Housing Market Analysis and Needs Assessment City of Rockville, Maryland
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s Housing Market Analysis and Needs Assessment City of Rockville, Maryland Lisa Sturtevant & Associates,1 LLC December 2016 Photo credits (cover and case study profiles): Adobe Stock, City of Rockville, Lisa Sturtevant & Associates, LLC Table of Contents Study Objectives ......................................................................................................................................... 1 Report Summary ......................................................................................................................................... 2 Current Demographic, Economic and Housing Market Characteristics ...................................................... 7 Demographic Characteristics................................................................................................................... 7 Employment and the Labor Force ......................................................................................................... 13 Housing Market Conditions ................................................................................................................... 23 Housing Affordability............................................................................................................................. 34 Pipeline Development ........................................................................................................................... 40 Forecasts of Housing Demand .................................................................................................................. 44 Summary of the Forecast Process ......................................................................................................... 44 Characteristics of Households ............................................................................................................... 45 Characteristics of Occupied Housing Units ............................................................................................ 51 Strategies to Meet Housing Needs in the City of Rockville ....................................................................... 55 Existing Tools ......................................................................................................................................... 57 New Tools .............................................................................................................................................. 63 Case Study Profiles .................................................................................................................................... 76 Housing Market Analysis and Needs Assessment City of Rockville, Maryland Study Objectives The City of Rockville contracted with Lisa Sturtevant & Associates, LLC to conduct a study of housing market conditions and housing needs in the City and to assist in the development of strategies for accommodating future City residents with housing that is affordable and connected to transit, jobs and other amenities. The unique and changing characteristics of Rockville’s population and job base, the current housing programs in the City, and the limited opportunity for greenfield development within Rockville’s boundaries will all shape housing needs in the future and will dictate the extent to which those needs can be met. The City’s housing needs and the ability to meet those needs will also be driven by factors outside of the County, including changes to the regional economy and policy decisions in Montgomery County and the State of Maryland. Finally, the ability to talk about the City’s housing needs in a way that has saliency with a broad set of stakeholders will also be key to successfully implementing a comprehensive housing strategy in the City of Rockville. The study was organized around several interrelated tasks that culminate in this final report. The results from the study will be used by City staff to update the housing element of Rockville’s comprehensive plan and to inform the development of the City’s housing strategies. Housing Market Analysis and Needs Assessment 1 City of Rockville, Maryland Report Summary CURRENT DEMOGRAPHIC, ECONOMIC AND HOUSING MARKET CHARACTERISTICS Demographic Characteristics The City’s population is changing in some dramatic ways, which drive the housing needs of residents and workers. Like much of the rest of the Washington DC region and the country, Rockville’s population gains in recent years have been driven by increases in the non-white population. The well-documented trend toward greater racial diversity is largely a result of a greater share of childbearing-age women and higher fertility rates among the non-white population, specifically the Hispanic and Asian populations. While there is significant diversity within the non-white population, this growth in the non-white population has implications for housing in the City, including growing demand for rental housing, lower-cost housing and housing that can accommodate multi-generational households. The population of single-person households, including young people starting out in their careers, has increased substantially. The population of young adults includes a significant number of people who may be living alone now but may be heading towards marriage, children and, potentially, homeownership. Many other young adults have not yet made the move into their first home, whether a rental or homeownership. Instead, they are living at home with their parents. Housing options in the City of Rockville will be an important determinant of whether these young adults remain in the City as they age. The number of older adults in the City of Rockville has increased substantially in recent years as a result of broad demographic trends and the development of senior housing in Rockville. As seniors comprise a larger share of Rockville’s population, there will be more demand for a variety of housing types that can facilitate aging within the community. As a result, there is increased demand for housing that can serve persons with physical and mental disabilities of all ages. Like in Montgomery County and many other places in the Washington DC metropolitan area, the median household income in the City of Rockville is relatively high. However, the income distribution in the City is becoming increasing bifurcated, with growth at both the low and high ends. There are also economic divides in the eastern and western parts of the City. Changing demographic characteristics, along with changes to the structure of the local and regional economy, mean that the number of households with more moderate incomes will increase in the future though high-income households will continue to be attracted to Rockville and will put upward pressure on home prices and rents. Employment and Labor Force The City of Rockville is an important job center in the region, but its economy and labor force is closely linked to the Montgomery County economy. Because of Rockville’s small size, the share of people both living and working in the City is relatively low, but there is a substantial amount of commuting between the City and the rest of Montgomery County. Housing Market Analysis and Needs Assessment 2 City of Rockville, Maryland The City has key private sector employers in the Professional & Business Services and Health Services sectors. However, Government—including City and County governments—continues to be the largest sector of the Rockville economy. Future job growth in the City will depend critically on the growth of the Government sector but as the population increases more slowly, growth in the Government sector will also slow. The City of Rockville can continue to be an attractive location for private sector employment, given its transit-accessibility. The economic restructuring that is happening at the regional level may be more important to the City’s housing demand than the local employment base. As Federal procurement spending has declined in the Washington DC metropolitan area, the region’s economy is shifting towards one that is less reliant on government and more reliant on diverse, private sector employment. Recent economic growth has been led by jobs that typically pay lower wages and as a result, average wages across the region have stagnated. Slower-growing wages have been making it more difficult for working households in Rockville and across the Washington DC metropolitan area to find housing they can afford. Housing Market Conditions Like the rest of the region and the country, the Rockville housing market experienced the ups and downs of the most recent housing market boom and bust. As a result of relatively strong post- recession job growth in the region and Rockville’s attractive location near transit, the housing market in the City rebounded fairly quickly. Since the downturn, the number of renters in Rockville has increased dramatically. The rising rental rates has been driven by demographic and economic trends in the region, and the renter population has become more diverse. The growth in the renter population is also a direct result of new multi-family construction in the City. The biggest impediments to homeownership have been slow-growing wages and rising student debt (particularly among young, potential first-time home buyers), as well as limited inventory. New home construction ground nearly to a halt during the recession, and single-family home building activity—including townhouses—is still very weak in Rockville. Options for first-time home buyers remain fairly limited in the City. Housing Affordability