THE MARKET FOR AFFORDABLE HOUSING IN TAOS Bureau of Business & Economic Research Jeffrey Mitchell, Ph.D. July 12, 2011 Funded by: Town of Taos University of New Mexico – Taos

Housing Costs The majority of those in the workforce are unable to afford market-priced housing in Taos County. About 12% of households could afford the median price of a market home (about $300 thousand). Only about 5% of households employed in Taos County could afford the median price of a market home. UNM Bureau of Business & Economic Research

Capacity to Pay vs. Cost of Housing UNM Bureau of Business & Economic Research Gap between two lines represents shortage of affordable housing.

Causes of Housing Crisis Two underlying causes: Demand for housing by seasonal residents drive up property (esp. land) values. Supply of land is constrained by state regulations and limited development of services (water & sewer). Slowdown in the market is NOT a cause. UNM Bureau of Business & Economic Research

Household Responses to Housing Crisis Households respond to high cost of housing in three ways. –Publicly subsidized housing –Substandard housing (esp. trailers) –Subdivision of family land These strategies are not sustainable. Without effective, intervention high cost of housing will limit labor supply and long term economic growth. UNM Bureau of Business & Economic Research

Future demand for affordable housing Optimistic scenario – growth of middle income employment base (professional & business, healthcare and education services) –Est. demand for 250 low-income units (monthly costs <$850) by 2018 and strong demand of affordable owner-occupied units ($160k-$200k). Pessimistic scenario – continued growth of low income employment in hospitality & construction. –Estimated demand for 1,500 low income units by UNM Bureau of Business & Economic Research

Recommendations Economic development that emphasizes higher paying jobs, increasing the capacity of workforce to affordable available housing. Increase the supply of land available for residential development. –Extend water & sewer infrastructure. –Encourage higher density residential development on serviced land. –Town & County collaboration. UNM Bureau of Business & Economic Research

THE MARKET FOR AFFORDABLE HOUSING IN TAOS Bureau of Business & Economic Research Jeffrey Mitchell, Ph.D. July 12, 2011 Funded by: University of New Mexico – Taos Town of Taos