By Gary Bennett and Hugh Gordon
This article appears in the January 12, 2024 issue of the Frederick News-Post.
As the largest monthly expense for just about all of us, it is no surprise that housing plays an outsized role in our regional and national economy.
First, there is the robust construction industry and all it employs.
We see the workers every day as we make our way around Frederick. It is no surprise that housing construction and allied trades are a large economic engine for most localities, including Frederick County.
Nearly 10% of employees in Frederick County work in the construction and allied trades industry. It is one of the largest industries in our diverse local economy. Any disruption in the construction industry, or any of our top industries, would be harmful to Frederick’s overall economy.
Second, there is the menace of inflation.
The wide gap we see now in the supply of and demand for housing that has driven up housing prices to historic levels had its origins in the recession of 2007.
Later, supply chain woes caused by the COVID-19 epidemic in 2020 drove up the cost of housing even more. The lack of balance in the housing market and the higher prices that come with it have been a major driver of inflation.
Even as food and fuel prices begin to moderate, housing prices remain stubbornly high. Mortgage interest rates that rose exponentially over the past year have only cooled demand slightly.
Rents remain artificially high, too, as folks get priced out of the home-buying market and increase competition for rentals. It seems clear, and most experts agree, that the best way to make a meaningful and long-lasting dent in inflation in the U.S. is to create more moderately priced housing.
Thirdly, our current lack of affordable housing may have a profound economic impact on the future if it’s not proactively addressed.
Research has shown that increasing access to affordable housing is the most cost-effective way to reduce childhood poverty and increase economic mobility in America. If we can somehow condition ourselves to take the long view on increased affordable housing instead of focusing on the short-term problems that can be solved with government action and political will, society will be better off.
In a large multi-year study, Stanford economist Raj Chetty found that children living in stable, affordable homes are more likely to thrive in school and have greater opportunities to learn inside and outside the classroom. Children who moved to lower-poverty neighborhoods saw their earnings as adults increase by approximately 31% and had an increased likelihood of living in better neighborhoods as adults.
Indeed, the lack of safe, affordable housing is costing U.S. cities in many ways we don’t always see. It forces families to live far from work, increasing their carbon footprint. It lowers tax bases that fund the amenities we take for granted. And, perhaps most painfully, we lose potential workers and customers that keep our local businesses thriving.
You don’t have to look any farther than our Maryland neighbor to the west, Cumberland in Allegany County, for a discouraging example.
Cumberland has long embraced a very slow-growth housing policy. With little excess housing stock, Cumberland cannot grow.
Young people who may want to stay cannot find entry-level housing. Older folks who wish to sell their large family homes in hopes of downsizing to a smaller, more manageable home cannot find buyers or more modest homes to move to.
Businesses that come to town cannot find appropriate housing for their employees. It is a self-fulfilling cycle that Cumberland has found itself in for years.
Prosperity for the Frederick region depends on decisive action now to make sure our housing stock meets the needs of the future.
We are pleased to see both Frederick City and Frederick County taking steps to make building moderately priced dwelling units more appealing to developers, and if they don’t build them, a revenue base so government can fund affordable housing programs.
For Fredrick businesses to grow and stay vibrant, they need more customers and reliable workers who have housing. To succeed, Frederick County must remain a diverse place where all people have decent, safe, affordable places to live in thriving communities.
Editor’s note: Gary Bennett is a retired marketing executive. Hugh Gordon is the association executive for the Frederick County Association of Realtors and has decades of experience in the real estate world, including 24 years as a mortgage banker. They are longtime Frederick County residents and members of Frederick’s Affordable Housing Council.