Workforce Housing is Critical to Houston’s Economic Future

August 2015

Houston’s ability to continue to attract young people, particularly within the creative class, is key to its long-term economic sustainability. Recent studies on Houston’s demography reveal that over 80% of the population growth within the Greater Houston region following the 2009 recession has occurred in the suburbs. Data from the Census Bureau revealed that while the population of the Houston region grew by approximately 156,000 in 2014, the City of Houston only accounted for 36,000 new residents. This continued trend of Houston’s diminishing role as the main driver of population growth for the region raises concerns about the City’s ability to maintain the growth of its economy and the City’s tax base over the long run.

Houston’s ability to sustain across-the-board growth is tied to its ability to continue to attract employers and new residents within the city limits. Employers need to know that their workforce will have ample affordable housing options, and can live close enough to work, where traffic and the transportation costs do not become major deterrents, particularly for the working class. According to a July 2015 Houston Business Journal report on Houston’s largest private employers, 7 of the top 10 are in industries where the average worker is paid hourly, and earns somewhere between minimum wage and $42,000 annually; the top three being HEB, Landry’s Inc, and Academy Sports + Outdoors.

The Census Bureau, and Bureau of Labor Statistics 2015 data show that, of the approximate 804,000 households within Houston city limits, 456,000 take home less than $50,000 annually. To make it even more plain, the median income within the city of Houston is estimated at $45,000, which means 50% of residents make above that amount, while the other half is below that number. At a median income of $45,000, the average resident is not able to afford a mortgage for the median home value of $159,000 ($187,000 was the median home sales price reported by the Houston Association of Realtors for June 2015). With the average rental price of a new one bedroom apartment ranging north of $1,200, working class families are millennials are left with a tough financial balancing act.

The City of Houston can get ahead of the curve and maintain its competitive edge by tackling the issue of workforce housing head-on. City leadership must prioritize development of workforce housing as a critical component of securing Houston’s economic future and growing the tax base. The City should take steps to leverage its existing land and financial resources to encourage development of workforce housing. Chiefly among these would be selling existing surplus land at a de minimis amount to workforce housing developers, rather than selling it off to balance its budget as it has done over the last five years. Next, the City also needs to leverage its federal housing funds and involve Tax Increment Reinvestment Zones (TIRZ’s) in partnering with developers to spur development of workforce housing throughout all parts of Houston. Furthermore, the city should prioritize development of workforce housing in areas where it’s making significant infrastructural investments and in areas within proximity of major employment centers.