No single solution exists among the efforts to deliver attainable and affordable housing in a country where home prices continue to escalate significantly and the dream of homeownership is out of reach of millions of households, an expert panel told attendees at ULI’s 2019 Fall Meeting in Washington, D.C.
Casey Anderson, chair of the Montgomery County (Maryland) Planning Board; George E. Casey Jr., chief executive officer of Stockbridge Associates; Tony Pickett, chief executive officer of Grounded Solutions Network; and Hilary Goldfarb, senior vice president and regional development officer of the Rockefeller Group, addressed the multifaceted housing challenge during a session at the meeting.
Panelists discussed what cities and local governments can do to help preserve attainable housing and facilitate development of new housing oriented to middle-class households. Find more coverage from #ULIFall at https://t.co/Sg1bqjzKn3 pic.twitter.com/rOtqfnRrar
— Urban Land Institute (@UrbanLandInst) September 24, 2019
The percentage of the population that can afford a typical home today has been shrinking as the average home size increases—trends that have been continuing for decades, said session moderator Adam Ducker, senior managing director at real estate advisory firm RCLCO.
A move toward more modular, factory-built housing could lower prices because it provides more efficient assembly and controls labor costs, said Casey, who is also
the chair of the Housing Innovation Alliance. The common method of construction on a job site with multiple subcontractors assembling a house from materials delivered piecemeal is inefficient, said Casey, comparing the process to delivering auto parts to scattered assembly sites, rather than building cars at auto factories.
“What we have is a labor problem,” Casey said. “The factory is the solution. The builder of the future is going to be buying modules from a factory.”
A drawback to modular housing, some panelists mentioned, is the inability of the buildings to allow for unique features, styling, or easy customization. But the factory production increases speed and lowers labor expenses for builders.
A growing trend across the country is the development of accessory dwelling units (ADUs), small secondary dwellings typically built in the back yard of existing homes, said Anderson. The Montgomery County Planning Board, located in the Washington, D.C., metropolitan area, has relaxed some restrictions on construction of ADUs, opening the door to a modest increase in the product type, he said.
The ADUs are viewed as a way to supply additional rental units in communities that are fighting against a national housing shortage, though some homeowners push back against the changes and against integrating rental properties into single-family neighborhoods.
“It’s not a radical idea to have some modest densification,” Anderson said. The program is not expected to expand rapidly: “We need to find ways to lay the groundwork for something more expansive,” he said.
At the current pace of expansion of ADUs, it will be difficult for the programs to have a substantial impact on the nation’s housing shortage, said Stockbridge’s Casey. “It’s like trying to put out a forest fire with a teaspoon.”
But ADUs should not be ignored as a product type, said Goldfarb. “The accessory dwelling unit is an important strategy, and we can’t minimize it.”
In a multifamily example, she cited Rockefeller Group’s new 326-unit Liv Goodyear, near Luke Air Force Base just west of Phoenix. Low land prices and a less restrictive regulatory environment allowed the firm to build the project at an exceptionally low construction cost with favorable rents. It has been successful. “It’s our fastest-absorbing residential project in the nation,” Goldfarb said.
Another promising solution is development of affordable homes on land owned by community land trusts, said Pickett. His Grounded Solutions Network is a Washington, D.C.–based nonprofit association with a network of 240 affiliated organizations and agencies across the country. Those homes, typically with a long-term ground lease, are sold to homeowners who get the advantage of not having to buy the land under their homes. The program, which is growing in popularity, allows the homebuyer to accumulate equity.
“We get to do some transition to get folks a foothold in homeownership,” Pickett said. Later, the buyers can harvest some of their equity and move up or relocate to a second home.
The program also enables communities to reactivate pockets of vacant land in blighted districts and rebuild neighborhoods through homeownership, Pickett said.
Opposition to change frequently arises in almost any neighborhood. When asking a question of the panel, one audience member at the standing room–only session referred to neighborhood opposition he labeled as “BANANAS”—build absolutely nothing anywhere near anything.
The panelists noted that new ideas and solutions to address the affordable housing problem can be found in many locations and with many property types. Newly built single-family rental communities, for example, could be examined for possible adaptation as for-sale housing.
“None of us have the answers,” Ducker said. “We hope you leave here today with a few ideas.”
Said Goldfarb: “There is no silver bullet. All strategies have to be on the table.”