Tag Archives: housing news

Unease Down East

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Burlington and Portland, Maine, have a few things in common. They’re the biggest cities in their states, they both pride themselves in their trendy livability (as measured by magazine rankings, food-trucks per capita, those sorts of things), they both experienced negligible development of rental housing for many years, they both worry about gentrifying neighborhoods, and they both have a housing affordability problem.

Portland’s problem might seem a bit more acute, thanks in part to a six-part series in the Portland Press Herald that elaborates on what the mayor-elect calls a “housing crisis.” portland1The themes echo other crises around the country – soaring rents (up 40 percent over the last five years), stagnant or declining incomes, middle-income renters priced out and fleeing to the burbs.

The average two-bedroom apartment in Portland, according to the newspaper, is $1,560. That’s too bad, because an apartment like that is out of reach for anyone with a housing voucher. HUD puts the fair-market rent for a two-bedroom in Portland at $1,074 – which happens to be well below Burlington’s $1,309. What’s more, landlords in Portland can capitalize on the hot rental market by charging non-refundable application fees, which their counterparts in Vermont cannot.

How Portland is going to relieve its “crisis” is an open question. The mayor-elect has appointed a committee. The city is examining municipally owned land with an eye toward potential sites for affordable housing. New developments are supposed to make some units affordable for middle-income renters, but that inclusionary policy apparently doesn’t extend to the working poor. Here, as elsewhere, the remedies seem to pale before  the problem.

Modest proposal revisited

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At first glance, The Times’ recent  exposition on the surfeit of Chinese residential real-estate investment seemed exotic, distant. The money seems to be flowing into hot, upscale regions to the south, and one of the investors even asserted, “Chinese people like newer areas.” china1

But before you conclude this phenomenon has nothing to do with us, in graying old Vermont, consider this: Chinese students are enrolling in U.S. universities in increasing numbers, the story pointed out, adding: “Their parents often buy homes in college towns.”

“If you look at the stuent populations of any major or nonmajor university,” the Times story quoted a Chinese real estate executive as saying, “you’ll get a really good indication of what property prices are going to do.” What he apparently meant is that Chinese buyers, who more often than not pay cash, bid prices up.

This brings to mind the University of Vermont – never mind whether it qualifies as a major or a nonmajor institution. It’s eagerly stepping up its quotient of international students – part of the strategic plan, don’t you know – and the lion’s share of those students come from China. These are students, generally, whose parents can afford to pay full fare.

Here we pause and pivot to point out two independent trends:

  • Chinese investors are pouring money into American residential real estate, and many of them hanker to live in this country.
  • Vermont is desperately short not just of affordable housing, but of the capital needed to fill that need.

All of which suggests that we revive the EB-5 idea we floated a few months ago. Why not tap the profusive cash of Chinese investors who yearn for green cards to build affordable housing for Vermonters – affordable housing in upscale, high-opportunity areas, no less. With their residency established, the parents could then find accommodations for themselves near their collegiate offspring. China2

We can’t resist noting, again, that the Vermont regional EB-5 office is headquartered in the same state agency (Commerce) that hosts the Department of Housing and Community Development.

The co-op alternative

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 Before Burlingtonians succumb to the blandishments of “purpose-built” student-housing developers, they might do well to consider an alternative with a long tradition of affordability: student co-op housing.

Student housing co-ops are scattered around the country. Perhaps the best known is the Berkeley Student Cooperative, which dates from 1933 and offers housing to about 1,300 students in 20 properties.  Berkeleystudentcoop1According to the co-op’s website, monthly rent is about $745 in a room and board house (compared to $1,354 in a university dorm triple) and $433 to $881 a month for single room in an apartment. (By comparison, the market rate for a one-bedroom apartment is typically over $2,000.) No wonder there are 1,000 students on the waiting list.

And yes, some of those Berkeley co-op houses have game rooms and hot tubs.

A thumbnail case for student co-ops can be found here, on the website of the North American Students of Cooperation (NASCO). Housing co-ops operate on variations of a shared-equity model. Here’s NASCO’s description of a common form:

“In a ‘Market Equity’ coop, a member joins the coop, buys a share, and lives in a unit.  This is similar to something like a condo complex, but instead of owning one condo, you own a share in the whole complex.  When you decide to leave the coop, you can sell your share at whatever the market will pay for it.”

Housing co-ops also come with shared governance, work expectations, and so on. They’re not limited to students, of course. Champlain Housing Trust has five co-ops with 81 apartment units in Burlington, with another one on the way on Bright Street.

You’ll never be faced with this choice, but it never hurts to ask: Which would you rather see on the northeast corner of North Winooski Avenue and Main Street: purpose-built student housing, with a climbing wall, or a student housing co-op without one?

 

Daunting affordability gaps

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Here’s a seat-of-the-pants calculation that shows one dimension of Burlington’s (and Vermont’s) affordability problem for renters:

According to Vermont Housing Data, Burlington has 9,596 rental units. Of the households living in them, 61 percent are paying more than 30 percent of their income for housing — the standard threshold of unaffordability. By that standard, 5,853 rental units in Burlington are unaffordable to the people who live in them.

Lake Champlain Burlington, Vermont.

(The same source reports Vermont’s rental units at 69,581. More than half the households in those units – 52.5 percent – are paying more than 30 percent. That puts the state’s unaffordable rental units at 36,530.)

Those are just the figures for the standard housing burden. In Burlington, 35.7 percent of renters are severely burdened, paying more than 50 percent of their income on housing. That works out to 3,426 rental units that, for them, are severely unaffordable (and 18,369 such units statewide).

These are unsettling numbers, and of course there’s no easy remedy or policy panacea (although doubling public funding for affordable housing and raising the minimum wage to $15 would probably help).

Inclusionary zoning – which requires a specified percentage of units in new developments to be affordable – is among the policies that can be brought to bear. For a thorough, thoughtful treatment of the subject by Rick Jacobus, a Burlington alum, click here. He points out, among other things, that “inclusionary housing is one of the few proven strategies for locating affordable housing in asset-rich neighborhoods where residents are likely to benefit from access to quality schools, public services and better jobs.” In other words, it’s fully in keeping with the renewed national emphasis on affirmatively furthering fair housing.

He also writes that “inclusionary housing has yet to reach its full potential.” That’s an understatement in Vermont — one of 13 states that has statutes authorizing inclusionary policies that virtually no municipality except Burlington has taken advantage of – and in Burlington itself, where an inclusionary ordinance has been on the books for 25 years. Over that period, the policy has resulted in only about 260 affordable units (many of them condos).

That relatively low number reflects, in part, a lag in Burlington housing development in comparison to the rest of the county. What accounts for that, and is there any way the city’s inclusionary policy could be tweaked to make it more effective? Answers to these and other questions may be a year away. The Housing Action Plan calls for hiring a consultant to review the city’s inclusionary policy and make recommendations by next fall.

At last! Housing that serves a purpose

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Thanks partly to the Burlington Housing Action Plan, which calls for housing up to 900 collegians “potentially on one to two carefully-selected downtown locations,” we’re going to be hearing a lot, over the next few years, about something called “purpose-built student housing.”

That’s because the new wave of student housing around the country is being generated by private developers on behalf of colleges and universities, as would be the case in Burlington. And what these developers say they’re putting up is “purpose-built.”  KnoxSuch as “The Knox,” in Knoxville, Tenn., near the University of Tennessee campus.

Now, you might well wonder: “Purpose-built” housing as opposed to what? Pointless housing? (Perhaps examples of the latter spring immediately to mind.)

So, what does “purpose-built” mean? Here’s the Merriam Webster definition:

Designed and built for a particular use

Like, to be lived in? As in, duh, apartment building? There must be more to it.

Students aren’t the only target of “purpose-built” developments. A cursory Google search turns up “purpose-built” developments for older people, disabled people, mixed-income people. A prime example of the latter is East Lake, a revitalized neighborhood in Atlanta that used to be a rundown public housing project.

Take note: “Purpose-built communities” and “intentional communities” are not the same thing. (“Intentional communities” as opposed to what, you might wonder. Accidental communities?)

The purpose-built phenomenon seems to be hot in Canada. Check out Mirvish Village in Toronto, which prides itself on its diversity. The website does not make it easy to discern, however, how much it costs to live there.

OK, so what’s special about “purpose-built” student housing, as distinct from a plain old privately contracted dorm? (Redstone Lofts on UVM’s campus, privately built and managed, would be an example of the latter, sort of. Nobody was describing that as “purpose-built” when it went up a few years ago.)

The amenities, apparently. knox2Roof decks, hot tubs, climbing walls, flat-screen TVs in every suite, swimming pools, those sorts of things.

Very well, let’s imagine six-story “purpose-built” student housing on the northwest corner of South Winooski Avenue and Main Street, the parking lot next to the fire station. (Presumably the climbing wall and hot tubs would be on the inside, not accessible to passers-by.) Here’s what we’d like to know:

Will the inclusionary zoning ordinance apply, and if not, how can the ordinance be amended to ensure that a decent share of these “purpose-built” units are affordable? 

Tampering with the sacrosanct

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The presidential candidates have a lot to say about tax reform, but with one exception, they’re not about to get rid the big sacred cow — the mortgage-interest deduction, found on Schedule A of Form 1040:scheduleA (2)

Economists have been complaining about the mortgage-interest deduction for years. It’s a regressive benefit, increasing with income. It enhances inequality, effectively inflates property values and misallocates resources, or so the argument goes. In 2012, the mortgage interest deduction cost the federal government $70 billion, according to the Urban Institute, compared $36 billion for low-income housing subsidies.

But nobody expects that deduction to go away any time soon. It’s a firmly entrenched loophole (aka “third rail”) not only for the wealthy elite, but for the simple majority. The home ownership rate in this country exceeds 60 percent (in Vermont, it’s over 70 percent), and of course the lion’s share of those people are mortgage-holder beneficiaries. IRS2

The ranks of renters are increasing, though, and the more they do, the more seriously they might be taken as a political constituency. Politicians take renters seriously in Germany, where renters are in the majority and the regulatory climate is much more in their favor. Germany doesn’t offer a mortgage-interest deduction, either.

Might the growing numbers of American renters be mobilized to support the elimination of the mortgage-interest deduction — which ostensibly doesn’t benefit them anyway — in favor of increased housing subsidies for low- and moderate-income tenants? That seems like a stretch, unless another Occupy-style movement sweeps the country.

Well, if eliminating the mortgage-interest deduction discourages home ownership, so be it. There’s even evidence that home ownership isn’t necessarily such a wonderful thing, because it damages labor markets:

“We find that rises in the home- ownership rate in a U.S. state are a precursor to eventual sharp rises in unemployment in that state,” write economists David Blanchflower and Andrew Oswald, in a 2013 paper. Why? Partly because higher rates of homeownership curtail labor mobility and lead to longer commutes.

So, who’s the exception among the presidential candidates? Ben Carson. bencarson He’s the only one who has said he’d do away with the mortgage-interest deduction. (Even Bernie Sanders doesn’t go that far – he’d cap it at $300,000.) For a full-throated defense of this Carson stance from someone who doesn’t agree with much of anything else he says, click here. 

Another population bubble

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Millennials become the most numerous living generation this year, outnumbering the Baby Boomers, and there’s no shortage of treatises analyzing their tastes, their world views, and their impact on the housing market. How seriously to take these generalizations, or any other thumbnail pronouncements about generations, is an open question. (For a Pew Foundation exegesis of “generations research” that finds Millennials less religious, more diverse and less conservative than their predecessors — that is, compared to Generation X, Baby Boomers and the Silents(!), click here.)

Clearly, though, people born after 1980 tend to have higher levels of student loan debt than their forebears, and fewer are buying houses as a result.Millennials1 Young renters’ student debt burdens grew after the Great Recession, even as their median incomes dropped, which left them less able to qualify for a mortgage or to save for a downpayment. A new research brief from the Harvard Joint Center for Housing Studies, “Student Loan Debt and the Housing Decisions of Young Households,” lays out the details.

Nevertheless, there are commentators who see Millennials as poised to fuel a housing boom. “Millennials are making their move in the housing market,” proclaims the Dallas Morning News, quoting real-estate industry source attributing 30 percent of home sales to Millennials.

The common notion that Millennials want to live in cities is subject to dispute. More Millennials are moving from cities to suburbs than the other way around, Census data supposedly show. A survey came out earlier this year that got plenty of attention: It had 66 percent of Millennials preferring a life in suburbs, 24 percent rural areas, and just 10 percent cities.

The survey was sponsored by the National Association of Home Builders, though — an entity that would seem to have a vested interest in promoting the single-family-home-big-yard lifestyle.

But wait. A survey closer to home suggests that many Millennials really do hanker for a single-family home with a big yard. The 2014 “Young Professional Housing Survey Report,” sponsored by the Lake Champlain Regional Chamber of Commerce, asked 400 respondents (63 percent of whom were renters) what type of residence they would most like to live in, and 82 percent said single-family detached house with a yard. And most of those wanted a big yard!millennials2

Now, to the extent that these Burlington-area Millennials prefer suburban living, they do want to live in a place that’s a short commute to work, and a place where they can walk to community services.

Still, the young cohort seems to cling to the old American dream of a low-density-neighborhood lifestyle. Hasn’t anyone told them that big yards are obsolete in the Age of Climate Change?

Learning from Massachusetts

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The Greater Boston Housing Report Card 2015 is out, and it’s an eye-opener. Prepared for the Boston Foundation  by the Dukakis Center for Urban and Regional Policy at Northeastern University, it’s a detailed analysis of Massachusetts’ housing-unaffordability crisis –a crisis that results, in part, from not enough housing being produced. What accounts for the insufficiency?Mass2

“We have failed to meet housing production targets because there is no way to do so given the high cost of producing housing for working and middle-income households.”

That’s from the executive summary, which goes on to make the same point in another way:

“(T)he cost of developing new housing for working and middle-income households has become prohibitive in Massachusetts. Radical remedies will be needed to overcome the barriers to housing production …”

And what are the barriers? High development costs, of course ($274 per square foot for urban projects, of which $159 is construction and $41 is land acquisition). And zoning regulations that limit density and where multi-family projects can be built.

Now, you might be thinking, what does any of this have to do with us, up here in our little, rural, unprepossessing state? Metro Boston is another world — far pricier and denser than any place around here.

Well, we’d argue that the problems that Massachusetts is facing are problems we share — albeit on a smaller scale. And remember, Massachusetts has an affordable housing zoning law (Chapter 40B) that’s arguably stronger than what’s on Vermont’s books.

Yes, it would be nice if we could get a comparable report card for housing in Vermont, but failing that, perhaps we can learn something from what the one for Massachusetts.

The report notes that “Although there is a lot of vacant land, most vacant sites are not zoned for multi-family residential development.”

As for zoning:

“Highly restrictive zoning, present in virtually every one of the state’s 351 municipalities, creates an artificially high barrier to development. It pushes developers to propose smaller projects (i.e., fewer units) and smaller units (i.e., fewer bedrooms per unit) in order to reduce the perceived impact on the neighborhoods and — in the case of larger units attractive to families with school-age children — the perceived impact on the town or city’s education budget. The complexity of getting zoning changes approved dramatically extends the development period and increases carrying and soft costs. The cumulative effect drives up both the cost of development (seen in the high level of site costs, financing, and soft costs) and rents.Mass1

“Thus, significant resistance to any change in the local community ambience has also meant that local support has heavily favored low-density, smaller projects, both of which are far more expensive to produce. Higher density housing maximizes the efficiency of land use, and larger projects create economies of scale in development and construction. Massachusetts residents opposed to zoning for multi-family housing at 20 units per acre are astounded to learn that the city of Paris — a pretty nice place to live with undeniable “character” — has a density of approximately 120 units per acre!

“When developers are given permission only to build projects of very low density, they will do so. As a result, the housing that is built will be expensive and affordable only for the very well-to-do or, if public subsidies are involved, to people with very low incomes. Working and moderate-income families will not be able to afford these units. This state of affairs, of course, causes the average cost of producing multifamily housing in the Commonwealth to increase.”

Here we note that merely increasing the housing supply (as some are advocating) isn’t going to solve the affordability problem if the added supply happens to be … luxury-scale and thus … unaffordable to all but the wealthy.

More brainstorming: self-building

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The housing-unaffordability problem is too big, pervasive and complex to yield to single, simple remedies. Yes, government at all levels has to play a substantially bigger role than it does now. But without substantial new federal funding and subsidies — which can’t be found on mainstream politicians’ lists of spending priorities — we might as well brainstorm about piecemeal, alternative solutions.

Having touched on co-living and cohousing in the last post, we bring you a continental variant of this idea: collective building.baugruppe1

This intriguing headline in the Guardian, “The do-it-yourself answer to Britain’s housing crisis,” offers an entrée: community members, with help from a land trust, building their own affordable homes. Britain even has an organization, the National Custom and Self-Build Association, to promote such efforts.

Self-building seems to be an even bigger trend on the continent. In Germany, baugruppen, or building groups, are active all over, and reportedly account for 10 percent of new homes built in Berlin. baugruppe3These are groups of people who come together, often with something in common (they might be musicians, say, or share a political philosophy), and take responsibility for acquiring land, hiring architects and contractors, and creating their own housing. For a summary of how it works, click here, or another brief description, here.

The baugruppe is a well-established form of organization in Germany and apparently gets a good deal of institutional support, including financing from a state bank. Whether something like this could work in this country is an open question.

Mike Eliason, a designer who was author of a seven-part series on baugruppen, seems to think it could, at least in a place like Seattle. For the first article, on the website of a Seattle advocacy organization called The Urbanist, click here. As Eliason describes it, baugruppen projects cost less than traditional models because they do without developers and marketing, as well as real estate agents.baugruppe2

It all sounds reminiscent of cohousing, except that it’s commonly done in an urban setting — as the photos in this post reflect. It also sounds like a fairly middle-class phenomenon, considering how much of a personal investment it requires of its participants. Who has the time and energy necessary to do all the meeting and planning and hiring and so on? Probably not someone who holds down two minimum-wage jobs. Not that we don’t need affordable housing, sometimes called workforce housing, for middle-class professional types, too.

Scaling back, sort of

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A new verb, or gerund, is twittering its way into the contemporary housing lexicon: “co-living.”

It’s often paired with “co-working,” another neologism, and “micro-housing.” These words are being used most commonly to describe the emerging lifestyles of highly driven, hard-striving young entrepreneurs, typically in technical fields — Millennial start-up wannabes, they’re sometimes called in the literature.tiny1 Harnessed to their ambitions, they’re willing to live in tiny spaces with some common amenities (co-live), work in open-space offices where they can freely network and brainstorm with peers (co-work), and abandon the idea of maintaining a conventional “work-life balance.”

These patterns reportedly originated in the Bay Area, as you might expect, but are showing up in New York. This summer, the Times ran a story about Pure House, one of several businesses renting apartments with amenities to such people who are willing to pay $1,600 to $4,000 a month to share rooms with others of their ilk. “The Millennial Commune,” read the headline. (For BuzzFeed’s elaboration on this phenomenon, click here.)tiny2

We’ve never met anybody like that, but we take it on faith that such people really do exist. What we’d like to suggest, though, is that some variant of co-living might have appeal for ordinary people, too – Millennials and oldsters, alike. We’ll explain in a moment, but first, let’s be clear that co-living is not the same as cohousing.

Cohousing, as the Cohousing Association of the United States describes it, is “an intentional community of private homes clustered around shared space.” There are many variations of this basic idea of combining private and communal space, and a couple of dozen of these communities have sprung up around Vermont. These are clustered developments, but they’re not necessarily adduced as an answer to the housing-unaffordability problem because of the added costs associated with the shared facilities.

Co-living, by contrast, puts people in tiny apartments (say, 200-300 square feet) with access to some shared space (such as a communal kitchen and lounge). Typically, these are furnished rentals.

An example is Commonspace, 21 micro units being developed on two floors of a five story building in Syracuse, N.Y., above a co-working office space. Each unit will have a bathroom and a kitchenette and will rent from $700 to $900 a month — supposedly slightly less than a one-bedroom apartment goes for in Syracuse, according to a fine profile in The Atlantic. tiny3

Quite apart from the “co-working” annex, micro-units have proliferated in Seattle over the last few years and appear to appeal especially to people who want to live close by where they work.

Now obviously, this sort of place is not for everyone. It means, among other things, giving up the idea that you’ll be paying for living quarters big enough to hold all your seldom-used stuff.

But it might make sense for lots of people — recent college grads working their first jobs, dislocated workers or homeless people getting back on their feet, retirees living on fixed incomes. Not that all these people would necessarily have live together, but assorted communities might suggest themselves.

And beyond rentals, perhaps different ownership models could be devised by land trusts, using judicious public subsidies, all with an eye to affordability.