Own home `out of the question' for many

Prices in Maryland have risen to crisis level for work force, planning chief, others say

March 16, 2006|By JAMIE SMITH HOPKINS | JAMIE SMITH HOPKINS,SUN REPORTER

Maryland's home prices - so high they lock many workers out of the market - have reached "crisis" levels, speakers said yesterday at a conference called to address the issue.

"Housing Maryland's Work Force," held at the Sheraton Inner Harbor by the Home Builders Association of Maryland, drew more than 200 people from building industries, worker-affordability advocacy groups and local government agencies.

Even with a strong local economy, "for many, many Marylanders, homeownership is out of the question," said Audrey E. Scott, state planning secretary and chairwoman of the newly convened Governor's Task Force on Workforce Housing, which is scheduled to make recommendations by July 1. "It is incumbent upon us to come up with a solution."

The price of the average home sold in Maryland rose 95 percent since 2000 to $320,000 last year, according to Metropolitan Regional Information Systems Inc. Wages paid by employers in the state increased by a much smaller 20 percent - before factoring in inflation, which saps buying power.

The average Maryland worker who doesn't already own a home can't afford to buy one at average prices, a recent analysis by The Sun found. Even the average two-income household is out of luck if the couple adheres to the recommended limit of spending no more than 30 percent of pretax earnings for housing, including taxes and insurance.

The gap between income and prices explains why homeownership rates in the state declined slightly last year, according to Census Bureau numbers.

So-called "work force housing" - the buzzword fast replacing affordable housing - has become "a genuine crisis," said economist Anirban Basu, chief executive of Sage Policy Group Inc. in Baltimore. "At a period when you had historically low interest rates, for homeownership rates to fall is shocking."

Some of the speakers at the conference, whose sponsors included The Sun, are builders with an affordable-housing mission such as Enterprise Homes.

Chickie Grayson, president of the group, said before the event that the increasing cost of land and construction is driving up the price of new homes.

Building more densely brings down costs in part because infrastructure doesn't have to be spread out as far, Grayson said. "You're using less material - you're just being much more economical," she said.

But dense development isn't an option in many suburban communities, where zoning regulations favor single-family homes with yards - sometimes substantial ones.

A heavily regulated housing market is "inefficient," said conference speaker Anthony M. Yezer, an economics professor at George Washington University.

"Inclusionary zoning" has been offered as a solution to work force woes. It requires or encourages a builder to reduce the price on a percentage of a new subdivision's homes so workers such as teachers can afford them, sometimes giving the builder a density bonus as an incentive.

Montgomery County is a nationally known example of such zoning. But a panel at the conference blasted the strategy as useless at best.

"It raises the cost of constructing a house," said Elliot Eisenberg, housing policy economist for the National Association of Home Builders. "Builders aren't the ones who end up paying."

Kerry Vandell, an economics professor at the University of California, Irvine, studied inclusionary zoning and concluded that the regulations produce very little affordable housing.

"Much greater attention has to be paid to the supply side of the housing market," he said.

Michael A. Sarbanes, executive director of the Citizens Planning and Housing Association and chairman of an inclusionary zoning and housing task force in Baltimore, agrees that the region will have to figure out a better way to accommodate growth. But he also believes there's value in inclusionary zoning as a method for preserving mixed-income communities where a variety of workers can live.

Much of the recent attention about high housing costs has focused on teachers and other middle-income workers. Sarbanes is worried that policymakers are forgetting about workers who are paid more modestly but also help make the economy tick.

"You need them all," he said in an interview.

"The notion that you're going to pay attention to work force housing and exclude this enormous percentage of the work force doesn't make any sense to me. It avoids the real scale of the issue. This is a dire situation - we ought to be taking bold action to address it," Sarbanes said.

jamie.smith.hopkins@baltsun.com

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