Resources and Tools
by Kristen E. Humphrey, MLA, Local Assistance and Training Planner
In the January edition of Planning Practice Monthly, we introduced the Maryland Housing Needs Assessment & 10-Year Strategic Plan (Needs Assessment) and how it can be of value to Maryland jurisdictions in developing the required Housing Elements in their comprehensive plans. In February we summarized Section 2 of the report dealing with proposed statewide priorities.
This month, we are summarizing Section 3. State of housing in Maryland and in April Section 4. Needs by region & core actions to address them. In May, we’ll review Section 5. Maryland Housing Toolbox.
Finally, beginning in June, we are planning a series of “how-to” articles for local governments seeking to incorporate the information and recommendations found in the Needs Assessment into the required housing element section of their comprehensive plans, as specified in HB 1045 (2019).
As Such, Planning is seeking input from jurisdictions that have already employed the Needs Assessment as a guide for developing their housing element, or that are embarking on the process, and would like to partner with the Maryland Department of Planning (Planning) on an informative article on this topic. Interested readers may find contact links at the end of this article.
Summary – Section 3. State of housing in Maryland
Section 3 takes a deeper dive into statewide housing trends. It looks at both supply- and demand-side issues affecting renters and homeowners and assesses future trends through the year 2030. Considering the Needs Assessment was released in December 2020, both the data which are largely based upon 2017 American Community Survey (ACS) numbers, the assumptions about future trends are caveated based on the not yet fully known effects of the coronavirus pandemic on the economy and the housing market. (Needs Assessment p. 13/PDF p. 18.) Please visit the State Data Center website for more current ACS data.
Interestingly, around the time of Needs Assessment publication in late 2020, the housing market in Maryland appeared to have greatly heated up. During this period the supply of homes for sale and average days on market decreased, while home prices increased.
The recent supply chain issues affecting the cost and availability of building materials and equipment, as well inflation, may continue to impact home prices as well as home sales, as may any longer-term effects of the pandemic. Regardless, a growing lack of affordable housing across Maryland appears to be indisputable with only a few parts of the state having a surplus of units at the 30 percent and 50 percent AMI (Area Median Income) levels, which are defined as extremely and very low-income households by the US Department of Housing and Urban Development (HUD).
Statewide housing trends 2020-2030
According to Section 3 of the Needs Assessment, changing demographic, economic and market trends will affect future housing needs in Maryland. First, Maryland households are anticipated to increase by eight percent by 2030, from approximately 2.3 million in 2020 to 2.5 million. Most of this growth will be concentrated near job centers in the central parts of the state and, in general, will be made up of households with fewer individuals. Significantly, this projected growth will be among households with very low- and extremely low-income that would result in approximately one-third of households being “housing cost-burdened.”
Next, the state’s population, consistent with the rest of the country, is aging. Seniors make up 14 percent of the population (compared to 11 percent in 1990 and only eight percent in 1970). Numbers of residents over 85 have increased 500 percent since 1970, while those under 18 have decreased from 35 percent in 1970 to 22 percent in 2017.
Similarly, the numbers of people living with disabilities have increased dramatically, making up 11 percent of population. In perspective, between 2010-2017 the number of Marylanders living with a disability have increased 12 percent, whereas the total population of the state increased by just 5 percent.
Additionally, Maryland is becoming more ethnically and racially diverse. Nearly all the state’s population growth since 2000, more than 700,000 people, can be attributed to an increased share in the number of people of color (see Figure 1, right). Approximately 57 percent of households are White; Black households make up 30 percent; Hispanic households, 10 percent; Asian households, 6 percent, and all others, also 6 percent (with 3% identifying as more than one race) (pp. 16-17/PDF pp. 21-22).
Showing steady across the state, job growth has been greatest in the Washington, DC suburbs, Southern Maryland, and the Greater Baltimore regions, while there has been a decline in employment in some western rural counties and the Lower Eastern Shore.
Similarly, household incomes have grown modestly across the state; however, this growth has also been concentrated in the state’s central regions with some declines in rural counties. Median income becomes critically important when compared to increases in rent and home prices during the same period (see Figure 2, below).
As a measure of the strength of the housing market, the numbers of single-family housing building permits issued are often referenced. These numbers have varied considerably over the past 20 years, especially given the collapse of the housing market in 2009 but have trended upward more recently. Construction of single-family homes equaled roughly three-quarters of permits over the same period; however, they made up closer to two-thirds of residential permits over the past five years. Conversely,multi-family building permits have been largely steady, increasing from one-quarter to one-third of the market in the past five years (p. 18/PDF p. 23).These trends may be reflective of both changes in household size, make up, and housing costs outpacing household incomes (see Figure 2, above).
Two areas, Greater Baltimore and the Washington, DC suburbs are expected to gain the most households and residents over the next ten years, adding roughly 60,000 households each out of a total of 178,000 throughout the state.If current distribution patterns remain the same, more than 97,000 households will be in the extremely and very low-income household brackets. Among these households, more than half or 49,000 households will earn less than 30 percent AMI. These trends suggest a corresponding increase in competition for affordable housing and higher levels of housing-cost burdened households (p. 19/PDF p.24).
About one-third of all households are renters and roughly 59,500 new renter households are expected to be added to the state by 2030. Median rent rose by 34 percent between 2010-2017 (see graphic above), with all but two counties experiencing increases of at least 20 percent. This has been driven by factors including an increase in population and only moderate growth in multi-family housing construction. All but three counties have insufficient affordable housing (p. 21/PDF p. 26).
Almost 50 percent of all Maryland renters are cost-burdened.Greater than 88,000 extremely low- and very low-income households in total are housing cost-burdened, with 13 of 24 jurisdictions having inadequate supply of housing for very low-income renters. Additionally, the percent of moderately cost-burdened renters increased from 18 to 23 percent between 2000 to 2016 (pp. 21-23/PDF pp. 26-28).
Section 3 identifies four main programs that support renters either directly via financial assistance or indirectly through the preservation, stabilization, or creation of affordable units: the Rental Housing Program; Low-Income Housing Tax Credit; Rental Housing Works Program; and Housing Choice Voucher Program.
Additionally, the report identifies opportunities for new or expanded state programs/policies in support of the state’s renters, such as increasing financing available to renters through state programs and offering capacity-building and technical assistance support to local housing providers (p. 24/PDF p. 29).
The Needs Assessment’s analysis demonstrates that overall, homeownership has become more expensive over the past 20 years, after adjusting for inflation, and factoring in the housing market crash and Great Recession. In 2030, more than 118,000 out of 178,000 new households are anticipated to be homeowners, and the majority of these will reside in the Washington, DC suburbs and the Greater Baltimore region (p. 25/PDF p. 30).
While the median home value was $296,500 in 2017, which was 50 percent higher than in 2000, and more than $100,000 more than the national average, this does not tell the whole story:
- More homeowners are cost-burdened than before the Great Recession in 2007
- Although they have dropped statewide, rural counties continue to have higher rates of foreclosure, delinquency and short sales.
- Resales of existing homes accounted for 84 percent of total home sales in 2019 while new units equaled 10 percent. (The remaining 6 percent of sales were either short-sales or Real Estate Owned (REO) sales.)
- Despite an overall 21 percent increase in home sales in 2019 from 2015, increases at the county level ranged from a high of 43 percent to a low of just 2 percent.
- Other signs of a distressed market include an increase in pre-foreclosure filings around the state and disproportionate numbers of “underwater” home loans (i.e., having negative equity) in Baltimore City and Prince George’s County.
- Homeownership in Maryland remains harder to obtain for several ethnic and racial minorities as it does for women, as revealed by higher home loan application denial rates for these populations (pp. 25-26; PDF pp. 30-31).
While the percentage of cost-burdened homeowners is significantly smaller than the percentage of cost-burdened renters, nonetheless a full quarter of all homeowners in the state are cost-burdened: 15 percent of homeowners are moderately cost-burdened and ten percent are severely cost-burdened. Again, the proportion of homeowners who are cost-burdened is greater among certain minority households with 28 percent being Black, while only representing 22 percent of all homeowners, and seven percent being Hispanic while representing only 5 percent of all homeowners (Needs Assessment p.28).
Section 3 concludes with a description of the major programs supporting Maryland homeowners, (including the Maryland Mortgage Program, MD HOPE Network, and the Special Targeted Applicant Rehabilitation (STAR) Program) and lays out a series of opportunities for new or expanded programs and policies. Some of these opportunities are: increasing funding for down payment assistance and creating a more flexible Maryland Mortgage Program; expanding loan products for combined home purchases and rehabilitation; and forging partnerships to serve underserved homebuyer populations (p. 29/PDF p. 34).
The information covered in this section of the Needs Assessment illustrates the importance of understanding factors affecting the supply side (availability of affordable housing), and the demand side (needs the population being considered), as driven by market trends, demographic changes, and even geographic proximity or distance from growth centers around the state. Having a sense of the forces at work on a state level will prove valuable information in developing a picture of what is happening at a regional or local level in formulating or amending a jurisdiction’s housing element as part of the comprehensive planning/updating process.
Planning and DHCD encourage all planners to read the Needs Assessment, as it includes a wealth of information about how each community can address the challenge of providing affordable housing to its current and future residents. Be sure to check out our upcoming April 2022 edition for the next installment of our Maryland Needs Assessment summary covering Section 4 – Needs by region & core actions to address them!
For more information about the 2020 Maryland Housing Needs Assessment and 10-Year Strategic Plan, please contact Bernice Mensah, Director, Housing Economic Research Office, Maryland Department of Housing, and Community Development at email@example.com, or Joe Griffiths, Planning Assistance and Training manager at firstname.lastname@example.org.
 “The coronavirus pandemic accelerates Maryland home buying, increases median prices, again in November.” Hallie Miller, Baltimore Sun, December 15, 2020.
 An increasing number of Marylanders are “housing cost burdened” and “severely housing cost burdened” which are defined by HUD as spending greater than 30% and 50% respectively of household income on housing costs.
 Homeowners who pay more than 30 percent of their income on housing but less than 50 percent are “moderately cost-burdened,” and homeowners who pay at least 50 percent of their household income on housing are “severely cost-burdened” as defined by HUD.
 The Housing Needs Assessment identified some of the lowest home sales during this timeframe occurred in counties with the highest prices such as Montgomery and Howard counties, indicating that fewer houses at an affordable rate were available in those areas than perhaps ever before (p. 25, PDF p. 30).
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