The Economic and Business Case for Affordable Housing...Millennials: The Lasting Impact of the Great Recession • Unemployment for 18-29 year olds (recent graduates) peaked at 18

1© MARKET STREET SERVICES MASSACHUSETTS HOUSING INSTITUTE

The Economic and Business Case for Affordable Housing

MASSACHUSETTS HOUSING INSTITUTEJUNE 15, 2016


Market Street Services

• Founded in 1997 by J. Mac Holladay

• Worked in more than 160 communities across 34 states

• Assist communities with evaluating their competitiveness and strategically planning for a preferred future

• We are facilitators, first and foremost

• Our commitment is to a definition of economic development and community improvement that, at its core, is about personal wealth creation for all citizens and building better communities


Demographic Trends and Changing PreferencesImplications for Community, Economic, and Workforce Development


“Ever since the global financial crisis, economists have groped for reasons to explain why growth in the U.S. and abroad has repeatedly disappointed, citing everything from fiscal austerity to the euro meltdown. They are now

coming to realize that one of the stiffest headwinds is also one of the hardest to overcome: demographics.”

Greg Ip2050: Demographic Destiny

Wall Street Journal


Age Composition (2014)

25.8% 23.7% 23.6% 23.8%

7.2% 7.3% 7.2% 7.4%

26.4% 26.2% 27.7% 23.6%

26.2% 27.8% 27.1% 28.8%

14.5% 15.1% 14.3% 16.4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

United States Massachusetts Boston MSACounties

All OtherMassachusetts

Counties

65 and over

45-64

25-44

20-24

Under 20

Source: United States Census Bureau; Population Estimates


18% 21% 20% 20% 25% 24% 25% 25% 24% 24% 26% 22% 24% 21%

5%7% 5% 6%

6% 15%7% 7% 7% 6% 8%

5% 7% 10%18%

21% 23% 23%22%

20%24% 25% 25% 25% 24% 30% 28%

35%31%

31% 32% 33% 30%26% 29% 29% 29% 29% 27% 29% 27%

22%28%

21% 20% 18% 16% 15% 16% 14% 16% 16% 15% 13% 14% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%65 and over

45-64

25-44

20-24

Under 20

Age Composition (2014)Most sustainableLeast sustainable



Massachusetts Net Migration (1990 – 2014)

-60,000

-50,000

-40,000

-30,000

-20,000

-10,000

0

10,00019

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

14

Source: Internal Revenue Service (IRS)


Workforce Sustainability by State

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

-10% -5% 0% 5% 10% 15% 20%

Age D

epen

denc

y Gap

(% 25

-44 m

inus

%45

-64)

Net Migration Rate (net migration from 2000-2014 as a share of 2000 population)

Source: Internal Revenue Service (IRS); United States Census Bureau


Migration Trends (2000 – 2011)

Source: Applied Population Laboratory, University of Wisconsin- Madison; Internal Revenue Service; United States Census Bureau








Workforce Sustainability and Quality of Place

Source: Urban Land Institute (2013)

National survey conducted by the Urban Land Institute focusing on individual preferences and desired community attributes.

What is the ideal size for your preferred place of residence?

30%

27%

16%

29%

27%

21%

15%

21%

20%

22%

23%

38% 5%

0% 20% 40% 60% 80% 100%

Baby Boomer(ages 48-66)

Gen X(ages 35-47)

Gen Y(ages 18-34)

Rural Small Town Suburbs Medium or Large City Other


Why are Millennials looking to cities and more urban environments?

• Transportation choices: transit, walkability, bikeability

• Diversity: welcomeness, inclusivity, culture

• Amenities: proximity to nightlife, gathering places, arts and entertainment

• Mixed uses: proximity and access

Workforce Sustainability and Quality of Place


Core/Central County Share of Metropolitan Population Growth

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Atlanta MSA

Dallas MSA

Denver MSA

Indianpolis MSA

Nashville MSA

Philadelphia MSA

Seattle MSA



The Corporate Site Selection Process

1. Evaluate regions and identify a short list

2. Select the desired region

3. Choose the desired site within the selected region

Location requirements vary by sector

Location requirements have changed considerably over time


1 Availability of skilled labor2 Highway accessibility3 Labor costs4 Occupancy or construction costs5 Available buildings6 Corporate tax rate7 State and local incentives8 Low union profile9 Energy availability and costs10 Right-to-work status11 Tax exemptions12 Available land13 Expedited or fast track permitting14 Proximity to major markets15 Environmental regulations

Area Development’s 28th Annual Corporate SurveyMost Important Site Location Factors (2014)


Impact on Corporate Relocations

Suburban/exurban relocations to city centers (2013 – 2016):

• Atlanta: Coca-Cola, Porsche, Worldpay, athenahealth, Pulte Group, and NCR

• Chicago: United Airlines, BP, Motorola, Allscripts, GE Capital, Walgreens, Sara Lee, Archer Daniels Midland (ADM), ACCO, NAVTEQ, Barilla

• Detroit: Quicken Loans, MSX International, Title Source, Rossetti, Lowe Campbell Ewald, The Professional Group

• Bay Area: Pinterest relocation from Silicon Valley to San Francisco


So, what have we learned?• Labor shortages are coming (age composition): Baby Boomers are exiting the workforce;

there are barely enough 25-44 year olds to replace 45-64 year olds

• Talent attraction and retention (net migration): Regions with disadvantageous age dynamics can overcome potential future labor shortages through positive levels of net in-migration

• Talent development: Higher education and training institutions are only advantages (in terms of labor supply) to the degree to which a community or region can retain their graduates

• Millennial preferences: Exhibiting stronger preferences for urban environments in medium to large metropolitan areas; place matters!

• Businesses are responding to these trends: Site location criteria is changing; businesses are following people, not vice versa

Demographic ChangeImplications for Community, Economic, and Workforce Development


In summary, where does Massachusetts stand today?• Disadvantageous but not insurmountable age dynamics

• Historical out-migration but some evidence of a reversal

As a share of the United States:• Jobs: 2.5%

• Job openings: 2.3%

• Degree completions: 2.8%

• 25-44 year olds: 2.1%

• Net International Migration: 3.8%



The big question: Do we have what it takes to compete for talent –both attracting and retaining – in today’s competitive climate?

• Job opportunities

• Transportation options

• Amenities

• Inclusion

• Affordability?



Housing Affordability and Changing PreferencesImplications for Community, Economic, and Workforce Development


Housing Affordability: United States

50100150200250300350400450500550600650700

Median Existing Single-Family Sales Price Median Household Income

Source: National Association of Realtors (NAR); United States Census Bureau; Moody’s Economy.com

Index of Home Prices and Household Incomes (1980Q1 = 100)


Housing Affordability: Massachusetts

50100150200250300350400450500550600650700

Median Existing Single-Family Sales Price Median Household Income


Index of Home Prices and Household Incomes (1980Q1 = 100)


Housing Affordability Ratio: United States and Massachusetts


2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

United States Massachusetts

Ratio of Median Existing Single-Family Home Prices to Median Household Income


80

100

120

140

160

180

200

220

Median Asking Rent Median Household Income

Rental Affordability: United StatesIndex of Median Asking Rent and Household Income (1980Q1 = 100)

Source: United States Census Bureau


Millennials: The Lasting Impact of the Great Recession

• Unemployment for 18-29 year olds (recent graduates) peaked at 18 percent in 2009, more than double the rate for all other ages. (Bureau of Labor Statistics)

• Just 63 percent of Millennials were working in 2013 as compared to 70 percent in 1990. (Federal Reserve Bank of Atlanta)

• In 2015, Millennials accounted for 33 percent of the employed but 48 percent of the unemployed (Bureau of Labor Statistics)

• The average college-educated 18-34 year-old earned 36 percent less in 2013 than their counterpart in 2007. (Federal Reserve)

• More graduated with more debt: average student loan debt rose 56 percent between 2004 and 2014, from $18,550 to $28,950. (Institute for College Access and Success)

• Meanwhile, the homeownership rate for Millennials is down from 44 percent in 2004 to 36 percent in 2014. (United States Census Bureau)

• Nearly one in three (32.1 percent) Millennials (aged 18-34) are currently living with their parents. (Pew Research)


Millennials: Desired Features in a City

Feature Thriving job market

Rating8.19

Affordable rent 7.94Affordable home prices 7.55Parks or hiking trails 6.52Local restaurants (non-chain) 6.49Top-rated public schools 6.07Walkability 5.75Revitalized downtown 5.64LGBTQ-friendly 5.47Ethnic food 5.43Quality public transportation 5.34A nearby beach, lake, or river 5.07Local college or university 4.99

ABODO Survey: Evaluate your desired features in a city (10 = most important; 1 = least)


Millennials: The “Perfect” City?

City Percent

New York City, NY 19.9%San Francisco, CA 10.3%Seattle, WA 9.2%Portland, OR 9.1%Los Angeles, CA 7.8%Austin, TX 5.5%Chicago, IL 4.8%Denver, CO 2.4%San Diego, CA 2.4%Boston, MA 2.3%Atlanta, GA 1.9%Dallas, TX 1.5%Washington, DC 1.4%

ABODO Survey: Identify your “perfect” city:


Millennials: Evidence of Stubbornness

Feature Thriving job market

Rating8.19

Affordable rent 7.94Affordable home prices 7.55Parks or hiking trails 6.52Local restaurants (non-chain) 6.49Top-rated public schools 6.07Walkability 5.75Revitalized downtown 5.64LGBTQ-friendly 5.47Ethnic food 5.43Quality public transportation 5.34A nearby beach, lake, or river 5.07Local college or university 4.99

City Percent

New York City, NY 19.9%San Francisco, CA 10.3%Seattle, WA 9.2%Portland, OR 9.1%Los Angeles, CA 7.8%Austin, TX 5.5%Chicago, IL 4.8%Denver, CO 2.4%San Diego, CA 2.4%Boston, MA 2.3%Atlanta, GA 1.9%Dallas, TX 1.5%Washington, DC 1.4%

ABODO Survey: Millennials on Desired Features and the “Perfect” City


So what are we left with?

• A battle for Millennial talent: communities and economic regions are facing talent shortages, some more so than others.

• This battle for talent will dictate our future economic geography.

• Millennials that demand more urban, mixed-use environments with access to a variety of attributes.

• Millennials that demand and need affordable housing opportunities – rental and ownership.

• Those that are able to provide the best combination of attributes, access, and affordability that Millennials demand will win.


Rural and small town America is hollowing out.

Remember this?

30%

27%

16%

29%

27%

21%

15%

21%

20%

22%

23%

38% 5%

0% 20% 40% 60% 80% 100%

Baby Boomer(ages 48-66)

Gen X(ages 35-47)

Gen Y(ages 18-34)

Rural Small Town Suburbs Medium or Large City Other

Housing Implications for Rural and Small Town America


18% 21% 20% 20% 25% 24% 25% 25% 24% 24% 26% 22% 24% 21%

5%7% 5% 6%

6% 15%7% 7% 7% 6% 8%

5% 7% 10%18%

21% 23% 23%22%

20%24% 25% 25% 25% 24% 30% 28%

35%31%

31% 32% 33% 30%26% 29% 29% 29% 29% 27% 29% 27%

22%28%

21% 20% 18% 16% 15% 16% 14% 16% 16% 15% 13% 14% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%65 and over

45-64

25-44

20-24

Under 20

Most sustainableLeast sustainable




Rural and small town America is hollowing out.

Who’s left? Gen X and Boomers…

• …but not all of them.

• Baby Boomers are living longer and in some cases working longer

• Retirement portfolios were hit hard by the Great Recession




1. Accommodating an aging population

2. Accommodating an aging housing stock

3. Competing for this generation

4. Preparing for the next generation


• Educate partners and stakeholders about the problem.

• Bring employers to the table. Put the housing argument in terms that they understand and to which they relate.• The social argument: limited appeal

• BANANAs, NIMBYs, CAVEmen, political views, etc.

• The economic argument: broader appeal

• Addressing fiscal impact and misinformation:• Detractors: “Multi-family development doesn't pay its way…”

Implications for All


Questions?

37© MARKET STREET SERVICES PARTNERSHIP GWINNETT 3.0

Matt TarletonVice President and PrincipalMarket Street [email protected]

Thank you!

@_MarketStreet

Documents

The Economic and Business Case for Affordable Housing...Millennials: The Lasting Impact of the Great Recession • Unemployment for 18-29 year olds (recent graduates) peaked at 18