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Residential development key to economic health

Residential development
key to economic health

By Matt Moroney

Sept. 4, 2002

It has been our organization’s experience that when decision-makers discuss and implement an economic development strategy, residential development is often left out of the discussion. While most communities focus on the net tax revenue that is generated through industrial and commercial developments, it is important that those communities also realize how important it is to have residential development providing the customer base and human resources necessary for a vibrant business climate to exist. The correlation that exists between residential, industrial and commercial development is a key component of any effective economic-development strategies for any community.

Understand that vibrant economic conditions cannot exist without all these components in balance within any given community and region. Many communities lack this understanding and focus on the commercial and industrial aspect of this equation, which does not produce a cohesive economic mix. One community should not be dependent on the region to support its local economy. For example, a community should not just be an exclusive bedroom community (low- or high-end housing) or a commercial/industrial community. This exclusive dynamic leads to an inefficient delivery of services and greater transportation and environmental problems.

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Another factor in this discussion is housing affordability, which relates substantially to a region’s work force. While many community leaders talk about affordable housing, it is often the case that federal, state and local policy decisions contribute substantially to the costs associated with housing. Our metropolitan region is on the fast track to being in line with the price of housing in the Chicago suburbs. The household income being spent on housing is nearly 40 percent in the metropolitan Milwaukee area … that is almost $24,000 of household income going toward housing costs. Average housing prices are approximately $260,000 in the Milwaukee area. The entry-level housing market is currently at approximately $200,000, which requires a household income of $49,500 (based on a mortgage rate of 6.5 percent, 20 percent down and a 30-year fixed).

These statistics are alarming since southeastern Wisconsin has had the image of an affordable region. While evaluating economic development, these statistics do have an affect on our work force and the region’s business climate. Affordable housing is an important component of a vibrant region, and it is necessary to house a growing population at all levels of the income scale for the long-term economic success of the region.

It is therefore in the best interest of all (especially those in the construction and real estate industries) to support project proposals that lead to greater availability of housing for the work force. Without the necessary supply of work-force housing, opportunities for economic development in the future will not be as abundant.

Matt Moroney is the executive director of the Metropolitan Builders Association and can be reached at 262-436-1122 or by email.

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