The Rent is Too Damn High in Montgomery County… And other changes in the last 20 years

Last week, the Montgomery County Planning Department released their report, “Montgomery County Trends — A Look at People, Housing, and Jobs Since 1990.” The aim of the report is to update the Montgomery County General Plan, first adopted as a guide to growth in 1964 and last updated in 1993.

If the left-wing of the political spectrum is to take power in Montgomery County, it will need to identify and understand the trajectory of the county’s growth. For that reason, below are a few interesting observations found in the report.

With a robust understanding of how, where, and why the county has changed, advocates for social justice will be better able to identify class struggle scenarios appearing on the horizon.

Montgomery County’s population is growing in numbers, diversity, and aging

A common theme of the report is that the county has not recovered from the 2007-2008 financial crisis. Family median household income has been stagnant since 2010 and not risen above its adjusted 1999 median income (Fig. 12)

Screen Shot 2019-02-02 at 9.23.27 AMThe highest household income areas of the county are, unsurprisingly, concentrated in the west, along the Potomac River and into Bethesda-Chevy Chase (Map 11).

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Inequality is growing with us

Popular talking points about Montgomery County include its status as a “minority-majority” county,  growing number of international communities, and diverse population. But this rhetoric is masking big differences in household income across subpopulations which point to disturbing levels of inequality.

African American and Hispanic households are less likely than white households to make over $100,000 a year, and they are far more likely to make below $50,000. The county’s median income is just under $100,000, but African American and Hispanic median household income is around $70,000. This inequality grew during the period studied.

White households saw the greatest income gains (12.4%) followed by Asian households (6.4%). Meanwhile, Hispanic and African American households each saw a drop in household income of 3.1% and 5.5%, respectively. The drop in African American household income is the largest since 1989.

The income divide between renters and homeowners has also grown. Between 1989 and 2016, the median income of rented households fell 2.1% while owner-occupied households increased their income by 6.5%.

For more on inequality in Montgomery County, we encourage readers to study this 2015 report by the Urban Institute.

The county is running out of new space to build, so homeowners are reconstructing their homes bigger, and at a higher cost to neighborhood affordability

The limited opportunities for development downcounty has increased the number of building teardown activity, particularly in Bethesda (Map 17). In single-family zoned areas, teardowns are not leading to more units. On the contrary, units are replaced one-to-one but at a larger size and greater cost. This is driving up the prices of surrounding neighborhoods and further increasing the inequality and exclusivity of the region.

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While single-family teardowns are not contributing to affordable housing, multi-family teardowns are successfully replacing existing affordable housing units with new Moderately Priced Dwelling Units (MPDUs), although there is some disagreement about exactly how “affordable” they are. County Executive Marc Elrich has been subject to criticisms which allege that he believes the County Planning Department is tearing down existing affordable housing, but people close to Elrich claim the criticisms stem from mischaracterizations of his words or actions.

One thing is made certain in the report regarding affordable housing: rents are rising. And while there is a lot of good in local urbanist Dan Reed’s analysis, on rents he appears to be inadequate, claiming, “[a]fter years of rising, rents have stabilized in recent years as new apartments are built.”

This is flatly contradicted in the report’s contention that “[e]ven with the increase in new development, rents have still increased significantly…asking rents per square foot having increased nearly 50 percent since 2000…” Figure 28. from page 62 of the report illustrates the rise in rent per square. Reed is a proponent of market-driven development strategies that rely on housing “filtering” from higher cost to lower levels of affordability over time with steady housing construction. This ideology may contribute to his missing the ever-increasing cost of rent.

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Rent is taking a larger and larger bite out of workers’ paychecks. Stagnant wages and rising rents have led to 40% of renters in the county paying 35% of their income or more toward housing. Adding insult to the absence of rent stabilization laws, the report admits there is “a challenge” to increasing the supply of deeply affordable housing to the growing population of cost-burdened renters:

MPDUs – the most reliable source of affordable housing production — are often out of reach for them, and often Low Income Housing Tax Credit (LIHTC) projects do not include a large enough share of low- to very low-income units, due to their expense.

This is a common criticism of strategies that rely on government padding the runway for the private market to build affordable housing — they cannot deliver the level of housing stock at the level of affordability necessary to solve the problem.

Rent is too high, wages too low

The growth of wages outside the federal government sector is relatively stagnant. Real wages for county-based jobs “did not improve appreciably between 1990 and 2016.” Only professional, scientific, and technical services fields that correspond to the well-educated incoming residents are growing — by about 2% per year.

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Surprise! The restaurant industry lied to you about minimum wage

A finding that should surprise no one is that the modest increases in the county’s minimum wage laws has not resulted in mass job loss. The report shows food service is keeping pace with the rest of employment growth in the county. 

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There is much, much more to the report that is worthwhile to consider. For example, there’s the embarrassing revelation that people choose to drive alone to work rather than carpool. Commuters are also choosing environmentally destructive solo car-travel over public transit by a wide margin (Fig.46).

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There are sections on commercial real estate, industrial land use, and housing structures and units across the county. The report answers why you can’t compare Montgomery County employment growth to Fairfax County, Virginia (employment in the latter is fueled by Defense Department employees and defense contractor employees — do we want a county of war profiteers?).

Concluding with retail, industrial and office land use, the report observes that declining federal spending has led to increased office space vacancies. A proposed suggestion is adaptive reuse or redevelopment of vacant office parks and complexes.

Los Angeles and New York have successfully converted office space into housing already. If Montgomery County is going to turn rhetoric about acceptance and diversity into action, then improving on that model by converting empty office space into deeply affordable, county-owned, rent-controlled units would be a step in the right direction.

Knowing the built environment, the population changes, and the persistent structural racism and oppression informs socialist organizing. These findings are just the beginning of a series of Planning Department reports. There will need to be a way to take these reports and adjust organizing to meet the demands of a changing county.

by Erik O. Write

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