PROVIDENCE, R.I. (WPRI) – Rhode Island would need to add as many as 40,000 new housing units over the next decade to keep up with the state’s changing demographics, but the state is currently on course to fall far short of that amount, according to a new study released Wednesday.
The study, conducted by Roger Williams University’s HousingWorks RI, said projected growth in the number of Rhode Islanders in two groups – Millennials and seniors – will drive demand, particularly for multifamily homes. At the same time, Rhode Island has experienced a sharp drop in residents ages 45 to 64 since the Great Recession.
The study forecasts Rhode Island will need to add between 34,610 and 40,230 housing units over the next 10 years, or roughly 3,500 units annually, to meet demand. To put that in perspective, the state has issued fewer than 1,000 building permits a year since 2008, and has only issued more than 3,500 once since 1990, according to Census Bureau statistics included in the report.
The study was commissioned and released by Rhode Island Housing, the quasi-public agency that provides loans for affordable housing projects.
“We are simply not building enough housing, which is continuing to drive up the cost, because the supply is not there,” Barbara Fields, executive director of Rhode Island Housing, told reporters during a briefing on the report’s findings. “The fact is, incomes in Rhode Island have not kept pace with housing costs,” she said.
Added Nicholas Retsinas, chairman of Rhode Island Housing’s board of commissioners: “We’re not going to be able to attract and retain a labor force that’s necessary to attract businesses.”
Gov. Gina Raimondo has proposed issuing a $40-million bond to subsidize new affordable housing developments, along the same lines as similar borrowing authorized by voters in 2006 and 2012. If approved by the General Assembly, the bond proposal would go before voters in the November election.
Fields argued the General Assembly should also consider appropriating additional taxpayer money to fund housing programs in the state budget. State government will spend $100 and $77 per capita on housing this year in Massachusetts and Connecticut, respectively, but less than $9 in Rhode Island, she said.
“If we want Rhode Island to attract and retain businesses, we need homes that are in reach for their employees and their families,” Fields said.
The HousingWorks report said new housing construction in Rhode Island is also limited by government red tape, thanks to municipal zoning codes and other regulations that make it more difficult and costly for developers to build. It singled out “large-lot zoning requirements that limit density” and “ordinances that prohibit or require special permits for the production of multifamily homes.”
It noted that the rental market is also tight in Rhode Island, with the most recent rental vacancy rate standing at 4.4%. Fields said a “healthy” rental vacancy rate is roughly 7.5%.Ted Nesi (email@example.com) covers politics and the economy for WPRI.com. He hosts Executive Suite and writes The Saturday Morning Post. Follow him on Twitter: @tednesi