Photo by dan reed! on Flickr.

This is the second in a 5-part series about how the Washington metropolitan area can provide housing options for its growing workforce. Read part 1.

Is the Washington region building enough housing, or the right types of housing, for the future? At current rates, probably not, and that risks stifling the region’s economic vitality.

Over the next 20 years, the Washington metropolitan area will add over a million net new jobs.  At the same time, the region will need 1.8 million workers to replace retirees and others leaving the workforce.

These workers will need over 700,000 new housing units by 2030, but even if the pace of construction over the last 20 years continues, the region would only add about ¾ that much. Plus, new workers will (and already do) demand more multi-family housing and housing at lower price points than what exists today or what most builders are constructing.

In 2010, the Washington metropolitan area depended on non-resident workers more than any other metropolitan area in the country. About 230,000 commuters from places like Baltimore, the Eastern Shore, Richmond and West Virginia work in Washington every day. Hundreds of thousands of other workers commute between jurisdictions each morning and evening.

A major source of the region’s transportation problems is the inadequate supply of housing within the region. Without enough housing for our future workers, the consequences will be enormous. Home prices and rents will rise, our roadways will become more congested, our transit systems strained to the limit, and employers will depend more and more on non-resident workers.

Housing the workforce is key to the Washington region sustaining its current economic success and achieving its economic growth potential in the future.

The region needs more than 700,000 new housing units by 2030

Forecasts from the George Mason University Center for Regional Analysis found that to accommodate future employment growth, the Washington region would need to add 731,457 new housing units between 2010 and 2030, or about 36,500 housing units each year. The table below shows how many units each jurisdiction needs if it wants to house all of its future workers inside its borders.

Housing demand by jurisdiction, 2010-2030


Yet, over the past 20 years, the region has only built about 28,000 housing units each year. During the economic downtown of the last few years, there have been especially low levels of building activity by historic standards.

Building permits, Washington region


Future workers will demand different housing from what exists today

The types of units needed in the future will also differ from the region’s current stock. The shifting demographics of entry-level workers will create demand for more multi-family and rental units and more moderately-priced housing.

While current housing in the region is about 67% single-family and 33% multi-family, the housing demand forecasts foresee demand that is the reverse of current patterns, 40% single-family and 60% multi-family.

Comparing current and forecasted units
Single-family vs. multi-family


New workers will need relatively lower cost housing. About 55% of the region’s new workers will demand owner-occupied housing (about 400,000 owner-occupied housing units). 69% of homeowners will demand housing priced below $400,000 (in 2010 dollars), including a quarter that can only afford homes priced up to $200,000. Current owner-occupied housing is disproportionately higher cost (over $400,000).

Comparing prices of current and forecasted units
Owner-occupied units, Washington region


On the rental side, the forecasts predict a significant need for rental housing below $1,250 per month for more moderate income households. The luxury segment will only be about 1% of rental housing compared to 9% today.

Comparing prices of current and forecasted units
Renter-occupied units, Washington region


Most local governments are not planning enough housing for their future workers, and may hinder new housing with regulations on new development. Meanwhile, builders need to recognize the need for more multi-family housing and smaller, more affordable owner and renter homes in the region.

Next in this series: To what extent do local government regulatory processes affect the region’s ability to provide housing units that meet the forecast needs?

Lisa A. Sturtevant, PhD is President of Lisa Sturtevant & Associates, LLC, an Alexandria, Virginia-based consulting firm specializing in housing, demographic and economic research. She previously served as Vice President for Research of the National Housing Conference and Deputy Director of the Center for Regional Analysis at George Mason University.

Agnès Artemel became interested in revitalizing cities after growing up in France and Germany, where livable and walkable have always been the norm.  She is a founder of the Northern Virginia Streetcar Coalition and Alexandrians Delivering smart growth Around Metro (ADAM).  Her professional focus is on market and feasibility studies, real estate development approvals, and economic development partnerships. Agnès has a Masters in urban and regional planning.