In earlier posts, I outlined where Montgomery County stands in terms of jobs and wages, discussed the related issue of income inequality and pointed out that the older segment of our population is going to grow disproportionately to other age groups over the next two decades.
Now let’s assess the past and future rate of population growth, job openings and housing construction, and the relationship of these factors to lagging wage growth in contributing to one of most significant economic challenges: a shortage of affordable housing.
Population and job growth
Before we can evaluate how much new housing and office space is needed in the future, we first have to understand how many people (and jobs) we might reasonably expect to live and work in Montgomery County. You might be surprised to learn that the rate of population growth is now – and is expected in the coming decades to be – less than 1 percent a year, a rate well below historic levels. This chart shows the average annual population growth during each decade since 1950, with projections for the future:
Of course, even a slow rate of growth adds up to a lot of people when we’re starting from a current population of almost 1.1 million. An anemic rate of population and job growth over the next three decades would still imply around 200,000 more residents by 2040:
These projections are based on econometric models that rely on relatively conservative assumptions about job growth (no Amazon headquarters, no new dot com boom, no striking oil in the backyard). In fact, if the regional economy generates substantially fewer jobs than these forecasts predict, we will be dealing with economic stagnation. In other words, our growth rates are modest, and if they were any lower we would be confronting much more difficult problems.
Housing Supply
If you drive down Georgia Avenue through Silver Spring or travel on Wisconsin Avenue through Bethesda, you might think Montgomery County is experiencing a building boom. The sky is filled with cranes, pedestrians and drivers contend with lane and sidewalk closures, and apartment buildings seem to be going up everywhere you look. The highly visible development activity in our downtowns obscures the bigger picture reality, which is that the rate of new housing construction is well below levels typical of recent decades and is not nearly enough to keep up even with moderate rates of population and job growth.
In my next post, I’ll explain how this constrained supply affects housing costs.
Laura
Why are the population numbers estimates? Don’t we KNOW? If there’s not enough housing, and the population is actually decreasing or growing extremely slowly, why is every place so crowded and why is everyone clamoring about things being over crowded? Most people I know do NOT want Amazon here, it will just add to the problems. We need space and farm-to-table and parks and trees and NOT more buildings, outlet malls, shopping centers, strip malls and the like. We do not need more people in this county.
Bridget Schwiesow
The best measurement of the population is the census, which takes place every ten years. The Census Bureau provides a mid-cycle update with the American Community Survey, which does not include a comprehensive count but provides a pretty good estimate. As for parks and open space, I plan to cover those topics in a future post.
Herb
How are multi family and single family defined? Is a townhouse community multi family or single family? Or in other words do single family homes have to be completely detached to be classified as single family?
Re population growth the chart shows a forecast of a .7% growth rate for Moco from 2020 to 2030 which would mean a 7,300 increase. (.007 x 1,052,000). yet the growth projection chart shows a 70,000 increase. (1,052,000 to 1,128,000) What am I doing wrong?
Casey Anderson
Herb –
I think you are one place off with the decimal point, i.e., seven percent is .07. Townhouses are classified as “single family – attached.” Note that the colors of the bars distinguish single from multi family units, but the total (the height of each bar) is based on the overall number of units (so a single family house or one townhouse is one unit, while a building with 200 apartments is 200 units).