Why Can’t I Afford to Live Here?
Housing has become expensive all over, at least if you want to be near a source of employment.
In some coastal areas, the cost of housing is ridiculous. Case in point: people in New York City will pay $1,800 for 98 square feet in a building where there is access to a kitchen, but otherwise just a room and bathroom, basically the size of a walk-in closet.
In other areas—like the rust belt Midwest and Great Lakes areas where the job opportunities are slimmer, there is shrinkage—more houses than takers. The same is true in Pittsburgh, which underwent a massive transformation from its industrial heyday, which after going into a long decline is now getting its footing back as an “eds and meds” corridor. But that’s attracting young graduates; not so much the middle class families that fled long ago. The result: 650,000 existing structures and only 350,000 people, according to 2008 numbers.
In these specific urban realities, the problem becomes getting rid of the glut of available dwellings—not to mention the aging infrastructure—which, if you include the fire and police and other services that maintain them all year after year, has become a burden on the taxpayers.
But in places where real estate markets are exploding, affordability is the critical issue. Prohibitive prices make it more difficult for people to move to places they prefer and harder for employers to find service workers and all the people who keep the high-priced urban areas humming.
Even in the Great Depression, it was possible to have enough square footage to house a family, often a multi-generational family, unless you were of course living in the Dust Bowl, which impacted America’s Southern Plains region. People who were lucky enough to own houses during this time took in boarders, and construction, if you had any money, was cheap.
For years it was possible to find housing that matched one’s income. The usual markers were size, age of the house or apartment, and location. “Drive till you qualify” became the watchword in the 1960s for folks who worked in the city and were looking for middle-class, suburban life. It is still is a reality, though the distances have become longer and the commutes more expensive. It began to change in the 1980s, with a brief setback with the crash of 1987.
The Recession of 2008 saw the first real deflation of the real estate market since 1929. But this time the recovery of new construction was slow and began in the high-end market. There was no real incentive to build lower- and middle-end housing as long as a developer could get a fast and good return on a McMansion.
In metro areas experiencing a resurgence of economic growth, the lack of housing for middle and lower income families is a stark reality. Seniors and soon-to-be retired folks on fixed incomes are also struggling to find affordable places to live. Add the younger people just starting out, trying to establish a household. Even the requirements for renting are daunting. First month’s rent, last month’s rent, and a month’s damage deposit can be quite a bit when the average apartment is close to $2000.
The government has moved into this issue, usually in a state-by-state way. Generally there’s been a move to limit affordable units to those with “qualifying” income. In other words, it’s not available if you have a decent income and simply want to live well within your means.
In Massachusetts, and with variations in other states in the Northeast, the basis for affordable housing programs is based on 80 percent of median income. So if the median area income (AMI) in the greater Boston area (according to most recent numbers) is $107,800, a family of four with an income of $81,100 or less would qualify for affordable housing. The state goal is for every town to have at least 10 percent affordable housing, but most fall short, even when the law incentivizes it. As an inducement, developers of new projects are allowed to bypass town zoning laws if a) 25 percent of the proposed units are designated affordable, and b) the town currently has less than 10 percent affordability. This is certainly incentivizing because many townships in Massachusetts have restrictive zoning with low density or relatively large lot size requirements. The state also offers tax incentives to developers who pursue new construction or significant upgrades to existing buildings, of which at least 80 percent of units are “market rate” or affordable housing.
Trailers, or mobile homes, can’t be counted as a town’s affordable housing stock under current Massachusetts law. It doesn’t matter because in many towns in Massachusetts, trailer parks are zoned out because they are considered blight.
But in reality, trailers are market rate, affordable housing. The “trailer trash” stereotype might prevail in New England but it doesn’t in retirement areas in the southwest and Florida. Giving the trailer or mobile home a social facelift lies in designing better parks and the dwellings themselves. Some of the units designed in response to the hurricane Katrina disaster were a first step in using the cost efficiency of manufactured housing to bring in a kind of small, affordable housing in that could be used as an infill, as a small development along the lines of a pocket neighborhood, or even a larger development.
The popular Pocket Neighborhood style—small houses grouped together to provide a sense of community—can make very efficient use of land and appeals to people who want to be close to others, in a neighborhood. There is a real need for zoning to respond to this. I think there is a path for a new urbanist solution for this kind of layout.
But the real problem with the affordable housing today is the selection process for who gets it. I recently saw a 23-page application for a affordable housing rental. Anyone who is self-employed will find that gross income, not net income is counted. For example, in the application, it states that someone with a bicycle repair business who might buy parts, a bicycle chain, even a bike at wholesale to be sold at retail, must count the gross income with no deduction for expenses or parts.
The rental form concludes with the information that for a single person renting an apartment, the maximum income allowed is $54,000, but it also points out that the minimum you must make to qualify for the rent (about $1600 a month) is $50,000. All the applicants must be entered into a lottery and this whole process (except the lottery) must be repeated every year. But if your income changes, if your marital status changes, you may be forced to move.
There is a move among New Urbanists to look also at what codes do to force real costs of development up. Close study of all the complex state and federal restrictions shows that one of the cheapest forms of housing to develop is a four-unit, wood frame walk-up apartment. Without an elevator, and small enough, this two- or three-story building can meet Federal Fair Housing, ADA, and the International Building Code and still be efficient to develop and rent.
The cost impacts of going bigger, like adding elevators, or more expensive construction, is worth understanding if you want to build something that is rentable at a rate than can amortize a mortgage and still be affordable. This kind of building can also be added into all sorts of small infill sites. The logical developers of this kind of housing are small scale developers who can hold the properties and build a portfolio of buildings, maybe costing $500,000 to $1million to build, but bringing lasting value to a neighborhood and a way for small scale developers to build wealth.
Essentially this is downsizing the idea of development—incremental small development. This can also include mixed use, and live-work—apartments above the stores solutions.
This also brings back the traditional patterns of neighborhoods and small towns. What stops this from happening, this more naturally occurring affordability, is a combination of zoning, rigidity of existing regulations on affordability, and the complexity of the financing programs. Efforts on all of these fronts would go a long way towards easing the affordability problems in our growing metro-urban centers.
Sara Hines is an architect, developer, author and urbanist based in Massachusetts. She is currently working on a 40B affordable housing project. [email protected]