Affordable housing means different things in different parts of the country. In the Washington, DC to Boston corridor it could mean an average new home costs about $350-400,000.
In the South, maybe $185-200,000 while the Midwest could be somewhere between the two. Head into the California to Washington State corridor along the coast and $600-1,000,000 might be the affordable standard.
So just how is an affordable housing established in each region. Simply put, it is the amount of house a median income borrower(s) can afford. Where there are more higher paid employees, the price of affordable housing goes up.
In the case of some parts of the country, the median price is lower because the overall median income is less. Makes sense to me.
But that is not what comes to mind today. Back in the 1950 - 60’s, a single family affordable house was typically a 960 sq ft ranch with no garage on a nice lot with grass and a deck. Think Levittown.
In the 1990’s and 2000’s, the ranch style home morphed into an 2,000 sq ft two story or cape cod with a garage on a bigger lot. Just look at any communities developed by tract builders to see these homes.
Then 2008 hit and ‘affordable’ became a Millennial thing. Huge College debt, poorer paying jobs and their wanting to be close to the city is forcing everyone to rethink what “affordable” is, not only for them but a lot of Gen X homebuyers also.
Today’s affordable housing comes in many forms that weren’t even on the radar just 10 years ago.
Tiny Houses built on trailers you can buy at Home Depot and put in a relative’s backyard just long enough to buy a real house.
Stacked Cargo containers converted into housing. Reminds one of where the robots lived in the movie IRobot.
Converted storage sheds sold by landscape supply houses, 84 Lumber and Lowe’s.
Something else that the Boomers and early Gen X’ers didn’t have to face were high land costs, impact fees, water runoff management, high septic, well or public utility costs. I was looking at empty lot near my home (rural undeveloped) and quickly learned the $51,000 price tag for the one acre lot turned into $94,500 with all the regulations, fees and utilities. And that was before a single shovel of dirt was turned. Yikes!
Some areas of the country have impact fees of $25,000, 50,000 and in some areas, the impact fees can be close to $100,000. Double Yikes!
The next time you hear that ‘what we need is more affordable housing”, don’t confuse what was affordable with what is affordable today.
Today’s tract builders are struggling with this problem and looking for ways to ‘right size’ their offerings but most are finding it darn near impossible. Many developers, city planners and designers are looking to prefab to solve the problem but as long as there is no economy of scale, that will probably never be a long range solution.
On the other end of the spectrum, new home construction is beginning to see larger homes being built for the homebuyer that has moved beyond affordable.
There is a change coming to the modular housing industry over the next ten years and if our industry is not working on something to address this changing market, we will continue to be an asterisk in the number of new homes built annually.