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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)
Affordable housing drives down property values
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.
Affordable housing drives down property values
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.
What does do we mean by“affordable housing”?
It means closing the gap between local wages and salaries and the going rate for a decent home.
What does do we mean by“affordable housing”?
It means strengthening the community by building a strong and diverse economic and social base.
What does do we mean by“affordable housing”?
It means improving the quality of life for all members of the community.
What does do we mean by“affordable housing”?
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.
What makes housing affordable?
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”.
What makes housing affordable?
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.
A Look at Income Sufficiency Using Montgomery County
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.
A Look at Income Sufficiency Using Montgomery County
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
White Black HispanicMONTGOMERY Co. 54.8% 58.5% 63.0%Bradley County 44.8% 50.0% 41.9%Knox County 48.5% 40.8% 59.4%Rutherford County 52.5% 44.9% 56.6%Washington County 49.8% 50.0% 51.4%
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
White Black HispanicMONTGOMERY Co. 17.7% 22.8% 19.1%Bradley County 23.5% 33.7% 43.9%Knox County 22.2% 24.1% 30.8%Rutherford County 21.0% 23.9% 29.6%Washington County 22.3% 20.0% 16.2%
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
White Black HispanicMONTGOMERY Co. 51.2% 63.8% 47.2%Bradley County 37.5% 50.0% 33.3%Knox County 39.7% 55.3% 40.6%Rutherford County 45.4% 57.2% 47.8%Washington County 40.6% 67.2% 86.2%
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.
Who is affected by “Affordability”?
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.
Who is affected by “Affordability”?
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
250.0% or greater200.0% to 249.9%175.0% to 199.9%130.0% to 174.9%
Cost of a Median-Priced Home for a Median Income Family, 2005
Cost of a Median-Priced Home for a Median Income Family, 2015
250.0% or greater200.0% to 249.9%175.0% to 199.9%130.0% to 174.9%
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.