Housing affordability still an impediment to DC’s growth

One of the most pressing issues facing the D.C. region’s economic growth is how to provide for housing opportunities for all citizens, especially if D.C. hopes to chase high-value-added and high-paying jobs. It’s important to make sure that people don’t get left behind, and that folks have a place to live. David Bowers, vice president and Mid-Atlantic market leader for Enterprise Community Partners, is one of the real leaders in the region on the issue of housing affordability.

ABERMAN: Why is affordable housing such a big issue for our region?

BOWERS: Well, affordable housing is a big issue for our region for, really, two big reasons: one, it’s a quality all of life issue, obviously, for folks who, if they don’t have the availability of affordable housing, and they’re making oftentimes toxic choices about, do I pay my rent ot do I pay for healthcare expenses? Do I pay for food, clothes, entertainment, or do I have to travel? Do I have to spend an hour, hour and a half, two hours traveling to and from work? So there’s a real quality of life issue. And then you also get the economic side of it, as it relates to the region’s economic competitiveness.

We’ve seen more and more coverage over the last eighteen months or so about how the sky high cost of housing in this region are causing companies and employees to make decisions essentially with their feet, to decide either to move out of the area and/or to hesitate when it comes to moving into the area. And so, we’ve seen that even in conversations with folks like Amazon, and others, who are looking at, do I stay or do I come to the region, and looking at the cost of housing as one of the critical measures. So, when we think about the region’s economic competitiveness, over time, the lack of housing options across the income continuum could really put a dent in our competitiveness.

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ABERMAN: That’s the key here. I think that when people talk about affordable housing, often they talk about the standpoint, as they should, of underprivileged and economically disadvantaged people, but the reality is that, for example, American University’s millennial survey that was released a couple months ago, showed that even if people are able to achieve job opportunities here, they can’t always find a place to live. Now, there are going to be people listening who say, well, that’s just life, that’s capitalism, and the markets dictate. What’s your reaction to that?

BOWERS: A couple of things: one is that it is a real issue that a lot of people don’t think about, Washington D.C., this region being as expensive as it is. People tend to think of New York and Boston, San Francisco. D.C., for the last couple of years, has ranked consistently as one of the top two or three most expensive regions in the country, kind of depending on the day of the week and the indicator, but we’re always the top three, four, five. So, it is literally more expensive to live here than almost anywhere else in the country. So, even if you’re making what many would think of as a nice salary, a good living wage, you could still be struggling to find affordable rental options and certainly on the home ownership side. It’s a real stretch for a lot of people.

Think about Amazon, we talk about 50 thousand good paying jobs, and when you look into their documents, they talk about a lot of folks making 100,000 dollars a year. For a lot of people, making 100,000 dollars a year, when you hear that number, you think, oh, you’re doing good. But in this region, where you’ve got rents that can run, easily, $2,500 to $3,500 a month, for a one bedroom, maybe a two; where average housing costs in certain jurisdictions to buy a home can run seven, eight, nine hundred thousand, a million dollars. One hundred thousand doesn’t go as far as people may think. So, I think that that’s a real issue. And when it comes to this notion of, you know, let the market do what it will: from my old Econ 101 days, that’s one approach.

The other approach is to say, look, we are a citizenry that has to be active in thinking about, what are the outcomes we as a society, we as a region, want to see? What kind of quality of life do we want to see? Do we want to see one where we have economic integration, and ethnic integration, and opportunities for all? If that’s the case, we can’t just have that kind of laissez-faire attitude of, well, let the market do what it will, and there’ll be winners and losers. Because the cost of the losing is not just for the loser, so to speak. It really does ripple to others.

ABERMAN: I recently made the observation that it’s great to be a cool community, but you’ve got to be cool to be kind.

BOWERS: That’s right. That’s exactly right. And that requires some intentionality, and I think part of the work of a group called the Housing Leaders Group of Greater Washington has been to try to think about, at a regional level, how can we be more intentional, to balance the market forces, which bring, in many cases, good? Good amenities, and good options, and quality of life on one level, but also make sure that we can, with intentionality, promote some policies and investments that will allow for folks across an income range to be involved.

And when we talk about across an income range, a lot of times you hear about teachers, and firefighters, and nurses. And that’s true, but I challenge anyone who hears this broadcast to look around where you work right now, and more than likely, a lot of the folks who are where you work, there are a number of them who are directly impacted by this issue. So, it really does affect more, a lot more, families and individuals than a lot of people really think about.

ABERMAN: Some of this is regulatory, from the standpoint of housing density, permitting, things like this. But another part of it, I think, is the private sector. You’re involved in, and I think that others in the private sector are, aggregating capital, now, to actually drive at this problem. Tell me a little bit about what the private sector is doing.

BOWERS: Absolutely. So there have been some exciting movements by groups like where I work, Enterprise, pulling together equity funds and acquisition funds. Groups like JBG Smith, doing similar work, pooling together private capital equity, and essentially looking for private capital that will accept returns slightly below market rate. And what I like to say, Jonathan, to be clear, I equate it to saying, you know what, you may not get a Bentley return, but you’ll get a real nice Mercedes return. So it’s not like people are are quote-unquote losing money in the absolute term, it’s just that they’re not making quite as much as they would have.

And so, groups like Enterprise, private sector players, for-profits like JBG Smith, getting into the marketplace of looking for options for investors to invest, and balance mission-related investing, looking at multiple returns. Not just the economic returns, but the social returns, the quality of life impact it could have in the region, where stakeholders are residing. So, that’s exciting for us to see, folks working to aggregate that kind of capital that can then leverage public capital that’s being invested by local and state jurisdictions in the region, to work to provide the access that developers need, for-profit and non-profit developers who are doing housing, that will serve folks, again, across the income continuum. So that’s exciting for us to see that kind of movement.

ABERMAN: David, last question before I let you go. You’re at the front, Don Quixote, with the flag. What are we not doing, as a region, that we need to do to help you?

BOWERS: What we’re not doing, as a region, I think, is one: being honest and open about the scale of the problem. When we talk about 150,000 families that are living severely cost-burdened, which means they’re paying more than half of their income for their rent, when you talk about 150,000 new low-income households that are coming here, when we think about the fact this could be a 25 to 35 billion dollar requirement in terms of solving for this issue, in our region, a lot of folks are scared off by the numbers. And so, number one, we have to just admit and say out loud, the scope and scale of the problem.

The second thing we really need to do is: decision makers, policy makers, from boardrooms, to city halls, and mayor’s offices, I think, need to quantify their responses in terms of the need. So, what I like to say is, stop pulling out willy-nilly numbers. So, let’s do five million, or twenty million, or 100 million. Let’s make sure that the budget number decisions that we’re making are tied to solving for percentage of the need. And the final thing is: we need more actual dollars invested, and the implementation of good policies that we know can work to reduce cost.

ABERMAN: If you’re wondering who is in the forefront of dealing with affordable housing, and you don’t know who else to look to, check out and find David Bowers. Thanks for joining us in the studio today, David, it was great to have you.

BOWERS: Jonathan, thanks, great to be with you.