Affordable Housing Where Land and Labor Is High?

June 4, 2019 — The Big Picture

For decades now, cities have been perplexed by how to create affordable housing in a city where land and labor costs are high. While federal government funding was a source for affordable housing in the past, today cities have to come up with their own funding and their own solutions. Seattle made headlines earlier this year for approving and then repealing a new “head tax” that would fund affordable housing and homelessness solutions. Boston and Washington, D.C. are enforcing inclusionary zoning regulations that require developers to either build affordable housing or pay a fee into a housing fund. The State of California is putting new propositions on the ballot this November to raise $4 billion for affordable housing solutions and enable local oversight of rent control.

These government efforts are great tools to have in our toolbox. But they’re not enough – the demand for affordable housing far outstrips the few thousands of units these programs can create.

Although it is not a perfect solution either, encouraging less expensive housing choices could help cities cope with their affordability crises. It is astonishing to think that many of the least expensive ways to live – in shared housing or in microunits/tiny houses – are illegal in many cities. By zoning much of our cities as single-family housing and prohibiting housing that falls below a certain minimum size, cities have made it hard for residents to find housing that meets their needs and is affordable.

Yet at the same time, there is a growing share of the market that is craving these alternatives to the traditional single-family home. The number of people living alone has grown to 28 percent and many of these singletons are willing to trade space for a lower monthly rent. At the same time as digital life takes hold and more people freelance, housing that provides a social life and shared amenities has become more attractive to some than living entirely alone. There is potential to offer more affordable housing by better matching the needs of these demographics to the housing stock.

New co-living operators like WeLive, Ollie, and Starcity are offering an array of shared living options, and luring people with additional amenities like in-house yoga classes, housekeeping and socializing. While these frontrunners are offering shared living at a high price point, other developers like PodShare in Los Angeles are providing more barebones accommodation (bunk beds and shared co-working space). Cities like Philadelphia are looking at how to better regulate and legalize existing rooming houses so small operators of naturally occurring shared living may provide less expensive housing too. In New Orleans, the city is enabling co-living for service workers.

This model of pairing a housing type to working-class and middle-class tenants make sense. In Philadelphia, there are micro-apartment developments aimed at teachers and social workers. While micro-apartments in expensive neighborhoods are going to be barely more affordable than larger ones. Micro-housing in less affluent neighborhoods combine small size and lower price point to more dramatically reduce housing costs.

Finally, new technologies like 3D printing and modular housing could provide cost savings in construction that can be passed on to consumers. Construction is one of the few areas of the economy that hasn’t seen productivity gains since the 1970s. While modular housing is prevalent in market-rate housing, city governments building affordable housing are just beginning to catch up. This year New York issued a request for proposal for modular construction of affordable housing for the first time. Nonprofits like New Story use 3D printing to build disaster housing – in a few years there may be other applications for governments to use these inexpensive methods to build affordable housing more affordably.

No one innovation is going to solve our affordable housing crisis, but cities need to look at both the existing housing stock and the methods of creating new housing to bring the cost of housing down.

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