This month, the Delaware State Housing Authority released its first results from a long-awaited Housing Needs Assessment – the first survey of the state of Delaware’s housing market and affordable housing needs in about a decade.
Those results were not exactly surprising: We desperately need more housing, and more housing affordable to lower-income earners.
Editor
Delaware Business Times
Housing and the growing gap in affordability of housing is something Delaware Business Times has been reporting on for more than a year now, and the new report largely confirms what we’ve come to know. The median prices of homes have grown tremendously in Delaware since the pandemic, especially in Sussex County and the Middletown-Odessa-Townsend corridor.
The report found that half of renters in Delaware are cost-burdened, paying at least 30% of their income on rent, with 25,000 severely cost-burdened, paying more than 50%. Those startling statistics also inevitably lead to the finding that homeownership rates have dropped for all age cohorts except seniors, with the most significant decline among ages 35 to 44, where the rate dropped from 71% to 63%.
If young workers are increasingly rent-burdened, then it will be difficult for them to build savings for a down payment and home purchase. Longer periods of renting also means that young families are not building the same kind of generational wealth that their parents did, raising the risk of debt-burdened families decades from now.
Among the industries where an estimated third of all Delaware workers are cost-burdened are hospitality, entertainment, construction, and retail – or areas of the economy that are often steppingstones to other professions.
Homebuying is a challenge until a household earns at least 120% of the average median income, or about $80,000 in Delaware, according to the report. But three-quarters of Delaware renters have incomes less than that, meaning just 20% of homes for sale are affordable to them.
Compounding the challenges of lower wage earners are that there are currently 13,617 too few rental units within their price range, including 5,816 for those under 50% of AMI, the report found. Making matters worse, higher-income renters sometimes “rent down,” crowding out middle-income-affordable units.
All of this adds up to not enough housing or rentals for those in our state earning below the median income.
“We know that affordable housing must be a priority for our state,” Gov. John Carney said in a statement released with the report. “We have a lot of work to do, but we are moving in the right direction. We are making historic investments in housing throughout Delaware, and the data collected in the Housing Needs Assessment will help us to identify the most effective solutions.”
The Carney administration, as well as leaders in each of Delaware’s three counties, have invested federal American Rescue Plan Act funds into building new affordable housing and aiding residents to become homeowners.
The governor has earmarked $105 million from state ARPA funds for housing development and emergency housing initiatives across the state, as well as $26.4 million to help advance a major affordable housing project in Wilmington’s Riverside community.
New Castle County allocated $15 million of its ARPA funds toward projects that will increase availability of affordable transitional, rental and ownership units, including the awarding of $2.3 million this month to Interfaith Community Housing of Delaware to retain 35 rental units in Claymont.
Sussex County has invested $8.3 million of ARPA funds into housing, supporting down payments and settlement assistance for eligible homebuyers, affordable housing subsidies to developers, and rehabilitation funds to keep affordable housing open.
All this investment is worthwhile, and frankly opportune, amid the immense federal spending coming out of the COVID pandemic. But the ARPA funds have a sunset of Dec. 31, 2024, and the giant pot of money has largely been spoken for already to cover needs across the spectrum.
Therefore, ARPA will not be a panacea for the housing crisis.
Solving this puzzle will require prioritizing future state and federal funding to subsidize the cost of housing amid a market that can easily sell more expensive homes to retirees flocking here from northern states. It will require the prioritization of zoning-friendly to affordable housing communities to encourage and direct their development, including strategies like density-bonuses that can ease the profitability case for private developers.
Perhaps most of all, it will require all Delawareans to have an overdue conversation about income and affordability, as many of the communities most in need of workers are also those with the loudest “not-in-my-backyard” opposition. Cheaper housing does not mean increased crime or traffic if managed properly, and it provides a meaningful bridge to building generational equity.
Leaders in both New Castle and Sussex counties have told me recently that employers have slowed hiring efforts or moved projects because they were afraid that their workers would not be able to afford to live near their facilities. That’s a serious problem that will only continue to grow if not addressed.
I hope leaders across the state take a look at the Housing Needs Assessment and begin to understand the implications of not tackling the housing crisis. Delaware’s future may depend on it.
