Workforce Housing - History

History

The concept of workforce housing has its early roots in the ski towns of Telluride and Aspen, Colorado. In 1974, in response to locals not being able to purchase homes due to the disparity between wages and the cost of homes and land rising sharply due to buyers from New York and Hollywood, a conference was organized at the Aspen Institute. In Aspen a plan was developed to create a secondary and separate "local worker" housing market which was based on local wages and affordability. One standard tool invented to create affordably priced homes for local workers that would stay affordable for future generations was a deed restriction, which in its most simple form states that to qualify for purchasing a home the applicant must live in the community, not own another home in the community, must work essentially full-time and must have lived in the community for a minimum period of time. Also, the owner can only sell the home to someone that meets the same criteria. Later provisions added over the years of "trial and error" include income restrictions to qualify, and cap rates on the amount of profit an owner is allowed to make in order to guarantees that the home will remain affordable forever. Three per cent per annum has been a justifiable number over the years.

The workforce housing problem seemed to be an anomaly in the ski resorts, made worse due to limited land for development due to mountains and federally owned land, which made "sprawling" unrealistic. Instead, it seems to have been a precursor to the problems now facing vacation communities and metropolitan areas all around the country and the world. In the early 2000s record low mortgage interest rates spurred a nationwide surge in housing demand. Record housing construction and record housing prices in many communities drove land costs higher. Construction materials and labor costs, propelled by disastrous hurricanes in 2004 and 2005 that damaged or destroyed hundreds of thousands of homes in Florida and on the Gulf Coast, amplified the problem to create a critical dilemma: in many communities, average income households cannot afford a median-priced home. For a while, the low interest rates and availability of creative financing options bridged the gap between housing costs and income for some households, enabling people to obtain mortgages that consumed more than 30% of their income or to use rising equity in their home to compensate for the affordability gap. The subprime mortgage crisis and current economic downturn raise questions as to the ability financing tools and private developers to effectively solve current or future affordable housing shortages.

Housing has played an important role in economic advancement and the growth of America's middle class. Federal housing policy has at times in the past created programs to assist the population currently targeted for workforce housing. For instance, after World War II the needs of returning veterans and the baby boom led to the GI bill which included provisions for favorable mortgage terms and fueled suburban development, creating affordable home ownership opportunities for a generation of Americans. Public housing projects also provided rental housing to many urban families. In later decades means-testing, white flight, and mismanagement would change the nature and perception of public housing, but in mid-century America they were still providing quality, affordable housing to thousands of working and middle-class families.