Affordable Housing Crisis (3 Viewers)

[whoknew]

   Logic over feelings

I don't even know what this means. What feelings?
 

I started this thread to talk about the affordable housing crisis (regardless of what DW says) that we are facing in the US. Someone else in this thread wanted to talk about violence in some housing projects. So I thought that article had an interesting study. I still think it is an interesting study - though Para makes good points about it. 

No idea what you are talking about.

 

[parasaurolophus]

I don't even know what this means. What feelings?
 

I started this thread to talk about the affordable housing crisis (regardless of what DW says) that we are facing in the US. Someone else in this thread wanted to talk about violence in some housing projects. So I thought that article had an interesting study. I still think it is an interesting study - though Para makes good points about it. 

No idea what you are talking about.

I wasnt sure what he meant either. I think you have been very reasonable in this thread. 

 

[supermike80]

I don't even know what this means. What feelings?
 

I started this thread to talk about the affordable housing crisis (regardless of what DW says) that we are facing in the US. Someone else in this thread wanted to talk about violence in some housing projects. So I thought that article had an interesting study. I still think it is an interesting study - though Para makes good points about it. 

No idea what you are talking about.

I wasn't commenting on your post. 

But I guess my point is everyone wants to FEEL like we can fix things so simply.  "Hey!! Get some lights!!!" But we very often fail to ask ourselves if it was that simple, wouldn't it be done already?   

It hits many of us in the feels, because we all want to change the housing crisis or magically reduce crime rates, but when we are hit with the reality that simple solutions probably wont work, it hurts.

 

[Ditkaless Wonders]

In 1950 we averaged 3.4 persons per household and the average suburban home was a touch under 1000 square feet at 983 sq. ft.  That was right around 290 sq. ft. per person.  Now, well the average suburban home now is 2600 sq. ft. and the average occupancy is around 2.5 persons or a bit over 1000 sq. ft. per person.  It use to be that homes were one car garage homes, now three is the new norm.  It use to be that homes had no air conditioning, now, not so.  If things are less affordable in the category "Housing" it is largely because that category has come to mean something entirely different.

Now would zoning regulations in most cities tolerate or allow building to 1950's norms, no, not in most areas.  We see smaller homes as indicative of a lack of City health.  Still, there is a tiny house movement and some cities are allowing zones for those more affordable houses, built to different expectations.

As for rentals and condos, well in Colorado, at least, a place with which I am familiar, builders have eschewed building such product as construction defect laws passed a half dozen years ago make them feel that their potential liability from litigious owns and occupants makes those products less profitable than building McMansions.  Whether they are truly at risk or whether they are angling for legal protection, for changes in the law, who can say.  It is interesting to note, however, that legislation meant to protect the consumer had, as it sometimes does, unintended consequences.   

 

[parasaurolophus]

As for rentals and condos, well in Colorado, at least, a place with which I am familiar, builders have eschewed building such product as construction defect laws passed a half dozen years ago make them feel that their potential liability from litigious owns and occupants makes those products less profitable than building McMansions.  Whether they are truly at risk or whether they are angling for legal protection, for changes in the law, who can say.  It is interesting to note, however, that legislation meant to protect the consumer had, as it sometimes does, unintended consequences.   

Thanks for posting this DW. What a fascinating little tangent. Looks like the law was reformed in 2017, but the per condo building fees seem to be very out of whack. 30k fee to the city??? Thats insane, at least where i live.

 

[BassNBrew]

In 1950 we averaged 3.4 persons per household and the average suburban home was a touch under 1000 square feet at 983 sq. ft.  That was right around 290 sq. ft. per person.  Now, well the average suburban home now is 2600 sq. ft. and the average occupancy is around 2.5 persons or a bit over 1000 sq. ft. per person.  It use to be that homes were one car garage homes, now three is the new norm.  It use to be that homes had no air conditioning, now, not so.  If things are less affordable in the category "Housing" it is largely because that category has come to mean something entirely different.

Now would zoning regulations in most cities tolerate or allow building to 1950's norms, no, not in most areas.  We see smaller homes as indicative of a lack of City health.  Still, there is a tiny house movement and some cities are allowing zones for those more affordable houses, built to different expectations.

As for rentals and condos, well in Colorado, at least, a place with which I am familiar, builders have eschewed building such product as construction defect laws passed a half dozen years ago make them feel that their potential liability from litigious owns and occupants makes those products less profitable than building McMansions.  Whether they are truly at risk or whether they are angling for legal protection, for changes in the law, who can say.  It is interesting to note, however, that legislation meant to protect the consumer had, as it sometimes does, unintended consequences.   

Speaking of unintended consequences....rent control 

https://www.naahq.org/news-publications/rent-control-nys-new-devaluation-play?utm_source=Pardot&utm_medium=Email&utm_campaign=Industry-Insider

 

[BassNBrew]

In 1950 we averaged 3.4 persons per household and the average suburban home was a touch under 1000 square feet at 983 sq. ft.  That was right around 290 sq. ft. per person.  Now, well the average suburban home now is 2600 sq. ft. and the average occupancy is around 2.5 persons or a bit over 1000 sq. ft. per person.  It use to be that homes were one car garage homes, now three is the new norm.  It use to be that homes had no air conditioning, now, not so.  If things are less affordable in the category "Housing" it is largely because that category has come to mean something entirely different.

Now would zoning regulations in most cities tolerate or allow building to 1950's norms, no, not in most areas.  We see smaller homes as indicative of a lack of City health.  Still, there is a tiny house movement and some cities are allowing zones for those more affordable houses, built to different expectations.

As for rentals and condos, well in Colorado, at least, a place with which I am familiar, builders have eschewed building such product as construction defect laws passed a half dozen years ago make them feel that their potential liability from litigious owns and occupants makes those products less profitable than building McMansions.  Whether they are truly at risk or whether they are angling for legal protection, for changes in the law, who can say.  It is interesting to note, however, that legislation meant to protect the consumer had, as it sometimes does, unintended consequences.   

Thanks for posting this.  Nice to see some hard data for what my eyes are seeing.

 

[Dondante]

Are large corporations in the residential construction world given tax incentives for building affordable housing? 

 

[whoknew]

In 1950 we averaged 3.4 persons per household and the average suburban home was a touch under 1000 square feet at 983 sq. ft.  That was right around 290 sq. ft. per person.  Now, well the average suburban home now is 2600 sq. ft. and the average occupancy is around 2.5 persons or a bit over 1000 sq. ft. per person.  It use to be that homes were one car garage homes, now three is the new norm.  It use to be that homes had no air conditioning, now, not so.  If things are less affordable in the category "Housing" it is largely because that category has come to mean something entirely different.

Now would zoning regulations in most cities tolerate or allow building to 1950's norms, no, not in most areas.  We see smaller homes as indicative of a lack of City health.  Still, there is a tiny house movement and some cities are allowing zones for those more affordable houses, built to different expectations.

As for rentals and condos, well in Colorado, at least, a place with which I am familiar, builders have eschewed building such product as construction defect laws passed a half dozen years ago make them feel that their potential liability from litigious owns and occupants makes those products less profitable than building McMansions.  Whether they are truly at risk or whether they are angling for legal protection, for changes in the law, who can say.  It is interesting to note, however, that legislation meant to protect the consumer had, as it sometimes does, unintended consequences.   

That's really interesting. Thanks for posting. 

To add to that, though, you are talking about suburban homes. Which almost certainly (with the exception of NYC, Chicago, and the Bay area) means a commute - often significant - in a car. This is a) expensive, b) aggravating and pleasure reducing, and c) environmentally bad. 

There has been a trend for people to move closer to cities. This is a good thing and should be encouraged.

Also - I don't think many lower income workers are buying 2500 square foot houses. Or if they are, they are far away from the city center - thus bringing in the issues raised above.

 

[whoknew]

Are large corporations in the residential construction world given tax incentives for building affordable housing? 

Sometimes. What I've seen more of lately, though, is they are given zoning variances as incentive to build affordable.

So, for example, if you want to build bigger and higher than the current zoning allows, you have to make a certain percentage of the units affordable.

 

[Dondante]

Sometimes. What I've seen more of lately, though, is they are given zoning variances as incentive to build affordable.

So, for example, if you want to build bigger and higher than the current zoning allows, you have to make a certain percentage of the units affordable.

Gotcha. Do you think that's an effective practice? I'm in the construction world, in and around all types and price points for residential construction all over the country, and I've yet to see this in practice. 

I raised the question because it's something that's puzzled me for years. Why wouldn't the government give ample tax credits to the country's biggest and best builders if they participated in the construction of affordable housing? And I'm talking about communities - not sections of affordable units in a high-density platform. Is it the obvious reason? That the industry as a whole isn't into low or zero margin projects? Do you think there's a way to incentivize this process enough to get the major players to participate? 

I'm not a tax guy or a finance guy, but it seems like there is an opportunity there. 

 

[Ditkaless Wonders]

That's really interesting. Thanks for posting. 

To add to that, though, you are talking about suburban homes. Which almost certainly (with the exception of NYC, Chicago, and the Bay area) means a commute - often significant - in a car. This is a) expensive, b) aggravating and pleasure reducing, and c) environmentally bad. 

There has been a trend for people to move closer to cities. This is a good thing and should be encouraged.

Also - I don't think many lower income workers are buying 2500 square foot houses. Or if they are, they are far away from the city center - thus bringing in the issues raised above.

Certainly the movement I zoning departments across the land is to the new urbanism, denser, walkable neighborhoods with substantial public transportation options.  the traditional suburb is being phased out, and for good reason.  for instance I had a hand in writing regs. for what my city calls transportation Oriented Districts or TOD's, greater density while maintaining amenities.  less reliance on cars and parking, more on public transport, bus and light rail in the case of my City.  anyhow, not really my area.  I do believe this, developers have no interest in affordable housing, they are interested in profitable housing.  Cities, well they may have such an interest for their work forces.  If so they may have to incentivize such development as developers would prefer other options for their money and effort, currently.  The calculus has to change, and it will in response to other economic needs.  For instance I have noticed the resurgence, in new clothing, of the company towns of the late 19th century.

 

[Ditkaless Wonders]

Sometimes. What I've seen more of lately, though, is they are given zoning variances as incentive to build affordable.

So, for example, if you want to build bigger and higher than the current zoning allows, you have to make a certain percentage of the units affordable.

A strong trend in my city to be certain.

 

[whoknew]

Certainly the movement I zoning departments across the land is to the new urbanism, denser, walkable neighborhoods with substantial public transportation options.  the traditional suburb is being phased out, and for good reason.  for instance I had a hand in writing regs. for what my city calls transportation Oriented Districts or TOD's, greater density while maintaining amenities.  less reliance on cars and parking, more on public transport, bus and light rail in the case of my City.  anyhow, not really my area.  I do believe this, developers have no interest in affordable housing, they are interested in profitable housing.  Cities, well they may have such an interest for their work forces.  If so they may have to incentivize such development as developers would prefer other options for their money and effort, currently.  The calculus has to change, and it will in response to other economic needs.  For instance I have noticed the resurgence, in new clothing, of the company towns of the late 19th century.

Yea I posted an article at the beginning of this thread about Google, Amazon, and Facebook planning to build corporate housing. Like you said - its the return of the company town.

Not sure that's the best solution. But I applaud those companies for thinking outside the box. Its just really easy to see how that can turn bad.

 

[whoknew]

Gotcha. Do you think that's an effective practice? I'm in the construction world, in and around all types and price points for residential construction all over the country, and I've yet to see this in practice. 

I raised the question because it's something that's puzzled me for years. Why wouldn't the government give ample tax credits to the country's biggest and best builders if they participated in the construction of affordable housing? And I'm talking about communities - not sections of affordable units in a high-density platform. Is it the obvious reason? That the industry as a whole isn't into low or zero margin projects? Do you think there's a way to incentivize this process enough to get the major players to participate? 

I'm not a tax guy or a finance guy, but it seems like there is an opportunity there. 

I think some do give tax credits. Once again, I know Texas the best, but property taxes are very high here in Texas. So its not unheard of to see a government entity give a tax break to someone if they are going to build a lot of affordable. And that can turn a project profitable. But from what I can see, at current, local municipalities here prefer to use the zoning variance method over tax breaks.

 

[Ditkaless Wonders]

Yea I posted an article at the beginning of this thread about Google, Amazon, and Facebook planning to build corporate housing. Like you said - its the return of the company town.

Not sure that's the best solution. But I applaud those companies for thinking outside the box. Its just really easy to see how that can turn bad.

No question that when it is from a corporation and is cloaked as largesse that one ought to look for the strings attached.

 

[whoknew]

One interesting option a new entity is doing here in Austin is - I guess its called impact investing. The group is investing in existing multifamily, well here - 

"The Austin Housing Conservancy is a private equity open end fund that will invest equity from high net worth individuals, foundations, banks, and institutional investors primarily in existing multifamily communities targeted at workforce individuals and families. The Austin Housing Conservancy fund will limit rent rate increases to Austin area wage growth, thus 'bending the cost curve.'"

So its goal is to provide a modest return to investors while also keeping the housing affordable for workforce. Its an interesting concept.

 

[Steve Tasker]

Gotcha. Do you think that's an effective practice? I'm in the construction world, in and around all types and price points for residential construction all over the country, and I've yet to see this in practice. 

I raised the question because it's something that's puzzled me for years. Why wouldn't the government give ample tax credits to the country's biggest and best builders if they participated in the construction of affordable housing? And I'm talking about communities - not sections of affordable units in a high-density platform. Is it the obvious reason? That the industry as a whole isn't into low or zero margin projects? Do you think there's a way to incentivize this process enough to get the major players to participate? 

I'm not a tax guy or a finance guy, but it seems like there is an opportunity there. 

There are plenty of incentives, some tax-related, some not.

Some local incentives that our local developers use are NY Sec. 485-a property tax exemptions, PILOT agreements, sweetheart below-market financing deals through local IDAs, Capital Improvement exemptions from state sales tax, historical rehab credits.  Every locality and state will have similar opportunities for large-scale developers.  

At a federal level, the LIHTC would be the main driver of what you are referring to here, I think.  Also an option, but comes with a lot of red tape associated with it.  Accelerated depreciation (available to any business, not just real estate) is also very beneficial for developers.

Anecdotally, I used to work for one of the nation's larger privately-held real estate companies; they do both construction/development and property management.  They avoid residential real estate like the plague.  My understanding is that the rental protections associated with bad tenants were something they generally did not want to deal with.  Much easier to make a 10-year deal with a major non-residential tenant for $20,000/month on a space rather than 20 residential tenants at $1,000/month each.  Much easier to collect, much easier to sue, and much easier to manage.  I can't speak for other large real estate management companies/developers, but it wouldn't surprise me if they don't really want to be in the residential management space either. 

 

[dgreen]

In 1950 we averaged 3.4 persons per household and the average suburban home was a touch under 1000 square feet at 983 sq. ft.  That was right around 290 sq. ft. per person.  Now, well the average suburban home now is 2600 sq. ft. and the average occupancy is around 2.5 persons or a bit over 1000 sq. ft. per person.  It use to be that homes were one car garage homes, now three is the new norm.  It use to be that homes had no air conditioning, now, not so.  If things are less affordable in the category "Housing" it is largely because that category has come to mean something entirely different.

But don't we have several products that have become nicer/better over time and they haven't led to an affordability problem?

I'd guess if people wanted to resell their TVs and treated them as investment opportunities, we'd put laws into place that make the manufacture and distribution of them more difficult, driving up their price, and we'd have an affordable TV problem.

 

[Dondante]

There are plenty of incentives, some tax-related, some not.

Some local incentives that our local developers use are NY Sec. 485-a property tax exemptions, PILOT agreements, sweetheart below-market financing deals through local IDAs, Capital Improvement exemptions from state sales tax, historical rehab credits.  Every locality and state will have similar opportunities for large-scale developers.  

At a federal level, the LIHTC would be the main driver of what you are referring to here, I think.  Also an option, but comes with a lot of red tape associated with it.  Accelerated depreciation (available to any business, not just real estate) is also very beneficial for developers.

Anecdotally, I used to work for one of the nation's larger privately-held real estate companies; they do both construction/development and property management.  They avoid residential real estate like the plague.  My understanding is that the rental protections associated with bad tenants were something they generally did not want to deal with.  Much easier to make a 10-year deal with a major non-residential tenant for $20,000/month on a space rather than 20 residential tenants at $1,000/month each.  Much easier to collect, much easier to sue, and much easier to manage.  I can't speak for other large real estate management companies/developers, but it wouldn't surprise me if they don't really want to be in the residential management space either. 

Interesting. Thanks for the insight. 

 

[Koya]

Heya folks - as many of you know, I've steered clear of engaging in the forums for reasons stated a number of times, but this happens to be a subject of which, I have deep knowledge. In addition to affordability being one of the greatest issues facing almost every community in which I work (mixed-use real estate development and consulting work, the latter usually for municipal clients), I recently completed a 40 page white paper on the affordability crisis for a client detailing the causes, and potential strategies to overcome, this issue.

Yes, I am known for lengthy posts, but I'll try to keep this under 40 pages (if folks want a link or copy of the report I'll be happy to send via email, just PM me... and I have written probably a half dozen articles/blogs including a 5 part series on this issue).

A few top line thoughts:

Yes it's a crisis. Undersupply and growing demand

1. It is absolutely a crisis.  We have under produced housing by nearly 7.5 MILLION units from 2000-2015. 

2. To exacerbate the lack of overall production, much of the existing product is not suited for what today's consumer wants.  There is increased demand for rental apartments that is even further lacking than for sale single family... and both product types are in even greater demand (with less relative supply) in walkable, urban, locations (center city cores, mixed-use suburban nodes, smaller cities, and historic downtowns).

3. This is economics 101 - there is a SEVERE lack of demand. Overall, and moreso for the aforementioned market segments/geographic locations. 

Causes of the crisis: We ain't building enough (Duh)

1. The primary reason for housing affordability crisis is lack of new supply of new housing, especially those offerings that meet today's demand. This is due to a number of factors

2. The biggest factor is local resistance to almost any type of development, ESPECIALLY any development with density / rentals / multifamily (the most constrained and in demand product types as compared with demand... not saying there is more demand OVERALL for these typologies, but we have more single family homes compared to demand than we do for an albeit smaller overall market segment in rental apartments or condos, but there is such a dearth of the latter that there's a greater relative imbalance). NIMBYism is especially acute in the very areas that have the greatest demand such as the Bay Area.

3. For a confluence of factors, including NIMBYism and local resistance, there is even GREATER lack of supply not only for rentals in general, but for attainably priced rentals.  The same can be said for single family homes.  For rental/multifamily, there is such risk involved in the process that only large, very well capitalized developers can take the chance that a project might take 5, 7, 10 years to get approvals.  And some, never gain them at all.  This also results in only very large scale, institutional sized development as opposed to a range of building sizes.  It doesnt make sense to built 30, 70, 100 units.  So you see all these "similar looking" 250-350 unit buildings, often taking up an entire block for effenciency sake... but degrading the overall urban experience, walkability, and overall value of an area long term.  In terms of single family homes, who is going to build a 1200 sf house when any number of factors (including prohibitions on small scale multifamily like a four-plex or six plex, or lack of legal ability to build and accessory dwelling unit) make it far more profitable to build 3,500 sf.  So, if you only want/need/can afford the typical house of 30 or 50 years ago, there's very little new supply - often none. 

Long story short: our system is so difficult for developers to build, it only makes sense to build BIG... and to aim for lux and super lux segments.  As noted, there are affordable housing programs such as Low Income Housing Tax Credits (LIHTC) and other public programs, but that often means you can build for the poor or the rich, but not the vast majority of people in between.

Some strategies to address the issue (basically, make building more housing and more varied housing legal)

1. Most of all... WE NEED MORE SUPPLY.  So we need to create an environment where there is more development - of all product types, within all communities, at all scales. Small, medium, large.  Attainably priced through luxury (fyi, building more luxury, contrary to the complaints of the un/misinformed, actually helps LOWER the overall cost of housing for an area/region through increased supply, even if that new supply is too expensive for most, as other existing product then drops a rung on the "lux" meter)

2. Build a lot more "Missing Middle" product - by making it legal Missing middle usually connotes anything from accessory dwelling units to two-six or even 12 plexes.  These building types used to be found in almost every neighborhood... but neighborhood resistence/NIMBYism, often fueled by classest/economicist/racist underpinnings has resulted in almost no new product of these types being built.  These are simply ways to "gentle densification" of existing neighborhoods, and has been embraced by areas like Oregon and Minneapolis, that have made it all but illegal for local municipalities to have single family home ONLY zoning.

3. Allow and incentivize more 30-100 unit developments.  This is a key factor in smaller urban areas, historic downtowns and suburban locations.  As I will get to in my final point, below, we need to create an environment where local and regional, smaller scale investors/developers, can make money building smaller scale apartment complexes.  We can't survive only building 250+ units at a time, by a handful of the same companies - who are the only ones that can sustain the economics and/or have the political connections to get things done.

4. Streamline the approval process: Not only do we need to make it legal to build these housing types - we need to DRASTICALLY reduce to risk (both time and cost... not to mention overall uncertainty) of the entitlement/zoning process.  Make the process clear, transparent, and fair.  Have what is legal clearly defined... as opposed to today where many/most municipalities have vague or none-existent multifamily zoning where it really comes down to the whims of the city council and mayor to approve or decline each individual project.  The result of how we do it today is a lack of certainty, the ability for only politically connect developers to succeed, and too much leverage on behalf of elected boards to try to get a pound of flesh (or multiple pounds) from a developer in the form of additional requirements that the developer has to provide (more affordable housing, more parks/amenities for the public, ridiculously high impact and connection fees that render all but super lux developments economically infeasible).

5. Proximity, transit, and walkable, mixed-use development: Far too often, we look at the cost of housing as just that: housing. It's really the cost of housing in terms of its effect on the cost of living. The average car costs about $9,000-10,000 A YEAR to own and operate.  Not to mention time lost to commuting.  For those who must drive 45, 60, 90 minutes from their place of employment because they can't afford anything closer, those costs climb higher... for those who can least afford it.  If we build more housing near employment centers and also provide non-auto only options to commute, we can provide significant cost relief to families.  I'll have to confirm, but if a family can go from two cars to one car, they gain something like $150,000 more in ability to pay for a mortgage, and something like $1000-1,500 more in their pocket for rent.  Those are HUGE costs, and absolutely dependent on where housing is located.

Hope this first (and classically lengthy) post is informative.  Feel cute, might delete later (or rather, may or may not check in, as I don't want to get wrapped into the other threads here for aforementioned reasons). I will check my PMs though either way.

I could literally go on for pages here, but those are the basics.  TL;DR - we need to vastly increase supply of housing of all types, but especially multifamily and missing middle product types to counter the vast imbalance between growing demand, and stagnant and mis-purposed supply.

 

[supermike80]

Heya folks - as many of you know, I've steered clear of engaging in the forums for reasons stated a number of times, but this happens to be a subject of which, I have deep knowledge. In addition to affordability being one of the greatest issues facing almost every community in which I work (mixed-use real estate development and consulting work, the latter usually for municipal clients), I recently completed a 40 page white paper on the affordability crisis for a client detailing the causes, and potential strategies to overcome, this issue.

Yes, I am known for lengthy posts, but I'll try to keep this under 40 pages (if folks want a link or copy of the report I'll be happy to send via email, just PM me... and I have written probably a half dozen articles/blogs including a 5 part series on this issue).

A few top line thoughts:

Yes it's a crisis. Undersupply and growing demand

1. It is absolutely a crisis.  We have under produced housing by nearly 7.5 MILLION units from 2000-2015. 

2. To exacerbate the lack of overall production, much of the existing product is not suited for what today's consumer wants.  There is increased demand for rental apartments that is even further lacking than for sale single family... and both product types are in even greater demand (with less relative supply) in walkable, urban, locations (center city cores, mixed-use suburban nodes, smaller cities, and historic downtowns).

3. This is economics 101 - there is a SEVERE lack of demand. Overall, and moreso for the aforementioned market segments/geographic locations. 

Causes of the crisis: We ain't building enough (Duh)

1. The primary reason for housing affordability crisis is lack of new supply of new housing, especially those offerings that meet today's demand. This is due to a number of factors

2. The biggest factor is local resistance to almost any type of development, ESPECIALLY any development with density / rentals / multifamily (the most constrained and in demand product types as compared with demand... not saying there is more demand OVERALL for these typologies, but we have more single family homes compared to demand than we do for an albeit smaller overall market segment in rental apartments or condos, but there is such a dearth of the latter that there's a greater relative imbalance). NIMBYism is especially acute in the very areas that have the greatest demand such as the Bay Area.

3. For a confluence of factors, including NIMBYism and local resistance, there is even GREATER lack of supply not only for rentals in general, but for attainably priced rentals.  The same can be said for single family homes.  For rental/multifamily, there is such risk involved in the process that only large, very well capitalized developers can take the chance that a project might take 5, 7, 10 years to get approvals.  And some, never gain them at all.  This also results in only very large scale, institutional sized development as opposed to a range of building sizes.  It doesnt make sense to built 30, 70, 100 units.  So you see all these "similar looking" 250-350 unit buildings, often taking up an entire block for effenciency sake... but degrading the overall urban experience, walkability, and overall value of an area long term.  In terms of single family homes, who is going to build a 1200 sf house when any number of factors (including prohibitions on small scale multifamily like a four-plex or six plex, or lack of legal ability to build and accessory dwelling unit) make it far more profitable to build 3,500 sf.  So, if you only want/need/can afford the typical house of 30 or 50 years ago, there's very little new supply - often none. 

Long story short: our system is so difficult for developers to build, it only makes sense to build BIG... and to aim for lux and super lux segments.  As noted, there are affordable housing programs such as Low Income Housing Tax Credits (LIHTC) and other public programs, but that often means you can build for the poor or the rich, but not the vast majority of people in between.

Some strategies to address the issue (basically, make building more housing and more varied housing legal)

1. Most of all... WE NEED MORE SUPPLY.  So we need to create an environment where there is more development - of all product types, within all communities, at all scales. Small, medium, large.  Attainably priced through luxury (fyi, building more luxury, contrary to the complaints of the un/misinformed, actually helps LOWER the overall cost of housing for an area/region through increased supply, even if that new supply is too expensive for most, as other existing product then drops a rung on the "lux" meter)

2. Build a lot more "Missing Middle" product - by making it legal Missing middle usually connotes anything from accessory dwelling units to two-six or even 12 plexes.  These building types used to be found in almost every neighborhood... but neighborhood resistence/NIMBYism, often fueled by classest/economicist/racist underpinnings has resulted in almost no new product of these types being built.  These are simply ways to "gentle densification" of existing neighborhoods, and has been embraced by areas like Oregon and Minneapolis, that have made it all but illegal for local municipalities to have single family home ONLY zoning.

3. Allow and incentivize more 30-100 unit developments.  This is a key factor in smaller urban areas, historic downtowns and suburban locations.  As I will get to in my final point, below, we need to create an environment where local and regional, smaller scale investors/developers, can make money building smaller scale apartment complexes.  We can't survive only building 250+ units at a time, by a handful of the same companies - who are the only ones that can sustain the economics and/or have the political connections to get things done.

4. Streamline the approval process: Not only do we need to make it legal to build these housing types - we need to DRASTICALLY reduce to risk (both time and cost... not to mention overall uncertainty) of the entitlement/zoning process.  Make the process clear, transparent, and fair.  Have what is legal clearly defined... as opposed to today where many/most municipalities have vague or none-existent multifamily zoning where it really comes down to the whims of the city council and mayor to approve or decline each individual project.  The result of how we do it today is a lack of certainty, the ability for only politically connect developers to succeed, and too much leverage on behalf of elected boards to try to get a pound of flesh (or multiple pounds) from a developer in the form of additional requirements that the developer has to provide (more affordable housing, more parks/amenities for the public, ridiculously high impact and connection fees that render all but super lux developments economically infeasible).

5. Proximity, transit, and walkable, mixed-use development: Far too often, we look at the cost of housing as just that: housing. It's really the cost of housing in terms of its effect on the cost of living. The average car costs about $9,000-10,000 A YEAR to own and operate.  Not to mention time lost to commuting.  For those who must drive 45, 60, 90 minutes from their place of employment because they can't afford anything closer, those costs climb higher... for those who can least afford it.  If we build more housing near employment centers and also provide non-auto only options to commute, we can provide significant cost relief to families.  I'll have to confirm, but if a family can go from two cars to one car, they gain something like $150,000 more in ability to pay for a mortgage, and something like $1000-1,500 more in their pocket for rent.  Those are HUGE costs, and absolutely dependent on where housing is located.

Hope this first (and classically lengthy) post is informative.  Feel cute, might delete later (or rather, may or may not check in, as I don't want to get wrapped into the other threads here for aforementioned reasons). I will check my PMs though either way.

I could literally go on for pages here, but those are the basics.  TL;DR - we need to vastly increase supply of housing of all types, but especially multifamily and missing middle product types to counter the vast imbalance between growing demand, and stagnant and mis-purposed supply.

Lots and lots of words there to bascially say we need more houses, and more at a lower cost point--But (As I have said a gazillion times) NO ONE wants these lower cost housing settlements in their neighborhoods.

 

[The Narrator]

I know this issue best in Austin, so I will speak to that. 

Traditionally, lower income families lived on the east side of Austin. That is/has been completely redeveloped and lower income families moved out. To live in an area where lower income families can afford, they likely have to move quite a ways out from the city. And Austin doesn't have good public transportation yet.

So they have over an hour commute each way - which is both expensive and environmentally hazardous. 

Its a big problem.

A thousand times this. We can't separate the cost of housing from the cost of transportation, because we all have to get from our house to work and services. Low density suburbs and no convenient public transportation basically just offload the highest transportation cost in money and time off on the poorest among us. 

 

[whoknew]

This kind of #### frustrates the hell out of me. Its killing Austin and (I'm sure) other cities around the country:

Historic zoning

Similar stories happening all over Austin.

 

[The Narrator]

Single family zoning, minimum lot sizes, required setback, and minimum parking requirements all force people to be more spread out. Then we don't allow the businesses people need as part of their daily life to be anywhere near where they live. The density isn't high enough to support transit, we don't build infrastructure for anything but cars, so we force people into the most expensive method of transportation. Which makes parking a bigger issue than it should, and more parking spots spread us out even further. 

We built our entire environment in the way in which makes it the most expensive at just about every possible turn. And looking back into the not distant past, we did most of it on purpose to keep black people out of the white neighborhoods. 

Basically, we made a bunch of laws to make housing artificially more expensive. Then we applied those laws to about 80 percent of our residential land. And now we are shocked we have a housing affordability crisis. 

And that's to say nothing of the fact that we treat housing as an investment, and we've got a ton of people with most of their net worth tied up in this asset.

Its a huge problem and I don't see any kind of quick, simple, easy fix. We've done the wrong thing in just about every way for decades. 

 

[The Narrator]

On top of making housing less affordable, this development style (which is an 80ish year old experiment) is breaking our cities budgets too. Suburban development doesn't kick off enough tax revenue to municipalities to pay for services and cover long term maintenance obligations. 

And we can get into public health consequences of removing walking from the public sphere, the environmental impact of every part of this, the isolation our entire environment encourages, and a host of other stuff. This is a big problem. We treat these as local issues, but we're probably going to need a national response eventually because the public doesn't understand this and doesn't like change - especially the contingent that votes in higher numbers 

 

[GoBirds]

Single family zoning, minimum lot sizes, required setback, and minimum parking requirements all force people to be more spread out. Then we don't allow the businesses people need as part of their daily life to be anywhere near where they live. The density isn't high enough to support transit, we don't build infrastructure for anything but cars, so we force people into the most expensive method of transportation. Which makes parking a bigger issue than it should, and more parking spots spread us out even further. 

We built our entire environment in the way in which makes it the most expensive at just about every possible turn. And looking back into the not distant past, we did most of it on purpose to keep black people out of the white neighborhoods. 

Basically, we made a bunch of laws to make housing artificially more expensive. Then we applied those laws to about 80 percent of our residential land. And now we are shocked we have a housing affordability crisis. 

And that's to say nothing of the fact that we treat housing as an investment, and we've got a ton of people with most of their net worth tied up in this asset.

Its a huge problem and I don't see any kind of quick, simple, easy fix. We've done the wrong thing in just about every way for decades. 

Great posts, I agree with the bolded and am surprised some of our local municipalities aren’t open to higher densities but where I’m at the previously rural areas that are exploding want to hold to these large lot suburban layouts and are trying to rollback cluster developments they allow currently which make so much sense. 

 

[Koya]

Lots and lots of words there to bascially say we need more houses, and more at a lower cost point--But (As I have said a gazillion times) NO ONE wants these lower cost housing settlements in their neighborhoods.

No, that is not what was stated.  The nuance is important. 

First, yes, we need to build more housing - of all types.  Yes, a focus on lower price points.  But at ALL price points is the key factor here. And lower price points need to be focused on middle class, not subsidized and low income housing.

That said, we must understand the root causes of the issue - WHY, at any number of levels, are we not producing enough housing.

Then, we have to understand a multi-tiered approach to overcoming the obstacles to housing.  It's not as simple as "just build more" - for the reasons I listed (and many more, to be honest).

MOST of all, I want to know what do you mean by "housing settlements" - utilizing verbiage like that is very much a part of the problem:

1. It connotes that even low or moderately priced housing is a "settlement" which is a negative if not deraugotory term. That perpetuates the fears in many communities that lead to NIMBYism in the first place... settlement also connotes, whether you meant it or not, that those folks living there will be "different" - racially/ethnically, socially, economically - which is one of the most common reasons why folks present NIMBYism (racism/classism).  I'm not saying you harbor these feelings, but that language is at best, suspect, so I'm curious just why you chose "settlements" as a work.

2. "Lower cost" does not mean "subsidized" or "low income" - accessory dwelling units and other missing middle product types are hardly aimed for low income... what we need is for both single family and multifamily to be delivered where middle class America does not have to spend 30%+ of their income on housing, and moreso on housing + transportation.

Heck, my last point about transportation is something that doesn't even have to do with the sheer supply vs demand numbers in aggregate, so curious why you'd suggest it was a lot of words (it was) to "only" say we need more housing.

 

[The Narrator]

Great posts, I agree with the bolded and am surprised some of our local municipalities aren’t open to higher densities but where I’m at the previously rural areas that are exploding want to hold to these large lot suburban layouts and are trying to rollback cluster developments they allow currently which make so much sense. 

My two cents? Cars don't scale. They take up so much space. So when we grow we have big issues around transportation, and people see growth as the problem, they get upset at growth. They view higher density as more growth, and part of the problem rather than part of the solution. 

Then they go to city council meetings and yell at city council members who may or may not understand this, because city council isn't a real job. The council members want to protect their city (and not piss off voters) and do what they can to keep the vocal people from getting more upset with them. 

The system isn't set up to make big change or to do the right thing. The system is set up to preserve the status quo for the most part, but the status quo sucks. 

 

[GoBirds]

My two cents? Cars don't scale. They take up so much space. So when we grow we have big issues around transportation, and people see growth as the problem, they get upset at growth. They view higher density as more growth, and part of the problem rather than part of the solution. 

Then they go to city council meetings and yell at city council members who may or may not understand this, because city council isn't a real job. The council members want to protect their city (and not piss off voters) and do what they can to keep the vocal people from getting more upset with them. 

The system isn't set up to make big change or to do the right thing. The system is set up to preserve the status quo for the most part, but the status quo sucks. 

Totally agree, it’s nuts. We own some property that is in the municipalities comprehensive plan for up to 10 units/acre but the current zoning is for 1 and if we try to rezone to something inline with the comprehensive plan the NIMBYs would be out with pitchforks. The council people don’t have the backbone to stand up to them so the cost of development is through the roof and new homes are then $400k plus. It makes no sense long term. 

 

[parasaurolophus]

people see growth as the problem, they get upset at growth. They view higher density as more growth, and part of the problem rather than part of the solution. 

This would be me. Growth is a problem. This planet does not need more people. . 

 

[The Narrator]

This would be me. Growth is a problem. This planet does not need more people. . 

To grow or not to grow isn't a question. We're going to grow. The question is how we respond to it and if we make smart decisions in light of that fact. 

 

[supermike80]

No, that is not what was stated.  The nuance is important. 

First, yes, we need to build more housing - of all types.  Yes, a focus on lower price points.  But at ALL price points is the key factor here. And lower price points need to be focused on middle class, not subsidized and low income housing.

That said, we must understand the root causes of the issue - WHY, at any number of levels, are we not producing enough housing.

Then, we have to understand a multi-tiered approach to overcoming the obstacles to housing.  It's not as simple as "just build more" - for the reasons I listed (and many more, to be honest).

MOST of all, I want to know what do you mean by "housing settlements" - utilizing verbiage like that is very much a part of the problem:

1. It connotes that even low or moderately priced housing is a "settlement" which is a negative if not deraugotory term. That perpetuates the fears in many communities that lead to NIMBYism in the first place... settlement also connotes, whether you meant it or not, that those folks living there will be "different" - racially/ethnically, socially, economically - which is one of the most common reasons why folks present NIMBYism (racism/classism).  I'm not saying you harbor these feelings, but that language is at best, suspect, so I'm curious just why you chose "settlements" as a work.

2. "Lower cost" does not mean "subsidized" or "low income" - accessory dwelling units and other missing middle product types are hardly aimed for low income... what we need is for both single family and multifamily to be delivered where middle class America does not have to spend 30%+ of their income on housing, and moreso on housing + transportation.

Heck, my last point about transportation is something that doesn't even have to do with the sheer supply vs demand numbers in aggregate, so curious why you'd suggest it was a lot of words (it was) to "only" say we need more housing.

I agree lower cost doesn't mean subsidized and it shouldn't.  

And I guess I lost your point. I said we need more housing, you said that was not stated then in your very first sentence you said we need more housing?  So do we need more housing or not?

What I mean by settlements is this.  In my opinion, clustering low cost housing, or in some cases subsidized housing,  has proven to be unsuccessful over and over.  Therefore, for this to work, lower priced housing must be worked into suburbs, city centers and neighborhoods where they will be resisted...at every turn.  Leading to more gated communities, housing associations etc.   That's the challenge in my view.  You are going to have a very hard time dropping one or a few low cost housing units into higher priced neighborhoods.  

 

[parasaurolophus]

To grow or not to grow isn't a question. We're going to grow. The question is how we respond to it and if we make smart decisions in light of that fact. 

Well when governments make decisions based on anticipated tax revenues from growth that collapse without growth of course we will grow in those areas. 

My city would be in huge trouble if they didn't keep approving new projects because they are starving for tax dollars that they have already spent. This mindset is terrible and leads to bad corporate welfare deals and TIFs. 

Taken on a nationwide scale it is worse and creates loops. We need more housing! Omg, we need more immigrant workers to build housing! Oh no, we need even more housing we forgot those workers need to live somewhere! Oh crap we need more workers! Ok, the housing is built, we need more jobs for those workers now! I know, lets offer a huge corporation a tax free deal to relocate here! Omg we need more workers for farming because those other workers wont do that, but we have to feed them! Oh crap, we need more housing again. Hey how come these companies aren't paying any taxes?

 

[parasaurolophus]

Washington Can’t Solve a Housing Crisis That Doesn’t Exist 

I realize it is mother jones and just a contributor, but from a little bit of research, the numbers do seem to check out. It is a pain to navigate that bureau site IMO, but that page I linked has good info and then if you just search in the bar for different terms in his article, you can see it looks like accurate numbers. 

 

[GROOT]

Do high property taxes play a role in this?

 

[parasaurolophus]

Do high property taxes play a role in this?

What do you mean? Like even if there was housing approved in an area truly making it affordable would be hard because of property taxes? 

 

[parasaurolophus]

What I mean by settlements is this.  In my opinion, clustering low cost housing, or in some cases subsidized housing,  has proven to be unsuccessful over and over.  Therefore, for this to work, lower priced housing must be worked into suburbs, city centers and neighborhoods where they will be resisted

I actually think putting lower cost, unsubsidized housing in lower income areas has been proven to help an area. The problem is that gentrification has become such a dirty word. 

There are ways this can be accomplished that would help the vast majority of residents in areas but the media and activists would only focus on a few families that got priced out so who really wants to try?

 

[GROOT]

What do you mean? Like even if there was housing approved in an area truly making it affordable would be hard because of property taxes? 

Do owner/landlords pass on higher property taxes to tenants?

 

[The Narrator]

Well when governments make decisions based on anticipated tax revenues from growth that collapse without growth of course we will grow in those areas. 

My city would be in huge trouble if they didn't keep approving new projects because they are starving for tax dollars that they have already spent. This mindset is terrible and leads to bad corporate welfare deals and TIFs. 

Taken on a nationwide scale it is worse and creates loops. We need more housing! Omg, we need more immigrant workers to build housing! Oh no, we need even more housing we forgot those workers need to live somewhere! Oh crap we need more workers! Ok, the housing is built, we need more jobs for those workers now! I know, lets offer a huge corporation a tax free deal to relocate here! Omg we need more workers for farming because those other workers wont do that, but we have to feed them! Oh crap, we need more housing again. Hey how come these companies aren't paying any taxes?

The problem here is that the way we build residential (primarily suburban) doesn't kick off enough tax revenue to pay for services and infrastructure maintenance. So we build more, collect impact fees up front, and use those impact fees to do back maintenance, and in the process inherit yet more development that costs more than it makes us long term. It's a ponzi scheme. 

Growth isn't the problem or the solution. It's what happens to human populations. The problem is how we build to accommodate for that growth. 

 

[The Narrator]

Do owner/landlords pass on higher property taxes to tenants?

As a general rule, landlords will charge what the market will bear, and their own costs don't have anything to do with that. 

Do landlords charge less when the mortgage gets paid off? Nah. 

 

[The Narrator]

I actually think putting lower cost, unsubsidized housing in lower income areas has been proven to help an area. The problem is that gentrification has become such a dirty word. 

There are ways this can be accomplished that would help the vast majority of residents in areas but the media and activists would only focus on a few families that got priced out so who really wants to try?

One of the issues is that we have so few high quality urban areas that when one pops up it gets filled by people with means because they're who can afford the in demand place. 

I don't know how to completely solve this problem because it's not that simple, but it seems like building more cool urban areas would reduce gentrification concerns. 

 

[The Narrator]

I agree lower cost doesn't mean subsidized and it shouldn't.  

And I guess I lost your point. I said we need more housing, you said that was not stated then in your very first sentence you said we need more housing?  So do we need more housing or not?

What I mean by settlements is this.  In my opinion, clustering low cost housing, or in some cases subsidized housing,  has proven to be unsuccessful over and over.  Therefore, for this to work, lower priced housing must be worked into suburbs, city centers and neighborhoods where they will be resisted...at every turn.  Leading to more gated communities, housing associations etc.   That's the challenge in my view.  You are going to have a very hard time dropping one or a few low cost housing units into higher priced neighborhoods.  

Absolutely agree. If we cluster the lower priced housing we create something resembling a ghetto. It should be legal to build missing middle type homes - plexes, row houses, cottages, etc in all neighborhoods. But at a local level, the people already there are a much more powerful influence than the people who aren't there yet because we haven't built for them. 

Which is why earlier in the thread I think I mentioned that local control is keeping us from solving this issue. Oregon just eliminated single family zoning this last legislative session. That's an amazing step, and one I think that is vital not only to housing affordability but to long term municipal financial stability. 

 

[GoBirds]

Absolutely agree. If we cluster the lower priced housing we create something resembling a ghetto. It should be legal to build missing middle type homes - plexes, row houses, cottages, etc in all neighborhoods. But at a local level, the people already there are a much more powerful influence than the people who aren't there yet because we haven't built for them. 

Which is why earlier in the thread I think I mentioned that local control is keeping us from solving this issue. Oregon just eliminated single family zoning this last legislative session. That's an amazing step, and one I think that is vital not only to housing affordability but to long term municipal financial stability. 

What do you mean by this, elimination of any new single family home developments? Is that possible?

 

[The Narrator]

What do you mean by this, elimination of any new single family home developments? Is that possible?

Not at all. They just eliminated the restriction that only single family homes could be built in any neighborhood. People can now build missing middle housing in addition to single family homes. 

 

[Sand]

And that's to say nothing of the fact that we treat housing as an investment, and we've got a ton of people with most of their net worth tied up in this asset.

It is an investment.  Always has been.  Has there ever been a time when people didn't sink a lot of their net worth into real property?

This would be me. Growth is a problem. This planet does not need more people. . 

Growth in the US is basically nonexistent without foreign immigration.  Close the borders and you have your solution, at least here.

What we do see is the emptying of the countryside for the cities (and the biggest problems you hear about are centered in a small number of "hot" locations).  There is plenty of inexpensive housing in smaller communities.

Washington Can’t Solve a Housing Crisis That Doesn’t Exist 

That's the best researched article I've read on that site.

 

[Koya]

I agree lower cost doesn't mean subsidized and it shouldn't.  

And I guess I lost your point. I said we need more housing, you said that was not stated then in your very first sentence you said we need more housing?  So do we need more housing or not?

What I mean by settlements is this.  In my opinion, clustering low cost housing, or in some cases subsidized housing,  has proven to be unsuccessful over and over.  Therefore, for this to work, lower priced housing must be worked into suburbs, city centers and neighborhoods where they will be resisted...at every turn.  Leading to more gated communities, housing associations etc.   That's the challenge in my view.  You are going to have a very hard time dropping one or a few low cost housing units into higher priced neighborhoods.  

Sorry, just now checking in, appreciate the response.

Yes, we need more housing, of all types, and all pricepoints (even more new luxury housing, especially apartments, helps drive down the overall cost throughout a market and it is the only sustainable and successful long term approach. Supply vs Demand, again).

I was taken back by the word "settlements" because people so often use loaded and veiled terms when it comes to their anti-growth, anti-housing stances.  Settlements has a really bad connotation, but I agree 100% that when you build a bunch of subsidized, low income, housing all in one area, you are creating both a slum, and a negative economic and social spiral that becomes a self fulfilling prophecy for failure - for both residents of that "project" and the neighborhood itself.

I fully recognize that most communities resist even the more gentle approaches that I mentioned above such as ADU's, missing middle etc.  However, this has become a crisis enough that we must find ways to overcome that resistance, and that is possible. Four tools to do so:

1. Carrot and stick approach - let local municipalities still have control to say "no" to new housing. But those that resist new housing, including and especially attainably priced and multifamily options go to the bottom of the list for County, State, and Federal funds.  Do what you want, but don't expect the tax payer to subsidize your exclusionary zoning.

2. Locate appropriately and provide incentives to do so - put more dense apartment/condos in or near existing downtowns or within planned mixed-use developments and districts, all the moreso near transit.  Provide funding and other tools to localities and companies/individuals willing to do this, and DON'T subsidize continued low density sprawl.

3. To reiterate, work at all scales. From ADUs and missing middle (where you can provide small contractors or churches with revolving loans that get repaid and then re-loaned to incent additional smaller scale affordable development) to the larger stuff, under the umbrella of the first two strategies above.

4. Take an inclusive, public facing approach to new development - I know this first hand, as I created one of the more successful public engagement platforms, which overcame huge NIMBYism to garner significant entitlements for mixed-use development that included a full range of multifamily zoning. We did this through crowdsourcing support, working with the local communities in a grass roots effort, amplified by in person meet ups and social networking tools.  The key was to focus not on a plan initially of what we as the developer would build, but on the process.  Start with goals that the community wants to achieve (a place their kids can afford to live, job creation, boost of tax base, vibrant downtown, support for local businesses, more walkability, etc)... you get these desired outcomes and the only way to achieve what the COMMUNITY asks for is a mixed-use approach that includes a range of income levels for the housing we would build.  I know this from experience, and it can overcome extreme resistance in some of the most anti-growth markets in the country.

Sorry for the verbosity.