After purchasing a plot of land in the Griffin Heights neighborhood, the couple reached out to Printed Farms, a Florida startup that has access to the Danish manufacturer COBOD’s construction 3D printer, to head the innovative project.
Work began Thursday on a plot of land in northwest Tallahassee area and is expected to finish by Friday. The automated printer can lay up to two feet of wall a day.
Once initial construction on the three-bedroom, two-bathroom house wraps up, it still won’t be ready for its first owner until it has furnishings installed, which may take an additional eight to 10 weeks.
The house will cost between $175,000 and $200,000 depending on its appraisal and area median income affordability, Light said.
Once there are some completed homes, this will provide opportunities for builders and possible homeowners to consider them. I wonder how much of the devil is in the details. What is the materials and labor cost compared to traditional methods? How long will these homes last? Will the appearance and experience of the home be similar to traditional construction? How much faster could such homes be constructed? How many people would want to be among the first to try them out?
Of course, if this can help address affordable housing needs, it could be a big deal. Alongside tiny homes, ADUs, and other innovations, many communities in the United States need more quality and cheaper units.
The developers propose to build a three-story building on approximately 2.5 acres at 874-920 N. Quentin Road, on the southwest corner with Poplar Street. All of the apartments — one-, two- and three-bedrooms — would be set aside for tenants whose income is between 30% and 80% of the area’s median income.
Village staff members recommended denying the plan, and the plan commission did the same after a public hearing Tuesday night. The village council will have final say and is expected to discuss the matter Aug. 9.
Plan commissioners praised the developer’s successful record of affordable housing developments, but they didn’t like the plan for the Palatine site, saying it’s too dense. The area consists of single-family homes and townhouses, with an apartment complex further north…
Several residents spoke Tuesday against the plan, saying they are worried about traffic, noise and light pollution, and changing the character of the neighborhood.
The final word will come in a few weeks. In the meantime, this set of arguments is a common one when suburbs consider apartments or even townhomes and condos. A key issue is the density of the project. What this often means is the community prefers to have single-family homes. Denser housing is often thought of as smaller housing or cheaper housing. Here, that is clear in that it is affordable housing where, through a sizable tax credit ($15 million) from an Illinois agency, residents will not need to pay full market rate.
Additionally, people often have concerns about the aesthetics and daily experiences around apartments. Apartment buildings are taller and are bulkier compared to homes on grassy lots. Because of more residents on less land, there will be more traffic on local roads. This particular proposal is close to a busier intersection but it also would be adjacent to single-family homes. It just looks different than single-family homes. If there are too many denser developments, the impression may be that single-family homes are not valued.
In sum, this density and kind of housing is perceived as a threat to the character of single-family home communities. Municipalities will sometimes respond to such proposals by asking the developer to reduce the number of units. Or, they might reject it all together by saying that it is not a good fit. And the search for land for affordable housing continues.
Far worse than corporations taking a few thousand units off the market for owners are the governments and noisy NIMBYish residents taking millions of units off the market for owners and renters alike—by blocking construction projects in the past few decades. (California alone has an estimated shortage of 3 million housing units.) From New York to California, deep-blue cities and states have amassed a pitiful record of blocking housing construction and failing to meet rising demand with adequate supply. Many of the people tweeting about BlackRock are represented by city councils and state governments, or are surrounded by zoning laws and local ordinances that make home construction something between onerous and impossible.
One of the issues at play here is a numbers one: who exactly is acting within the US housing market and how much sway do they have. Concerns about corporations and housing can be placed in the larger context of how many housing units there are and how many are being built. Here are the numbers Thompson provides:
The U.S. has roughly 140 million housing units, a broad category that includes mansions, tiny townhouses, and apartments of all sizes. Of those 140 million units, about 80 million are stand-alone single-family homes. Of those 80 million, about 15 million are rental properties. Of those 15 million single-family rentals, institutional investors own about 300,000; most of the rest are owned by individual landlords. Of that 300,000, BlackRock—largely through its investment in the real-estate rental company Invitation Homes—owns about 80,000. (To clear up a common confusion: The investment firm Blackstone established Invitation Homes, in which BlackRock, a separate investment firm, is now an investor. Don’t yell at me; I didn’t name them.)
If I am calculating correctly, institutional investors currently own 2% of the single-family rentals. Of course, this number could grow if these firms find this to be a good investment.
Thompson settles on local actors – governments and residents – as holding back housing construction. In this numbers game, restrictions on a local level collectively are holding back the construction of single-family housing. If these restrictions were lifted or lessened, concerns about institutional investors would presumably diminish because there is a larger supply of houses to choose from.
One problem I see with this among the larger numbers: while local actors might in the aggregate have oversight over millions of units, they individually have control over relatively few units. Let’s say a particular suburb in the Bay Area (and this NIMBY argument often comes back to California) is against building new single-family homes. Depending on the size of the community and the availability of land, this might affect just a few homes to several thousand. This is not many. Zoom out to the whole region and many suburbs doing this adds up to tens of thousands of potential homes. Do this across all of California’s metro areas and the numbers add up. Similarly, you could do this across all the metro areas in the United States.
All of this does not necessarily mean Thompson is wrong. Yet, to get to the numbers of new homes constructed that would make a significant difference – whether in reducing the need many metro areas have for more affordable housing or outweighing the actions of investment firms – would require a lot of change across many communities. State or federal legislation may or may not be successful and would be unpopular in many places without a significant public groundswell of support that this is an issue that all or even most communities need to address.
Together, municipal changes regarding zoning and NIMBY could add up. But, changes would need to come across communities to make a big difference.
A sweeping affordable housing bill, recently passed by Illinois state lawmakers, has strengthened the Affordable Housing Planning and Appeal Act (AHPAA). That law requires cities, with at least 1,000 residents and with less than 10% affordable housing, to submit affordable housing plans to the state. The law also allows for affordable housing developers to appeal the decisions of municipalities who reject their affordable housing proposals. Those appeals are heard by the Illinois Housing Appeals board.
The AHPAA, originally passed in 2003, is intended to encourage affordable housing, but resistance is rampant. As of October 2020, the Illinois Housing Development Authority identified 46 municipalities that met the law’s requirements. At that time, fewer than half had submitted plans or indicated that they intended to do so. Some municipalities cited home rule as the reason why they didn’t comply. The revised law says that doesn’t matter anymore. It gives the Illinois Attorney General enforcement powers, including seeking court relief, if the municipalities continue to flout the law…
Schecter said the next hurdle is getting units built — not just submitting plans. She said deadlines are needed for when municipalities must turn in their plans and by when they must achieve the 10% affordable housing requirement.
The last paragraph quoted above suggests there is still work to be done. The recent changes suggests there are now consequences if communities do not submit plans. But, I would guess the real goal of the 2003 guidelines and the update is to lead to new affordable housing units. Even if tomorrow Illinois moved to push communities to submit plans, it would take years for the actual housing to be planned and built. According to various groups, there at least tens of thousands of affordable housing units needed in the Chicago region. If these legislative changes make a sizable dent in this number, this could help a lot of people.
The company’s resilience suggests the S.R.O. housing model never really disappeared. It was reinvented for the suburbs, where, since the mid-2000s, more poor people have been living than in cities, according to research by Elizabeth Kneebone and Alan Berube, the authors of the 2013 book “Confronting Suburban Poverty in America.” And it morphed in accord with broader economic trends — captured, above all, by two statistics: One in five adults who “wanted more work” were doing without full-time work in late 2019, according to the Federal Reserve; and 53 million people have low-wage jobs, research from the Brookings Institution shows. An expanding industry built on informal and impermanent housing is a reflection of the precariousness that increasingly defines daily life for millions of Americans.
And one company sees it as a business opportunity:
The Siegels see no end to demand and seized on the pandemic as an opportunity to expand beyond Nevada. Last July, the Siegel Group announced the purchase of two Budgetel hotels, 15 miles from downtown Birmingham, Ala.; in November, the company said it was buying a HomeTowne Studios with 130 units in Baton Rouge. The most recent purchase, announced in early May, is an Amerihome Inn & Suites in Houston, five miles north of the beltway in the city’s outer suburbs. That brought the chain to 60 sites nationwide, which now also include Toledo; Memphis; Jackson, Miss.; and Shreveport, La. As Stephen Siegel put it to me, “Our business model is great in a good and a bad economy.”
As the article notes, there are much bigger problems here masked by the opportunity or reliance on extended stay hotels: there are limited housing options for people with limited income, evictions on their record, and poor credit. Government assistance can be lacking or very slow. Landlords have their own worries. Suburban safety nets are thin or do not reach very far. Non-profits and religious groups are not as involved in housing. As sociologist Matthew Desmond showed in Evicted, the housing issue is a big one.
What suburban community would want to address this? Many suburbs want to be a higher-status community and this generally means avoiding having cheaper housing. Depending on the suburb, cheaper housing might be everything from smaller single-family homes to apartments to trailer homes. Hotels might be more acceptable because they could be used by a wide variety of people, including business visitors and potential tourists. If there are problems at such hotels, this could lead to issues.
Local buyers bid against one another as well as against investors who now comprise about a fifth of annual home sales nationally. Online platforms such as BiggerPockets and Fundrise make it easier for out-of-town investors to buy real estate in smaller cities across the U.S., said John Burns of California-based John Burns Real Estate Consulting.
Often, Mr. Burns said, “the cash flows are better in the Tulsas and Allentowns of the world” for those seeking to rent out properties. In the fourth quarter of 2020, nearly a fifth of homes sold in the Allentown area were bought by investors, according to Mr. Burns’s data.
While much attention is directed to hot real estate markets in major metro areas – with a lot of attention for the most expensive like Manhattan, San Francisco, Los Angeles, and others – this hints at a different dynamic. In smaller town, there is not a big supply of new housing. Thus, investors can purchase homes and turn them into rental properties. Without large influxes of new residences, these rental units can bring in good money as buyers look to move up within an unchanging local supply.
If there is such demand and limited supplies of new homes in places like Bethlehem, Pennsylvania, the focus of this article, one possible future is a business opportunity for local or national builders who could come in and provide new apartments or single-family homes. While the community may not be growing much in terms of population, housing stocks do need replenishing and what people desire over time changes. Could building in Bethlehem generate the kinds of profits builders are looking or are more of them chasing even better profit opportunities in hotter markets with faster-growing populations?
If investors are making a significant number of these purchases, could communities respond in ways that help retain opportunities for local residents as opposed to far-off companies? Could they form local investment funds or cooperatives that then only sell or rent the homes at reasonable rates to local residents? This could be an affordable housing issue in many communities and even if local actors generated little profit in the transactions, they could help insure a supply of human capital.
Coach houses – stand-alone housing structures sometimes built above garages and sometimes referred to as “granny flats” – were once prevalent in Chicago, but changes in zoning and parking requirements caused their construction to be banned in 1957. In December, the Chicago City Council re-legalized coach houses and apartment units in basements and attics, passing the Affordable Dwelling Units Ordinance. The ordinance took effect May 1, and the city is now accepting applications.
The five pilot areas cover much of the city, with zones in the north, northwest, west, south, and southeast areas of Chicago. After a three-year evaluation period in these pilot zones, the city will decide whether to make the ordinance citywide policy…
For properties planning to construct two or more additional dwelling units, every other unit must be affordable housing.
This opens up new opportunities both for property owners and those searching for housing. For landlords, they can gain more income, house family members, or create new space on their property that people could live in later. For those needing housing, these are likely smaller spaces that could provide dwellings in residential neighborhoods and possibly help keep such housing more affordable with more units available.
But, how many of these units will be created? Property owners might not like the idea of someone living so close to them. It takes money to create these units. The density of residential neighborhoods is important to many single-family home owners; they often want more space. Does this create more demand for parking and vehicles? Could this lead to tension on a block if some want to add units and neighbors are not as bullish on the prospects?
Furthermore, do these efforts continue to concentrate wealth and opportunities in the hands of particular land owners who can afford to create and rent units? Will this truly lead to more cheap housing or will certain neighborhoods have more of these units at higher prices?
Sadly, those who win these all-out bidding wars will probably, suddenly feel that there is enough housing, and yes, we need affordable housing, but really affordable housing, you know? (And not here!)
But for every winner there will be many losers, and maybe the process can radicalize these would-be buyers, and their friends, and their parents, and the people they talk to. There really aren’t enough places to live. Those people can channel their frustration with bidding wars into political activism aimed at housing suppressants like parking requirements, restrictive zoning, and density limits. If appeals to neither historical wrongs nor economic growth get the job done, a strong dose of self-interest can’t hurt.
Here are three reasons why I would not hold my breath waiting for the successful homeowners to advocate for cheaper housing:
Americans often subscribe to the idea that their individual successes are due to their actions, not necessarily due to systems. The winners of individual bidding wars can talk about the particular factors that led to their success. Those who did not win can adjust their individual strategies. It is a leap for many to think that their individual choices matter less than the conditions that empower or constrain their choices. (Site note: this sounds like explaining the basics of sociology in an individualistic society.)
Suburbanites for decades moved into subdivisions and communities and then limited similar opportunities for others. The postwar suburban boom did not provide opportunities for all in a variety of ways. This could come out this way: people might yearn for and then move into a new development but subsequently complain about similar developments proposed right around them as a potential threat to their way of life. Can suburbs be frozen in time at the point at which people first moved in? Or, are suburbs and all communities in some sort of constant flux? Combine this with #1 and I could imagine some saying, “We bid successfully, we do not necessarily want a lot more of people like us being successful because this would change the community we bought into, and now we will resist future efforts.”
Regarding putting pressure on politicians and others: how many homeowners were in this position and how would they join together in a movement? Housing is very difficult to address at a national level because of local particularities and politics. At the local level, proposals often run into issues with #1 and #2 above. People may be in support of the abstract notion of more housing or cheaper housing but they often prefer it somewhere else. Significant social and/or political change often requires tipping points or catalysts whereby interests come together and action is possible. COVID-19 could be one of those situations for housing but it would require much sustain effort.
Councilman Patrick Kelly, the lone dissenting vote, objected to the lack of affordable housing in the 227-unit development, a “missed opportunity” that could have helped efforts to diversify the city’s housing stock.
State law requires 10% of a town’s housing supply to qualify as affordable. Naperville falls shorts at an estimated 7.5%…
The townhouses will be priced from the $300,000s. While the project doesn’t provide, by definition, affordable housing, Councilwoman Judith Brodhead said it “does fit the category of attainable housing.”
“Certainly, there’s not new construction, anything that you can find in north Naperville, in that kind of price range,” Whitaker said.
Much of the opposition to the proposal for an empty piece of land has centered on the possible environmental impacts. The property in question backs up to a Forest Preserve and there are bird and animal habitats nearby.
But, the affordable housing question is an interesting one. In wealthier suburbs, affordable housing does not necessarily mean housing for poorer residents. Such communities could not like affordable reasons for a number of reasons including who might live there and how smaller and/or cheaper homes might affect other homes in the community.
And there are ways to push off affordable housing. For example, zoning in particular ways can limit the number of residences that are cheaper. Another way is to recast what affordable housing is. Remarks, like the one above in the quoted section, are not unknown in Naperville. See this example from last July. Naperville is a desirable community: it is wealthy, has good schools, has an exciting suburban downtown, has lots of parks. Even as a large suburb, it has a lofty status. According to 2019 Census estimates, the median home value is over $416,000.
With all of this, a townhouse at $300,000 is a lower price. Units on this kind of land in a community like Naperville could go for a lot more. Yet, is $300,000 attainable for all the people who want to live in Naperville? Or, the people who work in Naperville? It is cheaper – but is it affordable?
There are limited ways to force suburbs like Naperville to construct housing that is affordable. President Biden wants to offer more carrots in this area. Public pressure from residents and organizations could push Naperville leaders to address this more fully. Naperville has served as a center of suburban protests before. But, there will always be questions of how such units would fit with the character of the existing community, what it means for existing units and residents, and who might live in such housing.
Chicago, like many American cities, asks developers of particular projects to include a portion of the space for affordable housing. But, developers argue this may make an entire project not worth their while. Here is a recent example from proposed developments on Chicago’s North Side:
But those fees and the sites’ location within a pilot area where there are higher affordable-housing requirements – 20%, all on-site – have made some projects difficult to finance. The 700 W. Chicago project also has been made more difficult by the COVID-19 pandemic, which leaves a record level of vacant office space in downtown Chicago…
Omni Group appears to have been able to overcome financing challenges in part because it negotiated a lower purchase price for the site – $38 million, down from an initial $50 million deal with Greyhound – in response to the affordable-unit requirements
The firm is also known for keeping apartment buildings it develops, rather than selling them after they’re built and filled with renters. The decades-long investment strategy may help offset the 500-plus affordable units, which typically lose money for developers because of high construction costs.
The affordable housing requirements are not the only factor at work here but they are a regular part of proposals in many locations. The goal is to have some of the benefits of a new development in a desirable urban location – a valuable asset – address the important issue of affordable housing. If developers have no or little interest in constructing affordable housing on its own, the construction of desirable projects can still help lead to affordable housing.
What would be very interesting to know is how exactly the money, including financing, costs, and profits, works out with the requirements for affordable housing. Can the developers here not make any money or does it reduce their profits below acceptable levels? It is one thing if money will be lost but another if the affordable housing requirements limit the profit. How much return do they expect on a large project like this? Is the goodwill of participating in providing affordable housing worth anything (status, money down the road, favorable approaches to future projects, etc.)? While this is likely firm-specific proprietary information, I imagine some money still could be made.
Legally Sociable 