NAHB Symposium Focuses On Growing Shortage Of Affordably Priced Workforce Housing

December 9, 2004 – On an issue of growing concern for the American public, a day-long Workforce Housing Symposium held yesterday at the National Housing Center in Washington, D.C. provided a forum for housing industry leaders, community advocates, employers and top government officials to discuss their efforts to solve the shortage of affordably priced housing for workers in the communities they serve.

“Despite today’s positive housing market conditions, millions of working families – teachers, police officers, firefighters and other moderate-income workers who are the heartbeat of any community – are finding it increasingly difficult to purchase or rent a decent home in, or close to, the communities where they work,” said Bobby Rayburn, president of the 215,000-member National Association of Home Builders (NAHB) and a home and apartment builder from Jackson, Miss.

“In many markets, the gap between those who can afford a home and those who can’t is widening at an alarming rate, and the availability of affordable rental housing is in short supply,” Rayburn told the symposium.


A telephone survey in July commissioned by NAHB and Freddie Mac – the sponsors of the symposium – found widespread concern about the dearth of affordable housing, especially among low-income households, renters, minorities and those living in markets in the West with high housing costs.

Nine out of 10 of the households surveyed indicated that workers should be able to live in the communities where they work, said Cary Overmeyer, a research analyst for Atlanta-based TNS NFO.
“Americans value having these people as their neighbors,” he said.

The survey also found that U.S. households are just about evenly split in their support for higher housing densities as a means of reducing housing costs, said Overmeyer, but 72% indicated support for neighborhoods with mixed housing types. Fifty percent of those polled said that companies should provide stipends and other economic assistance to enable their employees to find affordable housing, and 55% indicated that there was a role for the local government in this endeavor.

Seventy-two percent of those surveyed said they believed that affordable workforce housing should be a concern of politicians.


A second NAHB study released in conjunction with the symposium – “Where Is Workforce Housing Located?” — found that workers who provide vital services to the community face an uphill battle to find affordable housing in the nation’s top 25 metropolitan areas. For the most part, essential workers can find housing they can afford in less than half of the areas in those cities, said David Crowe, NAHB’s Senior Vice President for Federal Regulatory and Housing Policy.

Crowe identified a general pattern of affordable housing: “In the middle of the metro area is an affordable ‘doughnut hole,’ an area of housing affordability that is often small and is adjacent to, or incorporated within, the traditional business center of the city. Around this affordable central core is a large ring that contains housing that is not affordable to low- and moderate-income families. On the urban fringe, far from many employment centers, is a distant ring that contains affordable housing.”

Overall, the study found that median-income teachers could afford housing in 44% of all the census tracts in the 25 metro areas studied. A median paid nurse could find affordable housing in just 11% of Denver’s census tracts; police officers were limited to about 25% of the neighborhoods in Miami; and retail workers were priced out of 97% of the tracts in the 25 cities, the study found.


Opening the symposium, U.S. Secretary of Housing and Urban Development Alphonso Jackson outlined several initiatives his department is pursuing to provide homeownership opportunities for the nation’s working families, including the elimination of regulatory barriers that drive up costs.

Jackson, who is reviewing all of his agency’s rules and policies to ensure that they are not impeding the production of affordable housing, voiced support for reducing paperwork in Federal Housing Administration programs and he was sharply critical of “exclusionary zoning and gold-plate development standards that limit the ability of developers to build homes. These barriers must come down.”

As part of the Bush Administration, which he noted is remarkably committed to expanding housing opportunity at a time when the nation is at war, Jackson said he will be working to realize the President’s goal of creating seven million additional affordable homes in the next decade and to enact an FHA single-family zero downpayment mortgage program that would enable 140,000 families a year to achieve homeownership.


In a free-wheeling discussion on housing challenges facing the nation, Jack Kemp and Henry Cisneros, HUD secretaries during the Bush and Clinton Administrations respectively, agreed that workforce housing is a cause that will engage both Democrats and Republicans in the new Congress.

For the sake of housing affordability, Cisneros, who is chairman of American City Vista, emphasized the importance of preserving current housing incentives under the tax code when the Bush Administration and Congress begin their deliberations over tax reform next year.

While at HUD, Cisneros said he learned that altering the mortgage interest deduction “would be so disruptive to the housing sector that even though there is a big amount of money there, and it’s not always the most equitably distributed tax expenditure, nevertheless you can’t quarrel with the role that housing plays in the American economy and you don’t want to tinker with something that has functioned as well as the housing sector has.”

Both Cisneros and Kemp agreed that there are several steps the government can take to facilitate affordable housing at a modest cost to the Treasury at a time when the size of the federal deficit could be exerting constraints on spending.

Cisneros advocated focusing on predatory lending, fair housing and issues related to reforming the government sponsored enterprises, Fannie Mae and Freddie Mac. “This doesn’t cost a lot of money and produces an awful lot of bang toward this agenda of moving people into homeownership,” he said.

Citing the tremendous need to supply housing that is affordable for the nation’s public servants, Cisneros mentioned the example of local governments in California, which he said are having to “change the hours of police officers from five 8-hour shifts a week to three 12-hour shifts because the police officers are put up in a dormitory in the days between their three-day shifts and then sent home for four days because it’s not reasonable to ask them to commute the distances that they would have to commute because of home prices. That’s what’s happening in our country.”

“When a policeman or policewoman in Los Angeles has to be put up in a dormitory so that he or she can work three 12-hour shifts, that should be a national disgrace,” said Kemp.

Kemp, who is chairman of FreedomWorks, an organization dedicated to fighting for less government, lower taxes and more freedom, called for expanding the earned income tax credit, providing more funding for the American Dream Downpayment Act and supporting the Community Development Block Grant programs.

“Expanding the supply of housing is absolutely essential to making it affordable, particularly to these people who are critical first priorities – police, teachers, firefighters,” said Kemp. “Local leaders, community activists and politicians must work together to remove barriers. Housing is the most highly regulated industry in America – bar none. Everything from wetlands legislation to endangered species legislation, we all want to save the condor, see the eagles. All of this affects housing, it affects land distribution.”

Kemp added another major obstacle is the Not in My Backyard syndrome, or NIMBY. “Unless people are willing to set aside preconceived notions of what low- or moderate-income families bring to the community, I don’t know if we’ll ever solve this housing supply problem,” he said.

To keep this issue at the forefront, Kemp urged all interested parties to contact their local and federal lawmakers and to ask them one question: “What are you doing to relieve the regulatory burden on home builders?”


Richard Syron, chairman and CEO of Freddie Mac, said that the institution he heads is stepping up its
efforts to expand affordable rental and homeownership opportunities at the end of a four-year period in which home builders constructed more than 7 million new homes, mortgage lenders originated more than $11 trillion in home loans, Freddie Mac financed homes for more than 17 million families and Realtors and others sold more than 31 million homes, bringing the U.S. homeownership rate to an all-time high.

“But as today’s symposium makes clear, our best has not been enough,” Syron said. “Because our job is far from being done. That is especially true in the emerging market – minorities and new immigrants – that as you know will be the source of most of our growth in the coming years.”

Syron said that Freddie Mac has launched a major “Project Greenlight” initiative geared to expanding mortgage products, lifting more families out of the subprime market and reaching out to expand the pool of potential home buyers.

Another new undertaking, “Home Possible,” will make loan terms more flexible “so our affordable housing programs can include more of the families they’re supposed to serve.” He said the program would serve hundreds of thousands of families, and he added that Freddie Mac automated underwriting decisions are now good for six months rather than four. “This will give home builders extra time to put the finishing touches on a new home without risking the loss of a qualified buyer,” he said.

Syron also said that providing prospective home buyers with counseling would be a key element of Freddie Mac’s efforts to ensure that new home owners make decisions that will enable them to live in their homes without eventually having to default on their mortgages.

As to the reform efforts for housing’s government sponsored enterprises that the next Congress will be pursuing, Syron said that he welcomes them as long as they strengthen the nation’s housing finance system and its commitment to low-cost homeownership, rather than weakening them.


Adhering to the old adage that, “A problem well defined is half-solved,” a panel of housing researchers at the symposium examined exactly who is affected by shortages of affordable workforce housing, and the circumstances that are fueling the challenges at hand.

Barbara Lipman, research director at the Center for Housing Policy, reported that over the six-year period ending in 2003, the total number of families with critical housing needs – defined as those paying at least half their income for housing and/or living in substandard conditions – rose by 67%. Of that total, about 25% were working families with at least one full-time wage-earner.

American Housing Survey data indicates that a sizeable percentage of those with critical housing needs are immigrants, with about 2.2 million foreign-born households on the list, along with about 11.9 million native-born households. Working families account for more than half of all foreign-born households, and immigrants with critical housing needs often aren’t newcomers. “In fact, more than one-third of the 1.2 million immigrant working families with critical housing needs arrived in the U.S. between 1980 and 1989,” said Lipman.

“With all the uncertainties about workforce housing, one thing we know is that the problem isn’t going away by itself,” said Nic Retsinas, director of Harvard’s Joint Center for Housing Studies. One reason, he said, is the job market.

“In the amount of time that the number of single-family homes affordable to working families has increased 10%, the number of jobs in the retail and service industries has increased almost 100%,” he noted. As lower-paying jobs proliferate, the number of those commuting will increase substantially. Citing regulatory barriers for keeping the supply of lower-priced housing at bay in close-in neighborhoods, he said, “We do not see a time when the housing market will recalibrate itself to this new labor market.”

What we don’t know, says Retsinas, is to what extent the absence of affordable workforce housing affects local economic competitiveness. “There is no hard data on this, which is one reason the business community has not been as engaged as it should be” in finding solutions, he said. “The question we must try to answer is, ‘If you commute 45 minutes to work, what does that do to your productivity?’”


Panelists at the symposium described approaches that have scored local success in providing affordable workforce housing through collaborations between the home building industry and the public sector, with the idea that these strategies will find wider application in communities around the country.

“We see again and again that meaningful action on workforce housing comes through dynamic partnerships involving private and public sector entities,” said Marsha Elliott, an NAHB National Vice President.

“By working together, and by drawing lessons from successes from around the country, we can improve the housing opportunity for millions of low- and middle-income families,” she added. “Not surprisingly, many of the most effective solutions come from local initiatives. But we can identify ideas and practices that have worked and look for opportunities to apply those ideas in other places,” said Elliott, who is the president of Terrestris Development Company, a Chicago area home builder.

That advice was echoed by Carl Guardino, president and CEO of the Silicon Valley Manufacturing Group, a public policy trade association representing 180 of Silicon Valley’s most respected private sector employers. “If you hear something you like, steal it,” he said, referring to innovative public-private partnerships for providing affordable housing.

Working entirely with private financial sources, Guardino’s group created the Housing Trust of Santa Clara County, which has helped more than 1,260 families buy their first homes and enabled hundreds of units of affordable rental housing to be developed.

Other examples of successful efforts to make housing affordable are catalogued on the National League of Cities Web site at, said Charlie Lyons, the immediate past president of that organization. Key to providing affordable housing, according to Lyons, who is also a selectman in the Town of Arlington, Mass., is to pursue non-traditional housing types; reassure suburbanites that affordably priced housing in their community is not a threat to what they have invested in their home; and convince home owners that higher densities will not lead to lower property values.

Kevin Kast, president and CEO of SSM St. Joseph Health Center in St. Charles, Mo., said that the shortage of affordable housing for hospital workers is a growing problem. More than half of the employees in his area’s health care system earn less than $40,000 per year, Kast said, and the dwindling supply of housing those workers can afford is a legitimate concern for recruiting and keeping essential staff.

While many hospital administrators worry about malpractice insurance, Kast said, he worries about having the cooks, nurses, maintenance staff and others who are so essential to a functioning hospital.


Symposium panelists from the Washington, D.C. metropolitan area, where workers are grappling with towering home prices, noted that more production is the obvious solution to growing affordability problems, but there are few local government programs in the area to help increase workforce housing.

“The problem is especially acute in areas where employment growth is exceeding growth in the housing supply,” said Gary Garczynski, a past president of NAHB and president of the National Capital Land and Development Company.

David Flanagan, president of Elm Street Development, said that the Washington, D.C. area, which is expected to have a robust economy for the next 25 years, needs stronger regional and state planning to accommodate a projected influx of 1.5 million new residents and 800,000 new homes. “States have got to reward cities and counties that step up and push for more housing,” Flanagan said.

Existing housing and apartments present the best shot for the region to meet its workforce housing needs, said Tom Bozzuto, founding partner of Bozzuto and Associates, because land prices have become prohibitively expensive, surging 24% between 1990 and 2000, compared to an increase of only 2.9% in hard construction costs.

“It will be practically impossible to provide workforce housing with new construction unless we have government programs,” Bozzuto said. While federal programs promoting low-income housing do exist, he said, there aren’t any currently targeted to workforce housing.

One of the few local initiatives in place supporting workforce housing – the Moderately Priced Dwelling Unit program in Montgomery County, Md., which requires a 10% set-aside for home buyers making less than 80% of the county’s median income – has helped to push up densities to absorb the cost of the subsidy, but after some initial success is running into problems from land sellers who are factoring those higher densities into their prices.

In the secondary mortgage market, Robert Tsien, senior vice president at Freddie Mac, reported that the development of business- and consumer-oriented programs to help foster the availability of workforce housing is underway at Freddie Mac, including “Workforce Home Benefits,” an employer-assisted homeownership program, and “Dispel the Myths,” a consumer pilot program in six cities.

The “Workforce Home Benefits” program enables employees who meet eligibility requirements to obtain financial assistance with their downpayment or closing costs from their employers. Implemented for the first time by Freddie Mac and Tyson Foods, Inc., earlier this year, the next phase of the program, he said, will include 12 companies and institutions, including hospitals and universities.

“Dispel the Myths” is a consumer outreach and homeownership counseling program that was created to educate potential home owners about the home buying process. The program is currently operating in Baltimore; Las Vegas; Columbus, Ohio; Miami; Chicago and Dallas, and Tsien said that it will expand to 18 more cities and is expected to reach more than 25,000 potential home owners.