Building affordable homes
Now, theoretically, any housing can be "affordable" if subsidized, either directly or by regulation that forces the price of some units to be maintained lower than market value. But let's ignore that possibility here, let's look at what affordable housing can really be. Without subsidies, developers have to recoup the cost of constructing homes from those who buy the homes, so a look at the actual cost of building a house should provide a glimpse into what affordable housing can be.
Like any project, the first step is to establish a budget. For simplicity's sake, I will suppose that an affordable housing option is 3 times gross household earning, given my sources, all the amounts will be in Canadian dollars, adjust accordingly for American figures.
OK, so in Canada, the median household income is 69 000$. The low-income threshold for an household of 2 people is around 25 000$. So, as a gross estimate, an affordable median housing unit should be about 210 000$, and an affordable housing option for a poor household should be 75 000$.
So, what does that buy you?
So, a 210 000$-house would be something like this 3-bedroom 1 260-square-foot bungalow, with an unfinished basement that offers the possibility of doubling the living space (so total potential living space of 2 520 square feet).
On the other hand, what does 75 000$ buy you? Well, looking at the catalog, houses don't even go that low, the most affordable house model is a 2-story 910-square-foot house with 3 small bedrooms and an unfinished basement that can increase total living space to about 1 300 square feet.
If we look at bungalows only, then the cheapest bungalow model is a bit pricier and a bit smaller (768 square feet), but with a potential of over 1 500 square feet after the basement is finished.
But all is not lost, because filed under "chalet" or "secondary homes" meant to be only occasionally used homes in the countryside, we can find the following.
These are different from the bungalows above in that they are lacking in basements, meant to be built on concrete slabs. Which means that these do not have expandable living spaces. Note that unlike the previous homes, where the construction cost per square foot was around 100$, the small houses actually have higher construction costs per square foot, around 150$.
Still, this shows that it is theoretically possible to build affordable housing in North America, even in the form of single-family houses, housing that can be affordable even for people at the threshold of poverty. And indeed, such small houses can sometimes be seen in Japan in clusters that seem to indicate public housing developments.
|Probable public housing developments in Hokkaido, Japan, note the number on the buildings, typical of Japanese public housing developments|
|Small 1-story houses in Obihiro|
Of course, there is always the option of multi-family developments, and the same site provides a range of low-rise options for multi-family housing.
This triplex offers three 2-bedroom 950-sf units for about 300 000$ (around 100$/sf)
This 4-plex offers four 2-bedroom units, each 910 square feet, for 383 000$, or about 100$ per square foot too.
This 6-plex offers six 2-bedroom units each about 1 000 square-foot big for 604 000$, or about 100$ per square foot.
Note that all these buildings have common characteristics of being low-rise, of being wooden-framed structures, of having little public areas (for multifamily units) and lacking elevators or any complex mechanical system. From what I've read, this is the most affordable type of housing one can build (at least per square foot). As long as you satisfy these criteria and do not have a tiny building, the construction cost per square foot tends to be roughly the same, around 100$ per square foot.
On the other hand, high-rise constructions that require concrete frames, elevators, sprinklers, plenty of mechanical fan ventilation of inner areas and units, etc... tend, from what I've read, to cost 50 to 100% more to build than the low-rise units. Not only that, but these mechanical systems need to be maintained, which adds to the cost over time. So if an household can afford only a 700 square-foot apartment in a low-rise unit, maybe it could afford only a 350 to 450 square-foot unit in an high-rise.
I know, I know, a building's cost is not limited to construction cost. So let's talk about this.
Land costYou can't just build housing in the air, you have to acquire a plot of land first. Since land is not built, but rather pre-owned, it's all a matter of supply and demand, without construction costs as a yard stick to estimate value in a functional market. However, not all land is worth the same, the desirability of the location varies and creates submarkets. For example, if you have subway lines in a city, land within walking distance of a subway station may well be a submarket for land, and that type of land may well be in shortage even if there's plenty of undeveloped land waiting for buyers all around the city, land that just happens to not be near subways.
Furthermore, a building should have to pay for the municipal infrastructure needed to link it to a city's street grid and public services (drinking water, sewers). I can't find good figures to estimate the cost of these, I've seen the cost of entire street reconstruction of around 5 000$ per linear meter, but construction may actually be cheaper than reconstruction in this case.
So, anyway, to be able to build affordable housing, you also have to find affordable land, which means undesirable land that is in high supply. Usually, such land is found mostly on the edge of built areas, leading to the "drive 'til you qualify" phenomenon. Alternatively, you have to find a way to cut down on the land consumption per unit, have smaller lots or more units on a single lot.
Since the value of land is linked to the supply of it, it would stand to reason that greenbelt regulations or agricultural land protection laws that forbid development on land restrict the supply and thus make land on the fringe more expensive. There is also a matter of speculation, if land appreciates and taxes on land are low, speculators may believe it best to put off putting their land on the market to let their value climb more. If there are lots of speculators, this can artificially constrain the supply of land too, so putting higher taxes on land to force speculators to put their property on the market faster can help land prices go down.
Building affordable housing... a losing approach?
The case of the post-WWII entry-level house
Well, construction cost-wise, the houses built in that era were not particularly expensive to build, they were cookie-cutter wooden-frame small houses which were often only 800 to 1000 square-foot big, generally sold with unfinished basements or attics to cut down on costs while retaining the possibility for expansions.
Houses such as these are still affordable to build today... it's just a matter of finding cheap enough land.
And that is the single most crucial factor of the post-WWII starter home, which is hard to reproduce. Houses built in this era were built in perhaps the single greatest period of land glut in the history of urban development. This oversupply of land for urban development was the result of technological upheaval in the form of mass motorization and of the rapid creation of the interstate/freeway system. Though the freeways were made to help rapid movement from city to city, they were rapidly taken over by commuters who used them to be able to access cheaper land while maintaining access to the jobs and services of the cities, which then still held most of the jobs and businesses.
Before cars, the fastest mode of travel inside cities was transit, which meant that people had to find land within reasonable walking distance of a streetcar line. That limited the amount of land each streetcar line made available to development and encouraged a still somewhat dense development form...
|Streetcar suburb of Chicago|
|Land within easy reach of a major city in the streetcar era, with the streetcar lines in black|
|In the car era, the land within easy reach of the city has been increased significantly, creating a huge glut of land to develop in the suburbs|
Though there was a huge movement to metropolitan areas in that era, the amount of land was so great that land was dirt-cheap.
So, small cheap houses with unfinished basements and attics, land made nearly worthless due to the glut brought about by cars and freeways, these are the ingredients for the era of the cheap "starter" home of the post-WWII period.
Where did the starter home go?
The dream of a cheap house also came at exponentially higher transport costs, making people depend more and more on oil imported from unsavory overseas regimes. What one didn't spend on housing, one started spending on cars.
It's important to point out that starter homes are still around in second-tier cities that have not maxed their land or which still support the ever-growing freeway system to keep adding land to develop.
|Starter home built in 2014 in the suburbs of Indianapolis, still affordable for a one-income family|
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?
This is long enough...I initially wanted to talk about the alternatives for affordable housing in this article, but it's clear it's best if I stop here and write another article. This article only looked at one way of obtaining affordable housing, namely the one way that people tend to obsess about: building housing that is affordable from day one, because of the current supposition that neighborhoods are essentially pieces of art to preserve over the years rather than living and evolving human ecosystems.
For those wanting to read the follow-up to this article, click here.