The impact of housing affordability on the economy
The potential to address inequality increased employee retention and productivity, chances for economic development, increased tax generation, and increased access to excellent, affordable housing are just a few of the economic advantages. According to a 2004 study, there is a negative correlation between high housing costs and worker productivity, retention, and recruitment. This harms businesses and the local economy. Since then, the effects of the country’s high housing costs—both for renters and homeowners—have only worsened. Everyone benefits when local, state, and national economies are released from the drag caused by home affordability issues. Learn more about some of the economic effects of housing from these economists, housing professionals, and public officials.
Pittsfield is a 45,000-person post-industrial New England city that is undergoing reconstruction following a protracted period of economic collapse. We had to work hard to develop a broad economy because we were a community with just one enterprise. We can observe how neglecting to invest in a number of our communities with high concentrations of poverty reduces the housing’s worth. Our focus must now shift to local reconstruction.
People may be unable to afford to live in a neighborhood as housing costs rise, therefore they may relocate further away. People may be deterred from working in positions paying greater earnings by moving farther away from hot markets. This makes it difficult for companies to hire staff and is bad for regional economies. Because less-educated and lower-income households are more likely to be unable to purchase housing in denser, higher-cost locations, the greater cost of housing in markets with higher incomes also may be worsening income disparity. The drag on the economy and its contribution to increased income disparity are playing out on the national stage, even though local decisions may be important factors in the rising cost of housing.
Attracting and keeping business and manufacturing
“Home affordability is an economic issue. Take Indiana, my state, which is one of the top manufacturing states in the Midwest.
“Manufacturers have been screaming because they have the factory jobs, but the communities where they do business don’t have enough affordable workforce housing — homes between $100,000 and $250,000. We have a giant auto plant in Southern Indiana but not enough affordable housing to keep up with the demands of the manufacturer or the vendors that work with them. The bankers are screaming because they have money to lend to families, but there’s not enough housing that the workers can afford.
The Chamber of Commerce is saying, affordable housing doesn’t just help families — it helps the local government. When we get families into homes they can begin paying property taxes. And if they have a home that they can afford, they have more expendable funds to spend on food and other consumer goods. They help local businesses because they can afford to eat in restaurants and shop in stores.
Additional “hidden” costs
To answer the question, “What health care and educational costs could be avoided if all families with children lived in a stable home,” we have used part of our studies from Children’s HealthWatch, a research policy network centered at Boston Medical Center. We calculated the amount to be $111 billion over ten years.
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