Wednesday, March 23, 2005

Housing boom great but not for all, says real estate panel

Although there was much of the usual euphoria surrounding discussion of the area's red-hot housing market, on March 16, a panel of experts in Reston forecast some clouds, particularly the lack of affordable housing, a cloud they agree is already overhead.

While it is hardly news that housing prices in the area are exploding with double-digit percentage increases in assessed valuations and equally high sales prices, less visible are the statistics on affordable housing. Increasingly, the experts said, while the area continues to create new jobs, those in relatively lower paid occupations are being kept out of the area—or driven out—by the high cost of housing.

The panel, assembled by the Greater Reston Chamber of Commerce, was charged with providing a "Residential Real Estate Forecast." The mostly upbeat projections were not specific to Reston. They covered the entire region but with an emphasis on Fairfax County.

Housing prices outpacing incomes

Christine Todd, with the Northern Virginia Association of Realtors, said she expects 2005 to be another record year for home sales. A problem for Realtors and buyers, as was the case in 2004, she said, is a lack of inventory. Listings are down 18 percent thus far this year, she reported.

Todd said later, in a question and answer session, that interest rates are of no immediate concern in the residential real estate market.

"When interest rates hit 9 percent," she said, "we should worry. But no one thinks we're going to see that for a long time."

Fairfax County Supervisor Catherine Hudgins (D-Hunter Mill) hailed the strong economy but noted that "the (county's) two greatest challenges are transportation and affordable housing."

She zeroed in on affordable housing.

"Housing prices are outpacing incomes," Hudgins said. "You [would-be residents] need an income of $42,000 to $48,000 to live here."

Hudgins said there is a county initiative under consideration to dedicate one cent of each real estate tax dollar to affordable housing. That would generate $17.9 million this year, she said, hardly enough to reverse the situation. But, with the county's limited tax authority, it is not incidental, either, she said.

Lee Rau, with the Fairfax County Redevelopment and Housing Authority, cited recent history in the county's efforts to grapple with the lack of affordable housing.

"In 2003, Fairfax County added 470 affordable housing units but lost 300," Rau said.

Rau echoed Hudgins' remarks on affordability, saying a $48,000 annual income is necessary to rent a two-bedroom apartment in the county. He also noted that a high percentage of county residents are spending more than 30 percent of their income on housing.

Quoting George Mason University professor Stephen Fuller, Rau said that, despite the fact that the area will continue to generate a high number of jobs, "the next threat will be a labor force shortage."

He added that, if that threat materializes, it will be due in large part to housing affordability as well as transportation and other factors.

Sticker shock

Rau said another problem in addressing affordable housing is educating the public.

"In Northern Virginia, the attitude toward affordable housing is not all that hospitable," Rau said, explaining that some residents equate affordable housing with a decline in nearby property values.

Leslie Channell, human resources director for Reston Hospital Center, provided an employers' perspective. The hospital has 1,150 employees, 86 percent of whom live in Fairfax and Loudoun counties. Channell said attracting candidates from outside the area is increasingly difficult because of the "sticker shock" they experience in seeking housing.

Channell said that ensuring salaries are competitive, holding English as a Second Language classes and assisting with daycare provide some assistance to employees in lower paid fields who struggle to find affordable housing.

Tom Williamson, of Comstock Homes, cited estimates that the region is expected to create 1.6 million new jobs and gain 2 million in population by 2030, thus creating significant pressures for housing, transportation and related infrastructure.

Noting that "Fairfax County has only 2,600 acres of undeveloped land left," Williamson said rezoning with an eye toward infill development and greater densities, particularly around Metro stations, should be considered.

Williamson, whose firm is converting the Penderbrook development apartments in Fairfax to condominiums, said such conversions "lower the ladder to home ownership."

Even so, he predicted that the apartment rental market would see a turnaround in Fairfax County.

Good news for those on the lowest rungs of the ladder.


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