Housing crisis impacts business

The topic was an impending housing crisis, one that not only manifests itself in a lack of affordable housing, but also in a lack of housing supply for middle-income earners.

The summit, hosted by Fleet Bank’s Neil Steinberg, was held to engage business and government leaders in a discussion of housing and its correlation to economic development.

That correlation to economics must not go unnoticed.

In his budget address, Gov. Don Carcieri outlined a job creation strategy that calls for 20,000 new jobs through the expansion of current business and the relocation of new businesses to the state. The plan targets for 5,000 new jobs to be created through 2007.

In that same address, Carcieri highlighted the need to increase the available housing to attract and retain businesses.

That need for housing is of paramount importance if the governor’s bold job-creation goals are to be met.

According to the R.I. Public Expenditure Council, 700 new housing units are needed per 1,000 jobs created. In the 10-year period between 1990 and 2000, Rhode Island experienced 8-percent household growth. However, the state only produced a 6-percent increase in housing units, RIPEC reports.

Simply put, there aren’t enough houses being built – and too many houses on the market are commanding prices that talented young professionals cannot afford. It is a formula that makes it more difficult for companies to recruit and retain the best and brightest workers available.

“This is seriously related to both the recruitment and retention of employees,” said Peter Marino, RIPEC’s director of policy. “For the person making $50,000 to $60,000 per year … it is a very difficult purchase.”

We see the recent economic summit as a good start. We commend Fleet Bank and the other participants for bringing attention to such an important issue.

Fleet has also made a commitment to fund a housing economic impact study and plan. The study is expected to analyze the real economic impact of housing, including projections for the supply necessary to support business expansion.

We look forward to seeing that plan and we join Fleet in challenging the business community to continue the housing crisis dialogue. It is very much a matter of economic development and job creation.