By RDG Director of Innovation and Global Research Doug Radcliff
"One of the fundamental questions that should always be addressed in a funding campaign is 'why are we doing this?' As simple as that question is, it is oftentimes difficult for some to answer."
-Rob Radcliff
The iconic cartoon, the Simpsons, has “predicted” so many major events, from Super Bowls to technological advances to political events. However, the aspect of the show that has always astounded me is the premise – the “typical” American family in the 80s and 90s. What was the “typical” American family? The dad/husband was a blue-collar worker, the mom/wife takes care of their three kids, and they live in the suburbs in a house of around 2,200 square feet with four bedrooms, two bathrooms and a sauna in the basement. Some estimations put the worth of the house at around $450,000. All of this is done on the salary of the dad who has no higher education, which, (adjusted for inflation) is under $40,000 per year. Sure – there are some baseline stories regarding how they initially got the house, but the point remains the same, this is what was considered “typical”, and it was not unheard of for a family to live in a house on only one salary whose recipient has no higher education. The show offers many opportunities for further investigation and analysis – for example, a deep dive into the diminishing blue-collar work, the belief in the necessity of a college degree to be “successful”; but our focus here is the affordable housing crisis. Yes, it is a fictitious show and almost every aspect of it is exaggerated and unrealistic, but that does not change the United States’ current affordable housing crisis.
In 1990, the median household income was $30,636 per year. It grew to $54,132 per year in 2022 – a 76% increase. In 1990, the median home value was $79,100 (158% more than salary). In 2022, the median home cost was $479,500 (786% more than salary). Obviously, each and every individual state is different, but the trend is clear: there has been a massive increase in the prices of homes – over 500% – while the average salary has less than doubled. This never was and never will be sustainable. Not only does this affect owners, but disproportionally, low-income renters.
According to the Urban Institute, “there is a shortage of 7.3 million affordable rental homes” for extremely low-income individuals. According to United Way and “the National Low Income Housing Coalition, on a national scale, only 36 affordable and available rental homes exist for every 100 extremely low-income renter households.” Additionally, in certain metro areas, minimum-wage workers need to work 80+ hours/week and average-wage workers 50+ hours/week to afford a one-bedroom rental. The cities experiencing the largest shortages are major metro areas, including (#1–#10) New York City (deficit of 805,452 units), Los Angeles, Miami, Chicago, Houston, Dallas, DC, San Francisco, Atlanta, and Philadelphia (deficit of 142,102 units). The cities experiencing the smallest shortages are (#1–#10) Louisville (deficit of 15,304 units), Buffalo, Raleigh, Rochester, Cincinnati, Oklahoma City, Richmond, Hartford, Tucson, and Pittsburgh (deficit of 27,071 units).
A 10,000-page PhD thesis could be written on the historical development of the United States’ housing crisis. So briefly, what comes to my mind when I think of this as an economic developer? To put it simply, we are spending millions of dollars on marketing campaigns designed to attract people, talent, and workforce to our respective markets, yet our cities are not equipped with the basic means to support and house so many of these individuals. It seems certain steps are being overlooked. What happens when we spend millions of dollars to generate interest in and recruit talent to our region, but when they come, they are unable to find affordable housing? The answer is that millions of dollars were spent on something we were not prepared for and that the result (people moving to your city) may not be permanent. The even greater risk is the residual and generally unmeasurable “bad feelings” about our cities emanating from the very people we are trying to recruit.
The lack of affordable housing impedes the growth of businesses as well as other benefits of population growth, such as spending. This not only impacts the decisions of businesses looking to expand in the region, but also already existing businesses looking to expand. Therefore, it seems both logical and necessary for community developers to be analyzing and addressing the current affordable housing crisis. If we want to develop our communities economically, of which attracting more workforce is a necessary component, the very foundation is having available housing for them when they come. Community and economic development projects need to keep this in mind. They need to ask themselves; do we have adequate housing? Do we have available options for workforce migrants to live? Will they be able to find housing that makes their family happy and want to stay. Because if not, people may come, but will they stay? The last thing we want to be doing is spending hard earned resources on initiatives to attract people to our region when our region does not have the means to house them.
There are several strategies that communities can take to increase affordable housing (and should follow them simultaneously). First and foremost, they should consider engaging with local and regional builders and developers to establish a collaborative plan and vision for the future. Furthermore, they should consider attracting real estate investors on a national and regional scale, which can be done through, for example, a marketing strategy promoting your region. Finally, all this needs to be done with local governments also at the table to ensure construction projects can be carried out in a timely manner without zoning issues. Remember, if government officials help build the strategy, they are more likely to want to see it through to a successful conclusion. Each city has their own unique challenges. Therefore, there is no one plan fits all. The one thing that is certain is that nationally speaking there is a major affordable housing crisis, impacting most communities, that should be viewed as one of the fundamental pieces of community development. Having the means to house individuals moving to your community should be a preliminary step of community development.