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Growing regional economies by increasing the supply of housing

I led a panel at the Virginia Governor’s Housing Conference last week, where the conference theme was “Housing: Building Strong Economies.” In Virginia, along with most of the rest of the country, local

jurisdictions are tackling challenges associated with rebuilding their

Housing affordability should be a key component of local housing and economic development strategies.

economies in the aftermath of the recession. Housing—as evidence by the emphasis of the Virginia conference—is often talked about as being critical to promoting economic growth.

At the local level, there has been a great deal of analysis of how the development of affordable housing spurs local job growth and economic activity. Building affordable housing does, in fact, create jobs and encourage spending and local revenue both during and after the construction period. So, too, does building market rate housing or commercial development projects.

Is there another perspective on how housing is important to economic growth? This question was the basis for my conference panel at the Virginia housing conference. Without discounting the direct and induced economic impacts of affordable housing development, I propose a shift in the focus of the discussion. The availability of housing affordable to people along the income spectrum is an important building block of strong, resilient regional economies. Along with a robust transportation network, good schools, sound government, and an open business environment, housing affordability should be a key component of local and economic development strategies.

We worry about what will happen to our economy if those other pieces go missing or are insufficient. If we don’t have a strong employer base and a business-friendly environment, we lose jobs and our economy suffers. If our transportation system is a mess, we recognize the impact on quality of life and the region’s attractiveness to businesses. If our schools are deficient and we are not preparing the future workforce, we worry about our competitiveness. When our local government is poorly run, we know that is an obstacle to attracting private businesses. We talk about these things—and sometimes we try to fix them—because we know that they are important to attracting and retaining a diversity of businesses that lead to a robust and vibrant regional economy.

But we seldom talk about how an insufficient supply of housing can serve as an obstacle to economic growth.

What could we expect if there is an insufficient supply of housing that is affordable to workers along the income spectrum?


  • Workers are not able to live close to their jobs so traffic congestion increases, which decreases worker productivity and makes it a less efficient place for businesses to locate.
  • Businesses have a hard time attracting and retaining workers who can’t afford to live in the region, so they seek to locate elsewhere.
  • Resident-serving businesses (e.g. grocery stores, restaurants, dry cleaners) have difficulty hiring local workers so local businesses disappear and prices for everyone in the community go up.

In the session I moderated, housing practitioners and advocates from Arlington, Richmond and Virginia Beach talked about how regional efforts to increase the supply of affordable housing need to bring the economic development and business community into the discussion, and that it is the responsibility of the housing community to help them understand that affordable housing is a “bottom-line” issue. Some of the questions that were raised at the session included the following:

  • How can data and research bring business groups to the table around affordable housing? Specifically, how can we quantify (and monetize) the link between a lack of housing and reduced economic development potential?
  • What are the specific roles that can be carved out for chambers of commerce or economic development departments in the housing planning process? How can we identify and foster a champion in the business community?
  • How can models from around the country—including the Silicon Valley Leadership Group—be modified and built up in some regions?

What are your thoughts on this approach to the link between affordable housing and economic development? Are you having these conversations in your jurisdictions?

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