Category Archives: Housing

Rapid Rehousing: a Homelessness Program that Works

by James A. Bacon

Not only can Virginians count on getting electric current when they flip on the light switch, the Old Dominion can boast of something else that Californians cannot: The number of homeless people in the state is declining. A lot. And we’re spending a tiny fraction of the money that Californians do to deal with the problem.

The number of homeless people in Virginia has tumbled 36% over the past decade, from 9,080 people in 2010 to 5,780 this year, according to figures provided by Pam Kestner, deputy director of housing at the state Department of Housing and Community Development in a presentation to the Virginia Housing Commission. (Virginia Mercury reported on the presentation here.)

The homelessness rate in Virginia runs about seven homeless people per 10,000 residents compared to 33 in California and 46 in New York. Progress has been especially evident in the Richmond area, where homelessness dropped from 1,158 people in 2007 to 497 this year. While the state of California spends roughly $1 billion a year on programs for the homeless (and local governments spend hundreds of millions more), Virginia and federal government together have budgeted $17.4 million for homeless services this year in the Old Dominion.

This is a remarkable untold story. Who knew that Virginia had been so successful in copying with homelessness? Continue reading

Map of the Day: Median Housing Values

Virginia median owner-occupied house values by census district. Source: StatChat blog. Click to enlarge.

The StatChat blog has published a fascinating map showing the median value of owner-occupied housing across Virginia by census tract. The map appears as part of an essay on the relationship between housing affordability and school quality, which I may blog about later. But in the meantime, I thought the map was worth publishing on its own terms.

There are no huge surprises here — the highest median values occur in Virginia’s major metropolitan areas, most notably Northern Virginia, and values are lowest in depressed rural areas, particularly Southside and Southwest Virginia. (The blog post does not contain a color key indicating what values the colors represent, but you still get an idea of relative values.) Continue reading

Housing Prices and Homebuilder Oligopoly

Competitive intensity of the homebuilder industry in the Washington-Baltimore area, 2006. Yellow indicates where 6 or more firms account for 90% of construction, dark blue indicates only two firms.

by James A. Bacon

What is driving up housing prices in Virginia, especially Northern Virginia? In the simplest terms, the increase can be explained by a sustained imbalance in supply and demand. Between population growth and rising incomes, the demand for new dwellings is outpacing the supply of new dwellings built. Then the question becomes, what is restricting supply?

My commentary on this blog has emphasized the role of local zoning codes, comprehensive plans, and NIMBYism in restricting the density of development where demand is greatest, in and near the urban core of Virginia’s major metros. But Jacob Cosman and Luis Quintero with the Johns Hopking University business school point to a different, though related, phenomenon: The consolidation of the home building industry.

Intensity of competition in 2015. Source:Cosman and Quintero.

“Our empirical results indicate that a higher degree of concentration in local housing construction markets leads to less housing production, a decreased rush to build more units, and greater volatility in prices,” conclude the authors in their paper,  “Fewer players, fewer homes: concentration and the new dynamics of housing supply.Continue reading

Is Inclusionary Zoning the Answer to the Housing Crisis?

Source: “Inclusionary Zoning and Housing Market Outcomes.” 

by James A. Bacon

I have often advanced a common-sense proposition: If you want to create more affordable housing, increase the supply of housing. If the housing stock increases faster than demand, the price declines. A new study on “inclusive housing” policies in the Washington-Baltimore metropolitan area, which includes Northern Virginia, gives some support to that proposition, although it suggests that in highly regulated housing markets, the relationship between supply, demand and price is not straightforward.

Emily Hamilton, a research fellow at George Mason University’s Mercatus Center, has undertaken an in-depth study of inclusionary zoning in the Washington-Baltimore metro. Inclusionary zoning (IZ) is a policy in which local governments require or incentivize real estate developers to provide below-market-rate houses in new housing developments.

Economic theory (which has informed my thinking on this blog) predicts that IZ could be counter-productive. By increasing the cost of building new units, the policy diminishes the supply of new housing, which has the effect of pushing housing prices higher overall. But IZ programs vary widely in design and impacts vary, says Hamilton in her paper, “Inclusionary Zoning and Housing Market Outcomes.” Continue reading

Why Are So Many Rural Virginians Stuck in Place?

Declining geographic mobility. Graph credit: McKinsey Global Institute

by James A. Bacon

A recurring question on this blog and elsewhere is why don’t more Americans (and rural Virginians) move to areas of greater economic opportunity? Why do they remain stuck in communities with high unemployment and low wages? Americans have always moved to economic opportunity in the past. What’s different now?

Those questions give rise to another set of questions. If people refuse to budge, should the rest of society take pity on them and subsidize their choice to stay put? As Don Rippert commented in a previous post, “The best thing the state can do is issue relocation vouchers to rural residents.”

The authors of a McKinsey Global Institute report, “The Future of Work in America,” tackles the geographic-mobility question. The biggest factor, they suggest, is the vast and growing gap in the cost of living between prospering cities and lagging communities. “Variations in the cost of living — and particularly in housing costs — are a clear contributing factor holding back geographic mobility in the United States. The cities offering the greatest job opportunity also happen to be expensive places to live.” Continue reading

Dueling Crises: Unaffordable Housing vs. Flammable Housing

by James A. Bacon

Citing housing affordability as the key issue, the Virginia Board of Housing and Community Development has voted down an update to the state building code that would have mandated the installation of sprinklers in all new single-family homes and townhouses.

Virginia home builders have said that the sprinkler requirement would add between $15,000 and $25,000 to the construction cost of a new residence, according to reporting by WAMU, American University Radio. Keith Brower, a former Loudoun County fire chief has countered that the cost would be significantly less, about $5,000 for a 2,000-square-foot house. Whatever the case, there is no debate that the mandate would have added thousands of dollars to the cost of a dwelling unit.

WAMU summarized the home builders’ arguments this way:

Home-builders hailed the 10-4 vote taken Monday, saying that requiring sprinklers would only throw another obstacle in the way of the new housing construction that is needed to help close what officials say is a 75,000-home gap between what’s currently expected to be built across the region and what’s actually needed to keep pace with estimated job growth.

Continue reading

Want More Affordable Housing? Build More Luxury Apartments.

Camden Fairfax Corner luxury apartments. Yes, building more housing like this is part of addressing the affordable housing crisis.

by James A. Bacon

Planners in the Washington metropolitan area are worried, as they well should be, that continued population growth coupled with housing shortages could turn the region into another unaffordable hellhole like San Francisco or Los Angeles where legions of homeless people are taking over the public spaces and making life miserable for everyone. The solution, says the Metropolitan Washington Council of Governments (COG), is to build more housing.

“You can’t afford to live in San Francisco — the workforce [there] is being displaced,” said COG Vice Chair Derrick Leon Davis, from Prince George County, Md. “We don’t want to be that region.”

Davis is absolutely right about that. Unfortunately, the solutions proffered by the regional planning organization aren’t practicable. COG says the region needs to add 320,000 housing units between 2020 and 2030, 75,000 more than previously forecast. Of those, reports the Washington Post, at least three-quarters should be “affordable to low- and middle-income households.” That, in turn, likely requires increasing public subsidies such as rental vouchers and low-cost loans or redirecting funds from schools, transportation or other priorities.

In other words, COG planners have set a goal and then established preconditions that make fulfillment of that goal politically and fiscally impossible. Continue reading

Richmond and DC Among Cities People Are Most Eager to Ditch

by Don Rippert

Anywhere but here. Moneywise Publishing is citing a “study” detailing the most and least desirable American cities based on real estate inquiries. Real estate brokerage firm Redfin tracks Americans using their web site to find new places to live.  According to the company, 25% of people browsing home listings online are “looking to get outta town.” Tracking the places people want to leave isn’t very encouraging for Virginia. Both the Richmond metropolitan area and the Washington, D.C. metropolitan area are on the list of 19 top places to leave. Redfin also tracks the 10 places people most want to go. No Virginia city makes that list. Continue reading

Those Tenant-Eviction Stats Are Valid

by Marty Wegbreit

The August 15, 2019 post, “A Closer Look at Those Tenant-Eviction Stats,” fails to stand up to statistical or critical analysis. The post blames Virginia’s Independent City/County form of government for high eviction rates. (Five of the highest ten eviction rates in large U.S. cities over 100,000 population are in Virginia.) Virginia’s independent cities do not incorporate the wealthier suburbs. Supposedly, this artificially raises the eviction rate. No data are presented to support this theory.

When you examine cities of similar population, similar area, and similar percentage of African-American population, Richmond still stands out with a high eviction rate.

Richmond’s eviction rate is substantially greater than Jackson, Miss., and Baton Rouge, La. Something clearly is wrong in Richmond. The theory of cities that do not incorporate wealthier suburbs also fails when comparing Richmond to Chesapeake, an independent city more than 5½ times larger in area. Continue reading

A Closer Look at those Tenant-Eviction Stats

Graphic credit: VPM

Virginia’s eviction-reform movement gained considerable momentum last year when the New York Times, citing data of the Princeton Eviction Lab, published a story asserting that four Virginia cities numbered in the top 10 cities with the highest eviction rates in the country. Richmond supposedly had an eviction rate five times the national average. Armed with this scandalous data, renters rights advocates pressed successfully for changes to state law that make it somewhat easier for tenants to avoid eviction.

Now a VPM (Virginia Public Media) investigation has revealed significant flaws in the data. The first problem is one that I identified shortly after the Times article was published: The reason Virginia cities stood out so prominently in the Top 10 list was not that Virginia laws are tougher on renters but because Virginia’s city/county form of government skewed the data.

A second problem is that Princeton Eviction Lab cobbled together different data sets for different states. The Lab was able to obtain court data directly from 12 states, including Virginia. For the others, they used data from private sources. Continue reading

Density as an Answer

It seems that our leader, Jim Bacon, is on the cutting edge of new thinking about how to address the rising cost of housing.  (Of course, this is no surprise to BR readers.)  An article in yesterday’s New York Times describes how planners, economists, and environmentalists across the country have begun to advocate more density.

The target of the critics is detached, single-family residential zoning. “It is illegal on 75 percent of the residential land in many American cities to build anything other than a detached single-family home,” the authors contend. They created maps, included in the article, depicting the residential area within many cities (and some suburbs) that is zoned for detached, single-family residential units. (There are no Virginia localities shown.) There are real contrasts. In New York City and Washington, D.C., only 15 percent and 36 percent, respectively, of the residential land is zoned for detached, single-family homes, whereas in Minneapolis and Charlotte, N.C., the percentages are 70 and 84, respectively. Cities in the western part of the country have even higher percentages restricted to detached, single-family units.

Some areas are taking action. Minneapolis has recently ended detached, single-family zoning; Oregon is considering legislation that would allow options as dense as fourplexes in larger cities and duplexes in smaller cities; and Seattle has upzoned six percent of its single family-zoned land. As expected, there has been strong opposition from homeowners in these areas. In the California legislature, such opposition has stalled a bill that would affect local zoning statewide.

It is remarkable how much effect small changes could make. According to the authors’ analysis, “Over time, if just 5 percent of the largest single-family lots in Minneapolis — lots of at least 5,000 square feet — converted to triplexes, that would create about 6,200 new units of housing, according to UrbanFootprint [a software program]. If 10 percent of similar-sized lots in San Jose, Calif., added a second unit, the city would gain 15,000 new homes.”

It may be time for policymakers in Virginia to begin looking at such changes.  As for me, I am glad I bought my detached house with a yard, small as it is, thirty years ago.

As Arlington Housing Prices Soar, Supply Is Unresponsive

The worst fears of Amazon critics are coming true. Housing prices are becoming increasingly unaffordable — even before Amazon sets up shop at its HQ2 facility in Arlington and floods the region with 25,000 employees.

The average home price in Arlington County jumped 7% in the past year to $713,000, as investors poured into the market in anticipation of Amazon’s arrival, reports the Washington Post. Inventories are so sparse that some popular Zip codes in Arlington and Alexandria show no homes for sale at all.

Alexandria saw a comparable increase in average home prices, while Fairfax County saw a year-over-year gain of 6%. Said Terry Clower, director of George Mason University’s Center for Regional Analysis: “This is a market response to the Amazon HQ2 announcement, with investors competing with residents for a shrinking number of homes for sale.”

In a functioning real estate market, prices act as a signal for the allocation of capital. A surge in home prices would be matched by a surge in home building as developers and builders. But, as seen in the table above, based on Arlington County permit statistics, the supply of housing is increasing negligibly. In 2016 the county’s housing stock stood at 111,549 units. According to Arlington County permitting data, the increase in housing units (completions minus demolitions) was only 810 units in 2017 and a negligible 220 units in 2018 — roughly a 1% increase in the housing stock over two years. Continue reading

The Virtues of Incremental Development

Would you rather live here….

One more angle to think about when appraising Amazon’s HQ2 project in Arlington… A single developer, JBG Smith, will have a disproportionate impact on the evolution of the urban fabric in the National Landing district of Arlington and Alexandria. In theory, a single big developer can mobilize more resources, carry out better planning and execute a more uniform standard of design than could an uncoordinated army of small builders.

… or here?

Not so fast. Over on the Strong Towns blog, Daniel Herriges compares “Texas donut” approach typical of Dallas, Texas – a monumental ediface consuming an entire city block — with the incremental approach of traditional development in Charleston, S.C.

“Incremental development doesn’t mean slow, small, or cautious. Incremental means many hands,” Herriges writes. “The ‘increment of development’ is how big each project is, but says nothing about how many projects are taking place. Continue reading

The Crux of Arlington’s Affordable Housing Crisis: $350,000 Per Unit


Amazon will donate $3 million to support affordable housing in Arlington County, the company has announced. While government officials and charities welcomed the donation, reports the Washington Post, critics contend that the sum is sufficient to build only a handful of units.

According to the Northern Virginia Affordable Housing Alliance, new housing in the Virginia suburbs costs about $350,000 per unit. In other words, Amazon’s gift is enough to build about 8.6 housing units. For purposes of comparison, the tech giant expects to employ 25,000 at its Arlington facility, and that doesn’t include jobs created by vendors, partners, spin-offs and support entities such as Virginia Tech’s new technology campus that locate near Amazon’s HQ2.

In other words, the donation is meaningless. The number we should focus on, however, is $350,000. If that’s what it costs to build “affordable” housing in Northern Virginia, then no wonder there is a housing panic. Continue reading

Want More Affordable Housing? Try Free Markets.

More apartments needed… Affordable housing complex approved in Brooklyn, N.Y.

Exclusionary regulation at the local level is the root cause of unaffordable housing, and a rollback of exclusionary regulation is the best long-term solution, argue Salim Furth and Emily Hamilton, research fellows at George Mason University’s Mercatus Center.

“Contemporary American land use law embodies the bad idea that private land ought to be publicly planned. In practice, these plans routinely exclude low-income families by indirect means, causing income-based segregation,” they write in an attachment to April 2, 2019, testimony to the U.S. House Committee on Financial Services.

Exclusion is widespread: most jurisdictions, through zoning ordinances, ban apartments and manufactured homes in all but a few locations. Single-family homes are usually allowed, but only in specified areas and often on lots larger than many buyers want. As a consequence, those states that give the most power to planners and the least authority to property owners have abysmal housing growth rates. When wages rise in those states, rents and home prices soar.

Continue reading