Worcester and Affordable Housing
Great article here by Henry Schwan in the T&G
He brings up a lot of pertinent issues and tells some truly sad stories about people who are having tough times due to rising rental prices.
He astutely points out that there are huge applicant pools for subsidized units and a huge waiting list for Section 8 vouchers.
"Simply put, there isn't enough supply of affordable housing to meet rising demand"
I agree with this and I see it on a daily basis when I visit Multis in Worcester.
But it is not just "affordable housing" that is lacking in Worcester, it is all types of housing.
People are moving to Worcester, and that has been accelerated by COVID as people were able to work from home or work Hybrid .
You many be familiar with the economic concept of Wage-Price Spiral--- Rising wages raise the demand for goods which causes prices to rise. This forces companies to raise wages which again in turn increase demand and raises prices.
I would like to introduce you to the "Demand-Rent Spiral"- WorcesterMulti
It is so much cheaper to live in Worcester than parts to the East. This bargain shopping has placed more demand on housing and raised rents.
This demand causes rents to rise. This encourages investors to come to the market and improve apartments so they can get higher rents, which in turn causes rents to rise more.
Additionally Section 8 Vouchers are too low to cover the higher rents, so Section 8 and HUD raise the value of these vouchers which put upward pressure on the rents on the low end of the scale and raises all rents.
Essentially COVID(Hybrid and remote work) and all the great improvements made to the community in Worcester, have created this Spiral.
In the same way that the FED uses Monetary Policy(raising rates) to stop the Wage-Price Spiral by slowing the economy. That is the same way that we will stop the Demand-Rent Spiral.
First we need to build additional housing- of any kind- to increase supply.
Second higher interests rates will curb demand(for everything) by limiting disposable income, so less should be spent for rent on the higher end. This will serve to moderate rental increases for everyone.
If we were able to reduce the Commercial Tax Rate in Worcester, it would spur more job creation and there would be less need for Section 8 vouchers among able bodied working age people. This is a step that the CITY COUNCIL can do to make things better for those who are struggling who are highlighted in this article.