Conference tackles affordable housing issue

Affordable and workforce housing are among the most debated topics in Sussex County, especially in the eastern part of the county where housing costs have risen dramatically.

That topic was the theme of the annual Today and Tomorrow Conference Oct. 26 at Delaware Technical Community College. For the past 30 years, movers and shakers in the county have joined each October in the college-sponsored event to discuss some of the most pressing issues facing the county. This year’s event was held in person and virtually.

A group of advocates and professionals helped put the issue into perspective and discussed some of the challenges, but the overriding message was that action is needed now to stem the tide of the affordable housing crisis.

While the lack of affordable housing is a county-wide problem, it's more acute in eastern Sussex where many workers cannot afford housing near their work.

Here are some of the facts:

• Affordable housing is defined as housing where the homeowners spend less than 30% of their household income on housing-related costs

• In Sussex, 30% of homeowners spend more than 30% on housing; the average homeowner pays 28% of their income on housing

• Average sales price of homes in the county is $470,000 and the average rent is $1,027 a month

• The average homeowner spends 53% of total income on housing and transportation together, as more and more workers who are employed in the resort area are forced to seek housing in central and western Sussex

• There are more than 3,200 occupied substandard homes in the county.

Panel leads discussion

Bobbi Barends, vice president and campus director of Delaware Technical Community College, served as emcee.

The event included a discussion moderated by David Moore, president and CEO of Milford Housing Development Corp., featuring Jake Booth, president and managing partner of Capstone Homes; Brandy Nauman, director of Sussex Community Development and Housing Department; C. Denise Hicks, board member of NeighborGood Partners (formerly NCALL) and Josh Grapski, managing partner of La Vida Hospitality.

Katherine Millard, director of development and advocacy at Sussex County Habitat for Humanity, provided closing remarks.

Larger than Habitat

Keynote speaker Kevin Gilmore, CEO of Sussex County Habitat for Humanity, has spent most of his adult life building affordable housing. He said Habitat has invested $35 million in affordable housing, building 167 homes, repairing more than 400 homes and providing more than 2,000 people with financial counseling.

Gilmore said what Habitat does is just one solution. “It will take more than one solution. In reality, the affordable housing crisis in Sussex County is much bigger than Habitat. It's an issue for our society. We can't afford not to fix this,” he said.

Gilmore said the area median income per household, as established by the U.S. Department of Housing and Urban Development, is used to qualify individuals for services.

The AMI for a family of three is $75,600. At 80% (low income), it drops to $60,500; at 50% (very low income), it's $37,800; and at 30% (extremely low income), it's $22,680.

Many workers in the county's top employment fields make from 50% to 30% of AMI, including those in retail, food service and accommodations. The average annual wage in the county is $48,653.

He said with home prices in the $300,000 to $400,000 range and above, there is a $200,000 to $300,000 deficit for what the average resident can afford.

At the higher end at 120% of AMI, income is $90,720. “People earning under 120% of AMI can't afford market-rate housing in Sussex,” Gilmore said.

“The answers to the problems that exist in the county are sitting in this room. Ask yourself what you can do to make everyone in Sussex County have an affordable place to call home,” Gilmore said.

The high cost of building

Booth said even with an extremely strong housing market in the county, builders are experiencing a 35% to 40% increase in the cost of materials and nearly a 100% increase in the cost of building lots. He said to build a 1,400-square-foot house with three bedrooms and two bathrooms in 2019 cost $120,000 or $85 per square foot; today, that cost is $160,000 or $115 per square foot.

The cost of standard single-family home lots has risen from $40,000-$50,000 in 2018-19 to $80,000-$100,000 in 2022. And the cost to improve the lots for construction has risen from $25,000 to $50,000.

Adding increases in interest rates from 3% to nearly 7%, the cost of building that 1,400-square-foot house is now $240,000 to $270,000 without adding related costs to sell a home.

Booth said when looking at price points for affordable housing, the cost of construction and the lot have be considered as a package.

He said making lots more affordable would provide an incentive to construct affordable or workforce housing.

Companies face employment issues

Grapski said for the first time, his company is forced to look at transportation and housing in an effort to hire and retain employees. La Vida employs 450 people in the county during the summer season and 250 to 300 during the off-season.

He said the cost of housing is the No. 1 reason employees have left their jobs.

Grapski said his company and others in the hospitality field are looking at ways to provide transportation and housing to employees, including temporary rentals and even home purchases. He said the challenge is to manage that expense when food prices have risen as much as 50%. 

Speaking from the audience, Lewes Councilman Khalil Saliba said ways for employers to provide housing for their employees need to be addressed. “They should not bear that burden on their own. We need to reach out to our elected officials to discuss tax credits to employers. If we really want to move the needle, we need to secure this,” he said.

Housing bits

• Millard said Sussex Housing Group is launching the Yes in My Back Yard program to advocate for affordable housing.

• Nauman said landlords are overlooked as part of the solution. She said they are resistant to get involved, but need to be included in discussions.

• Several participants talked about removing obstacles to affordable housing, including efforts by municipalities and government to limit rentals of small units, garage apartments and seasonal rentals.

• There is a need for more programs to assist with down payments and closing costs.

To view the conference, go to sussexcountyconference.com.