From left: John Sinnott of Struever Bros., Michele Caprio of the R.I. Association of Realtors, Sharon Conard-Wells of West Elmwood Housing, Scott Wolf of Grow Smart Rhode Island and PBN Editor Mark S. Murphy at a discussion on affordable housing.
Since the late 1990s, housing costs have risen far faster than wages. The median selling price of a single-family house in Rhode Island more than doubled between 1998 and 2004, from $126,000 to $264,700, while the median household income rose by about 10 percent, to an average of $47,021 for 2003 and 2004.
On March 16, as part of its Economic Agenda series, the Providence Business News hosted a panel discussion on the housing affordability issue and how to address it.
“I’ve never seen the housing situation in this state so severe, or such a gap between the average income of people in the state and the average price of homes,” said Scott Wolf, panelist and executive director of Grow Smart Rhode Island.
Citing a report last year by the HousingWorks R.I. coalition, Wolf said Rhode Islanders with a household income of $75,000 can afford to buy a median-priced home in just six of the state’s 39 communities, while households with an income of $100,000 can buy the median-priced home in 20 of the 39. “People making $50,000 or less are really up against it, and even people considered upper middle class are struggling,” he said.
Panelist Sharon Conard-Wells, executive director of the West Elmwood Housing Development Corporation, said her nonprofit group tries to quell the financial pressures that high housing costs put on Providence’s West End residents by providing affordable housing and loans.
“The housing that we do is not necessarily driven by traditional market demands,” she said. “We look at what’s going on in the neighborhood and see what are the issues we need to address, so that we can provide houses that will allow people who are there to stay.”
West Elmwood also builds mixed-income developments, with lower-priced units that the working poor can afford, and others at market prices.
Michele Caprio, president of the Rhode Island Association of Realtors, which represents 5,000 real estate agents, said affordable housing is important because “homeownership is one of the primary sources for people to actually build wealth, so anything we can do to promote homeownership and promote the individual building of wealth is, I think, very significant.”
In addition, she said, if fewer people can afford to buy homes, the state might have trouble attracting businesses, because workers might not be able to afford to live here.
Wolf said one cause of the high cost of housing is that Rhode Island is being discovered by Bostonians, who see the state’s real estate as a low-cost alternative to what’s available to them in their city. There also are people moving in from the south “who are discovering that the Rhode Island coastline is less developed than the Jersey coastline or the Cape, and they’re buying second and third homes.”
“We’re not increasing our supply adequately,” Wolf said. “With limited supply and demand is going up, supply isn’t expanding to meet the demand. It’s simple economics.”
John D. Sinnott, senior development director for Struever Bros. Eccles & Rouse, said the company is having little trouble filling 143 rental units at its Rising Sun Mills mixed-use development in Providence.
About 90 percent of the units are spoken for by empty nesters, young single adults and single parents, said Sinnott. The average rent for a 1,000-square-foot apartment is about $1,300.
“There is a growing trend back toward urban living,” he said. “A lot of people like to be able to walk to work, walk to shows. Building in an urban setting … you’re cutting down on traffic and congestion, cutting down the urban sprawl out in the suburbs.”
Wolf said that although many of the residential units being developed probably aren’t affordable for the average worker, the plus side is the ripple effect adaptive reuse projects such as Rising Sun Mills could have.
If the project attracts talented professionals from surrounding states, those professionals could start businesses that create jobs, he said. It also increases the state’s tax revenue, which can be used to improve education and aid for the working poor.
Asked what the state and cities can do to increase affordable housing, Wolf said: “At the local level, there needs to be much more flexibility about density in appropriate locations. … Density can be our friend. It’s not always our enemy.”
Conard-Wells said nonprofit developers do not have access to some of the tax breaks that for-profit developers get. She said that issue needs to be examined, as well as the income guidelines that determine who gets help with housing costs. People with incomes just above the maximum levels allowed for assistance are most at risk.
“If we can find ways to keep rent low enough, we can provide housing for those people,” she said. “That to us is affordable housing.”
