Quality Homes For Arizona’s Workforce…

Key To a Vibrant Economy

14 June 2004

Phoenix, Arizona

Michael Collins

Housing Matters1. Children and families2. Neighborhood/community quality3. Economic benefits4. Workforce stability

Alarming Trends1. Lack of affordable homes2. Citizens are concerned3. Negative effects on communities and families

Solutions Exist Public-private partnership is key Changing perceptions to counter NIMBY Targeted investment is required Overcome regulatory barriers to accelerate development

Overview

The Benefits of Quality Affordable Homes

Supports stronger families

Supports stronger communities

Creates economic spin-offs

Stabilizes work force

Research Shows: Housing Matters for Families

Moving has negative impact on school performance

Affordable homes combined with steady employment reduce stress and health care costs

Tough choices: Paying greater than 30% of income for housing or taking on low-quality home

reduces ability to pay for other expenses results in poor living environment

Sources: Demography, 1991; GAO, 1994; Evans, et al, 2002; Newman, et al, 1999; Millennial Housing Commission, 2002.

Higher Housing Costs Impact SpendingLow-Wage Monthly Spending Constrained by Housing Costs

$699

$241

$28

$95

$43 $38$14

$34 $21

$68

$556

$39$29$24

$215

$20

$161

$351

$0

$100

$200

$300

$400

$500

$600

$700

$800

All non-housing Food Clothes Healthcare Insurance & pension Entertainment

20-29% 30-50% >50%Share of Income Spent on Housing

Source: Consumer Expenditure Survey, 2001.

$80 less

$14 less $61 less $23 less $17 less

Many Benefits of Homeownership

Owners have greater self-esteem

Owners are more involved in community organizations, voting and other activities

Children of owners are more likely to buy homes

Homeowners build more wealth than comparable renters

Source: Neighborhood Reinvestment, 2003

Benefits for Neighborhoods Families and children

benefit from quality neighborhoods

Quality homes have a “rub-off effect” on the real estate market

Affordable “working-family” neighborhoods have a positive impact on home values and rents

Sources: Millennial Housing Commission, 2002; Joint Center for Housing Studies, 2004

Properties in neighborhoods with mixed housing types appreciate at greater rates than even affluent single-family areas.

Source: Joint Center for Housing Studies, 2004

The Housing Sector & the Economy

In 2001, new residential construction was associated with roughly 3.5 million jobs nationally and $166 billion in local income

In 2001, home building was the source of about $65 billion in combined taxes and fees

In 2000, home building and remodeling accounted for about 4 percent of GDP

Source: Millennial Housing Commission, 2002.

Housing is a Third of Nation’s Tangible Assets

Source: Bureau of Economic Analysis, Survey of Current Business, September 2001

Local Economic Benefits for the Community

Building equity for owners Lenders originating mortgages Construction & home-related

businesses Household spending Real estate professionals Local governments Employers, businesses & professionals

Potential Benefits of 1,000 New Owner Occupied Homes and 1,000 Apartments

2,783Jobs Supported

$3 MillionHome related spending

$18 MillionLocal government revenue

$9 MillionTransaction revenues

$49 MillionLender revenue over 10 yrs.

$53 MillionHousehold wealth in 10 yrs.

$134 MillionConstruction activity

Source: Michael Collins N-BEST; NAHB; $30,000 income; $100,000 homes, $60,000 apartments

Local Income $161 Million

66% of the net worth of low-income households is in their home

Among non-elderly low-income families, owners have 12 times the wealth of similar renters

61% see buying a home a safe investment with potential vs. 39% for IRAs

Asset Building for Families

Source: 2001 Survey of Consumer Finances; Fannie Mae 2003 National Housing Survey

America’s Housing Challenges

1. Affordability is the single greatest housing challenge facing the nation Affordability problems reach across all but the

highest income groups

2. The burden on working families

3. Supply constraints

4. Persistent homeownership gapsSource: Millennial Housing Commission, 2002.

Affordability Challenges for Working Families

Source: JCHS tabulations of the 2000 Census Supplemental Survey.

Single Earner Households 2000

21%

13%

33%

22%

19%

30%

21%

36%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Moderately Cost-Burdened (%)

Severely Cost-Burdened(%)

Moderately Cost-Burdened (%)

Severely Cost-Burdened(%)

Full Time Part Time

1-2 times Minimum WageAll

Burdens on Working Families

36 percent of households (both owners and renters) with children have:

physically inadequate housing, or crowded housing, or pay more than 30 percent of income.

29 million households pay > 30% of income in rent Ability to pay for food, health care, insurance reduced Commute times lengthen Pressure to crowd into homes

Sources: Millennial Housing Commission, 2002; Joint Center for Housing Studies, 2004

Immigrants Face Crowding IssuesCrowded Households: Native & Foreign

(more than one person per room)

8%

13%

22%

26%

8%

4% 3% 3%

0%

5%

10%

15%

20%

25%

30%

1970 1980 1990 2000

Foreign Born Native Born

Source: 2000 Census

Supply Gaps

Between 1997 and 1999, the share of homes that are affordable fell from 47% to 44% of the total owner-occupied stock

Half million net new affordable units over two years; 69% are mobile/manufactured homes

1.1 million net rental units added 1991 to 2001

Only 20% affordable to low-income families

Net losses of units for working familiesSource: 1999 American Housing Survey

66.2%71.3%

45.7% 46.3%

55.7%53.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

All Households White alone Hispanic or Latino Black or AfricanAmerican

American Indian /Native

Asian

Persistent Gaps in Homeownership Rates

Source: Census 2000

Share Owning Home, 2000

41% of Working Families say lack of affordable housing is “a big or fairly big problem”

-Peter D. Hart Research Associates, 2004

Lack of Affordable Homes is Real Issue

71% of surveyed families agree “government should place a higher priority on making housing – both for renters and owners – affordable in my area”- Public Opinion Public Opinion Strategies, 2003

Worries Among Renters and Owners

62% worry that the cost of housing is getting so expensive that teachers, firemen & police cannot afford to live in the area

42% worry they have to spend too much time commuting because homes closer to work are too expensive

48% think rents are being driven up because there is not enough rental housing available

Source: Public Opinion Public Opinion Strategies for NAR 2003

What if Nothing is Done?

Families and children worse off housing expenses erode consumption commute times lengthen stress increases health care costs school performance declines

Workforce stability declines increase in recruitment and retention costs pressure on wages to keep up with housing costs health & productivity decline

Neighborhoods lose quality of life lack of diversity - segregation volatility in real estate markets community services and amenities

Policy Issues Facilitate Partnerships across sectors Facilitate Investments – land cost & quality standards Campaigns to Change Perceptions – erase NIMBY Streamline Regulations – reduce delays & lower cost Planning for Growth – inclusionary zoning Innovations & Experiments

Land trusts Equity partnerships Manufactured housing Employer assisted housing

Mixed-income High density designs Transportation & energy

efficiency

Housing Matters1. Children and families2. Neighborhood/community quality3. Economic benefits4. Workforce stability

Alarming Trends1. Lack of affordable homes2. Citizens are concerned3. Negative effects on communities and families

Solutions Exist Public-private partnership is key Changing perceptions to counter NIMBY Targeted investment is required Overcome regulatory barriers to accelerate development

Conclusion

Quality Homes For Arizona’s Workforce…

A Key To a Vibrant Economy