Fairfax County Moderate Income Definition Project George Mason University Center for Regional Analysis Presentation of Report September 22, 2006

Purpose of Analysis Assess the County’s definition of moderate income in terms of its use for affordable housing programs

Factors and Findings Income Available for Housing NeedsIncome Available for Housing Needs Housing Supply and Costs in Fairfax CountyHousing Supply and Costs in Fairfax County Ability of Moderate Income Families to Afford Housing in the Fairfax County Housing MarketAbility of Moderate Income Families to Afford Housing in the Fairfax County Housing Market Other FactorsOther Factors ConclusionsConclusions

Income Available for Housing Needs

Based on consumer expenditure data, renter households in Fairfax County have approximately 22% of income available for housing after expenditures for food, transportation, health care and other items.Based on consumer expenditure data, renter households in Fairfax County have approximately 22% of income available for housing after expenditures for food, transportation, health care and other items.

From Median household income grew by 8.8%Median household income grew by 8.8% Average home price grew by 84%Average home price grew by 84% Average rent increased by 29%Average rent increased by 29% Costs of utilities and fuel grew by 26%Costs of utilities and fuel grew by 26% Costs of health care grew by 19%Costs of health care grew by 19%

Increases: 1999 to 2004, Fairfax %

Increases in Costs March 2005 – March 2006 U.S. Source: BLS, GMU Center for Regional Analysis %

Income Available for Housing Needs For households and families to maintain lifestyles given increases in costs, a 30% threshold for housing affordability is too high.

Variations in Income Needed by Family Size and type

“The Self-Sufficiency Standard for the Washington, DC Metropolitan Area 2005” Dr. Diana Pearce, University of Washington Prepared for Wider Opportunities for Women How much income would it take for families to live and work without public or private assistance or subsidies? – a measure of income needed to meet basic needs.

Summary Results of Standards Report for Fairfax County: 2005 Family Type Income Needed One Adult, One Child $39,000 - $52,400 One Adult, Two Children $46,300 - $75,300 One Adult, Three Children $57,900 - $103,900 Two Adults, One Child $54,600 - $68,100 Two Adults, Two Children $57,800 - $84,600 Two Adults, Three Children $66,900 - $110,700

Housing Supply and Costs in Fairfax County

Median Sales Price Existing Houses Fairfax County Source: MRIS, GMU Center for Regional Analysis $ + 129% Since 2000 All Housing Types

Number of Units Sold by Price Range Fairfax: All Housing Types Source: MRIS, GMU Center for Regional Analysis %

Share of Private Rental Market by Monthly Rent Level Range: , Fairfax County Source: MRIS, GMU Center for Regional Analysis %

Ability of Moderate Income Families to Afford Housing in the Fairfax County Housing Market

Household Income and Housing Price Divergence, 1995 – 2005 Washington Metro Area % Housing Price Income Long term compound interest rate increases, in current $: Income = 5.4%, Housing = 7.0%

Existing Housing Sales Affordable at 30% of Income, 2000 and 2005, Fairfax % 5% Down, 6.5% 30-yr mortgage

Percent of Income Required to Purchase Housing, 2000 and 2005, Fairfax % 5% Down, 6.5% 30-yr mortgage

Other Factors

Percent of Jobs in Fairfax Held by Resident vs In-Commuters % In-Commuters Residents

Households Relocating Outside Fairfax County IRS County-County Migration FilesIRS County-County Migration Files 2000 – 2004 from Fairfax County to:2000 – 2004 from Fairfax County to: » »Loudoun21,800 » »Prince William23,400 » »Fauquier, Spotsylvania, Stafford5,000

Conclusions

Income available for families to spend on housing has declined because of rising costs of other needs.Income available for families to spend on housing has declined because of rising costs of other needs. The “Self-Sufficiency Standards” report documents that many family types need incomes greater than the median to meet the basic needs.The “Self-Sufficiency Standards” report documents that many family types need incomes greater than the median to meet the basic needs.

Conclusions For-sale housing price increases in the past five years have made home ownership practically impossible for moderate income families in Fairfax, even at 120 % of median income.For-sale housing price increases in the past five years have made home ownership practically impossible for moderate income families in Fairfax, even at 120 % of median income. Rental market is now the only choice for moderate income families, and the rental prices now and next five years will see significant increases, at the 6-7 percent per year.Rental market is now the only choice for moderate income families, and the rental prices now and next five years will see significant increases, at the 6-7 percent per year.

Conclusions Analysis of the rent burden in the county shows that a growing share of households and families making more than 80% of median face significant affordability problems, especially larger families that face a reduced supply and higher costs of larger units.Analysis of the rent burden in the county shows that a growing share of households and families making more than 80% of median face significant affordability problems, especially larger families that face a reduced supply and higher costs of larger units.

Conclusions In the consideration of policy changes, there are large differences in the housing affordability situation between residents who bought several years ago and newer residents moving into the county.In the consideration of policy changes, there are large differences in the housing affordability situation between residents who bought several years ago and newer residents moving into the county.

Conclusions Trends in in-commuting and household relocation outside the county indicate that more must be done in addressing housing affordability if the County wants moderate income families to have living in the county as a choice.Trends in in-commuting and household relocation outside the county indicate that more must be done in addressing housing affordability if the County wants moderate income families to have living in the county as a choice.

Recommendation – Ownership Housing New policies and programs are needed if ownership housing is to be possible for moderate incomes and families.

Recommendation – Rental Housing There is a growing housing affordability problem for moderate income households, and the definition of moderate income should be expanded. Market conditions will be changing rapidly in the next 2-3 years, and the issue should be re-examined.