Why Is Economic Growth Often a Catch-22 for Housing?

If you build it, they will come.

That’s true when new businesses or investment opportunities come to an area, breathing new life into the local economy. For example, demand for housing often surges to accommodate a growing workforce. But there’s a catch-22 to economic growth: High demand can put pressure on home prices and, when combined with low housing inventory, lead to an affordability problem that challenges a new workforce.

The National Association of REALTORS® on Tuesday hosted a symposium in Columbus, Ohio—a prime example of a city facing explosive housing demand—to address these challenges. The Affordable Workforce Housing Symposium included a series of panel discussions with government, business and community leaders.

Community leaders said the CHIPS and Science Act, which was signed into law by President Joe Biden last year and seeks to drive investment in U.S. semiconductor manufacturing, research and development, has led to a recent upswing in investment in the Columbus metro area. A new plant is being built, which is expected to create 3,000 new direct jobs and 7,000 construction jobs.

“It’s not just here in Ohio but across the country,” Adrienne Elrod, director of external affairs for the CHIPS program at the Department of Commerce, said during the symposium. “We are going to see significant job growth because of CHIPS, and the affordable housing in those areas will be critically important.”

Indeed, “this unprecedented and exciting growth presents both opportunities and challenges for your communities, especially when it comes to affordable housing supply,” said NAR Chief Advocacy Officer Shannon McGahn. “REALTORS® can work with all stakeholders—from government officials to advocacy organizations to the private sector—to ensure that the economic growth that comes with the CHIPS investments is sustainable for the region and its workforce.”

Access to affordable housing is critical for workforce retention, speakers noted at the symposium. This means households need access to housing that doesn’t require more than 30% of their income, they noted. Elayne Weiss, special policy adviser for the Department of Housing and Urban Development, said the agency is working with state and local governments to incentivize additional housing and provide access to a growing workforce in places seeing CHIPS investments.

“We’re looking for new ways of financing, looking at what policies are getting in the way of building affordable housing, unlocking that supply and working with our partners at all levels,” Weiss said. “We all know the affordable housing crisis has been decades in the making, and it’s not going to be solved overnight. But we know that if we start now, we can really make some good headway.”

State and local officials, housing advocates and leaders in the business community also shared at the symposium how they’re attracting developers who are committed to building quality affordable housing and addressing measures to keep longtime residents in their communities.  

“We want to make sure that there’s housing that’s affordable for all our workforce, and that spans a large number of income and family types and family needs,” said Erin Posser, assistant director of housing strategies for the Columbus Department of Development. “We want to make sure that the market is providing and that the supply we need is available in our community.”