This article appeared in the March/April 2020 issue of NAIOP-MD InSites Newsletter

A dramatic forecast of a looming housing shortage in the Greater Washington region is fueling discussions about the adequacy of Greater Baltimore’s housing supply.

Last fall, the Metropolitan Washington Council of Governments (MWCOG) released an analysis of that region’s projected economic development compared to its anticipated residential development. The expected creation of 413,000 additional jobs in Greater Washington between 2020 and 2030 would leave the region with a housing shortfall of 75,000 units unless local governments intervened, the MWCOG report concluded. That shortfall, it warned, could render Washington-area housing less affordable to many workers and worsen transportation problems in a region that already sees more than 325,000 workers commute into Greater Washington daily.

Those findings caught the attention of the Baltimore Metropolitan Council (BMC) which arranged a presentation by MWCOG officials. As an exercise, BMC staff also applied MWCOG’s basic methodology which assumes a ratio of 1.53 jobs per household, to the job growth and residential development numbers from BMC’s Round 9 Cooperative Forecast.

That calculation concluded that Greater Baltimore would experience an estimated housing shortfall of approximately 70,000 units by 2030.

“This is not to say that Baltimore Metropolitan Council believes that will be the housing need in the Baltimore region. It is not an endorsement of the [MWCOG] methodology,” said Shawn Kimberly, BMC Senior Planner.

The MWCOG methodology includes “a host of caveats that would give me pause,” Kimberly said. The model assumes and aims for very low levels of commuters. Its projections could be impacted by multiple factors, including economic performance, local demographics, workforce participation rates and the number of individuals holding multiple jobs in the gig economy. BMC also follows a “rosier model” of projecting job growth which could impact the assessment.

Members of the BMC and local governments, however, say the model’s core warning about a growing housing shortage is valid.

“In general, the Baltimore metropolitan region is going to experience very strong demand for housing and the supply may not be adequate to address that … Over time, that will increase housing affordability problems,” said Jeff Bronow, Chief of the Division of Research for the Howard County Department of Planning and Zoning.

Despite strong demand for new housing, Howard County is seeing a sharp drop in new housing starts. By the end of November 2019, the county had issued just 733 building permits for the year — down from 2,114 in 2018 and the lowest number recorded in the last 40 years. Several factors contributed to the slowdown, including a shortage of undeveloped land for residential projects and the county’s new adequate public facilities law that can close some school districts to residential development for four years.

“For one of the first times in the county’s history, [elected officials in Anne Arundel] are looking at the issue of affordable housing very seriously,” said Kathleen Koch, Executive Director of Arundel Community Services Development, Inc.

Since 2000, median house prices in Anne Arundel have increased at roughly double the rate that median household incomes have increased. Employees in some key county industries — including hospitality, health care and childcare — struggle to afford in-county housing or manage transportation to work from affordable neighborhoods, Koch said.

The county estimates that it is already experiencing a shortfall of nearly 9,000 affordable rental units for low-income households and expects to need an additional 1,176 affordable rental homes in the next three years.

“There are uncertainties in the jobs forecasts, but if correct, these projections could signal a significant housing issue. That, in turn, could become a barrier to attracting employers and talent to the region,” said Tom Ballentine, NAIOP-MD Vice President for Policy and Government Relations.

Current and looming housing challenges are already spurring some initiatives in local and state governments.

Anne Arundel County has passed legislation offering incentives to developers — including increased density and permission to build in certain commercial and light industrial zones — if their projects include a set percentage of affordable residential units.

Howard County will begin work on a new housing master plan this year that will assess demand and affordability issues. In an effort to address transportation and housing issues, the Maryland Transit Administration is scheduled to complete a study this fall that will identify corridors for transit investment in Baltimore.

“In most areas of the country, construction dollars follow transit investment,” said Mike Kelly, BMC Executive Director. “Baltimore has not capitalized on that as much as other regions, but there is certainly a lot of potential there to simultaneously address transportation and housing needs.”

“For NAIOP members involved in residential or mixed-use development, this could present opportunities,” Ballentine said.

Originally published in January/February 2020 NAIOP-MD InSites.