This document discusses issues related to affordable housing in Tennessee. It begins by addressing common misconceptions about affordable housing, such as claims that it is unattractive, drives down property values, and attracts undesirable tenants. The document refutes these claims with evidence from research studies. It notes that affordable housing needs exist not just in urban areas but also in rural and suburban communities. Charts and tables provide data on population and housing trends in Tennessee to illustrate these points.

1. The Future for Housing Affordability
OR
“Who can afford a crystal ball?!”
Paul Henkel
Asst. Director for Research, Planning and Technical Services

2. S
N
O
TI
EP
C
N
IS
C
O Misconceptions about affordable
M
housing
NIMBY, “Not In My Back Yard”
• Is Unattractive
• Drives down property values
• Attracts only undesirable tenants
• Only an urban/central city problem

3. #1
N
O
TI
EP
O
N
C Affordable Housing is Unattractive
C
IS
M
Efficient planning
and design can
actually lower both
construction and
maintenance costs.
Quality design helps
affordable housing
to fit its context.
City Design Center, APA Website

4. #2
N
O
TI
EP
O
N
C Affordable housing
C
M
IS drives down property values
Among working communities, the average
value of owner-occupied houses is highest
in those that have the most apartments. *,**
* “The Vitality of America's Working Communities”, Harvard University’s Joint Center for Housing Studies, 2003.
** A working community is defined by having an average household income between 60% and 100% of AMI)

5. #2
N
O
TI
EP
O
N
C Affordable housing
C
M
IS drives down property values
Tax Credit properties do not have a
negative impact on property values, as long
as there is a dispersal rather than
concentration of properties.*
* “Low Income Housing Tax Credit Housing Developments And Property Values”, The Center for
Urban Land Economics Research, Univ. of Wisconsin, 2002.

6. #2
N
O
TI
EP
O
N
C Affordable housing
C
M
IS drives down property values
The impacts of federally assisted housing
on area property values depend largely
upon*:
1. Characteristics of the neighborhood
2. Concentration of assisted housing units
3. Scale of the assisted housing facility.
* “A Review of Existing Research on Effects of Federally Assisted Housing Programs on Neighboring Property
Values”, College of Urban, Labor and Metropolitan Affairs, Wayne State University, 2002.

7. #3
N
O
EP
TI Affordable housing
C
O
N
C
attracts unwanted tenants
IS
M

8. #4
N
O
TI
EP
O
N
C Affordable housing
C
M
IS is an Urban Problem
The shortage of affordable housing may
be greatest in cities, because populations
are larger and often more evident.
But rural and suburban areas also have a
great need for affordable housing.

9. #4
N
O
TI
EP
O
N
C Affordable housing
C
M
IS is an Urban Problem
Rural % of Low Income % of Renter % of Median Renter
Counties Homeownership Owner Households Households with Income Needed to
(random) Rate with Cost-Burden Cost-Burden Afford 2-BR at FMR
Bledsoe 81.7% 45.30% 27.8% 77.0%
Clay 80.0% 49.20% 22.8% 106.0%
Crockett 74.9% 51.70% 32.7% 67.0%
Decatur 80.1% 41.80% 29.0% 80.0%
Fentress 79.1% 51.90% 31.1% 104.0%
Hancock 78.7% 37.50% 24.6% 170.0%
Houston 77.0% 62.20% 26.1% 96.0%
Jackson 80.8% 50.30% 20.8% 97.0%
Lake 60.0% 62.20% 29.7% 114.0%
Moore 83.7% 44.50% 21.0% 71.0%

10. What do we mean by
“affordable housing”?
It means housing available to low
and moderate income people at a
monthly cost that does not exceed
30% of their gross income.

11. What do we mean by
“affordable housing”?
It means housing available to the
local workforce.

12. What do we mean by
“affordable housing”?
It means closing the gap between
local wages and salaries and the
going rate for a decent home.

13. What do we mean by
“affordable housing”?
It means strengthening the
community by building a strong
and diverse economic and social
base.

14. What do we mean by
“affordable housing”?
It means improving the quality of
life for all members of the
community.

15. General Population Patterns

16. Population of Tennessee
by County, 2005
300,000 –
910,000
100,000 –
299,999
50,000 – 99,999
20,000 – 49,999

17. Projected Population and Housing Stock
in Tennessee, 2006-2026
7,600,000 4,000,000
2.24 persons per housing unit in 2006
7,200,000
Population 3,000,000
6,800,000
Housing
6,400,000 2,000,000
Stock
6,000,000
2.00 persons per housing unit in 2026 1,000,000
5,600,000
5,200,000 0
08
10
12
14
16
18
20
22
24
26
06
20
20
20
20
20
20
20
20
20
20
20

18. Counties with Slow Growth or
Population Decline, 2005-2015
-1.0% to -9.0% Decline
0.0% to 4.9% Growth
5.0% Growth or greater

19. Counties with Moderate to High
Population Growth, 2005-2015
15.0% to 42.0% Growth
5.0% to 14.9% Growth
Lower than 5.0% Growth

20. Metro and non-Metro Areas
by Projected Population Change
2005-2015
15.0% to 18.0% Growth
10.0% to 14.9% Growth
5.0% to 9.9% Growth
Lower than 5.0% Growth

21. Metro Area Population Change, 2005-2025
1,422,544
Nashville MSA
2,006,891
655,400
Knoxville MSA
832,781
999,491
Memphis MSA
1,096,835
160,171
Clarksville MSA
220,413
130,575
Morristown MSA
163,428 Populations are listed
188,944 as total # of people
Johnson City MSA
219,691
351,383
Chattanooga MSA
369,781
108,036
Cleveland MSA
124,646
110,857
Jackson MSA
124,945
2005
208,912
Kingsport-Bristol MSA 2025
219,032

22. non-Metro Population Change, 2005-2025
900,000
2005
800,000
2025
700,000 769,756
705,587
600,000 640,157
500,000 571,343
400,000
416,112
300,000
415,146
200,000
100,000
0
East Middle West
Tennessee Tennessee Tennessee

23. Fatter Cats, 2005-2025
Nashville MSA 3.7%
Changes $ Allocation
Knoxville MSA
based upon population 0.5%
Clarksville MSA 0.3%
East TN non-MSA 0.1%
Morristown MSA 0.1%
Cleveland MSA -0.1%
Jackson MSA -0.1%
Johnson City MSA -0.1%
Middle TN non-MSA -0.1% Changes weight of
Kingsport-Bristol MSA -0.5% political pull
Chattanooga MSA -0.8%
West TN non-MSA -1.2%
Memphis MSA -1.7%
-5.0% -3.0% -1.0% 1.0% 3.0% 5.0%

24. Components of
Population Change

25. Components of Population Growth in
Tennessee, 2001-2005
45,000
Natural Increase
40,000
International Migration
35,000
Domestic Migration
30,000
25,000
20,000
15,000
10,000
5,000
0
2001 2002 2003 2004 2005

26. Impact of Recent Movers by County,
2001-2005
Out-flow of Recent Movers
0.0% - 2.9% Recent Movers
3.0% - 5.9% Recent Movers
6.0% or greater Recent Movers

27. Impact of Recent Movers by Metro and
non-Metro Areas, 2001-2005
Out-flow of Recent Movers
0.0% - 1.9% Recent Movers
2.0% - 3.9% Recent Movers
4.0% or greater Recent Movers

28. Tennessee's Population in 2005
by Race-Ethnicity
6,000,000
4,809,644
5,000,000
4,000,000
Population
3,000,000
2,000,000 1,002,636
1,000,000 180,575
0
White Afr. American Hispanic

29. One Scenario for Population Growth
by Race-Ethnicity in Tennessee
7,000,000
5,937,029
6,000,000 5,561,427
5,171,894
5,000,000
4,000,000
3,000,000
2,000,000 1,506,508
1,136,690 1,288,668
1,000,000 1,442,746
375,277
779,913
0
2006
2007
2008
2011
2012
2015
2016
2019
2020
2023
2024
2027
2028
2031
2032
2005
2009
2010
2013
2014
2017
2018
2021
2022
2025
2026
2029
2030
2033
2034

30. African American Population of
Tennessee by Age and Sex, 2000-2005
Females
Males
85+
80-84
75-79
70-74
65-69
60-64
Future 55-59
Elderly 50-54
Housing 45-49
Need 40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
<5
50,000 40,000 30,000 20,000 10,000 0
0 10,000 20,000 30,000 40,000 50,000

31. Hispanic Population of Tennessee
by Age and Sex, 2000-2005
Males Females
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29 New
20-24 Household
15-19 Formation
10-14 Population
5-9 Growth
<5
20,000 15,000 10,000 5,000 0 0 5,000 10,000 15,000 20,000

32. Trends in 1-person Owner Households
in Tennessee, 1960-2000
1960 1970 1980 1990 2000
1,800,000
1,600,000 Owner-occupied Households
1-person Owner-occupied
Owner Households
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
7.40% 11.00% 14.90% 18.60% 20.80%
Percent 1-person

33. Trends in 1-person Renter Households
in Tennessee, 1960-2000
1960 1970 1980 1990 2000
800,000
Renter-Occupied Households
700,000
1-person Renter-occupied
Owner Households
600,000
500,000
400,000
300,000
200,000
100,000
0
13.70% 21.20% 32.30% 35.10% 37.60%
Percent 1-person

34. Median Household Income
by County, 2005
$55,000 or higher
$50,000 - $54,999
$45,000 - $49,999
$28.700 - $44,999

35. Projected Household Income Change
by County, 2005-2015
+50.0% to +93.9%
+35.0% to +49.9%
+20.0% to +34.9%
- 5.0% to +19.9%

36. Median Home Sales Price, 2005
$125,000 or higher
$100,000 - $124,999
$75,000 - $99,999
$50,700 - $74,999

37. Median Home Sales Price Average
Annual Rate of Increase, 2000-2005
8.0% or greater
6.0% to 7.9%
4.0% to 5.9%
0.0% to 3.9%

38. Projected Median Home Sales Price
Change, 2005-2015
+125.0% to +220.0%
+100.0% to +124.9%
+75.0% to +99.9%
0.0% to +74.9%

39. What makes housing affordable?
When the monthly mortgage (principle,
interest, tax & insurance) or rent payment
plus utilities comprise less than 30% of
the household gross income.

40. What makes housing affordable?
If a household’s monthly rent or mortgage
payment comprises 30% or more of the
household income, the household is
considered to be “cost burdened”.

41. What makes housing affordable?
Strictly limiting monthly mortgage or rent
payments to less than 30% of income does
not necessarily mean that the remaining
income is sufficient to meet an individual
family’s needs.

42. A Look at Income Sufficiency Using
Montgomery County
Information on the chart to follow shows
the income sufficiency of average annual
salaries of various professions in
Montgomery County.

43. A Look at Income Sufficiency Using
Montgomery County
Key to Understanding
The professions’ salaries shown would be
single income households, and do not
represent the innumerable variations in
household earning and financial coping
strategies.

44. A Look at Income Sufficiency Using
Montgomery County
Another Key to Understanding
While homes in more outlying areas
(relative to a city center) are initially more
affordable, monthly commuting expenses,
both in money and time, can quickly reduce
the relative “affordability” of these homes.

45. Annual Income
$0
$10,000
$20,000
$30,000
$40,000
$50,000
Hairdresser $60,000
Cashier
Preschool Teacher
Retail Salesperson
EMT
Nurse Aide
Medical Assistant
Construction Laborer
Social Worker
Bus Drivers
Army E-2 (2 yr service)
Carpenter
Police Officer
Electrician
Real Estate Broker
in Clarksville, TN
Teachers
Army E-5 (8 yr service)
Accountant
Army O-1 (2 yr service)
$0
$95,200
$129,900
$30,000
$60,000
$90,000
Affordable Home Price
$120,000
$150,000
$180,000
Affordability of a Median-priced Home
2004
2004
New Home
Median Price
Median Price
Existing Home

46. Max. Affordable
Hairdresser
Hairdresser $42,099
$42,099 What constitutes an
Cashier $44,782
Preschool Teacher $47,273
affordable home in
Retail Salesperson $56,383 Montgomery Co.?
EMT $59,272
Median-priced, Existing Home in
Median-priced, affordable at
Existing Home New Home in
Existing Home affordable at
Nurse Aide $62,397
<30% cost burden
Montgomery Co.
<30% cost burden
Medical Assistant
Medical Assistant $64,378
$64,378
Construction Laborer $69,651
Social Worker $71,529
Bus Drivers $79,958
Army Enlisted $86,611
Carpenter $87,410
Police Officer
Police Officer $92,954
$92,954
Electrician $96,860
$42,000, 3br/2ba, 891 ft2ft
$130,500, 3br/2ba, 1780 ft2 2
$64,900, 3br/2ba, 1607
$94,500, 3br/1ba, 1464
Real Estate Broker $103,726
Teachers $121,034
Army NCO $125,790
Accountant
Accountant $126,983
$126,983
Army Officer $127,296

47. What about affordable
rental property?
In Montgomery County, in 2004, 3,257
renters earn 50% or less than area median
income.

48. What about affordable
rental property?
Maximum monthly
MONTGOMERY $583
housing cost for a
family at 50% of
Bradley $591
median income.
$672
Anything more is cost Knox
burden.
Rutherford $748
Washington $552
$0 $200 $400 $600 $800

49. Fair Market Rent is not always fair
Estimated Percent of Renters Unable to Afford Two-Bedroom FMR
MONTGOMERY 37%
Bradley 43%
Knox 47%
Rutherford 45%
Washington 44%
0% 10% 20% 30% 40% 50%

50. Where do cost-burdened renters reside?
All Renter % Cost
Household % Cost Number Burdened
s Burdened ≤80% AMI ≤80% AMI
MONTGOMERY 17,645 34.1% 8,495 60.7%
Bradley 10,780 35.2% 6,750 53.1%
Knox 52,280 37.5% 33,985 54.6%
Rutherford 20,035 42.2% 13,250 60.2%
Washington 14,075 36.4% 8,520 55.8%
Everywhere.

51. Does cost burden discriminate?
Percent of County Renters at 30-80% MFI by Race/Ethnic Group
White Black Hispanic
MONTGOMERY Co. 33.7% 36.4% 42.4%
Bradley County 39.7% 44.9% 45.6%
Knox County 37.9% 36.4% 41.3%
Rutherford County 41.4% 46.5% 47.2%
Washington County 37.2% 35.4% 64.0%
Nope.

52. Is need in all areas identical?
Renters with
cost burden % African % Other
(≤80% AMI) % White American % Hispanic Minority
MONTGOMERY 5,154 56.0% 33.1% 6.4% 4.5%
Bradley 3,589 87.1% 7.4% 3.3% 2.2%
Knox 18,555 78.1% 16.0% 1.7% 4.2%
Rutherford 7,962 77.7% 14.1% 5.0% 3.2%
Washington 4,756 89.0% 6.2% 2.5% 2.2%
Not at all.

53. Is cost burden the only problem?
Percent of those Renters at 30-80% MFI with Housing Problems,
Crowding and/or Cost-burden
White Black Hispanic
MONTGOMERY Co. 54.8% 58.5% 63.0%
Bradley County 44.8% 50.0% 41.9%
Knox County 48.5% 40.8% 59.4%
Rutherford County 52.5% 44.9% 56.6%
Washington County 49.8% 50.0% 51.4%
No.
Multiple problem issues are common.

54. Do home owners fare any better?
Percent of County Home Owners at 30-80% MFI by Race/Ethnic Group
White Black Hispanic
MONTGOMERY Co. 17.7% 22.8% 19.1%
Bradley County 23.5% 33.7% 43.9%
Knox County 22.2% 24.1% 30.8%
Rutherford County 21.0% 23.9% 29.6%
Washington County 22.3% 20.0% 16.2%
Yes.
But they have some of the same, and
some different difficulties.

55. How are they different?
Percent of those Home Owners at 30-80% MFI with Housing Problems,
Crowding and/or Cost-burden by Race/Ethnic Group
White Black Hispanic
MONTGOMERY Co. 51.2% 63.8% 47.2%
Bradley County 37.5% 50.0% 33.3%
Knox County 39.7% 55.3% 40.6%
Rutherford County 45.4% 57.2% 47.8%
Washington County 40.6% 67.2% 86.2%

56. Who is affected by “Affordability”?
The common perception is that only poor,
unemployed, or part-time workers cannot
“afford” housing.
Yes, it is true that these groups are most
severely impacted. But housing affordability is
not just a problem of lower-income groups.

57. Who is affected by “Affordability”?
A wide variety of residents are in need of affordable
housing including:
municipal employees:
teachers and police officers
service-industry labor force:
hairdressers, shop clerks, travel agents;
…All of whom may be working full time but whose
income is not sufficient to afford quality housing in the
local area.

58. Who is affected by “Affordability”?
Local businesses and employers are also
affected by a lack of affordable housing which
can cause an unstable, constantly shifting
local labor force.

59. Cost burden significantly
impacts the elderly
Housing affordability is a problem that
does not discriminate based on age.
Many elderly households in Tennessee
have income levels that are lower than
30% of median family income.

60. Cost burden significantly
impacts the elderly
Percent of Elderly
MONTGOMERY 26%
Households with
Incomes less than
Bradley 35%
30% of the Area
Median Income
Knox 27%
Rutherford 25%
Washington 34%
0% 10% 20% 30% 40%

61. Low-income Households in Montgomery Co.
RENTERS OWNERS
Percent <50%MFI Percent <50%MFI
Ft. Campbell Ft. Campbell

62. Knowing what we now know, how
might the following impact
Tennesseans?

63. Median Rent versus Median Income
1970-2020
$65,000 $800
Median Household Income
$52,000
Median Gross Rent
$600
Tennessee Median Rent
$39,000
$400
$26,000
Tennessee Median Income
$200
$13,000
$0 p $0
p
70
80
90
00
10
20
19
19
19
20
20
20

64. Median Home Value versus Median
Income 1970-2020
$140,000 $75,000
Median Household Income
$120,000
Median Home Value
$60,000
$100,000 Tennessee Median
$80,000 Home Value $45,000
$60,000 $30,000
$40,000
Tennessee Median Income $15,000
$20,000
$0 p $0
p
70
80
90
00
10
20
19
19
19
20
20
20

65. Cost of a Median-Priced Home for a
Median Income Family, 2005
250.0% or greater
200.0% to 249.9%
175.0% to 199.9%
130.0% to 174.9%

66. Cost of a Median-Priced Home for a
Median Income Family, 2015
250.0% or greater
200.0% to 249.9%
175.0% to 199.9%
130.0% to 174.9%

67. A note about predicting the future
We cannot predict the future.
We can only project a possible future
based on what we know about the past
and present.

68. A note about predicting the future
It is certain that the affordability of
housing is an issue of significant
importance today.
Evidence points to the fact that it will
become more, rather than less significant
for the average family in Tennessee in the
immediate future.

69. hank you very much for your attention
If you have any questions after the presentation, feel free to contact me:
Paul Henkel, M.Soc.Sc., A.B.D.
Asst. Director for Research, Planning and Technical Services
Tennessee Housing Development Agency
404 James Robertson Parkway, Suite 1114
Nashville, Tennessee 37243
(615) 741-2400
paul.henkel@state.tn.us www.tennessee.gov/thda