ft2

Existing Home affordable at <30% cost burden

Max. Affordable

What about affordablerental property?

In Montgomery County, in 2004, 3,257 renters earn 50% or less than area median income.

Maximum monthly housing cost for a family at 50% of median income.

Anything more is cost burden.

$552

$583

$591

$672

$748

$0 $200 $400 $600 $800

Washington

Rutherford

Knox

Bradley

MONTGOMERY

What about affordablerental property?

Fair Market Rent is not always fairEstimated Percent of Renters Unable to Afford Two-Bedroom FMR

44%

45%

47%

43%

37%

0% 10% 20% 30% 40% 50%

Washington

Rutherford

Knox

Bradley

MONTGOMERY

Where do cost-burdened renters reside?

All RenterHouseholds

% CostBurdened

Number≤80% AMI

% CostBurdened≤80% AMI

MONTGOMERY 17,645 34.1% 8,495 60.7%

Bradley 10,780 35.2% 6,750 53.1%Knox 52,280 37.5% 33,985 54.6%Rutherford 20,035 42.2% 13,250 60.2%Washington 14,075 36.4% 8,520 55.8%

Everywhere.

Percent of County Renters at 30-80% MFI by Race/Ethnic Group

White Black HispanicMONTGOMERY Co. 33.7% 36.4% 42.4%Bradley County 39.7% 44.9% 45.6%Knox County 37.9% 36.4% 41.3%Rutherford County 41.4% 46.5% 47.2%Washington County 37.2% 35.4% 64.0%

Does cost burden discriminate?

Nope.

Is need in all areas identical?

Renters withcost burden(≤80% AMI) % White

% AfricanAmerican % Hispanic

% OtherMinority

MONTGOMERY 5,154 56.0% 33.1% 6.4% 4.5%Bradley 3,589 87.1% 7.4% 3.3% 2.2%

Knox 18,555 78.1% 16.0% 1.7% 4.2%Rutherford 7,962 77.7% 14.1% 5.0% 3.2%Washington 4,756 89.0% 6.2% 2.5% 2.2%

Not at all.

Is cost burden the only problem?

Percent of those Renters at 30-80% MFI with Housing Problems, Crowding and/or Cost-burden


No. Multiple problem issues are common.

Do home owners fare any better?

Percent of County Home Owners at 30-80% MFI by Race/Ethnic Group


Yes.But they have some of the same, and

some different difficulties.

How are they different?

Percent of those Home Owners at 30-80% MFI with Housing Problems, Crowding and/or Cost-burden by Race/Ethnic Group


Who is affected by “Affordability”?

The common perception is that only poor, unemployed, or part-time workers cannot “afford” housing.

Yes, it is true that these groups are most severely impacted. But housing affordability is not just a problem of lower-income groups.


A wide variety of residents are in need of affordable housing including:

municipal employees: teachers and police officers

service-industry labor force: hairdressers, shop clerks, travel agents;

…All of whom may be working full time but whose income is not sufficient to afford quality housing in the local area.


Local businesses and employers are also affected by a lack of affordable housing which can cause an unstable, constantly shifting local labor force.

Cost burden significantlyimpacts the elderly

Housing affordability is a problem that does not discriminate based on age.

Many elderly households in Tennessee have income levels that are lower than 30% of median family income.

Percent of Elderly Households withIncomes less than 30% of the Area Median Income

34%

25%

27%

35%

26%

0% 10% 20% 30% 40%

Washington

Rutherford

Knox

Bradley

MONTGOMERY

Cost burden significantlyimpacts the elderly

Low-income Households in Montgomery Co.

RENTERSPercent <50%MFI

OWNERSPercent <50%MFI

Ft. Campbell Ft. Campbell

Knowing what we now know, how might the following impact

Tennesseans?

Median Rent versus Median Income 1970-2020

$0

$13,000

$26,000

$39,000

$52,000

$65,000

1970

19

80

1990

20

00

2010

p20

20p

Med

ian

Hou

seho

ld In

com

e

$0

$200

$400

$600

$800

Median G

ross Rent

Tennessee Median Rent

Tennessee Median Income

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

1970

19

80

1990

20

00

2010

p20

20p

Med

ian

Hom

e Va

lue

$0

$15,000

$30,000

$45,000

$60,000

$75,000 Median H

ousehold Income

Median Home Value versus Median Income 1970-2020

Tennessee MedianHome Value

Tennessee Median Income


Cost of a Median-Priced Home for a Median Income Family, 2005

Cost of a Median-Priced Home for a Median Income Family, 2015


A note about predicting the future

We cannot predict the future.

We can only project a possible future based on what we know about the past and present.

A note about predicting the future

It is certain that the affordability of housing is an issue of significant importance today.

Evidence points to the fact that it will become more, rather than less significant for the average family in Tennessee in the immediate future.

If you have any questions after the presentation, feel free to contact me:

Paul Henkel, M.Soc.Sc., A.B.D.Asst. Director for Research, Planning and Technical Services

Tennessee Housing Development Agency404 James Robertson Parkway, Suite 1114Nashville, Tennessee 37243(615) 741-2400

[email protected] www.tennessee.gov/thda

Thank you very much for your attention.

Documents

The Future for Housing Affordability - Amazon S3...Values”, College of Urban, Labor and Metropolitan Affairs, Wayne State University, 2002. Affordable housing attracts unwanted tenants