Compounding Interests, Compounding Inequities


Chapter 2The Charge to Local Government

September 11, 2019 was a great day for the Washington Region. After a year-long effort by local planning and housing director staff, the Metropolitan Washington Council of Governments (MWCOG) adopted three regional targets on housing, agreeing to collaboratively address the area’s production and affordability challenges. The collective action, outlined in a resolution approved by the MWCOG Board of Directors, set out to determine:

  1. How much housing was needed to address the region’s current shortage and whether the region could produce more.
  2. The ideal location for new housing to optimize and balance its proximity to jobs; and
  3. The appropriate cost of new housing to ensure it is priced for those who need it.

In addition to setting regional targets, the resolution called on officials to work within their communities to adopt local-level targets on production, accessibility, and affordability. It also emphasized the need to work closely with the non-profit, private, and philanthropic sectors in achieving these goals.

The Urban Institute also released a study in the same month, “Meeting the Washington Region’s Future Housing Needs.” The analyses are complementary, and they both quantify the projected housing needs in the region in the coming decade. Both studies come to similar conclusions about the general magnitude of the issue: future housing needs far outpace recent housing production trends, and affordability levels should be targeted for this new housing stock so it can align with the needs of the region’s future population growth.

The MWCOG analysis provides a regional target of 320,000 net new housing units between 2020 and 2030, 75% of which should be located in Activity Centers or near high-capacity transit, and 75% of which should be affordable to low- and middle-income households. The Urban Institute report identifies the need for approximately 375,000 net new housing units between 2015 and 2030, about 77% of which should be affordable to households with middle-income levels and below.

While the reports have similar findings, there are some key distinctions. The MWCOG targets call for an additional 75,000 units above what was forecasted in the 9.1 Cooperative Forecasts, while the Urban Institute targets are benchmarked to the 9.1 Cooperative Forecasts for household growth. In addition, the MWCOG targets cover a 10-year period (2020 to 2030), while the Urban Institute targets cover a 15-year period (2015-2030). Based on these two differences, the Urban Institute targets are conservative relative to the MWCOG targets from an annual perspective. MWCOG targets call for approximately 32,000 net new housing units per year, and the Urban Institute targets aim for approximately 25,000 net new housing units per year.

Despite these differences, both sets of targets provide a valuable lens on how the region can position itself to accommodate future housing needs. Forecasts are never perfect, but they do provide useful guidance for policy making and planning for the future. The Urban Institute targets serve as the foundation of the HIT for several important reasons:

  • Specific price bands: A key characteristic of the Urban Institute forecasts is granularity. Each housing target is broken down into specific monthly cost price bands that are based on affordability by household income. This level of detail is critical for local policy makers as it sheds light on not only the quantity of housing needed, but also the depth of affordability that will be needed in each local housing market.
  • Jurisdiction-level targets: While the Urban Institute study was regional, the targets within the analysis were at the jurisdiction level. This is important because the HIT is designed to be a regional tool that is driven by collective local action.
  • Benchmarked to 9.1 Cooperative Forecasts: The Urban Institute targets are benchmarked to the 9.1 MWCOG Cooperative Forecasts. This is significant because it connects the targets directly to locally produced forecasts within each jurisdiction.
  • Consistent methodology for all localities: The targets for each jurisdiction were created using the same methodology and data sources. This allows for an “apples to apples” comparison over time. Each jurisdiction is being measured using a standardized analysis of future housing need.
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