April SmartCode Update
Last month, SmartCode Corner examined emerging influences that inform the need for and the makeup of evolving codes. The 2010 Census identifies emerging changes in the area's demographic profile and is also quite illuminating when examining employment trends. This month consideration is given to workforce housing. For the purpose of this discussion, workforce housing is defined as housing for the occupations needed in every community, including teachers, nurses, police officers, firefighters and many other critical workers. A brief look will be given to major centers of employment for the region. These two factors combined are the Housing + Transportation Affordability Index.
As a prelude to further discussions on the Housing + Transportation Affordability Index there will be an examination of the employment centers and some of the external factors affecting housing choice. By analyzing employment data from various resources including the Census Bureau's LED (Local Employment Dynamics) labor shed analysis profiles and Info Group market data, definitive locations within the Birmingham MSA can be identified as major employment centers (17,500 jobs+ per square mile or site groupings of 1,000 or more jobs). The areas identified include the Birmingham City Center and Southside areas, stretching south along Highway 280 to Brookwood and southwest to Oxmoor, as well as Riverchase. These areas collectively employ over 30% of the region's workforce, or about 144,000. The map to the left (click to enlarge) is a spatial representation of employment in the region.
Recent presentations in Orlando, Florida by the Urban Land institute (ULI) Terwilliger Center for Workforce Housing identifies some important emerging trends. It is anticipated that two population groups at opposite ends of the age spectrum will influence housing development in the post-recession economy: generation Y (Gen Y) and people who are 65 and older. John McIlwain, ULI senior resident fellow for housing identified several factors that will influence the housing market.
- The continued decline of home prices nationally-the Standard & Poor's Case-Shiller 2010 national price of $130,380 was down by 4.1 percent from 2009, and is expected by McIlwain to fall 5 percent in 2011;
- The ongoing foreclosure crisis-more than 2 million foreclosures occurred last year and an equally high volume is expected for this year;
- Approximately 25 percent of the nation's current homeowners have mortgages that are "under water"-meaning their home loans exceed the value of their homes;
- A drop in the national homeownership rate, from the 2004 economic-boom peak of 69 percent to the current level of 66.58 percent;
- Looming changes in the federal housing finance system that will likely raise the cost of home financing; and
- An eventual increase in mortgage interest rates back to the long-term norm of 7 to 8 percent
How does this affect these two groups? Because many of the traditional seniors will outlive their retirement funds, they have perhaps the most pressing need for affordable housing. However, regardless of the varying lifestyle choices of younger and older seniors, the housing best suited to all is denser, mixed-use, mixed-income development that minimizes the need to drive.
Income constraints among even the most educated GEN Y, point to a strong demand for affordable housing near employment centers in urban areas. The GEN Y is the creative class, they are the group driving innovation in business and technology, and they create value-added jobs. GEN Y will represent the newest workforce housing challenge.
A competitive urban area will be one with an attractive Housing + Transportation Affordability Index. In May, SmartCode Corner will examine the Birmingham Area Housing + Transportation Affordability Index and how SmartCode can be part of the solution.
If you have SmartCode questions, please contact Steve Ostaseski, Richard Amore or Philip Amthor at the RPCGB. Steve may be reached by phone at 205.264.8422. Richard may be reached by phone at 205.264.8447. Philip may be reached by phone at 205.264.8421.