Interim Director for OP Appointed

Rosalynn Hughey photo 1Deputy Mayor for Planning and Economic Development Victor Hoskins has appointed Rosalynn Hughey as interim Director of the D.C. Office of Planning (OP) effective February 24, 2014. Harriet Tregoning is resigning as Director effective February 21, 2014 to join the U.S. Department of Housing and Urban Development. Prior to her appointment Hughey served as OP’s Deputy Director of Citywide and Neighborhood Planning.  Hughey joined the Office of Planning in 2000 and has over 25 years’ experience in urban planning.

Are Children an Endangered Species in Urban Areas?

By Art Rodgers

The classic problem of many science fields is you can only weigh something if you stop it, or you can determine where it’s going, but then you can’t weigh it.  Fortunately, this is less of a problem with demographic data where you can measure where it’s been and measure where it is now and at least forecast where it’s going.  Why is it then many fail to take advantage of this? Last month an article has made the claim that children are disappearing from urban areas and others have picked up on it.  The assertion is based on data from one point in time; the 2010 US Census.  Their conclusion?  Cities are unfriendly toward children and what is more, cities are not doing enough about it.

First, let’s expand the data to more than a single year.  Nationally children are becoming a smaller percentage of the population, from 24.0 percent in 2010 to 23.5 percent in 2012; so it is only natural that dense urban areas reflect that trend as well.  But wait!  Half of the cities listed below didn’t!  They actually increased their percentage of children, and even San Francisco with its astronomical housing prices was able to maintain its current percentage.

Population Under 18 years

  United States

24.0%

23.5%

Rank Municipality

2010 Census

2012 ACS 1-yr

1 San Francisco city, CA

107,524 (13.4%)

13.4%

2 Seattle city, WA

93,513 (15.4%)

15.3%

3 Pittsburgh city, PA

49,799 (16.3%)

16.1%

4 Washington City, DC

100,815 (16.8%)

17.3%

5 Boston city, MA

103,710 (16.8%)

17.3%

6 Urban Honolulu CDP, HI

58,727 (17.4%)

17.3%

7 Miami city, FL

73,446 (18.4%)

18.8%

8 Portland city, OR

111,523 (19.1%)

19.2%

9 Atlanta city, GA

81,410 (19.4%)

18.4%

10 Minneapolis city, MN

77,204 (20.2%)

20.7%

Source: U.S. Census Bureau American Community Survey (ACS)

Second, it’s true that two data points do not a trend make, so let’s investigate why this percentage of children is increasing in these cities and estimate if it will continue.  I use Washington, DC as an example.  In DC’s case, between 2000 and 2010 it was one of the top cities for attracting recent college graduates due to the combination of growing tech and federal job opportunities.  This is probably true for other cities where tech, finance and other industries were growing.  Well it’s only natural that these young professionals who migrated as singles met, hooked up and guess what happened next.

What has changed in this age old story?  In the past, those new young families moved to the suburbs largely because of the poorly performing urban schools.  In the case of the District of Columbia, Boston and a few other cities, what may be responsible for reversing this trend is the move toward universal free public pre-school for three and four year olds.  Not only does this save young professional families upwards of $20,000 per year per kid in daycare costs, it introduces them to the public/charter school system, which helps to change their perception of the schools.  This has created a wave of middle-class children diversifying the public schools while their parents have networked and brought their collective political clout to improve the schools even further.

The private sector in DC has also seen the shift in the market and responded by adding baby happy hours and children’s cultural and athletic opportunities to go along with all the other great children’s activities that are available in DC.

The change in the percent of households with children under the age of 18 has also reflected the shift, moving from 19.3 percent in 2010 to 20.3 percent in 2012.  The DC Office of Planning (OP) believes the shift is strong enough and sustainable that their official ten-year forecast through 2020 includes the number of children under the age of 18 increasing by as much as 50,000.  This would push the number of households with children to approximately 25.0 or 26.0 percent by 2022, but only require about 20% of single-family housing to flip from older/childless households to these new families.

The District’s housing market has also been impacted.  According to Zillow.com, over the past two years prices have grown three times as fast per year for three bedroom units (18 percent per year) as for 1-bedroom units (5 percent per year).  DC’s housing is already very expensive, and many single-family row houses are being split into smaller units for the large numbers of singles, but the $20,000 savings in daycare translates into some serious purchasing power for those who have the means to leverage it.  This of course has the potential to exacerbate the displacement of lower income families in many of the District’s neighborhoods, but the city has also embarked on an ambitious goal of 10,000 new affordable units by 2020 and recently dedicated $187 million dollars for affordable housing to reach that goal.

Urban schools and housing costs certainly make it challenging to raise a family in a city, and cities can do more to make it easier, but I can personally attest through my investigation of the data and my own experiences as an urban parent that, at best, these recent blogs see the glass half full.  Time will tell, but it certainly looks like many cities, including Washington, DC, are setting the table for families with children by improving public and charter school performance; offering universal pre-kindergarten, revitalized public libraries, schools, playgrounds, parks and recreation centers; providing increasingly convenient neighborhoods throughout the city with services and retail in most communities; and creating lots of transportation choices that help families access all the city has to offer.

Art Rodgers is the Senior Housing Planner at the Office of Planning. The opinions expressed in this post belong solely to Art Rodgers and should not be construed as the official opinion of the DC Office of Planning.

Are DC Area Housing Prices Outpacing Income?

By Art Rodgers

Recent articles and posts everywhere, including Greater Greater Washington, have talked about how housing is becoming unaffordable.  However, the graph below suggests that home prices may be more affordable now than they were in 1990.  It was constructed by calculating the purchasing power of household income using prevailing mortgage rates and comparing it to the growth of the Case-Shiller Index over time.

 

Source: HUD, FHLMC, S&P Case-Shiller, DC Office of Planning.

Source: HUD, FHLMC, S&P Case-Shiller, DC Office of Planning.

In 1990 the US Department of Housing and Urban Development (HUD) estimated the Area Median Income (AMI) for the Washington Metropolitan Statistical Area (MSA) was $51,000, and according to FreddieMac the average interest rate for a home mortgage was 10.13 percent!  This suggests the typical household could afford a mortgage of about $144,000[1].  Over time the AMI went up and interest rates went down.  In 2012 HUD estimates the AMI is $107,500 and interest rates average 3.5 percent.  Using the same calculation, the same typical household can now afford a mortgage of $595,000.  When the average annual rate of change in the Case-Shiller Index is applied over time to the same starting point of $144,000, the index suggests a current home price of $527,000.

So yes, housing prices have outpaced household income, but this analysis suggests that it’s primarily due to increased buying power from low interest rates that has inflated housing prices and not a gap between supply and demand or other factors.  If this is the case, it raises some different, but vital questions the region should be asking:

  • If prices are up in large part due to interest rates being kept perhaps artificially low?  What happens when those rates go back up? The Federal Reserve’s program of quantitative easing seeks to offer a soft landing to keep housing prices stabilized.  But unlike everything else, the saying for interest rates is “what goes down must come up.”    A simple increase in interest rates from 3.5 percent to 4.5 percent reduces purchasing power by $67,000 or 11 percent.  Renting will become more attractive. However, to the extent this affects housing prices, how will local budgets be affected by potentially even lower property values?
  • The problem is perhaps not a shortage of housing, but where the housing is in relation to the jobs.  Drive till you qualify is certainly part of the problem.  OP’s study on housing & transportation costs estimated that lower transportation costs in the District can save a household on average $4,000 to as much as $16,000 annually compared to the outlying suburbs, but the lending industry doesn’t recognize the savings from low transportation costs or the expense of a high cost area when underwriting loans.
  • It’s also the region’s overall imbalance, where all the jobs are to the west and all the lower cost housing is to the east.  In Prince George’s County the median sales price is $177,500 and demand has only recently taken note of the opportunity.  The imbalance adds to the region’s traffic congestion, longer commutes, etc.  Therefore, how can we fix the regional jobs/housing imbalance, and create greater housing affordability to the west and more jobs to the east and help people live closer to their work?
  • Finally, the growing barbell distribution of household income is making it harder for a larger percentage of households on the lower end to afford homeownership.  Homeownership does confer several benefits of greater housing cost stability and asset development that can help raise intergenerational wealth.  How can these benefits be extended to a wider range of households while growing the stock of affordable units as population increases?

[1] Using the standard 30 percent of income toward housing costs.  Down payment requirements held constant.

Housing & affordability in the DC region

A recent series of blog posts on Greater Greater Washington have focused on housing in the region.  Over the next few weeks OPinions hopes to continue the conversation and potentially raise additional questions for everyone to discuss.  Please give us your thoughts.

In the meantime, check out this 2011 study by OP and the Center for Neighborhood Technology, H+T in DC: Housing Plus Transportation in DC.

Where might DC area federal jobs be located in the next 15 years?

By Charlie Richman

(Click to animate) OP’s analysis of possible DC area federal office locations though 2027

What if the General Services Administration is right about telecommuting and stops renting office space?

We looked at where GSA puts federal workers today, and imagined where the workers might be in 15 years if plans for increased telecommuting proceed.  Existing rules already favor transit-accessible locations.

Our back-of-the-envelope analysis started with GSA’s current offices.  We dropped expiring leases each year to meet an aggressive schedule for consolidating space, ending leases farthest from mass transit first and consolidating jobs at the remaining sites.  After 15 years all of the leased space would be gone.  Look what that would mean for the density of jobs downtown!

(Click to animate) Federal job density in the DC-area over the next 15 years

We don’t believe the future will look exactly like this, but we’re trying to learn from the exercise.  Perhaps we’ll need to focus more on meeting the needs of part-time telecommuters.

What do you think?