A changing global economy has brought jobs to Ulster, Dutchess and Orange counties with pay checks that do not keep pace with the rising cost of housing, meaning that affordable housing will continue to be in increasingly short supply in those counties through at least 2020.
That is the conclusion of a housing study conducted jointly by the three counties. The result is a widening affordability gap, described as the difference between the cost of available housing and what people can afford to pay without devoting more than 30 percent of their income to housing. The report was released June 30.
“Despite the short-term relief for some homeowners in the three-county region that has come from price declines in the housing market, the need for affordable housing is expected to continue to grow,” said Dennis Doyle, planning director of Ulster County.
The study found the three counties had an “affordability gap” of about 72,000 units in 2006 and that shortfall in units is projected to reach about 99,000 units by 2020.
The counties embarked on the joint study in 2007 citing the “strong regional economic links” between the counties adjacent the New York metro area economic giant. It noted high-paying manufacturing job losses in the region were offset with gains in the service sector, “but those jobs typically pay lower wages.” according to the report released June 30.   Â
The rapid increase in home prices during the late 1990s and early 2000s outpaced income growth. The average price of housing in the region rose 10 percent while household regional incomes rose only 4 percent between 1990 and 2006, according to the report.
During this time, developers built larger, more expensive single-family homes and fewer small homes or multi-family units. The report notes that during the study time period, communities in the region frequently opposed “compact and affordable housing development,” due to fears it would raise taxes through a need for additional municipal services.
The report posits that the lowering housing prices during this recession will not equal the price increases recorded during the housing bubble.
“The market has come back (down) a little bit, but a lot of people have lost jobs, so they’re out of the market, and the mortgage industry has changed,” said Kevin O’Connor, executive director of Rural Ulster Preservation Co., a nonprofit housing counseling agency that participated in the study process.
The report estimates that in 2006 Dutchess County had a “total affordability gap” reflecting the void between wages and home costs of 24,813 units (17,913 owner and 6,900 renter). From 2006 to 2020, this gap is expected to increase by 7,648 units. Meanwhile the county”™s median single family home sales price rose from $135,000 in 1996 to $330,000 in 2006, an increase of 144 percent or 9.3 percent per year.
Orange had an affordability gap of its 31,272 units (21,921 owner and 9,351 renter) in 2006. That gap is projected to reach 13,064 units by calendar 2020. The median single family home price in Orange County increased from $124,900 in 1996 to $298,500 in 2006. This represents a 139 percent increase overall, or an average annual increase of 9.1 percent.
Ulster County had an affordability gap of 15,953 units (10,696 owner and 5,257 renter) in 2006, which is expected to increase by 6,079 units by 2020 Ulster County: Prices for single family homes rose over from $95,000 in 1996 to $244,665 in 2006. This is an increase of 157% over the 11 year period, or 9.9% per year.
The report outlines several strategies to address the crisis, including financing assistance for homebuyers, subsidizing some rents, and creating incentives for developers of low-priced housing. It suggests that a regional commitment to building affordable housing using joint public-private partnerships is the most likely strategy to close the gap.
Investing in affordable housing, also now being called worker housing, could pay dividends to the region the report suggests, in two key ways. A commitment to building affordable housing would immediately create high paying jobs in the construction trades that would ripple into other sectors of the economy in the short term. And it could pay long term benefits by making the region more attractive to manufacturing companies who often research the availability of worker housing before they bring jobs to an area. Â
Besides housing the report is a voluminous compilation of data about the three subject counties. A complete copy of the study is available at co.ulster.ny.us/planning/trihouse.html.
