Joe Urban | Sam Newberg, Urbanist

The Many Perspectives of Affordability

Dateline: 3:31 pm February 22, 2019 Filed under:

I was happy to see the Star Tribune counterpoint this week pushing back against a piece from earlier in February calling for reduced developer fees in order to make housing more affordable. The for-sale housing construction industry has every right to make this issue its priority, but as this week’s piece pointed out, communities need to pay for public amenities like parks and other things. We like nice stuff. I can accept the argument that part of the social contract in the Twin Cities is we have higher expectations for our public realm and developer fees are higher as a result. Therefore, I just don’t think this issue comes close to a high priority when dealing with the affordable housing crisis.

Nicollet Square in Minneapolis, an Example of the Real Need for Affordable Housing

Housing First Minnesota represents about 1,200 home builders, developers and suppliers in Minnesota. It’s a big industry, and I can understand their perspective on this issue. If you can lower the price of new home, you make the purchase of that home possible for hundreds or thousands more potential buyers. As well, going after fees is much easier than construction material costs or even zoning changes.

Simply put, building any kind of housing isn’t cheap. An excellent Star Tribune article by Lee Schafer in June 2018 indicated that even with free land in north Minneapolis (or anywhere), the cost of building a home approaches $300,000. Size matters. The Schafer article indicates that Project for Pride in Living builds new homes that average only 1,500 square feet, versus the typical new home in the United States that is well over 2,000. The average Habitat for Humanity home in the United States is 1,050 square feet.

For what it’s worth, I found a house for $210,000 in this year’s Parade of Homes. If you can believe this, it’s a 960 square foot two-bedroom, one-bath (double garage, of course!) starter home with an unfinished basement. It’s in the lovely community of River Falls, Wisconsin, home of Fox Den Books and Swinging Bridge Brewing. However, this is a “drive-’til-you-qualify” housing situation and that all-important commute gets long and expensive for many potential buyers. #H+T=A.

On the apartment rental housing side of affordable housing, if you haven’t done so, please watch all or parts of the Sold Out documentary at the Minnesota Housing Partnership website. Yes, it’s a couple years old, but it has lost none of its relevance, given this week’s Finance & Commerce article discussing how some of the best opportunities for real estate investors is to buy older apartment buildings, renovate them and raise rents. It is important that the Sold Out documentary pointed out the right of apartment owners and investors to do this, and it is also true that we must continue to reinvest in older buildings to prevent deferred maintenance, which causes larger problems down the line. The problem is, as Sold Out explains, when naturally occurring affordable housing becomes less affordable, there is a ripple effect through our communities.

I hope if anything this post demonstrates that affordable housing is complicated. It is very important to understand that a lot of people make money off of housing industry, even the affordable industry. I hope home builders prosper. Moreover, I hope we find additional finding and new ways to preserve existing and create new affordable housing. It’s also a good case for increased wages.

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