Smart Growth America

One of the central goals of the Smart Growth movement is to expand the range of choice in housing, both in style and location. Homes for the people who live, work and play in our metropolitan regions should be both affordable and accessible to jobs and essential services. Across the region, each jurisdiction should accommodate owner-occupied, rental and low-income housing in a mix that doesn’t disadvantage any community.

IN SEARCH OF A BETTER PLACE TO LIVE
WHAT'S BEHIND THE AFFORDABILITY CRUNCH?
EXPANDING CHOICES FOR CHANGING MARKETS
THE NEED FOR A COHERENT NATIONAL POLICY
THE LINK BETWEEN AFFORDABILITY AND GROWTH MANAGEMENT

In search of a better place to live

Real estate agents have a phrase that aptly captures the uncomfortable truth: “Drive til you qualify.” What they mean, of course, is that families in search of their piece of the American Dream increasingly must drive farther and farther into the hinterland to find homes with mortgages they can afford. The growth rate of that distance accelerated in the last few years in most metropolitan regions. Unfortunately, the traffic did just the opposite.

To be sure, some of this housing-driven sprawl reflects a desire for a house on a large lot that surpasses the pain of long commutes and time away from children and home. But to a large degree, the situation can be attributed to a lack of choice for home seekers.

Market surveys and real-life experience shows that many people would gladly buy or rent in closer-in areas, and would be happy with a rowhouse, apartment or a house on a smaller lot in a well-designed neighborhood – if they could afford it (see evidence below). The problem is even more acute for those on the lowest end of the wage scale; as close-in, affordable apartments are being converted to condominiums or demolished, suburban jurisdictions are erecting obstacles to construction of replacement units. Affordability issues are especially tough for the country’s fastest-growing minority, Hispanics, whose ownership rates continue to lag behind those of the general population, as do those of African-Americans.

In 2000, the National Low Income Housing Coalition reported that there was not a locale in the United States where a full-time, minimum-wage earner could afford fair-market rent for a two-bedroom apartment. And the U.S. Department of Housing and Urban Development (HUD) reports that approximately 5.4 million households in the United States — an all-time high — face worst-case housing needs, defined as living in severely inadequate housing or paying more than half of their income for housing.

There is a report by the NLIHC about the amount of money a household must earn in order to afford a rental unit of a range of sizes (0, 1, 2, 3, and 4 bedrooms) at the area's Fair Market Rent. Read "Out of Reach" here.

What’s behind the affordability crunch?

The problem is that the demand for convenient, affordable housing simply is not being met. Many metro areas saw phenomenal population growth during the 1990s, in many cases outpacing housing construction. At the same time, low interest rates and the wealth effect of the stock market bubble helped drive up prices. In many cities a reaction to long commutes and the sameness of new suburbs fueled a rediscovery of traditional neighborhoods, driving up prices in previously “affordable” neighborhoods. In many suburbs, development restrictions and exclusionary zoning practices curbed the construction of lower-priced housing.

At the same time, rigid practices on the part of financial institutions, real estate developers and marketers and government officials have thwarted creative and innovative approaches to meeting the full range of housing demand. However, we in the smart growth movement are working hard to erase some of those barriers, even as we continue to develop and refine new ideas.

To respond to the need for housing options in traditional, walkable neighborhoods, the Center for Neighborhood Technology (CNT) in cooperation with nonprofits and federal agencies developed the Location Efficient Mortgage (LEM). The LEM recognizes the savings available in neighborhoods where residents can walk from their homes to stores, schools, recreation, and public transportation. Due to the work of CNT and their partners, Fannie Mae - the nation's largest source of home mortgage fund - has sponsored a market test of the LEM in four metropolitan market areas: Chicago, Seattle, San Francisco, and Los Angeles. More information on the LEM can be found here.

Expanding choice for changing markets

There is growing evidence that the one-size-fits-all approach to subdivision building is failing to meet the demand for greater choice. For example, demand is extremely strong for the types of neighborhoods that were common before World War II – compact, walkable neighborhoods with access to shopping and services. This demand is driven by a shift in demographics – empty nesters in the 55 to 64 age bracket will be the fastest-growing segment of the home-buying market until 2010 – smaller families, and change in consumer preferences. Unfortunately, many of these types of neighborhoods are literally illegal to build due to prohibitions against multi-family dwellings, accessory-dwelling units (“granny flats”), and mixing uses.

To learn more about the growing demand for smart growth housing, read “The Coming Demand” produced by the Congress for the New Urbanism.

See also: “Current Preferences and Future Demand for Denser Residential Environments,” Dowell Myers & Elizabeth Gearin, as published in Volume 12; Issue 4 of Housing Policy Debate (PDF). This anaylsis concludes that shifting demographics and consumer preferences will lead to an expanded market for more compact, walkable neighborhoods throughout the country.

Urgently needed: A coherent national housing policy

Federal housing policy has had an enormous impact on land use patterns over the past 70 years. After the Great Depression, the Federal Housing Administration’s home mortgage insurance program made homeownership a possibility for millions of Americans, raising homeownership rates from 44 percent in1940 to more that 66 percent today. Unfortunately, FHA-insured mortgages were originally only available for new housing on the suburban fringe and explicitly discriminated against minorities.

Today, more than 28 million Americans do not have access to decent, affordable housing. Without an adequate supply of quality affordable housing located near job centers, low-income people are frequently faced with either living in increasingly remote locations with longer commutes and higher transportation costs or living in substandard housing in distressed neighborhoods. Creating and protecting an adequate supply of affordable housing in our communities is critical to keeping our communities strong and minimizing pressures to sprawl.

One effort to create a new national initiative is the National Housing Trust Fund. Find out more by visiting our coaltion partner, The National Low-Income Housing Coalition.

“The Link between Housing Affordability and Growth Management: The Academic Evidence,” by the Brookings Institution

Critics of growth management accuse it of driving up housing prices. However, this study by the Brookings Institution found that lower-middle and lower-income families often are priced out of housing in areas that lack any growth-management measures. Indeed, they frequently are deliberately screened out through exclusionary zoning practices. Smart-growth policies that attempt to ensure each jurisdiction provides its fair share of affordable, workforce housing can mitigate against these problems, the authors conclude.