The Coming Housing Crunch

Homebuilding limits, impending job surge are putting the region on a collision course

Sun Special Report

July 23, 2006|By ARTICLE BY JAMIE SMITH HOPKINS

The Baltimore metropolitan area stands ready to add more than 200,000 jobs over the next 25 years, propelled by the huge economic engine of the nation's capital and the growing demands of talent-hungry employers. But it won't have enough homes for all those workers.

Local jurisdictions have increasingly reined in new residential construction, even as businesses created jobs faster in the region than they did nationwide. Howard County, for instance, issued 22 percent fewer permits for new dwellings last year than it did in 2000.

It's a mismatch that's on track to get much worse. A Sun analysis of state job and household forecasts found the metro area - Baltimore and its five suburban counties - would be 20,000 homes short in just four years. By 2030, the region would be 100,000 homes shy - as many dwellings as Howard County has now, to put that in perspective.

The gap could be even larger because the state forecasts include just a portion of the jobs expected from the national military base reshuffling.

Experts say the disparity will over time further pressure housing costs in an area that has seen steep price increases in the past few years, outpacing many other regions. The shortage would probably push workers into ever-longer commutes, clogging highways and local roads. Ultimately, some say, the housing crunch could choke job growth and throw the region into a recession.

"There is a price to be paid for constrained supply," said Nicolas P. Retsinas, director of Harvard University's Joint Center for Housing Studies.

Local leaders aren't sounding alarms. Just the opposite. They adamantly promote job growth and just as adamantly keep a lid on residential development, ignoring any conflict between the two policies. It is as much a lack of regional planning as of long-range thinking because each jurisdiction makes its own rules, as is overwhelmingly the case nationwide.

The result so far: Though homebuilding has picked up in the pro-growth city, the suburban counties - Anne Arundel, Baltimore, Carroll, Harford and Howard - issued permits for 1,200 fewer units last year than they did in 2000, a 10 percent drop, according to Baltimore Metropolitan Council data.

Builders say the falloff would have been greater if they hadn't turned to "infill," building on already approved vacant lots in established neighborhoods, a finite resource. All told, suburban Baltimore's supply of lots ready for building is one of the tightest among the country's growing regions - "abnormally tight, bad tight," according to Kenneth Wenhold of Metrostudy, a housing market information provider.

County leaders have slowed the pace of homebuilding in response to potent public frustration. Many suburban residents, sick of congested roads and crowded schools and wary of possible higher taxes, want even less development, according to a poll conducted for The Sun last fall. They are increasingly well-organized and often manage to delay, alter or block projects, turning on its head the old story of powerful developers rolling into town to do whatever they please.

But employers are so coveted by local politicians as a source of tax revenue and economic health that the counties all have officials whose sole responsibility is to persuade businesses to move in or expand, sometimes by offering incentives.

"Nobody wants to stop the job growth ... but everybody wants to stop the housing growth," said Jeff Bronow, chief of research for Howard County's planning department.

This mind-set comes at a time when the region is adding jobs at a healthy pace and is poised for many more. Thank location.

Proximity to Washington has helped save the Baltimore region from the fate of many other Rust Belt cities and their suburbs. The increasing spillover of contracts, research grants and other money from the nation's capital continues to transform an economy that was once a manufacturing stronghold into one with high-tech, highly educated and highly paid workers.

The National Security Agency, one of Maryland's largest employers, is in Anne Arundel County. The sprawling headquarters of both the Social Security Administration and the Centers for Medicare and Medicaid Services are in Baltimore County. The region has an ever-growing cluster of contractors - many specializing in defense and information technology - that make a living off the federal government. All this attracts well-educated workers.

`Knowledge city'

"Baltimore is becoming more of a knowledge city than its peer cities," said Richard P. Clinch, director of economic research at the University of Baltimore's Jacob France Institute.

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