Every industry and market has been impacted by COVID-19 in some way, often negatively. The pandemic disrupted supply chains and drastically altered consumer behavior. Industries like hospitality and travel have been decimated. While transportation, warehousing and the manufacturing of personal protective equipment and sanitation products sky-rocketed.
One particular market that re-bounded and even surpassed pre-pandemic levels is the housing market. Ady Advantage’s proprietary and forward-thinking research identifies housing as one of the four key barriers to the attraction and retention of talent. Accessible, affordable housing plays a key role in attracting businesses. When housing is available to a variety of income levels, employers can attract and retain employees at all levels. Consider the following trends and insights we’ve uncovered in our research.
- Millennials comprise the largest share of home buyers. According to the National Association of Realtors, millennials account for 37 percent of home-buyers.
- Even pre-pandemic, Millennials and younger Gen Xers were fleeing big cities in search of cheaper housing, better schools, and a warmer climate. Many are choosing to relocate to the South and West.
- With the COVID-19 pandemic in a continuous cycle of surging and abating across the country, the importance of housing has increased. People are physical distancing and predominantly doing so at home. Which by extension, has led them to place a higher value on their housing situation.
Construction and Inventory
- Costs of construction materials are a significant barrier to the development of new housing, especially low to mid-range housing properties.
- Many developers prefer to construct high-end housing properties because they are “easier” to build and can offer a higher profit margin than multiple, lower-cost units.
- The current low inventory of available housing in communities across the country is running head-first into an increase of demand. The result is prices rising beyond what many can afford. Real median household income has not kept pace with median home prices, benefiting existing homeowners and heightening the barriers for first-time buyers.
Geography and Housing Policies
- Significant disparities impact housing affordability across local markets, with coastal cities experiencing some of the most severe housing affordability challenges.
- Local policies and procedures around permitting, building codes, zoning and other regulations in many communities still act as artificial constraints on housing development and growth.
- Local governments increasingly play a proactive role and developing new incentives or re-tooling existing ones to incent housing development in their communities – a role that many municipalities have not had to play in twenty or thirty years. These include tools such as tax increment financing and tax abatements.
- There is an increasing recognition that the market has failed and will continue to fail to address the housing needs of local workforce if left to itself.
Here at Ady Advantage, we anticipate demand for housing to continue to rise, and for the housing availability and affordability crisis to continue as a result. However, there are steps economic developers can take to address the challenges and opportunities related to housing in their communities. Reach out to Ady Advantage today. We look forward to discussing how we can help your community address its housing needs.