By Deborah Goonan, Independent American Communities
When you look at the Big Picture, it’s easy to see why housing is so expensive in the U.S.
Today IAC highlights 4 national trends toward higher density, multifamily housing, with a big emphasis on suburban condos and building more rental apartments.
See if you can spot real estate industry PR, which is shifting away from detached single family housing, private land ownership, and homeownership in general.
Also note the intensifying political tug of war over housing issues at the local level.
1. Housing units getting smaller
Urban planners are more likely to hear buzzwords such as “tiny living,” “microliving,” and “co-living” from urban developers these days. In many large U.S. cities, such as Miami, New York, Seattle, and San Francisco, homeownership is out of reach, and rent is insanely expensive.
After decades of rubber stamping over-development of cities — including thousands of rarely occupied exclusive condo towers and gated estate villas — it suddenly occurred to city leaders that there’s no affordable housing within the municipality for young singles and retired Americans.
Well, DUH! That’s what happens when cities suddenly cram thousands of residential and commercial properties on relatively small land parcels. The high cost of land leads developers to build high-end real estate for the well-to-do and uber-wealthy. Everyone else is either forced to live in older, run-down apartments or condos, if not move out of the city altogether.
But that creates a problem: cities have too few full-time residents. And most of them cannot afford to eat at local restaurants and cafes, or shop downtown.
The apartment industry’s solution? Build extremely dense rental units the size of a 2-car garage or, as the Miami New Times puts it, “the size of two Canadian jail cells.”
If they build it, will people come?
It’s hard to believe that people will rush to rent a 375-square foot apartment in Miami Beach or a 130-square foot co-living studio in Seattle.
These small living quarters might work for college students or short-term work-living arrangements, until the novelty wears off. In the end, few people settle into the Tiny Life for the long-term.
The real motive behind tiny apartments and adult dormitories — real estate investors earn high rental income per square foot of living space.
But this trend probably explains why Americans are fleeing big cities for a better life in small towns and suburbs.
North Beach Town Center to Include Hundreds of Apartments the Size of Two Canadian Jail CellsBRITTANY SHAMMAS | MARCH 7, 2019 | 8:19AM
Living in tiny homes was much harder than these people realized Business Insider, Megan Willett Jul. 27, 2015, 8:22 PM
2. Green New Deal supporters want to turn suburbs into more densely populated, no-car cities with mass transit stops
Be on the lookout for urban planners, financiers, and developers that have finally embraced the reality that “suburbia is here to stay.” Now, instead of trying to entice folks to move to cities, they’ve decided to bring the city to you.
Keep an eye on your local government’s future development plans, which could be influenced by socialist, progressive policy ideals, such as:
- Government-owned land trusts, reducing available land for purchase. (Which is just as bad, if not worse, than governments allowing private developers and financial institutions to “land bank” millions of acres of land for future development.)
- Policies that will make owning and driving a car so expensive that you’d be forced to rely on mass transit or bicycles, regardless of the weather or inconvenience.
- High property taxes on land, to push middle and working class Americans into multifamily style townhouses, condos, and apartments with no private back yards.
My prediction: a majority of Americans will resist these changes, which would amount to moving backward in terms of quality of life. But staunch New Green Deal believers won’t easily give up on their utopian vision.
How the Green New Deal Could Retrofit Suburbs –
The original New Deal included a bold attempt to rethink suburbia. We can still learn from it. City Lab, FEB 11, 2019. AMANDA KOLSON HURLEY
3. The rise of the corporate landlord
Homeownership rates have barely edged upward in recent years, remaining near historic lows, at 64.8%. Millions of people who cannot afford to buy a house — or those who chose not to own — are stuck paying rents the size of mortgage payments.
Fewer young adults are buying a home, and the median income of home buyers now exceeds $86,000. The median price of a home, $228,389, is up 10% from 2015.
But these days, America’s landlord is a more likely to be a private equity fund. That’s the result of a decade of Wall Street investors on a real estate buying binge — purchasing distressed properties, sprucing them up a bit, then leasing apartments and single family homes. In some of America’s cities and towns, it’s hard for a tenant to avoid renting from one of these corporate landlords.
In any city or small town, when a few wealthy corporations own most of the rental property, rents will be high. It’s a matter of supply and demand. After all, with almost no competition, even dissatisfied cash-strapped tenants are less likely to leave at the end of their leases.
When Wall Street Owns Main Street — Literally
Adapted from Makers & Takers: How Wall Street Destroyed Main Street Copyright © 2017 by Rana Foroohar, Penguin Random House LLC. By Rana Foroohar, Evonomics
Private equity funds like Blackstone are giant financial institutions that operate largely outside the scrutiny of governmental regulation, since they are officially designated “nonbanks” or “shadow banks”—never mind that many of them are bigger than the better-known institutions that are subject to regulation. Most people rightly associate private equity with offshore bank accounts (remember Mitt Romney and Bain Capital?), big corporate buyouts in which formerly healthy firms are loaded up with debt and stripped of their assets, mass layoffs, and an utter lack of transparency in their financial dealings. But these days, the big news about private equity is that it is at the heart of the country’s housing rebound.
QUARTERLY RESIDENTIAL VACANCIES AND HOMEOWNERSHIP, FOURTH QUARTER 2018 (Release Number: CB19-10)
4. Shift from rent-subsidized “affordable housing” to “workforce housing”
Because rent is so damned high in relation to income, even in small cities and towns, middle and working class Americans can barely afford to make ends meet.
Affordable housing advocates have flooded the media with dozens of reports claiming that one-third of U.S. households are “cost burdened.” That’s defined as spending more than 30% of monthly income on rent.
The U.S. has a severe shortage of subsidized rental housing that is affordable to low-income households.
But the latest push has shifted toward building more “workforce housing,” to serve teachers, firefighters, and working adults above poverty level, earning modest incomes.
Instead of rent subsidies, local governments use tax credits to pay developers to build workforce rental housing. Supporters say the tax credits keep rent affordable. On the contrary, critics say the tax credits are a give away to landlord-developers.
And most homeowners still resist development of large rental communities near their neighborhoods. Many assume that tenants and apartment managers won’t take care of the property. Homeowners also fear an increase in traffic, overcrowding of schools, and an influx of crime.
All of these factors create obstacles to keeping rent affordable in relation to income.
WATCH Neighborhood HOA upset about apartment proposal
Many locals are concerned about the increase of population that might effect the local schools.
One-third of Wilmington households are cost-burdened. Breaking down the affordable housing crisis by the numbers
By Michael Praats- Port City Daily (NC)
March 3, 2019