The Role of Affordable Housing in Stimulating Job Creation and Economic Development
Facilitating the availability of affordable
housing appearspays big dividends to local communities as well as to
homeowners according to a study released today by the National Housing Center
and the Center for Housing Policy. The
Role of Affordable Housing in Creating Jobs and Stimulating Local Economic
Development was authored by KeithWardrip, Laura Williams, and Suzanne Hague
under a MacArthur Foundation Grant.
The authors found virtually no
negatives to policies encouraging affordable housing which can include tax credits
for building or rehabilitating housing, providing low cost loans for down payment
or closing cost assistance, subsidies to lower the cost of housing to
affordable levels, or providing sound underwriting for loans in under-served
areas.
Building or rehabbing housing not
only creates construction jobs but the construction related money buys
materials and supplies from local dealers and worker wages ripple through the
economy, supporting businesses from grocery and clothing stores to dry
cleaners, restaurants, and health care.
The National Association of Home Builders (NAHB) estimates that building
100 new low-income housing units will generate more than 120 construction jobs
and, when construction is complete, the new residents of those units will
support roughly 30 jobs in a wide variety of industries.
Employers often report that a
lack of affordable housing affects their ability to hire and retain employees
and there is evidence that its availability plays some role in the decision to picking
a location for the company. Employees
apparently feel the same way. Studies
showed that, during the run-up in home prices in the first half of the last
decade, 23 of the 35 highest-cost metro areas lost population while most
moderately priced housing markets grew.
Research suggest that workers with choices might move away from high
cost areas to pursue job opportunities in more affordable places.
When affordable homes are built
or rehabbed there can be substantial benefits to state and local
government. Fees are collected for permitting,
zoning, and utilities; addition sales and property taxes are generated. The NAHB study estimates that 100 Low-Income
Housing Tax Credit units occupied by families generate roughly $827,000 in
local revenue immediately, with more than half coming from permit/impact fees
and utility user fees. Where a well
designed development replaces a less aesthetic use of the land, higher property
values can translate into higher property tax revenues.
The authors found that homebuyers
who participate in an Affordable Homeownership Program appear less likely to
undergo foreclosure than those who do not.
Many of these programs reduce the use of subprime loans which tend to be
foreclosure prone. However, one
Massachusetts study found that participants in a program that provided
low-interest loans to help with down payment costs were only half as likely to
be in foreclosure as homeowners with prime fixed-price loans.
Foreclosures are costly to local
governments which have to absorb many direct costs such as increased police and
social services for impacted neighborhoods as well as loss of property taxes
and utility revenues. "Municipal
costs for a single foreclosure can easily total in the thousands of dollars and
exceed $30,000 in extreme cases. In
addition, foreclosures can lower nearly property values, further reducing tax
revenues," the study says.
When families have affordable
housing they have more funds available to spend in the local community and
studies have found that low- and moderate-income families are more likely than
other groups to spend that excess income rather than save it. Working families earning between $20,000 and
$35,000 spend 54 percent less on housing and transportation costs if they can
find affordable housing in urban areas compared to those who live outside of
city centers; again providing them with more funds to spend in the community.
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