Fighting over affordable housing in Cedar Rapids

Lest you think NIMBY responses to new housing are limited to expensive cities, here is a case of opposition to 45 affordable housing units in Cedar Rapids, Iowa:

Neighbors said they didn’t oppose affordable housing per se, but that they feared the burden of the construction on their area, citing issues such as an increase in traffic and car accidents, potential flooding, and a lack of walkability for incoming residents. The developer said it had selected the site because it would immerse residents in a middle-density community with access to family amenities, including a bus stop, parks, and an elementary school.

At first, it looked like NIMBYism had prevailed: The petition and complaints convinced the city planning commission to vote against the request to rezone the property at an April 2016 meeting. But a few months later, the proposal was revived, becoming a test of what it would take to defeat neighborhood concerns and develop affordable housing that was integrated into rather than segregated from low-poverty communities.

That’s when the real animosity started to emerge, according to Phoebe Trepp, the director of Willis Dady, the local homeless services organization that would provide assistance at the development…

City leaders are also interested in spreading affordable housing throughout the city, rather than clustering it in the poorer southeast quadrant. Susie Weinacht, a City Council member at large, says that city staff want “housing options available throughout the community.”

This sounds fairly typical. A decent-sized community has difficulty providing affordable housing as well as dealing with homelessness. The city wants to spread the affordable units throughout the city so that poorer residents are not concentrated in one area (and perhaps to limit political opposition if one area had to host more units). Residents are not happy about this. They raise all sorts of common concerns about new developments – traffic, too much density near single-family homes, water issues, negative effects on property values – while also hinting at issues of race, ethnicity, and class (not cited in the excerpt above but more details are in the full article). A public debate ensues, one side wins, and the other side is not happy.

Is there a better way to do this whole process? Toward the end of the article, an official says that affordable housing initiatives work best when the support is from the grassroots (rather than planned by local or larger governments). This is probably true. Yet, how does one convince working-class to upper-class residents that it is in their interests to live near affordable housing? This is an incredibly tough sell to make to many Americans.

It is also worth asking about how the neighborhood fares within five, ten, twenty years of the construction of affordable housing units. Are the fears of Cedar Rapids neighbors unfounded? Does a denser development significantly alter the character of the community and drive existing residents away? Having some of these facts may not matter to some residents but showing some data could help ground the discussions in reality rather than emphasizing possible negative effects.

Crossing the line into NIMBYism

Author Margaret Atwood is opposed to an eight story residential building that would back up to her home in pricey Toronto. In some exchanges on social media, Atwood was accused of a NIMBY attitude. This raises an interesting question: when does one’s actions move from normal concerns about a home or neighborhood and into NIMBYism? Here is a description of Atwood’s concerns:

As the debate escalated, Atwood threw shade at a prominent local urbanist, accusing him of being in the pocket of developers, and went toe-to-toe with the architecture critic of a major Canadian newspaper.

The exchanges were confusing because, historically, Atwood has championed urban issues. She fought cuts to the Toronto Public Library under Mayor Rob Ford and opposed a plan by the University of Toronto to cover one of its historic green spaces in artificial turf.

In actuality, the opposition Atwood officially registered with the city was muted compared to those of others, particularly her husband, author Graeme Gibson.

“[The condo] hover[s] close to a brutal and arrogant assault on a community that has been here since the 19th Century,” he wrote in an email to the local city councillor.

In her email, Atwood focused on potential damage to several trees with roots in the development area, and later insisted on Twitter she would prefer affordable housing and a community center in the building.

In really expensive markets, perhaps anyone opposed to new housing units could be accused of NIMBYism. In many cities, there is a shortage of affordable housing and, as the article notes, it seems like wealthier residents do not want to live near cheaper housing and they have the clout to contest development. Additionally, it is difficult to imagine how sufficient housing units could be provided without making major changes to neighborhoods and cities as a whole.

But, is there also a way that NIMBYism is particularly expressed? This particular article hints at three possible distinctions. First, her husband used particular language. Perhaps taking a haughty or dismissive tone does not help. Second, Atwood has fought for the people regarding other city issues so perhaps she is not the average, out-of-touch wealthy resident. Third, Atwood may be trying to make a more nuanced argument – not opposed to the building but opposed to its uses – but this is difficult to relay through social media and it may not matter in a city like Toronto where housing is a controversial issue.

For better or worse, NIMBY is in the eye of the beholder. When arguments about land use and personal property arise, they are often heated. Accusing an opponent of NIMBY and the related idea that they are trying to keep people away from what they already have is a common tactic. Whether this application of a label helps the process in the long run is another matter to consider.

No cheap homes left at the bottom of the housing market

One downside of increasing housing values is that the lower end of the market also rises:

More telling is that at the start of 2013, when home prices were just beginning to bounce off the bottom of the housing crash, the share of homes sold above $500,000 was just 9 percent of all sales. Today that share is more than 14 percent. The share of lowest-priced home sales today is less than half of what it was then as well.

“On the lower end, there is virtually no property at a very low price level anymore,” said Lawrence Yun, chief economist for the National Association of Realtors. “The same property has been moved up to a different price bucket just because the prices have been rising strongly, over 40 percent price appreciation in the past five years. We are not getting the transactions on the lower end because there is virtually no inventory on the lower end.”

In the wake of the housing crisis, investors bought thousands of low-priced, distressed homes, putting a price bottom on the market but also removing lower-priced inventory. The expectation at the time was that if prices jumped, the investors would sell. For the most part, they did not. In fact, investors continue to buy properties, even at peak prices today because both the rental market and the market to flip these homes are so lucrative…

Homebuilders are continuing to increase production and selling homes they haven’t even built at a historically fast pace. They are not, however, putting up low-priced homes, even though demand there is high. They argue they cannot make the margins work, given the high costs of land, labor, materials and regulation. The median price of a newly built home recently hit a record high.

Two quick thoughts:

  1. I thought letting this go to the markets would solve the problem. In other words, if there is a need for cheaper housing, shouldn’t the market correct? It does not appear this is happening as builders do not want to have smaller margins. Some interventions may be necessary if no businesses see an opportunity.
  2. This makes the issue of affordable housing even more difficult. Many big cities already have major shortages of affordable housing. If prices keep increasing and little is being built at the lower end, might be drastic consequences?

Over decades, luxury housing can become affordable housing

Several examples suggest one source of affordable housing today is luxury housing built decades ago:

One of these complexes was the Timberlee in suburban Raleigh Hills, a close-in suburban neighborhood. According to The Oregonian, the Timberlee on SW 38th Place was one of the most prosperous of the 13 apartment complexes it examined in its story, with 97 percent of its 214 units rented.

The Timberlee Apartments are still around today. While none of the units are currently for rent, according to Apartments.com, rents in the area run from about $1,000 for studios and one-bedroom units to $1,300 and more for two-bedroom and larger apartments. By today’s standards, the Timberlee seems modest, and a bit dated, rather than luxurious…

New housing is almost always built for and sold to the high end of the marketplace. It was that way 100 years ago and 50 years ago. But as it ages, housing depreciates and moves down market. The luxury apartments of two or three decades ago have lost most of their luster, and command relatively lower rents. And the truth is, that’s how we’ve always generated more affordable housing, through the process that economists call “filtering.” And the new self-styled “luxury” apartments we’re building today will be the affordable housing of 2040 and 2050 and later.

What causes affordability problems to arise is when we stop building new housing, or build it too slowly to cause aging housing to filter down-market. When new high-priced housing doesn’t get built, demand doesn’t disappear, instead, those higher-income households bid up the price of the existing housing stock, keeping it from becoming more affordable. Which is why otherwise prosaic 1,500-foot ranch houses in Santa Monica sell for a couple of million bucks, while physically similar 1950’s era homes in the rest of the country are either now highly affordable—or candidates for demolition.

If this is one of the larger sources for affordable housing, then the lesson seems to be that we just need to construct lots of housing all the time. Not all of the expensive housing will filter down to cheaper prices but some will as it ages and the neighborhood or community conditions change.

In the bigger picture, this also suggests there is not an easy immediate fix to affordable housing. Once it is identified as a problem in a community or region, it may be too late. Instead, the housing built today – and even housing proposed right now often takes a while to go through the full planning, approval, and construction process – could affect conditions decades later.

Will a major need for affordable housing lead to population gains in less desirable places?

As I read another story the other day about a need for affordable or reasonably priced housing – this time for aging baby boomers – it led me to a hypothetical question: would people move to less desirable locations if housing there was significantly cheaper? Many Americans have retired to cheaper locations that also have other amenities like nice weather (think Florida and Arizona). But, would they move to cheaper suburbs within a metropolitan region that perhaps has a lower quality of life or move to a new state that is cheaper but less glamorous (think a move from the Chicago region to Kansas or Youngstown, Ohio)? In other words, would they trade fewer amenities for cheaper housing? Is cheap housing so big of an issue that many people will move to acquire it? Conservatives argue that people should vote with their feet. And the continued population gains of the Sunbelt suggest that they do, to some degree. But, people have particular ideas about what they expect when they move. For retiring, they often want to go somewhere warm. For affordable housing, they want to go to nice communities.

These desires strike me as normal in our society: people want a nice yet affordable place to live. However, is this possible? Does the movement of people to particular locations drive up prices and long-term costs (providing a higher quality of life has to be paid for by someone)? In the end, can you really have it all: an affordable place to live but with great care or nice amenities or a high quality of life? Maybe not.

Imagine affordable housing is such an issue in the Bay Area that a large group of retirees decides to move to a small town in North Dakota. With the money made on the sale of their homes in the Bay Area (or the large rents they save), they have money left over to both save for the future and put into the local community. Granted, North Dakota doesn’t have the same kind of life as the Bay Area – no major city, different weather and topography, and social connections left behind – but the housing is certainly cheaper and the anxiety about day to day existence might be reduced. This might sound far-fetched outside of some odd religious group…but if housing is such a need, why couldn’t it happen?

Searching for communities for the under $20k house for poorer residents

Truly cheap yet good housing is hard to find. Here is a group who thinks they found an answer though the construction may be the least of their issues:

For over a decade, architecture students at Rural Studio, Auburn University’s design-build program in a tiny town in West Alabama, have worked on a nearly impossible problem. How do you design a home that someone living below the poverty line can afford, but that anyone would want–while also providing a living wage for the local construction team that builds it?

In January, after years of building prototypes, the team finished their first pilot project in the real world. Partnering with a commercial developer outside Atlanta, in a tiny community called Serenbe, they built two one-bedroom houses, with materials that cost just $14,000 each.

The goal: To figure out how to bring the ultra-low-cost homes, called the 20K Home, to the broader market. “We’re in a kind of experimental stage of the program, where we’re really trying to find out the best practice of getting this house out into the public’s hands,” says Rusty Smith, associate director of Rural Studio. “Really this first field test was to find out all the things that we didn’t know, and to find out all of the kind of wrong assumptions that we had made, and really find out how we had screwed up, honestly.”…

In Serenbe, their first problem was a zoning issue: The houses were too small. (It’s a common problem for anyone trying to build a tiny home.) But they also realized there were numerous other issues, from dealing with insurance, to the bank. In the pilot project, the homes will be owned by the community and shared with artists as part of a residency program. But in a typical case, when someone is buying the house on a limited income and can’t afford the $20,000, banks won’t finance a mortgage for such a small amount of money.

It is worthwhile to consider that the actual construction is not the issue. Rather, how many communities and institutions really want to have cheap housing nearby? This is a common problem with creating cheaper housing: it is often within communities that are already cheaper, leading to issues like a lack of property value appreciation, a concentration of lower income residents, limited local tax revenues, and a stigma for the community.

The real trick with cheaper housing, then, is to be able to intersperse it among more expensive housing. We know this is especially helpful for young kids. (Thinking of the larger picture, this is why school integration wouldn’t go far enough – you don’t just want to bus students to go to school together but you want a range of incomes and groups to live near each other.) Again, who is really open to this?

Legislative options to add more housing in California

A number of legislative options are on the table in California to encourage the construction of more housing and counter the actions of nearby residents:

Dozens of the solutions floating in the state Legislature aim to address that supply problem, including several that would streamline the process by which housing projects get approved (one, for example, would limit the circumstances in which a special permit could be required to build a granny flat). Others would not-so-subtly make it much harder for local residents and government agencies to block new projects, like by requiring a two-thirds vote for any local ordinance “that would curb, delay, or deter growth or development within a city.”

That latter bill epitomizes the frustration many young working people and families have as they try to attain what was once a milestone of adulthood—homeownership—that is now out of reach for even those making decent money. Some of those folks are YIMBYs, or supporters of a “Yes in My Backyard” agenda. “We know that our housing struggles are not the result of impersonal economic forces or lack of individual effort, but derive from bad policy and bad laws that have restricted housing growth for decades,” said YIMBY leader Brian Hanlon, co-founder of the California Renters Legal Advocacy and Education Fund, at an April Assembly committee hearing….

It’s unclear what the chances for each bill are. Though legislators seem eager to spur more housing construction quickly, some of their allies might not be. Many environmentalists, for example, want new projects to comply with CEQA, the state’s landmark environmental law that requires developers to study and possibly mitigate the environmental impact of whatever they build. And developers are never quick to embrace mandates that they include affordable units in their projects.

If the bills do pass, will any of them actually make a dent in what’s become a crippling problem all across the state? The Sacramento Bee’s Dan Walters recently wrote off the current proposals in the Legislature as “tepid, marginal approaches that would do little to close the gap.” Cuff admits many critics dismiss individual bills as a drop in the bucket. “But on the other hand, let’s put a drop in the bucket,” she says. “A drop is better than a drought.”

This is a long-term issue that may take decades to work out. The issue is complicated as it involves social class, race and ethnicity, understandings of local control, and property values.The article notes that some claim the legislative suggestions thus far are too small and I suspect a number of the bills would lead to lawsuits from communities and residents.

If I had to make a prediction (a near impossible task) based on what has happened in many suburbs throughout the United States, I would guess that the wealthier communities will find ways around these legislative actions. This could happen through the courts as they can better afford the time and money or there could be loopholes in the bills. Either way, the burden of the affordable or cheaper housing will likely fall on communities that are lower income and non-white.