Workforce housing

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Workforce housing is a relatively new term that is increasingly popular among planners, government administrators and housing activists, and is gaining cachet with home builders, developers and lenders. "Workforce housing" can refer to almost any housing, but always refers to "affordable housing". "Workforce housing" is defined by four principal factors:

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[edit] Affordability:

Based on criteria set by mortgage lenders, the U.S. Department of Housing and Urban Development (HUD) concludes that no more than 30% of household income should be allocated to housing Principal, Interest, Taxes and Insurance (PITI). Conventional mortgage lenders typically allow 28% of household income for PITI in calculating loan amounts. FHA financing allows 29 percent. VA financing allows 41%. Typically, pricing calculations that define "workforce housing" use 30% of household income as the maximum threshold of affordability.

[edit] Home ownership:

Most appropriately, "workforce housing" connotes single-family detached homes for sale at prices that workforce families can afford. Obviously, workforce families often seek alternative housing opportunities in rental apartments and rental homes, town homes, condominiums, co-ops and shared housing, including subsidized housing. The most appropriate and socially valuable definition of "workforce housing" connotes fee-simple ownership of single-family homes with yards, one of the least efficient but perhaps the most personally satisfying land use forms.

[edit] Critical workforce:

Most appropriately, "workforce housing" connotes housing intended to appeal to key members of the workforce such as police officers, teachers, nurses and medical technicians, office workers, etc., whom we think of as "the backbone of any successful community" (Lisa Arthur, Miami Herald, June 6, 2006). Workforce families are generally younger and often include or plan to include children.

"Workforce housing," then, implies a subjective change in awareness of a widespread social condition that has been referred to generally by terms such as "affordable housing".

[edit] Proximity:

Most appropriately, "workforce housing" is located in or near employment centers (as opposed to distant suburbs) and is sometimes cited as one antidote to "urban sprawl", with its accompanying traffic congestion, lengthy commutes, convenience stores and strip retail centers.

Ideally, workforce housing aims at satisfying the housing needs of family households earning 50% to 150% of median household income in a given SMSA (Standard Metropolitan Statistical Area). Ideally, workforce housing aims at providing for-ownership single-family homes priced and financed in 30-year fixed-rate monthly terms equal to approximately 15% to 45% of median household income within a given SMSA.

[edit] History:

Record low mortgage interest rates spurred a nationwide surge in housing demand from 2002 - 2006. Record housing construction in many communities and record housing prices in almost all communities drove land costs higher. Construction materials and labor costs, propelled by disastrous hurricanes in 2004 and 2005 that damaged or destroyed hundreds of thousands of homes in Florida and on the Gulf Coast, amplified the problem to create a critical dilemma: in many communities, "average" income households cannot afford a median-priced home.

[edit] A critical problem:

A decline of this younger, working "middle class" signals bad news for many communities. Without a satisfied and supportive middle class striving to realize the promise of economic advancement, a key plank of capitalist theory is threatened.

More practically, essential goods and services (transport, delivery, installation, maintenance) become increasingly expensive and decline in quality as competitive forces vanish. An absentee and commuting service class creates substantial demand for suburban tract neighborhoods, regional road systems, strip retail centers and other evidence of "urban sprawl".

In addition, there exists a policy gap to fund workforce housing development. Many of the funding programs of the federal and state governments are geared towards 30% to 80% of area median income. The population that is 90% to 120% (in come states up to 180% AMI) is left with a low supply of housing that does not nearly meet the demand of housing within this price point. Due to a majority of the funding sources capturing 30% to 80% of median income, poverty and incomes are regionally marginilzed into urban areas. This effect creates a non sustainable economic base to the communities to which becomes the receipt of low and moderate housing development. As this policy gap persists; if the subsidies are not expanded - developers will mostly build housing for the population of 30% to 80% of median income.

As urban centers have suffer from this pervasive problem, their these economies cannot compete with the neighboring suburbs. As a result, the "workforce" population moves into an area they can afford. This effect has cripled the social, political and economic sustainability of many urban areas throughout the US: Newark, Philiadelphia, Washington DC, Baltimore etc. HUD has contributed this American occurrence by not updating their housing programs to reflect true market forces of real estate, price increases with the past 10 years and social trends of population movements. Moreover, HUD is viewed as the umbrella organization upon which state governments will mimic their policies to correspond for funding eligibility.

[edit] Solution strategies:

Many U.S. communities have developed sophisticated strategies to address the acute shortage of workforce housing. The Workforce Housing Coalition of the Greater Seacoast in Portsmouth, New Hampshire, may rank among the first community-based organizations to specifically address workforce housing needs by name.

The third or fourth-most populous state and one of America's last frontiers, Florida has faced record growth for most of its history. More recently, some Florida communities have developed sustainable programs to encourage development of workforce housing. The Florida Housing Coalition has served for almost 20 years as one of the leading U.S. innovators in housing advocacy. The South Florida Workforce Housing Initiative in Miami publishes 37 reasonable public policy initiatives to promote workforce housing development. The Florida Workforce Housing Network is an example of a regional web community that promotes workforce housing with a wide range of resource links and open discussion.

[edit] External links

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