By: Wesley Holmes

One of the principle concepts of sustainable development is to avoid devouring unspoiled landscape and find ways to make our existing infrastructure more efficient and affordable. To avoid the continued decline of natural habitat and ecosystem services it is becoming increasingly necessary to take a fresh look at the homes we have already built and try to make them more affordable and attractive to first time home buyers. A new report, issued by the Joint Center for Housing Studies of Harvard University, finds that the weak economy coupled with an increase in government programs to support home renovation and first time homebuyers have made sustainable re-development the most promising growth sector in the housing market.

The State of the Nations Housing Report provides a periodic assessment of the nation’s housing outlook and summarizes important trends in the economics and demographics of housing. Predictably, this years report is short on good news. Fewer homes were started in 2009 than in any year since World War II. Census Bureau estimates show that construction permits totaled just 583,000 in 2009, compared with 2.16 million at the 2005 peak and an annual average of 1.32 million in the 1990s. This is the first time since 1959, when records began being kept, that annual permits have numbered less than 900,000. One of the most interesting key facts in the report is that while new home sales were down by 23-percent, the sale of existing homes in 2009 climbed five-percent. Much of the growth in existing home sales is credited to declining real estate prices, along with government tax credits marketed to first-time homebuyers. The report notes that controversial bailout programs helped spark a turnaround and drove all of the increase in existing home sales in 2009.

Experts note that the outlook for the housing market will continue to be rather bleak until employment and income, the leading indicators of housing development, begin to rise. One of the chief impediments to home ownership is the issue of affordability. All told, 40.3 million households spent more than 30 percent of their incomes on housing in 2008, while 18.6 million of these households spent more than half—up from 13.8 million in 2001. After holding steady at 12 percent in both 1980 and 2000, the share of “severely burdened” households (those spending more than half their incomes on housing) jumped by a third, to 16 percent, in 2008. More than half of the 4.5 million low-income single-parent households spent 60 percent or more of their incomes on housing in 2008.  Lower income households with children who dedicated more than half their income to housing had less than $600 per month left for all other necessities. Similarly burdened elderly and single-person households had even less (under $500) left over after housing expenses.

While the housing market and new home development face a long road to recovery, experts do see opportunity to make significant gains in energy efficiency for municipalities and reduction of utilities expenditure for homeowners. In a recent press release, Casius Pealer, director of affordable housing policy for the U.S. Green Building Council, noted that “As existing home sales begin to rise, there is a great opportunity to bring the energy and water efficiency aspects of these homes up to today’s standards,” The Housing Report found that if all pre-2000 homes were brought up to the same efficiency as post-2000 homes in their regions, residential energy consumption would fall by 22.5 percent! Indeed, the only sector to show growth in the 2010 Housing Report is in energy efficiency home renovation. In 2009, the American Recovery and Reinvestment Act (ARRA) extended energy efficiency tax credits for homeowners and funded low-income home weatherization programs. The share of professional remodelers reporting that they had worked on projects linked to the energy efficiency tax credits increased from 39 percent in 2009 to 53 percent in early 2010. Mohsen Mostafavi, Dean of the Harvard University Graduate School of Design noted that “Today’s homeowner has the ability to significantly reduce home energy costs through environmentally-conscious building materials and design approaches”.

As home prices move consistently higher, the Housing Report predicts that some of the equity that owners lost over the last decade will be restored. But rising prices will also put additional strain on the already large number of households facing affordability challenges. One of the reports seminal conclusions is that tackling affordability issues while leveraging the potential of housing to anchor neighborhood revitalization and achieve energy savings will need to be national priorities in the decade ahead. Contrasting with oft heard calls for an end to federal domestic spending, the report calls for a continuation and expansion of policy implements like those found in the ARRA that will encourage efficient home and community design as a means to drive down housing costs and make homeownership more affordable. Longer-term federal commitments include HUD’s new Sustainable Communities Initiative, to encourage more energy-efficient and transit-friendly development patterns on a local level. Additionally, homeowners and builders alike continue to make homes more energy efficient, led by regional certification programs such as the USGBC’s LEED for Homes and LEED for Neighborhood Development programs, both of which offer credits for smart location and linkages and location efficiency. At stake are potentially large savings in the energy consumed to heat and cool homes, as well as in the number of vehicle miles traveled and related carbon emissions.

Projects like the APUS Academic Center are at the forefront of this growing development paradigm. The success of our project in Charles Town will serve as a guiding example of how we can utilize sustainable development practices to bring new vitality and much needed economic opportunity to communities across the country.  Simultaneously lowering the cost of property ownership through increases in efficiency and sensible project siting.

Links of Interest

HUD-DOT-EPA Interagency Partnership for Sustainable Communities