Exploring Three Models for More Affordable Homes in U.S. Cities

Changes to design, construction, and zoning policies could increase the supply of affordably priced housing, said panelists at an event hosted by the Harvard Joint Center for Housing Studies (JCHS).

“It is the cost of the construction, the cost of land, and the cost of regulation that we have to address,” said Chris Herbert, managing director of the JCHS.

The cost of housing has grown more quickly than the incomes of many who need a place to live, especially renters. “Renter cost burdens have doubled since 1960, with a substantial jump in the 2000s,” says Herbert.

Land is much less available for development than it was in the 1960s—and that increases what developers need to pay for a site to build. The cost of housing is also pushed higher by limits on the kind of homes that developers are allowed to build. Also, the construction techniques that builders use to create homes have not changed much in the last 100 years, which may also make the cost of housing higher than it needs to be.

“All these factors interrelate,” he says.

Affordable by Design in San Francisco

It is possible to build housing for less, even in the most expensive cities in the United States.

“Our philosophy has always been the same—to build ‘market rate’ housing that is affordable by design,” says Michael Thomas, director of business development, Panoramic Interests, a developer based in San Francisco.

One way to do that is to use space more efficiently. Paradoxically, the apartments created by Panoramic that use space the most efficiently are not its smallest, 250-square-foot (23 sq m) studios. Its three-bedroom apartments with 600 square feet (56 sq m) of space are more efficient, because they take up just 200 square feet (18.5 sq m) of space for each bedroom. Renters have responded well to these larger, efficient apartments. “The favored unit turned out to be the three-bedroom,” says Thomas.

Panoramic is also planning to add a four-bedroom apartment to its unit mix. To attract renters to its apartments, the firm makes sure to include enough common space outside the apartment. That typically includes a rooftop terrace, but no gym, swimming pools, or doggie daycare. “We’ve banned the words ‘amenity space.’ The biggest amenity is price,” Thomas says.

The cost of a house is also less if developers do not have to include parking—especially in places where land is expensive and the development cost can run as high as $60,000 per space. Panoramic is currently creating a development with 1,000 new apartments and no parking spaces near a mass transit stop in Oakland, California.

Investments in mass transportation and new technologies like ride sharing and driverless cars could free up a significant amount of that space for redevelopment, according to Terri Ludwig, president and chief executive officer of Enterprise Community Partners Inc. About 30 percent of the total space in U.S. cities is taken up by roads and parking.

Philadelphia’s $100,000 House

Architects in Philadelphia have also figured out how to build new homes for just $100,000 per home—much less than seemed possible. The basic design for these houses includes 1,000 square feet (93 sq m) of space and costs $100 per square foot ($1,076 per sq m) to develop. Each is designed to earn a Platinum certification in the Leadership in Energy and Environmental Design (LEED) program.

“We thought of these as urban cabins,” says Brian Phillips, principal with ISA Architects, based in Philadelphia and Cambridge, Massachusetts. His firm approached the job like an industrial design team, producing starter homes for first-time buyers.

The architects designed simple, efficient shapes that fit neatly into Philly’s street grid of rowhouses. “In Philadelphia, whether you’re rich or poor, you probably live in a 16-foot-wide [5 m] house,” says Phillips. These designs use color on the outside to vary the facade, instead of complicated rooflines. “The outside of the house did not need to be expensive. We put the value on the inside.”

Modular construction techniques also can create significant savings in the cost to develop housing ISA’s rowhouses—not necessarily because the cost of the labor or materials is less, but because modular construction techniques can cut months off the amount of time it takes to build.

“It saved us almost eight months of construction time,” agreed Thomas, who is planning to use modular construction on the new project in Oakland. “We can erect a six-story building in less than a week,” he added.

Alabama’s $20,000 House

Not to be outdone, architects at the Rural Studio at Auburn University have been working on concepts for nearly two decades in rural Hale County, Alabama. The designs are compact and simple to be affordable for both rural, low-wage workers and seniors who live on fixed incomes and can afford just roughly $100 a month in rent or mortgage costs.

Rural Studio has created three models that are ready to be produced on a large scale for small, one-bedroom houses, according to Andrew Freear, director of the Rural Studio. Each includes single-form gable roofs, nine-foot (2.7 m) ceilings, five windows, and two doors. The houses are built on site “so that that money and jobs stay in the local economy,” says Freear.

Planning for Housing

The rules that govern how land is used can also have a huge effect on the cost of housing. Local officials often create rules that forbid less expensive housing types. Many areas do not allow builders to create a single-family house that sits on a lot smaller than a full acre (0.4 ha).

“We have these tiny, tiny jurisdictions. They are making their own planning decisions, but they are not thinking regionally,” says Jesse Kanson-Benanav, chair of A Better Cambridge, a group of residents of Cambridge, Massachusetts, that advocates for housing development.

Sometimes, even when a local government creates zoning laws to encourage developments, fights still erupt. In the San Francisco Bay area, local officials spent three years to create a plan that would allow certain kinds of housing development on an “as-of-right” basis. But individual projects often need permission to make minor changes to the as-of-right plan. “Then we re-litigate the whole plan,” says Adhi Nagraj, chair of the Oakland Planning Commission and its design review committee.

“People used to move to places of opportunity where they could better their lives for themselves or their families,” says Harriet Tregoning, a former Loeb Fellow. “Because we have constrained the housing supply . . . that economic mobility is gone.”

Laws on the state and federal levels can override local resistance to change. California lawmakers are also considering a new law that would require communities to allow the as-of-right development of dense new housing near transit stops. However, opposition is mobilizing to the bill, as some California residents object to the likelihood that development might change their neighborhoods.

“What is the right of the people who have already moved to a neighborhood to allow or disallow new people from coming to that neighborhood? That is the crux of every planning commission fight,” says Kanson-Benanav.