Housing Supply & Demand Trends

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Housing Element of the General Plan
Montgomery County Maryland
Montgomery County, Maryland

M‐NCPPC Analysis of the Supply & Demand for Housing
Research & Technology Center, Montgomery County Planning Department
July 3, 2008
 Purpose
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Housing Supply & Demand

Support Housing Element General Plan update
• Information
• Analysis

Focusing on land use aspects of housing policy

Focusing on land use aspects of housing policy

Give general policy directions—not setting housing targets
 Scope of Report
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Housing Supply & Demand

Analyze Montgomery County’s housing crunch
• Gap analysis
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• Quantify existing & future housing needs
• Identify who faces a housing crunch
• Supply & demand analysis
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•Examine forces shaping the housing environment

Consider next steps
Consider next steps
• Discuss housing policy implications
• Identify topics for future research

M‐NCPPC
 Key Findings
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Housing Supply & Demand

•There is a sizeable shortage of affordable housing 

• Gap will worsen if current trends continue

• Housing environment presents opportunities & constraints
Housing environment presents opportunities & constraints

M‐NCPPC
 Housing Supply & Demand Trends
Montgomery County Maryland
Montgomery County, Maryland

Affordable Housing Gap Analysis

Affordable Housing Gap Analysis

M‐NCPPC Analysis of the Supply & Demand for Housing
Research & Technology Center, Montgomery County Planning Department
July 3, 2008
 Gap Analysis Overview
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Affordable Housing Gap Analysis

Quantifies supply / demand mismatch

Captures affordability and choice
• Affordability to households in income levels
• Suitability for households of different sizes

Assesses changes in housing gap over time based on:
Assesses changes in housing gap over time based on:
• Currently projected residential development patterns 
• Existing mix of incomes, household sizes 

M‐NCPPC
 Assumptions
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Affordable Housing Gap Analysis

What is “affordable”? 

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Total cost of housing is 30% of gross income or less
f h i i 30% f i l

Includes all housing costs, such as
• rent or mortgage
• utilities, insurance, taxes
• condominium or association fees
condominium or association fees

Maximum housing costs affordable in each income band
 Assumptions
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Affordable Housing Gap Analysis

• Demand is based off of what existing and projected households 
in the County could pay today at maximum affordability if they 
needed housing
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• Incomes and housing costs in constant 2004 dollars

• No distinction made between demand for rental vs. owned 
housing
 Key Findings
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Affordable Housing Gap Analysis
If current trends continue:
If current trends continue:

• Current shortfall of 50,000 units will grow to 62,000 units  
b 2030
by 2030

• Households and families with 4 or more people will be the 
most affected

• Affordability crisis will move up the income ladder from 
Affordability crisis will move up the income ladder from
households earning less than $90,000 to those earning less 
than $120,000
 Key Findings
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Affordable Housing Gap Analysis

Current shortfall is being absorbed by households:

• Paying greater than 30% of household income on housing

• Living in overcrowded units (both accessory apartments 
Li i i d d it (b th t t
and doubling up in small apartments)

• Owning homes that they could not afford today
 Affordability + Choice (2005)
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Affordable Housing Gap Analysis

Total Shortfall of affordable + appropriately sized units: 50,000
Number of Persons in Household
Affordable Monthly Housing 
Annual Household Income Cost 1 2 3 4+ Total
Less than $30,000 Less than $749  (9,932) (6,666) (4,884) (5,331) (26,813)
$30,000 to $59,999 $750 to $1,499 3,273 (40) (3,149) (9,745) (9,661)
$60 000 to $89 999
$60,000 to $89,999 $1 500 to $2 249
$1,500 to $2,249 3 765
3,765 (2 175)
(2,175) (1 768)
(1,768) (6 002)
(6,002) (6 179)
(6,179)
$90,000 to $119,999 $2,250 to $2,999 7,414 448 (219) 1,902 9,545
$120,000 to $149,999 $3,000 to $3,749 6,275 1,821 233 3,556 11,884
$150,000 and above $3,750 and above 14,356 5,471 2,505 4,344 26,676
Total 25 150
25,150 (1 141)
(1,141) (7 283)
(7,283) (11 275)
(11,275) 5 451
5,451

Median household income
• $83,880 (2004)
$83,880 (2004)
• $91,641 (2006)
 Affordability (2005)
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Affordable Housing Gap Analysis

Shortage/Surplus by income group (2004 dollars)

• Shortage is most acute for households earning less than 
$90,000 per year

• Households earning $150,000 or more have plenty of 
options
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 Choice (2005)
( )
Affordable Housing Gap Analysis

Shortage/Surplus household size

• Singles have widest range of affordable housing options

• Families of 4
Families of 4+ have the most difficulty finding affordable 
have the most difficulty finding affordable
housing

• Couples earning less than $90,000 face a housing shortage
Couples earning less than $90 000 face a housing shortage
 Affordability + Choice (2030)
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Affordable Housing Gap Analysis

Total Shortfall of affordable + appropriately sized units:  62,000
Number of Persons in Household
Number of Persons in Household
Affordable Monthly Housing 
Annual Household Income Cost 1 2 3 4+ Total
Less than $30,000 Less than $749  (9,991) (7,412) (5,895) (6,529) (29,828)
$30,000 to $59,999 $750 to $1,499 13,364 5,692 (1,790) (10,578) 6,688
$60,000 to $89,999 $1,500 to $2,249 3,755 (4,171) (3,076) (9,307) (12,799)
$90,000 to $119,999 $2,250 to $2,999 9,061 (1,186) (1,484) (677) 5,713
$120,000 to $149,999 $3,000 to $3,749 9,057 2,632 283 3,717 15,689
$150,000 and above $3,750 and above 16,814 3,344 875 122 21,156
Total 42,060 (1,102) (11,087) (23,252) 6,620

Median household income
• $83,880 (2004)
$83,880 (2004)
• $91,641 (2006)
 Key Changes (2005 to 2030)
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Affordable Housing Gap Analysis

• More multi‐family rental units for moderate income singles, 
l i f il l i f d i i l
small families

• Absorption of large, expensive homes
 Affordability (2030)
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Affordable Housing Gap Analysis
Shortage/Surplus by income group (2004 dollars)
h / l b i ( d ll )

• Shortage is increasing to include households earning up to 
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$120,000 per year

• Housing crisis deepens for very low income households 
Housing crisis deepens for very low income households
earning less than $30,000 per year

• Crunch eases for some moderate income households
C h f d i h h ld

• Households earning $120,000 or more still have many 
options
 Choice (2030)
( )
Affordable Housing Gap Analysis

Shortage/Surplus household size

• Shortage grows for households, families of 4+

• Crunch eases for small households of moderate means 
C h f ll h h ld f d t
(1‐2 persons)

• Singles have widest range of options
 Housing Supply & Demand Trends
Montgomery County Maryland
Montgomery County, Maryland

Supply & Demand Analysis

Supply & Demand Analysis

M‐NCPPC Analysis of the Supply & Demand for Housing
Research & Technology Center, Montgomery County Planning Department
July 3, 2008
 Supply
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Housing Supply & Demand

Housing Inventory

Single‐family detached homes still predominate
Single‐family detached homes still predominate
• most common housing built before 1970
• getting larger, pricier

Since 1970s most new housing has been higher density 
• single‐family attached (townhomes) 
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• multi‐family 
• multi‐family units—getting larger, but too few 3‐ 4‐
bedrooms
bedrooms 
M‐NCPPC
 Housing Inventory
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Distribution of Housing Stock
Distribution of Housing Stock
Construction by Decade
Source: Maryland SDAT
39,089

30,816 32,318
28,479
21,857
16,434
11,966

Pre‐1950 1950s 1960s 1970s 1980s 1990s 2000s

Single Family  Detached Single Family  Attached Multi‐Family

 Housing Inventory
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Median Square Footage of Condos Sold (2006)
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Source: STAR,  Maryland  SDAT
1,320 1,300
1,149 1,181
1,037

420

0
Pre‐1950 1950 to  1960  1970 to  1980 to  1990 to  2000 to 
1959 to1969 1979 1989 1999 2006

Condominiums
 Housing Inventory
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Housing Type % of New Construction By Decade
S
Source: Maryland 
M l d SDAT
0% 3%
4% 4%
16% 22% 21%
0% 27% 33%

29%
42% 29%
24%
96% 93%
84%

50% 44% 42%

37%

Pre‐1950 1950s 1960s 1970s 1980s 1990s 2000s

Single Family  Detached Single Family  Attached Multi‐Family

 Supply Constraints
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Housing Supply & Demand

Limited land availability
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•Approaching build‐out
•In‐fill provides most opportunities

Rising costs
Rising costs
•Labor, materials, energy costs
•Building and regulatory environment

M‐NCPPC
 Demand Drivers: Overview
Housing Supply & Demand

Population & Household Growth & Change

Economic Growth & Change

Changing environment
Ch i i t
• rising energy, transportation prices
• lifestyle preferences

M‐NCPPC
 Demand Drivers
Housing Supply & Demand

Continuing population & household growth

Demographic change
Demographic change
• aging population
• immigration
• changing households
h i h h ld

What has not changed
• most households own their homes
• relatively affluent and educated population

M‐NCPPC
 Household Growth
  Household Projections
Total Units, 2005‐2030
Source: COG 7.1 Forecasts Households 441,300
424,800
407,900
390,000
370,000
347 000
347,000

2005 2010 2015 2020 2025 2030

 Population Aging
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Age Groups
Household Population
Household Population
Source: M‐NCPPC 2005 Census Update Survey

11%
26% Under 18
18 to 29
18 to 29
28% 30 to 44

12% 45 to 64
65+
23%
 Foreign‐Born Household
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  Foreign‐Born Households
g
by housing  type
Source: M‐NCPPC 2005 Census Update Survey

Muti‐Family 38%

Single‐Family 34%

Montgomery County 35%
 Demand Drivers
Housing Supply & Demand

Economic change
• more jobs in Montgomery County
• technology business, other non‐government growth
h l b i h h
• growth in base sectors drives demand for support jobs
• diverse skills, backgrounds needed

What has not changed
• Federal government
Federal government
• large base of transient residents
• workforce generally highly educated, well‐paid

M‐NCPPC
 Median Household Income

  Median Household Income (2004)
by structure type
Source: M‐NCPPC 2005 Census Update Survey

Muti‐Family $48,463

Single‐Family $106,242

Montgomery County $83,880 
 Educational Attainment
Educational Attainment
Population Age 25 and Over
Population Age 25 and Over
Source: M‐NCPPC 2005 Census Update Survey Less than High School

8% Hi h S h l
High School

35% Associate or Trade School
22%

Bachelor's Degree
6%
Graduate, Professional or 
Doctoral Degree
29%
 Housing Market Trends
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Housing Supply & Demand

Strong demand + supply constraints create shortage

Housing bubble exacerbated situation

Price effects:
Price effects:

• Homeownership increasing out of reach for nearly all types 
of housing
of housing

• Rentals more accessible 

M‐NCPPC
 Housing Prices
g
$1,000,000 0 33
8 1, 60 89 4, 8
New Single‐Family
g y $8 $
Detached
Existing Single‐Family
Detached
$750,000 New Townhouse

Existing Townhouse 00 0
55 2, 5 6 0, 00
$ $ 5

$500,000 0
1 8, 51 67 3
$5 1,
$ 46

1, 15 0
0, 00 0 $ 36
$250,000 $ 35

$0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
 Housing Prices
g
  Market Rate Turnover Rents
by market area
Source: DHCA 2007 Rental Apartment Vacancy Report
$1,674
$1,523
$1,369
$1,281
$1,186
, $1,165 $1,165 $1,202 $1,170
$1,039
 Housing Supply & Demand Trends
Montgomery County Maryland
Montgomery County, Maryland

Implications + Next Steps
Implications  Next Steps

M‐NCPPC Analysis of the Supply & Demand for Housing
Research & Technology Center, Montgomery County Planning Department
July 3, 2008
 Implications
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Housing Supply & Demand

Need to meet continued high demand

Respond to changing cost structure

Respond to changing consumer needs, preferences
•Housing for all incomes
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•Housing for all life stages
•Housing for all types of households

M‐NCPPC
 Implications
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What is working?

• Recent emphasis on higher
Recent emphasis on higher‐density
density development
development

• Trend to larger units in multi‐family

• Smart growth‐oriented policies

M‐NCPPC
 Potential Areas for Further Research

Consider further analysis: 

• sub‐county supply and demand

• workforce housing demand – especially in the future

• energy and transportation costs related to housing
energy and transportation costs related to housing

• economic value of smart growth

• linkage fees to non‐residential development

M‐NCPPC
 Potential Areas for Further Research

…consider further analysis (cont)

• work with other agencies 

• conduct joint affordable housing market analysis 
addressing supply constraints

• housing needs and options for specific groups (families, 
workforce, seniors, etc.)

• rental preference and needs 

M‐NCPPC