Tuesday, January 24, 2012

millennials won't stay in montgomery if they can't afford it

Looking Back Towards Ellsworth
Urban centers like downtown Silver Spring are drawing Millennials, but many of them are being priced out.

I belong to the Millennials, the largest generation in American history, with 80 million members. Sometimes called Generation Y or the Echo Baby Boomers, we're about to finish school and enter the workforce en masse. Many of us will stay in or move to the D.C. area. But my generation may not come to Montgomery County if we can't find affordable housing in an urban setting.

It's no surprise that D.C.-area housing can be scarce and expensive. The popular "Shit People in D.C. Say" video jokes that all twenty-somethings here live in English basements or converted sunrooms renting for $1,400 a month. Meanwhile, recent college graduate and Washington Post columnist Steven Overly has been documenting his struggle to find a place to live.

The issue of housing young adults is especially acute in Montgomery County, which has morphed from "the perfect suburbia" into a regional employment center where Millennials can find work. There's already an acute shortage of affordable housing, particularly around the county's Metro stations, where apartments can command rents 40 percent higher than those in other areas.

In Montgomery County, there are about 180,000 Millennials, or about 20% of the total population. As the county's Planning Director Rollin Stanley points out, many of them have gone back to live with their parents. I did after I graduated college, as did most of my friends.

where people live at
A map of where thirty-five of my friends and coworkers, all within three years of graduating college, were living in 2009. Yellow houses represent people living with their parents, while red beds represent those living on their own.

As the economy improves, we'll want to move out of the house and out of the suburbs as well. There's no shortage of articles about how Millennials want to live in urban settings. My friends who've struck out on their own are trying to get near Metro or their favorite hangouts, both in D.C. and in suburban downtowns like Silver Spring and Bethesda. But the kind of housing and neighborhoods we want are in short supply here. After all, Montgomery County was and is still seen as a place to raise kids, and its built form represents what people thought was the best way to do so, with big, detached houses and cul-de-sacs.

A recent report (PDF) from economist Stephen Fuller suggests that the county will need as many as 60,000 new homes in the next ten years to accommodate new households. Nearly half of them will be needed by households making less than $50,000 a year, while two-thirds will need to be multi-family homes. That's us: Millennials moving out of their parents' houses, looking for small homes in close-in locations we can afford on entry-level salaries.

Developers are responding to the demand for housing. Both new and old apartment buildings are being repositioned to draw young professionals with high-end amenities, but their high rents price many Millennials out of the market. Twenty years ago, my mother rented a one-bedroom in downtown Silver Spring for $685 a month. Today, that same apartment rents for $1,742 a month, but there are now granite countertops and swanky rooftop parties.

If the Millennial generation wants to live the urban lifestyle, which can take cars off the road, conserve land and revitalize older neighborhoods, shouldn't we make it easier and more affordable to do so?

Buildings Along East-West Highway
Increasing the supply of housing, like these recently-built apartments in Silver Spring, can help lower prices.

The best way to reduce or even eliminate what Matt Yglesias calls the "Metro premium" is to increase the supply of housing near transit, reducing prices. In the coming years, thousands of new residential units will be built at several of Montgomery County's thirteen Metro stations. Even if 20-somethings aren't in the market for luxury apartments, they can help satisfy the demand for housing, lowering prices.

Increasing the variety of housing types will help as well. Montgomery County should encourage the creation of Accessory Dwelling Units, also known as granny flats or laneway homes. They'll provide a new source of low-cost housing while preserving the character of close-in, single-family neighborhoods. In more urban settings like downtown Silver Spring, so-called "micro-lofts" or Single Room Occupancy (SRO) units like the Videre in Seattle provide compact, comfortable accommodations to singles who don't need and can't afford a lot of space. And for those ready to buy a home, small-lot houses like these in Portland can give privacy while keeping costs down.

For some Montgomery County residents, the term "affordable housing" conjures up images of crime and blight. But those who need low-cost housing are often your own kids, eager to stay close to the people and places they love. If Montgomery County wants the Millennial generation to make their homes here, it needs to become more affordable. After all, one day we'll want to start families, and if we're already living here, we're more likely to stick around.


C. P. Zilliacus said...

By by Wendell Cox on NewGeography.com:

Why Housing is So Expensive in Metropolitan Washington

Dan Reed said...

I agree that overregulation plays a role in inflating housing costs. Between caps on density, prohibitions on "granny flats," minimum lot sizes and requirements that you build a lot of parking (even if it's not necessary), regulations drive up the cost of housing. We could get rid of the Ag Reserve and build there, which could increase supply and lower prices, but that would probably be offset by the cost of running roads and utilities out there, plus building schools and fire stations to serve them.

Maybe the real issue is overregulation in close-in communities where there's capacity for new housing AND existing infrastructure, but the political will doesn't exist to provide it (read: NIMBYs).

jag2923 said...

Floreen's bill is intriguing:

I think affordability will always be a balancing act. There's always going to be more demand than supply for affordable housing in a county as amazing as MoCo. It isn't viable for us to subsidize every single low/mid income individual or family who wants to live in the county.

Ultimately, smart growth in the county and region is the only way to satisfy demand, lower prices across the board, and give as many people (millennial or otherwise) as possible the opportunity to live a walkable, sustainable, and fulfilling lifestyle. If downtown Silver Spring or Bethesda isn't within a person's budget, I have no problem with the market forcing them to live in Wheaton or Glenmont - the key is turning those areas into something millennials are interested in.

retgroclk said...

Have the developers stop building homes with wood floors, granite counters etc.
Whatever happend to starter homes-- where the owners gradually improve the home as their incomes increased.
Even the apartments for the homeless are
expensive- there is no need to build low cost apartments with wifi, internet, cable and other amenities.

The County is tryibg to squeee the poor and middle class out of the area, hoping to attract more wealthier homeowners who can afford the higher property taxes and taxes in general.
When will it end?

C. P. Zilliacus said...

Dan, over-regulation, not just in Montgomery County, but in nearby jurisdictions, plays a huge role in excessive housing costs.

I would like to see much of our complex land use rules reformed and subjected to a reasonableness check.

As for the Ag Preserve, I don't have a problem with the part of it that drains to the Patuxent River, for that makes up a significant part of the WSSC drinking water watershed. The same cannot be said of the part of the Preserve that drains south to the Potomac River

As for increased costs of running utilities, that's not a problem with water and sewer - owners of the new homes to be served must pay for those extensions, at least in the Washington Suburban Sanitary District and some other parts of Maryland with which I am familiar. As for roads and schools, in Maryland the counties can (and do) require developers to include the cost of that infrastructure as a condition of development approval.

NIMBYs have been a scourge of new development and new projects in Montgomery County for many years (see: ICC).

Sometime, when you have a chance, go back and look up the incredebly sordid history of the proposed expansion of GEICO's main office on the Montgomery County side of Western Avenue (about 2 blocks from the Friendship Heights Metrorail station). I have not heard of a more transit-oriented employment center in Montgomery County, yet in spite of the county's stated committment to mass transit (then and now), it became obvious to me that the county was more committed to wealthy NIMBYs, who ran a successful campaign against GEICO (which ultimately gave up and instead moved most of its jobs to that bastion of Smart Growth, Stafford County, Virginia).

M Reese said...

retgroclk makes a good comment but the issue is there are already tens of thousands of "starter homes" for sale in montgomery county many of which are short sales. The fact is that the people who can afford new homes expect those high end finishes.

I also question the need for 50,000 new homes give the current housing market. These would without a doubt have to be infill homes near metro or other walkable areas (like the Kentlands, or The Washingtonion, etc).

Robert said...
This comment has been removed by the author.
Robert said...

Millennials won't stay in Montgomery if they can't afford it."

Well, Duh. No one will stay in Montgomery County if they can't afford it, and why should we be more concerned with the Millennials than with any other group?

The fact is that there are lots of available houses at prices lower than they have been in years, Sure, they may not be in Potomac, downtown Silver Spring, or downtown Bethesda, but the Millennials should do what every other age cohort has done over the years -- buy what they can afford and then improve it or move up as they can afford it,

Dan Reed said...

I understand that there are a number of foreclosed houses on the market today, but this isn't Florida or Arizona where there are entire subdivisions that have been abandoned. That "inventory" will be used up (i.e., bought up and occupied) sooner rather than later.

And besides, not all of that housing is suitable for small families or single people anyway.

I also don't think it's appropriate to say that people who can't afford to live in close-in areas just have to move further out. That's why traffic is so bad: because the cheapest housing is farther away, so everyone has to commute in. Why are we content to say downtown Silver Spring is just for rich people? If people of different ages/income levels/whatever can live there, it means less traffic, more investment, and more people to support local businesses.

My post was about young adults, but affordable housing is really an issue for lots of people. Those who are lucky enough to have high-paying jobs, or simply to have moved here when homes were cheaper, can't always appreciate that.

ms. mindless said...

I am a millenial who recently bought in Montgomery County. I considered parts of Virginia, the District and Montgomery before settling on Montgomery. The problem is not just our county. Have you priced housing in Arlington lately? Or Chinatown/Penn Quarter? I looked at a 1br+loft condo in Columbia Heights with police tape next door that was priced over $500k. Any place that is desirable to young, upwardly mobile people (close to metro, dining, shops, nightlife) is going to be expensive. There is no right to live close to all of these things. It would be nice, but there is not any city in the Western world where living near these kinds of amenities is cheap.

Have you ever researched housing in desirable parts of London, Paris? Vancouver, Rome or any other major city? Housing in the most desired areas has always been more expensive than housing in less desirable areas. You wrote about an apartment that your mother rented 20 years ago in Silver Spring for less than $700 that is now $1,700. How cheap do you think an apartment out in Gaithersburg was 20 years ago? I bet it was a third of the cost of the Silver Spring apartment.

We can't have our cake and eat it too. I feel your pain though!

Dan Reed said...

@ms. mindless

I don't see how your examples really apply to this situation. Of course things are more expensive now - that's inflation. But the rise in housing prices in the DC area have outpaced inflation, meaning the cost of living is greater relative to income. It's in the county's interest to ensure that its workforce (not just Millennials, but everyone) can live in the county, keeping their spending dollars (and tax dollars) in house. It's in the county's interest that its residents don't have to drive 20 miles to work or even 2 miles to get a gallon of milk, thus reducing congestion. Thus, it's worthwhile to encourage dense, urban development in select parts of the county (like Silver Spring), drawing people who are already interested in places like that, while increasing the housing stock and lowering prices for all.

I didn't say I "have a right" to live in a place like Columbia Heights. (I'm not sure what you're getting at with "police tape," but clearly people place a value on living there, even with the perception of crime.) But I think it's prudent for the county to make it easier to build here, in the interest of drawing and retaining future workers with a more affordable housing stock. If you can't afford to live here, you'll either commute in from another part of the region, burdening our roads while taking your tax dollars out of the county. Or you'll choose to live in another part of the country altogether, depriving the DC area of workers. (Some might see that as a good thing. I disagree.)

Just because the status quo exists doesn't mean that it's the way things are supposed to be.

ms. mindless said...

Dan, another thing you have me wondering about is how many millenials actually want to live in these greener, smaller dwellings (granny flats, studios, etc.)? I would have loved to buy a granny flat. Hell, the house I did end up buying is the size of one; but I wonder if that would really be attractive to most.

People in this region still seem to be completely obsessed with space. From teardown bungalows near downtown Bethesda that have been rebuilt into grotesque faux-Craftsman McMansions to the "eco-conscious" blairs boasting about having the "largest floor plans in the area". Are we (millenials) really going to give up all of our stuff and move into granny flats?

Dan Reed said...

A clarification:

@ms. mindless

I think you answered your own question. You live in a small space. I live in a small space. Most of my friends live in small spaces, be they rented rooms or studio or one-bedroom apartments. And I don't know anyone my age, save for maybe Mark Zuckerberg, who's living in a big house.

Richard Layman said...

some people in the comments refer to regulatory failures. The issue is a lot more nuanced and complicated.

The way zoning was set up (especially through the model zoning codes promulgated by the US Dept. of Commerce in the 1920s) was to segregate (and racially segregate) housing by type.

Combine that with market forces which are naturally going to focus on producing the most economically profitable housing, the housing production system overproduces certain types of housing and underproduces other types.

If zoning codes had called for mixing housing types with a framework and formula, maybe things would be different.

But not having regulation likely wouldn't have produced any different a situation, because the market forces would have produced similar results--overproduction of the most profitable type(s) of housing at the expense of variety and meeting the needs of multiple segments of the market.

Unknown said...

I am a Millennial, and I live In MoCo now. I wont be able to afford to live here(Where I grew up!), after I move out of my fathers house. Middle Aged adults and almost retirees struggle in this area. How can I make a life here? I should not have to make 100k+ a year to not struggle. It's one of the most expensive places to live in the entire world. How can society expect their young adults to stay here? We can't make a life here. You old people can wither and die here under the weight of your debt and the cost of living.