Building affordable housing | Hacker News Reader

Building affordable housing

urbankchoze.blogspot.com

56 pointsJSoet61 comments

The most novel part of that article for me was all the way at the end:

> But what about the existing starter homes built after WWII, aren't they still affordable?

> Well, no. The big problem of a starter home is that it's only cheap when it is first built, because it is barebone. Once the owners start making the house theirs to accommodate the growing needs of the family, the house gets bigger and more luxurious. Every addition to the house results in higher market value because of increased desirability. So once the original owners are ready to move out, the house is no longer a starter home, but a big, well-furnished home from which the owner will expect to recover the costs of remodeling.

> That is the issue of the "starter home" or "grow home" idea. That home is only affordable once, for its first owners. So for every generation to get its "starter home", every generation has to build entirely new neighborhoods in greenfield areas, where land is cheap. When a metropolitan area matures, this ideal no longer works, the greenfield areas are just too far and are disconnected from the city. So, what can be done?

Not only is it expensive to buy a home, you can't even buy one cheap that somebody else got for cheap because they've (likely) made it more valuable by making it more liveable for themselves!

What was novel to me but seemingly obvious now that it's been pointed out is how the introduction of cars and highways created a vast oversupply of usable land that previously wasn't practical to build on because workers had no way to get to their city jobs, and that's a big part of why housing was so cheap after WWII.

Perhaps the lesson here is that if we want affordable housing, we need better forms of high-volume transportation that can move people rapidly between city centers and distant under-developed outskirts.

> Not only is it expensive to buy a home, you can't even buy one cheap that somebody else got for cheap because they've (likely) made it more valuable by making it more liveable for themselves!

The first thing I did when I bought my home was fix the "problem" that made it sit on the market so long and sell for a discount.

(Fortunately, it was a landscaping problem that was easy for me to fix, but harder for other buyers to fix.)

Now I expect to, at a minimum, make my investment back if I sell the home.

In every American city I know, 80%-90% of the cost of an existing home is the lot, not the house. I don't know how to overcome this, but I understand it is caused by politics, suggesting it needs a political solution.

When Florida was abuilding like crazy after WWII for the next 25 years, the lot was usually about 10%.

I suspect your familiarity is with areas that are much higher cost than average. I've owned houses in two different MSAs in the top 25 in the US and the land value was much lower than 80% of the total value. Land value is also very demand-driven though local zoning regulations (multi-family units, proximity to commercial zones, etc.) do drive some of that demand.

Yeah, my familiarity is with the city proper, original streetcar suburbs, etc. I know modern suburbia is cheaper the further one travels from the city center, but this seems just another high price.

Also, I judge the lot value by how much it would sell for without the house. The price for empty (fill-in) lots is ridiculous. I'm all for the market setting prices, but this isn't that. This is Federal interference and local building lobbying.

If only there were some technology that would allow multiple homes to exist on a single lot...

That would just be priced into the lot.

People are going to spend 35-50% of their incomes on housing.

Federal mortgage regulations are strongly biased against that. And in the USA the Federal gov't. owns the mortgage industry.

Where is this? In Seattle the cost of construction is around $250-300 per sqft assuming mid-range quality of materials and a flat(-ish) site. You'd need to spend between $200-$500k to buy a lot in Seattle. So a reasonable 2,000 sqft house is going to be anywhere from 70-50% of the cost.

That's a new house. The weird thing is how often old houses don't sell for much more than an empty lot in single-family home neighborhoods. Although I'm not familiar with Seattle. I've lived in various parts of Florida, Denver (long ago), Michigan, Texas, etc. Mostly Sunbelt.

There's not many vacant residential lots within city limits in Seattle, but the ones out there are definitely cheaper than buying a lot with a home, new or old, on it.

Is that the cost for house? Do you have any data on building prices per sqft for High rise building?

Yep that's for a house. I don't have any costs for high rises.

One thing that I've seen quite a bit in Europe is people buying "unfinished" homes. They pay a builder to build a concrete structure with a tile roof, and get it plumbed and wired up to code. But then all the interior finishings (and sometimes even the doors/windows) are done by the owners, by trading a couple years of spare time for substantial cost savings.

I heard about something similar in Chile on a 99% Invisible podcast. http://99percentinvisible.org/episode/half-a-house/

That is the norm in china. In fact, renovated homes cost less than unrenovated ones because no one trusts anyone else's renovation (lots of cheap toxic crap), so it is understood that new owners would re renovate anyways. Basically, everyone just wants a concrete box. Renovations are quite cheap and quick however with the appropriate migrant worker (though see above, you have to be careful they don't use cheap toxic crap).

The idea isn't really all that much different from buying a "fixer-upper" though. A lot of people (like myself) buy a house in a location we like on property that we like that clearly needs a lot of updating and we do it over time, some of it ourselves, some of it (usually) with contractors. In my case, I'm not sure how much money had been put into the house over at least the previous 50 years.

That's how my family and all my neighbors did it. I remember our area was a construction site for years.

I think the lack of entry level housing is a massive reason the tiny house movement has become so popular. I think people are willing to reevaluate the space they require to live in so as not to spend a life paying off debt.

Discussion of tiny houses and pod apartments has become popular (not so much the things themselves) because they offer this tantalizing hope that reducing living space size will decrease rent/mortgage proportionately.

It doesn't for all sort of reasons.

Basic functional blocks like bathrooms and kitchens can only be made so small. And once one graduates from college, shared spaces seem a lot less attractive.

One angle to make housing affordable is to outlaw mortgage products beyond 15 years (along with ARMs), require 20% down, and eliminate the tax deduction on interest - of course you can't do this overnight.

Housing is a basic necessity and we need to get the rampant speculation and financialization out - we're all stuck in this game of musical houses waiting for the music to stop.

I believe that would decrease upward financial mobility. It still might be a good idea, but that would be a dramatic drag on home buying, which means anyone who currently owns rental property would see a sustainable uptick in demand, keeping a lot of middle class from ever leaving the world of renting.

Mortgage interest deduction being eliminated for owner-occupied housing I would support a transition to. Loan interest for business expenses [to include a loan secured by property, aka a "mortgage"] should continue to be a valid business deduction, meaning that renters would live in buildings that had tax deductible mortgage interest while owner-occupants wouldn't. If you're trying to pull the tax support for house prices, this won't entirely do it. I strongly oppose taking away business loan interest deductions as that harms a LOT of businesses.

I don't see anything wrong with ARMs. Most of Europe has ARMs as the standard/normal mortgage product. Interest-only, NINJA/liar loans, ARMs with introductory discounted rates are more problematic, but there's nothing wrong with a mortgage being adjustable, IMO.

Most people talk about land being the main cost barrier, but there are plenty of other costs that add up to the point where you're better off buying a standard resale home.

Having acquired land and being accustomed to living in ~600sqft all my adult life I thought I could build a reasonable living space for about $50,000. Once I started looking into it I ran into:

  - land clearing / prep ~$10,000
  - utility hookups and equipment ~$15,000
  - impact fees & permitting ~$5,000
  - foundation ~$5,000

Then comes the actual house construction. I was hoping for a company that would provide a livable shell that I could then improve upon while living in it. Long story short, it just didn't work out at the price I was hoping for.

I'm curious if you would share the additional costs you found beyond the land/clearing. And what area of the country are you looking at?

Of course the other option is rebuilding low scale areas around existing train stations as high density apartments.

The game has changed for most big cities since post wwii mass housing. Jobs are more focussed in fewer places and cities are much larger so getting into the city can be very hard from outer suburbs.

The UK is a good example for thr models discussed. It has been building small houses for a long time (like 150sqm lots) and have a minimum density requirement across the country to make this happen (which is also about retaining farmland in the longer term). Too many too far from jobs though its exacerbating englands divide between haves (in london and some other places - large and small) and have nots (in towns and accretions to towns with more people than jobs)

Something I've been thinking about on and off since YC announced their "New Cities" research project [1] is whether you could create more affordable cities from scratch in undeveloped land as a sort of speculative public-interest investment.

Suppose you begin with a large lump of money sufficient to buy at least several square miles of rural land and to pay for some basic infrastructure (roads, power lines, sewer, etc..).

At first, you practically give plots of land away to anyone willing to build a house. (Since it's rural, there's little reason to be there unless there's some critical mass of people already there.) Then, as people start moving in, you can raise the price of the lots to recover some of your initial investment and pay for additional infrastructure. Eventually, you should be able to sell lots at far more than the original land cost and recover your investment. This might also spare residents from having to pay taxes until the city is fully grown and there are no more lots to sell.

Some thoughts:

The new city should ideally be near at least some neighboring town with schools, stores, a hospital, and so on to make bootstrapping easier.

This would be an easier sell both to county government and prospective citizens if it were managed by a non-profit institution that is contractually obligated to re-invest profits back into the city. This could be similar to a normal city government, except that in this case the city starts off by owning all the buildable lots.

Partnering with a University that wants to build a new campus on cheap land would be ideal.

Figuring out the right amount of land to buy up-front would be difficult. Too much and it's too expensive and you never sell it all, too little and you'll end up having to buy more adjacent land later at steeply inflated prices or let some other developer buy it and let them absorb all the profits without re-investing it back into the city.

[1] https://news.ycombinator.com/item?id=11987032

Tiny homes are 150 to 250 square feet homes that that can be built anywhere from ~$20,000 to ~$50,000. The person who figures out how to mass produce these houses (each one is only about maybe the size of two RVs) for ~$10,000 will change this world.

So what land is your tiny one story home going to sit on (and be connected to utilities)? Of course, if you're flexible where you live such things exist and are called mobile homes.

There's plenty of land in the United States. Maybe it'll sit on some of that?

Sure, there's plenty of dirt cheap land in the US some of which even has electricity and water available for a possibly non-trivial hookup charge. (Or maybe you tank in water and use solar.) But the problem with building a house on that land (or plopping a mobile home) isn't the cost of the house. It's the fact that it's nowhere near jobs or other amenities people want to live near.

ADDED: The cost of housing in rural Nevada isn't what people are complaining about when they talk about the high price of housing.

You make good points, but they're not super relevant to the article (if you read the article it's clear that they're not talking about big cities, nor are jobs and amenities mentioned, other than the point I mention below)

Irrelevant to what? The price of attractive but very compact housing on cheap land away from population centers people want to live around basically isn't a problem for any but a minuscule slice of the population. It certainly doesn't address any issue that a potential tech worker in the bay area or NYC has.

Did you even read the article? This has nothing to do with big cities. The author explains how the development of infrastructure, notably highways changed the dynamic to sprawling suburbia and how suburban "nodes" link to the main metroplex in "second-tier cities." This was because of the fact that you can just drive further and keep your job.

Affordable housing requires affordable land. Big cities almost by definition do not have affordable land, therefore the housing will never be affordable in the way the author is asserting.

Yes, I read the article. All the handwaving about maybe land on the fringe... but maybe that would actually be more expensive because of land use restrictions... and utilities would have to happen somehow but not clear about the costs.

>Affordable housing requires affordable land. Big cities almost by definition do not have affordable land, therefore the housing will never be affordable in the way the author is asserting.

I agree. My assumption was that, given this context, he was talking about the outlying areas of cities people were interested in. Of course, otherwise, land prices are not the issue and housing construction prices aren't really the issue either.

Many counties prohibit this use via land use regulations defining this activity as camping and providing for a maximum time you may camp on your land. So it is likely not something you can do in a large part of the US.

In places were housing is expensive, land will be the majority of the cost. In places where land is cheap, housing is already not expensive.

The way to affordable housing is high density, mid-to-high rise condos.

> The way to affordable housing is high density, mid-to-high rise condos.

How though? Density sounds good on paper, and has tons of side benefits, but (as the blog post explains) the cost of land + construction jumps significantly.

I know here in the US, there basically is no such thing as "affordable high density condos". High density urban housing is expensive, by definition. So much so that there isn't a single unsubsidized affordable high-density urban housing unit in my entire state.

The only place I'm aware of that has affordable urban housing is Japan. And that's mainly due to a combination of having no meaningful population growth, and having excellent public transit literally everywhere. Two things the US simply can't have in our lifetime

> the cost of land + construction jumps significantly

Per person? I don't see how. For a 16-floor building, you can easily fit 120 comfortable condos on a plot of land that would otherwise only fit 2-4 single family homes. Yes, the building cost would definitely be higher, but not per household. On top of that, it would be made of steel and concrete, and not plywood, which generally rots and needs to be torn down every 50 years or so.

> High density urban housing is expensive, by definition.

By definition? I'm not sure about that. There must be some middle ground between glitzy new condo projects and "the projects", which were also high-rise and affordable.

Much of Eastern Europe, lots of Western Europe, former USSR, etc., all have relatively affordable housing.

The construction cost of steel and concrete buildings is significantly higher per square foot of floor space than that of low-rise timber-framed buildings. In Canada, the cost of concrete and steel buildings is around 80% more per square foot than the cost of timber-framed walk-up low-rise buildings, and the cost of condos in skyscrapers is a whooping 150% higher than low-rise walk-ups.

Here is a source for construction costs for major metropolitan areas in Canada: https://t.co/18FwgkSlWY

And here are some figures.

For Toronto:

House (medium quality): 120-240$/sf

Walk-up low-rise apartment (medium quality): 100-150$/sf

Residential condos (medium quality): 180-240$/sf

Point towers, 40-80 stories (medium quality): 230-310$/sf

For Vancouver

House (medium quality): 165-225$/sf

Walk-up low-rise apartment (medium quality): 155-180$/sf

Residential condos (medium quality): 205-250$/sf

Point towers, 40-80 stories (medium quality): 270-355$/sf

For Montréal

House (medium quality): 125-180$/sf

Walk-up low-rise apartment (medium quality): 100-155$/sf

Residential condos (medium quality): 150-180$/sf

Point towers, 40-80 stories (medium quality): 250-355$/sf

So if you can afford a 400 000$ housing unit, and you assume half of it goes to pay for the land, you could get a house with about 1 500 square feet of space, a similar sized condo in a low-rise, a 1 000 square foot condo in a concrete mid-rise or a 650 square foot condo in an high-rise.

Yes, high-density housing options lower the amount of land per unit, but at the same time, zoning for higher density tends to rise the cost of land. A lot zoned for an high-rise building will be worth many times what a lot zoned for single-family houses is worth even if the two lots are adjacent, since the land value is proportional to the potential revenue of development, so the bigger the development, the higher the potential revenue, the higher the land value.

> So if you can afford a 400 000$ housing unit, and you assume half of it goes to pay for the land

Why would half of your cost be for land in a high-rise condo? If understand your link correctly, these numbers are construction costs only. My argument always was that value of land is what makes SFHs expensive, not their construction cost.

> A lot zoned for an high-rise building will be worth many times what a lot zoned for single-family houses is worth even if the two lots are adjacent

If a developer buys a plot of land and rezones it for high-rise, they maybe gaining some value from the mere fact of rezoning, sure.

But as a consumer, say in Toronto, if I'm looking for housing right now (and I actually took a brief look at Toronto RE market in the past), available SFHs are as a rule significantly more expensive than condos, especially in the same neighborhoods.

In addition, if you're looking for something not older than 20-30 years, many SFHs force additional extra space on you (an extra bedroom or two) even if you don't need it -- it's very difficult to find a newish SFH with only 2 bedrooms for example.

So yes, in many cases, I'm forced into an apples-to-oranges comparison of a 3-4 bedroom SFH and a 2 bedroom condo, but as a consumer these are the only choices at times.

> Per person? I don't see how. Yes, the building cost would definitely be higher, but not per household

It really is, in every market I've looked at. /u/kchoze goes into this for Canada, but I'll add numbers for my own area in the Midwest US

-- Suburban House (Poor, Damaged) : ~$80/sqft

-- Suburban House (Average Quality) : ~$100/sqft

-- Suburban House (New Construction) : ~$130+/sqft

-- Suburban Townhouse (New Construction) : ~$130+/sqft

-- Semi-Urban (Gentrifying) Townhouse (New Construction) : ~$170/sqft

-- Urban Condo (Average Quality) : ~$180-$230/sqft

-- Urban Condo (New Construction, Low-Rise) : ~$280+/sqft

-- Urban Condo (New Construction, High-Rise) : ~$290-340+/sqft

It's not uncommon to be able to afford a brand new suburban sprawl home here, but no livable permanent housing in the dense urban area, regardless of age.

> By definition? I'm not sure about that. There must be some middle ground between glitzy new condo projects and "the projects"

I want that to be true, but I've never seen a single instance of this in the real world, and I'm drowning in thousands and thousands of examples where this is not true.

Can you point to any real-world examples in the US?

> "the projects", which were also high-rise and affordable.

They were directly heavily subsidized. No one is arguing that government subsidization doesn't reduce those particular residents cost. But the article assumes governments won't be willing to subsidize housing for middle-class residents.

Wait, do these numbers include the cost of land in the package or are these just the construction costs? Otherwise, I'm confused about this. My experience is that if there's a single family home sitting next to a tower of condos, the cost of single family home will always be higher than the cost of a single condo of similar quality in the tower, due to the cost of land alone. In fact, many times a 100-year old wooden SFH would still be more expensive than a brand new concrete condo.

> do these numbers include the cost of land in the package or are these just the construction costs?

They include land. All of those are full, retail, sticker prices as seen on Realtor.com / Redfin.com / Zillow.com

> My experience is that if there's a single family home sitting next to a tower of condos, the cost of single family home will always be higher than the cost of a single condo of similar quality in the tower,

My experience is the exact opposite.

On Redfin, right now as I happen to be writing this comment, I see a building full of luxury condos ($300k and up for 2bed) next to an 1898 SFH that needs a total reno ($114k for 4 beds). I see a bunch of brand new townhouses ($420k - 3bed) next to a teardown SFH ($170k, 4beds).

Seriously -- check this screenshot, you can see what I'm seeing - http://imgur.com/w0BIPiP . The high-density units are always 2x to 3x the price of a "sprawly" low-density single family home, despite being right next to each other.

And again, that's Redfin.com, so those are 100% all-inclusive full prices (including land, for the SFH).

---

Fundamentally, I know we need to be more respectful of our land use, and build denser housing. It's good for tax revenue, it's good for public transit, it saves slightly on infrastructure costs, etc. I'm aware of (and agree with) all of those benefits.

But, economically-speaking, high-density is terrible for residents. It immediately doubles or triples housing costs, at a time when most people can barely afford their existing housing in the first place.

I don't understand how anyone can believe dense housing will be a solution to affordability, when it's so obviously un-affordable in every situation it's currently practiced today.

I think in your examples this is due primarily to two factors. One, is that land is generally cheap in Grand Rapids, so is drastically decreased as a factor. And two, you're still comparing new luxury condos to teardown SFHs. If you recall, my original point mostly discussed areas with expensive land, such as the coasts.

Here are few examples from my experience:

Atlanta, Midtown neighborhood. This area has both high-rises and SFHs. Look at this link, and you generally find that comparable quality SFHs run over $1M vs. $250-$700K for new condos: https://www.redfin.com/city/30756/GA/Atlanta/filter/sort=lo-...

Seattle, Queen Anne and Belltown. Also a mix of condos and SFHs. SFHs are significantly more expensive: https://www.redfin.com/city/16163/WA/Seattle/filter/sort=lo-...

North Miami Beach. There are no SFHs available on the beach, so condos already sit on more desirable land. However, SFHs further inland with no easy access to the beach are still more expensive: https://www.redfin.com/city/11467/FL/Miami-Beach/filter/sort...

North York, Toronto. This also has a mix of condos and SFHs in the same area. SFHs generally run 2-3 times more expensive: http://www.remax.ca/find-real-estate/#minPrice=10000&propert...

Isn't that precisely the way cities are built in Europe? If so, housing isn't necessarily cheap/affordable there, either.

It should be relatively cheaper in places with lots of mid-to-high rise development. For example, Berlin is relatively cheap as I understand it. London is expensive, but if you randomly click around it on Google StreetView, you'll see there's way more 1-2 story townhouses there than 5-10 story residential buildings.

Berlin has become a lot more expensive recently, the cheap housing there is mostly historical now. And, income in Europe is much lower on average than in the US (except London, most parts of Switzerland, and such places), so you first have to correct for that, too.

Yes, high rises make housing cheaper, but that comes at a price: Hearing what the neighbors around you are doing and often even saying (or their TVs/music/...!) at all times, not having some "green space" or yard of your own (and in most cases not even a shared green space), having to come to terms with all co-owners when you want to change something outside your flat. Etc.

For the price you (don't) pay, the European model sucks. (Disclaimer: I'm European... :-))

I ran across the Reefer Home for $12,900 a few days back.

Description:

- 40ft x 9″6″ High Used reefer container.

- Bathroom with shower.

- Kitchenette.

- Electricity.

- Two large glass sliding doors.

- Security Bars on Doors.

- Painted

Link: https://containerhomes.net/products_prices/reefer-home-12900...

Video walk through: https://www.youtube.com/watch?v=xeM1ed7Wrl0

Why not mobile?

Elio motors designed an enclosed motorcycle for ~$7300.

Assuming a design like an enclosed TukTuk moped [1], a mini motor home would actually change the world overnight.

[1] http://www.designboom.com/design/cornelius-comanns-bufalino/

I could easily build a 250 sqft home for $10,000 excluding the foundation.

1. Why exclude the foundation from the cost? It's necessary, no?

2. Can they be mass produced? You should start a business if so.

1. I think not for something like a pole barn. And maybe someone else usually does that part.

We already have them; they're called mobile homes.

Here's one proposal for affordable housing in San Francisco: modular units that are extremely cheap to assemble and can be combined into a much larger building.

The developer can have them here instantly and wants to build on a plot near Cesar Chavez and rent to the city. The city's not interested because the buildings are not built here and they'd be a little more expensive than existing SRO's.

http://sf.curbed.com/2016/10/31/13481254/micropad-tour-patri...

The problem in SF is not the cost of physical building itself. The problem is zoning, permitting, legal, harassment lawsuits, etc.: http://www.theatlantic.com/magazine/archive/2007/11/a-tale-o.... Or see https://techcrunch.com/2014/04/14/sf-housing.

Fixing the problem is almost entirely about regulatory / legal issues.

I guess that's why I left that comment: solutions exist, the problems are more about political will.

Why not just build an apartment block? Do you really need the flexibility of being able to move units out?

We need more industrial solutions to housing. Cheaper, more efficient and better quality. Something like http://www.kodasema.com/en/

That website is awful. Is it yours? A bunch of links are dead and the auto-playing video made me seasick. I was trying to figure out whether there's a model with a double bed or you're just supposed to stay single forever, but gave up.

No, it's not mine!

I agree it's quite broken. But I still love their house design and concept.

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