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The Tentacle


September 24, 2013

Butting Heads over Housing Growth…Again?

Earl 'Rocky' Mackintosh

Once again Frederick County’s no-growthers and pro-growthers are baaaaaaaaack…and are at odds, but surely and ultimately market forces will prevail.

 

The past few election cycles have resulted in Frederick’s county commissioner administrations see-sawing between vastly opposing viewpoints on comprehensive planning. The Jan Gardner Administration continued the two-decade long tradition of implementing policies to restrain housing development with its 2010 Comprehensive Plan; the Blaine Young Administration effectively won office by promising to unravel it.

 

Both camps have fierce – one could even say zealous – defenders in the Frederick community.

 

(It would be an interesting exercise to calculate the percentage of Letters to the Editor in The Frederick News-Post during the past decade devoted to hot debate of housing development and growth planning in Frederick County.)

 

The rumored housing recovery, combined with the Young Administration green-lighting a number of long-standing residential projects that were stricken from the 2010 Comprehensive Plan, appear to have sparked tensions between the no-growthers and the pro-growthers once again.

 

No-growthers are sounding alarms that Frederick County will be as congested as Montgomery County before Blaine Young leaves office; pro-growthers appear to be dismissive of concerns raised by current residents such as potential school overcrowding and financing of road infrastructure.

 

The development and housing construction industries in this region are not enjoying this pendulum swing any more than Frederick County voters are. The best and brightest developers and builders investing and operating within this region favor a far more predictable political climate.

 

Frederick County’s fractious land planning battles may be scaring away the very experts most qualified to creatively and effectively resolve the county’s impending housing shortage without harming the quality of life we treasure here. Frederick City’s next administration and new county executive will have their work cut out to gain back the confidence of, and mend fences between, county residents and the development community.

 

Wherever you fall between the extremes in this debate, it’s important to remember one thing: the free market is driving the train. Local government control of the pace of regional housing development – in one direction or another – is an illusion at best.

 

Regardless of how many new residences are approved and stuffed in a development pipeline, they won’t be built and sold until there are people who want them and can afford to buy them.

 

Despite how tightly a comprehensive plan is locked down to constrain new housing supply, if the housing market continues to eek its way back from the pits of recession, real estate values will climb and pressure to grow will increase.

 

To that end, many who reside on the “Nay” side of the growth debate often forget Frederick County is part of a vibrant metropolitan region that despite periodic economic downturns has always faced the pressures of growth.

 

Let us not forget, it was the O’Malley Administration (not necessarily known as a promoter of growth) that mandated a target of 36,000 new housing units to be achieved in Frederick County by 2030. And it was the Gardner Board of County Commissioners that adopted a Comprehensive Plan it claimed would meet that goal.

 

The problem was that the very restrictive housing policies (i.e., the APFO test for schools to name one) nearly made that goal impossible. This, of course, is one of the primary reasons that there was a flood of housing project annexations into the city back in those days, which continued into the Young Administration.

 

For the record, the nearly 17,000 units of housing currently in the Frederick City & County residential pipeline are less than half of what is needed to meet the State of Maryland’s projections for Frederick’s population growth during the next 20-odd years.

 

In a previous post about multi-family development in Frederick County, I took a stab at how the residential absorption rate may play out in Frederick County up to 2030.

 

I projected a total of 29,500 new home building permits to be issued between 2011 and 2030. Even in this scenario, much of the growth is back-ended into 2027 through 2030, and yet this misses the 2010 Comprehensive Plan targets by about 18%; but, considering the severity of the recession, that’s not a surprise.

 

Put another way, that plan called for an average of 1,800 residential building permits to be issues each year. Between the years of 2011 and 2026, I estimate that permits average 1,300 units. Over the full 30 years the average only reaches 1,471.

 

With all that stated (and assumed) it is interesting to note in this projection that the current approved pipeline of nearly 17,000 homes will not be absorbed by the market before 2022…but this is by no means a glimpse into a crystal ball. There are many other factors that could impact these projections (for better or for worse, depending upon your perspective): deepening recession in Europe, effects of government spending cuts on this region, and continued labor shortages in the construction industry to name just a few.

 

Another critical element that many forget is that while market forces of supply and demand play a key role in the absorption of units, once approved, it can still take years before the necessary infrastructure is in place before the first house is sold to the end user.

 

No matter what lies ahead for our economy, and our community, one thing is for certain – market forces will not be contained. The laws of supply and demand will ultimately dictate how quickly Frederick County grows.

 

rocky@macroltd.com

 

Mr. Mackintosh is president of MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He also writes for his blog MacRo Report.

 



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