Tuesday, August 11, 2020

Why Isn't "Affordable Housing" Affordable?

Affordable housing means different things in different parts of the country. In the Washington, DC to Boston corridor it could mean an average new home costs about $350-400,000.

In the South, maybe $185-200,000 while the Midwest could be somewhere between the two. Head into the California to Washington State corridor along the coast and $600-1,000,000 might be the affordable standard.

So just how is an affordable housing established in each region. Simply put, it is the house a median income borrower(s) can afford. Where there are more higher paid employees, the price of affordable housing goes up.

In the case of some parts of the country, the median price is lower because the overall median income is less. Makes sense to me.

But that is not what comes to mind today. Back in the 1950 - 60’s, a single family affordable house was typically a 960 sq ft ranch with no garage on a nice lot with grass and a deck. Think Levittown.


In the 1990’s and 2000’s, the ranch style home morphed into an 2,000 sq ft two story or cape cod with a garage on a bigger lot. Just look at any communities developed by tract builders to see these homes.

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Over the past few years,'affordable’ has became a Millennial thing. Huge College debt, poorer paying jobs and their wanting to be close to the city is forcing everyone to rethink what “affordable” is, not only for them but a lot of Gen X homebuyers also.

Today’s affordable housing comes in many forms that weren’t even on the radar just 10 years ago. Here are couple examples of 'affordable' the Boomers never needed to consider. That is now changing for today's Millennial.

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Tiny Houses built on trailers you can buy at Home Depot and put in a relative’s backyard just long enough to buy a real house.

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Stacked Cargo containers converted into housing. Reminds one of where the robots lived in the movie IRobot.

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Converted storage sheds sold by landscape supply houses, 84 Lumber and Lowe’s.

Something else that the Boomers and early Gen X’ers didn’t have to face were high land costs, impact fees, water runoff management, high septic, well or public utility costs. I was looking at empty lot near my home (rural undeveloped) and quickly learned the $51,000 price tag for the one acre lot turned into $94,500 with all the regulations, fees and utilities. And that was before a single shovel of dirt was turned. Yikes!

Some areas of the country have impact fees of $25,000, 50,000 and in some areas, the impact fees can be close to $100,000. Double Yikes!

The next time you hear that ‘what we need is more affordable housing”, don’t confuse what was affordable with what is affordable today.

Today’s tract builders are struggling with this problem and looking for ways to ‘right size’ their offerings but most are finding it darn near impossible. Many developers, city planners and designers are looking to prefab to solve the problem but as long as there is no economy of scale, that will probably never be a long range solution.

On the other end of the spectrum, new home construction is beginning to see larger homes being built for the homebuyer that has moved beyond affordable.

There is a change coming to the modular housing industry over the next ten years and our industry is working on different ways to address this changing market.

1 comment:

Kevin said...

Affordable is a term like the word Normal as there is no clear definition for either simply based on the fact that what is Affordable or Normal for one is different for everyone else.

In my 35 years in government service I clearly recognized that Planners were chasing the winds of political opinions rather than Planning for the needs of the Community. There are many factors holding us back from helping the next generation and Gary has focused on just about all of them except Politics. Most Planners are conscious and very focused yet are redirected from best practices by Public Hearings and Political winds of the day.

Add to that RMA, RPA, Zoning and Subdivision Ordinances at the local levels all created and applied differently in spite of state laws governing in most states and professional designations aside. Its the Fiefdom Principle along with Selective Enforcement that drive away good developers and great developments over not knowing what the answer is today as it changes with the wind. Part of it is the minority vocal opinion of Not In My Back yard because.......syndrome.

A few articles back I mentioned ZONING as the number 1 problem for building as many disagreed and I can accept that as I didn't state I was always right given I was just expanding upon my own experiences and education. Many of us have witnessed the entrance of HUD Secretary Dr. Ben Carson into the discussion of Affordable Homes and what is the Number 1 reason why Secretary Carson can't achieve his goals at HUD? Yes its Zoning at the local level or Where to Place Manufactured Homes as an affordable alternative in the marketplace. Enter CROSSMod, National Mall Shows and so on.

Zoning was created to expand Home ownership, not restrict it and the following history lesson explains such ..."The State Standard Zoning Enabling Act (SZEA) is a federal planning document drafted and published through the United States Commerce Department in 1924, which gave states a model under which they could enact their own zoning enabling laws. The genesis for this act is the initiative of Herbert Hoover while he was Secretary of Commerce. Deriving from a general policy to increase home ownership in the United States, Secretary Hoover established the Advisory Committee on Zoning, which was assigned the task of drafting model zoning statutes.

In conclusion, if somehow Secretary of Housing and Urban Development Dr Ben Carson can convince the Secretary of Commerce to rewrite the Model Zoning Ordinance to its original intent which was to "Increase Home Ownership" and not restrict it or align districts in that its not beneficial to develop as such than and maybe then Affordable Housing will become the "norm" for all seeking a HOME not just a HOUSE.

Gary keep the discussion going and maybe some day both industry and government will find common ground where one sided opinions and politics are removed from the solution. Thank you for permitting me to comment.