HOA industry makes its case for affordable “attainable” housing

New ULI report offers insight into the HOA-industry’s agenda

By Deborah Goonan, Independent American Communities

By now, everyone in the U.S. knows about our housing affordability crisis. The problem extends beyond our cities’ disgraceful problems with homelessness.

As home prices continue to rise in most U.S. housing markets, middle class American households are stretching their budgets to the limit. In some of the hottest real estate markets, consumers continue to pay rent, often because they cannot find a house they can afford to buy.

It’s no secret that most new housing in the past decade has been built for wealthy buyers and investors. But now that the luxury housing market is saturated, developers and home builders are turning their sights to housing for the middle class.

In a recent study produced for the Urban Land Institute, these are the newest buzz words in real estate development circles — “attainable housing.”

The Attainable Housing study summarizes result of an RCLCO “survey of members of the ULI Community Development Council conducted in fall 2018,” and concludes by making the case for new housing construction to serve middle income Americans.

The report also offers insight into the HOA-industry’s political agenda and business plan in light of consumer backlash against high density housing.


What is Attainable Housing?

As defined in  Attainable Housing: Challenges, Perceptions, & Solutions, “Attainable housing” is “for-sale housing serving moderate income working families.” Specifically, it includes housing built for households earning 80-120 percent of the Area Median Income (AMI).

(By contrast, “affordable housing” is defined as housing for rent or for sale, where monthly housing costs do not exceed 30 percent of income. Much of the “affordable housing” in the U.S. is built for rent. Developers and nonprofits usually take advantage of a combination of tax credits, government grants, payment vouchers and housing subsidies to ensure a positive cash flow for stakeholders.)

The study suggests that attainable housing, built without tax incentives and subsidies, can be profitable for developers, due to “untapped” high demand.


Key facts highlighted in the study:

  • For more than 30 years, home prices have risen faster than household incomes
  • Since 1967, the top 20% of earners saw a much larger increase in income than middle income earners.
  • In 1967, the top 20% tier was 2.5 times median income. By 2017, the top tier earned 3.5 time median income.
  • The supply of newly-built homes at lower price points decreased significantly over the past decade and a half.
  • In 2019, only 12.9 percent of new homes are priced below $200,000, compared to 54.6 percent of new homes fifteen years ago.
  • Not surprisingly, prices of new construction homes are much higher than prices of existing homes. In October 2018, according to Census data, the median price of a new home was $325,100, and the median price of an existing home was $257,500.
  • 60% of households consist of one or two persons, yet more than 50% of new housing consists of larger 4-bedroom homes.


Attainable Housing “solutions”

The RCLCO/ULI study recommends selling the following four types of attainable housing.

  • Small homes, defined as less than 1800 square feet.
  • “Value” housing, with a few standard construction and design choices, and economies of scale. (Historically, consumers call these “cookie cutter” homes.)
  • “Missing Middle” attached housing including “duplexes, triplexes, fourplexes, courtyard buildings, bungalow courts, townhouses, multiplexes, and live/work buildings.”
  • High-density detached “cluster” homes.

These “solutions” continue to emphasize master planned communities with common ownership, governed by homeowners or condominium associations.

Home buyers should note that most new townhouse and “cluster” home communities are organized as  condominium associations, with only collective land ownership. In other words, you own the house — even if it’s completely detached — but you do not own the yard or the driveway.

Essentially, the “attainable” housing agenda is yet another push for high density, HOA-governed housing. The only notable difference is that there’s far less emphasis on stacked condominiums than in the years leading up to the recession of 2008.

RCLCO includes some statistics from its consumer survey of 3,400 home buyers with incomes of $50,000 or more, to support ULI’s proposed strategies.

Like surveys conducted for Community Associations Institute, the RCLCO survey sample is limited to a specific consumer segment, and not necessarily representative of the actual market.


Selling home buyers on smaller and attached homes in densely packed planned communities

RCLCO’s Attainable Housing report isn’t written for housing consumers. It’s written for influential stakeholders in the real estate industry.

But that’s exactly why a savvy home buyer should read this 32-page report!

It provides the reader with an insider’s view at the sales and marketing strategy of the HOA real estate industry.

For example, on page 13, note the paragraph on “Lifestyle-choice messaging,” which instructs developers and home builders to sell home buyers on “walkability” of the community and “maintenance-free living,” presumably by a homeowners’ or condo association.


Benefits for developers and home builders

On page 13, check out the reference to “land entitlement.” That’s industry lingo for obtaining local government approval for development plans.  Developers and builders are encouraged to purchase vacant lots in established communities, preferably with approved zoning changes and permits.

Clearly, the target audience of this publication is the deep-pocketed, large scale developer and home builders. The assumption is that it will take a decade or more to build out a master planned community.

And the report assumes that planned communities will remain under developer control for many years, even generations. That’s why the strategy mentions “move-up” and “move-down” opportunities within the same community.


ULI Report is all about HOAs, but never uses the word

The interesting thing about the ULI Attainable Housing report is that it doesn’t mention the terms “homeowners association” or “condominium association” at all.

Yet nearly every proposed housing option and case study mentioned in the report is HOA-governed.

Curiously, the report does not discuss the possibility amenities preferred by home buyers (according to the RCLCO survey) do not have to be incorporated into association-governed common interest developments.

The list of community amenities includes:

  • Fitness centers
  • Gated entry
  • Trails
  • Package receiving
  • Resort pool (lounge)
  • Art and culture, such as concerts, food, wine
  • Farmers market
  • Dog park
  • Sports courts
  • Pocket parks
  • Virtual services, such as community intranet
  • Lap pool / Children’s pool
  • Maker spaces Community garden
  • Golf

With the exception of “gated entries,” all of the amenities on the list can be offered by city or state parks, private businesses, or nonprofit organizations. There’s no need to sell buyers on community amenities, mandatory HOA fees with perpetual liens, and Restrictive Covenants.

Just think how much more affordable housing would be without mandatory HOA, condo, and amenity fees, on top of mortgage payments, taxes, and homeowners’ insurance.

Tomorrow’s post will delve a bit further into the HOA-industry’s affordability myths. ♦



Attainable Housing: Challenges, Perceptions, & Solutions
(Urban Land Institute and Terwilliger Center for Housing)
Ducker, Adam, Kelly Mangold, and Lorry Lynn. Attainable Housing: Challenges,
Perceptions, and Solutions. Washington, DC: Urban Land Institute, 2019. ISBN: 978-0-87420-450-6

Affordable Housing Is Doable For Builders And Buyers, But Here’s The Problem
Brenda Richardson, Forbes Contributor, Jun 2, 2019, 08:37am

2018 Housing and Community Preference Survey (RCLCO) Article and research prepared by Gregg Logan, Managing Director, and Kelly Mangold, Vice President.






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